NOTE 12 — COMMITMENTS

(1) Contract Manufacturing Agreement

Milestone Scientific has informal arrangements with third-party manufacturers of the STA devices and epidural instruments pursuant to which they manufacture these products under specific purchase orders but without any long-term contract or minimum purchase commitment. The Company has a purchase commitment for the delivery of 1,650 STA instruments as of June 30, 2026. As of June 30, 2026 and December 31, 2025, the purchase order commitment was approximately 871,000 respectively, and approximately $1.4 million was paid and reported in advance on contracts in the unaudited condensed consolidated balance sheet. The Company also had advances on contracts of approximately $364,000 related to materials for future purchase orders for the manufacture of its next-generation dental instrument.

The advances in contracts represent funding for future epidural instruments and epidural replacement parts. As of June 30, 2026 and December 31, 2025, the Company also has advances on an open purchase order for long lead items for a future purchase order for the manufacturing of Epidural instruments of approximately $34,000, respectively.

(2) Operating Leases

The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:

The components of lease expense were as follows:

 SCHEDULE OF COMPONENTS OF LEASE EXPENSE