Note

– Sale of Business Component

January 31, 2017,

we completed the sale of certain identified assets and liabilities associated with a specific customer contract from our project management business for

$350,000

pursuant to an Asset Purchase Agreement (“APA”) dated

December 12, 2016

with Tech Site Services, LLC, a privately held Maryland company. The sale price was subject to certain post-closing adjustments relating to working capital and obtaining the consent of the customer as a condition of closing. Tech Site Services, LLC also must pay us an earn-out payment equal to

10%

of all revenue generated under the customer contract in excess of

$2.5

million in each

-month period during the

two

-year period after the closing of this transaction.

The transaction closed on

January 31, 2017.

The APA contains representations, warranties, covenants and indemnification provisions customary for a transaction of this type. Many of the representations made by us are subject to, and qualified by materiality or similar concepts. Both parties have agreed to indemnify the other party for certain losses arising from the breach of the APA and for certain other liabilities, subject to specified limitations. In connection with the transaction both parties will provide transition services with respect to the business activities that were sold.

The customer contract and intellectual property sold had a net book value of

$0.

As a result of the sale, Tech Site Services LLC assumed liabilities of

$7,000,

resulting in

$343,000

of cash proceeds that was paid to us upon closing. Additionally, we incurred approximately

$29,000

in legal, escrow and other expenses that would

not

have been incurred otherwise. As a result, we recorded a net gain of approximately

$321,000

in our consolidated statement of operations for the

three

-month period ended

March 31, 2017.

July 1, 2016,

we adopted ASU

2014

regarding discontinued operations. As a result, we evaluated the sale of a portion of our project maintenance business component in light of this new standard. We concluded that the sale of a portion of our project management business component in

January 2017

was

not

a “material shift” (as defined in ASU

2014

) for us and therefore, is

not

considered a discontinued operation. In accordance with ASU

2014

08,

the following information is being provided:

	Three Months Ended March 31 ,
	201 8		201 7

Pre-tax profit related to project management business sold	$	-	$	47