Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Related Parties

v3.7.0.1
Note 11 - Related Parties
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]
NOTE
11
RELATED PARTIES
 
Milestone Scientific has a manufacturing agreement with
one
of its principal manufacturers of its handpieces, which is a related party, pursuant to which
 it manufactures products under specific purchase orders, but without minimum purchase commitments. Purchases from this manufacturer
$584,792
and
$1,037,144
for the
three
and
six
months ended
June 30, 2017, 
respectively. Purchases of handpieces from this manufacturer were
$485,167
and
$1,121,226
for the
three
and
six
months ended
June 30, 2016,
respectively
. Milestone Scientific Inc. owed
$381,432
and
$687,522
to this manufacturer as of
June 30, 2017
and
December 31, 2016,
respectively.
 
Milestone Scientific had
$356,400
and
$1,714,600
 of related party sales of handpieces and instruments to Milestone China and Milestone China’s agent during the
three
and
six
months ended
June 30, 2017.
Milestone Scientific had
$356,400
and
$1,356,000
of related party sales of handpieces and instruments to Milestone China during the
three
and
six
months ended
June 30, 2016,
respectively. As of
June 30, 2017
and
December 31, 2016,
Milestone Scientific recorded deferred revenues and deferred costs associates with sales to Milestone China of
$356,400
and
$181,116,
and
$1,001,800
and
$620,041,
respectively.  As of
June 30, 2017
and
December 31, 2016,
Milestone China owed
$356,400
and
$2,714,600,
respectively, to Milestone Scientific for handpieces and STA instruments which is included in related party accounts receivable on the condensed consolidated balance sheets.  Milestone China made payments in
April 2017
to satisfy the outstanding instruments receivable from
2016
and therefore the deferred revenue of 
$1,001,800
at
December 31, 2016
has been recorded in revenue for the
six
months ended
June 30, 2017.
 
Milestone Scientific defers the total revenue and costs of goods sold when instruments and handpieces are shipped to Milestone China and
 Milestone China’s agent due to market conditions and Milestone China liquidity concerns. However, due to timing differences of when the inventory is sold to Milestone China and when Milestone China sells the acquired inventory to
third
parties, elimination of the intra-entity profit is required as of the balance sheet date. In accordance with ASC
323
Equity Method and Joint Ventures, Milestone Scientific has deferred the gross profit associated with inventory shipped to Milestone China that has
not
been sold to
third
parties. At
June 30, 2017
and
December 31, 2016,
the deferred profit was
$659,931
and
$630,990
,
respectively, which is included in the condensed consolidated balance sheets. For the
six
months ended
June 30, 2017
and
2016,
the loss on equity investment was
$28,941
and
$222,719,
respectively, which is included in the condensed consolidated statements of operation. For the
three
months ended
June 30, 2017
and
2016,
Milestone had a profit on equity investment of
$15,460
and loss on equity investment
$57,882,
respectively, which is included in the condensed consolidated statements of operations.
 
 
In
August 2016,
a stockholder of Milestone Scientific entered a
three
-year agreement with Milestone Scientific to provide financial and business strategic services. Expenses recognized on this agreement were
$25,000
and
$50,000
for the
three
and
six
months ended
June 30, 2017,
respectively. Expenses recognized on this agreement were
$35,000
and
$70,000
for the
three
and
six
months ended
June 30, 2016,
respectively.
 
In
January 2017,
Milestone Scientific entered into a
12
month agreement with Innovest S.p.A. to provide consulting services. This agreement will renew for successive
12
month terms unless terminated by Innovest S.p.A or Milestone Scientific. Expenses recognized on this agreement were
$20,000
and
$40,000
for the
three
and
six
months ended
June 30, 2017,
respectively.