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Discontinued Operations in India
 6 Months Ended
Jul. 31, 2012
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

17. Discontinued Operations in India

 

The Company decided to discontinue operations in its India glove manufacturing facility and put the assets and business up for sale. The Company decided to sell this division primarily because it has incurred significant operating losses since inception, and the Company has been unsuccessful in developing sufficient sales to reach at least break even. The Company was attempting to sell the operations as an ongoing operation but shut down its operations in December 2011.

 

Prior year financial statements for the three and six months ended July 31, 2011, have been restated to present the operations of the India glove manufacturing subsidiary as a discontinued operation.

 

In conjunction with the discontinuance of operations in FY12, the Company recognized a pretax loss on disposal of $1.7 million, primarily consisting of $0.9 million in fixed asset write-downs, $0.4 million in inventory write-downs and $0.1 million in professional fees relating to the sale and $0.3 million in shutdown expenses. The assets and liabilities of the discontinued operations are presented separately under the captions “Assets of discontinued operations in India” and “Liabilities of discontinued operations in India,” respectively, in the accompanying Balance Sheets at July 31, 2012 and January 31, 2012, and consist of the following:

 

    July 31, 2012     January 31, 2012  
Cash   $ 159,152     $ 230,502  
Accounts receivable     665       6,772  
Inventory     214,409       200,000  
Other current asset     22,724       27,262  
Property and equipment     1,525,555       1,534,034  
Total assets of discontinued operations     1,922,505       1,998,570  
Liabilities of discontinued operations:                
Accounts payable     10,063       5,715  
Other liabilities     22,417       59,065  
Total liabilities of discontinued operations     32,480       64,780  
                 
Net assets of discontinued operations   $ 1,890,025     $ 1,933,790  

 

The following table illustrates the reporting of the discontinued operations reclassified on the face of the Statements of Operations for the six months ended July 31, 2012 and 2011:

 

    Six Months Ended July 31,  
    2012     2011  
Net sales     —     $ 516,748  
Cost of goods sold     —       684,067  
Gross profit (loss)     —       (167,319 )
Operating expense     —       (157,535 )
Operating loss     —       (324,854 )
Shutdown expense accrual     —          
Loss from discontinued operations before income taxes     —       (324,854 )
Benefit from income taxes from discontinued operations     —       116,948  
Net loss from discontinued operations     —     $ (207,906 )

 

The above amounts presented for the previous fiscal year have been reclassified to conform to the current presentation.