Note

– Sale of Business Component

January 31, 2017,

we completed the sale of certain identified assets and liabilities associated with a specific customer contract from our project management business for

$350,000

pursuant to an Asset Purchase Agreement (“APA”) dated

December 12, 2016

with Tech Site Services, LLC, a privately held Maryland company. The sale price was subject to certain post-closing adjustments relating to working capital and obtaining the consent of the customer as a condition of closing. Tech Site Services, LLC also must pay us an earn-out payment equal to

10%

of all revenue generated under the customer contract in excess of

$2.5

million in each

-month period during the

two

-year period after the closing of this transaction.

The managing member of Tech Site Services, LLC is Thomas P. Rosato and the Company leased our Maryland office until

December 2016

from an entity that is

fifty

percent owned by Mr. Rosato. Rents paid under this lease were

$253,000

in the year ended

December 31, 2016.

The transaction closed on

January 31, 2017.

The APA contains representations, warranties, covenants and indemnification provisions customary for a transaction of this type. Many of the representations made by us are subject to, and qualified by materiality or similar concepts. Both parties have agreed to indemnify the other party for certain losses arising from the breach of the APA and for certain other liabilities, subject to specified limitations. In connection with the transaction both parties will provide transition services with respect to the business activities that were sold.

The customer contract and intellectual property sold had a net book value of

$0.

As a result of the sale, Tech Site Services, LLC assumed liabilities of $

7,000,

resulting in

$343,000

of cash proceeds that was paid to us upon closing. Additionally, we incurred approximately

$29,000

in legal, escrow and other expenses that would

not

have been incurred otherwise. As a result, we recorded a net gain of approximately

$321,000

in our consolidated statement of operations during the year ended

December

31, 2017.

September 28, 2016,

we sold certain identified assets and liabilities connected with our Maryland-based facilities maintenance business component for

$950,000

pursuant to an Asset Purchase Agreement dated

September 28, 2016

with Tech Site Services, LLC. The sale price was subject to certain post-closing adjustments relating to working capital and certain customer contracts of the business.

The customer contracts and intellectual property sold in

September 2016

had a net book value of

$0.

As a result of the sale, Tech Site Services, LLC assumed liabilities of

$308,000,

resulting in

$642,000

of cash proceeds. Additionally, we incurred approximately

$40,000

in legal, escrow and other expenses that would

not

have been incurred otherwise. As a result, we recorded a net gain of approximately

$910,000

in our consolidated statement of operations for the year ended

December 31, 2016.

As noted above, on

July 1, 2016

we adopted ASU

2014

regarding discontinued operations. As a result, we evaluated both the sale of the specific customer contract and the sale of a portion of our facilities maintenance business component in light of this new standard. We concluded that neither of these transactions were a “material shift” (as defined in ASU

2014

) for us and therefore, were

not

considered a discontinued operation. In accordance with ASU

2014

08,

the following information is being provided:

	Years Ended December 31,
	201 7		201 6
Pre-tax profit related to facilities maintenance business	$	-	$	812
Pre-tax profit related to specific customer contract	$	93	$	478

Pro forma impact of disposition of facilities maintenance business

The following unaudited pro forma combined results of operations are provided for the

years ended

December 31, 2017

and

2016

as though both of these disposition occurred on

January 1, 2016.

The unaudited pro forma consolidated statement of operations for the

years ended

December 31, 2017

and

2016

reflect the following adjustments:

(

)

Eliminates the revenues and cost of goods sold as if the transaction occurred on

January 1,

201

(

)

Eliminates operating expenses including salary and related costs for employees who transferred as if this transaction occurred on

January 1,

201

The unaudited pro forma consolidated financial information is provided for illustrative purposes only and does

not

purport to represent what the actual results of operations would have been had the transaction occurred on the respective date assumed, nor is it necessarily indicative of the Company

’s future operating results. However, the pro forma adjustments reflected in the accompanying unaudited pro forma financial information reflect estimates and assumptions that the Company’s management believes to be reasonable.

Pro forma adjustments related to the unaudited pro forma consolidated statement of operations for the

years ended

December 31, 2017

and

2016

were computed assuming the transactions were consummated on

January 1, 2016

and include adjustments which give effect to events that are (i) directly attributable to the transaction, (ii) expected to have a continuing effect on the Company, and (iii) factually supportable.

	Years ended December 31,
(unaudited, in thousands)	2017		2016
	(Pro forma)		(Pro forma)

Revenue	$	18,311	$	22,845
Net income (loss)	$	358	$	(2,655	)
Basic and diluted net income (loss) per share	$	0.02	$	(0.17	)