1.	Preparation of Interim Unaudited Consolidated Financial Statements

The consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures prepared in accordance with generally accepted accounting principles in the United States have been either condensed or omitted pursuant to SEC rules and regulations. However, we believe that the disclosures made are adequate for a fair presentation of results of operations and financial position. Operating results for the interim periods reported herein

may

not

be indicative of the results expected for the year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our latest Annual Report on Form

-K.

March 2, 2018,

we sold substantially all of our assets (the “Asset Sale”) to Churchill Downs LLC (“Buyer”), pursuant to the terms of the Asset Purchase Agreement, dated as of

November 20, 2017,

as amended by the First Amendment thereto dated

January 22, 2017 (

the “Asset Purchase Agreement”). Operations of the furniture business from

January 1, 2018

through

March 2, 2018

are reflected as discontinued operations pursuant to the provisions of Accounting Standards Codification

2015

20,

Presentation of Financial Statements – Discontinued Operations

for all periods presented. As a result of the sale, the Company

longer has a wholly owned subsidiary.

As a result of the Asset Sale, we have a variable interest in

two

entities that have been determined to be variable interest entities ("VIE"). If we conclude that we are the primary beneficiary of a VIE, we are required to consolidate it. To determine if we are the primary beneficiary, we evaluate whether we have the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our evaluation includes identification of significant activities and an assessment of our ability to direct those activities based on governance provisions and arrangements to provide or receive product and process technology, product supply, operations services, equity funding, financing, and other applicable agreements and circumstances. Our assessments of whether we are the primary beneficiary of our VIE requires significant assumptions and judgments. We have concluded that we are

not

the primary beneficiary of the

two

VIEs as we do

not

have the power to direct the activities that most significantly impact the VIEs’ economic performance and therefore are

not

required to consolidate these entities.

Results of the discontinued operations are excluded from the accompanying notes to the consolidated financial statement for all periods presented, unless otherwise noted.

Certain amounts in the

2017

consolidated financial statements have been reclassified to conform to

2018

presentation. These reclassifications do

not

have an impact on the consolidated statements of operations or the consolidated statement of comprehensive income (loss). During the

second

quarter of

2018,

the Company identified errors within the accrued franchise taxes and workers compensation liabilities that originated in prior periods under the former management team. As the errors were

not

material to the prior period, the Company has revised the consolidated balance sheet as of

December 31, 2017

to reduce the accrual for other long-term liabilities by approximately

$250,000

to correct these errors.

Recent Accounting Pronouncements

June 2016,

the FASB issued ASU

2016

13,

Financial Instruments – Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

(“ASU

2016

13”

). The amendments in ASU

2016

require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU

2016

amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendment is effective for public entities for annual reporting periods beginning after

December 15, 2019,

however early application is permitted for reporting periods beginning after

December 15, 2018.

The Company does

not

anticipate the adoption of ASU

2016

to have a material impact to the consolidated financial statements.

February 2016,

the FASB issued its final lease accounting standard, FASB Accounting Standard Codification ("ASC"),

Leases

(Topic

842

) (“ASU

2016

02”

), which requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of -use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC

840,

requiring leases to be classified as either operating or finance. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC

840

) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC

840

). Our leases as of

December 31, 2016,

principally relate to real estate leases for corporate office, showrooms and warehousing. The new standard will be effective for the

first

quarter of our fiscal year ending

December 31, 2019.

Early adoption is permitted. As of

June 30, 2018,

we do

not

have any long-term leases. We will evaluate the effect that ASU

2016

will have on our consolidated financial statements and related disclosures at such time a long-term lease is executed. The standard is to be applied under the modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented.

January 2016,

the FASB issued ASU

2016

01,

Financial Instruments-Overall (Subtopic

825

): Recognition and Measurement of Financial Assets and Financial Liabilitie

s. Subsequently, the FASB issued ASU

2018

03,

"Technical Corrections and Improvements to Financial Instruments-Overall." ASU

2016

requires equity investments except those under the equity method of accounting to be measured at fair value with the changes in fair value recognized in net income. The amendment simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. For equity investments that do

not

have readily determinable fair values and do

not

qualify for the existing practical expedient in ASC

820

to estimate fair value using the net asset value per share of the investment, the guidance provides a new measurement alternative. Entities

may

choose to measure those investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company adopted ASU

2016

January 1, 2018

and elected an accounting policy to measure its

equity interest in Churchill Downs Holdings, Ltd, as described in Note

under the cost method, less any impairment, plus or minus changes resulting from observable price changes. The adoption of ASU

2016

did

not

have a material impact to the Company’s consolidated financial statements.