DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

12 Months Ended

Sep. 30, 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 were inventory and accounts receivable. The Company sold, liquidated, or otherwise disposed of the remaining retail inventory as of September 30, 2024, and collected all remaining retail accounts receivable by the end of Fiscal 2024. As of September 30, 2024, the retail segment was fully discontinued, and we expect to have no further significant involvement in this 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 consolidated balance sheet as “discontinued assets held for sale” at September 30, 2023, and the results of operations for the retail segment have been classified as “Discontinued Operations” on the consolidated statements of operations for the years ended September 30, 2024 and 2023.

The total amount related to the retail segment included in Due to Forward China on the consolidated balance sheets was approximately $641,000 and $1,002,000 at September 30, 2024 and 2023, respectively.

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

	For the Fiscal Years Ended September 30,
	2024			2023
Revenues, net	$	757,000		$	4,333,000
Cost of sales		468,000			5,285,000
Gross profit		289,000			(952,000	)
Sales and marketing expenses		225,000			1,211,000
General and administrative expenses		67,000			27,000
Loss from operations		(3,000	)		(2,190,000	)
Loss on classification as held for sale		–			1,705,000
Loss from discontinued operations, net of tax	$	(3,000	)	$	(3,895,000	)

At September 30, 2023, discontinued assets held for sale of $508,000 consisted of the net inventory of the retail segment. This number includes an allowance of $1,464,000 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 Fiscal 2024 or Fiscal 2023.