Annual report pursuant to Section 13 and 15(d)

Discontinued Operations

v3.7.0.1
Discontinued Operations
12 Months Ended
Dec. 31, 2016
Accounting Policies [Abstract]  
Discontinued Operations

NOTE 9 – 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 consisted of intangible assets of $671,000, deferred tax liability of $118,000 and goodwill of $1,147,000, as determined by management with the assistance of an independent valuation firm.

 

On December 31, 2015, the Company and the former owners of Franklin agreed to unwind the agreement and return the original consideration exchanged in the contract. 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.

 

During the year ended December 31, 2016, the Company incurred additional expenses of $4,494 related to the winding-up of Franklin. During the year ended December 31, 2015, Franklin generated a loss from operations of $2,344,000. The following table provides additional detail of these losses which are reflected as a loss on discontinued operations.

 

    December 31,
2016
  December 31,
2015
Revenues   $ —       $ 388,000  
General and administrative     4,000       2,732,000  
   Loss from discontinued operations   $ (4,000 )   $ (2,344,000 )