NOTE F

– INVESTMENT IN

UNCONSOLIDATED SUBSIDIARIES

Advance Ocular Science SA

Advanced Ocular Sciences SA (“

Advanced Ocular”) is an entity organized to develop an instrument that delivers injections into the eyes. Advanced Ocular is a shell company as of

December

31,

2016.

Milestone Scientific owns

25%

of this entity. During

2015,

Milestone Scientific advanced

$78,798

for marketing and strategy planning to Advanced Ocular and they, or their organizers, are obligated to repay this advance once a public offering of Advanced Ocular equity is approved and funded in Poland during

2016.

No public offering was completed in Poland as of

December

31,

2016.

As such, Milestone Scientific has written-off the

$78,798

advanced to Advanced Ocular as of

December

31,

2016.

Advance Ocular was not included in the consolidated financial statements at

December

31,

2016

as no investment has

been made by Milestone Scientific. The suspended losses approximated

$19,700

December

31,

2016.

Milestone China Ltd.

June

2014,

Milestone Scientific invested

million through the contribution of

772

STA instruments (at a distributor price of approximately

$1,296

per instrument) for a

forty

percent

(40%)

ownership in Milestone China.

2014,

the instruments were shipped and were recorded as an investment in Milestone China at the cost of the inventory contributed. In

January

2016,

Milestone Scientific contributed

308

STA instruments with a retail value of approximately

$400,000

($1,296

per instrument) to Milestone China which increased Milestone Scientific's investment by approximately

$165,000

which represents the cost of the instruments. This did not increase Milestone Scientific's percentage of ownership since the contribution was proportionate to contributions from other shareholders.

Milestone Scientific recorded a loss on its investment in Milestone China of

$795,827

and

$418,432

for the

twelve

months ended

December

31,

2016,

and,

2015,

respectively. Milestone Scientific' investment in Milestone China was

as of

December

31,

2016

and

2015.

Milestone Scientific had suspended losses on its investment in Milestone China of

$1,124,350,

and

$215,347

as of

December

2016

and

2015.

Milestone Scientific

had

$3,425,000

of related party revenue for

sales of instruments and handpieces during the

twelve

months ended

December

31,

2016

to Milestone China.

Milestone Scientific recorded deferred revenues and cost associates with sales to Milestone China of

$1,001,800

and

$620,041

, respectively

as of

December

31,

2016.

Milestone China owes

$2,714,600

to Milestone Scientific for STA instruments and handpieces shipped in

2016,

which is included in due from related party at

December

31,

2016.

During

2015,

Milestone Scientific shipped

$507,000

in handpieces and

$938,304

in instruments to Milestone China Ltd.

Milestone Scientific recognizes the total revenue and costs of goods sold at the time the shipment of instruments and

handpieces to Milestone China. However, due to timing differences of when the inventory is sold to Milestone China and when Milestone China sells the acquired inventory to

third

parties, elimination of the intra-entity profit is required as of the balance sheet date. In accordance with ASC

323

Equity Method and Joint Ventures, Milestone Scientific has deferred the gross profit associated with inventory shipped to Milestone China that has not been sold to

third

parties. The deferred profit of

$630,990

and $

69,781,

as of

December

31,

2016

and

2015,

respectively is included in the loss from Milestone China within the Consolidated Statements of Operations and presented in due from related parties in the Consolidated Balance Sheets. Milestone Scientific received payment of

$1.7

million of the amount outstanding at

December

31,

2016

subsequent to year end.

The following table includes summarized financial information of Milestone China

	December 31, 2016 (unaudited)		December 31, 2015 (unaudited)

Assets:
Current Assets	$	9,362,198	$	772,999
Non -Current Assets		2,467,547		903,766
Total Assets:		11,829,745		1,676,765

Liabilities:
Current Liabilities		9,900,611		580,613
Stockholders' equity		1,929,134		1,096,152
Total liabilities and stockholders ’ equity	$	11,829,745	$	1,676,765

	December 31, 2016 (unaudited)			December 31, 2015 (unaudited)
Net Sales	$	1,126,484		$	2,303,660
Cost of Goods Sold		976,106			2,096,569
Gross Profit		150,378			207,091
Other Expenses		(2,834,980	)		(1,342,357	)
Net Losses	$	(2,684,602	)	$	(1,135,266	)