Discontinued operations

9 Months Ended

Mar. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

12. Discontinued operations

Because it was determined the assets of FHV LLC were insufficient to satisfy FHV LLC’s obligations to creditors, as of September 28, 2018, FHV LLC executed an Assignment for the Benefit of Creditors under California law, whereby all of the assets of FHV LLC have been assigned to a third party fiduciary who will liquidate such assets and distribute the proceeds to FHV LLC’s creditors pursuant to the priorities established and permitted by law.

Discontinued operations for the three and nine months ended March 31, 2019 and 2018 consist of the operations from the FHV LLC subsidiary.

Gain (Loss) from Discontinued Operations

	For the three months ended March 31,					For the nine months ended March 31,
	2019		2018			2019			2018
Revenues:
Vending machine sales, net	$	-	$	70,728		$	-		$	164,267
Franchise fees		-		7,045			-			14,340
Company owned machine sales		-		-			-			-
Royalties		-		76,630			8,041			231,743
Other		-		14,825			2,050			47,663

Total revenue, net		-		169,228			10,091			458,013

Cost of revenues		-		92,326			5,237			171,706

Gross margin		-		76,902			4,854			286,307

Operating expenses:
Personnel		-		43,685			-			692,226
Marketing		-		30,589			-			28,981
Professional fees		-		15,047			26,451			45,760
Insurance		-		14,607			-			37,546
Rent		-		12,618			6,199			32,718
Depreciation and amortization		-		7,032			-			10,802
Stock compensation		-		-			-			155,953
Research and development		-		-						3,000
Provision for legal settlement		-		70,434			-			376,394
Other		-		37,740			6			121,221

Total operating expenses		-		231,752			32,656			1,504,601

Income (loss) from operations		-		(154,850	)		(27,802	)		(1,218,294	)

Other expenses:
Interest expense		-		(32,960	)		-			(154,660	)
Derivative liability income (expense)		-		-			-			(220,003	)
Loss before provision for income taxes		-		(187,810	)		(27,802	)		(1,592,957	)

Provision for income taxes		-		-			-			-

Loss from operations		-		(187,810	)		(27,802	)		(1,592,957	)

Gain from disposition of operations				-			169,304			-

Net gain (loss)	$	-	$	(187,810	)	$	141,502		$	(1,592,957	)

See accompanying notes to the unaudited condensed consolidated financial statements.

The following tables lists the assets of discontinued operations and liabilities of discontinued operations as of March 31, 2019 and June 30, 2018 for FHV LLC.

Assets and Liabilities of Discontinued Operations

	March 31, 2019		June 30, 2018
	(unaudited)		(audited)
Current assets:

Cash	$	-	$	26,417
Restricted cash		-		1,500
Accounts receivable, net of allowance for doubtful accounts of $174,011		-		18,451
Inventory on-hand, net of allowance for obsolete inventory of $100,000		-		246,296

Current assets held for disposition	$	-	$	292,664

Current liabilities:
Accounts payable and accrued liabilities	$	-	$	280,159
Contract liabilities - customer advances and deferred revenues		-		515,517
Provision for franchisee rescissions and refunds		-		496,000

Total current liabilities	$	-	$	1,291,676

Generation NEXT Franchise Brands, Inc. 10-Q