will develop a professional version of the System suitable for commercialization and distribution to the professional medical markets.

          The Carticept agreement represented a significant step forward in our efforts to pursue strategic partnerships and revenue sharing collaborations with established industry leaders who share our interest in leveraging CompuFlo to develop new, cutting edge solutions capable of addressing many of the more than 700 market applications identified in the independent research study we commissioned in 2006. As we progress through 2007, we will continue to work towards identifying other strategic opportunities for joint development projects using CompuFlo as the impetus for new product development.

          Selling, general and administrative expenses for the first quarter increased, reflecting spending associated with the soft domestic market launch of the STA, which included expenses associated to advertising, trade show and sales training and support. The rise in selling, general and administrative expenses was also attributable to a non-cash charge of $248,700 associated with the accounting for share based compensation expense. The total increase was offset by our continued attention on strict cost containment in our general operating activities. Related research and development expenses for STA and CompuFlo totaled $178,566 for the first quarter period of 2007. While this total represented 10% of the total operating expenses, the continued investment in these development and commercialization programs is crucial for our Company’s future success.

          The following table shows a breakdown of our product sales (net), domestically and internationally, by product category, and the percentage of product sales (net) by each product category:

		Three Months Ended March 31,
		2007								2006
DOMESTIC
CompuDent		$	287,227				15.1	%		$	221,794				21.4	%
STA units			632,309				33.2	%			—				0.0	%
Handpieces			911,971				47.9	%			741,654				71.6	%
STA handpieces			20,545				1.1	%			0				0.0	%
Other			52,293				2.7	%			72,547				7.0	%
Total Domestic		$	1,904,344				100.0	%		$	1,035,995				100.0	%
INTERNATIONAL
CompuDent		$	51,080				14.3	%		$	231,908				44.2	%
Handpieces			291,961				81.6	%			239,146				45.5	%
Other			14,642				4.1	%			53,870				10.3	%
Total International		$	357,683				100.0	%		$	524,924				100.0	%
DOMESTIC/INTERNATIONAL ANALYSIS
Domestic		$	1,904,344				84.2	%		$	1,035,995				66.4	%
International			357,683				15.8	%			524,924				33.6	%
Total Product Sales		$	2,262,027				100.0	%		$	1,560,919				100.0	%

Summary of Significant Accounting Policies

          Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to accounts receivable, inventories, stock-based compensation, and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions.

Results of Operations

          The results of operations for the three months ended March 31, 2007 reflect a stable growth of our user base, well controlled expenditures necessary to expand our market, and significant investment in

new product development. The net loss for the three months ended March 31, 2007 represents a 22% improvement from the same period in 2006.

          The following table sets forth, for the periods presented, statement of operations data as a percentage of revenues. The trends suggested by this table may not be indicative of future operating results.

		Three Months Ended March 31
		2007								2006
Products sales, net		$	2,262,027				98	%		$	1,560,919				92	%
Royalty income			47,936				2	%			136,837				8	%
Total revenue			2,309,963				100	%		$	1,697,756				100	%
Cost of products sold			831,210				36	%			751,162				44	%
Royalty expense			5,752				—				16,421				—
Total cost of revenue			836,962				36	%			767,583				45	%
Gross Profit			1,473,001				64	%			930,173				55	%
Selling, general and administrative expenses			1,836,888				79	%			1,479,714				87	%
Research and development expenses			178,566				8	%			163,442				10	%
Total operating expenses			2,015,454				87	%			1,643,156				97	%
Loss from operations			(542,453	)			-23	%			(712,983	)			-42	%
Other income — interest			7,336				0	%			27,404				2	%
Net loss		$	(535,117	)			-23	%		$	(685,579	)			-40	%

Three Months ended March 31, 2007 compared to three months ended March 31, 2006

          Total revenues for the three months ended March 31, 2007 and 2006 were $2,309,963 (product sales of $2,262,027 and royalty income of $47,936) and $1,697,756, respectively. The $701,108 or 44.9% increase in net product sales is primarily related to STA unit and handpiece sales of $652,854 which did not exist in this same period last year. STA unit and handpiece sales are entirely domestic thru the first quarter. Domestic revenue from CompuDent units increased $65,433 or 29.5%, while international revenue declined $180,828 or 78% from year earlier levels. Disposable handpiece sales increased $170,317 or 23.0% domestically while international sales increased $52,815 or 22.1% reflecting the continuing increase in the expanding base of CompuDent units in service. The amount of $47,936 or 2% of total revenue is royalty income from granting United Systems Inc. a license to manufacture, market, and sublicense the Ionic White to the consumer market. Royalty income (net of royalty expenses) declined $78,232 or 65.0% reflecting retail competition in this increasingly highly competitive market.

          Cost of products sold for the three months ended March 31, 2007 and 2006 were $831,210 and $751,162, respectively. The $80,048 or 10.6% increase is primarily attributable to the additional cost of goods sold for the higher revenues previously discussed. Royalty expense related to the royalty income from the sales of the Ionic White ™ tooth whitening system was $5,752 for the three months ended March 31, 2007, a decrease from last year of $10,669 or 65.% as a result of lower royalties due to the market conditions described above. For the three months ended March 31, 2007, Milestone generated a gross profit of $1,473,001 or 64% as compared to a gross profit of $930,173 or 55% for the same period in 2006. Excluding the net royalty income (net of royalty expense) of $42,184 which has a gross profit of 88%, gross profit of products sales was $1,430,817 or 63% in 2006, representing a 21% increase in gross profit over the same period in 2006.

          Selling, general and administrative expenses for the three months ended March 31, 2007 and 2006 were $1,836,888 and $1,479,714, respectively. The $157,174 or 10.6% increase is attributable primarily to a non-cash charge of $248,700 associated with the accounting for share based compensation expense, as well as costs associated to the soft domestic market launch of the STA delivery system, including costs related to advertising, trade show participation and sales training and support.

          Research and development expenses for the three months ended March 31, 2007 and 2006 were $178,566 and $163,442, respectively. These costs are primarily associated with the development of Milestone’s Single Tooth Anesthetic (STA) delivery system and continuing efforts on the CompuFlo™ technology.

          Loss from operations for the three months ended March 31, 2007 and 2006 was $542,453 and $712,983, respectively. The $170,530 or 24% decrease in loss from operations is the primarily the result of increased revenue at higher gross profit %’s.

          Interest income of $7,336 was earned in the three months ended March 31, 2007 compared to $27,404 earned for the same period in 2006. The decrease of $20,068 or 73% in interest income is the result of a decreased average cash balance.

          For the reasons explained above, net loss for the three months ended March 31, 2007 was $535,117 as compared to a net loss of $685,579 for the same period in 2006. The $150,462 or 22.0% decrease in net loss is primarily a result of the increased total revenue and the increased gross profit % partially offset by the increased operating expenses.

Cash flow results

          As of March 31, 2007, Milestone had cash and cash equivalents of $451,202 and working capital of $2,401,521.

          For the three months ended March 31, 2007, Milestone’s net cash used in operating activities was $693,600. This was attributable primarily to a net loss of $535,117 adjusted for noncash items of $64,002 (of which $24,853 was depreciation expense; $5,712 was amortization of patents; $283,501 was stock and options issued for compensation, consulting, and vendor services; $5,688 was bad debt expense); a $1,073,202 increase in accounts receivable; a $12,171 decrease in royalty receivable; a $98,926 decrease in inventories; a $19,064 increase in advances to contract manufacturer; a $25,485 increase in prepaid expenses; a $947 decrease in other assets; a $482,973 increase in accounts payable and accrued expenses; and, a $44,497 increase in deferred compensation.

          Management believes that existing financial resources coupled with expected cash flow from operations are sufficient to meet Milestone’s capital needs for at least the next 12 months. However, if Milestone determines that it is in its best interests to increase funding for the development of various proposed medical products from its own resources, rather than relying on the advancement of development funds by existing or potential development partners, if development partners willing to fund certain development activities cannot be found or if cash flow from operations is less than now expected, Milestone may need to raise additional capital. No assurances can be given that additional capital, if required, can be raised on terms and conditions satisfactory to Milestone. If additional capital is required and it cannot be raised, then Milestone could be forced to curtail medical product development activities, cut marketing expenses for existing dental products or adopt other cost saving measures, any of which might negatively affect long-term growth prospects.

Liquidity and Capital Resources

          Milestone incurred net losses of approximately $535,000 and $686,000 and negative cash flows from operating activities of approximately $694,000 and $445,000 during the three months ended March 31, 2007 and 2006, respectively.

ITEM 3. CONTROLS AND PROCEDURES

	a)		Evaluation of Disclosure Controls and Procedures. Milestone’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of Milestone’s “disclosure controls and procedures” (as defined in the Securities Exchange Act, Rule 13a-15(e) and 15d-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Milestone’s disclosure controls and procedures were effective, as of the date of their evaluation, for purposes of recording, processing, summarizing and timely reporting material information required to be disclosed in reports filed by Milestone under the Securities Exchange Act of 1934.
	b)		Changes in Internal Control over Financial Reporting. There were no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, Milestone’s internal control over fiscal reporting.

PART II

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

     In the quarter ended March 31, 2007, Milestone issued total 15001 shares valued at $22,300.

ITEM 6. EXHIBITS

     The following exhibits are filed herewith:

	31.1		Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
	31.2		Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
	32.1		Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
	32.2		Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 16, 2007