Note 4 - Investment in Unconsolidated Limited Liability Company

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

4. Investment in Unconsolidated Limited Liability Company

On August 8, 2017, the Company entered into an exclusive Distributorship Agreement (the “Distributorship Agreement”) with 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.  

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 $2,500,000 in, and acquired membership units of, ICM. This investment has been recorded in investment in an unconsolidated limited liability company on the condensed consolidated balance sheets. The Company used the equity method to account for the investment in ICM because the Company does not control it but has the ability to exercise significant influence over it. As of June 30, 2022, the Company holds an 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 three months ended June 30, 2022 and 2021, the allocated net loss from ICM’s operations was $0 and $79,000, respectively. For the six months ended June 30, 2022 and 2021, the allocated net loss from ICM’s operations was $122,000 and $155,000, respectively.  The allocated net loss from ICM’s operations was recorded as loss from investment in unconsolidated limited liability company on the condensed consolidated statements of operations and comprehensive loss. 

In February 2019, the Company executed a mutual termination of the Distributorship Agreement with ICM. As a result, the Company no longer has a minimum purchase requirement to purchase a certain quantity of ICM products per month.   

As a result of a difficult business operating environment, which led to ICM laying off all of its employees and closing its office, and consideration of the financial results of ICM during the three and six months ended June 30, 2022, the Company recorded an impairment loss on investment in unconsolidated limited liability company on the condensed consolidated statements of operations and comprehensive loss in the amount of $455,000.

During the three and six months ended June 30, 2022 and 2021, the Company purchased zero and 100 units of ICM products for approximately $0 and $12,000, respectively. Through June 30, 2022, the Company has purchased approximately 5,425 units of ICM products. The Company paid ICM $0 and $10,000 for product related costs during the three and six months ended June 30, 2022 and 2021, respectively. There were no amounts due to ICM for accounts payable as of June 30, 2022 and December 31, 2021.