Note 2 - Sales of Subsidiary; Discontinued Operations

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

2. Sale of Subsidiary; Discontinued Operations – On March 31, 2015, we and CRC Industries, Inc., a Pennsylvania corporation (“CRC”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) whereby we sold all of the issued and outstanding stock of our wholly owned subsidiary, ChemFree Corporation (“ChemFree”), to CRC (the “ChemFree Sale”). The purchase price for the all-cash sale was $21,600,000, subject to customary post-closing adjustments, including a working capital adjustment. The company retained all net cash of ChemFree as of the closing date. In the quarter ended March 31, 2015, the company recorded a gain on the sale of ChemFree of $18,746,000 and retroactively classified the ChemFree operations as discontinued operations in all periods presented. Subsequently, in the quarter ended June 30, 2015, the company recorded $20,000 of expense related to the sale of ChemFree for a net gain of $18,726,000 on the sale of ChemFree in the year-to-date period of 2015. The company is applying operating loss and capital loss carryforwards against the gain on sale and expects to incur an alternative minimum tax liability of approximately $120,000 on the transaction, which amount is included in liabilities of discontinued operations as of December 31, 2015. The estimated tax was paid in the quarter ended March 31, 2016. At the closing, a total of $3,300,000 of the purchase price was placed in escrow for purposes of securing our obligations to indemnify CRC and to refund a portion of the purchase price if ChemFree’s actual working capital amount on the closing date is less than the agreed upon target set forth in the Stock Purchase Agreement. In 2015, $880,000 of the escrow amount, net of the final working capital adjustment of $220,000 was released to the company. The remaining escrow balance of $2,200,000, which will remain in escrow until September 30, 2016, is shown as Restricted Cash as of December 31, 2015 and June 30, 2016.

The following condensed financial information is provided for the ChemFree discontinued operations for the periods shown:

	Three Months Ended June 30,				Six Months Ended June 30,
(unaudited, in thousands)	2016		2015		201 6		2015
Net sales	$	--	$	--	$	--	$	2,902
Operating loss		--		--		--		(3	)
Net income before income taxes		--		--		--		6
Income taxes		--		--		--		9
Net loss from discontinued operations	$	--	$	--	$	--	$	(3	)

The only liabilities of discontinued operations, presented separately on the balance sheet as of December 31, 2015, consist of $120,000 in current tax liabilities, which were paid before June 30, 2016.