Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

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Discontinued Operations
6 Months Ended
Jun. 30, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

As a condition to closing the transactions contemplated by the Birch Merger Agreement (see note 4), Birch was required to spin-off its U.S.-based consumer customers, wireless customers and its small business customer-base (which include those business customers with $111 per month or less of monthly revenue) and assets associated with the support of those customers (collectively, the “Birch Consumer Segment”). Accordingly, prior to closing the Birch Merger on the Birch Closing Date, Birch distributed the assets and liabilities associated with the Birch Consumer Segment to the pre-merger Birch shareholders. At the time of the distribution, the Birch Consumer Segment met the criteria in ASC 205-20-45 for discontinued operations and, as a result, the assets, liabilities and results of operations associated with the Birch Consumer Segment have been classified as discontinued operations for all periods presented in the accompanying unaudited condensed consolidated balance sheet, statements of operations and statements of cash flows.

 

Summarized results for discontinued operations are as follows (in thousands):

 

      Three Months Ended June 30,     Six Months Ended June 30,  
    2018     2017     2018     2017  
Revenues   $ 7,848     $ 24,988     $ 30,768     $ 51,755  
Cost of revenues, exclusive of depreciation and                                
amortization, shown separately below     5,035       16,791       20,482       34,199  
Gross profit     2,813       8,197       10,286       17,556  
                                 
Selling, general and administrative expenses     3,824       7,763       11,809       15,738  
Depreciation and amortization     500       3,684       2,008       6,873  
Impairment losses on intangible assets     -       -       5,379       -  
Total operating expenses     4,324       11,447       19,196       22,611  
Operating loss on discontinued operations     (1,511 )     (3,250 )     (8,910 )     (5,055 )
                                 
Other (expenses) income:                                
  Interest expense     (607 )     (1,493 )     (2,169 )     (3,078 )
  Gain on extinguishment of debt     17,297       -       17,297       -  
                                 
Net income (loss) on discontinued operations   $ 15,179     $ (4,743 )   $ 6,218     $ (8,133 )

 

The carrying amounts of assets and liabilities associated with discontinued operations are as follows (in thousands):

 

   

December 31,

2017

 
Accounts receivable, net of allowance for doubtful accounts of      
   approximately $1,917, respectively   $ 9,549  
Prepaid expenses     1,259  
Inventory     37  
Property and equipment, net     1,708  
Goodwill     3,550  
Intangible assets     23,935  
Total current assets of discontinued operations   $ 40,038  
         
Accounts payable and accrued expenses   $ 8,469  
Deferred customer revenue     2,375  
Other accrued liabilities     10,320  
Debt     13,700  
Total current liabilities of discontinued operations   $ 34,864