DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2020

DISCONTINUED OPERATIONS.

DISCONTINUED OPERATIONS

NOTE 3. DISCONTINUED OPERATIONS

Security Segment

On December 26, 2019, our board of directors and management made the strategic decision to investigate a possible buyer for the Security Segment and if no buyer could be found, cease operations of the Security Segment. We transferred all our Colorado security contracts and employees to a company on January 16, 2020, in exchange for which we will receive $1.00 per man hour worked on existing contracts for a period of one year. On February 6, 2020 we cancelled all our security contracts in California. The assets and liabilities for the Security Segment are presented in the balance sheet as of September 30, 2020 and December 31, 2019 as discontinued operations and the operating results for the three and nine months ended September 30, 2020 and 2019 are presented as gain (loss) from discontinued operations.

Assets and liabilities of discontinued operations for the Security Segment included the following:

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	81,015	$	77,380
Accounts receivable, net		3,440		280,058
Prepaid expenses and other current assets		651		17,780
Current assets discontinued operations		85,106		375,218
Property and equipment, net		—		15,584
Noncurrent assets discontinued operations		—		15,584
Accounts payable and accrued expenses		—		88,309
Customer deposits		—		60,940
Current liabilities discontinued operations		—		149,249

A summary of the discontinued operations for the Security Segment is presented as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Service revenues	$	—	$	524,525	$	119,891	$	1,596,673
Cost of sales		—		427,613		88,599		1,257,450
Selling, general and administrative		(65,053)		210,999		81,054		607,670
Professional fees		—		2,415		—		4,219
Depreciation and amortization		—		5,924		2,174		49,500
Total (income) expenses		(65,053)		646,951		171,827		1,918,839
OPERATING INCOME (LOSS)		65,053		(122,426)		(51,936)		(322,166)
Interest expense, net		—		984		984		2,438
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS	$	65,053	$	(123,410)	$	(52,920)	$	(324,604)

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows. The following table provides selected information on cash flows related to discontinued operations for the Security Segment for the nine months ended September 30, 2020 and 2019.

	Nine months ended
	September 30,
	2020		2019
Receivables	$	276,618	$	128,867
Prepaids and other		17,780		(8,752)
Depreciation and amortization		2,174		49,500
Capital expenditures		—		(1,331)
Accounts payable and accrued expenses		(88,309)		(51,239)
Customer deposits		(60,940)		(17,896)
Total	$	147,323	$	99,149

Consumer Goods Segment

On December 26, 2019, our board of directors and management made the strategic move to cease operations of Chiefton and committed to a plan to cease operations of STOA Wellness. We transferred all assets of STOA Wellness to an individual on January 10, 2020, in exchange for the release on the outstanding lease of the STOA retail store. The assets and liabilities classified as discontinued operations for the Consumer Goods Segment are presented separately in the balance sheet as of September 30, 2020 and December 31, 2019 and the operating results for the three and nine months ended September 30, 2020 and 2019 are presented as gain (loss) from discontinued operations.

Assets and liabilities of discontinued operations for the Consumer Goods Segment included the following:

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	—	$	25,223
Accounts receivable, net		—		7,836
Prepaid expenses and other current assets		—		14,394
Current assets discontinued operations		—		47,453
Right of use operating lease asset		—		83,525
Noncurrent assets discontinued operations		—		83,525
Accounts payable and accrued expenses		88,278		124,468
Operating lease liability, current		—		83,525
Current liabilities discontinued operations		88,278		207,993

A summary of the discontinued operations for the Consumer Goods Segment is presented as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues	$	—	$	91,308	$	33	$	149,975
Cost of service revenues		—		11,046		—		70,785
Cost of goods sold		—		66,158		—		125,454
Selling, general and administrative		(3,952)		230,613		25,733		669,496
Professional fees		—		14,715		—		99,375
Depreciation and amortization		—		9,775		—		16,939
Total (income) expenses		(3,952)		332,307		25,733		982,049
OPERATING INCOME (LOSS)		3,952		(240,999)		(25,700)		(832,074)
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS	$	3,952	$	(240,999)	$	(25,700)	$	(832,074)

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows. The following table provides selected information on cash flows related to discontinued operations for the Consumer Goods Segment for the nine months ended September 30, 2020 and 2019.

	Nine months ended
	September 30,
	2020		2019
Receivables	$	7,836	$	25,301
Prepaids and other		14,394		(29,967)
Inventory		—		(33,005)
Depreciation and amortization		—		16,939
Capital expenditures		—		(114,384)
Accounts payable and accrued expenses		(36,190)		71,887
Customer deposits		—		3,775
Total	$	(13,960)	$	(59,454)