Quarterly report pursuant to Section 13 or 15(d)

Note 12 - Commitments and Other

v3.7.0.1
Note 12 - Commitments and Other
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
NOTE
12
COMMITMENTS AND OTHER
 
(
1
) Lease Commitments
 
The headquarters for Milestone Scientific is located at
220
South Orange Ave, Livingston, New Jersey. Milestone Scientific leases approximately
7,625
square feet of office space. The lease term expires
January 31, 2020
and provides for a monthly lease payment of
$12,522.
Additionally, Milestone Scientific has other smaller insignificant leases ending through
2017.
Further, a
third
party distribution and logistics center in Pennsylvania handles shipping and order fulfillment on a month-to-month basis. For the
three
and
six
months ended
June 30, 2017,
rent expense amounted to
$34,833,
and
$69,349
respectively. For the
three
and
six
months ended
June 30, 2016
rent expense amounted to
$34,749,
and
$69,987,
respectively.
 
(
2
)
  Other Commitments
 
Milestone Scientific's employment agreement (the “
2009
Agreement”) with Leonard Osser, its former Chief Executive Officer, provides for payments of
$203,111
per year for
five
years to the executive or as he directs such payments, to a
third
party, to fund his acquisition of, or contribution to, an annuity, pension, or deferred distribution plan; or for an investment for the benefit of the executive and his family. Milestone Scientific expensed approximately
$51,000
and
$102,000
 for the
three
and
six
months ended
June 30, 2017,
and
2016
respectively to fund this obligation. In
July 2017,
Milestone Scientific entered into a new employment agreement with Mr. Osser, which superseded the
2009
Agreement pursuant to which he stepped down from his position as Chief Executive Officer and became Managing Director – China Operations (See Note
13
).  Pursuant to the new agreement, Milestone Scientific agreed to fund the last installment of
$203,111
in
January 2018
as provided for in the
2009
Agreement. 
 
The technology underlying the
SafetyWand®
and
CompuFlo®
, and an improvement to the controls for
CompuDent®
were developed by the Director of Clinical Affairs and assigned to Milestone Scientific. Milestone Scientific purchased this technology pursuant to an agreement dated
January 1, 2005.
The Director of Clinical Affairs will receive additional payments of
2.5%
of the total sales of products using certain of these technologies, and
5%
of the total sales of products using certain other of the technologies until the expiration of the last patent. The Director of Clinical Affairs was granted, pursuant to the agreement, an option to purchase, at fair market value on the date of the grant
8,333
shares of common stock upon the issuance of each additional patent relating to these technologies. If products produced by
third
parties use any of these technologies (under license from us) then the Director of Clinical Affairs will receive the corresponding percentage of the consideration received by Milestone Scientific for such sale or license.  
 
The Director of Clinical Affairs’ royalty fee was
$123,764
and
$305,672
for the
three
and
six
months ended
June 30, 2017,
respectively. Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of
$68,751
and
$137,502
for the
three
and
six
months ended
June 30, 2017,
and
2016
respectively.
The Director of Clinical Affairs’ royalty fee was
$110,764
and
$300,643
for the
three
and
six
months ended
June 30, 2016,
respectively.
 
In
May 2017
Milestone Scientific entered an agreement with Innovest a stockholder of Milestone Scientific to provide consulting services. Expenses recognized on this agreement were
$20,000
and
$40,000
for the
three
and
six
months ended
June 30, 2017,
resp
ectively.