Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.7.0.1
Discontinued Operations
3 Months Ended
Mar. 31, 2017
Discontinued Operations [Abstract]  
DISCONTINUED OPERATIONS

15. 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 results of operations of VaultLogix and its subsidiaries have been included within the line-item labelled gain on discontinued operations, net of tax within the unaudited condensed consolidated statement of operations for the three months ended March 31, 2017 and 2016. The Company recorded a gain on the disposal of these assets of $2,637 for the three months ended March 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 results of operations of Axim have been included within the line-item labelled net gain on discontinued operations, net of tax within the unaudited condensed consolidated statement of operations for the three months ended March 31, 2017 and 2016.

  

The following table shows the statement of operations of the Company’s discontinued operations for the three months ended March 31, 2016.

 

    For the three months ended  
    March 31, 2016  
       
Revenues   $ 1,377  
Cost of revenue     259  
Gross profit     1,118  
         
Operating expenses:        
Depreciation and amortization     439  
Salaries and wages     844  
Selling, general and administrative     536  
Total operating expenses     1,819  
         
Loss (income) from operations     (701 )
         
Other (income) expenses:        
Interest expense     (243 )
Other expense     (30 )
Gain (loss) on disposal     2,637  
Total other (income) expense     2,364  
         
Net income (loss) on discontinued operations   $ 1,663