12. PRODUCT DIVESTITURES:
On July 3, 2009 the Company entered into an agreement whereby the Company has granted the marketing rights to certain nutritional
products previously marketed by our division, Midlothian Laboratories (“Midlothian”), in exchange for a series of payments totaling $1,000,000 over the course of one year. In addition, the Company received a royalty on the sales of these
products, not to exceed $1,500,000 per year for three years ended June 30, 2012. Royalty income earned under this agreement amounted to $54,000 and $685,000 for the six months ended October 31, 2012 and 2011, respectively. The Company
retained this royalty stream when it divested its Midlothian business.
Effective May 1, 2011, the Company divested Midlothian in
exchange for a cash payment of $1,700,000. No gain or loss was recognized on the divesture as the Company had recorded an impairment charge of approximately $1,300,000 at April 30, 2011. The Company retained marketing and distribution rights to
generic buprenorphine sublingual tablets, an ANDA that is filed with the FDA, an ANDA that is in development and a royalty stream from products previously divested, as discussed above. Metrics, Inc. acquired Midlothian from the Company.