NOTE I - DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2018

Notes

NOTE I - DISCONTINUED OPERATIONS

NOTE I – DISCONTINUED OPERATIONS

In response to the changes in the telecommunications market and deterioration in the Company’s ability to effectively compete, the Company made the decision to exit the CLEC business.  On October 27, 2017, the Company’s board of directors adopted a plan to exit the CLEC business as soon as possible through the sale of its wholly owned CLEC subsidiary and/or substantially all of its CLEC subsidiary’s operating assets.  The Company was in negotiations with a potential buyer at December 31, 2017, which buyer subsequently purchased substantially all of its CLEC subsidiary’s operating assets pursuant to an asset purchase agreement which was executed and closed on February 1, 2018, (the “Sale”).

The Company determined that the Sale represented a strategic shift that will have a major effect on the Company’s operations and financial results since it represented a complete exit from the CLEC business and, therefore, classified its CLEC subsidiary as held for sale at December 31, 2017.

The Company recognized a gain of $233,277 on the Sale based on total consideration of $264,872 less total basis in the assets sold and transactions costs of $31,595.  The assets sold consisted primarily of customers and associated customer premise equipment.

Consideration:
Cash	$	246,500
Assumption of deferred revenue		8,366
Waived service obligation for February 2018		10,006
Total consideration	$	264,872
Total assets sold:
Customer contracts	$	-
Fiber innerduct		3,248
Fiber strands		-
Customer CPE		-
Total assets		3,248
Transactional costs		28,347
Total basis	$	31,595
Net gain	$	233,277

Assets and Liabilities of Discontinued Operations

	December 31,
	2018	2017
Carrying amounts of assets included in discontinued operations
Cash	$775	$1,801
Prepaid expenses and other current assets	-	2,671
Property and equipment, net	-	24,871
Total Assets of Discontinued Operations	$775	$29,343
Carrying amounts of liabilities included in discontinued operations
Accounts payable	$42,905	$57,342
Accrued and other liabilities	9,458	19,878
Convertible notes payable, related party – current portion	-	116,592
Convertible notes payable, related party – less current portion	-	-
Total Liabilities of Discontinued Operations	$52,363	$193,812

Operating Results of Discontinued Operations

	December 31,
		2018	2017
Revenues included in discontinued operations
Total revenue		$28,091		$155,614
Operating costs and expenses included in discontinued operations
Cost of revenue		$84,301		$221,653
Selling, general and administrative expenses		8,666		15,981
Depreciation and amortization		9,273		10,353
Interest expense		51		11,186
Total operating costs and expenses discontinued operations		102,291		259,173
Other Income included in discontinued operations
Gain on sale of assets		233,277		-
Other income from applied customer deposits		8,396		-
Net Income (Loss) from Discontinued Operations		$167,473		$(103,559)
Net Income (Loss) per share from discontinued operations basic and diluted		$0.01		$(0.01)

Cash Flows from Discontinued Operations

	December 31
	2018	2017
Net cash used in operating activities	(59,319)	(92,151)
Net cash provided by (used in) investing activities	218,153	(4,780)
Net cash used in financing activities	(116,592)	(28,374)
Net cash provided by (used in) discontinued operations	42,242	(125,305)