Sale of InStore Marketing Business and Presentation as Discontinued Operations

6 Months Ended

Jun. 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 $3.5 million 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 $1.5 million, 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 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 Consolidated Balance Sheets were as follows:

	June 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		63,000		169,000
Other accrued liabilities		21,000		81,000
Current liabilities related to discontinued operations	$	84,000	$	257,000

Results of discontinued operations are summarized below:

	Three Months Ended		Six Months Ended
	June 30, 2023		June 30, 2023
Net service revenues	$	6,211,000	$	19,042,000
Cost of services		4,588,000		14,499,000
Gross Profit		1,623,000		4,543,000
Operating Expenses:
Selling		361,000		725,000
Marketing		300,000		596,000
General and administrative		572,000		665,000
Total Operating Expenses		1,233,000		1,986,000
Operating (Loss) Income	$	390,000	$	2,557,000
Other Income		-		9,000
Income from discontinued operations before income taxes		390,000		2,566,000
Income tax benefit		-		-
Income from discontinued operations, net of tax	$	390,000	$	2,566,000

For the three and six months ended June 30, 2024, the Company recognized approximately $64,000 and $136,000, 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 three and six months ended June 30, 2024, the Company generated $292,000 of cash from discontinued operations.