Stock Purchase Agreement between Vertical Health Solutions, Inc. and Buyer of Drug Depot, Inc.
Vertical Health Solutions, Inc. sold its pharmacy division, Drug Depot, Inc., on June 1, 2007. The sale generated $67,000 in cash and $146,206 in debt forgiveness, but resulted in a net loss of $42,177 for the company. The agreement outlines the assets and liabilities transferred and provides pro forma financial information to show how the company's results would have looked if the sale had occurred earlier. The main obligations involve the transfer of Drug Depot's assets and liabilities and the financial settlement between the parties.
Exhibit 10.1
On June 1, 2007 the Company sold its pharmacy division, Drug Depot, Inc. The transaction generated proceeds of cash of $67,000 and forgiveness of debt of $146,206 and resulted in a net loss of $42,177.
The following table summarizes the carrying values of the assets and liabilities of Drug Depot included in the Consolidated Balance Sheets at December 31, 2006 and June 30, 2007:
The following pro forma financial information presents the results of operations of Vertical Health Solutions, Inc. as if the disposition had occurred at January 1, 2006 and 2007. The pro forma financial information is not intended to represent or be indicative of Vertical Health Solutions, Inc. consolidated results of operations or financial condition that would have been reported had the disposition been completed as of the beginning of the periods presented, and should not be taken as indicative of Vertical Health Solutions, Inc.’s future consolidated results of operations or financial condition.
| June 30, 2007 | December 31, 2006 | |||||
| Assets: | ||||||
| Current assets | $ | 400,518 | $ | 209,538 | ||
| Property and equipment | 24,606 | 14,983 | ||||
| Total assets disposed | $ | 425,124 | $ | 224,521 | ||
| Liabilities: | ||||||
| Current liabilities | $ | 315,947 | $ | 143,144 | ||
| Total liabilities | $ | 315,947 | $ | 143,144 | ||
| Net assets | $ | 109,177 | $ | 81,377 | ||
| 2006 | Adjustments | Proforma 2006 | |||||||||
| Sales | $ | 754,914 | (754,914 | ) | $ | 0 | |||||
| Cost of goods sold | 383,068 | (383,068 | ) | 0 | |||||||
| Gross profit | $ | 371,846 | $ | 0 | |||||||
| Operating expenses: | |||||||||||
| Selling, general and administrative expenses | 667,907 | (536,633 | ) | 131,274 | |||||||
| Total operating expenses | 667,907 | 131,274 | |||||||||
| Operating loss before other income and expense | (296,061 | ) | (131,274 | ) | |||||||
| Other income (expense): | |||||||||||
| Interest income | 18,050 | 18,050 | |||||||||
| Impairment of goodwill | (430,000 | ) | (430,000 | ) | |||||||
| Derivative instrument income (expense), net | 187,873 | 187,873 | |||||||||
| Gain on sale of subsidiary | 192,541 | 192,51 | |||||||||
| Gain on extinguishment of debt | 146,455 | 146,455 | |||||||||
| Interest expense | (3,533 | ) | (3,533 | ) | |||||||
| Total other income (expense) | 111,386 | 111,386 | |||||||||
| Loss from continuing operations before income taxes | (184,675 | ) | (19,888 | ) | |||||||
| Income taxes | 0 | 0 | |||||||||
| Loss from continuing operations | (184,675 | ) | (19,888 | ) | |||||||
| Discontinued operations | |||||||||||
| Loss from operations of Drug Depot, Inc. | 0 | 0 | |||||||||
| Loss on disposal of Drug Depot, Inc. | 0 | (42,177 | ) | (42,177 | ) | ||||||
| 0 | (42,177 | ) | |||||||||
| Preferred stock dividends | 0 | 0 | |||||||||
| Net loss | $ | (184,675 | ) | $ | (62,065 | ) | |||||
| Basic and diluted loss per share | (0.01 | ) | (0.00 | ) | |||||||
The following is the Statement of Operations for the six months ended June 30, 2007:
| Six Months | Adjustments | Pro Forma | |||||||||
| Sales | $ | 1,187,897 | (1,187,897 | ) | $ | 0 | |||||
| Cost of goods sold | 527,043 | (527,043 | ) | 0 | |||||||
| Gross profit | $ | 660,854 | $ | 0 | |||||||
| Operating expenses: | |||||||||||
| Selling, general and administrative expenses | 631,035 | (492,462 | ) | 138,573 | |||||||
| Total operating expenses | 631,035 | 138,573 | |||||||||
| Operating loss before other income and expense | 29,819 | (138,573 | ) | ||||||||
| Other income (expense): | |||||||||||
| Interest income | 3,479 | 3,479 | |||||||||
| Interest expense | (218 | ) | (218 | ) | |||||||
| Total other income (expense) | 3,261 | 3,261 | |||||||||
| Income from continuing operations before income taxes | 33,080 | (135,312 | ) | ||||||||
| Income taxes | 0 | 0 | |||||||||
| Income from continuing operations | 33,080 | (135,312 | ) | ||||||||
| Discontinued operations | |||||||||||
| Loss from operations of Drug Depot, Inc. | 0 | 0 | |||||||||
| Loss on disposal of Drug Depot, Inc. | (42,177 | ) | (42,177 | ) | |||||||
| (42,177 | ) | (42,177 | ) | ||||||||
| Preferred stock dividends | 0 | 0 | |||||||||
| Net loss | $ | (9,097 | ) | $ | (177,489 | ) | |||||
| Basic and diluted loss per share | (0.00 | ) | (0.01 | ) | |||||||
