Discontinued Operation

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATION

NOTE 17 — DISCONTINUED OPERATION

On December 31, 2017, the Company, Enertec Systems 2001 Ltd., or Enertec, previously our wholly-owned subsidiary, and Enertec Management Ltd., entered into a Share Purchase Agreement, or the Share Purchase Agreement, with Coolisys Technologies Inc., or Coolisys, a subsidiary of DPW Holdings, Inc., or DPW, pursuant to which the Company agreed to sell the entire share capital of Enertec to Coolisys. As consideration for the sale of Enertec's entire share capital, Coolisys agreed to pay, at the closing of the transaction, a purchase price of $5,250 as well as assume up to $4,000 of Enertec debt. Enertec met the definition of a component as defined by Accounting Standards Codification, or ASC, Topic 205. The Company believes the sale represented a strategic shift in its business. Accordingly, its assets and liabilities were classified as held for sale and the results of operations in the statement of operations and prior periods' results have been reclassified as a discontinued operation. On May 22, 2018, the Company closed on the sale, or the Closing, of all of the outstanding equity of Enertec pursuant to the Share Purchase Agreement.

At the Closing, the Company received aggregate gross proceeds of approximately $4,700, of which 10% will be held in escrow for up to 14 months after the Closing to satisfy certain potential indemnification claims (see below). Therefore, the Company has recorded such escrowed amount on its balance sheet as restricted cash and a liability. The final consideration amount was adjusted, pursuant to the terms of the Share Purchase Agreement, as a result of adjustments relating to certain Enertec debts at the Closing. In addition, Coolisys also assumed approximately $4,000 of Enertec's debt. The Company's capital gain from the sale of Enertec, based on the Company's balance sheet at the closing date was approximately $6,800.

In conjunction with, and as a condition to, the closing of the Share Purchase Agreement, the Company, Enertec, Coolisys, DPW and Mr. David Lucatz, the Company's Chief Executive Officer, agreed to execute a consulting agreement, or the Consulting Agreement, whereby the Company, via Mr. Lucatz, will provide Enertec with certain consulting and transitional services over a 3 year period as necessary and requested by the Coolisys (but in no event to exceed 20% of Mr. Lucatz's time). Coolisys (via Enertec) will pay the Company an annual consulting fee of $150,000 as well as issue the Company 150,000 restricted shares of DPW Class A common stock, or the DPW Equity, for such services, to be vested and released from restriction in three equal installments, with the initial installment vesting the day after the closing and the remaining installments vesting on each of the first 2 anniversaries of the closing. In the event of a change of control in the Company, or if Mr. Lucatz shall no longer be employed by the Company, the rights and obligations under the Consulting Agreement shall be assigned to Mr. Lucatz along with the DPW Equity.

As of the date of this Annual Report, the Escrow Amount remains in escrow as a result of an indemnification claim by Coolisys alleging for certain misrepresentations in the Share Purchase Agreement resulting in losses to Coolisys estimated by Coolisys at least US$4,000,000.

There is no ongoing litigation, the Company's position is that here is no ground for this claim and the company currently preparing a response to Coolisys latest notice.

The following is the composition from discontinued operation through May 22, 2018:

	For the Period between
	January 1, 2018 to May 22, 2018
Revenues	$	1,512
Cost of revenues		2,655
Gross (loss)		(1,143	)
Operating expenses:
Research and development		120
Selling and marketing		204
General and administrative		376
Total operating expenses		700
Loss from operations		(1,843	)
Capital gain		6,844
Finance expense, net		(102	)
Profit before provision for income taxes		4,899
Taxes on income		5
Net profit	$	4,894

	For the Period between
	January 1, 2018 to May 22, 2018
Net cash provided by (used in) operating activities	$	131
Net cash used in investing activities		(39	)
Net cash provided by (used in) financing activities		(63	)
NET CASH INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		29
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD		4,503
TRANSLATION ADJUSTMENT OF CASH AND CASH EQUIVALENTS		(147	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD	$	4,385