Note 2 - Discontinued Operations

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

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

2.

     

Discontinued Operations

On 

March 2, 2018, 

we sold substantially all of our assets (the “Asset Sale”) to Churchill Downs LLC (“Buyer”), pursuant to the terms of the Asset Purchase Agreement, dated as of

November 20, 2017, 

as amended by the First Amendment thereto dated 

January 22, 2018 (

the “Asset Purchase Agreement”).  Operations of the furniture business from

January 1, 2018

through

March 2, 2018

are reflected as discontinued operation pursuant to the provisions of Accounting Standards Codification

2015

-

20,

Presentation of Financial Statements – Discontinued Operations

for all periods presented.

Loss from discontinued operations, net of taxes, comprised the following for the 

twelve

months ended

December 31, 2018

and

2017

(in thousands):

	Twelve Months
	Ended
	Dec. 31,			Dec. 31,
	2018			2017
Net sales	$	6,787		$	45,178
Cost of sales		(6,485	)		(40,342	)
Selling, general and administrative expenses		(2,448	)		(11,972	)
Other income, net		-			32
Loss on sale of assets		(865	)		-
Loss from discontinued operations before income taxes		(3,011	)		(7,104	)
Income tax benefit		-			35
Loss from discontinued operations, net of taxes	$	(3,011	)	$	(7,069	)

Included in selling, general and administrative expenses incurred for the

twelve

months ended

December 31, 2018

were certain transaction costs including investment banking fees, legal fees, and other transaction costs directly attributable to the Asset Sale.

Net assets for discontinued operations are as follows (in thousands):

	December 31,		December 31,
	2018		2017
Cash	$	-	$	975
Accounts receivable, net		-		3,146
Inventory		-		23,231
Prepaid expenses and other current assets		-		541
Property, plant and equipment		-		1,449
Other assets		-		2,128
Total assets		-		31,470
Accounts payable and other liabilities		-		9,252
Accrued salaries, wages, and benefits		-		1,716
Deferred revenue		-		500
Other accrued expenses		-		1,179
Deferred compensation		-		4,101
Supplemental retirement plan		-		1,701
Other long-term liabilities		-		976
Total liabilities		-		19,425
Net assets	$	-	$	12,045

As a result of the Asset Sale, the Company had

no

revenue-generating operations.  As of

March 19, 2019,

our sources of income include dividends on HC Common Stock and HC Series B Stock, interest paid on the loan we made to HC Realty’s operating partnership, and interest paid on cash and subordinated secured promissory notes. The Company believes that the revenue generating from these sources in addition to the cash on hand is sufficient to fund operating expenses for at least

12

months from the date of these consolidated financial statements.  As previously disclosed, the Company

may

consider a rights offering of the Company’s common stock to existing stockholders to raise additional cash for acquisitions in addition to the equity interest we acquired in HC Realty which could provide the Company greater resources and flexibility in acquiring additional non-furniture assets, which

may

include purchasing additional HC Series B Stock.