RELATED PARTY TRANSACTIONS
|12 Months Ended|
Dec. 31, 2018
|Related Party Transactions [Abstract]|
|RELATED PARTY TRANSACTIONS||RELATED PARTY TRANSACTIONS
The Company is a party to a Royalty Agreement and License with Broady Health Sciences, L.L.C., a Texas limited liability company, (“BHS”) regarding the manufacture and sale of a product called ReStor™. George K. Broady, a director of the Company and beneficial owner of more than 5% of its outstanding common stock, is owner of BHS. Under this agreement, the Company agreed to pay BHS a price per unit royalty in return for the right to manufacture (or have manufactured), market, import, export and sell this product worldwide, with certain rights being exclusive outside the United States. The Company recognized royalties of $327,000 and $306,000 during 2018 and 2017, respectively. The Company is not required to purchase any product under the agreement, and the agreement may be terminated at any time on 120 days’ notice or, under certain circumstances, with no notice. Otherwise, the agreement terminates March 31, 2020.
During each of 2018 and 2017, the Company procured in China and arranged for shipment to The Aberdeen Group, LLC (“Aberdeen”), one order of apparel products. Aberdeen is owned 40% by Sharng Holdings, which is wholly-owned by the Company’s president, Chris T. Sharng, and his wife, 40% by Mr. Broady, and 20% by an unrelated third party. In each instanceAberdeen promptly paid the Company for the product and shipping cost incurred. Such orders were in the amount of $3,700 and $3,800 during 2018 and 2017, respectively. Given the Company’s provision of such product sourcing services to Aberdeen, Aberdeen also paid the Company a market-based fee consistent with the provision of such services of $450. The Company analyzed the nature of the transactions with Aberdeen to determine whether they could be construed a violation under the guidelines of Section 402 of the Sarbanes-Oxley Act of 2002. The Company, through advice from its legal counsel, concluded that there is not a reasonable possibility that the transactions with Aberdeen would be deemed a violation of Section 402. This relationship between the Company and Aberdeen ceased in early 2019.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef