DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 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 pursuant to the UMO Sale Agreement discussed below.

On January 25, 2022, the Company entered into a mutual agreement with Safety-Kleen to terminate the UMO 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. Subsequent to the April 1, 2022 acquisition of the Mobile Refinery, our UMO Business operations no longer consist of ‘all or substantially all’ of our assets and as such, we have determined that the sale of such operations does not reach a level that would require shareholder approval if sold under Nevada law. As such, the requirement to obtain shareholder approval for any subsequent sale of the UMO Business is no longer necessary.

The Company is still exploring opportunities to sell the UMO Business and believes it will sell such assets within a year. As of the day of this filing, the Company is in ongoing discussions with a third party regarding a potential sale of the Heartland Business and has accordingly presented only this division as discontinued operations while reclassifying the other UMO Business operations out of assets held for sale, and all liabilities of the UMO Business out of liabilities held for sale, other than in connection with the Heartland Business. The following summarized financial information has been reclassified as continued operations for the six months ended June 30, 2022 and 2021 (in thousands):


	June 30, 2022		December 31, 2021
Assets held for sale to assets held and used	$	81,616	$	74,046
Liabilities held for sale to liabilities held and paid	$	(35,507)	$	(37,645)
	Six Months Ended June 30,
	2022		2021
Net income from discontinued operations to continued operation	$	16,736	$	1,284

The following summarized financial information has been segregated from continuing operations and reported as Discontinued Operations for the three months and nine months ended September 30, 2022, and 2021 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues	$	22,153	$	14,507	$	63,534	$	41,039
Cost of revenues (exclusive of depreciation shown separately below)	14,306		8,638		36,077		23,124
Depreciation and amortization attributable to costs of revenues	391		393		1,170		1,160
Gross profit	7,456		5,476		26,287		16,755
Operating expenses:
Selling, general and administrative expenses (exclusive of depreciation shown separately below)	2,418		1,418		6,213		4,606
Depreciation and amortization expense attributable to operating expenses	63		63		188		188
Total operating expenses	2,481		1,481		6,401		4,794
Income from operations	4,975		3,995		19,886		11,961
Other income (expense)


Interest expense	—		(14)		(4)		(46)
Total other expense	—		(14)		(4)		(46)
Income before income tax	4,975		3,981		19,882		11,915
Income tax benefit (expense)	—		—		—		—
Income from discontinued operations, net of tax	$	4,975	$	3,981	$	19,882	$	11,915

The assets and liabilities held for sale on the Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 are as follows (in thousands):


	September 30, 2022		December 31, 2021
ASSETS

Inventory	$	2,190	$	1,253
Prepaid expenses	317		163
Total current assets	2,507		1,416

Fixed assets, at cost	17,658		15,451
Less accumulated depreciation	(9,140)		(8,047)
Fixed assets, net	8,518		7,404
Finance lease right-of-use assets	—		436

Intangible assets, net	626		814

Assets held for sale	$	11,651	$	10,070