Note 5 - Related Party Transactions

3 Months Ended

Mar. 31, 2012

Related Party Transactions Disclosure [Text Block]

5.     RELATED PARTY TRANSACTIONS

George Broady, a director of the Company and owner of more than 5% of its outstanding common stock, advanced $2,500 on January 13, 2011, and $30,000 on March 14, 2011 to settle certain claims against the Company.  The aggregate amount of these advances, plus a $4,000 advance on December 17, 2010, totaling $36,500 was repaid on August 8, 2011. 

Additionally, Mr. Broady advanced $100,000 to the Company on February 28, 2011 and $100,000 on March 14, 2011.  The Company agreed to pay Mr. Broady interest of 9% per annum on the aggregate amount of the advances.  The Company repaid Mr. Broady in full, plus accumulated interest, during the third and fourth quarters of 2011.

The Company is considering entering into a Royalty Agreement and License Agreement with Broady Health Sciences, L.L.C. (“BHS”) regarding the manufacture and sale of a new product called Restor™.  BHS has patents pending on that product.  Mr. Broady is a member of BHS, a Texas limited liability company.  During 2011, BHS permitted the Company to manufacture (or have manufactured), market and sell the Restor™ product.  To continue selling Restor™ and obtain certain exclusive rights outside of the United States, BHS has requested that the Company reimburse up to $42,000 in expenses incurred in 2011and pay a royalty of 2.5% of sales revenues for 2011 and subsequent years.  The Company is considering that proposal and discussing the terms of a definitive agreement.  At a royalty of 2.5% of net sales, the Company calculates that royalties for 2011 and the first three months of 2012 would total approximately $17,000.

No financing activities occurred during the first three months of 2012.  Cash provided by financing activities during first three months of 2011 was $233,000.  George Broady, a director of the Company and owner of more than 5% of its outstanding common stock, advanced $2,500 on January 13, 2011, and $30,000 on March 14, 2011 to settle certain claims against the Company.  The aggregate amount of these advances, plus a $4,000 advance on December 17, 2010, totaling $36,500 was repaid on August 8, 2011.  Additionally, Mr. Broady advanced $100,000 to the Company on February 28, 2011 and an additional $100,000 on March 14, 2011.  The Company agreed to pay Mr. Broady interest of 9% per annum on the aggregate amount of these advances.  The Company repaid Mr. Broady in full, plus accumulated interest, during the third and fourth quarters of 2011.