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Note H - Investment in and Transactions with Unconsolidated Subsidiaries | 12 Months Ended
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Dec. 31, 2018
Notes to Financial Statements |
Equity Method Investments and Joint Ventures Disclosure [Text Block] | NOTE H – INVESTMENT IN AND TRANSACTIONS WITH UNCONSOLIDATED SUBSIDIARIES Milestone China Ltd. Ownership In June 2014, Milestone Scientific invested $1 million in Milestone China Ltd. (“Milestone China”) by contributing 772 STA Instruments to Milestone China for a 40% ownership interest. Milestone Scientific recorded this investment under the equity method of accounting. In June 2017, Milestone Scientific entered into an agreement for the sale of its interest in Milestone China (a forty ( 40% ) percent interest) (the “Milestone China Shares”) to an unaffiliated United States domiciled purchaser and a 10 -year option agreement to repurchase the Milestone China Shares. The purchase price for the Milestone China Shares was $1,400,000 of which $125,000 was paid in cash and $1,275,000 was paid by delivery of a non-interest bearing secured promissory note. The note was payable in quarterly installments of $125,000 until paid in full and was secured by the Milestone China Shares until full repayment. In addition, pursuant to such note, the purchaser was precluded from selling all or substantially all its assets prior to repayment of the note. The 10 -year option agreement provided Milestone Scientific an option to repurchase the Milestone China Shares at $1,400,000 within the first two years and at fair market value (as defined in such agreement) for the remainder of the 10 -year term. The transaction has been accounted for as a secured financing. A note receivable is presented on the Company’s balance sheet, along with a deferral from financing transaction ( $1,400,000 ) as of December 31, 2017. The carrying value of the forty ( 40% ) percent investment at the transaction date was zero. As of March 2, 2018, the promissory note was in default. In April 2018, Milestone Scientific entered into a Release, Assignment and Termination Agreement (the “Termination Agreement”) with the issuer of the promissory note, pursuant to which, Milestone Scientific repaid the $250,000 payment made by the issuer and the issuer returned the Milestone China Shares to Milestone Scientific and cancelled the promissory note. Because of the Termination Agreement and related repayment made by Milestone Scientific, the Company derecognized the outstanding note receivable balance of $1,150,000 and the related deferred gain from financing transaction of $1,400,000. No gain or loss was recognized on the transaction. Related Party Transactions Milestone China is Milestone Scientific’s exclusive distributor in China. During 2017 and prior to the payment default during 2018 Milestone Scientific agreed to sell inventory to Milestone China and its agent. During 2018, Milestone Scientific recognized $900,000 of related party sales of handpieces and instruments to Milestone China and its agent. Milestone Scientific had $2,071,000 of related party sales of handpieces and instruments to Milestone China and its agent for twelve months ended December 31, 2017. As of December 31, 2018, Milestone Scientific had recorded deferred revenues and deferred costs associated with sales to Milestone China and it’s agents of $0.1 million and $0.5 million , respectively. As of December 31, 2017, Milestone Scientific recorded deferred revenues and deferred costs associated with sales to Milestone China and it’s agents of $ 1.7 million and $1.1 million, respectively. During 2018 Milestone Scientific entered into a payment arrangement with Milestone China to satisfy past due receivables from Milestone China and it’s agents which increased to $ 2.8 million at the time of the payment arrangement. The payment terms required $200,000 payments per month beginning in July 2018 through November 2018 and a balloon payment of approximately $1,425,000 during December 2018. During 2018 Milestone Scientific only collected $900,000 under the payment arrangement. Due to the default on the arrangement and Milestone China’s liquidity constraints, Milestone Scientific halted shipments to Milestone China. The Company has adjusted the accounts receivable related party and the deferred revenue related party based on the expected payment realization and recorded a reserve against the related deferred cost of $1.25 million. Gross Profit Deferral Due to timing differences of when the inventory sold to Milestone China is recognized and when Milestone China sells the acquired inventory to third parties, an elimination of the profit is required as of the balance sheet date. In accordance with ASC 323 Equity Method and Joint Ventures, Milestone Scientific has deferred 40% of the gross profit associated with recognized revenue from sales to Milestone China until that product is sold to third parties. At December 31, 2018 and 2017, the deferred profit was $421,800 and $751,500, respectively, which is included in deferred profit, related party in the consolidated balance sheets. For twelve months ended December 31, 2018 and 2017, Milestone Scientific recorded a loss and income on equity investment of $329,700 and $120,510, respectively, for product sold by Milestone China to third parties. Equity Method Disclosures As of December 31, 2018, and December 31, 2017, Milestone Scientific's investment in Milestone China was $0. As of December 31, 2018, and December 31, 2017, Milestone Scientific’s share of cumulative losses of Milestone China were $3,380,388 and $3,147,470, respectively, which have been suspended. The following table includes summarized financial information (unaudited) of Milestone China:
|  | December 31, 2018 |  |  | December 31, 2017 |
Assets: |  |  | (unaudited) |  |  |  | (unaudited) |
Current assets |  | $ | 10,587,648 |  |  | $ | 13,127,422 |
Non-current assets |  |  | 4,603,485 |  |  |  | 3,213,520 |
Total assets: |  | $ | 15,191,133 |  |  | $ | 16,340,942 |
Liabilities: |  |  |  |  |  |  |  |
Current liabilities |  |  | 17,696,033 |  |  |  | 18,468,937 |
Stockholders' deficit |  |  | (2,504,900 | ) |  |  | (2,127,995 | )
Total liabilities and stockholders’ deficit |  | $ | 15,191,133 |  |  | $ | 16,340,942 |
|  | December 31, 2018 |  |  | December 31, 2017 |
|  | (unaudited) |  |  | (unaudited) |
Net sales |  | $ | 7,598,998 |  |  | $ | 1,394,760 |
Cost of goods sold |  |  | 3,539,138 |  |  |  | 477,200 |
Gross profit |  |  | 4,059,860 |  |  |  | 917,560 |
Other expenses |  |  | (4,642,154 | ) |  |  | (5,975,360 | )
Net Losses |  | $ | (582,294 | ) |  | $ | (5,057,800 | )

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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