Discontinued Operations

12 Months Ended

Mar. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

On May 5, 2020, the Company completed the sale of substantially all of our assets used in connection with our Agriculture and Weather Analytics business to DTN, an operating company of TBG AG, a Swiss-based holding company, pursuant to the AWA Purchase Agreement signed on May 2, 2020, in exchange for a total purchase consideration of $12.0 million in cash, subject to working capital adjustments. Upon closing, the Company received $10.5 million in cash and $1.5 million of payment was deferred. DTN paid the Company $1.45 million at the 12-month anniversary of the closing date, and $0.05 million at the 18-month anniversary of the closing date. The parties also entered into certain ancillary agreements at the closing of the transaction that will provide Iteris with ongoing access to weather and pavement data that it integrates into its transportation software products, and a joint development agreement under which the parties agreed to pursue future joint opportunities in the global transportation market.

The sale of the Agriculture and Weather Analytics business was a result of the Company’s shift in strategy to focus on its smart mobility infrastructure management solutions and to capitalize on the potential for a future partnership upon the sale of this business component to DTN. We have determined that the Agriculture and Weather Analytics business, which constituted one of our operating segments prior to first quarter of Fiscal 2021, qualifies as a discontinued operation in accordance with the criteria set forth in ASC 205-20, Presentation of Financial Statements – Discontinued Operations.

On May 5, 2020, the Company also entered into a transition services agreement (“TSA”) with DTN, pursuant to which the Company agreed to support the information technology and accounting functions of the Agriculture and Weather Analytics business for a period up to 12 months and DTN agreed to provide the contract administration/account management services for certain contracts of the Company and other transition services. Either party may make any reasonable request to extend the period of time the other party shall provide a transition service beyond the initial service period or access to additional services that are necessary for the transition of the operations and business. The income and costs associated with the TSA for the year ended March 31, 2022 were de minimis, as compared to approximately $0.2 million in income and approximately $0.1 million in costs for the year ended March 31, 2021, which were included in Other income (expense) on the accompanying consolidated statement of operations.

The related assets and liabilities of the Agriculture and Weather Analytics business were reclassified to assets and liabilities of discontinued operations as of March 31, 2022 and March 31, 2021 on the accompanying consolidated balance sheets. The following table is a summary of major classes of assets and liabilities of discontinued operations:


	March 31, 2022		March 31, 2021
	(In thousands)
Assets
Trade accounts receivable, net of allowance for doubtful accounts	$	—	$	—
Unbilled accounts receivable	—		—
Prepaid expenses and other current assets	—		—
Total current assets of discontinued operations	—		—
Property and equipment, net	$	—	—
Right-of-use assets	6		78
Other classes of assets that are not major	—		—
Total noncurrent assets of discontinued operations	6		78
Total assets of discontinued operations	$	6	$	78

Liabilities
Trade accounts payable	$	—	$	—
Accrued liabilities	—		—
Accrued payroll and related expenses	63		—
Deferred revenue	—		—
Current Lease Liabilities	100		94
Total current liabilities of discontinued operations	163		94
Noncurrent Lease liabilities	172		261
Total liabilities of discontinued operations	$	335	$	355

The results of operations for the Agriculture and Weather Analytics business were included in net income (loss) from discontinued operations on the accompanying consolidated statements of operations. The following table provides information regarding the results of discontinued operations:


	Year Ended March 31,
	2022		2021		2020
Service revenue	$	—	$	695	$	6,714
Cost of service revenues	—		350		2,566
Gross profit	—		345		4,148

Operating expenses:
Selling, general and administration	180		780		3,718
Research and development	—		407		4,282
Restructuring charges	—		837		—
Total operating expenses	180		2,024		8,000
Operating loss from discontinued operations	(180)		(1,679)		(3,852)
Other income, net	—		72		—
Loss from discontinued operation before income tax	(180)		(1,607)		(3,852)
Income tax expense			(47)		—
Net loss from discontinued operations	(180)		(1,654)		(3,852)
Gain on disposal of discontinued operations before income tax	—		11,315		—
Income tax expense on gain on disposal	—		(18)		—
Gain on disposal of discontinued operations after income tax	—		11,297		—
Net income (loss) from discontinued operations	$	(180)	$	9,643	$	(3,852)

The following table provides information on the gain recorded on the sale of the Agriculture and Weather Analytics business for the year ended March 31, 2021. These amounts reflect the closing balance sheet of the Agriculture and Weather Analytics business upon the closing of the sale on May 5, 2020 (in thousands).


Initial proceeds from sale, net of transaction costs	$	9,440
Closing working capital adjustment	250
Deferred payments of purchase price	1,500
Total consideration, net of transaction costs	11,190

Trade accounts receivable, net of allowance for doubtful accounts	1,060
Unbilled accounts receivable	488
Other classes of assets that are not major	194
Total Agriculture and Weather Analytics business assets	1,742

Trade accounts payable	349
Deferred revenue	1,518
Total Agriculture and Weather Analytics business liabilities	1,867
Gain on sale of Agriculture and Weather Analytics business	$	11,315

The initial proceeds were net of transaction costs of approximately $1.1 million.