Discontinued Operations in India

9 Months Ended

Oct. 31, 2011

Discontinued Operations and Disposal Groups [Abstract]

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

17. Discontinued Operations in India

On December 5, 2011, the Company decided to discontinue operations in its India glove manufacturing facility and put the assets and business up for sale. The Company decided to sell this division primarily because it has incurred significant operating losses since inception, and the Company has been unsuccessful in developing sufficient sales to reach at least break even. The Company is attempting to sell the operations as an ongoing operation but, if unsuccessful, is preparing for a shutdown of operations by January 2012.

Prior year financial statements for the three and nine months ended October 31, 2010, have been restated to present the operations of the India glove manufacturing subsidiary as a discontinued operation.

In conjunction with the discontinuance of operations, the Company recognized a pretax loss on disposal of $880,694, consisting of $585,000 in inventory write-downs, $145,494 in shutdown expenses and $150,000 in operations in Q4 until shutdown. The assets and liabilities of the discontinued operations are presented separately under the captions “Assets of discontinued operations in India” and Liabilities of discontinued operations in India;” respectively, in the accompanying Balance Sheets at October 31, 2011 and January 31, 2011, and consist of the following:

	October 31, 2011		January 31, 2011
Cash	$	193,110	$	121,436
Accounts receivable		70,606		100,254
Inventory		190,013		622,480
Other current asset		36,084		20,371
Property/equipment		2,491,028		2,805,060
Total assets of discontinued operations		2,980,841		3,669,601
Liabilities of discontinued operations
Accounts payable		46,290		29,467
Other liabilities		319,917		4,473
Total liabilities of discontinued operations		366,207		33,940
Net assets of discontinued operations	$	2,614,634	$	3,635,661

The following table illustrates the reporting of the discontinued operations reclassified on the face of the Statements of Operations for the three and nine months ended October 31, 2011 and 2010:

	Three Months Ended October 31,						Nine Months Ended October 31,
	2011			2010			2011			2010
Net sales	$	225,307		$	612,563		$	742,055		$	1,513,754
Cost of goods sold		372,691			611,139			1,056,757			1,694,900
Gross profit		(147,384	)		1,424			(314,702	)		(181,146	)
Operating expense		100,312			80,278			249,630			262,878
Operating profit		(247,696	)		(78,855	)		(564,332	)		(444,024	)
Shutdown expense accrual		880,694			—			880,694			—
Loss from discontinued operations before income taxes		(1,128,390	)		(78,855	)		(1,445,026	)		(444,024	)
Benefit from income taxes from discontinued operations		406,120			28,388			520,210			159,849
Net loss from discontinued operations		(722,270	)		(50,467	)		(924,816	)		(284,648	)
Details of shut down expense:
Inventory write down	$	585,000
Cost associated with shut down		145,694
Operating expense accrual		150,000
	$	880,694

The above amounts presented for the previous fiscal year have been reclassified to conform to the current presentation.