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DISCONTINUED OPERATIONS | 6 Months Ended
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Jun. 30, 2018
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | 5. DISCONTINUED OPERATIONS A discontinued operation is a component of the Company’s business that represents a separate major line of business that had been disposed of or is held for sale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative Consolidated Statement of Operations, Consolidated Statement of Cash Flows, and Consolidated Balance Sheets are presented as if the operation had been discontinued from the start of the comparative year. During the fourth quarter of 2017, as part of the Company’s review of strategic alternatives, the Board of Directors of the Company approved efforts to sell the Company’s switchgear business. On May 2, 2018, Pioneer Custom Electric Products Corp. (“PCEP”), a wholly owned subsidiary of Pioneer Power Solutions, Inc. (the “Company”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with CleanSpark, Inc. (“CleanSpark”), pursuant to which PCEP will sell certain assets (the “Asset Sale”) comprising the PCEP business to CleanSpark (the “Purchased Assets”). No debt or significant liabilities are being assumed by CleanSpark in the Asset Sale. As consideration for the Purchased Assets, CleanSpark has agreed to pay total consideration comprised of the following: (a) an 18-month promissory note at 9% interest, in principal amount equal to the net carrying value of the working capital of the business at closing; (b) a three-year equipment lease to be entered into at closing of the Asset Sale, providing for rent payments in the amount of $7,500 per month, which also includes two renewal terms of one-year each at CleanSpark’s option and a CleanSpark purchase option of $1,000,000; (c) 7,000,000 shares of CleanSpark common stock, based on an agreed upon value of $0.80 per share, for a total agreed upon value of $5,600,000; (d) a five year warrant to purchase 1,000,000 shares of CleanSpark common stock at an exercise price of $1.60 per share; and (e) a five year warrant to purchase 1,000,000 shares of CleanSpark common stock at an exercise price of $2.00 per share. On June 29, 2018, each of PCEP and CleanSpark signed a letter agreement (the “Letter Agreement”) which extended the date on which, under certain specified conditions, either PCEP or CleanSpark may terminate the Asset Purchase Agreement if the Asset Sale has not been completed (the “Termination Date”) from June 30, 2018 to October 15, 2018. On July 16, 2018 each of PCEP and CleanSpark signed a second letter agreement (the “Second Letter Agreement”) which further extended the Termination Date to December 31, 2018. No other provisions of the Asset Purchase Agreement were otherwise amended or waived, and the Asset Purchase Agreement remains in full force and effect. Operating results for the switchgear business, which have been previously included in the T&D Solutions Segment, have now been reclassified as discontinued operations for all periods presented. The components of assets and liabilities that are attributable to discontinued operations are as follows:
|  | June 30, |  |  | December 31, |
|  | 2018 |  |  | 2017 |
|  | (Unaudited) |  |  |  |
Assets of discontinued operations: |  |  |  |  |  |  |  |
Accounts receivable - trade, net |  | $ | 1,010 |  |  | $ | 1,568 |
Inventories, net |  |  | 2,881 |  |  |  | 2,921 |
Prepaid expenses |  |  | 130 |  |  |  | 214 |
Property, plant and equipment, net |  |  | 393 |  |  |  | 524 |
Right of use asset |  |  | 19 |  |  |  | 129 |
Intangible assets, net |  |  | 1,414 |  |  |  | 1,477 |
Other assets |  |  | 249 |  |  |  | 240 |
Assets of discontinued operations |  | $ | 6,096 |  |  | $ | 7,073 |
Liabilities of discontinued operations: |  |  |  |  |  |  |  |
Bank overdrafts |  | $ | 48 |  |  | $ | 349 |
Accounts payable and accrued liabilities |  |  | 3,016 |  |  |  | 3,507 |
Liabilities of discontinued operations |  | $ | 3,064 |  |  | $ | 3,856 |
The following table presents the discontinued operations of the switchgear business in the Consolidated Statement of Operations:
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Revenues |  | $ | 882 |  |  | $ | 3,614 |  |  | $ | 4,584 |  |  | $ | 5,819 |
Costs and Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of goods sold |  |  | 1,167 |  |  |  | 3,365 |  |  |  | 4,115 |  |  |  | 4,905 |
Operating Expenses |  |  | 434 |  |  |  | 449 |  |  |  | 1,064 |  |  |  | 1,075 |
Interest income |  |  | (1 | ) |  |  | (1 | ) |  |  | (3 | ) |  |  | (3 | )
Other expense |  |  | 189 |  |  |  | 211 |  |  |  | 307 |  |  |  | 349 |
Total costs and expenses |  |  | 1,789 |  |  |  | 4,024 |  |  |  | 5,483 |  |  |  | 6,326 |
Loss before provision for income taxes |  |  | (907 | ) |  |  | (410 | ) |  |  | (899 | ) |  |  | (507 | )
Income tax benefit |  |  | (189 | ) |  |  | — |  |  |  | (189 | ) |  |  | — |
Loss from discontinued operations, net of income taxes |  | $ | (718 | ) |  | $ | (410 | ) |  | $ | (710 | ) |  | $ | (507 | )
The following table presents the switchgear business in the Consolidated Statements of Cash Flows:
|  | Six Months Ended June 30, |
|  | 2018 |  |  | 2017 |
Net cash used in operating activities |  | $ | (225 | ) |  | $ | (1,986 | )
Net cash used in investing activities |  |  | — |  |  |  | (7 | )
Net cash provided by financing activities |  |  | 225 |  |  |  | 1,993 |
Increase in cash and cash equivalents |  | $ | — |  |  | $ | — |

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- References No definition available. + Details
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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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