Note 4 - Investment in Unconsolidated Limited Liability Company

9 Months Ended

Sep. 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 would 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 September 30, 2022, the Company holds an approximately 7% ownership interest in ICM. The Company recognized 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 September 30, 2022 and 2021, the allocated net loss from ICM’s operations was $0 and $33,000, respectively. For the nine months ended September 30, 2022 and 2021, the allocated net loss from ICM’s operations was $122,000 and $188,000, 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. Due to the write down on its investment in ICM in the second quarter of 2022, the Company did not allocate any net loss from ICM’s operations for the second and third quarters of 2022.

During the three months ended June 30, 2022, the Company recognized an impairment loss of $455,000 on its investment in ICM due to the distressed financial condition of ICM, which has been recorded in the condensed consolidated statements of operations and comprehensive loss. As a result, the Company’s investment balance in ICM was $0 as of June 30, 2022.

During the three months ended September 30, 2022 and 2021, the Company purchased 0 and 40 units of ICM products for approximately $0 and $5,000, respectively. During the nine months ended September 30, 2022 and 2021, the Company purchased 0 and 140 units of ICM products for approximately $0 and $17,000, respectively. Through September 30, 2022, the Company has purchased approximately 5,425 units of ICM products. The Company paid ICM $0 and $7,000 for product related costs during the three months ended September 30, 2022 and 2021, respectively. The Company paid ICM $0 and $17,000 for product related costs during the nine months ended September 30, 2022 and 2021, respectively. There were no amounts due to ICM for accounts payable as of September 30, 2022 and December 31, 2021.

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.