• Filing Date: 2014-08-14
  • Form Type: 10-Q
  • Description: Quarterly report
v2.4.0.8
Note 8 - Commitments and Contingencies
3 Months Ended
Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]

NOTE 8 - COMMITMENTS AND CONTINGENCIES


We lease our office and manufacturing facility under a non-cancelable operating lease, which expires on June 30, 2019. The Company’s future minimum lease commitment at June 30, 2014 is as follows:


Period

 

Per year

 

2015

  $ 104,625  

2016

    104,625  

2017

    104,625  

2018

    104,625  

2019

    104,625  
    $ 523,125  

Rent and real estate tax expense for all facilities for the three months ended June 30, 2014 and 2013 was approximately $31,000 for each period.


MASTER SERVICES AGREEMENT


On February 12, 2010, ADM agreed to provide certain services to Ivivi Health Sciences, LLC (IHS) pursuant to a Master Services Agreement, as described below:


 

We provided IHS with engineering services, including quality control and quality assurance services along with regulatory compliance services, warehouse fulfillment services and network administrative services including hardware and software services;


 

We were paid at the rate of $26,000 per month by IHS for these services; in August 2012 IHS agreed to pay ADM approximately $6,000 per month for reduced services on a month-to-month basis, and on October 1, 2013 the monthly amount to be paid by IHS was reduced to $3,000 plus additional amounts for individual projects requested time to time by IHS. Pursuant to this agreement, revenues from engineering services to IHS for the three months ended June 30, 2014 and 2013 were $9,000 and $19,096, respectively.


MANUFACTURING AGREEMENT


Under the terms of the February 12, 2010 manufacturing agreement with IHS, ADM has agreed to serve as the exclusive manufacturer of all current and future medical and non-medical electronic and other electronic devices or products to be sold or rented by IHS. For each product that ADM manufactures, IHS pays ADM an amount equal to 120% of the sum of (i) the actual, invoiced cost for raw materials, parts, components or other physical items that are used in the manufacture of product and actually purchased for such entity by ADM, if any, plus (ii) a labor charge the based on ADM’s standard hourly manufacturing labor rate, which ADM believes is more favorable than could be attained from unaffiliated third parties. Under the terms of the Agreement, if ADM is unable to perform its obligations to IHS under the manufacturing agreement or is otherwise in breach of any provision of the manufacturing agreement, IHS has the right, without penalty, to engage third parties to manufacture some or all of its products. In addition, if IHS elects to utilize a third-party manufacturer to supplement the manufacturing being completed by ADM, IHS has the right to require ADM to accept delivery of its products from these third-party manufacturers, finalize the manufacture of the products to the extent necessary to ensure that the design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process have been met.


Pursuant to the manufacturing agreement, sales of finished goods to IHS for the three months ended June 30, 2014 and 2013 were $-0- and $41,189, respectively.