Note 7 - Investment in Affiliated Company

9 Months Ended

Sep. 30, 2012

Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note 7.  Investment in Affiliated Company

In July 2010, the Company obtained a 30% membership interest in NuGlow Cosmaceuticals, LLC (NuGlow), a direct-response company selling specialty skin care products, in exchange for an initial capital contribution of $350,000. Subsequently in September 2011, in connection with NuGlow’s additional capital raise, the Company contributed an additional $42,000 to maintain its 30% interest in NuGlow. In March 2012, the Company’s option to purchase the remaining interest of NuGlow (the Purchase Option) was extended from July 1, 2015 to July 1, 2017. In April 2012, in connection with NuGlow’s additional capital raise, the Company contributed an additional $27,000 to maintain its 30% interest in NuGlow.

The Company’s cumulative investment in NuGlow is accounted for as an equity investment and is adjusted at each reporting period to reflect the Company’s share of NuGlow’s net earnings, losses, contributions and any profit distributions. The Company accounts for the Purchase Option at fair value on the balance sheet with changes in value recognized in the statement of operations over the life of the Purchase Option. Additionally, at each reporting period, the Company assesses its investment in NuGlow to determine whether any events or changes in circumstances have occurred to indicate impairment of this asset. The primary factors the Company considers in its determination are NuGlow’s financial condition and operating performance. The Company would recognize an impairment loss if there was a decline in value that was deemed other than temporary.

At December 31, 2011, the carrying value of the Company’s investment in NuGlow was $223,255. For the three and nine months ended September 30, 2012, the Company recorded its share of NuGlow’s income of $14,674 and its share of NuGlow’s loss of $32,916, respectively. The equity loss for the first nine months of 2012, together with the additional investment made in April 2012, reduced the value of the Company’s investment in NuGlow to $217,339 as of September 30, 2012.

NuGlow’s condensed balance sheets at September 30, 2012 and December 31, 2011 and statements of operations for the three and nine months ended September 30, 2012 and 2011 are as follows:

NuGlow’s Condensed Balance Sheets (Unaudited)	September 30, 2012		December 31, 2011
Assets
Cash	$	4,891	$	200
Accounts receivable, net		33,807		18,276
Inventory		162,157		275,838
Prepaid expenses and other current assets		8,169		9,513
Total assets	$	209,024	$	303,827
Liabilities and members’ equity
Accounts payable and current liabilities	$	205,785	$	280,867
Members’ equity and accumulated deficit		3,239		22,960
Total liabilities and members’ equity	$	209,024	$	303,827

	Three Months Ended September 30,						Nine Months Ended September 30,
NuGlow’s Condensed Statements of Operations (Unaudited)	2012			2011			2012			2011
Revenue	$	184,976		$	264,139		$	670,088		$	756,023
Cost of goods sold		(80,807	)		(118,660	)		(308,957	)		(317,024	)
Operating expenses		(55,255	)		(223,388	)		(470,852	)		(687,150	)
Net profit (loss)	$	48,914		$	(77,909	)	$	(109,721	)	$	(248,151	)