3.   Discontinued Operations

On November 3, 2022, the Company announced it was seeking to divest its subsidiary, iBio CDMO, in order to complete its transformation into an antibody drug discovery and development company. In conjunction with the divestment, the Company commenced a workforce reduction of approximately 60% of the then current Company staffing levels (a reduction of approximately 69 positions). The Company substantially completed the employee reduction by January 2, 2023.

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Through the process of seeking to divest its contract development and manufacturing organization, on February 10, 2023, the Company, entered into an Auction Sale Agreement (the “Auction Sale Agreement”) with Holland Industrial Group, together with Federal Equipment Company and Capital Recovery Group LLC (collectively, the “Auctioneers”) for the sale at public auction of equipment and other tangible personal property (the “Equipment”) located at the Facility.  The Auctioneer guaranteed an amount of gross proceeds from the sale of the Equipment of $2.1 million, which was paid to the Company on February 17, 2023. The auction, which commenced on March 24, 2023 and concluded on March 30, 2023, resulted in total proceeds of approximately $2.9 million.  In accordance with the Auction Sale Agreement, the Company received 80% of the excess proceeds, after Holland Industrial Group’s $0.2 million fee. Total proceeds received in Fiscal 2023 after selling the Equipment were approximately $2.6 million.

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Additionally, iBio CDMO LLC entered into a Purchase and Sale Agreement to sell the Property to Majestic Realty for a purchase price of $17,250,000 consisting of: (i) the ground leasehold estate and interest held under the Ground Lease Agreement, dated March 8, 2010, as amended by an Estoppel Certificate and Amendment to Ground Lease Agreement, dated as of December 22, 2015, between iBio CDMO (as assignee from College Station Investors LLC) and the Board of Regents of the Texas A&M University System (together, the “Ground Lease”), related to 21.401 acres in Brazos County, Texas land (the “Land”); (ii) the buildings, parking areas, improvements, and fixtures situated on the Land (the “Improvements”); (iii) all iBio CDMO’s right, title, and interest in and to furniture, personal property, machinery, apparatus, and equipment owned and currently used in the operation, repair and maintenance of the Land and Improvements and situated thereon (collectively, the “Personal Property”); (iv) all iBio CDMO’s rights under the contracts and agreements relating to the operation or maintenance of the Land, Improvements or Personal Property which extend beyond the closing date (the “Contracts”); and (v) all iBio CDMO’s rights in intangible assets of any nature relating to any or all of the Land, the Improvements and the Personal Property (the “Intangibles”; and together with the Ground Lease, Improvements and Personal Property, collectively, the “Property”). On November 7, 2023, the Company received written notice from Majestic Realty of its election to terminate the Purchase and Sale Agreement between Majestic Realty and iBio CDMO LLC, pursuant to which iBio CDMO had agreed to sell to Majestic Realty the Property. The Property continues to be listed for sale.

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The Company incurred pre-tax charges of approximately $1.9 million in Fiscal 2023 for the employee reduction which consisted of severance obligations, continuation of salaries and benefits over a 60-day transitional period during which impacted employees remained employed but were not expected to provide active service, and other customary employee benefit payments in connection with an employee reduction.  The Company further recorded a charge in discontinued operations for approximately $35.7 million in Fiscal 2023, of which approximately $17.9 million was the result of a fixed asset impairment charge (see Note 11 – Fixed Assets for more information), approximately $4.9 million to write down inventory to its net realizable value, approximately $7.5 million of personnel costs including severance, approximately $0.9 million of interest related to the term note payable, and the balance related to operational costs related to winding down the CDMO business.

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The Company recorded additional fixed asset impairment charges in discontinued operations of $3.1 million during the second quarter of Fiscal 2024. See Note 5 - Financial Instruments and Fair Value Measurement for more information.

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The results of iBio CDMO's operations are reported as discontinued operations for three and nine months ended March 31, 2024 and for the three and nine months ended March 31, 2023. In addition, those assets and liabilities associated with the discontinued operations of the CDMO that the Company intends to sell have been classified as “held for sale” on the condensed consolidated balance sheets at March 31, 2024 and as of June 30, 2023. The Company has chosen not to segregate the cash flows of iBio CDMO in the condensed consolidated statements of cash flows. Supplemental disclosures related to discontinued operations for the condensed consolidated statements of cash flows have been provided below. Unless noted otherwise, discussion in the Notes to the Condensed Consolidated Financial Statements refers to the Company's continuing operations.

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The following tables present a reconciliation of the major financial lines constituting the results of operations for discontinued operations to the loss from discontinued operations presented separately in the condensed consolidated statements of operations and comprehensive loss (in thousands):

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The following table presents net carrying values related to the major classes of assets that were classified as held for sale at March 31, 2024 and June 30, 2023 (in thousands):

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The following table presents the supplemental disclosures related to discontinued operations for the condensed consolidated statements of cash flows (in thousands):

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