Note 1 - Business Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2014 |
Disclosure Text Block [Abstract] | ' |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | '1. Business Organization and Basis of Presentation |
Description of the Business |
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Sucampo Pharmaceuticals, Inc. (the Company) is a global biopharmaceutical company focused on innovative research, discovery, development and commercialization of proprietary drugs to treat gastrointestinal, ophthalmic, neurologic, and oncology-based inflammatory disorders. Over the next five years, we intend to expand our management, organizational and operational capabilities, expand our global partnerships, develop our diversified product pipeline, acquire non-prostone clinical candidates, and enhance our capital structure. |
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The Company currently generates revenue mainly from product royalties, development milestone payments, product sales and clinical development activities. The Company expects to continue to incur significant expenses for the next several years as the Company continues its research and development activities, seeks regulatory approvals and additional indications for approved products and other compounds, seeks global partnering opportunities for its approved products and compounds, and seeks strategic opportunities for non-prostone clinical candidates. |
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In the United States (U.S.) 8 mcg and 24 mcg AMITIZA® (lubiprostone) capsules are marketed for three gastrointestinal indications under the October 2004 collaboration and license agreement (the Takeda Agreement) with Takeda Pharmaceutical Company Limited (Takeda). These three indications are: 1.) 24 mcg capsules for the treatment of chronic idiopathic constipation (CIC) in adults, 2.) 8 mcg capsules for the treatment of irritable bowel syndrome with constipation (IBS-C) in adult women, and 3.) 24 mcg capsules for the treatment of opioid-induced constipation (OIC) in adults suffering from chronic non-cancer pain. Under the Takeda Agreement the Company is primarily responsible for clinical development activities, while Takeda is primarily responsible for the commercialization of AMITIZA in the U.S. and Canada. Takeda also holds marketing rights to AMITIZA in Canada and the Company filed for regulatory approval in Canada at the end of October 2014. The Company and Takeda initiated commercial sales of AMITIZA in the U.S. for the treatment of CIC, IBS-C, and OIC in April 2006, May 2008 and May 2013, respectively. In September 2014, the Company and Takeda launched a pilot direct-to-consumer advertising campaign for AMITIZA in select U.S. markets for adults with CIC. |
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In Japan, 24 mcg AMITIZA capsules are marketed under a license, commercialization and supply agreement (the Abbott Agreement) with Abbott Japan Co. Ltd. (Abbott Japan) for the gastrointestinal indication of chronic constipation (CC), excluding constipation caused by organic diseases. Abbott Japan initiated commercial sales of AMITIZA in Japan for the treatment of CC in November 2012. AMITIZA is Japan’s only prescription medicine for CC. The Company has been informed that Abbott Laboratories, Inc. has entered into an asset purchase agreement with Mylan, Inc. (Mylan), pursuant to which the Abbott Agreement will be sold to Mylan. The Company expects the transfer of the Abbott Agreement to Mylan will be completed in the first half of 2015, and the Company does not expect any significant changes in the commercialization of AMITIZA in Japan as a result of such transfer. |
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Under the terms of the Abbott Agreement, Abbott Japan agreed to pay the Company a commercial milestone payment of $2.5 million within forty-five (45) days after the end of the month during which the first occurrence of annual net sales of lubiprostone in Japan exceeded ¥5.0 billion. On October 6, 2014, after confirming the October 2014 notification by Abbott Japan that annual net sales had exceeded ¥5.0 billion by the end of September 2014, the Company invoiced Abbott Japan $2.5 million for the commercial milestone payment. This revenue was recorded in the third quarter of 2014. |
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The Company holds license agreements for RESCULA® (unoprostone isopropyl ophthalmic solution) 0.15% in the U.S. and Canada and the rest of the world, with the exception of Japan, Korea, Taiwan and the People’s Republic of China. RESCULA is approved in the U.S. for the lowering of intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension. The Company has ceased marketing RESCULA, and in the third quarter of 2014 incurred a $5.6 million intangible assets impairment related to RESCULA (see Note 5.) |
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The Company’s other clinical development programs include the following: |
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Pediatric Functional Constipation |
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As previously disclosed, two of the four planned phase 3 studies for the Company’s pediatric functional constipation development program are ongoing, both of which are testing the 24 mcg soft gelatin capsule formulation of lubiprostone in patients 6 to 17 years of age: a 12-week, randomized, placebo-controlled trial that initiated in December 2013 and a follow-on, long-term safety extension study that initiated in March 2014. |
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Alternate Formulation Lubiprostone |
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As previously disclosed, the Company has been developing a new dosage form of lubiprostone for patients who will not swallow the soft gelatin capsule. Takeda has agreed to fund 100% of the costs for the alternate formulation work for lubiprostone. Feasibility testing for this alternate formulation work is ongoing and is expected to be completed in the first quarter of 2015. If successful, the alternate formulation will enable future studies of lubiprostone in adults and younger children who will not swallow the current soft gelatin capsule formulation. |
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Intravenous and Oral Ion Channel Activators for Lumbar Spinal Stenosis |
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Two ion channel activators, in both the intravenous, or IV, and oral, or PO, forms, are in clinical development for the treatment of lumbar spinal stenosis (LSS). Positive top-line results from a phase 1b trial evaluating the safety and pharmacokinetics of the orally administered ion channel activator demonstrated the compound to be generally well-tolerated. The Company plans to initiate a phase 2a study with the orally administered compound in the second half of 2015 to evaluate the clinical effectiveness of the PO ion channel activator in patients with LSS. The Company has decided not to proceed with the IV version at this time. |
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Cobiprostone as an Oral Spray for Oral Mucositis |
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The Company has completed a phase 1b clinical trial for the target indication of prevention and/or treatment of oral mucositis. The results of this phase 1b trial showed that cobiprostone was well-tolerated and revealed low systemic exposure. The next phase of clinical development, a phase 2 trial, is expected to begin in the first half of 2015. |
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Cobiprostone for Non-Erosive Reflux Disease (NERD) |
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The Company announced it will begin a development program for cobiprostone to treat non-erosive reflux disease (NERD) for patients who have a non-satisfactory response to proton pump inhibitors. The Company plans to initiate a phase 2 program in NERD by the end of 2014. |
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Unoprostone isopropyl for Retinitis Pigmentosa (RP) |
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The Company has received orphan drug designation for unoprostone isopropyl from the FDA for the treatment of retinitis pigmentosa (RP) and from European Medicines Agency. In the first quarter of 2015 the Company will obtain interim, one-year data from the two-year Phase 3 study for RP in Japan, which is being funded by the Company's partner R-Tech Ueno. The Company continues to work with clinical experts and regulators in the U.S. and Europe to determine a go-forward plan for development of RP in these markets. Taken together, these will provide the Company with the information needed to decide on next steps in RP by mid-2015, with the aim to expand to a global program. Additionally, the Company is evaluating opportunities in other retinal diseases, such as geographic atrophy, the advanced stage of age-related macular degeneration. |
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Basis of Presentation |
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The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC, for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s Consolidated Financial Statements as of and for the year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 12, 2014. The financial information as of September 30, 2014 and for the three and nine months ended September 30, 2014 and September 30, 2013 is unaudited. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments or accruals, considered necessary for a fair statement of the results of these interim periods have been included. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year. |
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The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries: Sucampo AG (SAG) based in Zug, Switzerland, through which the Company conducts certain of its worldwide and European operations; Sucampo Pharma, Ltd. (SPL) based in Tokyo and Osaka, Japan, through which the Company conducts its Asian operations; Sucampo Pharma Americas LLC, (SPA) based in Bethesda, Maryland, through which the Company conducts its North and South American operations; and Sucampo Pharma Europe, Ltd., (SPE) based in Oxford, United Kingdom. The Company liquidated Ambrent Investments S.à.r.l., based in Luxembourg, at the end of 2013. All significant inter-company balances and transactions have been eliminated. |
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The preparation of financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
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Recent Accounting Pronouncements |
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In April 2014, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update 2014-08, “Presentation of Financial Statements and Property, Plant and Equipment”. Under the new standard, only disposals representing a strategic shift in operations that have a major effect on the organization's operations and financial results, or a business activity classified as held for sale, should be presented as discontinued operations. Additionally, it expands the disclosure requirements for discontinued operations to provide more information regarding the assets, liabilities, income and expenses of discontinued operations. This update is effective for interim and annual periods beginning after December 15, 2014, and early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements. |
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In May 2014, the FASB issued Accounting Standards Update 2014-09, "Revenue from Contracts with Customers." While the standard supersedes existing revenue recognition guidance, it closely aligns with current GAAP. Under the new standard, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration received for that specific good or service. It is effective for annual reporting periods beginning after December 15, 2016, including interim reporting periods, and early adoption is not permitted. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. The Company is currently evaluating the impact the adoption of this standard will have on the Company’s consolidated financial statements. |
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In August 2014, the FASB issued Accounting Standards Update 2014-15, “Presentation of Financial Statements-Going Concern”. The new standard provides guidance regarding management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for annual reporting periods beginning after December 15, 2016, including interim reporting periods, and early adoption is permitted. The Company is currently evaluating the impact of adopting this standard, but does not expect it will have a material impact on the Company’s consolidated financial statements. |
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Revision to Previously Issued Financial Statements |
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While preparing historical financial statements for the year ended December 31, 2013 and periods ended March 31, 2014 and June 2014, the Company identified certain immaterial errors in the presentation of certain line items in the previously reported financial statements. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, ASC Topic 250-10-S99-1, Assessing Materiality, and ASC Topic 250-10-S99-2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated these errors and, based on an analysis of quantitative and qualitative factors, determined that they were not material, individually or in aggregate to any previously issued financial statements and, therefore, amendment of previously filed reports with the SEC was not required. |
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The Company has revised certain comparative periods to correct for these errors; however, certain account balances have not yet been revised. As a result, the Company is including herein the correction of all such immaterial errors that have not been revised in its previous periodic filings. The Company has revised the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2013 to correct errors in the presentation of gross profit. As a result of this revision, gross profit was removed as a sub-total and costs of goods sold was disclosed as an operating cost under the heading “Costs and expenses”. Gross profit was presented on the Condensed Consolidated Statements of Operations and Comprehensive Income beginning in the year ended December 31, 2012 and for periods ended March 31, June 30 and September 30, 2013. |
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In addition, the Company has revised the Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2013 and 2012, the three months ended March 31, 2013 and March 31, 2014, the three and nine months ended September 30, 2013 and the Consolidated Balance Sheet as of December 31, 2013 and 2012 to correct errors in the recognition of indirect taxes at its Swiss subsidiary. The errors affect the years ended December 31, 2012 and 2013 and the periods ended March 31, 2013, June 30, 2013, September 30, 2013 and March 31, 2014. During those periods, the Company overstated its indirect tax liability and understated net income. |
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The Company has also revised the Consolidated Statements of Cash Flows for the year ended December 31, 2013 and the nine months ended September 30, 2013 to correct errors in the classification of foreign exchange gains and losses in net cash used in operating activities, investing activities and the effect of exchange rates on cash and cash equivalents and the change in net income. The errors in classification affect the year ended December 31, 2013 and the periods ended September 30, 2013, June 30, 2013 and March 31, 2013. These errors have no effect on the balances of cash and cash equivalents. |
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Selected Items - Annual | | As | | | Revision | | | As Revised | | | | | | | | | | | | | |
Previously | Adjustment | | | | | | | | | | | | |
Reported | | | | | | | | | | | | | |
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Consolidated Balance Sheet | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Presentation as of December 31, 2012 | | | | | | | | | | | | | |
Other liabilities | | $ | 1,253 | | | $ | (225 | ) | | $ | 1,028 | | | | | | | | | | | | | |
Total liabilities | | | 84,766 | | | | (225 | ) | | | 84,541 | | | | | | | | | | | | | |
Accumulated deficit | | | (34,100 | ) | | | 225 | | | | (33,875 | ) | | | | | | | | | | | | |
Total stockholders' equity | | | 43,030 | | | | 225 | | | | 43,255 | | | | | | | | | | | | | |
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Consolidated Statements of Operations | | | | | | | | | | | | | | | | | | | | | | | | |
and Comprehensive Income | | | | | | | | | | | | |
(In thousands) | | Presentation as of the year ended December 31, 2012 | | | | | | | | | | | | | |
Other income (expense), net | | $ | 1,602 | | | $ | 225 | | | $ | 1,827 | | | | | | | | | | | | | |
Total non-operating income (expense), net | | | (565 | ) | | | 225 | | | | (340 | ) | | | | | | | | | | | | |
Income (loss) before income taxes | | | 7,752 | | | | 225 | | | | 7,977 | | | | | | | | | | | | | |
Net income | | | 4,836 | | | | 225 | | | | 5,061 | | | | | | | | | | | | | |
Comprehensive income | | | 3,148 | | | | 225 | | | | 3,373 | | | | | | | | | | | | | |
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Consolidated Statements of Operations | | | | | | | | | | | | | | | | | | | | | | | | |
and Comprehensive Income | | | | | | | | | | | | |
(In thousands, except per share data) | | Presentation as of the year ended December 31, 2013 | | | | | | | | | | | | | |
Other income (expense), net | | $ | 2,921 | | | $ | 596 | | | $ | 3,517 | | | | | | | | | | | | | |
Total non-operating income (expense), net | | | 1,151 | | | | 596 | | | | 1,747 | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 10,347 | | | | 596 | | | | 10,943 | | | | | | | | | | | | | |
Net income | | | 6,419 | | | | 596 | | | | 7,015 | | | | | | | | | | | | | |
Net income per share: Basic | | | 0.15 | | | | 0.02 | | | | 0.17 | | | | | | | | | | | | | |
Net income per share: Diluted | | | 0.15 | | | | 0.01 | | | | 0.16 | | | | | | | | | | | | | |
Comprehensive income | | | 5,854 | | | | 596 | | | | 6,450 | | | | | | | | | | | | | |
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Consolidated Statements of Cash Flows | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Presentation as of the year ended December 31, 2013 | | | | | | | | | | | | | |
Net cash provided by (used in) operating activities | | $ | (5,418 | ) | | $ | 1,209 | | | $ | (4,209 | ) | | | | | | | | | | | | |
Net cash provided by (used in) investing activities | | | (13,881 | ) | | | 1,265 | | | | (12,616 | ) | | | | | | | | | | | | |
Effect of exchange rates on cash and cash equivalents | | | 798 | | | | (2,474 | ) | | | (1,676 | ) | | | | | | | | | | | | |
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Selected Items - Quarterly | | As | | | Revision | | | As Revised | | | | | | | | | | | | | |
Previously | Adjustment | | | | | | | | | | | | |
Reported | | | | | | | | | | | | | |
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Consolidated Balance Sheet | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Presentation as of March 31, 2014 | | | | | | | | | | | | | |
Other Assets | | $ | 455 | | | $ | 28 | | | $ | 483 | | | | | | | | | | | | | |
Other liabilities | | | 1,596 | | | | (917 | ) | | | 679 | | | | | | | | | | | | | |
Total liabilities | | | 78,839 | | | | (917 | ) | | | 77,922 | | | | | | | | | | | | | |
Accumulated deficit | | | (27,006 | ) | | | 945 | | | | (26,061 | ) | | | | | | | | | | | | |
Total stockholders' equity | | | 65,406 | | | | 945 | | | | 66,351 | | | | | | | | | | | | | |
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Consolidated Statements of Operations | | | | | | | | | | | | | | | | | | | | | | | | |
and Comprehensive Income | | | | | | | | | | | | |
(In thousands) | | Presentation as of the three months ended March 31, 2014 | | | | | | | | | | | | | |
Other income (expense), net | | $ | (323 | ) | | $ | 124 | | | $ | (199 | ) | | | | | | | | | | | | |
Total non-operating income (expense), net | | | (666 | ) | | | 124 | | | | (542 | ) | | | | | | | | | | | | |
Income (loss) before income taxes | | | 1,939 | | | | 124 | | | | 2,063 | | | | | | | | | | | | | |
Income tax benefit (provision) | | | (1,264 | ) | | | (44 | ) | | | (1,308 | ) | | | | | | | | | | | | |
Net income | | | 675 | | | | 80 | | | | 755 | | | | | | | | | | | | | |
Comprehensive income | | | 564 | | | | 80 | | | | 644 | | | | | | | | | | | | | |
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Consolidated Balance Sheet | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Presentation as of March 31, 2013 | | | | | | | | | | | | | |
Other liabilities | | $ | 1,210 | | | $ | (293 | ) | | $ | 917 | | | | | | | | | | | | | |
Total liabilities | | | 93,348 | | | | (293 | ) | | | 93,055 | | | | | | | | | | | | | |
Accumulated deficit | | | (37,245 | ) | | | 293 | | | | (36,952 | ) | | | | | | | | | | | | |
Total stockholders' equity | | | 40,003 | | | | 293 | | | | 40,296 | | | | | | | | | | | | | |
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Consolidated Statements of Operations | | | | | | | | | | | | | | | | | | | | | | | | |
and Comprehensive Income | | | | | | | | | | | | |
(In thousands, except per share data) | | Presentation as of the three months ended March 31, 2013 | | | | | | | | | | | | | |
Other income (expense), net | | $ | 1,081 | | | $ | 69 | | | $ | 1,150 | | | | | | | | | | | | | |
Total non-operating income (expense), net | | | 605 | | | | 69 | | | | 674 | | | | | | | | | | | | | |
Income (loss) before income taxes | | | (2,003 | ) | | | 69 | | | | (1,934 | ) | | | | | | | | | | | | |
Net income | | | (3,145 | ) | | | 69 | | | | (3,076 | ) | | | | | | | | | | | | |
Net income per share: Basic | | | (0.08 | ) | | | 0.01 | | | | (0.07 | ) | | | | | | | | | | | | |
Net income per share: Diluted | | | (0.08 | ) | | | 0.01 | | | | (0.07 | ) | | | | | | | | | | | | |
Comprehensive income | | | (3,108 | ) | | | 69 | | | | (3,039 | ) | | | | | | | | | | | | |
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Selected Items - Quarterly | | As | | | Revision | | | As Revised | | | | | | | | | | | | | |
Previously | Adjustment | | | | | | | | | | | | |
Reported | | | | | | | | | | | | | |
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Consolidated Balance Sheet | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Presentation as of September 30, 2013 | | | | | | | | | | | | | |
Other liabilities | | $ | 1,296 | | | $ | (651 | ) | | $ | 645 | | | | | | | | | | | | | |
Total liabilities | | | 79,923 | | | | (651 | ) | | | 79,272 | | | | | | | | | | | | | |
Accumulated deficit | | | (29,834 | ) | | | 651 | | | | (29,183 | ) | | | | | | | | | | | | |
Total stockholders' equity | | | 49,797 | | | | 651 | | | | 50,448 | | | | | | | | | | | | | |
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| | As Previously Reported | | | Revision Adjustment | | | As Revised | |
Condensed Consolidated Statements of Operations | | Three | | | Nine | | | Three | | | Nine | | | Three | | | Nine | |
and Comprehensive Income | Months | Months | Months | Months | Months | Months |
| Ended | Ended | Ended | Ended | Ended | Ended |
(In thousands, except per share data) | | 30-Sep-13 | |
Gross profit | | $ | 14,896 | | | $ | 55,647 | | | $ | (14,896 | ) | | $ | (55,647 | ) | | $ | 0 | | | $ | 0 | |
Total costs and expenses | | | (15,940 | ) | | | (49,130 | ) | | | (6,267 | ) | | | (9,457 | ) | | | (22,207 | ) | | | (58,587 | ) |
Other income (expense), net | | | (49 | ) | | | 1,776 | | | | 232 | | | | 427 | | | | 183 | | | | 2,203 | |
Total non-operating income (expense), net | | | (490 | ) | | | 390 | | | | 232 | | | | 427 | | | | (258 | ) | | | 817 | |
Income (loss) before income taxes | | | (1,534 | ) | | | 6,907 | | | | 232 | | | | 427 | | | | (1,302 | ) | | | 7,334 | |
Net income | | | 1,291 | | | | 4,266 | | | | 232 | | | | 427 | | | | 1,523 | | | | 4,693 | |
Net income per share: Basic | | | 0.03 | | | | 0.1 | | | | 0.01 | | | | 0.01 | | | | 0.04 | | | | 0.11 | |
Net income per share: Diluted | | | 0.03 | | | | 0.1 | | | | 0.01 | | | | 0.01 | | | | 0.04 | | | | 0.11 | |
Comprehensive income | | | 1,056 | | | | 3,863 | | | | 232 | | | | 427 | | | | 1,288 | | | | 4,290 | |
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Condensed Consolidated Statements of Cash Flows | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Presentation as of the nine months ended September 30, 2013 | | | | | | | | | | | | | |
Net cash provided by (used in) operating activities | | $ | (8,178 | ) | | $ | 985 | | | $ | (7,193 | ) | | | | | | | | | | | | |
Net cash provided by (used in) investing activities | | | (12,334 | ) | | | 470 | | | | (11,864 | ) | | | | | | | | | | | | |
Effect of exchange rates on cash and cash equivalents | | | (2 | ) | | | (1,455 | ) | | | (1,457 | ) | | | | | | | | | | | | |
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Condensed Consolidated Statements of Operations | | | | | | | | | | | | | | | | | | |
and Comprehensive Income | | | | | | | | | | | | |
(In thousands, except per share data) | | Presentation as of the three months ended December 31, 2013 | | | | | | | | | | | | | |
Net Income (loss) | | $ | 2,153 | | | $ | 170 | | | $ | 2,323 | | | | | | | | | | | | | |
Net income per share: Basic | | | 0.05 | | | | 0.01 | | | | 0.06 | | | | | | | | | | | | | |
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Condensed Consolidated Statements of Operations | | | | | | | | | | | | | | | | | | | |
and Comprehensive Income | | | | | | | | | | | | |
(In thousands, except per share data) | | Presentation as of the three months ended December 31, 2012 | | | | | | | | | | | | | |
Net Income (loss) | | $ | 13,532 | | | $ | 225 | | | $ | 13,757 | | | | | | | | | | | | | |
Net income per share: Diluted | | | 0.32 | | | | 0.01 | | | | 0.33 | | | | | | | | | | | | | |
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