Note 3 - Discontinued Operations and Sale of a Business

9 Months Ended

Sep. 30, 2022

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3.	DISCONTINUED OPERATIONS AND SALE OF A BUSINESS

As part of the Company’s stated strategy to transform Orbital Infrastructure Group into a diversified energy infrastructure services platform serving North American energy customers, the Company’s board of directors made the decision to divest of its Orbital Gas subsidiaries. The Orbital Gas subsidiaries provide proprietary gas measurement and sampling technologies and the integration of process control and measuring/sampling systems. They are legacy businesses that are not part of the Company’s strategy of building an infrastructure services company serving the electric power, telecommunications and renewable markets. The disposition of the Orbital Gas subsidiaries will facilitate the Company’s restructuring and cost savings initiatives and are intended to realign and simplify its business structure and better position the Company for future growth and improved profitability. In the fourth quarter of 2021, the Company recorded a $9.2 million impairment related to its U.K. operations to write the value of its investment in the U.K. operations to its expected realizable value of 3 million GBP ($4.1 million on December 31, 2021).

The sale of the U.K. operations closed in May of 2022. The Company could receive additional consideration if certain events transpire during the 12-month restricted period following the settlement date. In addition, the Company will receive a “royalty” of 15% on any sales of the GasPT device related to Snam Rete Gas and/or the Future Billing Methodology (FBM) Project. The Company sold a portion of the North America business in the third quarter of 2022 at approximately book value of the assets sold. Certain assets and liabilities not sold with the business were reclassified from held for sale to held and used. Remaining assets held for sale at September 30, 2022 include the VE Technology asset of the Company's North America Orbital Gas subsidiary. VE Technology is a gas sampling intellectual property, which provides a superior method of penetrating the gas flow without the associated vortex vibration, thereby making it a ‘‘stand-alone’’ product for thermal sensing (thermowells) and trace-element sampling.

Assets and liabilities held for sale that are included on the Company's balance sheet, relate to the company's discontinued businesses, and are described below.

	As of		As of
	September 30,		December 31,
(in thousands)	2022		2021

Carrying amounts of the major classes of assets included in discontinued operations:

Trade accounts receivable	$	—	$	2,996
Inventories		—		530
Prepaid expenses and other current assets		—		114
Contract assets		—		1,141
Assets held for sale, current portion		—		4,781
Property and equipment		—		42
Other intangible assets		1,814		1,813
Deposits and other assets		—		43
Assets held for sale, noncurrent portion		1,814		1,898
Total assets of the disposal group classified as held for sale	$	1,814	$	6,679

Carrying amounts of the major classes of liabilities included in discontinued operations:

Accounts payable	$	—	$	1,657
Contract liabilities		—		1,414
Operating lease obligations - current portion		—		76
Accrued expenses		—		1,126
Liabilities held for sale, current portion		—		4,273
Operating lease obligations, less current portion		—		85
Other long-term liabilities		—		9
Liabilities held for sale, noncurrent portion		—		94
Total liabilities held for sale	$	—	$	4,367

Selected data for these discontinued businesses consisted of the following:

Reconciliation of the Major Classes of Line Items Constituting Pretax Income from

Discontinued Operations to the After-Tax Income from Discontinued Operations That Are

Presented in the Condensed Consolidated Statement of Operations

(in thousands)	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
Major classes of line items constituting pretax profit of discontinued operations:	2022			2021			2022			2021

Revenues	$	933		$	6,097		$	7,002		$	14,816
Cost of revenues		(938	)		(4,608	)		(5,621	)		(10,418	)
Selling, general and administrative expense		(716	)		(1,973	)		(4,124	)		(6,367	)
Depreciation and amortization		—			(404	)		—			(1,249	)
(Provision) recovery of bad debt		25			5			(22	)		27
Interest expense		—			—			(13	)		(2	)
Gain on extinguishment of PPP loan		—			—			—			779
Other expense		30			234			18			227
Pretax income of discontinued operations		(666	)		(649	)		(2,760	)		(2,187	)
Pretax gain on sale of Orbital U.K.		—			—			299			—
Income tax expense		—			—			—			—
Total income from discontinued operations	$	(666	)	$	(649	)	$	(2,461	)	$	(2,187	)

Net cash used in operating activities of discontinued operations for the nine months ended September 30, 2022 was $0.8 million.

There was $62 thousand net cash provided by investing activities of discontinued operations for the nine months ended September 30, 2022.