Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Consolidation of Variable Interest Entity

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Note 4 - Consolidation of Variable Interest Entity
3 Months Ended
Mar. 31, 2017
Notes to Financial Statements  
Variable Interest Entity Disclosure [Text Block]
NOTE -
4
CONSOLIDATION OF VARIABLE INTEREST ENTITY
 
Milestone Medical
 
 
           As of
March
31,
2017,
Milestone Medical was approximately
96%
owned by Milestone Scientific. Milestone Medical was established to develop and commercialize intra-articular and epidural drug delivery instruments, utilizing an exclusive royalty-free license to Milestone Scientific's CompuFlo technology. The license was contributed by Milestone Scientific for its initial
50%
ownership in Milestone Medical in
September
2011.
 
 
           Since its initial investment in Milestone Medical, Milestone Scientific had accounted for the investment in accordance with the equity method of accounting. However, during
2015,
Milestone Scientific provided short term bridge financing to Milestone Medical in anticipation of the completion of a
secondary
stock offering in Poland. In
December
2015,
Milestone Medical suspended this capital raise efforts meriting re-consideration of the initial accounting for the investment as an equity method investment. In
April
2016,
Milestone Medical cancelled the uplisting of its shares to the Poland Warsaw Stock Exchange.  
 
       
 
           As a result of the change in circumstances around the proposed offering in
December
2015
by Milestone Medical, Milestone Scientific reevaluated its relationship with Milestone Medical and Milestone Medical's status as a VIE and determined that Milestone Medical did not have sufficient capital at risk to support its activities without additional financial support from Milestone Scientific.  Since the factors giving rise to concluding that Milestone Medical is a VIE happened proximate to the end of fiscal year
2015,
the date for measuring the consolidation of Milestone Medical was deemed to be
December
31,
2015.
 
 
           In the
second
quarter of 
2016,
Milestone Scientific initiated a share exchange program pursuant to which it would exchange
one
share of common stock for every
two
outstanding shares of Milestone Medical common stock. As there was no change in control, the acquisition of the non-controlling interest is reflected as an equity transaction with the carrying value of the non-controlling interest adjusted to reflect Milestone Scientific's increased ownership interest in the subsidiary.  As a result of these exchanges, Milestone Scientific owns approximately
96%
of Milestone Medical at
March
31,
2017.
 
Milestone Education LLC
 
 
           Milestone Education is a
50%
owned subsidiary of Milestone Scientific which began operations in
2013
to provide training and education to dentists throughout the world. Milestone Scientific accounted for its investment in Milestone Education using the equity method of accounting through
December
31,
2015.
Approximately
82%
of the revenue earned by Milestone Education is from services performed for Milestone Scientific as of
March
31,
2017.
As a result of this relationship, we determined that we had the power to direct the activities that most significantly impact
Milestone Education's economic performance, and that it was
  a VIE and would  be consolidated in the financial statements  of Milestone Scientific effective
January
2016.