Note N - Concentrations

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

NOTE N-- CONCENTRATIONS

Milestone Scientific has informal arrangements with

third

-party US manufacturers of the STA,

CompuDent

and

CompuMed

devices, pursuant to which they manufacture these products under specific purchase orders but without any long-term contract or minimum purchase commitment. Consequently, advances on contracts have been classified as current at

December 31, 2019 

and

2018.

  The termination of the manufacturing relationship with any of these manufacturers could have a material adverse effect on Milestone Scientific’s ability to produce and sell its products. Although alternate sources of supply exist, and new manufacturing relationships could be established, Milestone Scientific would need to recover its existing tools or have new tools produced. Establishment of new manufacturing relationships could involve significant expense and delay. Any curtailment or interruption of the supply, because of termination of such a relationship, would have a material adverse effect on Milestone Scientific’s financial condition, business and results of operations.              

For the

twelve

months ended

December

31,2019

an aggregate of approximately

53%

of the Company’s net product sales were from

one

US Distributor. For the

twelve

months ended

December 31, 2018,

an aggregate of approximately

53%

of Wand Dental’s net product sales were to

two

customers/distributors (

one

of which, Milestone China, is a related party),

43%

and

10%

respectively.

Accounts receivable for the major customer/distributors amounted to approximately or

77%,

of Milestone Scientific's gross accounts receivable as of

December 31, 2019. 

Accounts receivable for the major customer/distributors amounted to approximately or

82%,

or

49%

 and

33%

of Milestone Scientific's gross accounts receivable as of

December 31, 2018.

As of

December 31, 2018, 

Milestone China owed

$1,917,990

to Milestone Scientific. Due to the delinquent nature of the scheduled payments and Milestone China’s further liquidity constraints, Milestone Scientific reduced accounts receivable, related party and deferred revenue, related party by

$1,817,990

at

December 31, 2018.

Additionally, Milestone Scientific recorded a reserve of

$1,250,928

against the associated deferred cost, related party. 

Business interruptions, including any interruptions resulting from COVID-

19,

(see Note R-

Subsequent Events)

could significantly disrupt our operations and could have a material adverse impact on our business. All of our employees are located in the U.S. In addition to our employees, we rely on (i) distributors, agents and

third

-party logistics providers in connection with product sales and distribution and (ii) raw material and component suppliers in the U.S., Europe and China. If we, or any of these

third

party partners encounter any disruptions to our or their respective operations or facilities, or if we or any of these

third

party partners were to shut down for any reason, including by fire, natural disaster, such as a hurricane, tornado or severe storm, power outage, systems failure, labor dispute, pandemic or other unforeseen disruption, then we or they

may

be prevented or delayed from effectively operating our or their business, respectively.