Note 4 - Investment in Limited Liability Company
|3 Months Ended|
Mar. 31, 2021
|Notes to Financial Statements|
|Equity Method Investments and Joint Ventures Disclosure [Text Block]||
August 8, 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 in North America.
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 terms of the Distribution Agreement also included a minimum purchase requirement to purchase a certain quantity of ICM products per month. In addition, the parties agreed to certain mutual marketing obligations to promote sales of the licensed products. During the
March 31, 2021and
2020,the Company purchased
120units of ICM products for approximately
$10,000,respectively. As of
March 31, 2021,the Company has purchased approximately
5,285units of ICM products. The Company paid ICM approximately
$10,000for product related costs during the
March 31, 2021and
2020,respectively. There were
amounts due to ICM for the accounts payable as of
March 31, 2021and
December 31, 2020.
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. As of
March 31, 2021,the Company owned approximately
7%ownership interest in ICM. The Company recognizes its allocated portion of ICM's results of operations on a
three-month lag due to the timing of financial information. For the
2020,the allocated net loss from ICM's operations was
$182,000,respectively. The allocated net loss from ICM's operations was recorded as loss from minority interest in limited liability company in the condensed consolidated statements of operations.
February 2019,the Company executed a mutual termination of the Distributorship Agreement with ICM. As a result, the Company
nolonger has a minimum purchase requirement to purchase a certain quantity of ICM products per month.
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/disclosureRef