Basis of Presentation

9 Months Ended

Sep. 30, 2011

Nature of Business and Basis of Presentation [Abstract]

Basis of Presentation

Note 2 — Basis of Presentation

As of December 31, 2010, the Company had an accumulated deficit of approximately $29.2 million and reported a net loss of approximately $19.1 million for the year then ending. The Company used approximately $2.4 million in cash from operating activities of continuing operations during the year ending December 31, 2010. Furthermore, the Company had a working capital deficit of approximately $20.5 million as of December 31, 2010. At that time, there was substantial doubt about the Company’s ability to continue as a going concern.

During May 2011 and June 2011, the Company raised a total of $9.3 million in net proceeds from a private and public offering of common stock and warrants. As of September 30, 2011, the Company had cash and cash equivalents of $5.5 million and total equity of $6.8 million. In addition, the Company expects to collect $2.0 million in the next eight months from the Indemnity Escrow Fund related to the ApothecaryRx sale transaction. The $5.5 million in cash and cash equivalents, as of September 30, 2011, and the expected cash availability over the next twelve months of $7.5 million are both more than management’s projected cash needs for the next twelve months of approximately $5.3 million. As a result, the substantial doubt about the Company’s ability to continue as a going concern has been eliminated.

As of September 30, 2011, the Company’s Debt Service Coverage Ratio is less than 1.25 to 1 which is ratio required by the Company’s loan agreement with Arvest Bank (see Note 6). The Company has obtained a waiver from Arvest Bank for the Debt Service Coverage Ratio through December 31, 2011. Since the waiver does not extend past twelve months from September 30, 2011, the associated debt with Arvest Bank has been classified as current in the accompanying condensed consolidated balance sheets. There are no assurances that Arvest Bank will waive the debt covenant violation beyond December 31, 2011. However, management has historically been successful in obtaining waivers from Arvest Bank.

On June 3, 2011, the Company executed a reverse stock split of the Company’s common stock in a ratio of 1-for-4 (see Note 8). The effect of the reverse split reduced the Company’s outstanding common stock shares from 34,126,022 to 8,531,506 shares as of the date of the reverse split. The accompanying condensed consolidated financial statements give effect to the reverse split as of the first date presented.