Note 3 – Held for Sale

On January 14, 2015, the Company entered into an asset purchase agreement with Utility Pipeline, LTD to sell nearly all of the assets and liabilities of its Clarion and Walker Pennsylvania utility divisions. The Company will receive $0.9 million under the transaction. The agreement contains customary representations, warranties, covenants and indemnification provisions. The consummation of the transaction is dependent upon the satisfaction or waiver of a number of customary closing conditions, the receipt of regulatory approvals and the consent of certain lenders of the Company. The Company expects this transaction to be finalized in the third quarter of 2015.

Clarion and Walker have historically been reported as a component of the Company’s Natural Gas Operations segment and collectively contributed $24,000 and $11,000 to the Company’s pre-tax income from continuing operations for the three months ended June 30, 2015 and 2014, respectively, and $105,000 and $102,000 to the Company’s pre-tax income from continuing operations for the six months ended June 30, 2015 and 2014, respectively. The Company does not believe that the sale of Clarion and Walker constitutes a strategic shift that will have a major effect on its operations or financial results and as such, neither of the divisions have been classified as discontinued operations in the Company’s financial statements, but instead have been classified as assets and liabilities held for sale at June 30, 2015 and December 31, 2014.

On August 5, 2015, the Company executed an asset purchase agreement with Kentucky Frontier Gas, LLC, to sell nearly all the assets and liabilities of its subsidiary PGC in Kentucky. The Company will receive approximately $1.90 million under the transaction. The asset purchase agreement contains customary representations, warranties, covenants and indemnification provisions. The consummation of this transaction depends upon the satisfaction or waiver of a number of customary closing conditions and the receipt of regulatory approvals. Please see Note 15 – Subsequent Events for further information about the transaction.

Goodwill associated with the original acquisition of the operating assets of PGC in the amount of $283,425 is impaired as a result of the pending sale and has been included in the Distribution, general and administrative line item in the accompanying Consolidated Statement of Comprehensive Income. As a result of this transaction, the Company will recognize an asset impairment loss of $109,682 based on the carrying amount of assets sold totaling $1,939,682 and the estimated cost to sell of $70,000. This loss has been recorded in the Distribution, general and administrative line item in the accompanying Consolidated Statement of Comprehensive Income.

PGC has historically been reported as a component of the Company’s Natural Gas Operations segment and excluding the effects of the impairments discussed above, accounted for losses of $94,000 and $144,000 to the Company’s pre-tax income from continuing operations for the three months ended June 30, 2015 and 2014, respectively, and losses of $64,000 and $83,000 to the Company’s pre-tax income from continuing operations for the six months ended June 30, 2015 and 2014, respectively. The Company does not believe that the sale of PGC constitutes a strategic shift that will have a major effect on its operations or financial results and as such, PGC has not been classified as discontinued operations in the Company’s financial statements, but instead has been classified as assets and liabilities held for sale at June 30, 2015.

The following table summarizes the major classes of asset and liabilities classified as held for sale at June 30, 2015 and December 31, 2014.

	June 30,		December 31,
	2015		2014

Current Assets:
Accounts receivable, net	$	200,842	$	49,069
Unbilled gas		23,287		22,151
Inventory		37,113		3,622
Prepayments and other		6,600		5,401
Regulatory assets, current		173,681		203,241
Total current assets		441,523		283,484
Non-Current Assets:
Property, plant & equipment, net		2,159,076		407,247
Goodwill		111,705		111,705
Other assets		275		-
Total non-current assets		2,271,056		518,952

Total assets held for sale	$	2,712,579	$	802,436

Current Liabilities:
Accounts payable	$	22,872	$	36,184
Accrued liabilities		10,326		21,632
Customer deposits		111,675		-
Other current liabilities		36,920		3,600
Total liabilities held for sale	$	181,793	$	61,416