4.	Discontinued Operations

On May 15, 2017, we completed the sale and transfer of certain assets and certain liabilities primarily related to our Real-Time business segment pursuant to an Asset Purchase Agreement (the “RT APA”) dated as of May 15, 2017 with Real Time, Inc. (the “Purchaser”), an investment company owned by Battery Ventures, a private-equity firm based in Boston, Massachusetts, for $35,000 less agreed upon adjustments for working capital. Pursuant to the terms of the RT APA, we sold and transferred certain respective equity interests in one of our subsidiaries, which constituted the European operations of the Real-Time business, upon receipt of French regulatory approval on May 30, 2017. The RT APA includes customary terms and conditions, including provisions that require us to indemnify the Purchaser for certain losses that it incurs as a result of a breach by us of our representations and warranties in the RT APA and certain other matters.

Gross proceeds from the sale were paid to us as follows: (1) a $30,200 cash payment on May 15, 2017 (subject to an adjustment for estimated working capital as defined in the RT APA), (2) a $2,800 cash payment made concurrently with the transfer of the European operations of the Real Time business to the Purchaser received on May 30, 2017 and (3) $2,000 placed in escrow as security for certain purchase price adjustments and for our indemnification obligations to the Purchaser under the RT APA which amount will be released to us on or before May 15, 2018 (less any portion of the escrow used to make indemnification or purchase price adjustment payments to the Purchaser).

The RT APA contains customary representations and warranties of each of the parties. The RT APA contains indemnification rights in our favor following closing for (i) breaches of any of the representations or warranties by the Purchaser including, but not limited to, breaches related to organization, authorization, and governmental authorization, (ii) breaches of the covenants or agreements of the Purchaser in the RT APA, and (iii) liabilities which the Purchaser agrees to assume in the RT APA.

In conjunction with the RT APA, we and the Purchaser entered into Transition Services Agreements (the “TSAs”) for the U.S./Europe and Japan. Under the TSAs, we have agreed to provide and receive various services to and from the Purchaser on an arms-length fee-for-service basis for a term of six months as of the date of the TSAs, subject to a renewal term of up to eighteen months. Net amounts charged under the TSAs for the year ended June 30, 2017 are $6 and are recorded within operating expenses. Additionally, we and the Purchaser entered into a License and Support Agreement (the “LSA”). Under the LSA, the Purchaser has agreed to provide a royalty-free, non-exclusive license to certain software products that are purchased assets under the RT APA to us for a term of three years as of the date of the LSA.

Results associated with the Real-Time business are classified as income from discontinued operations, net of income taxes, in our consolidated statements of operations. Operating expenses recorded in discontinued operations include costs incurred directly in support of the Real-Time business. During the year ended June 30, 2017, these costs included $71 in compensation payments to several employees in lieu of a portion of unvested restricted stock holdings previously awarded and related accrued dividends. Additionally, we accelerated the vesting of 9,710 shares of previously unvested restricted stock to one officer resulting in an incremental stock compensation expense of $4 during the year ended June 30, 2017 (see Note 10 – Share-Based Compensation).

Prior year results have been adjusted to conform with the current year presentation. For the years ended June 30, 2017 and 2016, income from discontinued operations is comprised of the following:

	Year Ended June 30,
	2017		2016
Revenue	$	27,032	$	29,142
Cost of sales		10,568		11,689
Gross margin		16,464		17,453

Operating expenses:
Sales and marketing		5,300		5,798
Research and development		3,549		3,739
General and administrative		722		819
Total operating expenses		9,571		10,356
Operating income		6,893		7,097

Gain on sale of Real-Time business, net		34,574		-
Other income, net		92		422
Income from discontinued operations before income taxes		41,559		7,519

Provision for income taxes		2,067		5,895

Income from discontinued operations	$	39,492	$	1,624

A reconciliation of the gain before income taxes recorded on the sale of the Real-Time business for the year ended June 30, 2017 is as follows:

	Year Ended
	June 30, 2017
Purchase price	$	35,000
Purchase price adjustments for working capital		(839)
Net book value of assets sold		950
Currency translation adjustment reclassified from accumulated other comprehensive income (loss)		2,159
Transaction costs		(2,696)
Gain on sale of Real-Time business	$	34,574

Transaction costs directly associated with the sale of the Real-Time business include legal, accounting, investment banking and other fees paid to external parties.

Additionally in connection to the sale of our Real-Time business (1) we terminated the employment of two executives of the Company (including our Chief Financial Officer (“CFO”) at the time of the sale) and recorded severance costs of $602, (2) we accelerated the vesting of 69,214 shares of restricted stock for these two executives, representing a portion of each of their unvested restricted stock holdings previously awarded, resulting in incremental stock compensation expense of $12, (3) entered into a new employment arrangement with a sales executive (which superseded a previously existing arrangement that included a severance arrangement) for which he earned a signing bonus of $500 (of which $369 was expensed in the year ended June 30, 2017); and (4) paid transaction bonuses of $45 to internal staff. All of the above charges are included in the operating expenses of continuing operations in our consolidated statement of operations for the year ended June 30, 2017.

At June 30, 2016, the carrying amounts of assets and liabilities of discontinued operations in our consolidated balance sheet were as follows:

ASSETS
Current assets:
Cash and cash equivalents	$	1,470
Accounts receivable, net		6,242
Inventories		1,153
Prepaid expenses and other current assets		350
Total current assets		9,215

Property and equipment, net		483
Deferred income taxes, net		778
Other long-term assets, net		655
Total noncurrent assets		1,916
Total assets of discontinued operations	$	11,131

LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	$	2,876
Deferred revenue		4,109
Total current liabilities		6,985

Long-term liabilities:
Deferred revenue		970
Other long-term liabilities		977
Total noncurrent liabilities		1,947
Total liabilities of discontinued operations	$	8,932

Proceeds from the sale of the Real-Time business have been presented in the consolidated statement of cash flows under investing activities for the year ended June 30, 2017. In accordance with ASC Topic 205-20, additional disclosures relating to cash flow is required for discontinued operations. Cash flow information for relating to the Real-Time business for the years ended June 30, 2017 and 2016 is as follows:

	Year Ended June 30,
	2017		2016
Operating cash flow data:
Depreciation and amortization	$	305	$	328
Share-based compensation		74		81
Provision for (recovery of) excess and obsolete inventories		(13)		48
Provision for bad debts		-		31
Foreign currency exchange gains		(27)		(308)

Investing cash flow data:
Capital expenditures		(136)		(451)

	June 30, 2016
Cash and cash equivalents per balance sheet	$	18,798
Cash and cash equivalents classified within current assets of discontinued operations		1,470
Ending cash and cash equivalents balance per statement of cash flows	$	20,268