DISCONTINUED OPERATIONS

9 Months Ended

May 31, 2011

NOTE 3 - DISCONTINUED OPERATIONS

In accordance with FASB guidance on accounting for the impairment or disposal of long-lived assets the accompanying consolidated financial statements reflect the results of operations and financial position of the Company's activities in Guam as discontinued operations. Following the closure of the Guam operations in December 2003, the Company included the results of operations from Guam in the asset impairment and closure costs line of the consolidated statements of income through May 2005. However, after the sale of the Philippine operations in August 2005, the results of the Philippines and Guam activities have been consolidated in the discontinued operations line of the consolidated statements of income. Management views these activities as one activity managed under a shared management structure. Cash flow activities related to the Guam discontinued operations leased property are expected to terminate in August 2011, which is the end date of the lease term.

The assets and liabilities of the discontinued operations are presented in the consolidated balance sheets under the captions "Assets of discontinued operations" and "Liabilities of discontinued operations." The underlying assets and liabilities of the discontinued operations for the periods presented are as follows (in thousands):

	May 31, 2011		August 31, 2010
Cash and cash equivalents	$	56	$	41
Accounts receivable, net		301		219
Prepaid expenses and other current assets		64		39
Other assets		86		393
Assets of discontinued operations	$	507	$	692
Other accrued expenses	$	194	$	109
Liabilities of discontinued operations	$	194	$	109

The Company's former Guam operation has a deferred tax asset of $2.6 million, primarily generated from NOLs. This deferred tax asset has a 100% valuation allowance, as the Company currently has no plans that would allow it to utilize these losses. Additionally, a significant portion of these losses are limited as to future use by the Company.

The following table sets forth the income (loss) from the discontinued operations of each period presented, in thousands.

	Three Months Ended						Nine Months Ended
	May 31,						May 31,
	2011			2010			2011			2010
Net warehouse club sales	$	-		$	-		$	-		$	-
Pre-tax income (loss) from discontinued operations		(33	)		(4	)		(119	)		40
Provision for income taxes		(42	)		-			(42	)		-
Income (loss) from discontinued operations, net of tax	$	(75	)	$	(4	)	$	(161	)	$	40

The income (loss) from discontinued operations, net of tax is the net result of the subleasing activity in Guam.