NOTE 7 - DISCONTINUED OPERATIONS | NOTE 7 – DISCONTINUED OPERATIONS On July 1, 2019, Performance Food Group Company (“PFG”) announced that it entered into a definitive agreement to acquire Reinhart Foodservice, LLC (“Reinhart”) from Reyes Holdings, LLC. Reinhart was a principal purchaser of our fresh produce distribution business. On December 20, 2019, PFG received approval from the Federal Trade Commission to acquire Reinhart and closed the transaction on December 30, 2019. Most of our business through our License Agreement with Markon Cooperative was purchased by Reinhart. Although our Markon License Agreement had not been terminated, PFG notified us that it would use its existing suppliers, which did not include us. Since this agreement that generated over half of our existing business was effectively terminated, we decided to discontinue our fresh produce distribution business, and we notified all of our vendors and suppliers that we would not conduct new business with them after December 27, 2019. In accordance with the provisions of ASC 205-20, Presentation of Financial Statements March 31, 2020 December 31, 2019 Current Assets of Discontinued Operations: Cash $ 500,000 $ 500,000 Accounts receivable - 446,715 Total Current Assets of Discontinued Operations: $ 500,000 $ 946,715 Current Liabilities of Discontinued Operations: Accounts payable $ (873) $ 489,863 Accrual 1,393 17,400 Total Current Liabilities of Discontinued Operations: $ 520 $ 507,263 In accordance with the provisions of ASC 205-20, we have not included the results of operations from discontinued operations in the results of continuing operations in the consolidated statements of operations. The results of operations from discontinued operations for the three months ended March 31, 2020 and 2019, have been reflected as discontinued operations in the consolidated statements of operations for the three months ended March 31, 2020 and 2019, and consist of the following: For the Three Months Ended March 31, 2020 2019 Revenues of discontinued operations $ (1,381) $ 2,947,396 Cost of revenues of discontinued operations 207 2,778,915 Gross profit of discontinued operations (1,174) 168,481 Operating Expenses of Discontinued Operations: General and administration expenses 7,855 38,374 Business development - 21,392 Salaries and wages 21,250 42,500 Sales/marketing expense - 12,845 Taxes - payroll 1,685 3,369 Total operating expense of discontinued operations 30,790 118,480 Operating (loss) income from discontinued operations (31,964) 50,001 Other Income of Discontinued Operations: Other income 11,639 1,549 Net (loss) income from discontinued operations before provision for income tax (20,325) 51,550 Provision for income tax expense from discontinued operations - - Net (loss) income from discontinued operations $ (20,325) $ 51,550 In accordance with the provisions of ASC 205-20, we have included the net cash provided by discontinued operations in the consolidated statements of cash flows. The net cash provided by discontinued operations in the consolidated statements of cash flows for the three months ended March 31, 2020 and 2019, consists of the following: For the Three Months Ended March 31, 2020 2019 Net (loss) income from discontinued operations, net of tax $ (20,325) $ 51,550 Changes in assets and liabilities: Accounts receivable 446,715 (251,633) Inventory 505 Accounts payable and accrued liabilities (508,136) 267,723 Net cash provided by discontinued operations $ (81,746) $ 68,145 |