NOTE 3 – Divestitures

General Flange & Forge LLC (“GF&F”)

During the quarter ended June 30, 2017, the Company decided to divest its flanges and fittings operations, which was the sole entity in the Flanges and Fittings segment. The assets and liabilities of the segment are classified as assets and liabilities held for sale in the consolidated balance sheets and the operations are classified as discontinued operations in the consolidated statements of operations.

The operating results of GF&F classified as discontinued operations are summarized below (in thousands):


	June 30, 2018		June 30, 2017
Sales	$	726	$	4,782
Cost of sales		(615)		(3,619)
Gross profit		111		1,163
Selling, general and administrative		(108)		(671)
Income from discontinued operations, before income taxes		3		492
Income (loss) on sale of discontinued operations		(503)		—
Total income (loss) from discontinued operations, before income taxes		(500)		492
Income tax benefit on discontinued operations		224		(168)
Income (loss) from discontinued operations, net of tax	$	(276)	$	324

The following table presents the carrying amount as of June 30, 2017, of GF&F’s major classes of assets and liabilities held for sale in the consolidated balance sheets (in thousands):


	June 30, 2017
Current assets:
Accounts receivable, net	$	687
Inventories, net		717
Prepaid expenses and other current assets		48
Total current assets		1,452
Property and equipment, net		181
Goodwill		1,712
Total assets of discontinued operations	$	3,345

Current liabilities:
Accounts payable and accrued expenses	$	283
Total current liabilities		283
Other long-term liabilities		260
Total liabilities of discontinued operations	$	543

On September 15, 2017, the Company sold substantially all of the assets of GF&F to GFFC Holdings, LLC (“GFFC”) for $3.0 million. GFFC is owned in part by Quadrant Management Inc., which is an affiliate of the Company. The sale of GF&F is therefore a related party transaction. The GF&F sale was made pursuant to an industry-wide auction undertaken on behalf of the Company by a registered investment banking organization that managed the sale process with prospective bidders. GFFC entered into the bidding for the GF&F assets only after the first rounds of the auction indicated uncertainty both in respect to the timing for closing any prospective sale and achieving the Company’s valuation objectives. Mr. Alan Quasha, CEO of Quadrant and Chairman of the Company’s Board of Directors, recused himself from any deliberations or voting by the Board of Directors in respect of the sale of the GF&F assets to GFFC. The Board of Directors appointed a special committee consisting solely of independent directors to oversee the sale process. The special committee engaged its own independent legal counsel to advise the special committee in respect of the drafting of the asset sale agreement and ancillary transaction documents in accordance with customary terms and conditions for transactions of this type. In this manner, the special committee was able to conclude that the sale price and the terms and conditions for the transaction were superior to any other offers, as well as fair and reasonable to the Company and its shareholders.

ARC Wireless, LLC

On March 31, 2017, the Company divested its wireless business and sold the majority of its assets. The proceeds and related gain were immaterial.