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DISCONTINUED OPERATIONS
 9 Months Ended
Sep. 30, 2012
DISCONTINUED OPERATIONS  
DISCONTINUED OPERATIONS

3.   DISCONTINUED OPERATIONS

 

On August 10, 2012, the Company entered into an agreement with Sinclair to terminate, effective September 30, 2012, the distribution agreements relating to the promotion and sale of Xclair®, Numoisyn® Lozenges and Numoisyn® Liquid.

 

Product revenue, cost of goods sold and selling, general and administrative costs related to the promotion and sales of the of Xclair®, Numoisyn® Liquid and Numoisyn® Lozenges have been reclassified from operating results from continuing operations to income (loss) from discontinued operations in the consolidated statement of operations for all periods presented as follows:

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

Period from
August 13, 1996
(inception) to
September 30,

 

 

 

2011

 

2012

 

2011

 

2012

 

2012

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

Product revenue

 

$

164

 

$

302

 

$

524

 

$

583

 

$

3,604

 

Cost of goods sold

 

(95

)

(110

)

(273

)

(293

)

(2,045

)

Selling, general and administrative

 

(237

)

(121

)

(755

)

(578

)

(9,266

)

Goodwill and intangible impairment

 

—

 

—

 

—

 

—

 

(5,187

)

Interest expense

 

—

 

—

 

—

 

—

 

(110

)

Gain on termination of distribution agreements

 

—

 

1,192

 

—

 

1,192

 

1,192

 

Income (loss) from discontinued operations, net of tax of $0 for all periods presented

 

(168

)

1,263

 

(504

)

904

 

(11,812

)

 

The approximately $0.9 million present value of the estimated $1.0 million of minimum royalty payments the Company will receive over the next three years ending September 30, 2015 arising from the termination and settlement agreement and the recognition of approximately $0.3 million associated with a $0.3 million product returns provision liability for which an offsetting asset has been recorded based on our rights under the termination and settlement agreement result in a $1.2 million gain on termination of the distribution agreements for the three and nine months ended September 30, 2012.

 

The assets and liabilities associated with product promotion and sale have been classified within assets and liabilities of discontinued operations in the accompanying consolidated balance sheets:

 

 

 

December 31,
2011

 

September 30,
2012

 

 

 

(Unaudited)

 

(Unaudited)

 

Current assets of discontinued operations:

 

 

 

 

 

Inventory

 

$

182

 

$

—

 

Short term portion of minimum royalty arrangement receivable, net

 

—

 

423

 

Returns indemnification receivable

 

—

 

336

 

Accounts receivable

 

131

 

122

 

Total current assets of discontinued operations

 

313

 

881

 

Long-term assets of discontinued operations:

 

 

 

 

 

Long-term portion of minimum royalty arrangement receivable, net

 

—

 

433

 

 

 

 

 

December 31,
2011

 

September 30,
2012

 

 

 

(Unaudited)

 

(Unaudited)

 

Total assets of discontinued operations

 

313

 

1,314

 

 

 

 

 

 

 

Current liabilities of discontinued operations:

 

 

 

 

 

Accounts payable

 

$

46

 

$

—

 

Returns provision

 

202

 

336

 

Accrued liabilities and other current liabilities

 

279

 

102

 

Total current liabilities of discontinued operations

 

$

527

 

$

438