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Discontinued Operations

9 Months Ended

Sep. 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 nine months ended September 30, 2018. During the three and nine months ended September 30, 2019, costs related to WMI Group were recorded for the settlement of an action brought by the former landlord of Compac Development Corporation, additionally costs were accrued for legal counsel relating to the lawsuit brought by CPI. 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 completed its shut-down 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 nine months ended September 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 together with a goodwill impairment charge of ECC in the amount of $109,000 was included in loss from continuing operations in 2018 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 nine months ended September 30, 2019 and 2018:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net revenue		$				$	5,262,000			$	132,000			$	12,982,000
Cost of goods sold			—				4,252,000				105,000				10,769,000
Gross profit			—				1,010,000				27,000				2,213,000
Operating expenses:
Selling, general and administrative			100,000				91,000				155,000				1,442,000
Loss on assets held for sale			—				(2,493,000	)			—				(930,000	)
Total operating loss			(100,000	)			(1,574,000	)			(128,000	)			(159,000	)
Interest expense			—				(2,000	)			(1,000	)			(4,000	)
Other (expense) income			(111,000	)			4,000				(10,000	)			7,000
Loss from discontinued operations before income taxes			(211,000	)			(1,572,000	)			(139,000	)			(156,000	)

Provision for income taxes			—				—				—				2,000
Loss from discontinued operations, net of income tax		$	(211,000	)		$	(1,572,000	)		$	(139,000	)		$	(158,000	)

Non-cash operating amounts for discontinued operations for the three and nine months ended September 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 nine months ended September 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 nine months ended September 30, 2018 include depreciation of $49,000 and $146,000, respectively. The Company did not incur any capital expenditures for discontinued operations for the three and nine months ended September 30, 2018. There were no other significant non-cash operating amounts or investing items of the discontinued operations for the period.