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Note 13 - Commitments | 9 Months Ended
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Sep. 30, 2019
Notes to Financial Statements |
Commitments and Contingencies Disclosure [Text Block] | NOTE 13 — COMMITMENTS ( 1 ) Contract Manufacturing Agreement Milestone Scientific has informal arrangements with third -party manufacturers of the STA, CompuDent ® CompuFlo Epidural and CompuMed ® devices, pursuant to which they manufacture these products under specific purchase orders but without any long-term contract or minimum purchase commitment. In January 2018, Wand Dental entered into a new purchase commitment for the delivery of 1,000 devices beginning in 2019. In July 2019, the open purchase order was modified ,as of September 30, 2019 we have an open purchase order of $1,149,560 for 1,500 instruments and have advanced $434,605 as of September 30, 2019 against this purchase commitment. In August 2019, Milestone Medical entered into a new purchase commitment for the delivery of 100 Epidural instruments beginning in 2020. As of September 30, 2019 we have an open purchase order of $299,000 for 100 Epidural instruments and have advanced $89,700 against this purchase commitment. ( 2 ) Leases Operating Leases In June 2015, the Company amended its original office lease of approximately 6,851 square feet for its headquarters in Livingston, New Jersey. Under the amendment, the Company leased an additional 774 square feet of rentable area of the building and extended the term of the lease through January 31, 2020 at a monthly cost of $12,522. The Company has an option to further extend the term of the lease, however, this option was not included in the determination of the lease’s right-of-use asset or lease liability. Per the terms of the lease agreement, the Company does not have a residual value guarantee. The Company will also be required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts. These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability. In August 2019, the Company made the decision to not renew the existing office lease and instead signed a seven ( 7 ) year lease in a new facility (the “Roseland Facility”). The new facility is located in Roseland, New Jersey, the monthly lease payment is $9,275 commencing April 1, 2020.The Company is also responsible for electric charge equal to $2.00 per square foot which is equal to $11,130 annually, which shall be paid in equal monthly installments of $927.50. The Company will also be required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts. The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:
| ● | As the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company has utilized its incremental borrowing rate based on the long-term borrowing costs of comparable companies in the Medical Device industry.
| ● | Since the Company elected to account for each lease component and its associated non-lease components as a single combined lease component, all contract consideration was allocated to the combined lease component.
| ● | The expected lease terms include non-cancellable lease periods. Renewal option periods are not included in the determination of the lease terms as they were not reasonably certain to be exercised.
The components of lease expense as of September 30, 2019 were as follows:
Lease cost |  | Three Months Ended September 30, 2019 |  |  | Nine Months Ended September 30, 2019 |
Operating lease cost |  | $ | 39,555 |  |  | $ | 118,664 |
Total lease cost |  | $ | 39,555 |  |  | $ | 118,664 |
Other information |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows from operating leases |  |  | - |  |  | $ | 118,664 |
Right-of-use assets obtained in exchange for new operating lease liabilities |  |  | - |  |  |  | - |
Weighted-average remaining lease term - operating leases |  |  | - |  |  |  | 0.4 years |
Weighted-average discount rate - operating leases |  |  | - |  |  |  | 9.2 | %
Maturities of lease liabilities due under these lease agreements as of September 30, 2019 are as follows:
2019 (excluding the 9 months ended September 30, 2019 ) |  | Operating Leases |
2020 |  | $ | 39,555 |
2021 |  |  | 15,976 |
2022 |  |  | - |
2023 |  |  | - |
Thereafter |  |  | - |
Total lease payments |  | $ | 55,531 |
Less: interest |  | $ | (714 | )
Total operating lease liabilities as of September 30, 2019 |  | $ | 54,817 |
Total lease payments presented in the table above excludes legally binding minimum lease payments for operating leases signed for a the Roseland Facility that will commence April 1, 2020. The Company adopted ASU 2016 - 02 on January 1, 2019 as noted above, and as required, the following disclosure is provided for periods prior to adoption. Future annual minimum lease payments and operating lease commitments as of December 31, 2018 were as follows:
|  | Total |  |  | Less than 1 Year |  |  | 1-3 Years |  |  | 3-5 Years |
Operating Lease Obligations |  | $ | 175,557 |  |  | $ | 159,138 |  |  | $ | 16,419 |  |  | $ | - |
( 3 ) Other Commitments The technology underlying the Safety Wand® and CompuFlo ®, and an improvement to the controls for CompuDent ® were developed by the Director of Clinical Affairs and assigned to Milestone Scientific. Milestone Scientific purchased this technology pursuant to an agreement dated January 1, 2005. The Director of Clinical Affairs will receive additional payments of 2.5% of the total sales of products using certain of these technologies, and 5% of the total sales of products using certain other of the technologies until the expiration of the last patent covering these technologies. If products produced by third parties use any of these technologies (under license from us) then the Director of Clinical Affairs will receive the corresponding percentage of the consideration received by Milestone Scientific for such sale or license. See Note- 12 - other.

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