Note 2 - Discontinued Operations

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

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

2. 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. Following the closing of the sale, the company recorded a net of

$56,000

in post-closing adjustments primarily to reduce our estimated tax liability, resulting in a gain on the sale of

$18,802,000

in the year ended

December

31,

2015.

The company applied operating loss and capital loss carryforwards against the gain on sale and incurred 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 tax was paid in

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 was shown as Restricted Cash as of

December

31,

2015,

was released in its entirety in

2016,

along with interest earned.

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

Year ended December 31 , (in thousands)	201 6		2015
Net sales		--	$	2,902
Operating income		--		197
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 in

2016.