Annual report pursuant to Section 13 and 15(d)

Note 3 - Discontinued Operations

Note 3 - Discontinued Operations

12 Months Ended

Dec. 31, 2017

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

3.	Discontinued Operations

August 2011,

the Company completed the sale of

the GDS Business to Devicor. We recorded net income of

$759,000

2015

related to royalty amounts earned based on

2015

GDS Business revenue. The royalty amount of

$1.2

million was offset by

$436,000

in estimated taxes which were allocated to 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

$3.0

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.

We recorded a net gain on the sale of the

Business of

$89.2

million for the year ended

December 31, 2017,

including

$16.5

million 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

$4.1

million in estimated taxes. The guaranteed consideration was recorded as a receivable, the balance of which is reduced as quarterly payments are received.

As a result of the

sale of the GDS Business to Devicor and the Asset Sale to Cardinal Health

414,

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:

	December 31, 201 7		December 31, 201 6
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 assets associated with discontinued operations	$	—	$	3,249,502

Accounts payable	$	—	$	1,957,938
Accrued liabilities		7,092		607,659
Deferred revenue		—		2,300,000
Liabilities associated with discontinued operations, current		7,092		4,865,597
Other liabilities		—		—
Total l iabilities associated with discontinued operations	$	7,092	$	4,865,597

In addition,

we reported certain revenues related to the sale of the GDS Business to Devicor, as well as certain revenues and expenses related to the Asset Sale to Cardinal Health

414,

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:

	Years Ended December 31,
	2017			2016			2015
Revenue:
Lymphoseek sales revenue	$	2,917,213		$	16,997,497		$	10,235,277
Royalties on GDS Business		—			—			1,194,660
Grant and other revenue		—			575			669
Total revenue		2,917,213			16,998,072			11,430,606
Cost of goods sold		364,192			2,234,780			1,751,537
Gross profit		2,553,021			14,763,292			9,679,069
Operating expenses:
Research and development		383,446			1,744,496			2,225,004
Selling, general and administrative		961,873			5,093,529			6,369,183
Total operating expenses		1,345,319			6,838,025			8,594,187
Income from discontinued operations		1,207,702			7,925,267			1,084,882
Interest expense		(1,706,491	)		(14,856,404	)		(5,603,820	)
Income (loss) before income taxes		(498,789	)		(6,931,137	)		(4,518,938	)
Benefit from (provision for) income taxes		8,031			—			—
Loss from discontinued operations	$	(490,758	)	$	(6,931,137	)	$	(4,518,938	)