DISCONTINUED OPERATIONS

9 Months Ended

Apr. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

As discussed in Note 1 - "Nature of Operations", on February 25, 2022, the Company completed the disposition of IWCO Direct. The Company received no cash consideration for the disposition (the entire transaction being referred to as the “IWCO Direct Disposal”). As of the Disposal Date and subject to the terms and conditions of the Transaction Agreement, the parties entered into certain mutual releases as fully set forth in the Transaction Agreement. In addition, as part of the overall transaction, the Buyer issued a note in the principal amount of $6.9 million payable to the Company as consideration for intercompany obligations owed by IWCO Direct to the Company (the “Subordinated Note”). The Subordinated Note is subordinated to the obligations under the Financing Agreement (including any amendments or other modifications thereto) and matures on the date that is the earlier of (a) the later of (i) August 25, 2027 and (ii) the date that is six months after the maturity of the Financing Agreement, or (b) the date that is six months after repayment in full of the obligations under the Financing Agreement. Due to the subordinated nature of the Subordinated Note and the assessment of collectability, the Company determined the fair value of the Subordinated Note was zero.

The Company deconsolidated IWCO Direct as of the Disposal Date as the Company no longer held a controlling financial interest in IWCO Direct as of that date. The Company did not have any amounts included in accumulated other comprehensive loss associated with IWCO Direct at the time of deconsolidation. The disposal of IWCO Direct represents a strategic shift to exit the direct marketing business and its results are reported as discontinued operations for the prior year periods presented.

A summary of the results of the discontinued operations is as follows:

	Three months ended April 30,		Nine months ended April 30,
	2022		2022
Net revenue	$	18,167	$	165,542
Cost of revenue	17,894		156,697
Gross profit	273		8,845
Operating expenses:
Selling, general and administrative	4,517		30,744
Amortization of intangible assets	1,218		9,303
Total operating expenses	5,735		40,047
Operating loss	(5,462)		(31,202)
Other income:
Gain upon deconsolidation of IWCO Direct	38,043		38,043
Interest expense	(1,848)		(16,111)
Total other income, net	36,195		21,932
Income (loss) from discontinued operations before income taxes	30,733		(9,270)
Income tax benefit	(9,162)		(9,162)
Net income (loss) from discontinued operations	$	39,895	$	(108)