DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

6 Months Ended

Mar. 31, 2024

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

NOTE 3 DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

Considering the recurring losses incurred by the retail segment, in July 2023, the Company decided to cease operations of its retail distribution segment (“Retail Exit”). The primary assets of the retail segment are inventory and accounts receivable. The Company expects to sell, liquidate, or otherwise dispose of remaining retail inventory by June 30, 2024, and to collect remaining retail accounts receivable by the end of Fiscal 2024. After this time, we expect to have no further significant continuing involvement with the retail distribution segment. The Retail Exit is considered a strategic shift that will have a significant impact on the Company’s operations and financial results. The inventory of the retail segment meets the criteria to be considered “held-for-sale” in accordance with ASC 205-20, “Discontinued Operations.” Accordingly, the retail inventory is classified on our condensed consolidated balance sheets as “discontinued assets held for sale” at March 31, 2024 and September 30, 2023, and the results of operations for the retail segment have been classified as “Discontinued Operations” on the condensed consolidated statements of operations for the three and six months ended March 31, 2024 and 2023. The condensed consolidated balance sheets and results of operations for comparable prior periods have been reclassified to conform to this presentation in accordance with the accounting guidance.

The total amount related to the discontinued retail segment included in Due to Forward China on the condensed consolidated balance sheets was approximately $698,000 and $1,002,000 at March 31, 2024 and September 30, 2023, respectively.

The following table presents the major classes of the “Income / loss from discontinued operations, net of tax” in our condensed consolidated statements of operations.

	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2024			2023			2024		2023
Revenues, net	$	92,000		$	919,000		$	757,000	$	1,976,000
Cost of sales		(2,000	)		1,332,000			468,000		2,436,000
Gross profit		94,000			(413,000	)		289,000		(460,000	)
Sales and marketing expenses		78,000			323,000			223,000		602,000
General and administrative expenses		23,000			16,000			46,000		29,000
(Loss) / income from discontinued operations before income taxes		(7,000	)		(752,000	)		20,000		(1,091,000	)
Provision for income taxes		–			–			–		–
(Loss) / income from discontinued operations	$	(7,000	)	$	(752,000	)	$	20,000	$	(1,091,000	)

At March 31, 2024 and September 30, 2023, discontinued assets held for sale of $0 and $508,000, respectively, consist of the net inventory of the retail segment. These numbers include an allowance of $262,000 and $1,464,000, respectively to reduce excess or otherwise unsellable inventory to its estimated net realizable value.

There was no depreciation, amortization, investing or financing cash flow activities, or other significant noncash operating cash flow activities for the retail segment in the three and six months ended March 31, 2024 or 2023.