Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.21.1
Discontinued Operations
3 Months Ended
Mar. 31, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

Note 15 — Discontinued Operations

 

Discontinued operations are accounted for in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 360-10-35 Property, Plant and Equipment. In accordance with FASB ASC Section 360-10-35, the net assets of discontinued operations are recorded on our consolidated balance sheets at carrying value. The results of operations of discontinued operations are segregated from continuing operations and reported separately as discontinued operations in our consolidated statements of loss and comprehensive loss.

 

On March 12, 2021, the bankruptcy court approved the sale of the CBAV1, LLC Assets to BTL Diffusion SARL, the winning bidder, at the auction held on March 10, 2021 and March 11, 2021 for a total sum of $3,000,000, which includes a cash payment at closing in the amount of $2,650,000, less certain closing costs and credits, and additional royalty payments in the amount of $150,000 on April 15, 2022 and in the amount of $200,000 on April 15, 2023 (“CBAV1-BTL Transaction”).

 

A first closing of the CBAV1-BTL Transaction occurred on April 16, 2021, with the transfer of assets and release of funds completed on April 21, 2021 (“Final Closing”). Contemporaneously with the Final Closing, a certain license agreement between CBAV1 and Edison Nation, LLC (“Edison Nation”) terminated and any remaining operational assets of Edison Nation were transferred to BTL.

 

On November 30, 2020, the Company (the “Seller”) and its wholly owned subsidiary, SRM Entertainment, LTD (“SRM”) entered into a Stock Exchange Agreement (the “Exchange Agreement”) with Jupiter Wellness, Inc. (“Jupiter”)(the “Buyer”). Under the terms of the Exchange Agreement, the Buyer agreed to purchase all outstanding shares of common stock (the “Exchange Shares”) issued by SRM from the Seller. As consideration for the purchase of the Exchange Shares, the Buyer agreed to exchange 200,000 shares of its restricted common stock (the “Consideration Shares”), symbol JUPW as listed on NASDAQ Capital Markets. The Company made the decision to divest the amusement park business due to the slow re-openings of amusement parks around the world and the investment that would have been needed to remain open and the investment required to relaunch as the amusement parks begin to get back to full capacity.

 

The following table presents the carrying values of the assets and liabilities of our discontinued operations at March 31, 2021 and December 31, 2020, respectively:

 

    March 31, 2021     December 31, 2020  
             
Assets                
Current assets:                
Accounts receivable, net   413,962     $ 220,964  
Inventory     779,918       559,737  
Prepaid expenses and other current assets     160,666       261,980  
Total current assets     1,354,546       1,042,680  
Total assets   $ 1,354,546     $ 1,042,680  
                 
Liabilities and stockholders’ equity                
Current liabilities:                
Accounts payable   $ 589,363     $ 487,454  
Total current liabilities   $ 589,363     $ 487,454  

 

The following table presents the summary results of operations of our discontinued operations for the three months ended March 31, 2021 and 2020, respectively:

 

   

For the Three Months

Ended March 31,

 
    2021     2020  
Revenues, net   $ 697,883     $ 1,713,764  
Cost of revenues     490,195       1,054,693  
Gross profit     207,688       659,071  
                 
Operating expenses:                
Selling, general and administrative     286,602       903,764  
Operating income     78,914       (244,693 )
                 
Other (expense) income:                
Gain on divestiture     -       4,911,760  
Total other (expense) income     -       4,911,760  
(Loss) income before income taxes     78,914       4,667,067  
Income tax expense     -       -  
Net (loss) income   $ 78,914     $ 4,667,067