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3. Discontinued Operations

12 Months Ended

Dec. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Prior to October 2019, we operated a number of company-owned offices which were acquired in the Merger with Command Center. All of these company-owned offices were sold in the third quarter of 2019, the vast majority becoming franchisees, and we now no longer operate any company-owned offices. We also made the strategic decision to sell the assets of Command Center’s four California offices outside of our franchise system to an unaffiliated third party, and we no longer conduct business in the state of California. A summary of total consideration received, and assets sold is as follows:

Notes receivable		$	14,884,620
Accounts receivable			2,204,286
Cash			221,845
Consideration received		$	17,310,751

Customer lists		$	17,015,857
Lease and utility deposits			100,009
Fixed assets			57,448
Gain			137,437
Sale price allocation		$	17,310,751

Operating results from company-owned offices are included in our consolidated financial statements as discontinued operations. The income from discontinued operations as reported on our consolidated statements of operations was comprised of the following amounts:

		Year ended
		December 31, 2020				December 31, 2019
Revenue		$	-			$	13,932,769
Cost of staffing services			-				9,946,836
Gross profit			-				3,985,933
Gain on sale			-				137,437
Selling, general and administrative expense			-				(3,836,045	)
Net income before tax			-				287,325
Provision for income taxes			-				71,831
Net income		$	-			$	215,494

We continue to be involved with the offices we sold through franchise agreements. The term of our franchise agreement is five years, subject to renewal at the end of the current term. Franchise royalties from sold locations that subsequently became franchisees were approximately $3.0 million and $1.4 million, for the years ended December 31, 2020 and December 31, 2019, respectively.