Note 4 - Investment in Limited Liability Company
|9 Months Ended|
Sep. 30, 2017
|Notes to Financial Statements|
|Equity Method Investments and Joint Ventures Disclosure [Text Block]||
Investment in Limited Liability Company
2017,the Company entered into an exclusive Distributorship Agreement (the “Distributorship Agreement”) with InControl Medical, LLC (“ICM”), a Wisconsin limited liability company focused on women's health, pursuant to which the Company will directly market, promote, distribute and sell ICM’s products to licensed medical professional offices and hospitals.
Under the terms of the Distributorship Agreement, ICM agreed to
notdirectly or indirectly appoint or authorize any
thirdparty to market, promote, distribute or sell any of the licensed products to any licensed medical professional offices and hospitals in the United States. In exchange, the Company agreed to
notmarket, promote, distribute or sell (or contract to do so) any product which substantially replicates all or almost all of the key features of the licensed products.
The Company has a minimum purchase requirement to purchase a certain quantity of ICM products per month during the term of this Distributorship Agreement. In addition, the parties agreed to certain mutual marketing obligations to promote sales of the licensed products.
In connection with the Distributorship Agreement, the Company also entered into a Membership Unit Subscription Agreement with ICM and the associated limited liability company
operating agreement of ICM, pursuant to which the Company invested
$2,500,000in, and acquired membership units of, ICM. This investment has been recorded in investment in a limited liability company in the condensed consolidated balance sheets. The Company used the equity method to account for the investment in ICM because the Company does
notcontrol it, but has the ability to exercise significant influence over it. The Company’s allocated portion of ICM’s results of operations for the
September 30, 2017was immaterial.
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.
Reference 1: http://www.xbrl.org/2003/role/presentationRef