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Investment in Unconsolidated Subsidiaries
9 Months Ended
Sep. 30, 2015
Equity Method Investments And Joint Ventures [Abstract]  
Investment in Unconsolidated Subsidiaries

NOTE – 4 INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES

Milestone Medical Inc

Milestone Medical had a zero net book value at September 30, 2015. In July 2013, Milestone Scientific entered a strategic partnership with the largest provider of specialty sales and distribution solutions for healthcare in the United States. This agreement was terminated in the second quarter of 2015.

Prior to the fourth quarter of 2014 Milestone Scientific had distribution responsibility in the U.S. and Canada, and Beijing 3H was responsible for distribution in Macao, Hong Kong and other regions of Asia. In the fourth quarter of 2014, the joint venture agreement with Beijing 3H was terminated and Milestone Medical contracted with Milestone China to become its new distributor in Asia for both the epidural and intra-articular instruments. In the fourth quarter of 2014, Milestone Scientific Inc. purchased an additional 995,000 shares of Milestone Medical from another shareholder for $447,750 ($0.45 per share), which increased its percentage of ownership to 49.98% of Milestone Medical

Milestone Scientific recorded a loss on its investment in Milestone Medical of $590,612 and $1,566,711 for the three and nine months ended September 30, 2015 and $223,834 and $567,550 for the three and nine months ended September 30, 2014, respectively. For the nine month September 30, 2015 Milestone Scientific offset advances to Milestone Medical by $537,923 which is the excess loss of the Company’s investment in Milestone Medical. Milestone Scientific has accounted for its investment in Milestone Medical using the equity method of accounting. The losses described represent the applicable losses reported by Milestone Medical during the three and nine months ended September 30, 2015 and 2014, respectively. Milestone Scientific utilizes the equity method of accounting to recognize its financial results of the Medical Joint Venture.

 

Milestone Scientific did not have any legal expense related to seeking U.S. Food and Drug Administration (“FDA”) marketing clearance for the epidural and intra-articular instruments under section 510k for the three and nine months ended September 30, 2015. Milestone Scientific expensed $44,415 and $175,868 on behalf of Milestone Medical for the three and nine months ended September 30, 2014, respectively, for legal expenses related to seeking FDA marketing clearance for the epidural and intra-articular instruments under section 510K. As part of the joint venture agreement, Milestone Scientific agreed to pay all the legal fees related to the FDA clearance process.

Milestone Scientific had an investment in Milestone Medical of zero as September 30, 2015 and $888,720 as of December 31, 2014.

Milestone Education LLC.

 

The Education Joint Venture has been providing training and education to our dentists throughout the world. Milestone Scientific accounted for its investment in the Education Joint Venture using the equity method of accounting. The Education Joint Venture earned a profit of $4,686 and incurred a loss of $10,986 for the three and nine months ended September 30, 2015, respectively. The Education Joint Venture incurred a loss of $5,266 and $20,910 for the three and nine months ended September 30, 2014, respectively. Fifty percent of these losses were recorded in the condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014.

Milestone China Inc

In September 2014, Milestone Scientific agreed to invest $1. Million through the contribution of 772 STA instruments (at a distributor price of approximately $1,295 per instrument) for a forty percent ownership in Milestone China. The instruments were shipped to the distributors over a period of two years. Milestone China will purchase additional STA handpieces as required. In 2014, 772 STA instruments were shipped and are recorded at Milestone Scientific’s cost in the investment account for Milestone China on the Balance Sheet. Milestone China did not begin operations until July 2014. Milestone Scientific recognized a loss of $123,083 and $187,062 from Milestone China, for the three and nine months and ended September 30, 2015. These amounts represents 40% of the loss and profit of Milestone China for each period respectively. Milestone Scientific’s investment in Milestone China is $161,588 and $348,651 as of September 30, 2015 and December 31, 2014, respectively. Milestone Scientific shipped $938,304 of instruments and $138,600 of handpieces in the nine months ended September 30, 2015. Milestone Scientific recognized 60% of the revenue on shipments of instruments and handpieces. The remaining 40% of revenue is recognized at the time the goods are sold to a third party. At September 30, 2015 there was no deferred revenue, all instruments and handpieces were sold to a third party.