Discontinued Operations

6 Months Ended

Jun. 30, 2011

On March 31, 2010, Ceres adopted a plan to close the business of Organic Grain and Milling, Inc. (OGM). As of March 31, 2010, substantially all operational activities of OGM were discontinued. As a result, effective in its first quarter of fiscal 2010, the Company classified OGM as discontinued operations separate from the continuing operations of the Company for all the periods presented in the consolidated financial statements.

On July 1, 2010, the Company adopted a plan to close the business of Ceres Organic harvest, Inc. (Ceres). As of July 1, 2010, substantially all operational activities of Ceres were discontinued. As a result, effective in the quarter ended September 30, 2010, the Company classified Ceres as discontinued operations separate from the continuing operations of the Company for all the periods presented in the consolidated financial statements.

On August 6, 2010, the Company entered into an agreement to sell the Animal Wellness Group business. As a result, effective in the quarter ended September 30, 2010, the Company classified the Animal Wellness Group as discontinued operations separate from the continuing operations of the Company for all the periods presented in the consolidated financial statements.

On December 31, 2010, the Company adopted a plan to close the business of Modular Process Systems, LLC (MPS). As of December 31, 2010, substantially all operational activities of MPS were discontinued. As a result, effective in the quarter ended December 31, 2010, the Company classified MPS as discontinued operations separate from the continuing operations of the Company for all the periods presented in the consolidated financial statements.

The following table summarizes results of OGM, Ceres, MPS and the Animal Wellness group classified as discontinued operations in the Company’s consolidated statements of operations for the three and six month periods ended June 30, 2011 and 2010:

	Three months ended						Six months ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Sales, net	$	-		$	79,162		$	-		$	577,952
Cost of goods sold		-			62,511			-			537,516
Gross profit		-			16,651			-			40,436
Operating expenses		3,275			245,332			1,732			549,238
Goodwill and intangible asset impairment		-			853,548						853,548
Loss from discontinued operations		(3,275	)		(1,082,229	)		(1,732	)		(1,362,350	)
Interest expense		(867	)		(15,245	)		(1,783	)		(45,067	)
Loss from discontinued operations before taxes		(4,142	)		(1,097,474	)		(3,515	)		(1,407,417	)
Income tax expense (benefit) from discontinued operations		-			-			-			-
Loss from discontinued operations	$	(4,142	)	$	(1,097,474	)	$	(3,515	)	$	(1,407,417	)

The following table summarizes the major classes of remaining assets and liabilities in OGM’s, Ceres’, MPS’s and the Animal Wellness group’s balance sheets as of June 30, 2011 and December 31, 2010:

	June 30, 2011		December 31, 2010
Cash	$	1,998	$	24,037
Accounts receivable		31,273		41,946
Current assets of discontinued operations	$	33,271	$	65,983

Accounts payable	$	631,517	$	654,715
Accrued liabilities and deferred revenue		73,215		73,215
Notes payable		48,315		48,315
Current liabilities of discontinued operations	$	753,047	$	776,245

- Definition

The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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+ Details

CAPSALUS CORP 10-Q