DISCONTINUED OPERATIONS
 12 Months Ended
Dec. 31, 2013
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
NOTE B – DISCONTINUED OPERATIONS
 
During the year ended December 31, 2013, the decision was made to exit certain businesses and related products that are not core to future business plans. These non-core businesses include BNI Solutions, Inc. (BNI), Digilog, Inc. and DCX Systems, Inc. These businesses were previously reported in our consolidated financial statements as a separate segment, “Other Services”. The related products and services include video conferencing hardware and installation of telecommunications equipment, all of which are unrelated to our core M2M communication products and services. We anticipate the disposal of the discontinued operations to be completed within one year from the initial classification as discontinued operations.
 
All assets and liabilities of the discontinued operations have been reclassified into two line items, assets and liabilities of discontinued operations, and classified as current in the accompanying consolidated balance sheets. All revenue and expense of the discontinued operations have been reclassified and presented in the accompanying consolidated statements of income and comprehensive income as results of discontinued operations, net of income taxes, after income from continuing operations, net of income tax benefit and before net income. Similarly, all cash flows of the discontinued operations have been reclassified and presented in the accompanying consolidated statements of cash flows as cash flows from discontinued operations.
 
The following table presents the financial results of the discontinued operations for the years ended December 31, 2013, 2012, and 2011 (in thousands):
                         
   
For the Years Ended December 31,
  
   
2013
    
2012
    
2011
  
Net sales:
                  
Subscription and support revenue
   $ 881     $ 976     $ 1,827  
Embedded devices and hardware
     282       732       612  
Total net sales
     1,163       1,708       2,439  
Cost of sales, exclusive of depreciation and amortization shown below:
                        
Subscription and support revenue
     396       403       768  
Embedded devices and hardware
     320       377       373  
Gross profit
     447       928       1,298  
Operating expenses:
                        
Sales and marketing
     741       420       715  
General and administrative
     212       139       120  
Engineering and development
     99       88       84  
Depreciation and amortization
     13       56       79  
Goodwill impairment
     949       -       -  
Operating (loss) income
     (1,567 )     225       300  
Income tax (benefit) expense
     (187 )     93       6  
(Loss) income from discontinued operations, net of income taxes
   $ (1,380 )   $ 132     $ 294  
 
 
Discontinued operations include $0.9 million for the impairment of historical BNI goodwill, $0.6 million additional reserve for uncollectible accounts receivable and less than $0.1 million estimated costs to sell the discontinued operations. The carrying value of BNI goodwill was reevaluated for impairment in conjunction with our decision to exit these non-core businesses. We will not be pursuing new sales of BNI products and services and do not anticipate significant recurring sales to existing customers. These qualitative factors were indicators that it was more likely than not that the fair value of the BNI reporting unit was less than its carrying amount, including goodwill. We estimated the fair value of the reporting unit using a discounted cash flow model, resulting in the estimated fair value being less than carrying value of the reporting unit. To measure the amount of any impairment, we determined the implied fair value of goodwill in the same manner as if we were acquiring the reporting unit in a business combination. Specifically, we allocated the fair value of the reporting unit to all of the assets and liabilities of that unit, including any unrecognized intangible assets, in a hypothetical calculation. Based on this calculation, we determined that the associated goodwill was fully impaired.
 
The following table summarizes the assets and liabilities reported as discontinued operations for the periods presented (in thousands):
                 
   
December 31,
  
   
2013
    
2012
  
ASSETS
            
CURRENT ASSETS
            
Accounts receivable, less allowance for doubtful accounts of $600 and $16
   $ 253     $ 915  
Inventory, net of reserve for obsolescence of $30 and $30
     122       140  
Prepaid expenses and other current assets
     164       70  
TOTAL CURRENT ASSETS
     539       1,125  
Property and equipment, net
     9       1  
Software, net
     -       7  
Goodwill
     -       949  
Other assets
     292       202  
TOTAL ASSETS OF DISCONTINUED OPERATIONS
   $ 840     $ 2,284  
                 
LIABILITIES
                
CURRENT LIABILITIES
                
Accounts payable
   $ 10     $ 6  
Accrued expenses and other current liabilities
     171       181  
Deferred revenue
     26       1  
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS
   $ 207     $ 188