DISCONTINUED OPERATIONS
 9 Months Ended
Sep. 30, 2013
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
 
NOTE C – DISCONTINUED OPERATIONS
 
 
 
As part of a strategic planning process conducted during the quarterly period ended June 30, 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.
 
 
 
Accounting guidance requires that the discontinued operations be segregated and reclassified from ongoing, continuing operations for all financial statement periods presented. 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 operations and comprehensive income (loss) as results of discontinued operations, net of income taxes, after income from continuing operations, net of income tax benefit and before net income (loss). 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 three and nine months ended September 30, 2013 and 2012 (in thousands):
   
Three Months Ended
    
Nine Months Ended
  
   
September 30,
    
September 30,
  
   
2013
    
2012
    
2013
    
2012
  
Net sales:
                        
Subscription and support revenue
   $ 189     $ 172     $ 693     $ 632  
Embedded devices and hardware
     188       313       267       688  
Total net sales
     377       485       960       1,320  
Cost of sales, exclusive of depreciation and amortization shown below:
                                
Subscription and support revenue
     77       101       291       312  
Embedded devices and hardware
     90       129       276       297  
Gross profit
     210       255       393       711  
Operating expenses:
                                
Sales and marketing
     29       102       708       355  
General and administrative
     32       37       181       107  
Engineering and development
     22       21       73       66  
Depreciation and amortization
     2       18       9       53  
Operating income (loss)
     125       77       (578 )     130  
Goodwill impairment
     -       -       949       -  
Income tax expense (benefit)
     125       236       (90 )     236  
Loss from discontinued operations, net of income taxes
   $ -     $ (159 )   $ (1,437 )   $ (106 )
 
 
 
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.
 
The following table summarizes the assets and liabilities reported as discontinued operations for the periods presented (in thousands):
 
   
September 30,
    
December 31,
  
   
2013
    
2012
  
ASSETS
            
CURRENT ASSETS
            
Accounts receivable, less allowance for doubtful accounts of $605 and $16
   $ 640     $ 915  
Inventory, net of reserve for obsolescence of $30 and $30
     123       140  
Prepaid expense and other current assets
     26       47  
TOTAL CURRENT ASSETS
     789       1,102  
Property and equipment, net
     10       1  
Software, net
     -       7  
Goodwill
     -       949  
Other assets
     331       225  
TOTAL ASSETS OF DISCONTINUED OPERATIONS
   $ 1,130     $ 2,284  
                 
LIABILITIES
                
CURRENT LIABIITIES
                
Accounts payable
   $ 14     $ 6  
Accrued expense and other current liabilities
     205       181  
Deferred revenue
     135       1  
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS
   $ 354     $ 188