Annual report pursuant to Section 13 and 15(d)

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

NOTE 14 – DISCONTINUED OPERATIONS

During the third quarter of 2017, we sold our fixed railcar cleaning division which includes substantially all assets and liabilities of Tactical (except for cash) as well as three locations in REGS including Illinois, Maryland and Pennsylvania for a sales price of $2.4 million of proceeds received at the close on July 31, 2017, subject to an adjustment for working capital changes, and guaranteed payments of $1.1 million over the next three years. In addition, the Company is entitled to receive up to $1.5 million based on the performance of the fixed railcar cleaning locations, also over the next three years. Accordingly, the revenue and expenses associated with the railcar cleaning locations are presented as “Discontinued operations” on our consolidated statement of operations and on our consolidated statement of cash flows for the years ended December 31, 2018 and 2017. The sale was completed on July 31, 2017. For the years ended December 31, 2018 and 2017 we recorded net income from discontinued operations equal to $41,000 and $694,300, respectively. For the year ended December 31, 2017 we recorded a gain on the sale of rail operations of $2,686,700.

In December 2017, the Company and the buyer signed Amendment No. 1 to the Asset Purchase Agreement which modified certain terms in the original asset purchase agreement providing for a reduction to the first guaranteed payment in the amount of $276,000 in exchange for immediate release of certain liabilities arising from the collection by the Company of certain trade receivables included in the sale.

Major classes of line items constituting pretax loss on discontinued operations:

	For the year ending December 31,
	2018			2017

Services revenue	$	—		$	4,082,200

Services costs		—			3,070,200
General and administrative expenses		—			117,800
Salaries and related expenses		—			208,900
Other (income) expense		(41,000	)		(9,000	)
Total expenses		(41,000	)		3,387,900

Operating income		(41,000	)		694,300
Income tax benefit		—			—

Total income from discontinued operations	$	(41,000	)	$	694,300

Total gain on disposal of rail operations:

	July 31, 2017

Consideration from sale	$	2,641,000
Net present value of future consideration		824,000
Carrying value of net assets*		(653,600	)
Gross gain on disposal		2,811,400

Closing costs		(116,100	)
Total gain on sale of rail operations	$	2,695,300

*Carrying value of net assets

Accounts receivable, net	$	1,130,500
Property and equipment, net		177,200
Other		60,200
Total Assets	$	1,367,900

Accounts payable	$	678,600
Accrued expenses and other		35,700
Total Liabilities	$	714,300
Carrying value of net assets	$	653,600