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Note 2 - Discontinued Operations
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 2 Discontinued Operations

 

On   October 22, 2023, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”), by and among (i) the Company, Xoft Solutions, LLC, a Delaware limited liability company, and Xoft, Inc., a Delaware corporation, each a wholly owned subsidiary of the Company (collectively with the Company, the “Sellers” and each, a “Seller”), and (ii) Elekta Inc., a Georgia corporation, and Nucletron Operations B.V., a company organized under the laws of the Netherlands (together, “Buyers” and each a “Buyer”), pursuant to which the Company agreed to transfer to the Buyers substantially all of the assets and liabilities primarily related to the Company’s Xoft business lines (the “Business”), including with respect to employees, contracts, intellectual property and inventory, for total cash consideration of approximately $5.76 million dollars from the Buyers to the Company, and the assumption by Buyers of all liabilities relating to the Business (the “Transaction”). This payment is guaranteed by Elekta AB, a company organized under the laws of Sweden, the ultimate parent company of the Buyers.  In accordance with the Purchase Agreement, the Company received a cash payment of approximately $5 million in  November 2023 with the remaining $0.7 million held in escrow for a period of 15 months following  October 22, 2023. The escrow balance is reflected in the caption Prepaid expenses and other current assets as of June 30, 2024 and in Other assets in the long-term section of the Company's Consolidated Balance Sheet as of  December 31, 2023.

 

The closing of the Transaction occurred simultaneously with the execution of the Purchase Agreement.

 

In connection with the Transaction, the parties entered into a transition services agreement pursuant to which the Company will provide certain migration and transition services to facilitate an orderly transition of the operation of the Business to the Buyers during the five-month period following consummation of the Transaction, extendable at the option of the parties.

 

The Purchase Agreement contains certain representations, warranties, covenants and indemnification provisions, including for breaches of covenants and for losses resulting from the Company’s liabilities specifically excluded from the Transaction.

 

The Business, which had previously been presented as a separate reporting segment, meets the criteria for being reported as a discontinued operation and has been segregated from continuing operations. The following table summarizes the results from discontinued operations:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2023

  

2023

 

Revenue

 $1,694  $3,138 

Total cost of sales

  742   1,599 

Gross profit

 $952  $1,539 

Total operating expenses

  362   1,638 

Provision for income taxes

      

Income (loss) from discontinued operations, net of tax

 $590  $(99)

 

Total operating expenses presented in the table above exclude amounts that had previously been allocated to the Business for certain shared marketing expenses.  The previously allocated amounts were de minimis and $0.3 million for the three and six months ended June 30, 2023, respectively.  The previously allocated expenses are included in the Marketing and sales line for all periods presented in the Condensed Consolidated Statements of Operations.

 

The Business is included in the Company's Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023.  Estimated cash provided by the Business during the six months ended June 30, 2023 was approximately $0.5 million, primarily from operating activities and excluding the impact of previously allocated marketing expenses.