Milestone Medical : 12-31-2021 Annual Report and Financial Statements

Consolidated report of

MILESTONE MEDICAL INC. and its SUBSIDIARY

For the Year Ended December 31, 2021

Report includes:

• 1. General information about Milestone Medical, Inc. ("Issuer") and Milestone Medical Poland Sp. Z o.o. (the Subsidiary), collectively the Company or Milestone Medical.

• 2. Consolidated financial statements prepared according to the accounting rules applicable to the Issuer together with information on accounting rules (policy) applied to the preparation of report.

• 3. Information on the rules applied to the preparation of the report, including information on changes to the applied accounting rules (policies).

• 4. Brief description of the most important achievements or failures of the Issuer and its Subsidiary during the period of the report as well as a description of the most important factors and events, atypical ones, which affect the achieved results.

• 5. A description of the status of implementation of activities and investments of the Issuer and its Subsidiary and the timetable of their implementation.

• 6. If the Issuer and its Subsidiary took initiatives to develop, its activities aimed to implement innovative solutions at the enterprise during the period of the report - information on such activities.

7.

Description of the organization of the group indicating consolidated entities.

New Jersey, March 18, 2022

Milestone Medical, Inc.

Annual Report for Year 2021

1.

THE LETTER OF THE BOARD OF DIRECTORS AND MANAGEMENT

To Our Valued Shareholders,

Although we faced temporary challenges during the pandemic, we have made significant progress over the past year advancing our efforts around the CompuFlo® Epidural Instrument and CathCheck™ System. We are gaining momentum, building upon the early success of our initiatives as we begin to work towards penetrate large hospitals, healthcare systems and pain management clinics with our CompuFlo® Epidural and CathCheck™ Verification System. Specifically, now that we have penetrated several medical institutions with our medical instrument, we are we are enhancing our sales and marketing organization as we prepare for the next phase of our growth. We are continuing these efforts into 2022, as we execute on our goal of establishing our medical instruments and disposables as the new standard of care for epidural procedures in labor and delivery and pain management.

Our initial focus has been on the labor and delivery market with 2.4 million annual epidural analgesia procedures in the U.S. alone. Most notably, in 2021, we began selling CompuFlo Epidural and CathCheck disposables to several premier medical centers, including Memorial Regional Hospital, Clear Lake Campus Hospital, Regional Medical Center (RMC), a premier regional healthcare system in South Carolina; the University of Texas Medical Branch at Galveston (UTMB); a nationally recognized Medical University of South Carolina (MUSC); and University Hospital of Würzburg in Germany.

In December 2021, we also signed an agreement for the purchase of CompuFlo® Epidural and CathCheck™ Verification System disposables with a major Northeast teaching hospital and two premier U.S. hospitals, expanding the Company's geographic footprint. Importantly, these premier hospitals belong to large healthcare systems in the United States, which is important validation of our technology. We believe the use of our instruments and disposables provides a level of safety and efficiency not currently available using conventional syringes and a significant economic benefit to the institution.

Additionally, we have expanded our global reach by adding new international distributors in Austria, Switzerland, Canada, Slovenia, and the United Arab Emirates. Each brings relationships within key global markets and proven track records introducing medical devices within their territories.

While our initial rollout is focused on the labor and delivery market, we are also targeting the pain management market. The overall addressable market for epidural anesthesia is estimated to be approximately $5 billion, with 11 million epidural procedures performed in the U.S. on an annual basis. The pain management market not only includes numerous hospitals, but also specialty centers, outpatient centers and sports medicine centers. Overall, we are receiving positive feedback and gaining recognition among both hospitals and physicians based on our ability to achieve better outcomes at lower cost. Two major thought leaders, Dr. Harsh Govil, MD, MPH and Dr. Miguel de la Garza have begun incorporating the CompuFlo® Epidural instrument into their practice for pain management to utilize the instrument for both surgical cases and office-based procedures to access the epidural space safely and quickly. The adoption of CompuFlo® Epidural instrument of Dr. Miguel de la Garza follows the approval by Surgery Partners, one of the largest and growing surgical services business in the country,for use across their network in pain management.

In summary, we have been successful in commencing the first phase of our commercial rollout of the CompuFlo Epidural Instrument®. The sales initiatives are taking hold, our sales pipeline is robust, and we look forward to finalizing additional agreements with several premier hospitals. We are in late-stage discussions with a number of hospitals, medical institutions and pain management clinics across the country that have the potential to convert to additional commercial orders. The feedback from both anesthesiologists and the healthcare institutions has been positive, given the safety and economicbenefits of our instruments. We have invested heavily in our new sales force and now have 9 full time experienced sales representatives in the field that are calling on hospitals every day. We are also in the process of adding new international distributors to build upon the traction we are gaining in the domestic market. Additionally, we successfully expanded the addressable market for our instruments beyond labor and delivery by entering the pain management market. The pain management market is at least twice the size of the labor and delivery market segment, and we believe the CompuFlo® Epidural instrument has the potential to capture a significant share of this market given its unparalleled safety, reduced risk of complications and cost savings.

We had a productive year at Milestone Medical and continue to make progress. We would like to thank our shareholders and employees for their continued support of our efforts and look forward to keeping you apprised of developments at Milestone Medical as they unfold.

Sincerely,

Board of Directors

Arjan Haverhals - Chief Executive Officer

2. STATEMENTS OF THE BOARD OF DIRECTORS AND MANAGEMENT

The management of the Milestone Medical, Inc. and Subsidiary ("the Company") declare that the annual consolidated financial statements and comparable data were prepared in accordance with accounting principles generally accepted in the United States of America and presents a true and fair view of the Company's financial results and that the report on the Company is presented in a fair view of the Company, including a description of basic exposures and risks.

As of December 31, 2021, the Company believes that it does not have sufficient cash on hand and liquidity to meet all its anticipated obligations for the next twelve months, which raises substantial doubt regarding the Company's ability to continue as a going concern unless additional financing is achieved. The Company will continue to manage its cash position while taking strategic steps to finalize supportive clinical studies and market the product and to expand its business in the medical business sectors.

On behalf of the Board of Directors and management of the Company:

Arjan Haverhals - Chief Executive Officer

The Board of Directors and management of the Company declares that the authorized entity to audit the consolidated financial statements, Friedman LLP was selected by the Audit Committee and approved by the Annual General Meeting of Shareholders effective August 18, 2021 in accordance with legal regulations and that this entity and certified auditors, who audited these financial statements met conditions to express their independent opinion on the audit, in accordance with standards of the U.S. Public Company Accounting Oversight Board. Friedman LLP's report on the December 31, 2021, consolidated financial statements, included herein, expresses an unqualified opinion, and includes explanatory paragraph referring to the substantial doubt regarding the Company's ability to continue as a going concern.

On behalf of the Board of Directors and management of the Company: Arjan Haverhals - Chief Executive Officer

1. General information

Table 1 General Information about the Issuer

THE ISSUER	MILESTONE MEDICAL INC.
(Earlier: Milestone Scientific Research and Development, Inc.)
Registered office/Office:	425 Eagle Rock Avenue, Roseland, NJ 07068, USA
Telephone number:	011-973-535-2717
Facsimile number:	011-973-535-2829
E-mail:	[e-mail]
Main website address:	www.medicalmilestone.com

Source: The Issuer

3.1. Shareholding structure

In the table below shares issued are outstanding for computing the ownership percentage of shareholders holding at least 5% of votes at the General Meeting of Shareholders, applicable percentages are based on 22,000,000 shares outstanding on the date of this annual report preparation. All percentages are rounded.

Table 2 Shareholder structure with specification of shareholders holding at least 5% of votes at the General Meeting of Shareholders at the date of the report.

Name of Shareholder	Number of owned shares/votes	Shareholding/votes at General Meeting of Shareholders [%]
MILESTONE SCIENTIFIC, INC.	21,633,084	98.33%
OTHERS (<5%)	366,916	1.67%
TOTAL	22,000,000	100.00%

Source: The Issuer