Assets Held for Sale and Operations Classified as Discontinued Operations

12 Months Ended

Dec. 31, 2022

Assets held for sale and operations classified as discontinued operations [Abstract]

Assets Held for Sale and Operations Classified as Discontinued Operations

4. Assets held for sale and operations classified as discontinued operations

On September 16, 2021, the Company issued a press release announcing that as a result of a decision by the Company’s Board of Directors to explore strategic alternatives previously announced on April 7, 2021, the Board had authorized the Company to focus its strategy on acquisitions and organic growth in its cloud technologies business as well as to explore strategic opportunities for its IT solutions business, including the divestiture of Computex. The Company believed that the change would allow the Company to optimize resource allocation, focus on core competencies, and improve its ability to invest in areas of maximal growth potential.

On January 26, 2022, the Company entered into an asset purchase agreement to sell substantially all of the assets of its Computex business with the buyer agreeing to assume certain liabilities.

Accordingly, certain assets and liabilities of Computex were classified as held for sale as of December 31, 2021 in the accompanying consolidated balance sheets, and the related revenues and expenses became classified as discontinued operations. Also, in connection with the planned sale of Computex, the Company compared the expected sales proceeds less costs to sell with the carrying value of the reporting unit and in connection therewith recorded a noncash goodwill impairment charge of $32,100 during the year ended December 31, 2021. Such impairment is included within discontinued operations. The sale of Computex was consummated on March 15, 2022. Net sale proceeds received was $32,112.

Assets and liabilities classified as held for sale as of December 31, 2021 consisted of the following:

	December 31, 2021
Current assets:
Cash	$	4,136
Prepaid expenses		937
Trade receivables (net allowance of $146)		19,965
Inventory		2,737
Assets held for sale - current		27,775
Noncurrent assets:
Property and equipment, net		4,489
Goodwill		6,579
Other intangible assets, net		20,105
Other noncurrent assets		85
Assets held for sale - noncurrent		31,258
Total assets held for sale	$	59,033

Current liabilities:
Accounts payable and accrued expenses	$	26,023
Deferred revenue		3,214
Liabilities associated with assets held for sale - current		29,237
Long-term liabilities
Other liabilities		102
Liabilities associated with assets held for sale - noncurrent		102
Total liabilities associated with assets held for sale	$	29,339

Revenues and expenses classified as discontinued operations consist of the following:

	Year Ended
	December 31, 2022			December 31, 2021
Revenues:
Hardware	$	10,948		$	55,551
Third party software and maintenance		1,815			7,611
Managed and professional services		7,214			32,796
Other		165			978
Total revenues		20,142			96,936
Cost of revenue		14,176			67,497
Gross profit		5,966			29,439
Goodwill impairment		-			32,100
Selling, general and administrative		9,520			30,847
Loss from operations		(3,554	)		(33,508	)
Other income (expense)
Gain on sale of Computex		4,314			-
Gain on extinguishment of debt		-			4,177
Interest expense		-			(1,152	)
Other expense		-			22
Total other income		4,314			3,047
Income (loss) from discontinued operations before income taxes		760			(30,461	)
Income tax provision on discontinued operations		(36	)		(71	)
Net income (loss) from discontinued operations	$	724		$	(30,532	)

American Virtual Cloud Technologies, Inc. 10-K