Discontinued Operations

12 Months Ended

Feb. 29, 2024

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

NOTE 17 – DISCONTINUED OPERATIONS

On February 24, 2023 and May 1, 2023, the Company entered into agreements to sell: 1) all operating assets and inventory associated with the Company’s three U-Swirl Company-owned locations, and 2) all franchise rights and intangible assets associated with the franchise operations of U-Swirl, respectively. The May 1, 2023 sale was completed pursuant to an Asset Purchase Agreement (the “Asset Purchase Agreement”), dated May 1, 2023, by and among the Company, as guarantor, U Swirl as seller, LLC (“Purchaser”), a related company of Fosters Freeze, Inc., a California corporation. Pursuant to the Asset Purchase Agreement, on the Closing Date, Purchaser paid to U-Swirl $2.75 million, consisting of approximately (i) $1.75 million in cash and (ii) $1.0 million evidenced by a three-year secured promissory note in the aggregate original principal amount of $1.0 million. As a result of these asset sales, the activities of the Company’s subsidiary, U-Swirl, which were previously recorded to the U-Swirl operating segment are reported as discontinued operations in the consolidated statement of operations, consolidated balance sheet and consolidated statement of cash flows for all periods presented. The majority of the assets and liabilities of U-Swirl met the accounting criteria to be classified as held for sale and were aggregated and reported on separate lines of the respective statements.

On October 31, 2023, the Company filed a certificate of dissolution with the Secretary of State of the State of Nevada with respect to U-Swirl. As a result, U-Swirl is effectively fully dissolved and no longer in legal existence.

The following table discloses the results of operations of the businesses reported as discontinued operations for the years ended February 29 or 28, 2024, 2023 and 2022, respectively:

	FOR THE YEARS ENDED FEBRUARY 29 or 28,
	2024			2023			2022
Total Revenue	$	212,242		$	3,128,368		$	2,854,031
Cost of sales	-				654,353			556,933
Operating Expenses		143,198			2,048,129			2,087,021
Gain on disposal of assets		(634,790	)	-			-
Other expense, net	-			-			(137
Earnings from discontinued operations before    income taxes		703,834			425,886			210,214
Income tax provision	-				618,308			52,194
Earnings (loss) from discontinued operations, net of tax	$	703,834		$	(192,422	)	$	158,020

The following table reflects the summary of assets and liabilities held for sale for U-Swirl as of February 29 or 28, 2024 and 2023, respectively:

	AS OF FEBRUARY 29 or 28,
	2024		2023
Accounts and notes receivable, net	$	-	$	75,914
Inventory, net	-			6,067
Other	-			1,023
Current assets held for sale	-			83,004
Property and equipment, net	-		-
Franchise rights, net	-			1,708,336
Intangible assets, net	-			48,095
Deferred income taxes	-		-
Other	-			9,415
Long-term assets held for sale	-			1,765,846
Total Assets Held for Sale	-			1,848,850
Accounts payable	-			125,802
Accrued compensation	-			11,205
Accrued liabilities	-			11,981
Contract liabilities	-			29,951
Current liabilities held for sale	-			178,939
Contract liabilities, less current portion	-			184,142
Long term liabilities held for sale	-			184,142
Total Liabilities Held for Sale	$	-	$	363,081

The following table summarizes the gain recognized during the year ended February 29, 2024 related to the sale of assets on May 1, 2023, as described above:

Cash proceeds from the sale of assets	$	1,757,738
Notes receivable		1,000,000
Total consideration received		2,757,738
Assets and liabilities transferred
Franchise rights		1,703,325
Inventory		6,067
Liabilities		(229,431	)
Net assets transferred		1,479,961
Costs associated with the sale of assets		642,987
Gain on disposal of assets	$	634,790