INVESTMENTS IN UNCONSOLIDATED ENTITIES

9 Months Ended

Sep. 30, 2013

INVESTMENTS IN UNCONSOLIDATED ENTITIES [Abstract]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

NOTE 9. INVESTMENTS IN UNCONSOLIDATED ENTITIES

We use the equity method of accounting for investments in other companies that are not controlled by us and in which our interest is generally between 20% and 50% of the voting shares or we have significant influence over the entity, or both.

On January 11, 2012, we executed a shareholders' agreement for the establishment of Altrazeal Trading Ltd., a single purpose entity to be used for the exclusive marketing of Altrazeal® throughout the European Union, Australia, New Zealand, North Africa, and the Middle East. As a result of this transaction, we received a non-dilutable 25% ownership interest in Altrazeal Trading Ltd.

For the three and nine months ended September 30, 2013, the financial statements of Altrazeal Trading Ltd. were unavailable and our share of any gains or losses of Altrazeal Trading Ltd. for such periods have not been recorded in our financial statements.  The financial activity of Altrazeal Trading Ltd. for the three months and nine months ended September 30, 2013 would not have a material impact on our financial statements.

Based upon unaudited financial statements provided by Altrazeal Trading Ltd. for the year ended December 31, 2012, our share of Altrazeal Trading Ltd. losses exceeded the carrying value of our investment, therefore the equity method of accounting was suspended and no additional losses were charged to our operations. Our unrecorded share of Altrazeal Trading Ltd. losses for the year ended December 31, 2012 totaled $82,740.

Summarized financial information for our investment in Altrazeal Trading Ltd. assuming 100% ownership is as follows:

Altrazeal Trading Ltd.	December 31, 2012
Balance sheet
Total assets	$	415,248
Total liabilities	$	205,991
Total stockholders' equity	$	209,257
Statement of operations
Revenues	$	131,869
Net (loss)	$	(330,961	)

On October 19, 2012, we executed a shareholders' agreement for the establishment of ORADISC GmbH, a single purpose entity to be used for the exclusive development and marketing of OraDisc™ erodible film technology products.  We received a non-dilutable 25% ownership interest in ORADISC GmbH.

As of September 30, 2013, ORADISC GmbH had not begun operations and accordingly the net book value of the investee assets had not been determined and there were no equity method investee gains or losses for the three and nine months ended September 30, 2013.