NOTE 17 - DISCONTINUED OPERATIONS

Hartford and Lakewood Operations Asset Sales

On July 25, 2012, the Company and the Hartford and Lakewood Operations entered into an asset purchase agreement, pursuant to which the Hartford and Lakewood Operations sold substantially all of their assets to two newly-created subsidiaries of Kavveri Telecom Products Limited (Kavveri) for a purchase price of $5.5 million in cash, subject to adjustment, and the assumption of their various liabilities. At closing, the Company received $4.9 million in cash, with the remaining purchase price to be settled upon (1) completing the assignment of certain contracts post-closing, which was concluded, and (2) satisfying certain adjustments to the purchase price based on a final net asset valuation to be completed after closing as well as repurchase obligations of certain delinquent accounts receivables. The Company used the proceeds from this sale to repay the full amount outstanding under the Credit Agreement of $4,022,320 as of July 25, 2012. The difference of $877,680 was deposited in our operating cash account.

To date, the Company has not reached agreement with Kavveri with regard to a resolution for settling the net asset valuation. The Company is currently in discussions with Kavveri for the settlement of the final adjustments to the purchase price, and has reserved a total of $450,000 for possible future settlement, which includes approximately $104,000 recorded for the year ended April 30, 2014. There can be no assurance that the Company will be successful in settling with Kavveri the amounts claimed by them.

Australia Operations

On September 19, 2013, the Company entered into a Securities Purchase Agreement (the Agreement) with Turquino Equity LLC, a limited liability company (Turquino), whose managing member is Andrew Hidalgo, former Chairman and Chief Executive Officer of the Company. Pursuant to the Agreement, the Company agreed to sell 100% of the shares of Pride for $1,400,000 (Purchase Price). At the Closing Date, the Company will settle the Purchase Price with Turquino by applying the net after tax severance balance due Mr. Hidalgo under his separation agreement as further described in Note 19 “Executive Management Changes”, as partial payment towards the Purchase Price, and Turquino will pay cash for the difference between the Purchase Price and the net severance balance due. The Agreement contains a number of conditions to closing, including but not limited to the following: (i) each of the Company and Turquino shall have performed and complied with all terms of the Agreement required to be performed or complied with by it at or prior to the Closing Date; (ii) no action or proceeding by or before any governmental authority shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which might restrain, prohibit or invalidate any of the transactions contemplated by the Agreement, other than an action or proceeding instituted or threatened by a party or any of its affiliates; (iii) the representations and warranties contained in made by each of the Company and Turquino to each other shall be true and correct in all material respects on the closing date as though made on and as of the closing date; (iv) the Company obtaining a fairness opinion that the Purchase Price is fair; and (v) the Company has obtained shareholder approval.. On July 15, 2014, the Company obtained stockholder approval of the transaction. In order to close, the Company needs to obtain the release of liens by its secured note holders of the stock of Pride. The Company anticipates that the transaction will be closed on or about July 31, 2014.

Seattle Operations

On March 31, 2014, the Company entered into an asset purchase agreement (the Asset Purchase Agreement ) by and among the Company, and EC Company, as purchaser. Pursuant to the Asset Purchase Agreement, the Company agreed to sell substantially all of the assets of the Seattle Operations to EC Company for approximately $2.7 million in an all cash transaction. The final closing price is subject to adjustment based on the value of the assets on the closing date.

The Asset Purchase Agreement was amended to provide that in the event that the acquisition is not consummated by July 31, 2014, through no fault of EC Company, the purchase price will be reduced by $100,000. The consummation of the sale is subject to the approval of the Company’s stockholders, the NASDAQ Capital Market and the release of liens by our secured note holders of the assets of the Seattle Operations.

The Company has reported the financial activity of these four operations as discontinued operations for all periods presented. The disposal of two operations was concluded in fiscal year 2013, and the Company has reflected the gain from the disposal of the Hartford and Lakewood Operations in year ended April 30, 2013. A summary of the operating results for the discontinued operations is as follows:

	Years Ended April 30,
	2014		2013

REVENUE	$	16,698,767	$	22,455,300

COSTS AND EXPENSES:
Cost of revenue		11,889,953		16,480,328
Selling, general and administrative expenses		3,987,799		6,279,297
Depreciation and amortization		450,476		517,470
Goodwill impairment		-		1,936,059
		16,328,228		25,213,154

OPERATING INCOME (LOSS) FROM DISCONTINUED OPERATIONS		370,539		(2,757,854)

Interest expense (income)		5,885		(16,243)

Income (loss) from discontinued operations before income tax provision		364,654		(2,741,611)

Income tax provision		330,764		546,321

Income (loss) from discontinued operations, net of tax		33,890		(3,287,932)

(loss) gain from disposal		(104,446)		1,756,586

TOTAL LOSS FROM DISCONTINUED OPERATIONS	$	(70,556)	$	(1,531,346)

There were no assets or liabilities included in the consolidated balance sheets for the Hartford and Lakewood Operations at April 30, 2014 or 2013.

The following table summarizes the assets and liabilities held for sale:

	April 30, 2014		April 30, 2013
ASSETS

CURRENT ASSETS:

Accounts receivable, net of allowance	$	3,351,881	$	4,223,321
Costs and estimated earnings in excess of billings on uncompleted contracts		616,858		819,714
Prepaid expenses and other current assets		33,073		109,774
Total current assets held for sale		4,001,812		5,152,809

PROPERTY AND EQUIPMENT, net		342,884		526,817

OTHER INTANGIBLE ASSETS, net		-		250,632

OTHER ASSETS		30,046		30,704
Total other assets held for sale		372,930		808,153

Total assets held for sale	$	4,374,742	$	5,960,962


LIABILITIES
Current portion of loans payable	$	26,921	$	20,152
Accounts payable and accrued expenses		1,425,586		1,727,506
Billings in excess of costs and estimated earnings on uncompleted contracts		345,108		298,342
Total current liabilities held for sale		1,797,615		2,046,000

Loans payable, net of current portion		88,404		66,964
Total liabilities	$	1,886,019	$	2,112,964