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Discontinued Operations

6 Months Ended

Jun. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

Note 2. DISCONTINUED OPERATIONS

As discussed in Note 1, the Company sold WMI Group to CPI in December 2018. As such, these businesses are reported as discontinued operations for the three and six months ended June 30, 2018. The Company has not segregated the cash flows of these businesses in the condensed 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 Condensed Consolidated Financial Statements refers to the Company’s continuing operations.

Also discussed in Note 1, the Company disposed of its EPC and ECC subsidiaries on March 31, 2019. As required, the Company has retrospectively recast its condensed consolidated statements of operations for all periods presented. As such, these businesses are reported as discontinued operations for the three and six months ended June 30, 2019 and 2018. 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 Condensed Consolidated Financial Statements refers to the Company’s continuing operations.

For the year ended December 31, 2018, the Company recorded a loss on abandoned assets of $386,000, which was included in loss from continuing operations in 2018, and a goodwill impairment charge for ECC in the amount of $109,000, as a result of the Company’s decision to close its EPC and ECC businesses.

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 condensed consolidated statement of operations for the three and six months ended June 30, 2019 and 2018:

		Three Months Ended June 30,								Six Months Ended June 30,
		2019				2018				2019				2018
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net revenue		$	—			$	4,844,000			$	132,000			$	7,720,000
Cost of goods sold			—				4,061,000				105,000				6,517,000
Gross profit			—				783,000				27,000				1,203,000
Operating expenses:
Selling, general and administrative			—				(724,000	)			(96,000	)			(1,351,000	)
Gain on impairment of assets			—				1,563,000				41,000				1,563,000
Total operating income (loss)			—				1,622,000				(28,000	)			1,415,000
Interest expense			—				(1,000	)			(1,000	)			(2,000	)
Other income			—				2,000				101,000				3,000
Income from discontinued operations before income taxes			—				1,623,000				72,000				1,416,000

Provision for income taxes			—				—				—				2,000
Income from discontinued operations, net of income tax		$	—			$	1,623,000			$	72,000			$	1,414,000

Non-cash operating amounts for discontinued operations for the three and six months ended June 30, 2019 include depreciation of $0 and $6,000, respectively. The Company did not incur any capital expenditures for discontinued operations for the three and six months ended June 30, 2019. 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 and six months ended June 30, 2018 include depreciation of $49,000 and $97,000, respectively. The Company did not incur any capital expenditures for discontinued operations for the three and six months ended June 30, 2018. There were no other significant non-cash operating amounts or investing items of the discontinued operations for the period.