• Filing Date: 2016-11-15
  • Form Type: 10-Q/A
  • Description: Quarterly report (Amendment)
v3.5.0.2
7. DISCONTINUED OPERATION
9 Months Ended
Sep. 30, 2016
Discontinued operations  
DISCONTINUED OPERATION

The Company acquired assets from LP&L on October 22, 2014. Due to the default of the purchase agreement between the Company and LP&L on April 7, 2015, the Company lost control over LP&L. Based on the requirements of ASC 810, Consolidation, the Company will no longer present assets and liabilities retained as of the date of deconsolidation. To accomplish this, the results of LP&L’s operations are reported in discontinued operations in accordance with ASC 205, Presentation of Financial Statements.

 

Summarized operating results for the discontinuation of operations is as follows:

 

Fair value of consideration  $629,668 
Fair value of retained non-controlling investment    
Carrying value of non-controlling interest   (215,861)
    413,807 
Less: carrying value of former subsidiary's net assets   (1,439,077)
Gain on disposal of LP&L's interest and retained non-controlling investment   1,852,884 
Loss from discontinued operation from January 1, 2015 to April 7, 2015  $(278,463)

 

As of the date of deconsolidation, in accordance with ASC 810, Consolidation, we recognized a gain of $1,852,884 related to this event during the second quarter of 2015. We have no carried value of assets related to our retained investment in LP&L, but retain a non-controlling equity interest, which is 1.56% of LP&L interest with fair value amount of $0. The Company analyzed the carrying value of LP&L’s net assets on the deconsolidation date and determined the amount to be $1,439,077 including the following,

 

Cash  $37,294 
Accounts receivable   804,137 
Inventory   14,802 
Collateral Postings   136,997 
Accrued Revenue   414,683 
Fixed assets   29,475 
Collateral Deposit   200,000 
Accounts payable and accrued liabilities   (1,658,957)
Note Payable-related party   (117,124)
Note payable   (837,040)
Due to Premier   (463,344)
Carrying value of former subsidiary's net assets  $(1,439,077)

 

The Company had no involvement with the management of LP&L after the date of deconsolidation and confirms that this transaction was not with a related party and that LP&L will not be a related party going forward after the deconsolidation.

 

Major assets and liabilities of the discontinued operation of LP&L are as follows as of December 31, 2014:

 

   December 31, 2014 
     
Cash  $23,698 
Accounts receivable   810,446 
Inventory   42,319 
Collateral Postings   286,997 
Accrued Revenue   479,406 
Fixed assets   33,928 
Collateral Deposit   200,000 
Assets of discontinued operations  $1,876,694 
      
Accounts payable and accrued liabilities   1,209,359 
Note Payable-related party   141,860 
Note payable   991,400 
Current liabilities of discontinued operations  $2,342,619 

 

Major line items constituting net loss of the discontinued operations of LP&L are as follows for the periods from January 1, 2015 through April 7, 2015 (deconsolidation):

 

   2015 
     
Revenues  $2,287,851 
Cost of sales   2,144,747 
Gross profit   143,104 
Selling, general and administrative expenses   421,567 
      
Loss on discontinued operations  $(278,463)