| DISCONTINUED OPERATIONS STORED ENERGY AND DAYLIGHT PUMP DIVISIONS [Text Block] | NOTE 8 – DISCONTINUED OPERATIONS – STORED ENERGY AND DAYLIGHT PUMP DIVISIONS
On November 16, 2016, the Company entered into an agreement with Fleaux Services, LLC for the sale of the Company’s battery and stored energy division, which includes, but is not limited to, all inventory, support equipment, and office operations located at 9204 Linwood Avenue, Suite 104 and 105, Shreveport, LA 71106. The sale is for a cash consideration of $350,000
USD; plus a
3% royalty on all Galenfeha-style batteries sold over the course of the next two years from the date this purchase agreement was executed. The cash consideration was for $175,000
in inventory and $175,000
for business good-will and was provided directly by Fleaux Services in cash. The sale includes all future sales, future purchase orders resulting from previous negotiations, and all intellectual property related to Galenfeha, Inc. battery manufacturing and distribution. Fleaux Services, LLC will assume responsibility for expenses related to the Galenfeha, Inc. battery division that includes previous expenses incurred for sales meetings that secured future purchase orders. All contractual agreements between the Galenfeha Inc. battery division and outside parties, including, but not limited to, consultants, suppliers, distributors, and sales representatives, become the responsibility of Fleaux Services, LLC. This includes all suppliers’ outstanding invoices for materials not yet delivered and support equipment that will be relinquished to Fleaux Services, LLC upon the execution of this agreement. Galenfeha, Inc. will retain payments on all current outstanding purchase orders invoiced before the date of this purchase agreement. A gain on the sale of the battery and stored energy division of $15,008
was recognized as a capital transaction.
On March 9, 2017, the Company entered into an agreement with Fleaux Services, LLC for the sale of the Company’s Daylight Pumps division, which includes, but in not limited to, all inventory located at 9204 Linwood Avenue, Suite 104 and 105, Shreveport, LA 7116, as well as all usage rights for the name “Daylight Pump.” The sale is for cash consideration of $25,000, and Fleaux Services, LLC will assume the responsibility of a promissory note held by Kevin L. Wilson in the amount of $350,000
and all accrued interest due since the date of issuance on August 23, 2016. The sale will include all future pump sales, future purchase orders resulting from previous negotiations, and all intellectual property related to Daylight Pumps. During 2016, the Company recognized an aggregate impairment loss on this asset group of $443,935
to recognize the asset group at the lower of fair value or carrying value.
The Company recognized the sale of its stored energy division and Daylight Pumps division as a discontinued operation, in accordance with ASU 2014-08,
“Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.”
Assets and Liabilities of Discontinued Operations The following table provides the details of the assets and liabilities of our discontinued stored energy division:
Assets sold: November 16, 2016
Inventory assets $
180,681
Prepaid expenses
13,830
Property and equipment, net of accumulated depreciation
169,275
Total assets of discontinued operations
363,786
Consideration received:
Cash proceeds
350,000
Liabilities assumed
28,794
Total liabilities of discontinued operations
378,794
Net assets sold
363,786
Consideration received
378,794
Related party gain recognized as a capital transaction
15,008
The following table provides the details of the assets and liabilities held for sale of our discontinued Daylight Pump division:
Assets sold: March 9, 2017
Inventory assets $
375,000
Prepaid expenses
-
Property and equipment, net of accumulated depreciation
-
Total assets of discontinued operations
375,000
Consideration received:
Cash proceeds
25,000
Liabilities assumed
402,291
Total liabilities of discontinued operations
427,291
Net assets sold
375,000
Consideration received
427,291
Related party gain recognized as a capital transaction
52,291
Income and Expenses of Discontinued Operations The following table provides income and expenses of discontinued operations for the three months ended March 31, 2017 and 2016, respectively.
March 31, 2017 March 31, 2016
Revenue – Third Parties $
11,435
286,039
Revenue – Related Parties
-
17,382
Less: Cost of Goods Sold
6,041
219,582
Gross Profit
5,394
83,839
Other expenses
General and administrative
27,250
75,871
Payroll expenses
-
100,956
Professional fees
-
13,125
Engineering research and development
-
(21,174
)
Depreciation and amortization expense
-
6,842
Interest expense
5,789
1,951
Income (loss) from discontinued operations
(27,645
)
(93,732
) |
