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Sale of InStore Marketing Business and Presentation as Discontinued Operations

3 Months Ended

Mar. 31, 2024

Sale of InStore Marketing Business and Presentation as Discontinued Operations

Sale of In-Store Marketing Business and Presentation as Discontinued Operations

4. Sale of In-Store Marketing Business and Presentation as Discontinued Operations.

On August 3, 2023, the Company completed the sale of certain assets and certain liabilities relating to the Company’s In-Store Marketing Business for a price of $3.5 million to TIMIBO LLC, an affiliate of Park Printing, Inc. (the “Buyer”) under an Asset Purchase Agreement (the “Purchase Agreement”). The Company retained accounts receivable, as well as cash, cash equivalents and marketable securities. The cash consideration for the sale was subject to a post-closing adjustment. The final purchase adjustment for the net balance was to reduce the cash consideration by $1.5 million, with the Company retaining an equal amount of cash that had been received for unexecuted programs. Under the Purchase Agreement, $200,000 was escrowed for a twelve-month period for any future claims, as defined in the Purchase Agreement, by the Buyer against the Company.

The results of the In-Store Marketing Business have been presented as discontinued operations and the related assets and liabilities have been classified as related to discontinued operations, for all periods presented. The carrying amounts of major classes of assets and liabilities that were reclassified as related to discontinued operations on the Consolidated Balance Sheets were as follows:

	March 31,		December 31,
	2024		2023
Current Assets:
Accounts receivable, net	$	115,000	$	292,000
Current assets related to discontinued operations	$	115,000	$	292,000

Current Liabilities:
Accounts payable	$	-	$	7,000
Sales tax		111,000		169,000
Accrued liabilities		55,000		81,000
Current liabilities related to discontinued operations	$	166,000	$	257,000

Results of discontinued operations are summarized below:

Three Months Ended March 31	2023
Net services revenues	$	12,831,000

Cost of services		9,911,000
Gross Profit		2,920,000

Operating Expenses:
Selling		364,000
Marketing		296,000
General and administrative		93,000
Total Operating Expenses		753,000

Operating Income		2,167,000

Other income		9,000
Income from discontinued operations before income taxes		2,176,000
Income tax benefit		-
Income from discontinued operations, net of tax	$	2,176,000

The Company collected the remaining accounts receivable from the discontinued operation in April 2024. For the three months ended March 31, 2024, the Company recognized approximately $72,000 of benefit in sales, general and administrative expense of discontinued operations from the reduction in the accrual for sales tax due to the expiration of the statute of limitations.