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SEGMENTS AND CONCENTRATIONS
 12 Months Ended
Sep. 30, 2025
Segment Reporting [Abstract]  
SEGMENTS AND CONCENTRATIONS

NOTE 16        SEGMENTS AND CONCENTRATIONS

 

Segments

 

As a result of discontinuing the retail and OEM segments (Note 3) and our new digital asset treasury strategy, the Company now has two reportable segments: design and digital assets. See Note 2 for more information on the composition and accounting policies of our reportable segments. The results of the retail and OEM segments were classified as discontinued operations as discussed in Note 3. The prior year segment disclosures have been reformatted from what was previously disclosed to conform to the current year presentation.

 

The Company’s Chief Executive Officer serves as the Chief Operating Decision Maker (“CODM”) and evaluates the financial performance of the business and makes resource allocation decisions on the basis of revenue, gross profit and net income or loss from continuing operations before income taxes for each reportable segment.

 

The tables below represent the primary measure of segment performance evaluated by the CODM, as well as additional measures that are regularly provided to the CODM on a segment-level.

 

          
   Design Segment 
   Fiscal 2025   Fiscal 2024 
Revenues  $13,606,000   $19,991,000 
Cost of revenues   12,708,000    14,691,000 
Depreciation expense (a)   119,000    116,000 
Gross profit   779,000    5,184,000 
Sales and marketing personnel costs   356,000    541,000 
Sales promotion and marketing expenses   139,000    218,000 
General and administrative personnel costs   1,872,000    2,627,000 
Occupancy costs   668,000    662,000 
Amortization expense (a)   213,000    213,000 
Impairment of goodwill and intangible assets   2,026,000    200,000 
Interest income   (37,000)   (79,000)
Other segment expenses (b)   701,000    698,000 
(Loss)/income from continuing operations before income taxes  $(5,159,000)  $104,000 

 

 

           
   Digital Assets Segment 
   Fiscal 2025   Fiscal 2024 
Revenues  $4,582,000   $– 
Cost of revenues   170,000    – 
Gross profit   4,412,000    – 
Asset management fees (a)   539,000    – 
Loss on change in fair value of digital assets   160,035,000    – 
Loss from continuing operations before income taxes  $(156,162,000)  $– 

 

(a) Depreciation expense, amortization expense and asset management fees are not regularly provided to the CODM, however they are components of loss from continuing operations before income taxes and identified as a "specific profit or loss" item and therefore disclosed separately in accordance with the related accounting guidance.
(b) Other segment expenses include insurance expense, bad debt expense, bank and payroll processing fees, and various other general and administrative expenses.

 

The following table is a reconciliation of segment loss from continuing operations before taxes to our consolidated loss from continuing operations before income taxes.

 

          
   Fiscal 2025   Fiscal 2024 
Design segment loss from continuing operations before income taxes  $(5,159,000)  $104,000 
Digital assets segment loss from continuing operations before income taxes   (156,162,000)   – 
Corporate and other non-segment expenses   (7,748,000)   (2,247,000)
Consolidated loss from continuing operations before income taxes  $(169,069,000)  $(2,143,000)

 

Segment assets consist of accounts receivable and digital assets, which are regularly reviewed by the CODM, as well as goodwill and intangible assets resulting from design segment acquisitions.

 

          
   Segment Assets at September 30, 
   2025   2024 
Design segment  $3,380,000   $5,820,000 
Digital assets segment   1,430,486,000    – 
Total segment assets   1,433,866,000    5,820,000 
General corporate assets   41,076,000    6,040,000 
Discontinued assets held for sale   –    2,908,000 
Total assets  $1,474,942,000   $14,768,000 

 

Geographic Concentrations

 

The Company’s long-lived assets consist of property and equipment and operating lease right-of-use assets, all of which are located in the United States. The Company’s consolidated net revenues for Fiscal 2025 and 2024 are from customers predominantly located in the United States.

  

Customer Concentrations

 

Revenues from one design segment customer represented 12.4% of the Company’s consolidated net revenues in Fiscal 2025 and revenue from two design customers represented 48.4% of the Company’s consolidated net revenues in Fiscal 2024.

 

Accounts receivable from three design segment customers represented 49.4% of the Company’s consolidated accounts receivable balance at September 30, 2025 and accounts receivable from two design segment customers represented 48.7% of the Company’s consolidated accounts receivable balance at September 30, 2024.

 

There were no concentrations of revenue or accounts receivable with any significant customer in our digital assets segment.