NOTE 11 — RELATED PARTY TRANSACTIONS

United Systems

In June 2021, the Company entered into a ten-year supply agreement with United Systems, the principal supplier of its handpieces, for the manufacture and supply of handpieces. Pursuant to the agreement, the Company procures products under specific purchase orders but without minimum purchase commitments. Purchases from this supplier were approximately $249,000 and $487,000 for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, and December 31, 2025, Milestone Scientific owed this supplier approximately $801,000 and $1,100,000, respectively, which is included in accounts payable and accrued expenses related party on the unaudited condensed consolidated balance sheets.

Director of Clinical Affairs

The Company pays royalties to its Director of Clinical Affairs pursuant to existing royalty arrangements related to certain Company products. Royalty expense paid to the Director of Clinical Affairs totaled approximately $96,000 and $112,000 for the three months ended March 31, 2026 and 2025, respectively. In addition, the Company paid consulting fees to the Director of Clinical Affairs totaling approximately $25,000 and $39,000 for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026 and December 31, 2025, accrued but unpaid royalties owed to the Director of Clinical Affairs were approximately $384,000 and $289,000, respectively. These amounts are included in accounts payable related party and accrued expenses related party in the Company’s consolidated balance sheets.

Directors

Leonard Osser

As part of the Company’s succession planning, on April 6, 2021, Mr. Osser entered into an agreement with the Company (the “Succession Agreement”) pursuant to which he agreed to restructure certain of his existing arrangements with the Company to in anticipation of providing broader executive support beyond the Company’s Chinese operations and, so that upon stepping down as Interim Chief Executive Officer, he would agree to assume the role of Vice Chairman of the Board.

In connection with the Succession Agreement:

On May 19, 2021, Mr. Osser stepped down as Interim Chief Executive Officer and formally assumed the role as Vice Chairman. Compensation under the Osser Employment Agreement and Osser Consulting Agreement is payable for 9.5 years from May 19, 2021.

For each of the three months ended March 31, 2026 and 2025, the Company recorded:

If the Company terminates Mr. Osser’s employment without cause (other than due to death or disability), or if Mr. Osser terminates his employment for good reason (each as defined in the applicable agreement), he is entitled to receive, in a lump sum, an amount equal to the aggregate present value (determined in accordance with Section 280G(d)(4) of the Internal Revenue Code) of all compensation payable from the termination date through the remainder of the employment term.

Vice Chairman Appointment and Option Grant

Upon stepping down as Interim Chief Executive Officer, Mr. Osser assumed the role of Vice Chairman of the Board on May 19, 2021. In connection with his new role as Vice Chairman and in exchange for his ongoing consulting services, Mr. Osser was granted options to purchase 2,000,000 shares of common stock at fair market value on the May 19, 2021. These options vest over five 5 years and expire ten 10 years from the date of grant.

Mr. Osser subsequently resigned from the Board of Directors on November 7, 2025.

Beneficial Ownership

Mr. Osser beneficially owns 2,844,028 shares of the Company’s common stock and is entitled to receive an additional 3,221,786 shares upon termination of his Employment Agreement.

Dr. D. Demesmin, Director

As of February 2024, the University Pain Medicine Center (STEMMEE), of which Dr. D. Demesmin, a member of the Company’s Board of Directors, serves as Chief Executive Officer, agreed to purchase products from the Company under terms and conditions consistent with those offered to other medical pain clinics in the United States. STEMMEE purchased medical products totaling approximately $6,000 for each of the three months ended March 31, 2026 and 2025. The company was owed approximately $ 22,300 and $ 25,500 as of March 31, 2026 and December 31, 2025 respectively. These amounts are regarded in related party accounts receivable.

Arjan J. Haverhals, Director

The Company entered into a consulting agreement with Jan Adriaan (Arjan) Haverhals (the “Haverhals Consulting Agreement”), effective January 1, 2025. The Haverhals Consulting Agreement continues for an indefinite term unless terminated in accordance with its terms. Either party may terminate the Haverhals Consulting Agreement upon 90 days’ prior written notice. The Company may terminate the Haverhals Consulting Agreement upon 30 days’ prior written notice in the event of Mr. Haverhals’ inability to provide services. Under the Haverhals Consulting Agreement, Mr. Haverhals is entitled to receive consulting fees at an annual rate of $350,000, payable monthly in arrears. For 2025, compensation was structured as follows:

 
The Company recorded consulting expense of approximately $150,000 for the three months ended March 31, 2025 related to the Haverhals Consulting Agreement. No expense was recorded for the three months ended March 31, 2026.

Mr. Haverhals is entitled to reimbursement of reasonable expenses incurred in connection with the performance of his services. He serves as an independent contractor and is not eligible for Company-provided employee benefits, including health or accident insurance, life insurance, paid sick leave, or paid vacation. In connection with the Haverhals Consulting Agreement, Mr. Haverhals entered into the Company’s standard form of non-disclosure, non-solicitation, non-competition, and invention assignment agreement.

As of March 31, 2026, and December 31, 2025, the Company owed Mr. Haverhals approximately $0 and $89,000, respectively, under the Haverhals Consulting Agreement, which is included in accounts payable—related party in the Company’s condensed consolidated balance sheets. Subsequent to December 31, 2025, Mr. Haverhals agreed to waive approximately $66,000 of amounts payable to him, which had previously been included in accounts payable—related party.

Pursuant to the Haverhals Consulting Agreement, Mr. Haverhals is entitled to receive 912,736 shares of the Company’s common stock six months following his resignation as Chief Executive Officer, subject to the terms of the Haverhals Consulting Agreement. As of March 31, 2026, such shares had not been issued.

At the Company’s Annual Meeting of Stockholders held on December 18, 2025, Mr. Haverhals was not re-elected to the Board of Directors, and his term as a director expired at the conclusion of the Annual Meeting.

April 2025 Convertible Notes

On April 9, 2025, the Company issued a series of promissory notes in the aggregate amount of $800,000 to Mr. Neal Goldman, Ms. Benedetta Casamento, and Dr. Didier Demesmin, each of whom is a director of the Company. The notes are due April 9, 2028 and bear interest at the annual rate of prime less 2.50%, payable annually. All principal and interest shall be payable in cash and/or shares of common stock at the sole discretion of the Company. The notes are convertible into shares of common stock by the holder at any time and by the Company at maturity. If the Company sells equity securities for gross proceeds in excess of $4,000,000, the holders may request repayment of their note in either cash, shares of common stock or a combination of cash and shares; provided, that the holders would then be entitled to receive only so much cash as the net proceeds to the Company in such sale of equity securities, after payment of other indebtedness and other uses (other than working capital) specified as a use of the proceeds in the relevant offering or disclosure documentation, shall be in excess of $4,000,000. Upon a liquidation event of the Company, as defined in the notes which includes a sale of the Company or assets, a merger, reorganization or combination transaction where the shareholders before the transaction own less than 50% of the Company after the transaction and a liquidation, dissolution or winding-up of the Company, the notes will be repaid in cash or its portion of any non-cash consideration. The conversion rate for any issuance of shares of common stock will be at the then fair value of a share of common stock, with the fair value being determined with reference to the public market price of a share of common stock, but not less than $0.50. The notes are unsecured and have typical default terms.

On April 20, 2026, the Company completed the Private Placement of 7,962,963 units at a purchase price of $0.27 per unit, generating gross proceeds of approximately $2.15 million, consisting of $1.80 million in cash and a reduction of $351,000 in outstanding principal of the Company’s Convertible Notes, the holders of which applied such principal amounts toward the purchase of units in the offering in lieu of cash. Each of Mr. Neal Goldman, Ms. Benedetta Casamento, and Dr. Didier Demesmin reduced their outstanding aggregate principal amount of Convertible Notes by $219,000, $87,750, $43,875 and received 812,501 325,000 162,500 shares and warrants respectively. 

BP4 S.r.l. / Innovest S.p.A.

BP4 S.r.l. / Innovest S.p.A.\n\nBP4 S.r.l. (“BP4”) is a significant shareholder of the Company, beneficially owning approximately 11.31% of the Company’s outstanding common stock, and is considered a related party. On January 15, 2026, the Company entered into an Amended and Restated Memorandum of Understanding (the “MOU”) with Innovest S.p.A., as the holder of certain consent and blockage rights with respect to BP4. Pursuant to the MOU, and subject to certain conditions, BP4 agreed to enter into a lock-up agreement pursuant to which it would not distribute or sell any of its shares of capital stock of the Company for twelve months following consummation of a $2.5 million offering by the Company. The lock-up provides for early release if the Company’s stock price exceeds specified thresholds for a defined period, permitting partial distributions of shares to BP4’s quotaholders. The Company paid BP4 $32,000 in respect of additional disbursements accumulated in connection with the transaction contemplated by the MOU, which payments are subject to an aggregate cap of $100,000.

On March 31, 2026, the Company entered into an amendment to the MOU to, among other things, revise the definition of “Qualified Offering” and “Other Locked-Up Parties” in order to facilitate an offering by the Company.