Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in

the United States ("GAAP") and include the accounts of Milestone Scientific and its wholly owned and majority owned subsidiaries, including, Wand Dental, Milestone Advanced Cosmetic and Milestone Medical. Milestone Education is a variable interest entity of which Milestone Scientific is the primary beneficiary and is consolidated into Milestone Scientific's financial statements. Prior to

December

31,

2015,

Milestone Medical was accounted for as an equity investment (See Note E). All significant, intra-entity transactions and balances have been eliminated in the consolidation.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain reclassifications have been made to the

2015

financial statements to conform to the consolidated

2016

financial statement presentation. These reclassifications had no effect on net loss or cash flows as previously reported.

Consolidation, Variable Interest Entity, Policy [Policy Text Block]

Variable Interest Entities

A variable interest entity (“VIE”) is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE.

If Milestone Scientific determines that it has operating power and the obligation to absorb losses or receive benefits, Milestone Scientific consolidates the VIE as the primary beneficiary. Milestone Scientific

’s involvement constitutes power that is most significant to the entity when it has unconstrained decision making ability over key operational functions within the entity.

Milestone Scientific is the primary beneficiary of Milestone Medical as of

December

31,

2015

(see Note E) and Milestone Education as of

January

2016.

Accordingly, the assets and liabilities of Milestone Medical

and Milestone Education are included in the accompanying consolidated financial statements.

Because Milestone Scientific had an increasing variable interest in Milestone China, it further considered the guidance in Accounting Standard Codification ("ASC")

810

as it relates to determining whether Milestone China is a VIE and, if so, identifying the primary beneficiary. As Milestone China’s equity at risk and voting rights were not proportional to their economic interest, Milestone China was determined to be a VIE. Milestone Scientific would be considered the primary beneficiary of the VIE if it has both of the following characteristics:

●

Power Criterion: The power to direct the activities that most significantly impact the entity

’s economic performance; and

●

Losses/Benefits Criterion: The obligation to abso

rb losses that could potentially be significant or the right to receive benefits that could potentially be significant to the VIE.

Milestone management does not have the ability to control the activities that most significantly impact Milestone China'

s economics and, therefore, the power criterion has not been met. Management placed the most weight on the relationship and significance of activities of Milestone China to the majority shareholder/CEO of Milestone China. As majority shareholder, majority holder of voting rights, and the active CEO, the

53%

investor has the power to direct the activities that most significantly impact the economic performance of Milestone China. Management has concluded that Milestone Scientific is not the primary beneficiary under ASC

810.

Accordingly, Milestone China has not been consolidated into the financial statements of Milestone Scientific and continues to be accounted for under the equity method (see Note F).

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Milestone Scientific considers all highly liquid investments purchased with an original maturity of

three

months or less to be cash equivalents.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

. Accounts Receivable

Milestone Scientific sells a significant amount of its product on credit terms to its major distributors. Milestone Scientific estimates losses from the inability of its customers to make payments on

amounts billed. A majority of credit sales are due within

ninety

days from invoicing. There have not been any significant credit losses incurred to date.

Standard Product Warranty, Policy [Policy Text Block]

. Product Return and Warranty

Milestone Scientific generally does not accept non-defective returns from its customers. Product returns under warranty are accepted, evaluated and repaired or replaced in accordance with the

Warranty Policy. Returns not within the Warranty Policy are evaluated and the customer is charged for the repair.

Inventory, Policy [Policy Text Block]

Inventories

Inventories principally consist of finished goods and component parts stated at the lower of cost

(first

-in,

first

-out me

thod) or market. Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence and product expiration requirements.

Equity Method Investments, Policy [Policy Text Block]

Equity Method Investments

Investments in which Milestone Scientific has the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in the long term assets on the Consolidated Bal

ance Sheets. Under this method of accounting,

Milestone Scientific's

share of the net earnings or losses of the investee is presented below the income tax line on the Consolidated Statements of Operations.

Milestone Scientific

evaluates its

equity method investments whenever events or changes in circumstance indicate that the carrying amounts of such investments

may

be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period.

Property, Plant and Equipment, Policy [Policy Text Block]

Furniture, Fixture and Equipment

Equipment is recorded at cost, less accumulated depreciation. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets, which range from

five

seven

years. The costs of maintenance and repairs are charged to operations as incurred.

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

10.

Intangible Assets - Patents

Patents are recorded at cost to prepare and file the applicable documents with the US Patent Office, or internationally with the applicable governmental office in the respective country. Although certain patents have not yet been approved, the costs related to these patents are being amortized using the straight-line method over the estimated useful life of the patent. If the applicable patent application is ultimately rejected, the remaining unamortized balance will be expensed in the period in which Milestone Scientific receives notice of such rejection. Patent defense costs, to the extent applicable are expensed as incurred. Patent applications filed and patents obtained in foreign countries are subject to the laws and procedures that differ from those in the United States. Patent protection in foreign countries

may

be different from patent protection under United States laws and

may

not be favorable to Milestone Scientific. Milestone Scientific also attempts to protect the proprietary information through the use of confidentiality agreements and by limiting access to its facilities. There can be no assurance that the program of patents, confidentiality agreements and restricted access to the facilities will be sufficient to protect the proprietary technology.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

11.

Impairment of Long-Lived Assets

Milestone Scientific reviews long-lived assets for impairment whenever events or circumstances

(i.e. a triggering event) indicate that the carrying amounts

may

not be recoverable. The carrying value of the assets is evaluated in relation to the operating performance and future undiscounted cash flows of the underlying assets. Milestone Scientific adjusts the net book value of an underlying asset if its fair value is determined to be less than its net book value. There have been no impairment indicators or triggering events and therefore,

impairment reviews have been performed in the period ending

December

31,

2016.

Revenue Recognition, Policy [Policy Text Block]

12.

Revenue Recognition

Revenue from product sales is recognized, net of discounts and allowances to domestic distributors, on the date of shipment for substantially all shipments, since the shipment terms are FOB warehouse.

Milestone Scientific recognizes revenue on date of arrival of the goods at the customer's location, where shipments are FOB destination. Shipments to international distributors are FOB warehouse, therefore revenue is recognized on shipment of the goods. In all cases the price to the buyer is fixed and the collectability is reasonably assured. Further, Milestone Scientific has no obligation on these sales for any post installation, set-up or maintenance, these being the responsibility of the buyer. Milestone Scientific's only obligation after sale is the normal commercial warranty against manufacturing defects if the alleged defective unit is returned within the warranty period. Instrument and hand pieces are not bundled but rather sold separately and, as such, there are no multiple element determinations in connection with the revenue recognition.

Shipping and Handling Cost, Policy [Policy Text Block]

13.

Shipping and Handling Costs

Milestone Scientific includes shipping and handling costs in cost of goods sold. These costs are billed to customers at the time of shipment for domestic shipments. International shipments are FOB warehouse, therefore

costs are incurred by

Milestone Scientific.

Research and Development Expense, Policy [Policy Text Block]

14.

Research and Development

Research and development costs, which consist principally of new product development costs payable to

third

parties, are expensed as incurred. Advance payments for the research are amortized to expense either as services are performed or over the relevant service period using the straight line method.

Income Tax, Policy [Policy Text Block]

15.

Income Taxes

Milestone Scientific accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed for temporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Earnings Per Share, Policy [Policy Text Block]

16.

Basic and diluted net loss per common share

Milestone Scientific presents “

basic” earnings (loss) per common share applicable to common stockholders and, if applicable, “diluted” earnings (loss) per common share applicable to common stockholders pursuant to the provisions of Statement of Financial Accounting Standards ASC Topic

260.

Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding and to be issued during each period. The calculation of diluted earnings per common share is similar to that of basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options, warrants, and the conversion of debt were issued during the period.

Since Milestone Scientific had net losses for

2016

and

2015,

the assumed effects of the exercise of potentially dilutive outstanding stock options and warrants were not included in the calculation as their effect

would have been anti-dilutive. Such outstanding options and warrants totaled

3,329,769

and

1,427,769

December

31,

2016

and

2015,

respectively.

Use of Estimates, Policy [Policy Text Block]

17.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to the allowance for doubtful accounts, inventory valuation, and cash flow assumptions regarding evaluations for impairment of long-lived assets and going concern considerations, and valuation allowances on deferred tax assets. Actual results could differ from those estimates

Fair Value of Financial Instruments, Policy [Policy Text Block]

18.

Fair Value of Financial Instruments

Fair Value Measurements: We follow the provisions of ASC

820,

Fair Value Measurements and Disclosures related to financial assets and liabilities that are being measured and reported on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market at the measurement date (exit price). We are required to classify fair value measurements in

one

of the following categories:

●

Level

inputs which are defined as quoted prices (u

nadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

●

Level

inputs which are defined as inputs other than quoted prices included within Level

that are observable f

or the assets or liabilities, either directly or indirectly.

●

Level

inputs are defined as unobservable inputs for the assets or liabilities.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and

may

affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

19.

Stock-Based Compensation

Milestone Scientific accounts for stock-based compensation under ASC Topic

718,

Share-Based Payment. ASC Topic

718

requires all share-based payments to employees, including grants of employee stock options, to be recognized in the Statements of Operations over the service period, as an operating expense, based on the grant-date fair values.

The weighted-average fair value of the options granted during

2016

and

2015

was estimated as

$1.70

and

$3.01,

respectively, on the date of grant. The fair value for

2016

and

2015

was determined using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2016			2015

Volatility		181	%		167	%

Risk-free interest		0.99	%		1.73	%

Expected Life (in years)		5			5

Dividend yield		0	%		0	%

Forfeiture Rate		6	%		6	%

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

May

2014,

the Financial Accounting Standards Board (“FASB”) issued guidance for revenue recognition for contracts, superseding the previous revenue recognition requirements, along with most existing industry-specific guidance. The guidance requires an entity to review contracts in

five

steps:

identify the contract,

identify performance obligations,

determine the transaction price,

allocate the transaction price, and

recognize revenue. The new standard will result in enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers. In

August

2015,

the FASB issued guidance approving a

one

-year deferral, making the standard effective for reporting periods beginning after

December

15,

2017,

with early adoption permitted only for reporting periods beginning after

December

15,

2016.

The FASB continues to release guidance clarifying certain aspects of the revenue guidance. We do not believe that this new accounting pronouncement will have a material impact on our financial statements.

August

2014,

the FASB issued a new standard Accounting Standards Update (“

ASU”)

No.2014

15,

“Presentation of Financial Statements – Going Concern” (Subtopic

205

40).The

new standard is intended to enhance the disclosure as it relates to management’s assessment of the abilities to continue as a going concern. The standard will be effective for the annual period ending after

December

15,

2016.

Milestone Scientific adopting this standard with its annual reporting as

December

31,

2016.

November

2015,

the FASB issued guidance simplifying the balance sheet classification of deferred taxes. The new guidance requires that all deferred taxes be presented as noncurrent, rather than separated into current and noncurrent amounts. The guidance is effective for reporting periods beginning after

December

15,

2016

and early adoption is permitted. In addition, the adoption of guidance can be applied either prospectively or retrospectively to all periods presented. We do not believe that this new accounting pronouncement will have a material impact on our financial statements.

February

2016,

the FASB issued a new standard ASU

No.2016

02,

“Leases“(Topic

842).

The new standard is intended to increase transparency and comparability among organizations to recognize lease assets and liabilities on the balance sheet and disclose key information about leasing arrangements. It will be effective for fiscal years beginning after

December

15,

2018

and for interim periods within fiscal years beginning after

December

15,

2020.

Milestone Scientific is in the process of determining what impact, if any, the adoption of this ASU will have on its financial position, results of operations and cash flows.

March

2016,

the FASB issued a new standard ASU

No.2016

07,

“Investments - Equity Method and Joint Ventures” (Topic

323):

The new standard is intended to eliminate the requirement that when an investment qualifies for the use of the equity method as a result of an in increase in the level of ownership or degree of influence, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect all of the previous periods that the investment was held. It will be effective for all entities for fiscal years and interim periods, beginning after

December

15,

2016.

Milestone Scientific is in the process of determining what impact, if any, the adoption of this ASU will have on its financial position, results of operations and cash flows.

March

2016,

the FASB issued a new standard ASU

No.2016

07,

“

Investments - Equity Method and Joint Ventures” (Topic

323):

December

15,

2016.

Milestone Scientific does

not believe that this new accounting pronouncement will have a material impact on our financial statements.

June

2016,

the FASB issued a new standard ASU

No.2016

13,

“

Financial Instruments – Credit Losses” (Topic

326).:

The new standard is intended to replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. It will be effective for all entities for fiscal years and interim periods, beginning after

December

15,

2018.

Milestone Scientific is in the process of determining what impact, if any, the adoption of this ASU will have on its financial position, results of operations and cash flows.

August

2016,

the FASB issued a new standard ASU

No.2016

15,

“Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Disbursements” (Topic

230).

The new standard provides guidance as to the conformity of presentation of certain cash receipts and disbursements. It will be effective for all entities for fiscal years and interim periods, beginning after

December

15,

2017.

Milestone Scientific is in the process of determining what impact, if any, the adoption of this ASU will have on its presentation within the statement of cash flows.