Discontinued operations

6 Months Ended

Jun. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations

Note 3. Discontinued operations

On January 1, 2019 the Company sold its 51% interest in Banana Whale to a third party in return for $1,500,000 in cash, a promissory note in the principal amount of $500,000 (the "Banana Whale Note") and the return of 295,322 shares of the Company's common stock issued upon acquisition.

In December 2019, an agreement regarding the remaining amount due on the Banana Whale Note of $500,000 was reached pursuant to which the Company received $250,000 in December 2019. In addition, the balance is payable over the two years ending December 2021 whereby the Company will receive an amount equal to 25% of reported EBITDA each quarter up to a maximum amount of $250,000 in the aggregate. As of June 30, 2020, no payments have been received.

During the year ended December 31, 2019, the Company decided to sell its interests in its subsidiaries, Love Media House and Browning. In connection with this determination, the Company concluded the intangible assets related to these subsidiaries were impaired. Accordingly, the Company recorded an impairment charge of approximately $2.4 million which was included in the loss from discontinued operations for the year ended December 31, 2019.

On February 18, 2020, the Company completed the sale of its interest in Browning to William J. Browning, the holder of the remaining Browning shares. Under the Recission Agreement, Browning and Mr. Browning agreed to repay advances totaling $210,000, made to Browning by the Company, over a 24-month period ending January 31, 2022 with an early repayment discount, equal to the amount of payment received during the six months ending August 31, 2020. Commencing September 1, 2020, the then balance outstanding is to be repaid in equal instalments over the remaining 18 months together with interest of 1% per month. During the three months ended March 31, 2020, the Company received $1,000 and in addition credited Browning with an additional $1,000 repayment discount reducing the outstanding principal to $204,000 as of June 30, 2020.

In June 2020, Mr. Browning returned the 89,333 shares of Company common stock issued under the original acquisition. The shares have now been cancelled by the Company.

During the six months ended June 30, 2020, the Company realized a gain of $606,000 on the sale of its 51% interest in Browning.

The Company has accounted for the operations of Love Media House and Browning as discontinued operations. The Statements of Operations for the three and six months ended June 30, 2020 and 2019 for discontinued operations is as follows (in thousands, unaudited):

	Three Months ended June 30					Six Months ended June 30
	2020		2019			2020		2019
Revenue	$	-		206		$	-		407
Cost of revenue:
Software and production costs		-		89			-		167
Amortization		-		50			-		100
		-		139			-		267
Gross Profit		-		67			-		140
Expenses
General and administrative		-		388			-		682
Depreciation		-		4			-		5
Other expenses		-		4			-		7
		-		396			-		694
Loss from Discontinued Operations	$	-		(329	)	$	-		(554	)

The balance sheet of discontinued operations as of June 30, 2020 and December 31, 2019 is as follows (in thousands):

	June 30,		December 31,
	2020		2019
	(unaudited)
Current Assets
Cash	$	-	$	2
Other current assets		1		27
		1		29
Property and equipment		5		34
	$	6	$	63
Current Liabilities
Accounts payable and accrued expenses	$	-	$	36
Deferred revenue		-		15
Loans payable		-		115
Finance contracts, due within one year		-		51
Notes payable – related parties		11		211
	$	11	$	428