Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Investment in Unconsolidated Subsidiaries

v3.7.0.1
Note 5 - Investment in Unconsolidated Subsidiaries
3 Months Ended
Mar. 31, 2017
Notes to Financial Statements  
Equity Method Investments and Joint Ventures Disclosure [Text Block]
NOTE -
5
INVESTMENT IN
UNCONSOLIDATED SUBSIDIARIES
 
Advance Ocular Science SA
 
 
           Advanced Ocular Sciences SA ("Advanced Ocular") is an entity organized to develop an instrument that delivers injections into the eyes. Advanced Ocular is a shell company as of
March
31,
2017,
Milestone Scientific owns
25%
of this entity. During
2015,
Milestone Scientific advanced
$78,798
for marketing and strategy planning to Advanced Ocular and they, or their organizers, are obligated to repay this advance once a public offering of Advanced Ocular equity is approved and funded in Poland during
2016.
No public offering was completed in Poland as of
March
31,
2017.
 
       
    As such, Milestone Scientific has written-off the
$78,798
advanced to Advanced Ocular as of
December
31,
2016.
Advance Ocular was not included in the 
condensed
consolidated financial statements at
March
31,
2017
as no investment has been made by Milestone Scientific.
 
Milestone China Ltd.
 
          
In
June
2014,
Milestone Scientific invested
$1
million in Milestone China Ltd. (“Milestone China”) by contributing
772
STA Instruments to Milestone China for a
40%
ownership interest. Milestone Scientific recorded this investment under the equity method of accounting.
Milestone Scientific recorded a loss on its investment in Milestone China of 
$0
and
$164,837,
as of
March
31,
2017
and
2016,
respectively. Milestone Scientific' investment in Milestone China was
$0
as of
March
31,
2017
and
December
31,
2016,
respectively.
Milestone Scientific incurred losses on its investment in Milestone China of
$1,528,376
and
$1,124,350
as of
March
31,
2017
and
December
31,
2016,
respectively, which have been suspended.
 
          
Milestone Scientific had
$356,400
and
$1,000,000
  of related party sales of handpieces and instruments during the
three
months ended
March
31,
2017
and
2016,
respectively, to Milestone China. As of
March
31,
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
March
31,
2017
and
December
31,
2016
Milestone China owes
$1,358,200
and
$2,714,600
, respectively,
 to Milestone Scientific for handpieces and STA instruments which is included in Accounts Receivable from related party on the condensed consolidated balance sheets
.  Milestone China paid
$1,001,800
million in
April
2017
to satisfy the outstanding instruments sales from
2016
and therefore
$1,001,800
has been recorded in revenue related to
2016
sales for the
three
months ended
March
31,
2017.
 
 
 
          
 
           Milestone Scientific recognizes the total revenue and costs of goods sold at the time the shipment of instruments and handpieces to Milestone China are paid. 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. The deferred profit of
$675,391
and
$630,990,
as of
March
31,
2017
and
December
31,
2016,
respectively was included within accounts receivable from related party in the condensed consolidated balance sheets. The profit deferred was
$44,401
and
$104,889
as of
March
31,
2017
and
2016,
respectively, and was included within loss on earnings from China Joint Venture on the condensed consolidated statements of operations.   
 
The following table includes summarized financial information of Milestone China:
   
March 31, 2017
   
December 31, 2016
 
       (Unaudited)       (Unaudited)  
Assets:
               
Current Assets
  $
10,110,398
    $
9,362,198
 
Non-Current Assets
   
2,743,178
     
2,467,547
 
Total Assets:
   
12,853,375
     
11,829,745
 
                 
Liabilities:
               
Current Liabilities
   
11,884,862
     
9,900,611
 
Stockholders' equity
   
968,714
     
1,929,134
 
Total liabilities and stockholders
’ equity
  $
12,853,575
    $
11,829,745
 
                 
   
March 31, 2017
   
March 31, 2016
 
Net Sales
  $
427,400
    $
272,220
 
Cost of Goods Sold
   
479,411
     
209,400
 
Gross Profit
   
(52,011
)    
62,820
 
Other Expenses
   
(958,055
)    
(379,773
)
Net Losses
  $
(1,010,066
)   $
(316,953
)