3. DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3.  DISCONTINUED OPERATIONS

Effective February 23, 2016, the Company closed a transaction to sell 90% of its ownership in FD  to New Fresh Co., LLC, a Florida limited liability company controlled by the former founder of FD who was appointed Interim CEO of FD prior thereto.  The consideration to Innovative Food Holdings consisted primarily of a restructuring of our loans, which includes the ability to convert to additional amounts of FD under certain circumstances. There is no continuing cash inflows or outflows from or to the discontinued operations.

ASC 360-10-45-9 requires that a long-lived asset (disposal group) to be sold shall be classified as held for sale in the period in which a set of criteria have been met, including criteria that the sale of the asset (disposal group) is probable and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. This criteria was achieved on February 9, 2016. Additionally, the discontinued operations are comprised of the entirety of The Fresh Diet, excluding corporate services expenses. Lastly, for comparability purposes certain prior period line items relating to the assets held for sale have been reclassified and presented as discontinued operations for all periods presented in the accompanying condensed consolidated statements of operations and the condensed consolidated balance sheets.

The following information presents the major classes of line item of assets and liabilities included as part of discontinued operations in the consolidated balance sheet: 

	December 31,
	2015
Current assets - discontinued operations:
Cash and cash equivalents	$	491,969
Inventory		173,987
Other current assets		640,137
Due from related parties		461,240
Total current assets - discontinued operations	$	1,767,333
Noncurrent assets - discontinued operations:
Property and equipment, net	$	802,843
Intangible assets, net		3,862,711
Total noncurrent assets - discontinued operations	$	4,665,554
Current liabilities - discontinued operations:
Accounts payable and accrued liabilities	$	3,022,466
Deferred revenue		5,035,906
Accrued liabilities - related parties		135,935
Accrued interest		58,943
Revolving credit facilities		211,211
Notes payable, current portion		528,594
Deferred tax liability		1,069,200
Contingent liabilities		450,000
Total current liabilities - discontinued operations:	$	10,512,255
Long term liabilities - discontinued operations:
Note payable - long term portion		101,181
Notes payable - related parties, long term portion		2,199,970
Total long term liabilities - discontinued operations	$	2,301,151

The following information presents the major classes of line items constituting the after-tax loss from discontinued operations in the consolidated statements of operations.  The three and six months ended June 30, 2016 includes the results from discontinued operations from January 2, 1016 through the date of disposal (February 22, 2016):

	Three Months Ended
	June 30,		June 30,
	2016		2015
Revenue		-		4,898,851
Cost of goods sold		-		3,440,094
Gross margin		-		1,458,757
Selling, general and administrative expenses		-		3,525,100
Total operating expenses		-		3,525,100
Operating loss		-		(2,066,343	)
Other (income) expense:
Gain on sale of discontinued operations		-		-
Interest expense, net		-		20,713
Total other (income) expense		-		20,713
Income (loss) from discontinued operations, net of tax	$	-	$	(2,087,056	)

	Six Months Ended
	June 30,			June 30,
	2016			2015
Revenue		2,389,950			9,503,820
Cost of goods sold		1,764,834			6,961,680
Gross margin		625,116			2,542,140
Selling, general and administrative expenses		3,368,213			6,459,539
Total operating expenses		3,368,213			6,459,539
Operating loss		(2,743,097	)		(3,917,399	)
Other (income) expense:
Gain on sale is discontinued operations		(7,201,196	)		-
Interest expense, net		10,820			43,364
Total other (income) expense		(7,190,376	)		43,364
Income (loss) from discontinued operations, net of tax	$	4,447,279		$	(3,960,763	)

The following information presents the major classes of line items constituting significant operating and investing cash flow activities in the consolidated statements of cash flows relating to discontinued operations:

	Six Months Ended
	June 30,			June 30,
	2016			2015
Cash Flow: Major line items
Depreciation and Amortization		39,509			202,216
Non-cash compensation		1,028,908			372,530
Purchase of equipment		(6,296	)		(18,530	)
Cash from revolving credit facilities		685,959			954,120
Payments made on revolving credit facilities		(641,831	)		(1,314,991	)
Principal payments made on notes payable		(7,074	)		(32,703	)
Principal payments made on capital leases		(8,094	)		(59,459	)

The components of the gain on sale and income from discontinued operations are as follows:

	February 22, 2016
Receivable due from buyer, net of reserve of $8,700,000	$	-
Net proceeds  from sale of assets and liabilities		-
Assets sold		(6,225,073	)
Liabilities sold		13,426,269
Net liabilities sold		7,201,196
Gain on sale		7,201,196
Loss from discontinued operations before income tax		(2,753,917	)
Income tax expense		-
Income from discontinued operations	$	4,447,279