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Note 13 - Commitments | 3 Months Ended
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Mar. 31, 2020
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, epidural, and intra-articular devices, pursuant to which they manufacture these products under specific purchase orders but without any long-term contract or minimum purchase commitment. In July 2019, the company entered into a new purchase commitment for the delivery of 1,400 STA CompuDent® instruments. As of March 31, 2020, the purchase order commitment was $736,120 and advances of $313,766 are reported in inventory advances. In August 2019, the Company entered a new purchase commitment for the delivery of 100 Epidural instruments beginning in 2020. As of March 31,2020, we have an open purchase order of $299,000 for 100 Epidural instruments and have advanced $149,500 against this purchase commitment. The Company also has advances on an open purchase order for long lead items for a future purchase order for the manufacturing of Epidural instrument in 2021, in which an advance of $121,649 is reported in inventory advances. ( 2 ) Leases Operating Leases In June 2015, the Company amended its original office lease 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 had 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 its existing office lease for its corporate headquarters located in Livingston, New Jersey and instead signed a new seven ( 7 ) year lease in a new facility located in Roseland, New Jersey (the “Roseland Facility”), which commenced of January 8, 2020. Under the Roseland Facility lease, rent payments commence on April 1, 2020 and the monthly lease payments escalate annually on January 1 of each year, and range from $9,275 to $10,898 per month over the lease term. The Company is also required to pay a fixed electric charge equal to $2.00 per square foot which is paid in equal monthly installments over the lease term or $11,130 annually. These fixed monthly payments have been included in the measurement of the operating lease liability and related operating lease right-of-use asset as the Company has elected the practical expedient to not separate lease and non-lease components for all leases. The Company is also 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, which are accounted for as variable lease expenses. As of March 31, 2020, total operating lease right-of-use assets were $649,425 and total operating lease liabilities were $677,052, of which $65,034 and $612,018 were classified as current and non-current, respectively. As of December 31, 2019, total operating right-of-use assets were $15,924 and total operating lease liabilities (current) were $15,924. The increase in the operating right-of-use assets and total operating lease liabilities was due to the Company entering into a new real estate operating lease for its corporate headquarters (see below). During the quarter ended March 31, 2020, the Company also entered into a five -year lease for copiers which resulted in the recognition of property and equipment and total finance lease liabilities of $43,242. As of March 31, 2020, total finance lease liabilities were $41,800, of which $7,279 and $34,521 were classified as current and non-current, respectively. Cash flow information related to the Company's right-of-use assets and related lease liabilities were as follows:
Lease cost |  | Three Months Ended March 31, 2020 |  |  | Three Months Ended March 31, 2019 |
Cash paid for operating lease liabilities |  | $ | 17,264 |  |  | $ | 39,555 |
Cash paid for finance lease liabilities |  | $ | 2,252 |  |  | $ | - |
Right-of-use assets obtained in exchange for new operating lease liabilities (1) |  | $ | 663,009 |  |  | $ | 166,292 |
Property and equipment obtained in exchange for new finance lease liabilities |  | $ | 43,242 |  |  |  |  |
(1) For the three months ended March 31, 2019, the balance includes operating leases existing as of the adoption of ASC 842 on January 1, 2019. |
Weighted-average remaining lease term - operating leases (years) |  |  | 7.0 |  |  |  | 0.4 |
Weighted-average remaining lease term- finance leases (years) |  |  | 4.8 |  |  |  | 0.0 |
( 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. The Director of Clinical Affairs’ royalty fee was approximately $95,000 and $91,490 for the three months ended March 31, 2020 and 2019, respectively.

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