Sale of TMR Business to Novadaq/Discontinued Operations

6 Months Ended

Jun. 30, 2011

Sale of TMR Business to Novadaq/Discontinued Operations

Sale of TMR Business to Novadaq/Discontinued Operations

10.          Sale of TMR Business to Novadaq/Discontinued Operations

On November 5, 2010, the Company entered into an agreement to sell its TMR business to Novadaq. This transaction was approved by the Company’s shareholders at a special meeting on January 31, 2011 and the transaction closed on February 1, 2011.

Under terms of the agreement, Novadaq acquired substantially all of the Company’s assets that were used in the TMR business including all manufacturing rights, substantially all product inventories, and all equipment, intellectual property, regulatory approvals, clinical data and documentation related to TMR, for a purchase price of $1 million in cash and the assumption of all the Company’s obligations under service contracts as of the closing date totaling $614,000.  The total carrying value of the assets sold as of the transaction date was $385,000.  In addition, the Company incurred transaction costs of $50,000.  The Company has recorded a gain on sale of discontinued operations of $1,179,000 in the statement of operations.

The operating results of these operations, including those related to the prior periods, have been reclassified from continuing operations to discontinued operations in the accompanying condensed consolidated financial statements.

Revenues and Cost of Sales attributable to discontinued operations for the three and six months ended June 30, 2011 and 2010 are as follows:

	Three months ended June 30				Six months ended June 30
	(In thousands)				(In thousands)
	2011		2010		2011		2010
Revenues:
Product sales	$	—	$	498	$	455	$	995
Service fees	—		273		68		571
Total	—		771		523		1,566
Cost of revenues:
Product sales	—		14		442		32
Service fees	—		87		28		206
Total	—		101		470		238
Income from discontinued operations	$	—	$	670	$	53	$	1,328

A summary of discontinued operations on the consolidated balance sheets at June 30, 2011 and December 31, 2010 are as follows:

	June 30, 2011		December 31, 2010
	(In thousands)
Current assets:
Accounts receivable, net	$	—	$	217
Inventory	—		526
Prepaid expenses and other current assets	—		352
	$	—	$	1,095
Current liabilities:
Accounts payable	—		$	30
Accrued compensation	—		27
Accrued expenses	—		50
Deferred revenue	—		1,010
	$	—	$	1,117