• Filing Date: 2020-05-13
  • Form Type: 10-Q
  • Description: Quarterly report
v3.20.1
HELD FOR SALE AND DISCONTINUED OPERATIONS
3 Months Ended
Mar. 31, 2020
Discontinued Operations and Disposal Groups [Abstract]  
HELD FOR SALE AND DISCONTINUED OPERATIONS

In September 2019 and March 2020, the Company determined that Global and AOC Key Solutions, respectively, met the criteria for held for sale accounting because it expects to complete the sale of Global and AOC Key Solutions during the next 12 months. Historically, Global and AOC Key Solutions have been presented as part of the Professional Services Segment. On April 2, 2020, AOC Key Solutions was sold pursuant to a purchase and sale agreement as further detailed in Note 10.

 

During the first quarter of 2020, in connection with the Company’s plan to sell AOC Key Solutions and Global, the Company determined that all of the historical Professionals Services Segment, not subject to sale, should be classified as discontinued operations. As part of this plan Firestorm has also been classified as discontinued operations and presented as part of held for sale and discontinued operations. Previously, Firestorm was not included as part of held or sale and discontinued operations as it did not meet the threshold of being considered a strategic shift.

 

The pending dispositions are a result of the Company’s strategic decision to concentrate resources on the development of its Technology Segment and will result in material changes in the Company's operations and financial results. As a consequence, the Company is reporting the operating results and cash flows of Global, AOC Key Solutions and Firestorm as held for sale and discontinued operations, including for all prior periods reflected in the unaudited condensed consolidated financial statements and these notes.

 

Pursuant to ASC Topic 205-20, Presentation of Financial Statements - Discontinued Operations, the results of operations from Global, AOC Key Solutions and Firestorm for the three months ended March 31, 2020 and 2019 have been classified as held for sale and discontinued operations and presented as part of loss from held for sale and discontinued operations in the accompanying unaudited condensed consolidated statements of operations presented herein. The assets and liabilities also have been classified as held for sale and discontinued under the line captions of current and long term assets held for sale and discontinued and current and long term liabilities held for sale and discontinued in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019.

 

The assets and liabilities classified as held for sale and discontinued operations in the Company's unaudited condensed consolidated financial statements as of March 31, 2020 and December 31, 2019 are shown below (dollars in thousands). 

 

    March 31, 2020     December 31, 2019  
    Global     AOC Key Solutions     Firestorm     Total     Global     AOC Key Solutions     Firestorm     Total  
ASSETS                                                
Cash and cash equivalents   $ 37     $ 118     $ 6     $ 161     $ 225     $ 93     $ 12     $ 330  
Accounts receivable, net     3,183       3,866       -       7,049       2,763       4,055       -       6,818  
Other current assets, net     157       41       -       198       238       52       3       293  
Current assets held for sale and discontinued     3,377       4,025       6       7,408       3,226       4,200       15       7,441  
Property and equipment, net     113       37       -       150       113       41       -       154  
Right-of-use lease assets, net     105       477       -       582       130       499       -       629  
Goodwill     669       -       -       669       669       -       -       669  
Intangible assets, net     1,994       -       -       1,994       1,994       -       -       1,994  
Deposits and other long-term assets     -       12       -       12       -       11       -       11  
Long-term assets held for sale and discontinued     2,881       526       -       3,407       2,906       551       -       3,457  
Total assets held for sale and discontinued   $ 6,258     $ 4,551     $ 6     $ 10,815     $ 6,132     $ 4,751     $ 15     $ 10,898  
LIABILITIES                                                                
Accounts payable and accrued expenses   $ 724     $ 1,572     $ 29     $ 2,325     $ 461     $ 1,260     $ 33     $ 1,754  
Lines of credit     1,776       1,404       -       3,180       1,842       1,894       -       3,736  
Lease liability, short term     115       103       64       282       113       100       54       267  
Current liabilities held for sale and discontinued     2,615       3,079       93       5,787       2,416       3,254       87       5,757  
Other long-term liabilities     33       -       -       33       -       -       -       -  
Lease liability, long term     -       439       30       469       30       467       39       536  
Long-term liabilities held for sale and discontinued     33       439       30       502       30       467       39       536  
Total liabilities held for sale and discontinued   $ 2,648     $ 3,518     $ 123     $ 6,289     $ 2,446     $ 3,721     $ 126     $ 6,293  

  

The major components of the held for sale and discontinued operations, net of tax, are presented in the unaudited condensed consolidated statements of operations below (dollars in thousands):

 

    Three Months Ended March 31,  
    2020     2019  
    Global     AOC Key Solutions     Firestorm     Total     Global     AOC Key Solutions     Firestorm     Total  
Revenue   $ 6,305     $ 3,392     $ -     $ 9,697     $ 7,058     $ 2,878     $ 680     $ 10,616  
Cost of revenue     5,476       1,866       -       7,342       6,146       1,592       295       8,033  
Gross profit     829       1,526       -       2,355       912       1,286       385       2,583  
Operating expenses:                                                                
General and administrative expenses     762       1,284       (4 )     2,042       971       1,115       508       2,594  
Selling and marketing expenses     39       131       -       170       82       125       63       270  
Operating expenses     801       1,415       (4 )     2,212       1,053       1,240       571       2,864  
Income loss income from operations     28       111       4       143       (141 )     46       (186 )     (281 )
Other income (expense):                                                                
Interest expense     (90 )     (74 )     -       (164 )     (48 )     (31 )     -       (79 )
Other expense     5       2       -       7       1       2       -       3  
Total other expense     (85 )     (72 )     -       (157 )     (47 )     (29 )     -       (76 )
Income (loss) from held for sale and discontinued operations     (57 )     39       4       (14 )     (188 )     17       (186 )     (357 )
Income tax provision from held for sale and discontinued operations     -       -       -       -       -       -       -       -  
Net income (loss) from held for sale and discontinued operations   $ (57 )   $ 39     $ 4     $ (14 )   $ (188 )   $ 17     $ (186 )   $ (357 )