NOTE 3 – 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.  The Company received proceeds of $8,243,000 and recorded a gain on the sale of $2,057,000 in the first nine months of 2020.



Concurrent with the closing of the transaction, the Company and Oldcastle entered into a Transition Services Agreement (“TSA”) under which Suttle agreed to continue to manufacture products for Oldcastle for up to six months, to ensure seamless supply and quality assurance to the existing customer base. As of September 30, 2020, the services under the TSA were complete and the plant closed and was readied for sale. Concurrently with the closing of the transaction and the TSA, the Company and Oldcastle also entered into a lease agreement under which Oldcastle agreed to lease two buildings in Hector, Minnesota, where Suttle had conducted operations. Base rents under the lease agreement range from $6,970 to $7,180 per month. On October 29, 2020, the Company conducted an on-line auction for the remaining Suttle machinery and equipment assets in Hector and the preliminary net sales price totaled $700,000. The associated assets and liabilities related to this sale were classified as held for sale at December 31, 2019.  The presentation of discontinued operations has been retrospectively applied to all prior periods presented.



The assets and liabilities of the discontinued operations classified as held for sale are as follows:





The financial results of the discontinued operations are as follows:





During the nine months ended September 30, 2020, the Company recorded $958,000 in restructuring expense. This consisted of severance and related benefits costs due to the sale of the remainder of Suttle’s business lines and the closure of the plant now that the TSA is completed. We expect total restructuring costs over 2020 and 2021 to be $1,100,000, including any remaining shut down costs. The Company paid $396,000 in restructuring charges during the first nine months of 2020 and had $562,000 in restructuring accruals recorded in accrued compensation and benefits at September 30, 2020 that are expected to be paid during 2020 and 2021.