Quarterly report pursuant to Section 13 or 15(d)

Note 3 - Discontinued Operations

Note 3 - Discontinued Operations

9 Months Ended

Sep. 30, 2017

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3 .	Discontinued Operations

March 3, 2017,

the Company completed

the sale to Cardinal Health

414

of its assets used, held for use, or intended to be used in operating its business of developing, manufacturing and commercializing a product used for lymphatic mapping, lymph node biopsy, and the diagnosis of metastatic spread to lymph nodes for staging of cancer, including the Company’s radioactive diagnostic agent marketed under the Lymphoseek

trademark for current approved indications by the FDA and similar indications approved by the FDA in the future, in Canada, Mexico and the United States.

In exchange for the Acquired Assets, Cardinal Health

414

(i) made a cash payment to the Company at closing of approximately

$80.6

million after adjustments based on inventory being transferred and an advance of

million of guaranteed earnout payments as part of the CRG settlement

, (ii) assumed certain liabilities of the Company associated with the Product as specified in the Purchase Agreement, and (iii) agreed to make periodic earnout payments (to consist of contingent payments and milestone payments which, if paid, will be treated as additional purchase price) to the Company based on net sales derived from the purchased Product subject, in each case, to Cardinal Health

414’s

right to off-set. In

event will the sum of all earnout payments, as further described in the Purchase Agreement, exceed

$230

million over a period of

ten

years, of which

$20.1

million are guaranteed payments of

$6.7

million per year for each of the

three

years immediately after closing of the Asset Sale. At the closing of the Asset Sale,

million of such earnout payments were advanced by Cardinal Health

414

to the Company, and paid to CRG as part of the Deposit Amount paid to CRG. This advance is to be applied to the

third

year of guaranteed payments.

We recorded a net gain on the sale of the

Business of

$86.9

million for the

nine

months ended

September 30, 2017,

including

$16.5

in guaranteed consideration, which was discounted to the present value of future cash flows. The proceeds were offset by

$3.3

million in estimated fair value of warrants issued to Cardinal Health

414,

$2.0

million in legal and other fees related to the sale,

$800,000

in net balance sheet dispositions and write-offs, and

$6.4

million in estimated taxes.

As a result of the

Asset Sale, we reclassified certain assets and liabilities as assets and liabilities associated with discontinued operations. The following assets and liabilities have been segregated and included in assets associated with discontinued operations or liabilities associated with discontinued operations, as appropriate, in the consolidated balance sheets:

	September 30 , 2017		December 31, 2016
Accounts and other receivables	$	—	$	1,598,994
Inventory, net		—		1,374,618
Prepaid expenses		—		170,635
Assets associated with discontinued operations, current		—		3,144,247
Property and equipment, net of accumulated depreciation		—		70,973
Patents and trademarks, net of accumulated amortization		—		34,282
Assets associated with discontinued operations, noncurrent		—		105,255
Total a ssets associated with discontinued operations	$	—	$	3,249,502

Accounts payable	$	232	$	1,957,938
Accrued liabilities		32,909		607,659
Deferred revenue		—		2,300,000
Liabilities associated with discontinued operations, current	$	33,141	$	4,865,597

In addition, we reclassified certain revenues and expenses related to the Business to discontinued operations for all periods presented

, including interest expense related to the CRG and Platinum debt obligations as required by current accounting guidance. The following amounts have been segregated from continuing operations and included in discontinued operations in the consolidated statements of operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue:
Lymphoseek sales revenue	$	—		$	6,672,489		$	2,917,213		$	14,673,689
Grant and other revenue		—			385			—			575
Total revenue		—			6,672,874			2,917,213			14,674,264
Cost of goods sold		—			918,928			364,192			2,012,301
Gross profit		—			5,753,946			2,553,021			12,661,963
Operating expenses:
Research and development		(5,951	)		356,612			382,070			1,450,231
Selling, general and administrative		—			1,129,093			805,464			4,092,951
Total operating expenses		(5,951	)		1,485,705			1,187,534			5,543,182
Income from discontinued operations		5,951			4,268,241			1,365,487			7,118,781
Interest expense		—			(2,566,330	)		(1,718,506	)		(12,286,093	)
Income (l oss) before income taxes		5,951			1,701,911			(353,019	)		(5,167,312	)
Benefit from (provision for) income taxes		(552	)		—			20,181			—
Income (l oss) from discontinued operations	$	5,399		$	1,701,911		$	(332,838	)	$	(5,167,312	)