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16. DISCONTINUED OPERATIONS | 12 Months Ended
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Sep. 30, 2020
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | Effective September 30, 2019, the Company ceased operations of four business subsidiaries: EE1, IM1, BPU and Level H&W. These subsidiaries accounted for our licensing, entertainment, and products segments prior to fiscal 2019 and the Company determined that these business units were not able to provide support or value to the CBD business, which the Company is now strategically focused on. Therefore, the Company has classified the operating results of these subsidiaries as discontinued operations, net of tax in the Consolidated Statements of Operations. The following table shows the summary operating results of the discontinued operations for the years ended:
|  | September 30, |  |  | September 30, |
|  | 2020 |  |  | 2019 |
Gross Sales |  | $ | - |  |  | $ | 888,254 |
Allowances |  |  | - |  |  |  | (12,129 | )
Total Net Sales |  |  | - |  |  |  | 876,126 |
Costs of sales |  |  | - |  |  |  | 604,714 |
Gross profit |  |  | - |  |  |  | 271,412 |
Operating expenses |  |  | 3,200 |  |  |  | 539,581 |
Income (loss) from operations |  |  | (3,200 | ) |  |  | (268,169 | )
Other income |  |  | - |  |  |  | 20,000 |
Realized and Unrealized gain (loss) on marketable securities |  |  | - |  |  |  | (2,337,280 | )
Impairment on discontinued operations |  |  | (45,783 | ) |  |  | (3,398,450 | )
Loss on disposal of property |  |  | - |  |  |  | (39,015 | )
Interest income (expense) |  |  | - |  |  |  | 29,141 |
Income (loss) before provision for income taxes |  |  | (48,983 | ) |  |  | (5,993,773 | )
Provision for income taxes |  |  | - |  |  |  | 66,000 |
Net Income (loss) |  |  | (48,983 | ) |  |  | (5,927,773 | )
Net Income (loss) attributable to non-controlling interest |  | $ | - |  |  | $ | (929,323 | )
The following table shows the summary assets and liabilities of the discontinued operations as of September 30, 2020 and 2019.
|  | 2020 |  |  | 2019 |
Assets |  |  |  |  |  |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | - |  |  | $ | - |
Accounts receivable |  |  | 447,134 |  |  |  | 1,080,000 |
Total current assets included as part of discontinued operations |  |  | 447,134 |  |  |  | 1,080,000 |
Other assets: |  |  |  |  |  |  |  |
Total other assets included as part of discontinued operations |  |  | - |  |  |  | - |
Total assets included as part of discontinued operations |  | $ | 447,134 |  |  | $ | 1,080,000 |
Liabilities |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |
Accounts payable |  | $ | - |  |  | $ | - |
Total current liabilities included as part of discontinued operations |  |  | - |  |  |  | - |
Long term liabilities |  |  |  |  |  |  |  |
Total long term liabilities included as part of discontinued operations |  |  | - |  |  |  | - |
Total liabilities included as part of discontinued operations |  | $ | - |  |  | $ | - |
The following table shows the significant cash flow items from discontinued operations for the years ended September 30,:
|  | 2020 |  |  | 2019 |
Depreciation/ amortization |  | $ | - |  |  | $ | 22,199 |
Realized/unrealized (gain) loss on securities expenditures |  | $ | - |  |  | $ | 2,337,280 |
Impairment on discontinued operations assets |  | $ | 45,783 |  |  | $ | 762,629 |
Impairment on intangibles |  | $ | - |  |  | $ | 2,635,821 |
Non cash consideration received for services |  | $ | - |  |  | $ | (470,000 | )
On June 26, 2018 the Company entered into an Agreement with Boston Therapeutics, Inc. (OTC: BTHE), a pharmaceutical company focused on the development, manufacturing and commercialization of novel compounds to address unmet medical needs in diabetes. The agreement involved a licensing agreement and required the Company to create IP for a branding / marketing campaign. As payment for these services, Boston Therapeutics agreed to pay $850,000, of which $450,000 was issued as a note due no later than December 31, 2019 and $400,000 to be paid thru the issuance of BTI common stock based on the trading price at the agreement date ($0.075). As the stock has not been issued this is recorded as an other accounts receivable. In June 2019 the Company began the arbitration process to collect amounts owed and at September 30, 2019 determined the amounts were not collectible and recorded an impairment for the carrying value of $53,333 for the other accounts receivable and $450,000 for the note receivable. Effective September 30, 2019, the Company ceased operations of four business subsidiaries: EE1, IM1, BPU and Level H&W. Level H&W had an intangible asset with a carrying value of $958,065 which the Company recorded an impairment charge at September 30, 2019 for the full value of $958,065. Previously in fiscal 2019, impairments on intangible assets in the subsidiaries included $971,667 in IM1, $471,667 in EE1, and $234,422. In addition, for all subsidiaries, we had an aggregate impairment on discontinued assets: accounts receivable, note receivable, and investment other security and property and equipment of $762,629. At September 30, 2019, EE1 had an accounts receivable for prior services delivered to two customers in aggregate of $1,080,000 of which $1,000,000 was from a related party at the time. At September 30, 2020 the balance on the accounts receivable is $447,134, which reflects payments made and an impairment of $45,783. At March 31, 2020, one customer has breached their formal agreement on payments and on April 29, 2020, the Company filed a lawsuit for collection of this amount and legal fees. On October 16, 2020, the account receivable balance for this customer of $416,666 was paid in full. As two of the subsidiaries, EE1 and IM1, had minority interests (non-controlling interests) and all parties agreed to transfer the non-controlling interest to the Company, we have reclassified the non-controlling interest balance of $(482,648) to additional paid in capital as of September 30, 2019.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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