Milestone Scientific Inc. (OTC Bulletin Board: MLSS), the recognized leader in advanced injection technologies, today announced that it has entered into an agreement to extinguish $1.3 million of its outstanding debt in exchange for 822,000 shares of its common stock.
On June 28, 2007, Milestone secured a $1 million line of credit from a longstanding shareholder of the Company. The line of credit was amended in 2008 to $1.3 million. Borrowings bore interest at 6% per annum, with one year's interest at 1% payable in advance on each draw. The full amount of the line of credit and amendment, $1.3 million, had been drawn as of September 30, 2009. The outstanding debt due the investor was originally eligible for conversion into equity at a price of $0.26 per share. However, pursuant to a new agreement entered into with the investor on December 28, 2009, the debt has been converted into equity at a price per share of $1.58. As a consequence of the debt conversion, Milestone's balance sheet will no longer reflect the note as a current liability, thus increasing total stockholders' equity from $770,765 at September 30, 2009 to $2.07 million.
Leonard Osser, Chief Executive Officer of Milestone, noted, "We are very pleased to announce the conversion of $1.3 million in current debt to equity. This transaction significantly strengthens our balance sheet, eliminates further interest accrual and positions our Company to fully capitalize on our anticipated growth opportunities in the coming year. I'd like to again thank our trusted shareholder for standing by Milestone over many years and for his generous support and demonstrated commitment to our Company's long term success."
The certificates for the shares issued in connection with the debt conversion will bear a restrictive legend. Milestone Scientific is relying on the 'exempt security' provisions set forth in Section 3(a)(9) under the Securities Act of 1933, as amended, in issuing the shares in the debt conversion, as well as the transactional exemptions provided by Sections 4(2) and 4(6) of the Act and Regulation D. The shares of common stock issued in connection with the debt conversion represent approximately 5.8% of the Company's total outstanding shares immediately preceding the transaction.