Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.7.0.1
Discontinued Operations
6 Months Ended
Jun. 30, 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 six months ended June 30, 2016. The Company recorded a gain on the disposal of these assets of $2,637 for the six months ended June 30, 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 and six months ended June 30, 2016.

  

The following table shows the statement of operations of the Company’s discontinued operations for the three and six months ended June 30, 2016.

 

    For the three months ended     For the six months ended  
    June 30,
2016
    June 30,
2016
 
             
Revenues   $ -     $ 1,377  
Cost of revenue     15       274  
Gross profit     (15 )     1,103  
                 
Operating expenses:                
Depreciation and amortization     -       439  
Salaries and wages     -       844  
Selling, general and administrative     (8 )     528  
Total operating expenses     (8 )     1,811  
                 
Loss from operations     (7 )     (708 )
                 
Other (income) expenses:                
Interest expense     -       (243 )
Other expense     (128 )     (158 )
Loss (gain) on disposal     (1,063 )     1,574  
Total other (income) expense     (1,191 )     1,173  
                 
Net (loss) income on discontinued operations   $ (1,198 )   $ 465