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DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2018

Discontinued Operations Abstract

DISCONTINUED OPERATIONS

As discussed above, in March 2018, the Company entered into an agreement to sell WMI, Miller Stuart, WPI and Compac. As such, these businesses are reported as discontinued operations for the three months ended March 31, 2018 and 2017. As required, the Company has retrospectively recast its consolidated statements of operations and balance sheets for all periods presented. The Company has not segregated the cash flows of these businesses in the consolidated statements of cash flows. Management was also required to make certain assumptions and apply judgment to determine historical expenses related to the discontinued operations presented in prior periods. Unless noted otherwise, discussion in the Notes to Consolidated Financial Statements refers to the Company’s continuing operations.

At December 31, 2017, the Company has recorded a loss on impairment on intangible assets of $1,085,000 and a loss on assets held for sale of $1,563,000.

The following table presents a reconciliation of the major financial lines constituting the results of operations for discontinued operations to the net loss from discontinued operations presented separately in the consolidated statement of operations for the three months ended March 31, 2018 and March 31, 2017:

		Three Months Ended March 31,
		2018				2017
		(unaudited)				(unaudited)
Net revenue		$	2,543,000			$	3,479,000
Cost of goods sold			2,151,000				3,489,000
Gross profit			392,000				(10,000	)
Operating expenses:
Selling, general and administrative			485,000				680,000
Total operating expenses			(93,000	)			(690,000	)
Interest expense			-				(10,000	)
Other income (expense)			1,000				-
Loss from discontinued operations before income taxes			(92,000	)			(700,000	)

Provision for income taxes			—				-
Net loss from discontinued operations		$	(92,000	)		$	(700,000	)

Non-cash operating amounts for discontinued operations for the three months ended March 31, 2018 include depreciation of $42,000 and amortization of $38,000. Capital expenditures were $1,000. There were no other significant non-cash operating amounts or investing items of the discontinued operations for the period.

Non-cash operating amounts for discontinued operations for the three months ended March 31, 2017 include depreciation of $45,000 and amortization of $55,000. Capital expenditures were $-0-. There were no other significant non-cash operating amounts or investing items of the discontinued operations for the period.

See Note 6 for a reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued operations to the total assets and liabilities of the disposal group classified as held for sale that are presented separately in the consolidated balance sheets.