Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.4.0.3
Discontinued Operations
3 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
Discontinued Operations

NOTE 7 – DISCONTINUED OPERATIONS

 

On February 23, 2015 the Company entered into an agreement whereby, the Company issued an aggregate of 2.5 million shares of its restricted common stock valued at $1,700,000, in exchange for all of the issued and outstanding shares of Franklin Networks, Inc., a Tennessee corporation (“Franklin”), an internet company that began operations in September 2014. The acquisition of Franklin had been accounted for as a purchase and the operations of Franklin have been consolidated since the date of the acquisition. The $1.7 million purchase price was allocated based upon the fair value of the acquired assets which consists of intangible assets of $671,131, deferred tax liability of $117,741 and goodwill of $1,146,610, as determined by management with the assistance of an independent valuation firm.

 

On December 31, 2015, the Company and the former owners of Franklin, McGarrity, Palm and Pilgrim Consulting Services, Inc. agreed to unwind the agreement and return the original consideration exchanged in the contract. As a result, the Company recognized a loss of $1,638,536 due to the write off of the unamortized intangible assets, goodwill and deferred tax liability, reduced by the fair value of the 2.5 million shares of common stock returned to the Company amounting to $500,000 or a net amount of $1,138,536. In addition, the Company also recognized a loss from discontinued operations of $1,205,988 which includes stock-based compensation of $279,258.

 

In addition, during the three months ended March 31, 2016, the Company incurred expenses of $4,494 related to Franklin. During the three months ended March 31, 2015, Franklin generated a gain from operations of $37,539. Pursuant to ASC 2014-08, Reporting of Discontinued Operations, the Company reported the gain (loss) from operations as a gain (loss) from discontinued operations in the accompanying statements of operations since the Company considered its decision to rescind the Franklin acquisition as a strategic shift that has a major effect in the Company’s operations and financial results.