NOTICE OF ANNUAL MEETING
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
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Check the appropriate box:
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Rule 14a-6(e)(2))
þ Definitive Proxy
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o Definitive Additional
Materials
o Soliciting Material
Pursuant to
§240.14a-12
Milestone Scientific Inc.
(Name of Registrant as Specified in
its Charter)
(Name of Person(s) Filing Proxy
Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
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and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
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filing.
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(1)
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Form, Schedule or Registration Statement No.:
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TABLE OF CONTENTS
Milestone
Scientific Inc.
Notice of Annual Meeting of
Stockholders
To
be held on June 5, 2007
To the Stockholders of Milestone Scientific Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Milestone Scientific Inc. (Milestone or the
Company) will be held at Brown, Rudnick, Burlack and
Israel, 7 Times Square, New York, NY, on June 5, 2007 at
10:00 a.m., local time for the purpose of considering and
acting upon the following:
1. Election of five (5) directors;
2. Ratification of appointment of Eisner LLP as
Milestones independent auditors for the current year; and,
3. Any and all matters incident to the foregoing, and such
other business as may legally come before the meeting and any
adjournments or postponements thereof.
The Board of Directors (the Board) has fixed the
close of business on April 30, 2007 as the Record Date for
determining the stockholders having the right to notice of and
to vote at the meeting (the Record Date).
By order of the Board of Directors
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Name: Leonard Osser
Title:
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Chairman of the Board
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Livingston, New Jersey
May 4, 2007
IMPORTANT: Every stockholder, whether or not he or she expects
to attend the Annual Meeting in person, is urged to execute the
proxy and return it promptly in the enclosed business reply
envelope.
Sending in your proxy will not prevent you from voting your
stock at the meeting if you desire to do so, as your proxy is
revocable at your option.
We would appreciate your giving this matter your prompt
attention.
MILESTONE
SCIENTIFIC INC.
For Annual Meeting of
Stockholders
To be Held on June 5,
2007
Proxies in the form enclosed with this statement are solicited
by the Board of Milestone to be used at the Annual Meeting of
Stockholders and any adjournments thereof, to be held at Brown,
Rudnick, Burlack and Israel, 7 Times Square, New York, NY, on
June 5, 2007 at 10:00 a.m., local time, for the
purposes set forth in the Notice of Meeting and this Proxy
Statement. The Board knows of no other business which will come
before the meeting. This Proxy Statement and the accompanying
proxy will be mailed to stockholders on May 4, 2007.
THE
VOTING AND VOTE REQUIRED
Record
Date and Quorum
Only stockholders of record at the close of business on the
Record Date, are entitled to notice of and vote at the Annual
Meeting. On the Record Date, there were 11,703,267 outstanding
shares of common stock, par value $.001 per share. At the
Annual Meeting, each share of common stock is entitled to one
vote. In the aggregate, 11,703,267 votes may be cast at the
Annual Meeting. Shares represented by each properly executed,
unrevoked proxy received in time for the meeting will be voted
as specified.
Voting of
Proxies
The persons acting as proxies pursuant to the enclosed proxy
will vote the shares represented as directed in the signed
proxy. Unless otherwise directed in the proxy, the proxyholders
will vote the shares represented by the proxy: (i) for
election of the director nominees named in this Proxy Statement;
(ii) for ratification of the appointment of Eisner LLP as
independent auditors to audit the financial statements of the
Company for the fiscal year ending December 31, 2007; and
(iii) in the proxyholders discretion, on any other
business that may come before the meeting and any adjournments
of the meeting.
All votes will be tabulated by the inspector of elections
appointed for the Annual Meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker
non-votes. Under the Companys bylaws and Delaware law:
(1) shares represented by proxies that reflect abstentions
or broker non-votes (i.e., shares held by a broker
or nominee that are represented at the meeting, but with respect
to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present
and entitled to vote for purposes of determining the presence of
a quorum; (2) there is no cumulative voting, and the
director nominees receiving the highest number of votes, up to
the number of directors to be elected, are elected and,
accordingly, abstentions, broker non-votes and withholding of
authority to vote will not affect the election of directors; and
(3) proxies that reflect abstentions or non-votes will be
treated as unvoted for purposes of determining approval of that
proposal and will not be counted as votes for or against that
proposal.
Voting
Requirements
Directors are elected by a plurality of the votes cast at the
meeting. The affirmative vote of a majority of votes cast for or
against the matter by stockholders entitled to vote is required
to ratify the appointment of independent auditors.
Revocability
of Proxy
A proxy may be revoked by the stockholder giving the proxy at
any time before it is voted by delivering oral or written notice
to the Corporate Secretary of Milestone at or prior to the
meeting, and a prior proxy is automatically revoked by a
stockholder giving a subsequent proxy or attending and voting at
the meeting. Attendance at the meeting in and of itself does not
revoke a prior proxy.
Expenses
of Solicitation
We will pay the expenses of the preparation of proxy materials
and the solicitation of proxies for the Annual Meeting. In
addition to the solicitation of proxies by mail, solicitation
may be made by certain directors, officers or employees of
Milestone telephonically, electronically or by other means of
communication. We will reimburse brokers and other nominees for
costs incurred by them in mailing proxy materials to beneficial
owners in accordance with applicable rules.
2
ELECTION
OF DIRECTORS (Item 1 on the Proxy Card)
Five (5) directors are to be elected at the Annual Meeting,
each for a term of one year and until the election and
qualification of a successor.
It is intended that votes pursuant to the enclosed proxy will be
cast for the election of the five nominees named below. In the
event that any such nominee should become unable or unwilling to
serve as a director, the proxy will be voted for the election of
such person, if any, as shall be designated by the Board.
Management has no reason to believe these nominees will not be
available for election.
The following table sets forth the names and ages of each
nominee, the principal occupation of each during the past five
years and the period during which each has served as a director
of Milestone. Information as to the stock ownership of each
nominee is set forth under Security Ownership of Certain
Beneficial Owners and Management. All of the nominees to
the Board have been approved, recommended and nominated for
re-election to the Board by Milestones Nominating
Committee and by the Board.
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Name
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Age
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Position
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Director Since
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Leonard A. Osser
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59
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Chairman and Chief Executive
Officer
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1991
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Leonard M. Schiller(1)(2)(3)
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65
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Director
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1997
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Jeffrey Fuller(1)(2)(3)
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61
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Director
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2003
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Leslie Bernhard(1)
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62
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Director
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2003
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Pablo F. Serna C.
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31
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Director
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2006
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Member of the Audit Committee |
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Member of the Compensation Committee |
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Member of the Nominating Committee |
LEONARD A. OSSER has been our Chairman and Chief Executive
Officer since July 1991. From 1980 until the consummation of
Milestones Public Offering in November 1995, he was
engaged primarily as the principal owner and Chief Executive
Officer of U.S. Asian Consulting Group, Inc., a New Jersey
based provider of consulting services in work-out
and turnaround situations for publicly and privately
owned companies in financial difficulty.
LEONARD SCHILLER has been a director of Milestone since April
1997. Mr. Schiller has been a partner in the Chicago law
firm of Schiller, Klein & McElroy, P.C. since
1977. He has also been President of The Dearborn Group, a
residential property management and real estate acquisition
company since 1980.
JEFFREY FULLER has been a director of Milestone since
January 16, 2003. Mr. Fuller has been president and
owner of two municipal water supply systems, Hudson Valley Water
Co. and Lake Lenape Water Co. since 1983, and in addition, has
been an executive recruiter since 1995.
LESLIE BERNHARD has been a director of Milestone since May 2003.
Ms. Bernhard co-founded AdStar, Inc., and since 1986 has
been President, Chief Executive Officer and a director of
AdStar. AdStar is an application service provider for the
newspaper classified advertising industry.
PABLO F. SERNA C. has been a director and Senior Manager at Spot
Investments in Milan, Italy since July 2006. Mr. Serna
C. leads the corporate finance team at Spot Investments in
investment banking and project valuation consulting. Previously,
he held similar positions at Dynamic Decisions Group Ltd. Before
joining Dynamic Decisions Group Ltd., he served as an associate
with Real Options Group, an international academic research
center consulting to business entities in Milan, and was
previously the general manager with Estudios, Consultorias y
Asesorias Financieras, a Financial Consulting firm in Columbia.
All directors of Milestone hold office until the next Annual
Meeting of stockholders and until their successors are duly
elected and qualified. Officers are elected to serve, subject to
the discretion of the Board, until their successors are
appointed.
3
Committees
of the Board of Directors
Milestones Board has established audit, compensation and
nominating committees. The Compensation Committee reviews and
recommends to the Board the compensation and benefits of all the
officers of Milestone, reviews general policy matters relating
to compensation and benefits of employees of Milestone, and
administers the issuance of stock options to Milestones
officers, employees, directors and consultants. All compensation
arrangements between Milestone and its directors, officers and
affiliates are reviewed by the Compensation Committee, the
majority of which is made up of independent directors. The Audit
Committee meets with management and Milestones independent
auditors to determine the adequacy of internal controls and
other financial reporting matters.
Attendance
at Committee and Board of Directors Meetings
During the year ended December 31, 2006, the Board held
seven meetings. All directors attended more than 75% of the
number of meetings of the Board and its committees on which they
served. It is Milestones policy that directors are invited
and encouraged to attend the Annual Meeting. All of our
directors attended the 2006 Annual Meeting.
Compensation
Committee
The Compensation Committee reviews and recommends to the Board
the compensation and benefits of all officers of the Company,
reviews general policy matters relating to compensation and
benefits of employees of the Company, and administers the
issuance of stock options to the Companys officers,
employees, directors and consultants. The Compensation Committee
is comprised of Leonard M. Schiller and Jeffrey Fuller. During
the year ended December 31, 2006, the Compensation
Committee held one meeting.
Audit
Committee
The Audit Committee was established to meet with management and
the Companys independent accountants to determine the
adequacy of internal controls and other financial reporting
matters. The Board adopted a revised written charter for the
Audit Committee in July, 2005 (the Charter). The
Audit Committee reviewed the Companys audited financial
statements for the year ended December 31, 2006 and met
with the management of the Company to discuss such audited
financial statements. The Audit Committee has discussed with the
Companys independent accountants, Eisner LLP, the matters
required to be discussed pursuant to Statement on Accounting
Standards No. 61; has received the written disclosures and
the letter from Eisner LLP required by the Independence
Standards Board Standard No. 1; has discussed with Eisner
LLP its independence from management and the Company; and has
given Eisner LLP full and free access to the Audit Committee.
Based on its review and discussions, the Audit Committee
recommended to the Board that the audited financial statements
be included in the Companys Annual Report on
Form 10-KSB.
The Audit Committee is comprised of Leonard M. Schiller,
Leslie Bernhard and Jeffrey Fuller, all of whom are
independent as defined in the applicable listing standards. The
Board has determined that Jeffrey Fuller qualifies as an Audit
Committee Financial Expert and is independent as defined in
applicable federal securities laws and regulations. During the
year ended December 31, 2006, the Audit Committee held four
meetings.
Nominating
Committee
The Company formed a Nominating Committee in May 2004. The
members of the Nominating Committee are Leonard M. Schiller and
Jeffrey Fuller, each of whom is qualified as
independent under the applicable listing standards.
The Nominating Committee will consider director candidates
recommended by stockholders. In considering candidates submitted
by stockholders, the Nominating Committee will take into
consideration the needs of the Board and the qualifications of
the candidate. The Nominating Committee may also take into
consideration the number of shares held by the recommending
stockholder and the length of time that such shares have been
held. To have a candidate considered by the Nominating
Committee, a stockholder must submit the recommendation in
writing and must include the following information: the name of
the stockholder and evidence of the persons
4
ownership of Company stock, including the number of shares owned
and the length of time of ownership; the name of the candidate,
the candidates resume or a listing of his or her
qualifications to be a director of the Company; and, the
persons consent to be named as a director if selected by
the Nominating Committee and nominated by the Board.
The stockholder recommendation and information described above
must be sent to the Companys Chief Financial Officer at
220 South Orange Avenue, Livingston Corporate Park, Livingston,
NJ 07039 and must be received not less than 120 days prior
to the anniversary date of the Companys most recent annual
meeting of stockholders.
The Nominating Committee believes that the minimum
qualifications for service as a director of the Company are that
a nominee possess an ability, as demonstrated by recognized
success in his or her field, to make meaningful contributions to
the Boards oversight of the business and affairs of the
Company and an impeccable reputation of integrity and competence
in his or her personal or professional activities. The
Nominating Committees evaluation of potential candidates
shall be consistent with the Boards criteria for selecting
new directors. Such criteria include an understanding of the
Companys business environment and the possession of such
knowledge, skills, expertise and diversity of experience so as
to enhance the Boards ability to manage and direct the
affairs and business of the Company, including when applicable,
to enhance the ability of committees of the Board to fulfill
their duties
and/or
satisfy any independence requirements imposed by law, regulation
or listing requirements.
The Nominating Committee may also receive suggestions from
current Board members, company executive officers or other
sources, which may be either unsolicited or in response to
requests from the Nominating Committee for such candidates. The
Nominating Committee also, from time to time, may engage firms
that specialize in identifying director candidates.
Once a person has been identified by the Nominating Committee as
a potential candidate, the Nominating Committee may collect and
review publicly available information regarding the person to
assess whether the person should be considered further. If the
Nominating Committee determines that the candidate warrants
further consideration, the Chairman or another member of the
Nominating Committee may contact the person. Generally, if the
person expresses a willingness to be considered and to serve on
the Board, the Nominating Committee may request information from
the candidate, review the persons accomplishments and
qualifications and may conduct one or more interviews with the
candidate. The Nominating Committee may consider all such
information in light of information regarding any other
candidates that the Nominating Committee might be evaluating for
membership on the Board. In certain instances, Nominating
Committee members may contact one or more references provided by
the candidate or may contact other members of the business
community or other persons that may have greater first-hand
knowledge of the candidates accomplishments. The
Nominating Committees evaluation process does not vary
based on whether or not a candidate is recommended by a
stockholder, although, as stated above, the Board may take into
consideration the number of shares held by the recommending
stockholder and the length of time that such shares have been
held.
The Nominating Committee adopted a revised written charter in
July 2005, which is available to security holders on
Milestones website at www.milestonescientific.com.
Stockholder
Communication with the Board of Directors
The Board has established a process to receive communications
from stockholders. Stockholders and other interested parties may
contact any member (or all members) of the Board, or the
non-management directors as a group, any Board committee or any
chair of any such committee by mail or electronically. To
communicate with the Board, any individual director or any group
or committee of directors, correspondence should be addressed to
the Board or any such individual directors or group or committee
of directors by either name or title. All such correspondence
should be sent c/o Corporate Secretary at 220 South
Orange Avenue, Livingston Corporate Park, Livingston, NJ 07039.
All communications received as set forth in the preceding
paragraph will be opened by the Corporate Secretary of the
Company for the sole purpose of determining whether the contents
represent a message to our directors. Any contents that are not
in the nature of advertising, promotions of a product or
service, patently offensive material or matters deemed
inappropriate for the Board will be forwarded promptly to the
addressee. In the case of communications to the Board or any
group or committee of directors, the Companys Corporate
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Secretary will make sufficient copies of the contents to send to
each director who is a member of the group or committee to which
the envelope or
e-mail is
addressed.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table, together with the accompanying footnotes,
sets forth information, as of March 30, 2007, regarding
stock ownership of all persons known by Milestone to own
beneficially more than 5% of Milestones outstanding common
stock.
Except as otherwise indicated, the persons listed below have
sole voting and investment power with respect to all shares of
common stock owned by them. All information with respect to
beneficial ownership has been furnished to us by the respective
stockholder.
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Shares of
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Common Stock
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Beneficially
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Percentage of
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Name of Beneficial Owner(1)
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Owned(2)
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Ownership
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Leonard Osser
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1,670,135
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(3)
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14.32
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%
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Thomas R. Ronca
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36,205
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*
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David Cohn
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10,994
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*
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Leonard M. Schiller
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68,432
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(4)
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*
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Jeffrey Fuller
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66,667
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(5)
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*
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Leslie Bernhard
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66,667
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(6)
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*
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Pablo F. Serna C.
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20,000
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*
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All directors & executive
officers as a group (7 persons)
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1,939,100
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16.14
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%
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K. Tucker Andersen
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1,603,582
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(7)
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13.75
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%
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Less than 1% |
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The addresses of the persons named in this table are as follows:
Leonard A. Osser, Thomas R. Ronca, and David Cohn are all
at 220 South Orange Avenue, Livingston Corporate Park,
Livingston, NJ 07039; Leonard M. Schiller, Schiller,
Klein & McElroy, P.C., 33 North Dearborn Street,
Suite 1030, Chicago, Illinois 60602; Jeffrey Fuller, Eagle
Chase, Woodbury, NY 11797; Leslie Bernhard, AdStar, Inc., 4553
Glencoe Avenue, Suite 325, Marina del Rey, California
90292; K. Tucker Anderson, c/o Cumberland Associates LLC,
1114 Avenue of the Americas, New York, New York 10036. |
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A person is deemed to be a beneficial owner of securities that
can be acquired by such person within 60 days from
March 30, 2007 upon the exercise of options and warrants or
conversion of convertible securities. Each beneficial
owners percentage ownership is determined by assuming that
options, warrants and convertible securities that are held by
such person (but not held by any other person) and that are
exercisable or convertible within 60 days from the filing
of this report have been exercised or converted. Except as
otherwise indicated, and subject to applicable community
property and similar laws, each of the persons named has sole
voting and investment power with respect to the shares shown as
beneficially owned. All percentages are determined based on the
number of all shares, including those underlying options
exercisable within 60 days from the filing of this report
held by the named individual, divided by 11,674,304 outstanding
shares on March 30, 2007 plus those shares underlying
options exercisable within 60 days from the filing of this
report held by the named individual or the group. |
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Includes 325,722 shares issuable upon exercise of stock
options within 60 days of the date hereof as follows:
204,728 shares at $6.00 per share and
120,994 shares issuable upon the exercise of warrants
within 60 days of the date hereof, which are exercisable at
$4.89. |
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Includes 66,667 shares subject to stock options,
exercisable within 60 days of the date hereof as follows:
6,667 shares at $1.50 per share, 20,000 shares at
$3.27 per share, 20,000 shares at $1.40 per share
and 20,000 shares at $.83 per share. |
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(5) |
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Includes 66,667 shares subject to stock options,
exercisable within 60 days of the date hereof as follows:
6,667 shares at $1.50 per share, 20,000 shares at
$3.27 per share, 20,000 shares at $1.40 per share
and 20,000 shares at $.83 per share. |
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(6) |
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Includes 66,667 shares subject to stock options,
exercisable within 60 days of the date hereof as follows:
6,667 shares at $1.50 per share, 20,000 shares at
$3.27 per share, 20,000 shares at $1.40 per
share. and 20,000 shares at $.83 per share. |
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Includes 303,559 shares subject to warrants all of which
are exercisable within 60 days of the date hereof at prices
ranging from $4.89 to $6.00. |
EXECUTIVE
OFFICERS
The following table sets forth the names, ages and principal
positions of the executive officers of the Company and two
non-officer key employees as of March 30, 2007. Information
regarding Mr. Osser is presented above.
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Name
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Age
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Position
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EXECUTIVE OFFICERS
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Thomas Ronca
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61
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President and Chief Operating
Officer
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David Cohn
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55
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Chief Financial Officer
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KEY EMPLOYEES
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Mark Hochman, D.D.S.
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49
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Director of Clinical Affairs
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Eugene Casagrande, D.D.S.
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63
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Director of Professional Relations
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The principal occupation and business experience for the last
five years for Messrs. Ronca, Cohn, Hochman and Casagrande
are set forth below.
THOMAS RONCA has been our Chief Operating Officer since May
2005. In 2004, Mr. Ronca was a self-employed business
consultant. From 1994 until 2003, Mr. Ronca was a Senior
Vice President and General Manager of the Medical Technology
Division of B. Braun Medical, Inc., a subsidiary of B. Braun
Melsungen AG. From 1996 through 2000, he simultaneously served
as President and Chief Operating Officer of B. Braun Biotech,
Inc., which provides fermenters, bioreactors and laboratory
equipment to over 200 customers in the pharmaceutical and
biotechnology industries.
DAVID COHN has been our Chief Financial Officer since July 2006.
Previously, Mr. Cohn served as Controller of Bookazine Co.,
Inc., a book wholesaler and distributor. In addition,
Mr. Cohn has over 20 years of experience as Controller
in various companies, including Arbee Associates, an office
furniture dealership, and as an accountant and auditor in
various public accounting practices. A graduate of Rutgers
University, Mr. Cohn earned a Bachelor of Science degree in
Accounting and is a Certified Public Accountant.
MARK HOCHMAN has been a clinical consultant to Milestone since
1997 and has served on a part-time basis as the Director of
Clinical Affairs and Director of Research and Development since
1999. He has a doctorate of dental surgery with advanced
training in the specialties of periodontics and orthodontics
from New York University College of Dentistry and has been
practicing dentistry since 1984. He holds a faculty appointment
as a clinical associate professor at NYU School of Dental
Surgery. Dr. Hochman is a recognized world authority on
advanced drug delivery systems, has published numerous articles
in this area and is personally responsible for inventing much of
the technology currently made available by Milestone.
EUGENE CASAGRANDE has been the Director of Professional
Relations for Milestone since September 1998. In his capacity,
Dr. Casagrande represents Milestone in a variety of
clinical and industry related opportunities. Dr. Casagrande
is the President and founder of Casagrande Consulting Services,
an entity devoted to quality management in the dental industry.
7
COMPENSATION
OF DIRECTORS AND OFFICERS AND RELATED MATTERS
Executive
Compensation.
The following Summary Compensation Table sets forth all
compensation earned, in all capacities, during the fiscal year
ended December 31, 2006 by (i) Milestones
Principal Executive Officer and (ii) the two most highly
compensated executive officers, other than the Principal
Executive Officer, who were serving as executive officers at the
end of the 2006 fiscal year and whose salary as determined by
Regulation S-B,
Item 402, exceeded $100,000 (the individuals falling within
categories (i) and (ii) are collectively referred to as the
Named Executive Officers).
SUMMARY
COMPENSATION TABLE
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Name and Principal Position
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Year
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Salary
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Option Awards
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Total
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Leonard A. Osser
Principal Executive Officer
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2006
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$
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300,000
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(1)
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$
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300,000
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Thomas R. Ronca
President and Chief Operating Officer
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2006
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$
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192,970
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(2)
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$
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10,844
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(3)
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$
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203,814
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(1) |
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Includes $150,000 in deferred compensation in accordance with
his employment agreement to be paid in common stock and not paid
until the termination of the agreement in 2010 or thereafter, if
further extended. Excludes $1,299 paid by Milestone to Marilyn
Elson, a certified public accountant, in payment of tax
consultation services. Ms. Elson is the wife of Mr. Osser. |
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(2) |
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$28,333 of Mr. Roncas base salary for 2006 was paid
in 26,984 shares of restricted common stock. |
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(3) |
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The amounts in this column reflect the expense recognized for
financial statement reporting purposes for the fiscal year ended
December 31, 2006, in accordance with FAS 123(R),
Share-based Payments. for outstanding stock options
granted as part of the stock option plan. For details used in
the assumption calculating the fair value of the option reward,
see Note B to our Financial Statements for the year ended
December 31, 2006, which is located on pages F-7 through
F-11 of our Annual Report on
Form 10-
KSB. Compensation cost is generally recognized over the vesting
period of the award. The number of shares underlying this option
award totaled 10,000 shares. See the table below entitled
Outstanding Equity Awards at December 31, 2006. |
Outstanding
Equity Awards at December 31, 2006
The following table includes certain information with respect to
the value of all unexercised options previously awarded to our
Named Executive Officers. There were no outstanding stock awards
at December 31, 2006.
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Option Awards
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Number of
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Securities
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Underlying
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Unexercised
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Option
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Option
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Options
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Exercise
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Expiration
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Name and Principal Position
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Exercisable
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Price ($)
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Date
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Leonard A. Osser
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16,667
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(1)
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1.65
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1/1/2007
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Chief Executive Officer
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16,667
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(2)
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0.87
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1/1/2008
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Thomas R. Ronca
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10,000
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(3)
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1.50
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9/26/2011
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President and Chief Operating
Officer
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(1) |
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Fully vested |
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(2) |
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Fully vests on 7-1-06 |
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(3) |
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Options for 5,000 shares of Common Stock vest on
3/26/2008
and 9/26/2009 |
8
Stock
Plan
In 2006 we adopted an equity compensation plan for the issuance
of up to 300,000 shares of our common stock in lieu of cash
compensation for services performed by employees, officers,
directors and consultants (the 2006 Stock Plan). The
purpose of the 2006 Stock Plan is to conserve cash while
allowing use to adequately compensate existing employees,
officers, directors and consultants, or new employees, officers
directors and consultants, whose performance will contribute to
our long-term success and growth. We believe that the
availability of these shares will also strengthen our ability to
attract and retain employees, officers, directors and
consultants of high competence, increase the identity of
interests of such people with those of our stockholders and help
maintain loyalty to us through recognition and the opportunity
for stock ownership. All shares granted under this plan will be
at fair market value, or at a premium to that value, on the date
of grant.
During 2006, 98,089 shares of common stock valued at
$105,833 were granted under the 2006 Stock Plan for the
following reasons:
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for consulting services, 17,493 shares valued at
$20,250; and
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as part of annual compensation and severance, 80,596 shares
valued at $85,583 were issued to three employees and two former
employees.
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Additionally, in satisfaction of payables owed in connection
with warehousing and fulfillment services and exhibition
facilities, we issued 44,068 shares valued at $46,000 to
two of our vendors (the Vendor Shares). The Vendor
Shares were issued in reliance upon the exemption from the
registration requirements of the Act, as provided in
Section 4(2) thereof, as a transaction by an issuer not
involving a public offering. We reasonably believed that each
vendor had such knowledge and experience in financial and
business matters to be capable of evaluating the merits and
risks of the investment, each vendor represented an intention to
acquire the securities for investment only and not with a view
to distribution thereof and appropriate legends were affixed to
the stock certificates. No commissions were paid in connection
with such issuances.
Compensation
of Directors
Milestone paid no cash or stock based compensation to the
directors in 2006. On June 20, 2006, Milestone awarded, to
each of its independent directors, options expiring
June 19, 2011 for the purchase of 20,000 shares of its
common stock, half of which are exercisable immediately and the
remaining half exercisable on June 20, 2007 at
$.83 per share with respect to the year starting with
Milestones 2006 annual meeting and ending with
Milestones 2006 annual meeting.
The following table provides compensation information for the
year ended December 31, 2006 for each of the independent
directors. We do not pay any directors fees. Directors are
reimbursed for the costs relating to attending board and
committee meetings.
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Name
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Option Awards(1)
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Total(2)
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Leonard M. Schiller
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$
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16,000(2
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)(3)
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$
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16,000
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Jeffrey Fuller
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$
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16,000(2
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)(3)
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$
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16,000
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Leslie Bernhard
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$
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16,000(2
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)(3)
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$
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16,000
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Pablo F. Serna C.
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$
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16,000(2
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)(4)
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$
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16,000
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(1) |
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Amounts are calculated using the provisions of Statement of
Financial Accounting Standards (SFAS) No. 123R, Share-based
Payments. |
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(2) |
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On June 20, 2006, each of Milestones independent
directors was awarded options exercisable for 20,000 shares
of our common stock at $0.83 per share. |
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(3) |
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The aggregate number of option awards outstanding on
December 31, 2006 was 66,667. |
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(4) |
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The aggregate number of option awards outstanding on
December 31, 2006 was 20,000. |
9
Employment
Contracts
In December 2003, Milestone entered into a new employment
agreement with Mr. Osser for a five-year term commencing
January 1, 2004. Under the new agreement Mr. Osser
receives base compensation of $300,000 per year, payable
one half in cash and one half in common stock valued at the
average closing price of the common stock during the first 15
trading days in the month of December during each year of the
term. While the number of shares to be issued will be determined
each year, the stock will not be issuable until the end of the
term of the agreement. In addition, Mr. Osser may earn
annual bonuses up to an aggregate of $300,000, payable one half
in cash and one half in common stock, contingent upon Milestone
achieving predetermined annual operating cash flow, revenue and
earnings targets. For 2006 none of the predetermined annual
operating targets were achieved, although he could have earned a
$100,000 bonus based upon Milestone achieving break-even cash
flow from operations, a $100,000 bonus based upon Milestone
achieving net revenues of $7,000,000 and a $100,000 bonus based
upon Milestone achieving break-even earnings determined in
accordance with generally accepted accounting principles. The
cash flow bonus and the earnings bonus will not be payable to
the extent that the payment thereof will reduce operating cash
flow or earnings below break-even, respectively. For purposes of
the agreement operating cash flow shall mean cash flow from
operations plus accounts receivable increases and less accounts
payable increases. Shares of common stock issued in partial
payment of bonuses will be valued at the average closing price
of the common stock during the first 15 trading days in the
month of December during each year of the term. The stock
portion of the bonus awards, if any, will be paid at the end of
the term of the agreement.
In addition, if during any year of the term of the agreement
Mr. Osser earns a bonus under the above formula, he shall
also be granted
5-year stock
options to purchase twice the number of shares earned under the
above formula, each such option to be exercisable at a price per
share equal to the fair market value of a share on the date of
grant (110% of fair market value if Mr. Osser is a 10% or
greater stockholder on the date of grant). The options shall
vest and become exercisable to the extent of one-third of the
shares covered at the end of each of the first three years
following the date of grant, but shall only be exercisable while
Mr. Osser is employed by Milestone or within 30 days
after the termination of his employment.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Milestones
officers and directors, and persons who own more than ten
percent (10%) of a registered class of Milestones equity
securities to file reports of ownership and changes in ownership
with the Securities and Exchange Commission (SEC).
Officers, directors and greater than ten percent (10%)
stockholders are required by SEC regulations to furnish
Milestone with copies of all Section 16(a) forms they file.
To the best of Milestones knowledge, based solely on
review of the copies of such forms furnished to Milestone, or
written representations that no other forms were required,
Milestone believes that all Section 16(a) filing
requirements applicable to its officers, directors and greater
than ten percent (10%) shareholders were complied with during
2006.
Certain
Relationships and Related Transactions
Since the beginning of our fiscal year ended December 31,
2006, we did not have any related party transactions pursuant to
Item 404 of
Regulation S-B
of the Exchange Act. We have adopted a policy that, in the
future, the Audit Committee must review all transactions with
any officer, director or 5% stockholder.
10
AUDIT
COMMITTEE REPORT
The Audit Committee is comprised of three non-management
directors, Leonard M. Schiller, Leslie Bernhard and Jeffrey
Fuller, and operates pursuant to its Charter. During the 2006
fiscal year, the Audit Committee held four meetings with the
independent auditors. The Audit Committees purpose is to
assist the Board in its oversight of (i) the integrity of
our financial statements, (ii) our compliance with legal
and regulatory requirements, (iii) our independent
auditors qualifications and independence, and
(iv) the performance of our internal audit function and
independent auditors to decide whether to appoint, retain or
terminate our independent auditors, and to pre-approve all
audit, audit-related and other services, if any, to be provided
by the independent auditors; and to prepare this Report. The
Board has determined that each member of the Audit Committee is
independent within the meaning of the rules of both
the AMEX and the Securities and Exchange Commission
(SEC). The Board has also determined that each
member is financially literate and at least one member of the
Audit Committee has accounting or related financial management
expertise, as such qualifications are defined under the rules of
the AMEX, and that Mr. Jeffrey Fuller is an audit
committee financial expert within the meaning of the rules
of the SEC.
Management is responsible for the preparation, presentation and
integrity of our financial statements, accounting and financial
reporting principles and the establishment and effectiveness of
internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations.
The independent auditors are responsible for performing an
independent audit of the financial statements in accordance with
generally accepted auditing standards. The independent auditors
have free access to the Audit Committee to discuss any matters
they deem appropriate.
In performing its oversight role, the Audit Committee has
considered and discussed the audited financial statements with
management and the independent auditors. The Audit Committee has
also discussed with the independent auditors the matters
required to be discussed by the Statement on Auditing Standards
No. 61, Communication with Audit Committees, as currently
in effect. The Audit Committee has received the written
disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as currently in
effect, and has discussed with the auditors the auditors
independence. All non-audit services performed by the
independent auditors must be specifically pre-approved by the
Audit Committee or a member thereof.
During 2006 fiscal year, the Audit Committee performed all of
its duties and responsibilities under the Charter. In addition,
based on the reports and discussions described in this Report,
the Audit Committee recommended to the Board that the audited
financial statements of Milestone for the 2006 fiscal year be
included in its Annual Report on
Form 10-KSB
for such fiscal year.
Submitted
by the Audit Committee
Leonard M. Schiller
Leslie Bernhard
Jeffrey Fuller
Recommendation
of the Board of Directors
The Board of Directors recommends that the stockholders
vote FOR the election of directors.
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITOR (Item 2 on the Proxy
Card)
Milestone is seeking stockholder ratification of the appointment
of Eisner LLP as its independent public accountants for 2007.
Milestone engaged Eisner LLP as its Independent Registered
Public Accounting Firm on June 10, 2004, and Eisner LLP
audited Milestones financial statements for the fiscal
years ended December 31, 2004, 2005 and 2006. The reports
of Eisner LLP with respect to Milestones financial
statements appear in Milestones Annual Reports for the
fiscal years ended December 31, 2004, 2005 and 2006.
In the event the stockholders fail to ratify the appointment of
Eisner LLP, the Audit Committee may reconsider its selection.
Even if the selection is ratified, the Audit Committee in its
discretion may direct the appointment of a
11
different independent auditing firm at any time during the year
if the Audit Committee believes that such a change would be in
our best interests and in the best interests of our
stockholders. A representative of Eisner LLP will attend the
2006 Annual Meeting and will have an opportunity to make a
statement if he desires to do so and will be available to
respond to appropriate questions from stockholders.
Audit
Committee Matters and Fees Paid to Independent
Auditors
Audit
Fees
Audit fees for 2006 by Eisner LLP, Milestones principal
accountant were approximately $220,000 covering the audit of our
annual financial statements and the review of our financial
statements for the first three quarters in 2005. Such fees for
2005 by Eisner LLP, Milestones principal accountant since
June 10, 2004 were $215,000 covering the audit of our
annual financial statements and the review of our financial
statements for the first three quarters in 2005.
Audit-Related
Fees
Audit related fees to our principal accountant, consisting of
fees in connection with
S-3 and
S-8 filings
and related services, totaled 11,500 for 2006 and $34,000 for
2005.
Tax
Fees
There were no fees for services related to tax compliance, tax
advice and tax planning billed by our principal accountants in
2006 and 2005.
All
Other Fees
There were no other fees billed during 2006 and 2005 by
Milestones principal accountant.
Audit
Committee Administration of the Engagement
The engagement with Eisner LLP, Milestones principal
accountant, was approved in advance by our Audit Committee. No
non-audit services were approved by the audit committee in 2006.
The percentage of hours expended on audit by persons other than
the Milestones principal accountants full time,
permanent employees, did not exceed 50%.
Audit
Committee Pre-Approved Policies and Procedures
The Audit Committee will pre-approve audit services and
non-audit services to be provided by the Companys
independent auditors before the accountant is engaged to render
these services. The Audit Committee may consult with management
in the decision-making process, but may not delegate this
authority to management. The Audit Committee may delegate its
authority to pre-approve services to one or more committee
members, provided that the designees present the pre-approvals
to the full committee at the next committee meeting.
Recommendation
of the Board of Directors
The Board of Directors recommends that the stockholders
vote FOR the ratification of the appointment of the
independent auditor.
OTHER
BUSINESS
As of the date of this Proxy Statement, we know of no other
business that will be presented for consideration at the 2007
Annual Meeting other than the items referred to above. If any
other matter is properly brought before the 2007 Annual Meeting
for action by stockholders, the persons designated as proxies
will vote all shares in accordance with the recommendation of
the Board or, in the absence of such a recommendation, in
accordance with their best judgment.
12
ADDITIONAL
INFORMATION
Householding
The SECs rules permit companies and intermediaries such as
brokers to satisfy delivery requirements for proxy statements
and annual reports with respect to two or more stockholders
sharing the same address by delivering a single proxy statement
and annual report addressed to those stockholders. This process,
which is commonly referred to as householding,
potentially provides extra convenience for stockholders and cost
savings for companies. Some brokers household proxy materials
and annual reports, delivering a single proxy statement and
annual report to multiple stockholders sharing an address,
although each stockholder will receive a separate proxy card.
Once you have received notice from your broker that they will be
householding materials to your address, householding will
continue until you are notified otherwise or until you revoke
your consent. If at any time you no longer wish to participate
in householding and would prefer to receive a separate proxy
statement and annual report, please notify your broker. If you
would like to receive a separate copy of this years Proxy
Statement or Annual Report, please address your request for
delivery of the Proxy Statement
and/or
Annual Report to David Cohn, Chief Financial Officer, Milestone
Scientific Inc., 220 South Orange Avenue, Livingston Corporate
Park, Livingston, New Jersey 07039.
Requirements,
Including Deadlines, for Submission of Proxy Proposals,
Nomination of Directors and Other Business of
Stockholders
Stockholders interested in presenting a proposal for
consideration at the Annual Meeting of stockholders in 2007 must
follow the procedures found in
Rule 14a-8
under the Exchange Act. To be eligible for inclusion in the
Companys 2008 proxy materials, all qualified proposals
must be received by our Corporate Secretary no later than
April 30, 2008. A stockholder who wishes to make a proposal
at the next Annual Meeting without including the proposal in our
proxy statement must notify us by April 30, 2008. If a
stockholder fails to give notice by this date, then the persons
named as proxies in the proxies solicited by us for the next
Annual Meeting will have discretionary authority to vote on the
proposal. Stockholder proposals should be addressed to our Chief
Financial Officer, Milestone Scientific Inc., 220 South Orange
Avenue, Livingston Corporate Park, Livingston, New Jersey 07039.
EVERY STOCKHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO ATTEND
THE ANNUAL MEETING IN PERSON, IS URGED TO EXECUTE THE PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE.
Annual
Report
The Companys Annual Report to Stockholders for the year
ended December 31, 2006, including Audited Financial
Statements, has been mailed with this proxy material. The
Financial Statements; Managements Discussion and Analysis
of Financial Condition and Results of Operations; and, Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure contained therein are incorporated by
reference and are deemed part of this soliciting material.
Notwithstanding the foregoing, other portions of the Annual
Report to stockholders are not part of the Companys proxy
solicitation materials.
We will provide without charge to each person being solicited
by this Proxy Statement, on the written request of any such
person, a copy of our Annual Report on
Form 10-KSB
for the year ended December 31, 2006 including the
financial statements and financial statement schedules included
therein. All such requests should be directed to David Cohn,
Chief Financial Officer, Milestone Scientific Inc., 220 South
Orange Avenue, Livingston Corporate Park, Livingston, New Jersey
07039.
By order of the Board of Directors
Leonard Osser
Chairman of the Board
Livingston, New Jersey
May 4, 2007
13
t FOLD AND DETACH HERE AND READ THE REVERSE SIDE t MILESTONE SCIENTIFIC INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING ON JUNE 5,
2007. The undersigned hereby appoints Leonard Osser and David Cohn, and each of them, with full
power of substitution, the attorneys and proxies of the undersigned to attend the Annual Meeting
of Stockholders of Milestone Scientific Inc. (the Company) to be held on June 5, 2007, at 10:00
a.m., local time, at Brown, Rudnick, Burlack and Israel, 7 Times Square, New York, NY and at any
adjournment thereof, hereby revoking any proxies heretofore given, to vote all shares of common
stock of the Company held or owned by the undersigned as indi- cated on the proposals as more fully
set forth in the Proxy Statement, and in their discretion upon such other matters as may come
before the meeting. (Continued, and to be signed, on Reverse Side) |
1
t FOLD AND DETACH HERE AND READ THE REVERSE SIDE t Please mark your votes FOR X
like this all nominees, EXCEPT FOR WITHHOLD for nominee(s)
election vote listed below 1. ELECTION OF DIRECTORS of all from all
from whom nominees nominees Vote is withheld. FOR AGAINST ABSTAIN
Leonard Osser, Leonard M. Schiller, Jeffrey Fuller, 2. Confirmation of the appointment of Eisner
LLP as Leslie Bernhard and Pablo F. Serna C. Milestones independent auditors for the fiscal
year ending December 31, 2007. INSTRUCTION: To withhold authority to vote for any
individual, write that nominees name The shares represented by this Proxy, when this Proxy is
properly signed, will be in the space provided below: voted as directed or if no
direction is indicated, will be voted FOR all nominees ___for director
and FOR each of the proposals. The undersigned hereby acknowledges receipt of the Notice of, and
Proxy Statement for, the aforesaid Annual Meeting. IMPORTANT PLEASE FILL IN, DATE, SIGN
AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE. COMPANY ID: PROXY NUMBER: ACCOUNT
NUMBER: Signature Signature Date , 2007. NOTE: When shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator, trustee, or guardian, please
give full title as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by an authorized
person. |
2