Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Commitments and Other

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Note 11 - Commitments and Other
9 Months Ended
Sep. 30, 2016
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
NOTE
– 11 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 at a monthly cost of $12,522. Additionally, Milestone Scientific has other smaller insignificant leases ending through 2017. A third party distribution and logistics center in Pennsylvania handles shipping and order fulfillment on a month-to-month basis. For the three and nine months ended September 30, 2016 rent expense amounted to $25,031 and $95,019, respectively. For the three and nine months ended September 30, 2015, rent expense amounted to $18,941 and $56,693, respectively.
 
(2) Contract Manufacturing Arrangement
 
Milestone Scientific has informal arrangements for the manufacture of its product, The STA (single tooth anest
hesia) instrument is manufactured for Milestone Scientific by Tricor Systems, Inc. pursuant to specific purchase orders. The STA and the Wand® Handpiece with Needle is supplied to Milestone Scientific by a contractor in the United States, which arranges for its manufacture with two factories in China.
 
The termination of the manufacturing relationship with any of the above manufacturers could have a material adverse effect on Milestone Scientific
’s ability to produce and sell its products. Although alternate sources of supply exist and new manufacturing relationships could be established, Milestone Scientific would need to recover its existing tools or have new tools produced. Establishment of new manufacturing relationships could involve significant expense and delay. Any curtailment or interruption of the supply, whether or not as a result of termination of such a relationship, would adversely affect Milestone Scientific.
 
(3) Other Commitments and Subsequent Events
 
Other Commitments
 
The Chief Execut
ive Officer’s employment agreement with Milestone Scientific 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. For the three and nine months ended September 30, 2016, approximately $50,777 and $152,000 was charged to expense, respectively.  For the three and nine months ended September 30, 2015, approximately $50,778 and $152,000 was charged to expense, respectively.
 
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 us. Milestone Scientific purchased this technology pursuant to an agreement dated January 1, 2005. The Director 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. 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 $148,185 and $449,875 during the three and nine months ended September 30, 2016, respectively and $117,320 and $313,751, during the three and nine months ended September 30, 2015, respectively. Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $68,751 and $206,253 for the three and nine months ended September 30, 2016. Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $39,300 and $117,900 for the three and nine months ended September 30, 2015, respectively.
 
Beginning January 1, 2016, Milestone Scientific entered into a non-exc
lusive distribution agreement with Henry Schein. In June 2016 Milestone Scientific established a new exclusive distribution arrangement for its dental products for the United States and Canada with Henry Schein Inc. (“Henry Schein”), a global leader of distribution in the dental supplies. Under the new arrangement Milestone Scientific will, for the first time, have a dedicated independent sales force visiting dentists.