Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.20.2
Discontinued Operations
3 Months Ended
Mar. 31, 2020
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

Note 17 – Discontinued Operations

 

On July 12, 2017, the Company announced plans to spin off AMSG and in the third quarter 2017 our Board of Directors voted unanimously to spin off the Company’s wholly-owned subsidiary, HTS, as independent publicly traded companies by way of tax-free distributions to the Company’s stockholders. On June 10, 2020, the Company signed an agreement that will lead to the separation of these divisions into a public company. The agreement is with TPT Global Tech, Inc. (OTC: TPTW), a California-based public company, to merge HTS and AMSG into a public company after TPT completes a merger of its wholly-owned subsidiary, InnovaQor, Inc. with this public company. The public company will be known as InnovaQor going forward. Completion of the agreement is subject to a number of approvals and consents which need to be secured to complete the transaction. Subject to closing and the relevant SEC approvals it is intended that Rennova will receive approximately $22 million of preferred shares in the transaction, $5 million of which will be converted to common shares in the public company, and distributed to Rennova shareholders upon completion of the relevant registration/approvals with the SEC. The remaining approximately $17 million of preferred shares held by Rennova as an investment in InnovaQor will be convertible to common shares on achievement of certain milestones going forward. There can be no assurance that the transaction as described will be consummated or that terms including numbers or values for consideration shares will not change significantly before closing.

 

In accordance with ASC 205-20 and having met the criteria for “held for sale”, as the Company reached this decision prior to January 1, 2019, the Company has reflected amounts relating to AMSG and HTS as disposal groups classified as held for sale and included as part of discontinued operations. Prior to being classified as “held for sale,” AMSG had been the Company’s Decision Support and Informatics segment, except for the Company’s subsidiary, Alethea Laboratories, Inc., which had been included in the Clinical Laboratory Operations segment and now is part of AMSG, and HTS had been the Company’s Supportive Software Solutions segment. Segment operation disclosures in Note 16 no longer include amounts relating to AMSG and HTS following the reclassification to discontinued operations.

 

Carrying amounts of major classes of assets and liabilities classified as held for sale and included as part of discontinued operations in the condensed consolidated balance sheets consisted of the following:

 

AMSG Assets and Liabilities:

 

    March 31, 2020     December 31, 2019  
      (unaudited)          
Cash   $ 968     $ 452  
Accounts receivable, net     -       -  
Prepaid expenses and other current assets     -       -  
Current assets classified as held for sale   $ 968     $ 452  
                 
Property and equipment, net   $ -     $ -  
Deposits     -       -  
Non-current assets classified as held for sale   $ -     $ -  
                 
Accounts payable   $ 491,206     $ 491,206  
Accrued expenses     556,545       565,943  
Current portion of notes payable     253,076       256,274  
Current liabilities classified as held for sale   $ 1,300,827     $ 1,313,423  

  

HTS Assets and Liabilities:

 

    March 31, 2020     December 31, 2019  
      (unaudited)          
Cash   $ 1,921     $ 17,315  
Accounts receivable, net     475,483       482,472  
Prepaid expenses and other current assets     4,292       5,150  
Current assets classified as held for sale   $ 481,696     $ 504,937  
                 
Property and equipment, net   $ 3,114     $ 3,354  
Deposits     1,500       6,029  
Non-current assets classified as held for sale   $ 4,614     $ 9,383  
                 
Accounts payable   $ 676,581     $ 668,895  
Accrued expenses     814,543       810,184  
Current liabilities classified as held for sale   $ 1,491,124     $ 1,479,079  

 

Consolidated Discontinued Operations Assets and Liabilities:

 

    March 31, 2020     December 31, 2019  
      (unaudited)          
Cash   $ 2,889     $ 17,767  
Accounts receivable, net     475,483       482,472  
Prepaid expenses and other current assets     4,292       5,150  
Current assets classified as held for sale   $ 482,664     $ 505,389  
                 
Property and equipment, net   $ 3,114     $ 3,354  
Deposits     1,500       6,029  
Non-current assets classified as held for sale   $ 4,614     $ 9,383  
                 
Accounts payable   $ 1,167,787     $ 1,160,101  
Accrued expenses     1,371,088       1,376,127  
Current portion of notes payable     253,076       256,274  
Current liabilities classified as held for sale   $ 2,791,951     $ 2,792,502  

 

Major line items constituting loss from discontinued operations in the unaudited condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019 consisted of the following:

 

AMSG Loss from Discontinued Operations:

 

    Three Months Ended  
    March 31, 2020     March 31, 2019  
      (unaudited)       (unaudited)  
Revenue from services   $ -     $ 22,982  
Cost of services     -       16,655  
Gross profit     -       6,327  
Operating expenses     963       102,610  
Other expense     6,297       25,960  
Provision for income taxes     -       -  
Loss from discontinued operations   $ (7,260 )   $ (122,243 )

 

HTS Loss from Discontinued Operations:

 

    Three Months Ended  
    March 31, 2020     March 31, 2019  
      (unaudited)       (unaudited)  
Revenue from services   $ 159,068     $ 120,089  
Cost of services     8,777       32,190  
Gross profit     150,291       87,899  
Operating expenses     182,806       474,265  
Other expense     -       -  
Provision for income taxes     -       -  
Loss from discontinued operations   $ (32,515 )   $ (386,366 )

 

Consolidated Loss from Discontinued Operations:

 

    Three Months Ended  
    March 31, 2020     March 31, 2019  
    (unaudited)     (unaudited)  
Revenue from services   $ 159,068     $ 143,071  
Cost of services     8,777       48,845  
Gross profit     150,291       94,226  
Operating expenses     183,769       576,875  
Other expense     6,297       25,960  
Provision for income taxes     -       -  
Loss from discontinued operations   $ (39,775 )   $ (508,609 )