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DISCONTINUED OPERATIONS
 12 Months Ended
Dec. 31, 2013
Notes to Financial Statements  
12. DISCONTINUED OPERATIONS

As a result of our financial condition and inability to secure additional funding or significantly improve our liquidity position management reevaluated its strategic plan.  Management developed and implemented a plan to scale back operations.  We cannot continue to support the working capital needs of four pharmacies.  As a result, management has decided to close two pharmacies in order to reduce overall fixed pharmacy costs by 50% and concentrate our limited working capital to support the operations of the two remaining pharmacies we believe have the best prospects.   Management considered several factors in determining which two pharmacies to close, including historical financial performance, regulatory costs, current sales prospects, geographic and physical location and strength of existing physician relationships.  After consideration of these factors, management closed our Gresham and Riverside pharmacies on August 5, 2013 and August 8, 2013, respectively.

 

We recorded approximately $743,317 in expenses related to the closing of the facilities which included lease costs, asset impairment and goodwill impairment in the year ended December 31, 2013.  These closures met the discontinued operations criteria, and according is included in discontinued operations for all periods presented.  The Company’s Gain or (loss) from operations of discontinued pharmacies, net of tax benefit for the year ended December 31, 2013 and 2012, respectively are detailed as follows:

 

    Year Ended December 31,  
    2013     2012  
             
Sales   $ 2,270,536     $ 8,509,338  
                 
Cost of sales     1,740,863       6,769,696  
                 
Gross profit     529,673       1,739,642  
                 
Operating expenses      755,128        1,690,248  
                 
Impairment of goodwill     697,766       -  
                 
Loss from discontinued operations     (923,221 )     49,394  
                 
Other expenses                
Interest expense, net     14,151       75,455  
Income tax benefit     (328,080 )     (9,121 )
Gain or (loss) from operations of discontinued pharmacies, net of tax benefit   $ (609,292 )   $ (16,940)  

 

The Company’s assets and liabilities for discontinued operations included in the consolidated balance sheet as of December 31, 2013 and 2012 are detailed as follows:

 

    December 31, 2013     December 31, 2012  
ASSETS            
             
Current Assets            
 Accounts receivable, net   $ 4,048     $ 343,259  
 Inventories     -       211,427  
 Prepaid and other current assets     -       12,113  
   Assets of discontinued operations   $ 4,048     $ 566,799  
                 
 Other receivables, net     140,563       206,736  
 Property and equipment, net     -       15,670  
Goodwill     -       697,766  
        Assets of discontinued operations, non-current, net   $ 140,563     $ 920,172  
                 
 LIABILITIES                
                 
 Current Liabilities                
 Accounts payable and accrued expenses     150,652       2,655,303  
       Liabilities of discontinued operations   $ 150,652     $ 2,655,303