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Sale of InStore Marketing Business and Presentation as Discontinued Operations

9 Months Ended

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.