Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Related Parties

v3.7.0.1
Note 11 - Related Parties
 3 Months Ended
Mar. 31, 2017
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]
NOTE
–
11
RELATED PARTIES
 
Milestone Scientific has a manufacturing agreement with
one
of its principal manufacturers of its handpieces, which is a related party, pursuant to which it manufactures products under specific
purchase orders, but without minimum purchase commitments. Purchases of handpieces from this
manufacturer
were
$452,352
and
$636,059
during the
three
months ended
March
31,
2017
and
2016,
respectively. Milestone Scientific Inc owed
$1,082,304
 and
$1,235,052
to this 
manufacturer
as of
March
31,
2017
and
December
31,
2016,
respectively.
 
 
        
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 cost 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.   
 
 
         In
August
2013,
a stockholder of Milestone Scientific entered a
three
-year agreement with Milestone Scientific to provide financial and business strategic services. Expenses recognized on this agreement were
$25,000
and
$35,000
for the
three
months ended
March
31,
2017
and
2016,
respectively.