Annual report pursuant to Section 13 and 15(d)

ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2017

Assets And Liabilities Held For Sale And Discontinued Operations

ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

NOTE 13 – ASSETS AND LIABILITIES HELD FOR SALE AND 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 another $1.5 million based on the performance of the fixed railcar cleaning locations, also over the next three years. Accordingly, the carrying value of the assets and liabilities associated with the railcar cleaning locations are presented as “Assets held for sale” and “Liabilities held for sale” on our consolidated balance sheet as of December 31, 2016, and “Discontinued operations” on our consolidated statement of operations for the year ending December 31, 2017 and 2016, and on our consolidated statement of cash flows for the years ending December 31, 2017 and 2016. The sale was completed on July 31, 2017. For the years ended December 31, 2017 and 2016 we recorded net income from discontinued operations equal to $694,300 and $423,300, respectively. For the year ended December 31, 2017 we recorded a gain on the sale of rail operations of $2,695,300.

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.

Assets and liabilities held for sale were comprised of the following:

	December 31, 2017		December 31, 2016

Accounts receivable, net	$	—	$	841,800
Property and equipment, net		—		156,200
Other		—		26,600
Total Assets held for sale	$	—	$	1,024,600

Accounts payable	$	—	$	513,500
Accrued expenses and other		—		89,600
Total Liabilities held for sale	$	—	$	603,100

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

	For the year ending December 31,
	2017			2016

Services revenue	$	4,082,200		$	4,029,700

Services costs		3,070,200			3,146,500
General and administrative expenses		117,800			203,200
Salaries and related expenses		208,900			253,300
Other (income) expense		(9,000	)		3,400
Total expenses		3,387,900			3,606,400

Operating income		694,300			423,300
Income tax benefit		—			—

Total income from discontinued operations	$	694,300		$	423,300

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	$	642,900
Carrying value of net assets	$	653,600