DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 9: DISCONTINUED OPERATIONS

On December 16, 2015, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with the NRLBH and NRL Investment Group, LLC (the “NRL Group”) pursuant to which the Company sold to the NRL Group all of its shares of common stock in the NRLBH as of that date. Under the terms of the Purchase Agreement, the Company retained its ownership of the Preferred Stock of the NRLBH, which constitutes approximately 19% of the outstanding capital stock of the NRLBH, and which the Company will have the right to sell to the NRL Group on or after the fourth anniversary of the Purchase Agreement at the greater of $4,000,000 or fair market value. The Company has the right to receive earn-out payments from NRL Group starting in December 2016 up to a total of $10,000,000. The earn-out payments are payable to us each calendar month commencing with December 2016 and are 6% of NRLBH gross sales calculated in accordance with U.S. Generally Accepted Accounting Principles. No earn-out payments have been received to date. The Company concluded that the operations of the NRLBH sold to the NRL Group were accounted for as discontinued operations as the operations and cash flows of the discontinued company were eliminated from ongoing operations of the Company and there would not be significant involvement in the NRLBH’s operations after the disposal transaction.

During the year ended December 31, 2015 the Company completed its obligations under the Purchase Agreement with the NRL and recognized a loss on disposal of assets of $670,943 within discontinued operations as detailed below:

	Year Ended December 31, 2015
Proceeds recognized pursuant to Stock Purchase Agreement	$	50,000
Investment in NRL		11,728
Less carrying value of assets sold and liabilities assumed:
Accounts receivable		(923,266	)
Intangible assets		(20,949	)
Property and equipment		(314,628	)
Other assets		(62,854	)
Liabilities assumed by buyer		589,026
Net loss on disposal of assets	$	670,943

The results of the NRLBH are disclosed as discontinued operations in the Company’s Consolidated Statements of Operations and Comprehensive Loss for all periods presented:

	For the Year Ended December 31,
	2015
Revenue	$	5,523,116
Cost of revenue		(3,539,134	)
Gross profit		1,983,982
Expenses:
Selling expenses		(1,303,425	)
Research and development expenses		(1,012,392	)
General and administrative expenses		(1,665,840	)
Loss on disposal		(670,943	)
Exit and disposal expenses		(399,399	)
Other expense, net		65,881
Net loss from discontinued operations	$	(3,002,136	)