DISCONTINUED OPERATIONS - DECONSOLIDATION

12 Months Ended

Dec. 31, 2011

Discontinued Operation Deconsolidation [Abstract]

Discontinued Operations Deconsolidation Disclosure [Text Block]

NOTE 4— DISCONTINUED OPERATIONS – DECONSOLIDATION

WMC was primarily engaged in the manufacturing and importing of stair parts and related accessories.  In an effort to improve the overall results of the Company’s existing stair parts operation, the Company entered into the WMC transactions. These transactions were executed in an attempt to take advantage of the synergies available by combining two large players in an industry at the bottom of its economic cycle with complementary distribution channels and operations.

WMC was not able to achieve the revenue levels anticipated prior to the WMC transactions and, as a result, never produced positive cash flows. This caused, among other things, defaults on the WMC loan agreement. As the result of a decision reached by the Company’s board of directors in March 2010, that it was in the best interest of the Company and its shareholders that the Company sell, liquidate or otherwise dispose of its membership interests in WMC, the Company reported WMC as a discontinued operation effective January 1, 2010.

Effective June 7, 2010, WMC executed and delivered to PNC an Acknowledgment of Events of Default and Peaceful Possession Letter (the “Peaceful Possession Letter”), dated as of June 4, 2010, pursuant to which (1) WMC acknowledged that a material adverse change in its business and assets occurred and that such event constituted a forbearance default under the Loan Agreement, and (2) among other things:

(a) consented to PNC’s exercise of all rights of possession in and to the Collateral consistent with the Loan Agreement, the Other Documents (as defined in the WMC loan agreement) and applicable law, to be disposed of consistent with the Loan Agreements, the Other Documents and applicable law;

(b) consented to a sale of substantially all of the Collateral, other than the Marion Fixed Assets by PNC to WM Coffman Resources, LLC, or the “Buyer”, pursuant to the terms and conditions of a Foreclosure Agreement,

(c) consented to the Fixed Asset Auction; and

(d) agreed to change its name from WM Coffman, LLC to Old Stairs Co. LLC.

Included within the WMC loan agreement was a term loan with an original principal amount of $1,134,000, which was to be repaid in twenty-four equal monthly installments of $47,000.  This term note between PNC and WMC was collateralized by WMC’s fixed assets. As the result of the Peaceful Possession Letter, PNC took title to and possession of all of WMC’s fixed assets located in Marion, Virginia and, in July 2010 arranged for their sale.

At the time of the sale by PNC to the Buyer, the total outstanding amount of principal and accrued interest owing to PNC was approximately $5.2 million. Upon the effectiveness of the aforementioned sale by PNC, and sale of the Marion fixed assets, the outstanding principal and accrued interest owing to PNC was paid.  PNC was also able to satisfy the subordinated secured lender obligation of $250,000 plus all accrued interest thereon.  In December 2010, WMC received what it believes to be a final accounting from PNC.  As a result of sale of all tangible and intangible assets by or on behalf of PNC, WMC received approximately $344,000 in December 2010 and a final payment of $48,000 in March 2011.

As a result, in accordance with authoritative literature, the Company determined that WMC was a VIE and were required to deconsolidate WMC from its consolidated financial statements.   As the result of the foreclosure by PNC on WMC’s assets, tangible and intangible, and their subsequent disposal and sale thereof, the Company, determined that it no longer had a controlling financial interest in WMC and was no longer the primary beneficiary of WMC and accordingly and in accordance with ASC 810, deconsolidated WMC.  The Company determined that it no longer had the obligation to absorb losses that might be significant to WMC nor did it possess the right to receive benefits from WMC that could potentially be significant to WMC.

As the result of deconsolidating WMC, there are no assets or liabilities attributable to WMC included in the Company’s consolidated balance sheets at December 31, 2011 and 2010. The Company will perform an ongoing reassessment of the VIE to determine the primary beneficiary and may be required to consolidate WMC in the future.

The table below presents the items that have been classified as assets and liabilities of discontinued operations:

	December 31,
	2011		2010
Other current assets	$	23,000	$	23,000
Total current assets of discontinued operations	$	23,000	$	23,000
Accounts payable and accrued expenses		24,000		27,000
Total current liabilities of discontinued operations	$	24,000	$	27,000
Other long-term liabilities	$	292,000	$	306,000
Total non-current liabilities of discontinued operations	$	292,000	$	306,000

The table below presents the results of operations of discontinued operations, which for the year ended December 31, 2011, includes other income of $646,000, net of $9,000 of taxes from discontinued operations other than WMC. Additionally, for the year ended December 31, 2010 the table below presents the results of operations of discontinued operations of WMC, other than $67,000 of selling, general and administrative expenses.

	Years Ended December 31,
	2011		2010
Revenue	$	—	$	10,136,000
Gross profit	$	—	$	900,000
Selling, general and administrative expenses and interest expense		—		3,130,000
Loss on foreclosure and other expenses		—		5,240,000
Termination of lease		—		4,280,000
Other income		655,000		—
Income (loss) before income taxes		655,000		(11,750,000	)
Income tax expense		9,000		—
Income (loss) from discontinued operations		646,000		(11,750,000	)
Gain resulting from deconsolidation of WMC		—		12,090,000
Income from discontinued operations	$	646,000	$	340,000