Annual report pursuant to Section 13 and 15(d)

Discontinued Operations

v3.6.0.2
Discontinued Operations
12 Months Ended
Dec. 31, 2016
Discontinued Operations [Abstract]  
DISCONTINUED OPERATIONS
20. DISCONTINUED OPERATIONS

 

On February 17, 2016, the Company consummated the sale of certain assets of its former wholly-owned subsidiary, VaultLogix, and its subsidiaries, pursuant to the terms of an asset purchase agreement, dated as of February 17, 2016 among the Company, VaultLogix and its subsidiaries and KeepItSafe, Inc., a Delaware corporation. The cash purchase price paid to the Company for the assets was $24,000, which was paid to the Company as follows: (i) $22,000 paid in cash on the closing date and (ii) $2,000 deposited in an escrow account to secure the performance of the obligations of the Company and VaultLogix, including any potential indemnification claims, under the asset purchase agreement, to be released on February 17, 2017. The closing payments were subject to customary working capital adjustments. On November 4, 2016, the Company, VaultLogix and its subsidiaries and KeepItSafe, Inc, executed a settlement agreement, whereby for certain consideration, the Company received $150 of the escrow and KeepitSafe Inc. received $1,850. The settlement agreement released all claims among the parties and eliminated any obligations subsequent to that date.

 

The assets of VaultLogix and its subsidiaries have been included within the consolidated balance sheets as long-term assets of discontinued operations as of December 31, 2016 and 2015. The results of operations of VaultLogix and its subsidiaries have been included within the line-item labelled net loss on discontinued operations, net of tax within the consolidated statement of operations for the years ended December 31, 2016 and 2015. The Company recorded a gain on the disposal of these assets of $2,637 for the year ended December 31, 2016. 

 

On April 29, 2016, the Company consummated the disposal of certain assets of its former wholly-owned subsidiary, Axim, for the following future consideration: in the event that the purchaser of Axim undertakes a sale or disposition of assets related to Axim, the purchaser of Axim shall pay to the Company an amount equal to the lesser of (i) 50% of the gross proceeds of such sale or disposition or (ii) $1,500.

 

The assets and liabilities of Axim have been included within the consolidated balance sheet as current assets of discontinued operations, long-term assets of discontinued operations, and current liabilities of discontinued operations as of December 31, 2016 and 2015. The results of operations of Axim have been included within the line-item labelled net loss on discontinued operations, net of tax within the consolidated statement of operations for the years ended December 31, 2016 and 2015. The Company recorded a loss on the disposal of these assets of $1,063 for the year ended December 31, 2016. 

 

The following table shows the major classes of the Company’s discontinued operations as of December 31, 2016 and 2015.

 

    December 31,  
    2016     2015  
             
Current assets:            
Accounts receivable, net of allowances of $52   $ -     $ 91  
Current assets of discontinued operations   $ -     $ 91  
                 
Long-term Assets:                
Property and equipment, net   $ -     $ 1,245  
Goodwill     -       10,130  
Intangible assets, net     -       10,377  
Long-term assets of discontinued operations   $ -     $ 21,752  
                 
Current liabilities:                
Accrued expenses   $ -     $ 5  
Current liabilities of discontinued operations   $ -     $ 5  

 

 

    For the year ended
December 31,
 
    2016     2015  
             
Revenues   $ 1,377     $ 10,717  
Cost of revenue     274       1,896  
Gross profit     1,103       8,821  
                 
Operating expenses:                
Depreciation and amortization     439       2,963  
Salaries and wages     844       3,275  
Selling, general and administrative     528       1,997  
Goodwill impairment charge     -       13,219  
Intangible asset impairment charge     -       464  
Total operating expenses     1,811       21,918  
                 
Pre-tax loss from operations     (708 )     (13,097 )
                 
Other (income) expenses:                
Interest expense     (243 )     2,105  
Other expense     (158 )     50  
Gain on disposal     1,574       -  
Total other (income) expense     1,173       2,155  
                 
Pre-tax loss on discontinued operations     465       (15,252 )
                 
(Benefit from) provision for income taxes     -       (128 )
                 
Loss on discontinued operations, net of tax   $ 465     $ (15,124 )