Discontinued Operations |
Note 16 – 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 for 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, the Company has reflected amounts relating to AMSG and HTS (referred to below
as the AMSG & HTS Group) as a disposal group classified as held for sale and included as part of discontinued operations.
During the three months ended September 30,
2020, the Company announced that it had reached an agreement to sell its last clinical laboratory, EPIC Reference Labs, Inc., and
as a result, EPIC Reference Labs, Inc.’s operations have been classified as held for sale and included in discontinued operations
for all periods presented.
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 & HTS Group Assets and Liabilities:
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
|
|
(unaudited) |
|
|
|
|
Cash |
|
$ |
9,066 |
|
|
$ |
17,767 |
|
Accounts receivable, net |
|
|
174,641 |
|
|
|
482,472 |
|
Prepaid expenses and other current assets |
|
|
2,575 |
|
|
|
5,150 |
|
Current assets classified as held for sale |
|
$ |
186,282 |
|
|
$ |
505,389 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
1,168 |
|
|
$ |
3,354 |
|
Deposits |
|
|
- |
|
|
|
6,029 |
|
Right-of-use assets |
|
|
- |
|
|
|
- |
|
Non-current assets classified as held for sale |
|
$ |
1,168 |
|
|
$ |
9,383 |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
946,161 |
|
|
$ |
1,160,101 |
|
Accrued expenses |
|
|
1,286,326 |
|
|
|
1,376,127 |
|
Current portion of right-of-use operating lease obligations |
|
|
- |
|
|
|
- |
|
Current portion of notes payable |
|
|
238,018 |
|
|
|
256,274 |
|
Current liabilities classified as held for sale |
|
$ |
2,470,505 |
|
|
$ |
2,792,502 |
|
EPIC Reference Labs, Inc. Assets and Liabilities
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
|
|
(unaudited) |
|
|
|
|
Cash |
|
$ |
9,057 |
|
|
$ |
- |
|
Accounts receivable, net |
|
|
174,641 |
|
|
|
- |
|
Prepaid expenses and other current assets |
|
|
2,575 |
|
|
|
- |
|
Current assets classified as held for sale |
|
$ |
186,273 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
- |
|
|
$ |
- |
|
Deposits |
|
|
100,014 |
|
|
|
100,014 |
|
Right-of-use assets |
|
|
122,898 |
|
|
|
185,842 |
|
Non-current assets classified as held for sale |
|
$ |
222,912 |
|
|
$ |
285,856 |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
818,912 |
|
|
$ |
881,527 |
|
Accrued expenses |
|
|
283,368 |
|
|
|
338,662 |
|
Current portion of right-of-use operating lease obligations |
|
|
96,334 |
|
|
|
85,726 |
|
Current portion of notes payable |
|
|
- |
|
|
|
- |
|
Current liabilities classified as held for sale |
|
$ |
1,198,614 |
|
|
$ |
1,305,915 |
|
|
|
|
|
|
|
|
|
|
Right-of-use operating lease obligations |
|
|
26,564 |
|
|
|
100,116 |
|
Liabilities classified as held for sale |
|
$ |
26,564 |
|
|
$ |
100,116 |
|
Consolidated Discontinued Operations Assets and Liabilities:
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
|
|
(unaudited) |
|
|
|
|
Cash |
|
$ |
9,066 |
|
|
$ |
17,767 |
|
Accounts receivable, net |
|
|
174,641 |
|
|
|
482,472 |
|
Prepaid expenses and other current assets |
|
|
2,575 |
|
|
|
5,150 |
|
Current assets classified as held for sale |
|
$ |
186,282 |
|
|
$ |
505,389 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
1,168 |
|
|
$ |
3,354 |
|
Deposits |
|
|
100,014 |
|
|
|
106,043 |
|
Right-of-use assets |
|
|
122,898 |
|
|
|
185,842 |
|
Non-current assets classified as held for sale |
|
$ |
224,080 |
|
|
$ |
295,239 |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,765,073 |
|
|
$ |
2,041,628 |
|
Accrued expenses |
|
|
1,569,694 |
|
|
|
1,714,789 |
|
Current portion of right-of-use operating lease obligations |
|
|
96,334 |
|
|
|
85,726 |
|
Current portion of notes payable |
|
|
238,018 |
|
|
|
256,274 |
|
Current liabilities classified as held for sale |
|
$ |
3,669,119 |
|
|
$ |
4,098,417 |
|
|
|
|
|
|
|
|
|
|
Right-of-use operating lease obligations |
|
|
26,564 |
|
|
|
100,116 |
|
Liabilities classified as held for sale |
|
$ |
26,564 |
|
|
$ |
100,116 |
|
Major line items constituting loss from discontinued
operations in the unaudited condensed consolidated statements of operations for the three months ended September 30, 2020 and 2019
consisted of the following:
AMSG & HTS Group Loss from Discontinued Operations:
|
|
Three Months Ended |
|
|
|
September 30, 2020 |
|
|
September 30, 2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenue from services |
|
$ |
174,941 |
|
|
$ |
246,676 |
|
Cost of services |
|
|
390 |
|
|
|
26,012 |
|
Gross profit |
|
|
174,551 |
|
|
|
220,664 |
|
Operating expenses |
|
|
258,789 |
|
|
|
355,828 |
|
Other expense |
|
|
37,476 |
|
|
|
2,912 |
|
Provision for income taxes |
|
|
- |
|
|
|
- |
|
Loss from discontinued operations |
|
$ |
(121,714 |
) |
|
$ |
(138,076 |
) |
EPIC Reference Labs, Inc. Loss from Discontinued Operations
|
|
Three Months Ended |
|
|
|
September 30, 2020 |
|
|
September 30, 2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenue from services (1) |
|
$ |
- |
|
|
$ |
(34,630 |
) |
Cost of services |
|
|
- |
|
|
|
|
|
Gross profit |
|
|
- |
|
|
|
(34,630 |
) |
Operating expenses |
|
|
41,360 |
|
|
|
89,102 |
|
Other expense |
|
|
3,106 |
|
|
|
- |
|
Provision for income taxes |
|
|
- |
|
|
|
- |
|
Loss from discontinued operations |
|
$ |
(41,360 |
) |
|
$ |
(123,732 |
) |
|
(1) |
The Company recorded bad debts in excess of gross revenues in the three months ended September 30, 2019. |
Consolidated Loss from Discontinued Operations:
|
|
Three Months Ended |
|
|
|
September 30, 2020 |
|
|
September 30, 2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenue from services |
|
$ |
174,941 |
|
|
$ |
212,046 |
|
Cost of services |
|
|
390 |
|
|
|
26,012 |
|
Gross profit |
|
|
174,551 |
|
|
|
186,034 |
|
Operating expenses |
|
|
300,149 |
|
|
|
444,930 |
|
Other expense |
|
|
40,582 |
|
|
|
2,912 |
|
Provision for income taxes |
|
|
- |
|
|
|
- |
|
Loss from discontinued operations |
|
$ |
(166,180 |
) |
|
$ |
(261,808 |
) |
Major line items constituting loss from discontinued
operations in the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2020 and 2019
consisted of the following:
AMSG & HTS Group Loss from Discontinued Operations:
|
|
Nine Months Ended |
|
|
|
September 30, 2020 |
|
|
September 30, 2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenue from services |
|
$ |
437,119 |
|
|
$ |
766,627 |
|
Cost of services |
|
|
11,379 |
|
|
|
113,266 |
|
Gross profit |
|
|
425,740 |
|
|
|
653,361 |
|
Operating expenses |
|
|
509,989 |
|
|
|
1,413,423 |
|
Other expense |
|
|
61,067 |
|
|
|
31,874 |
|
Provision for income taxes |
|
|
- |
|
|
|
- |
|
Loss from discontinued operations |
|
$ |
(145,316 |
) |
|
$ |
(791,936 |
) |
EPIC Reference Labs, Inc. Loss from Discontinued Operations:
|
|
Nine Months Ended |
|
|
|
September 30, 2020 |
|
|
September 30, 2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenue from services (1) |
|
$ |
441 |
|
|
$ |
(18,066 |
) |
Cost of services |
|
|
- |
|
|
|
3,982 |
|
Gross profit |
|
|
441 |
|
|
|
(22,048 |
) |
Operating expenses |
|
|
106,704 |
|
|
|
453,280 |
|
Other income |
|
|
(87,286 |
) |
|
|
(500 |
) |
Provision for income taxes |
|
|
- |
|
|
|
- |
|
Loss from discontinued operations |
|
$ |
(18,977 |
) |
|
$ |
(474,828 |
) |
|
(1) |
The Company recorded bad debts in excess of gross revenues in the nine months ended September 30, 2019. |
Consolidated Loss from Discontinued Operations:
|
|
Nine Months Ended |
|
|
|
September 30, 2020 |
|
|
September 30, 2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenue from services |
|
$ |
437,560 |
|
|
$ |
748,561 |
|
Cost of services |
|
|
11,379 |
|
|
|
117,248 |
|
Gross profit |
|
|
426,181 |
|
|
|
631,313 |
|
Operating expenses |
|
|
616,693 |
|
|
|
1,866,703 |
|
Other expense (income) |
|
|
(26,219 |
) |
|
|
31,374 |
|
Provision for income taxes |
|
|
- |
|
|
|
- |
|
Loss from discontinued operations |
|
$ |
(164,293 |
) |
|
$ |
(1,266,764 |
) |
|