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DISCONTINUED OPERATIONS
 9 Months Ended
Sep. 30, 2014
Notes to Financial Statements  
Note 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 could not support the working capital needs of four pharmacies, so management decided to close two pharmacies to reduce overall fixed pharmacy costs by 50% and concentrate our limited working capital on supporting the operations of the two remaining pharmacies that, 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, including lease costs, asset impairment and goodwill impairment during the year ended December 31, 2013.  These closures met the discontinued operations criteria and, accordingly, are included in discontinued operations for all periods presented.  The Company’s loss from operations of discontinued pharmacies, net of tax benefit for the three and nine months ended September 30, 2014 and 2013, respectively are detailed as follows:

 

    Three Months Ended September 30,     Nine Months Ended September 30,  
    2014     2013     2014     2013  
                         
Sales   $ -     $ 162,806     $ -     $ 2,270,536  
                                 
Cost of sales     -       119,864       -       1,726,658  
                                 
Gross profit     -       42,942       -       543,878  
                                 
Operating expenses     6,743       157,793       34,637       731,100  
                                 
Impairment of goodwill     -       -       -       697,766  
                                 
Loss from discontinued operations     (6,743 )     (114,851 )     (34,637 )     (884,988 )
                                 
Other expenses                                
Interest expense, net     -       1,950       2,051       12,147  
Tax benefit     (2,360 )     (40,880 )     (12,841 )     (313,997 )

Loss from operations of discontinued

pharmacies, net of tax benefit

   $ (4,383 )   $ (75,921 )   $ (23,847 )   $ (583,138 )

  

The Company’s assets and liabilities for discontinued operations included in the consolidated balance sheet as of September 30, 2014 and December 31, 2013 are detailed as follows:

 

    September 30,     December 31,  
    2014     2013  
             
ASSETS            
             
Current Assets            
Accounts receivable, net   $ 428     $ 4,048  
Prepaid and other current assets     -       -  
Assets of discontinued operations   $ 428     $ 4,048  
                 
Other receivables, net     133,377       140,563  
        Assets of discontinued operations, non-current, net   $ 133,377     $ 140,563  
                 
 LIABILITIES                
                 
Current Liabilities                
Accounts payable and accrued expenses     78,408       150,652  
       Liabilities of discontinued operations   $ 78,408     $ 150,652