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8. COMMITMENTS AND CONTINGENCIES
12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

ROYALTY AGREEMENTS

 

Effective January 3, 2008, WCI entered into separate exclusive license agreements with both Applied Nutritionals, LLC (“Applied”) and its founder George Petito (“Petito”), pursuant to which WCI obtained the exclusive world-wide license to make products incorporating intellectual property covered by a patent related to CellerateRX products. The licenses are limited to the human health care market, (excluding dental and retail) for external wound care (including surgical wounds), and include any new product developments based on the licensed patent and processes and any continuations. The term of these licenses expires in 2018.

 

In consideration for the licenses, WCI agreed to pay Applied and Petito, (in the aggregate), the following royalties, beginning January 3, 2008: (a) an advance royalty of $100,000; (b) a royalty of 15% of gross sales occurring during the first year of the license; (c) an additional advance royalty of $400,000 on January 3, 2009; plus (d) a royalty of 3% of gross sales for all sales occurring after the payment of the $400,000 advance royalty. In addition, WCI must maintain a minimum aggregate annual royalty payment of $375,000 for 2009 and thereafter if the royalty percentage payments made do not meet or exceed that amount. The amounts listed in the two preceding sentences are the aggregate of amounts paid/owed to Applied and Petito) and the Company has paid the minimum aggregate annual royalty payments each year since 2008, including both 2016 and 2015. The total unpaid royalties as of December 31, 2016 and 2015, is $276,916 and $323,062, respectively.

 

On September 29, 2009, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), by and among the Company, RSI-ACQ, LLC, a wholly-owned subsidiary of the Company (RSI), Resorbable Orthopedic Products, LLC (“Resorbable”) and Resorbable’s members, pursuant to which, RSI acquired substantially all of Resorbable’s assets, in exchange for (i) 500,000 shares of the Company’s common stock, and (ii) a royalty equal to eight percent (8%) of the net revenues generated from products sold by the Company or any of its affiliates, which products are developed from or otherwise utilize any of the patented technology acquired from Resorbable. The royalty is paid to Barry Constantine Consultant LLC and one of the principals of the LLC is Barry Constantine whom is a contract employee of the Company and holds the position of Director of R&D.

 

PREPAIDS FROM INVENTORY CONTRACTS

 

In October of 2015, WCI entered into a contract with the manufacturer of the CellerateRX product to purchase $217,512 of product. Payment in the amount of $108,014 was made in October of 2015 with the remaining balance of $109,498 paid in 2016 and before receipt of product. This amount was recorded as an asset in the “Prepaid and Other Assets” account at December 31, 2015 based on the contractual obligation of the parties.

 

In November of 2016, ROP entered into a contract with the contract manufacturer of HemaQuell® product to purchase $13,787 of product. This amount was recorded as an asset in the “Prepaid and Other Assets” account at December 31, 2016, based on the contractual obligation of the parties. 

 

OFFICE LEASES

 

The Company’s corporate office is located at 16633 Dallas Parkway, Suite 250, Addison, TX 75001. The lease was entered into in November of 2013. The lease expires on April 30, 2017 and requires base rent payments of $5,737 per month for months 1-17, $5,866 for months 18-29, and $5,995 for months 30-41.

 

In March of 2017, the Company executed a new office lease for office space located at 1200 Summit Ave., Suite 414, Fort Worth, TX 76102 and will be relocating our corporate offices there. The lease is to be effective upon completion of leasehold improvements (sometime in April 2017) and end on the last day of the fiftieth (50th) full calendar month following the effective date. Monthly base rental payments are as follows: months 1-2, $0; months 3-14, $7,250; months 15-26, $7,401; months 27-38, $7,552; and months 39-50, $7,703.

 

PAYABLES TO RELATED PARTIES

 

As of December 31, 2016 and 2015, the Company had outstanding payable to related parties totaling $93,655 and $21,099, respectively. The payables are unsecured, bear no interest and due on demand