Discontinued Operations |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Discontinued Operations [Abstract] | |
| Discontinued Operations | NOTE 4 – DISCONTINUED OPERATIONS On March 11, 2020, the Company sold the remainder of its Suttle business lines, including the SoHo, MediaMAX, and SpeedStar brands and inventory as well as working capital, certain capital equipment, intellectual property, and customer relationships to Oldcastle Infrastructure, Inc. (“Oldcastle”) for $8,000,000, with a working capital adjustment 90 days after close. Oldcastle will operate the majority of the acquired Suttle business through its wholly owned subsidiary, Primex Technologies, Inc. Through the sale to Primex, a separate online equipment auction held in the fourth quarter of 2020, and various other sales, the Company received total proceeds of $8,900,000 and recorded a gain on the sale of $2,247,000 in 2020. The presentation of discontinued operations has been retrospectively applied to all prior periods presented. On August 2, 2021, the Company and Lantronix completed the sale by CSI to Lantronix of all of the issued and outstanding stock of CSI’s wholly owned subsidiary, Transition Networks, Inc., and the entire issued share capital of its wholly owned subsidiary, Transition Networks Europe Limited (collectively with Transition Networks, Inc., the “TN Companies”), pursuant to a securities purchase agreement dated April 28, 2021 (“E&S Sale Transaction”). The Company received net proceeds of $23,630,000, which included a working capital adjustment of $(1,376,000) and recorded a gain on sale of $13,455,000 during the third quarter of 2021. The presentation of discontinued operations with respect to this E&S Sale Transaction has been retrospectively applied to all prior periods presented.Under the securities purchase agreement, Lantronix has also agreed to pay CSI, if earned, earnout payments of up to $7.0 million payable following two successive 180-day intervals after the closing of the E&S Sale Transaction based on revenue targets for the business of the TN Companies as specified in the securities purchase agreement, subject to certain adjustments and allocations as further described in the securities purchase agreement. Concurrently with the closing of the transaction, CSI and Lantronix entered into a transition services agreement under which CSI will perform administrative and IT services, and lease office, warehouse and production space to Lantronix at CSI’s Minnetonka, Minnesota facility for a period of up to twelve months. On December 15, 2021, the Company sold its remaining real and personal property located in Hector, Minnesota, related to its former Suttle operations, with net proceeds of $842,000. The presentation of discontinued operations related these assets has been retrospectively applied to all prior periods presented. On November 18, 2021, the Company entered into a purchase agreement with Buhl Investors LLC, a Minnesota limited liability company, or its affiliated assignee for the sale of the Company’s headquarters building located in Minnetonka, Minnesota for $6,800,000. The agreement was amended on February 15, 2022 to allow for additional time to complete due diligence. The Company recorded the assets as held for sale at December 31, 2021. The assets and liabilities of this discontinued operation that are classified as held for sale are as follows: December 31, 2021 December 31, 2020 Cash and cash equivalents $ — $ 303,000 Trade accounts receivable, net — 5,775,000 Inventories, net — 8,561,000 Other current assets — 439,000 Total current assets $ — $ 15,078,000 Property, plant, and equipment, net $ 5,593,000 $ 6,937,000 Right of use asset — 129,000 Total noncurrent assets $ 5,593,000 $ 7,066,000 Total assets held for sale $ 5,593,000 $ 22,144,000 Accounts payable $ — $ 1,669,000 Accrued compensation and benefits — 767,000 Operating lease liability — 86,000 Other accrued liabilities — 1,206,000 Total current liabilities $ — $ 3,728,000 Operating lease liability $ — $ 30,000 Total noncurrent liabilities $ — $ 30,000 Total liabilities held for sale $ — $ 3,758,000 The financial results of the discontinued operations are as follows: Year Ended December 31 2021 2020Sales $ 20,478,000 $ 39,276,000Cost of sales 11,774,000 22,774,000Selling, general and administrative expenses 6,795,000 12,925,000Transaction costs 2,058,000 —Impairment loss 101,000 —Restructuring expenses 1,343,000 960,000Gain on sale of assets (13,451,000) (2,247,000)Foreign currency translation loss 642,000 —Other expense 61,000 322,000Operating income before income taxes 11,155,000 4,542,000Income tax expense 3,000 6,000Income from discontinued operations $ 11,152,000 $ 4,536,000 During the year ended December 31, 2021, the Company recorded $1,811,000 in restructuring expense, with $1,343,000 in discontinued operations. This consisted of severance and related benefits costs due to the sale of the E&S segment. The Company incurred $960,000 in restructuring costs in 2020 related to the sale of Suttle’s business lines and had $252,000 in restructuring accruals recorded in accrued compensation and benefits at December 31, 2020. The Company paid $1,547,000 in restructuring charges during 2021 and had $516,000 in restructuring accruals recorded in accrued compensation and benefits at December 31, 2021 that are expected to be paid during 2022. |