| DISCONTINUED OPERATIONS |
NOTE 3: DISCONTINUED OPERATIONS
As of June 30, 2019, the Company
was under ongoing negotiation to transfer Northway Mining, LLC to a related party, who at the time of filing this 10Q was no longer
a related party. Due to the foregoing, on July 1, 2019, the Company entered into certain Membership Interest Transfer Agreement
and announced a change in the strategic focus by not continuing the cryptocurrency business unit.
As a result of this shift, the Company
has disclosed in the financials as Assets held-for-sale the amount of $1,455,047 and Liabilities held-for-sale in the amount of
$ 2,345,861 reorganizing a cessation of its business operations for Northway Mining, LLC, in accordance with Accounting Standards
Codification (ASC) 205-20, Discontinued Operations. As such, the historical results of Northway Mining, LLC, have been classified
as discontinued operations. As of December 31, 2018, assets of discontinued operations consisted of property and equipment, cash
and other assets, totals $1,590,992. As of December 31, 2018, liabilities of discontinued operations consisted of accounts payable
and loans total $1,534,235.
Assets and liabilities held-for-sale
as of June 30, 2019 and December 31,2018 consisted of the following:
| | |
June 30, | |
December 31, |
| | |
2019 | |
2018 |
| Assets held-for-sale | |
| | | |
| | |
| Cash and cash equivalents | |
$ | — | | |
$ | 176,313 | |
| Cryptocurrency | |
| — | | |
| 6,189 | |
| Property and equipment, net | |
| 1,455,047 | | |
| 1,408,490 | |
| Total | |
$ | 1,455,047 | | |
$ | 1,590,992 | |
| | |
| | | |
| | |
| Liabilities held-for-sale | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 301,548 | | |
$ | 58,628 | |
| Checks drawn in excess of bank balance | |
| 9,139 | | |
| 27,793 | |
| Accrued expenses | |
| 5,080 | | |
| 5,080 | |
| Payroll liabilities | |
| 7,519 | | |
| 7,707 | |
| Related party loans | |
| 359,114 | | |
| 20,001 | |
| Auto loans | |
| 44,256 | | |
| 45,950 | |
| Loans payable - net of discounts $0 and $180,085 | |
| 1,363,843 | | |
| 1,010,714 | |
| Deferred revenue | |
| 255,362 | | |
| 275,362 | |
| Contingent liability | |
| — | | |
| 83,000 | |
| Total | |
$ | 2,345,861 | | |
$ | 1,534,235 | |
Results of the discontinued operations
for the three months and six months ended June 30, 2019 and 2018 are:
| | |
Three months ended | |
Six months ended |
| | |
June 30, | |
June 30, |
| | |
2019 | |
2018 | |
2019 | |
2018 |
| REVENUES | |
$ | — | | |
$ | — | | |
$ | 10,392 | | |
$ | — | |
| COST OF SALES | |
| — | | |
| — | | |
| 436,403 | | |
| — | |
| GROSS PROFIT | |
| — | | |
| — | | |
| (426,011 | ) | |
| — | |
| General and administrative expenses | |
| 40,416 | | |
| — | | |
| 124,068 | | |
| — | |
| Depreciation expense | |
| 28,783 | | |
| — | | |
| 57,248 | | |
| — | |
| Total operating expense | |
| 69,199 | | |
| — | | |
| 181,316 | | |
| — | |
| Loss from operations | |
| (69,199 | ) | |
| — | | |
| (607,327 | ) | |
| — | |
| OTHER INCOME (EXPENSES) | |
| | | |
| | | |
| | | |
| | |
| Interest expense and amortization of debt discount | |
| (83,667 | ) | |
| — | | |
| (477,960 | ) | |
| — | |
| Impairment loss on cryptocurrency | |
| — | | |
| — | | |
| (6,189 | ) | |
| — | |
| Gain on extinguishment of debt | |
| 143,904 | | |
| — | | |
| 143,904 | | |
| — | |
| Total other income (expense) | |
| 60,237 | | |
| — | | |
| (340,245 | ) | |
| — | |
| Loss from discontinued operations | |
$ | (8,962 | ) | |
$ | — | | |
$ | (947,572 | ) | |
$ | — | |
The
following table provides supplemental cash flow information related to discontinued operations:
| | |
Six Month Ended |
| | |
June 30, |
| | |
2019 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | |
| Loss from discontinued operation | |
$ | (947,572 | ) |
| Adjustments to reconcile loss from discontinued operation to net cash used in operating activities - discontinued operation: | |
| | |
| Gain on extinguishment of debt | |
| (143,904 | ) |
| Amortization of debt discount | |
| 207,040 | |
| Depreciation expense | |
| 57,248 | |
| Impairment loss on cryptocurrency | |
| 6,189 | |
| Default penalty interest | |
| 270,920 | |
| Change in operating assets and liabilities: | |
| | |
| Accounts payable and accrued expenses | |
| 247,365 | |
| Payroll liability | |
| (188 | ) |
| Deferred revenue | |
| (20,000 | ) |
| Net cash used in operating activities - discontinued operations | |
| (322,902 | ) |
| | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | |
| Cash paid for fixed assets acquisition | |
| (103,805 | ) |
| Net cash used in investing activities - discontinued operations | |
| (103,805 | ) |
| | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |
| | |
| Bank overdraft | |
| (18,654 | ) |
| Proceeds from notes payable | |
| 112,400 | |
| Repayment of notes payable | |
| (65,506 | ) |
| Proceeds from related party loans | |
| 307,134 | |
| Repayment of related party loans | |
| (83,286 | ) |
| Repayment of auto loan | |
| (1,694 | ) |
| Net cash provided by financing activities - discontinued operations | |
| 250,394 | |
|