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Sale of InStore Marketing Business and Presentation as Discontinued Operations | 9 Months Ended
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Sep. 30, 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 $3,500,000 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 $1,500,000, 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 and is included in Accounts receivable, net on the condensed consolidated balance sheets. 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 condensed consolidated balance sheets were as follows:
|  | September 30, 2024 |  |  | December 31, 2023 |
Current Assets: |  |  |  |  |  |
Accounts receivable, net |  | $ | - |  |  | $ | 292,000 |
Current assets related to discontinued operations |  | $ | - |  |  | $ | 292,000 |
Current Liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | - |  |  | $ | 7,000 |
Accrued sales tax |  |  | 40,000 |  |  |  | 169,000 |
Other accrued liabilities |  |  | 15,000 |  |  |  | 81,000 |
Current liabilities related to discontinued operations |  | $ | 55,000 |  |  | $ | 257,000 |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, 2023 |  |  | September 30, 2023 |
Net service revenues |  | $ | 1,976,000 |  |  | $ | 21,018,000 |
Cost of services |  |  | 1,568,000 |  |  |  | 16,067,000 |
Gross Profit |  |  | 408,000 |  |  |  | 4,951,000 |
Operating Expenses: |  |  |  |  |  |  |  |
Selling |  |  | 410,000 |  |  |  | 1,135,000 |
Marketing |  |  | 210,000 |  |  |  | 806,000 |
General and administrative |  |  | 142,000 |  |  |  | 642,000 |
Total Operating Expenses |  |  | 762,000 |  |  |  | 2,583,000 |
Operating (Loss) Income |  | $ | (354,000 | ) |  | $ | 2,368,000 |
Other Income |  |  | 21,000 |  |  |  | 54,000 |
(Loss) Income from discontinued operations |  | $ | (333,000 | ) |  | $ | 2,422,000 |
Gain from sale of discontinued operations before income taxes |  |  | 3,044,000 |  |  |  | 3,044,000 |
Income tax expense |  |  | 74,000 |  |  |  | 74,000 |
Gain from the sale of discontinued operations, net of tax |  | $ | 2,970,000 |  |  | $ | 2,970,000 |
Results of discontinued operations are summarized below: For the three and nine months ended September 30, 2024, the Company recognized approximately $66,000 and $202,000, respectively, 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. For the nine months ended September 30, 2024, the Company generated $292,000 of cash from discontinued operations.

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