Note 3 - Discontinued Operations

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE 3. DISCONTINUED OPERATIONS

We continuously assess the composition of our portfolio to ensure it is aligned with our strategic objectives and positioned to maximize return to our shareholders. On June 23, 2023, we completed the sale of our assets related to the SRB Business for $1.8 million in cash and the assumption of $1.7 million of real estate operating leases and other liabilities. The sale agreement contained customary representations, warranties, and covenants.

The proceeds, net of expenses, of $1.4 million, and the net carrying value of the SRB Business assets and liabilities assumed as of the date of sale at $10.0 million resulted in our recognition of a loss on sale of $8.6 million. The loss on sale includes no provision for income taxes as it is anticipated the tax benefit for the expected tax loss on disposition will not be realized based on our current U.S. valuation allowance position.

In consideration of the Lender’s (as defined below) consent to the sale and release of securities interests and liens on SRB Business assets, we paid a portion of the amount outstanding on our mortgage promissory note, not exclusively related to the SRB Business, from proceeds of the sale. In addition, we paid liabilities for accumulated paid time off to the employees of the SRB Business. The following table summarizes the distribution of proceeds (in thousands).

Purchase price	$	1,800
Expenses as of June 30, 2023		(375	)
Net proceeds	$	1,425
Repayment of mortgage promissory note	$	450
Payment of paid time off liabilities		215
	$	665

The following table summarizes the carrying amounts of the SRB Business as of June 23, 2023, the date of sale (in thousands).

Inventories	$	2,252
Other current assets		185
Property and equipment		7,710
Operating lease right of use assets		1,566
Total assets		11,713
Accrued expenses		9
Operating lease liabilities		1,668
Finance lease liabilities		12
Long-term debt		14
Total liabilities		1,703
Net assets sold	$	10,010

The buyer of the SRB business did not acquire accounts receivable generated by the operation of the SRB Business assets and generally did not assume any accounts payable or accrued expenses related to the operation of the SRB Business through the June 23, 2023, date of sale. 

We determined that the disposal met the criteria for presentation as discontinued operations in the second quarter of 2023. Accordingly, SRB Business results are presented as discontinued operations in our consolidated statements of operations and are excluded from continuing operations for all periods presented. In addition, the SRB Business assets and liabilities are classified as held for sale in our consolidated balance sheets for December 31, 2022.  The operations of the SRB Business are included in our results through the June 23, 2023, date of sale. The following two tables represent activity up to the date of the sale.

The following table summarizes the major line items included in loss from discontinued operations related to the SRB Business and divestiture (in thousands).

	December 31
	2023			2022
Revenues	$	6,857		$	14,970
Cost of goods sold		(6,796	)		(14,966	)
Selling, general and administrative expenses		(457	)		(1,293	)
Interest expense		(28	)		(56	)
Loss from operations of discontinued operations		(424	)		(1,345	)
Gain (loss) on sale		(8,585	)		147
Loss from discontinued operations	$	(9,009	)	$	(1,198	)
Depreciation included in cost of goods sold	$	646		$	1,238
Capital expenditures	$	111		$	964

The following table summarizes the major line items included in cash flows from discontinued operations related to the SRB Business and divestiture (in thousands).

	December 31
	2023			2022
Net cash used in operating activities	$	(211	)	$	(141	)
Net cash provided by (used in) investing activities		1,679			(229	)
Net cash used in financing activities		(460	)		(24	)
Net cash provided by (used in) discontinued operations		1,008			(394	)

In the year ended December 31, 2023, net cash provided by investing activities in the table above is presented in our consolidated statements of cash flows in net cash provided by investing activities of discontinued operations and includes the $1.4 million net proceeds from the sale of the SRB Business. In the year ended December 31, 2023, net cash used in financing activities in the table above is presented in our consolidated statements of cash flows used in financing activities of discontinued operations and includes the $0.5 million repayment of our mortgage promissory note from the initial proceeds from the sale.

The following table summarizes the carrying amounts of major classes of SRB Business assets and liabilities classified as held for sale as of December 31, 2022 (in thousands).

Inventories	$	1,913
Other current assets		311
Property and equipment		8,187
Operating lease right of use assets		1,701
Total assets held for sale	$	12,112
Accrued expenses, including paid time off liabilities of employees of the SRB business	$	236
Operating lease liabilities		1,841
Finance lease liabilities		17
Long-term debt, including $450 of mortgage promissory note, not exclusively related to the SRB business		468
Total liabilities held for sale	$	2,562