Quarterly report pursuant to Section 13 or 15(d)

Marketable securities

Marketable securities
9 Months Ended
Sep. 30, 2015
Notes to Financial Statements  
Marketable securities

Note 7 – Marketable securities


In connection with the Company’s sale of assets to MusclePharm in January 2014, the Company was to receive a total of 1,200,000 shares of MusclePharm common stock as consideration, 600,000 shares of which were required to be held in escrow until October 2014 to satisfy any breaches of representations under the Biozone Merger Agreement. The 600,000 shares not required to be held in escrow were sold by the Company for $5,400,000 in October 2014. On September 29, 2014, the Company signed a Memorandum of Understanding (“MOU”) with MusclePharm in which it agreed to release 90,000 shares of MusclePharm stock out of the original balance of 600,000 shares held in escrow in exchange for a release from all claims which MusclePharm had made concerning assets which it acquired in its purchase of assets from the Company in January 2014. The Company recognized a net loss on the return of these MusclePharm shares of $584,000 in the year ended December 31, 2014.  In October 2014, MusclePharm exercised its right to repurchase 250,000 shares of MusclePharm shares at $10.00 per share.   Pursuant to the MOU, MusclePharm did not withdraw the portion of its claim that related to a then pending eviction proceeding (See note 10) and the remaining 260,000 shares were to remain in escrow pending resolution of that proceeding.  However, the Company was informed that the escrow agent ultimately released all 260,000 shares to MusclePharm.  While the Company intends to attempt to recover the shares or their equivalent value from MusclePharm, the ultimate recovery of the shares is highly uncertain and the Company believes a loss is probable. Accordingly, the Company recorded a full allowance against the related escrow receivable amount.  To the extent the Company is able to recover the shares or other consideration from MusclePharm and/or the MusclePharm transfer agent upon resolution of this dispute, the Company would record other income at the time of such recovery.