Sale of Majority Owned Subsidiaries and Discontinued Operations

9 Months Ended

Sep. 30, 2022

Sale of Majority Owned Subsidiaries and Discontinued Operations

Sale of Majority Owned Subsidiaries and Discontinued Operations

3. Sale of Majority Owned Subsidiaries and Discontinued Operations

On April 22, 2021, the Company sold its majority interests in GKMP (51%) and iBud (50.1%) to THC Farmaceuticals, Inc. (“CBDG”). In consideration of the transaction, the Company received 1,500,000 shares of CBDG common stock and 1,500,000 shares of CBDG preferred stock. The Company’s Chief Executive Officer and Chairman of the Board, David Tobias is a Director of CBDG. Shares of CBDG common stock are traded on the OTC Pink Sheets Market.

The sale of the Company’s majority interests was undertaken to allow the Company to focus on its other operating subsidiary, PrestoCorp, to focus on capital formation for expansion of PrestoCorp, and to pursue other opportunities. At the time of the sale, iBud was inactive and GKMP had not yet achieved positive cash flow from operations.

On the closing date of the sale, CBDG common shares closed at $0.20 per share, for a fair value of $300,000. The CBDG preferred stock received is convertible into CBDG common stock on a one for one basis and has no other rights or preferences that distinguish it from the common stock and are convertible at any time by the Company. Management determined that the shares of preferred stock received are equivalent to CBDG’s common stock and valued the preferred shares at the same rate. In the aggregate, the total shares of CBDG stock received were valued at $600,000 on the date of the sale.

During the nine months ended September 30, 2021, the Company recognized a gain on sale of subsidiaries of $164,470 which represented the value of the consideration received consisting of the value of CBDG’s shares plus the carrying value of the subsidiaries’ non-controlling interest reduced by the net asset of each subsidiary:

Consideration received:
Common stock of CBDG, fair value	$	300,000
Preferred stock of CBDG, fair value		300,000
Total consideration		600,000
Non-controlling interests		(331,884	)
Net assets of subsidiaries on date of disposition:
GKMP		112,350
iBud		(8,970	)
Net assets		103,380
Gain on sale of subsidiaries	$	164,736

As a result of the sale, the Company has discontinued its operations for both subsidiaries. Summaries of the discontinued operations of GKMP and iBud for the period January 1, 2021 to September 30, 2021 are provided below.

	January 1 to
	September 30,
Discontinued Operations	2021
REVENUE		75,866
Cost of revenues		91,316
Gross profit		(15,450	)
EXPENSES
Depreciation and amortization		5,861
Wages and salaries		106,224
Advertising		1,693
General and administrative		102,833
Interest expense		2,144
Total expenses		218,755
NET LOSS FROM DISCONTINUED OPERATIONS		(234,205	)

GKMP and iBud generated losses from operations during the periods they were operated by the Company. The sale of our interests in GKMP and iBud was to allow management to devote more resources to PrestoCorp.