In Milestone Scientific entered into an agreement for the sale of its percent () interest in Milestone China (the “Milestone China Shares”) to an unaffiliated United States domiciled purchaser and a -year option agreement to repurchase the Milestone China Shares. The purchase price for the Milestone China Shares was of which was paid in cash and was paid by delivery of a non-interest bearing secured promissory note. The note was payable in quarterly installments of  and was secured by the Milestone China Shares until full repayment.  In addition, the purchaser was precluded from selling all or substantially all its assets prior to repayment of the note. The -year option agreement provides Milestone Scientific an option to repurchase the Milestone China Shares at within the years and at fair market value (as defined in such agreement) for the remainder of the -year term.

 

The transaction was accounted for as a secured financing and Milestone Scientific continued to account for its relationship with Milestone China under the equity method of accounting. A note receivable was presented on the Company’s condensed consolidated balance sheet along with a deferred gain from financing transaction of The carrying value of the () percent investment in Milestone China at the transaction date was .

 

As of the promissory note was in default. In Milestone Scientific entered into a Release, Assignment and Termination Agreement (the “Termination Agreement”) with the issuer of the promissory note, pursuant to which, Milestone Scientific repaid the payment made by the issuer and the issuer returned the shares of Milestone China’s common stock to Milestone Scientific and cancelled the promissory note. Because of the Termination Agreement and related repayment made by Milestone Scientific, the Company derecognized the outstanding note receivable balance of and the related deferred gain from financing transaction of gain or loss was recognized on the transaction.