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DISCONTINUED OPERATIONS
 3 Months Ended
Mar. 31, 2014
Notes to Financial Statements  
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 could continue to support the working capital needs of four pharmacies.  As a result, management 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, Oregon and Riverside, California 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 during 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 loss from operations of discontinued pharmacies, net of tax benefit for the three months ended March 31, 2014 and 2013, respectively are detailed as follows:

 

    Three Months Ended March 31,  
    2014     2013  
             
Sales   $ -     $ 1,200,750  
                 
Cost of sales     -       903,113  
                 
Gross profit     -       297,637  
                 
Operating expenses      14,280       300,969  
                 
Loss from discontinued operations     (14,280 )     (3,332 )
                 
Other expenses                
Interest expense, net     1,020       8,661  
Income tax benefit     (5,355 )     (4,198 )
Loss  from operations of discontinued pharmacies, net of tax benefit   $ (9,945 )   $ (7,795 ) 

 

The Company’s assets and liabilities for discontinued operations included in the consolidated balance sheet as of March 31, 2014 and December 31, 2013 are detailed as follows:

 

    March 31,     December 31,  
    2014     2013  
             
ASSETS            
             
Current Assets            
Accounts receivable, net   $ -     $ 4,048  
Prepaid and other current assets     7,767       -  
Assets of discontinued operations   $ 7,767     $ 4,048  
                 
Other receivables, net     137,470       140,563  
        Assets of discontinued operations, non-current, net   $ 137,470     $ 140,563  
                 
 LIABILITIES                
                 
Current Liabilities                
Accounts payable and accrued expenses     122,387       150,652  
       Liabilities of discontinued operations   $ 122,387     $ 150,652