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Note 5 - Related Party Transactions
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9 Months Ended |
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Sep. 30, 2012
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| Related Party Transactions Disclosure [Text Block] |
5.
RELATED
PARTY TRANSACTIONS
George
Broady, a director of the Company and owner of more than 5%
of its outstanding common stock, advanced $2,500 on January
13, 2011, and $30,000 on March 14, 2011 to settle certain
claims against the Company. The aggregate amount of
these advances, plus a $4,000 advance on December 17, 2010,
totaling $36,500 was repaid on August 8, 2011.
Additionally,
Mr. Broady advanced $100,000 to the Company on February 28,
2011 and $100,000 on March 14, 2011. The Company
agreed to pay Mr. Broady interest of 9% per annum on the
aggregate amount of the advances. The Company repaid
Mr. Broady in full, plus accumulated interest, during the
third and fourth quarters of 2011.
The
Company is considering entering into a Royalty Agreement
and License Agreement with Broady Health Sciences, L.L.C.
(“BHS”) regarding the manufacture and sale of a
new product called Restor™.
BHS has patents pending on that product. Mr. Broady
is a member of BHS, a Texas limited liability
company. During 2011 and 2012, BHS permitted the
Company to manufacture (or have manufactured), market and
sell the Restor™
product. In April 2012, the Company reimbursed
BHS $42,000 in expenses incurred in 2011 to promote the
Restor™
product on the Company’s behalf. To
continue selling Restor™
and obtain certain exclusive rights outside of the United
States, BHS has requested that the Company pay a royalty of
2.5% of sales revenues for 2011 and subsequent years.
The Company is considering that proposal and discussing the
terms of a definitive agreement. At a royalty of 2.5%
of net sales, the Company calculates that royalties for
2011 and the first nine months of 2012 would total
approximately $31,000.
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