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DISCONTINUED OPERATIONS | 6 Months Ended
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Jun. 30, 2023
DISCONTINUED OPERATIONS |
DISPOSITION | NOTE 4: DISCONTINUED OPERATIONS On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. This transaction is known as the “H&J Settlement”. The H&J Settlement was accounted for a business disposition in accordance with ASC 810-40-40-3A. As of June 21, 2023, the Company no longer consolidated the assets, liabilities, revenues and expenses of H&J. The components of the disposition are as follows: ​
​ | ​ | ​ | ​
Cash payment due to H&J Seller |  | $ | (229,000)
Common shares issued to H&J Seller* | ​ |  | (1,357,043)
Total fair value of consideration received (given) | ​ | $ | (1,586,043)
Carrying amount of assets and liabilities | ​ |  |
Cash and cash equivalents | ​ |  | 18,192
Accounts receivable, net | ​ |  | 55,782
Prepaid expenses and other current assets | ​ |  | 25,115
Goodwill | ​ |  | 1,130,311
Intangible assets, net | ​ |  | 1,246,915
Deposits | ​ |  | 4,416
Accounts payable | ​ |  | (40,028)
Accrued expenses and other liabilities | ​ |  | (734,068)
Deferred revenue | ​ |  | (18,347)
Due to related parties | ​ |  | (1,008)
Contingent consideration | ​ | ​ | (1,400,000)
Loan payable | ​ |  | (219,894)
Note payable - related party | ​ |  | (129,489)
Total carrying amount of assets and liabilities | ​ |  | (62,103)
Loss on disposition of business | ​ | $ | (1,523,940)
* | Represents the fair value of 78,103 shares of common stock issued to D. Jones.
Through June 30, 2023, the Company has made payments to D. Jones totaling $150,000. The remaining balance of $79,000 is included in accrued expenses and other liabilities on the consolidated balance sheet. The loss of disposition of business of $1,523,940 was included in income (loss) from discontinued operations, net of tax in the consolidated statements of operations. In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022. The results of the discontinued operations of HJ for the three and six months ended June 30, 2023 and 2022 consist of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Three Months Ended |  | Six Months Ended
​ | ​ | June 30, | ​ | June 30,
​ | ​ | 2023 |  | 2022 | ​ | 2023 |  | 2022
Net revenues | ​ | $ | 686,627 | ​ | $ | 1,089,569 | ​ | $ | 1,405,482 | ​ | $ | 1,892,849
Cost of net revenues | ​ |  | 292,107 | ​ |  | 328,915 | ​ |  | 565,621 | ​ |  | 605,413
Gross profit | ​ |  | 394,520 | ​ |  | 760,654 | ​ |  | 839,861 | ​ |  | 1,287,436
Operating expenses: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
General and administrative | ​ |  | 189,751 | ​ |  | 449,508 | ​ |  | 520,582 | ​ |  | 896,873
Sales and marketing | ​ |  | 169,875 | ​ |  | 332,723 | ​ |  | 346,167 | ​ |  | 515,775
Distribution | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Change in fair value of contingent consideration | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Total operating expenses | ​ |  | 359,626 | ​ |  | 782,231 | ​ |  | 866,749 | ​ |  | 1,412,648
Income (loss) from operations | ​ |  | 34,894 | ​ |  | (21,577) | ​ |  | (26,888) | ​ |  | (125,212)
Other income (expense): | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Interest expense | ​ |  | (3,003) | ​ |  | (29,828) | ​ |  | (11,675) | ​ |  | (40,862)
Loss on disposition of business | ​ |  | (1,523,940) | ​ |  | — | ​ |  | (1,523,940) | ​ |  | —
Other non-operating income (expenses) | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Total other income (expense), net | ​ |  | (1,526,944) | ​ |  | (29,828) | ​ |  | (1,535,615) | ​ |  | (40,862)
Income tax benefit (provision) | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Net income (loss) from discontinued operations | ​ | $ | (1,492,050) | ​ | $ | (51,404) | ​ | $ | (1,562,503) | ​ | $ | (166,074)
Weighted average common shares outstanding - basic | ​ |  | 246,809 | ​ |  | 14,329 | ​ |  | 236,824 | ​ |  | 9,836
Weighted average common shares outstanding - diluted | ​ |  | 834,604 | ​ |  | 14,329 | ​ |  | 824,619 | ​ |  | 9,836
Net income (loss) from discontinued operations per common share - basic | ​ | $ | (6.05) | ​ | $ | (3.59) | ​ | $ | (6.60) | ​ | $ | (16.88)
Net income (loss) from discontinued operations per common share - diluted | ​ | $ | (6.05) | ​ | $ | (3.59) | ​ | $ | (6.60) | ​ | $ | (16.88)
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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI https://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 + Details
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