Pursuant to an agreement (the “Sale Agreement”), on February 10, 2017, the Company sold its petroleum storage facility and related assets (the “Terminal”) owned or controlled by the Company’s former subsidiaries, Capital Terminal Company and Dunellen, LLC to Sprague Operating Resources, LLC (“Sprague”) for $23 Million subject to certain adjustments. In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the sale of the Terminal is accounted for as a discontinued operation. The liabilities associated with the discontinued operations are separately identified on the Company’s condensed consolidated balance sheets. These liabilities were not assumed by Sprague and remain obligations of the Company until settled. The Terminal’s discontinued operations is reported after income from continuing operations.

In accordance with the Sale Agreement, the Company has agreed to retain and pay for the environmental remediation costs associated with a 1994 storage tank fuel oil leak which allowed the escape of a small amount of fuel oil. Since 1994, the Company and its consultants have continued to work with the Rhode Island Department of Environmental Management (“RIDEM”) through the various phases of remediation and are now working to complete the final remediation. In February 2020, the Company submitted its revised Remedial Action Work Plan (“RAWP”) to RIDEM and obtained final approval to proceed in April 2020. Based on remediation cost estimates associated with the revised RAWP submitted in February 2020, which incorporates design changes necessary to meet the requirements of applicable life safety codes, the remediation accrual was increased by $846,000 resulting in an accrual of $1,043,000 at December 31, 2019. Through September 30, 2020, the Company incurred costs of $187,000 which decreased the amount accrued to $856,000. The Company anticipates that costs of approximately $480,000 of the amount accrued will be paid in 2021 and beyond. Any subsequent increases or decreases to the expected cost of remediation will be recorded in gain (loss) on sale of discontinued operations, net of taxes.

Pursuant to the Sale Agreement, at the closing the Company and Sprague entered into a letter agreement (the “Letter Agreement”) providing that if the cost of construction of a new breasting dolphin exceeded the initial estimate of $1,040,000, such excess would be borne equally by Sprague and the Company subject to certain limitations. In May 2018 the Company received notice from Sprague that Sprague had received bids for the breasting dolphin and that the cost of the construction was estimated at $1,923,284. Sprague requested that the Company acknowledge that it was obligated to pay 50% of the cost in excess of $1,040,000, or $441,642. The Company replied that pursuant to the Letter Agreement, the Company’s obligation cannot exceed $104,000 assuming, among other things, that Sprague had been timely in securing bids for the breasting dolphin and the scope of the work as bid was consistent with the Letter Agreement. In November 2019, the Company received a demand letter from Sprague asserting that Sprague was owed $427,000, which amount according to the letter represents 50% of the actual costs incurred ($1,894,000) in excess of $1,040,000. The Company continues to assert that its obligation cannot exceed $104,000. Subsequently, representatives from the Company and Sprague met to discuss the claim but no agreement was reached.

Gain on sale of discontinued operations for the three and nine months ended September 30, 2020 and 2019 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Indemnification escrow proceeds	$	-		$	-		$	-		$	862,000
Environmental remediation expense		-			-			-			359,000
Gain from discontinued operations before income taxes		-			-			-			503,000
Income tax expense (benefit):
Current		(24,000	)		(49,000	)		(52,000	)		137,000
Deferred		24,000			49,000			52,000			(37,000	)
		-			-			-			100,000

Gain from discontinued operations, net of taxes	$	-		$	-		$	-		$	403,000