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Discontinued Operations
|
9 Months Ended | ||||||
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Jun. 30, 2011
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| Discontinued Operations |
Note 5: Discontinued Operations
As
part of the Company’s strategy to evaluate each of its
business segments as separate entities, management noted that the
Direct Sales business segment has incurred operating losses and
declining revenues and did not fit with the Company’s change
in strategic direction. Accordingly, in March 2011, the
Company made the strategic decision to discontinue its Direct Sales
business and product offerings. Prior year financial statements
have been restated to present the Direct Sales business segment as
a discontinued operation.
The
Company initiated shutdown activities in March 2011 and closed the
Direct Sales business segment in May 2011. In
conjunction with the discontinued operations, the Company recorded
the following charges in the nine months ended June 30,
2011:
The
Direct Sales business segment accounted for $105,293 and $1,341,430
of net revenues for the three and nine months ended June 30, 2011,
respectively, and $658,847 and $3,092,607 of net revenues for the
three and nine months ended June 30, 2010, respectively, which are
now included as part of income (loss) from discontinued component
including disposal costs, in the accompanying unaudited condensed
consolidated statements of operations.
As
part of the Company’s plan to discontinue its Direct Sales
segment, the Company entered into an agreement dated April 25, 2011
to migrate those customers to a third party in exchange for ten and
five percent of gross revenues derived from such customers during
the first and second year, respectively. The Company has
no continuing involvement or influence in the third parties’
operations, nor does the third party have any recourse to the
Company in the event of lost customers, nonpayment by the
customers, etc. The Company recorded $4,000 in revenues
for this agreement during the three and nine months ended June 30,
2011.
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