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Note 8 - Stockholders' Equity | 9 Months Ended
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Sep. 30, 2019
Notes to Financial Statements |
Stockholders' Equity Note Disclosure [Text Block] | NOTE 8— STOCKHOLDERS’ EQUITY PUBLIC OFFERING AND PRIVATE PLACEMENT In February 2019, Milestone Scientific consummated a public offering and a private placement of Common Stock. The public offering generated gross proceeds of approximately $2.0 million for the issuance of 5,715,000 shares of common stock and warrants to purchase 1,428,750 shares of common stock. The warrants’ term is 5 years and they are exercisable at $0.50 per share. Subsequent to the public offering the underwriter exercised its over-allotment option and paid approximately $198,000 for 567,400 additional shares of common stock and 141,850 warrants. Also, in February 2019, the Company generated gross proceeds from a private placement of approximately $250,000 for 714,286 shares of common stock and warrants to purchase 178,571 shares of common stock from Bp4 S.p.A., a principal stockholder of Milestone Scientific, that exercised its right to participate on a pro-rata basis on the recent public offering. Bp4’s CEO is a director of Milestone Scientific and also Chief Executive Officer and Director of Wand Dental, a wholly owned subsidiary of Milestone Scientific. The warrants’ terms are 5 years and they are exercisable at $0.50 per share. WARRANTS The following table summarizes information about shares issuable under warrants outstanding at September 30, 2019 :
|  | Warrant shares outstanding |  |  | Weighted Average exercise price |  |  | Weighted Average remaining life |  |  | Intrinsic value |
Outstanding at January 1, 2019 |  |  | 1,592,775 |  |  | $ | 2.55 |  |  | $ | 0.21 |  |  |  | - |
Issued |  |  | 1,749,171 |  |  | $ | 0.50 |  |  | $ | 4.35 |  |  |  | 560,199 |
Exercised |  |  | (57,750 | ) |  | $ | 0.50 |  |  |  | - |  |  |  | - |
Expired or cancelled |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Outstanding and exercisable at September 30, 2019 |  |  | 3,284,196 |  |  | $ | 1.49 |  |  | $ | 2.30 |  |  |  | 560,199 |
See below for shares and warrants issued in excess of authorized shares for 2019 accounting treatment. PREFERRED STOCK In May 2014, Milestone completed a private placement, which raised gross proceeds of $10 million, from the sale of $3 million of Milestone Scientific common stock ( two million shares at $1.50 per share) and $7 million of our Series A Convertible Preferred Stock ("preferred stock") ( 7,000 shares at $1,000 per share). These shares were convertible, at the option of the holder, into the number of shares of common stock equal to the stated value divided by $2.545, subject to anti-dilution adjustments, at any time before May 14, 2019. These shares were mandatory convertible on May 14, 2019, into the number of shares of common stock equal to the stated value divided by $2.54 per share or $1.50 per share if the common stock does not trade at $3.15 for period of time, as defined by the agreements, both subject to anti-dilution adjustment. On May 14, 2019, the mandatory conversion date, the Preferred Stock was converted at a rate of $1.17 per common share resulting in the issuance of 5,982,906 shares of common stock. SHARES TO BE ISSUED As of September 30, 2019, there were 2,294,734 shares to be issued whose issuance has been deferred under the terms of an employment agreements with the Chief Executive Officer, Chief Financial Officer and other employees of Milestone Scientific. As of December 31, 2018, there were 1,908,813 shares, whose issuance has been deferred under the terms of an employment agreements with the Chief Executive Officer, Chief Financial Officer and other employees of Milestone Scientific. Such shares will be issued to each party upon termination of their employment. As of September 30, 2019 and December 31, 2018, there were 351,612 and 561,752 shares to be issued to non-employees, respectively, that will be issued to non-employees for services rendered. The number of shares was fixed at the date of grant and were fully vested upon grant date. See below for shares and warrants issued in excess of authorized shares for 2019 accounting treatment. SHARES AND WARRANTS IN EXCESS OF AUTHORIZED SHARES As a result of the shares and warrants issued in the public and private offerings as well as other issuance of common stock during 2019, the Company does not have a sufficient number of authorized shares of common stock to cover the exercise and issue of approximately 5 ,850,000 outstanding equity instruments. Therefore, the warrants issued in the public and private placements during 2019 and 2016 are classified as liabilities and will continue to be liability-classified until there are sufficient number of authorized shares of common stock to cover the shares issuable upon exercise of the warrants. As long as the warrants are liability-classified, they will continue to be re-measured each reporting period, with any increase or decrease in value recorded as a loss or gain in the condensed consolidated statement of operations. The fair value of the warrants is determined using a Black-Scholes option pricing model. The following assumptions were used to value the warrants at the reclassification to liability date:
|  | 2016 Warrants |  |  | 2019 Warrants |
Fair Value of Common Stock |  |  | $.36-$.83 |  |  | $ | 0.33 |
Expected Term |  | .2-.5 years |  |  | 4.9 years |
Volatility |  |  | 86%-100% |  |  |  | 83 | %
Dividend yield |  |  | 0.00 | % |  |  | 0.00 | %
Exercise Price |  | $ | 2.55 |  |  | $ | 0.50 |
Risk-free interest rate |  |  | 1.88%-2.09% |  |  |  | 2.30 | %
Weighted average fair value of warrants granted |  | $ | - |  |  | $ | 0.19 |
Number of shares underlying warrants granted |  |  | 1,512,067 |  |  |  | 1,749,171 |
On the date of issuance and reclassification the fair value of the warrants was approximately $376,000. As these warrants are liability-classified, they were revalued at September 30, 2019 using the following assumptions:
|  | 2016 Warrants |  |  | 2019 Warrants |
Fair Value of Common Stock |  | $ | 0.83 |  |  | $ | 0.08 |
Expected Term |  | 0.2 years |  |  | 4.4 years |
Volatility |  |  | 86 | % |  |  | 86 | %
Dividend yield |  |  | 0.00 | % |  |  | 0.00 | %
Exercise Price |  | $ | 2.55 |  |  | $ | 0.50 |
Risk-free interest rate |  |  | 1.88 | % |  |  | 1.55 | %
Weighted average fair value of warrants granted |  | $ | - |  |  | $ | 0.61 |
Number of shares underlying warrants granted |  |  | 1,512,067 |  |  |  | 1,691,421 |
As of September 30, 2019 the fair value of the warrants was approximately $1,017,000. For the three and nine months ended September 30, 2019 the loss on the liability classified warrants was approximately $680,542 and $674,792, respectively. Additionally, approximately 2.6 million of shares to be issued are classified as liabilities until there are sufficient number of authorized shares of common stock to cover the issuance of such shares. These shares were valued at the trading price of a share of the Company’s common stock ( $0.83 as of September 30, 2019 ) and they will continue to be re-measured each reporting period, with any increase or decrease in value recorded as a loss or gain in the condensed consolidated statement of operations. For the three and nine months ended September 30, 2019 the loss on the liability classified shares to be issued was approximately $1.2 million, respectively. The value of the shares to be issued liability is approximately $2.2 million as of September 30 , 2019. The Company plans to seek shareholder approval to increase the number of authorized shares of Common Stock at the next Shareholder’s meeting, which has been scheduled for December 17, 2019.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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