Annual report pursuant to Section 13 and 15(d)

Discontinued Operations and Disposition of Operating Segment

v3.20.1
Discontinued Operations and Disposition of Operating Segment
12 Months Ended
Dec. 31, 2019
Disposal Group, Including Discontinued Operation, Assets [Abstract]  
Discontinued Operations and Disposition of Operating Segment

DropCar Operating

 

On December 19, 2019, the Company entered into the Asset Purchase Agreement to sell substantially all of the assets associated with the DropCar Operating business. Operating results for the years ended December 31, 2019 and 2018 for the DropCar Operating business are presented as discontinued operations and the assets and liabilities classified as held for sale are presented separately in the balance sheet.

 

A breakdown of the discontinued operations is presented as follows:

 

    Years Ended December 31,  
    2019     2018  
SERVICE REVENUES   $ 4,579,745     $ 6,077,667  
COST OF REVENUE     4,172,320       7,863,673  
GROSS PROFIT (LOSS)     407,425       (1,786,006 )
                 
OPERATING EXPENSES                
   Research and development     205,000       322,269  
   General and administrative     2,245,394       9,119,772  
   Depreciation and amortization     395,081       354,657  
     TOTAL OPERATING EXPENSES     2,845,475       9,796,698  
                 
     OPERATING LOSS     (2,438,050 )     (11,582,704 )
                 
Other income, net     12,827       -  
Interest expense, net     -       (409,082 )
                 
LOSS FROM DROPCAR DISCONTINUED OPERATIONS     (2,425,223 )     (11,991,786 )
INCOME FROM SUISUN CITY DISCONTINUED OPERATIONS     -       315,119  
   LOSS FROM OPERATIONS OF DISCONTINUED COMPONENTS     (2,425,223 )     (11,676,667 )
LOSS ON SALE OF SUISUN CITY COMPONENT     -       (4,169,718 )
     LOSS FROM DISCONTINUED OPERATIONS   $ (2,425,223 )   $ (15,846,385 )

 

 

Assets and liabilities of discontinued operations held for sale included the following:

 

    December 31,  
    2019     2018  
             
Cash   $ 81,457     $ 415,569  
Accounts receivable, net     210,671       295,626  
Prepaid expenses and other current assets     83,058       107,768  
     Current assets held for sale   $ 375,186     $ 818,963  
                 
Property and equipment, net   $ 25,723     $ 39,821  
Capitalized software costs, net     410,261       659,092  
Operating lease right-of-use asset     1,886       -  
Other assets     3,525       3,525  
     Noncurrent assets held for sale   $ 441,395     $ 702,438  
                 
Accounts payable and accrued expenses     737,862       1,033,489  
Deferred revenue     302,914       253,200  
Current liabilities held for sale   $ 1,040,776     $ 1,286,689  

 

Suisun City Operations

 

On December 10, 2018, the Company signed a definitive agreement with a private corporation and completed the sale on December 24, 2018, of 100% of the corporate capital of Suisun City Operations, a wholly owned subsidiary of DropCar, Inc, for a total cash consideration of $3.5 million. The Company recognized the following loss on sale of component on the date of sale:

 

Sales price   $ 3,500,000  
Commissions and various transaction costs     (332,220 )
Net sales proceeds     3,167,780  
         
Carrying amounts of assets, net of liabilities     7,337,498 *
Loss on sale of Suisun City Operations   $ (4,169,718 )

 

* The carrying amounts of assets included cash of $1,504,366; accounts receivable and contract asset of $4,177,568; prepaid expenses and other current assets of $57,486; property and equipment of $295,206; intangibles and goodwill of $5,048,247; carrying amounts of liabilities included accounts payable and accrued liabilities of $3,688,831 and loans of $56,544.

 

The operations and cash flows of the Suisun City Operations were eliminated from ongoing operations following its sale. The operating results of the Suisun City Operations for the year ended December 31, 2018 were as follows:

 

Revenues   $ 13,730,252  
Cost of revenues     10,836,754  
Gross profit     2,893,498  
         
Selling, general and administrative expenses     2,285,661  
Depreciation and amortization     287,830  
Total Operating Expenses     2,573,491  
         
Interest expense, net     4,888  
         
Net income from discontinued operations   $ 315,119