Discontinued Operations

9 Months Ended

Nov. 30, 2024

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

NOTE 15 – 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 (the "Closing Date"), 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 nine months ended November 30, 2024 and 2023:

	For the Nine Months Ended November 30,
($'s in thousands)	2024		2023
Total Revenue	$	-	$	212
Cost of sales		-		-
Operating Expenses		-		143
Gain on disposal of assets		-		(635	)
Other expense, net		-		-
Earnings from discontinued operations before    income taxes		-		704
Income tax provision		-	-
Earnings from discontinued operations, net of tax	$	-	$	704

There were no assets and liabilities held for sale for U-Swirl as of November 30, 2024 and February 29, 2024.

The following table summarizes the gain recognized during the nine months ended November 30, 2023 related to the sale of assets on May 1, 2023, as described above (amounts in thousands):

Cash proceeds from the sale of assets	$	1,749
Accounts receivable		9
Notes receivable		1,000
Total consideration received		2,758
Assets and liabilities transferred
Franchise rights		1,703
Inventory		6
Liabilities		(229	)
Net assets transferred		1,480
Costs associated with the sale of assets		643
Gain on disposal of assets	$	635