DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

During the third quarter of 2021, the Company initiated and began executing a strategic plan to sell its UMO Business. An investment banking advisory services firm was engaged and actively marketed this segment. On September 28, 2021, the shareholders approved the proposed sale of its portfolio of used motor oil collection and recycling assets to Safety-Kleen.

The Company met all of the criteria to classify the UMO Business’s assets and liabilities as held for sale in the third quarter 2021. The Company has classified the assets, liabilities, and results of operations for this business as “Discontinued Operations” for all periods presented.

Disposal of the UMO Business represented a strategic shift that will have a major effect on the Company’s operations and financial results.

On June 29, 2021, the Company announced that it had entered into a definitive agreement to sell its portfolio of used motor oil collection and recycling assets (the UMO business) to Safety-Kleen, a subsidiary of Clean Harbors, Inc. (“Clean Harbors”) for total cash consideration of $140 million, subject to working capital and other adjustments, and subject to certain closing conditions, including regulatory approvals and a shareholder vote. After retiring term debt, together with the payment of transaction-related fees and financial obligations, total net cash proceeds from the transaction to Vertex were expected to be approximately $90 million.

The Board of Directors considered a number of factors before deciding to enter into the Sale Agreement, including, among other factors, the price to be paid by Safety-Kleen for the UMO Business, the scope of the sale process with respect to the UMO Business that led to entering into the Sale Agreement, the future business prospects of the UMO Business, including the costs to remain competitive and grow, the opinion of H.C. Wainwright & Co., LLC that the terms were fair, from a financial point of

view, the then planned acquisition of the Mobile Refinery, and the planned change in business focus associated therewith, and the terms and conditions of the Sale Agreement.

On January 25, 2022, the Company entered into a mutual agreement with Safety-Kleen to terminate the Sale Agreement. In connection with the termination agreement, the Company paid Safety-Kleen a break-up fee of $3 million.

Vertex is continuing to explore opportunities for the sale of the UMO business.

The following summarized financial information has been segregated from continuing operations and reported as Discontinued Operations for the three months ended March 31, 2022, and 2021.


	Three Months Ended March 31,
	2022		2021
Revenues	$	53,030,228	$	33,148,051
Cost of revenues (exclusive of depreciation shown separately below)	32,391,095		20,646,872
Depreciation and amortization attributable to costs of revenues	1,304,034		1,235,323
Gross profit	19,335,099		11,265,856
Operating expenses:
Selling, general and administrative expenses (exclusive of acquisition related expenses)	5,084,332		5,068,518
Depreciation and amortization expense attributable to operating expenses	445,263		455,953
Total operating expenses	5,529,595		5,524,471
Income from operations	13,805,504		5,741,385
Other income (expense)


Interest expense	(5,862)		(124,191)
Total other expense	(5,862)		(124,191)
Income before income tax	13,799,642		5,617,194
Income tax benefit (expense)	—		—
Income from discontinued operations, net of tax	$	13,799,642	$	5,617,194

The assets and liabilities held for sale on the Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 are as follows:


	March 31, 2022		December 31, 2021
ASSETS
Accounts receivable, net	$	15,968,359	$	9,583,488
Inventory	7,434,056		5,547,704
Prepaid expenses	582,027		449,522
Total current assets	23,984,442		15,580,714

Fixed assets, at cost	64,051,165		63,836,354
Less accumulated depreciation	(33,177,074)		(32,044,584)
Fixed assets, net	30,874,091		31,791,770
Finance lease right-of-use assets	740,839		812,974
Operating lease right-of use assets	27,650,255		28,260,318
Intangible assets, net	6,661,820		7,107,083
Other assets	563,293		563,293
Assets held for sale	$	90,474,740	$	84,116,152

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	11,797,738	$	7,764,209
Accrued expenses	2,011,877		1,323,850

Finance lease liability-current	236,890		295,935
Operating lease liability-current	27,650,255		28,260,318


Liabilities held for sale, current	$	41,696,760	$	37,644,312