4. Discontinued Operations   

Due to ongoing losses, in 2015 the Company decided to exit its Media business.  This strategic shift was intended to allow the Company to focus on its core Enterprise digital signage business and to improve the Company’s overall margins and profitability. The Company exited these operations on July 1, 2015 and has not had any involvement with the operations post disposal. Therefore, under applicable accounting standards, the Company has classified its Media operations as discontinued operations for financial reporting purposes in all periods presented except where specifically identified otherwise.  

On March 19, 2015, the Company announced that it had entered into a non-binding letter of intent to sell the Media business to an unaffiliated third party. On July 1, 2015, the Company completed the sale of its Media business to Global Eagle Entertainment (“GEE”). Under the terms of the agreement, the Company sold $2.3 million of customer receivables, fixed assets, and prepaid assets offset by $3.5 million of assumed and transferred liabilities such as accounts payable, accrued revenue share and agency fees, and accrued liabilities of Media in exchange for cash.  In addition, the transaction included certain amounts paid into escrow in full support of future potential obligations and an earn-out.  The transaction resulted in an initial pre-tax gain of $2.3 million. As part of the transaction agreement, GEE assumed all existing partner revenue sharing agreements and their related minimum revenue sharing requirements and certain vendor contracts held by Media. In addition, $0.9 million of certain asset and lease impairment charges, severance expenses, and transaction costs were incurred as part of the transaction and are reflected in the net loss from discontinued operations. Also, some employees of Media were transferred to GEE as part of the transaction agreement. The terms of the escrow required certain levels of performance related to a revenue sharing agreement and its related minimum revenue share requirements.  The Company did not meet the terms of the escrow and will not receive any additional funds.

The following table shows the results of operations of the Company’s discontinued operations for the three and nine months ended September 30, 2016 and 2015:  

The $0.3 million operating expenses incurred during the nine months ended September 30, 2016 were related to a lease impairment adjustment and final additional expenses for the discontinued operations of its Media business.  There are no assets nor liabilities of the Company’s discontinued operations at September 30, 2016 and December 31, 2015.