Divestiture of Automatic License Plate Recognition Business

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Divestiture of Automatic License Plate Recognition Business

Note B: Divestiture of Automatic License Plate Recognition Business

On July 9, 2015, the Company entered into a share and asset sales purchase agreement (the share and asset purchase agreement, “SAPA”) with TagMaster AB (the “Buyer”).  Under the terms of the SAPA, the Company and Image Sensing Systems EMEA Limited, a wholly-owned subsidiary of the Company (“ISS EMEA”), sold to the Buyer the entire issued share capital of Image Sensing Systems UK Limited, a wholly-owned subsidiary of ISS EMEA, as well as certain other assets owned by the Company primarily used or primarily held for use in connection with its license plate recognition (LPR) business.  The Buyer also agreed to assume on the closing date certain agreements and liabilities relating to the LPR business and the acquired assets.  Additionally, the Company and the Buyer also entered into a transitional services agreement.

 

Effective July 9, 2015, the LPR business qualified for discontinued operations presentation in the Company's condensed consolidated financial statements.  In accordance with Accounting Standards Codification (“ASC”) 205-20, the results of the discontinued LPR business have been presented as discontinued operations effective with the reporting of financial results for the third quarter of 2015.  As such, financial results for the three and six months ended June 30, 2016 have been reported on this basis.  Previously reported results for the three and six months ended June 30, 2015 have also been restated to reflect this reclassification.

The purchase price for the LPR business was $4.2 million, subject to certain customary closing adjustments based on the difference between estimated net asset value and final net asset value, of which $3.8 million has been paid to the Company.  The remaining $420,000 was placed in an escrow account and is available to satisfy any indemnification obligations the Company may have under the SAPA.  The $420,000 in escrow is classified as “discontinued operations assets” on the Company's Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015. 

The operational results of the LPR business are presented in the “Net loss from discontinued operations, net of tax” line item on the Condensed Consolidated Statements of Operations.  In accordance with ASC 205-20, no general corporate charges were allocated to the discontinued business.  The assets and liabilities of the discontinued business are presented on the Condensed Consolidated Balance Sheets as assets and liabilities from discontinued operations.

Other than consolidated amounts reflecting operating results and balances for both the continuing and discontinued operations, all remaining amounts presented in the accompanying condensed consolidated financial statements and notes reflect the financial results and financial position of the Company's continuing Autoscope® Video (“Autoscope”) and RTMS® (“RTMS”) businesses.

Revenue, operating loss from discontinued operations were as follows (in thousands):

	Three-Month Periods Ended June 30,				Six-Month Periods Ended June 30,
	2016		2015		2016		2015
Net revenue	$	-	$	653	$	-	$	1,333
Operating loss from discontinued operations		-		(1,397)		-		(2,296)
Net loss on discontinued operations, net of tax	$	-	$	(1,397)	$	-	$	(2,296)