Note N - Related Parties

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

NOTE N --

RELATED PARTIES

Milestone Scientific has a manufacturing agreement with

one

of its principal manufacturers, which is a related party, of its handpieces pursuant to which they manufacture products under specific

purchase orders, but without minimum purchase commitments. Purchases of handpieces from this vendor in China were

$3,025,249

and

$2,698,522

during the years ended

December

31,

2016

and

2015

respectively. All other purchases from other suppliers were not significant for the period. Milestone Scientific Inc owed

$1,235,052

 and

$716,519

to this supplier as of

December

31,

2016

and

2015,

respectively.

Milestone Scientific

has

$3,245,000

of related party revenue for

sales of instruments and handpieces during the

twelve

months ended

December

31,

2016

to Milestone China.

Milestone Scientific recorded deferred revenues and cost associates with the sales to Milestone China

$1,001,800

and

$620,041

as of

December

31,

2016.

 Milestone China owes

$2,714,600

to Milestone Scientific for STA instruments and handpieces shipped in

2016,

which is included in due from related party at

December

31,

2016.

  During

2015,

Milestone Scientific shipped

$507,000

in handpieces and

$938,304

in instruments to Milestone China Ltd.

Milestone Scientific recognizes the

total revenue and costs of goods sold at the time the shipment of instruments and handpieces to Milestone China. 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

$630,990

and $

69,781,

as of

December

31,

2016

and

2015,

respectively is included in the loss from Milestone China within the Consolidated Statements of Operations and presented in due from related parties in the Consolidated Balance Sheets. Milestone Scientific received payment of

$1.7

million of the amount outstanding at

December

31,

2016

subsequent to year end.

 

       In

June

2016,

Milestone Scientific

raised an additional

$2.0

million of gross proceeds in a private placement of

one

million shares of common stock, at a price of

$2.00

per share, to Innovest, a related party.

 

        In

August

2013,

a stockholder of Milestone Scientific entered a

three

-year agreement with Milestone Scientific to provide financial and business strategic services. The fee for these services are

$100,000

annually.