2. DISCONTINUED OPERATIONS

Disposal of Tartagal and Morillo Concessions

On January 3, 2017, the Company received the acceptance of its offer for the sale of SAHF’s interest in the Tartagal and Morillo concessions from High Luck Group (“High Luck”). The consideration for 18% of Tartagal and Morillo will be $2,000,000 upon the transfer of the concessions, and 3% of gross revenues from the production of oil or gas of either concession up to an additional $2,000,000. Once the transfer occurs, the companies will sign a mutual release. The release of funds is also contingent on other external factors detailed on a Consulting Agreement signed between a third party (Consultant”) and High Luck. After speaking with the Consultant to High Luck on various occasions, Delta has taken the position that most of the Consultant’s duties have been fulfilled and the ones that have not require High Luck to present paperwork to the province and fulfill its commitments to the Province. On February 10, 2017, High Luck Group deposited the initial $2,000,000 in an Escrow account. On April 4, 2017, the Escrow Agent released $500,000 to Delta as a deposit towards the initial $2,000,000 payment which is reported as a “Deposit related to discontinued operations” in the consolidated balance sheet as of September 30, 2017 pending closing of the sale.

On April 21, 2017, the official government decree for the transfer of Tartagal and Morillo was issued, but High Luck refused to meet with the SAHF representative to finalize the transfer despite extensive efforts from SAHF.

As of the date of this filing, High Luck still had failed to meet with SAHF to close the contract, and we have taken the position that High Luck is in breach of multiple clauses in the contract. The companies are attempting to solve the outstanding issues in this transaction.

Sale of SAHF

In July 2017, Delta closed the agreement with Enrique Vidal for the transfer of SAHF. As the buyer, he will receive 25% of the Tartagal and Morillo (T&M) Asset Sale in exchange for the buyer’s assumptions of all potential liabilities related to Valle de Lerma concession.

In connection with the deposit received from the sale of the T&M concessions and SAHF, the Company paid commissions and bonuses totaling to $175,000 during the nine months ended September 30, 2017 which are included in “Discontinued operations, net” in the consolidated statement of operations. Out of the remaining $1,500,000 that Delta is to be paid for the sale of T&M, SAHF is to receive $375,000. SAHF has already received $125,000 from the initial $500,000 that was transferred to Delta.

The following table presents the amounts of the major line items that are included in “Discontinued operations, net” in our consolidated statements of operations.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

General and Administrative	$	(45	)	$	(9,574	)	$	(193,055	)	$	(21,188	)
Impairment Expense	$	-		$	-		$	-		$	(191,236	)
Gain on sale of SAHF	$	-		$	-		$	15,535		$	-

Discontinued operations, net of income tax	$	(45	)	$	(9,574	)	$	(177,520	)	$	(212,424	)