Annual report pursuant to Section 13 and 15(d)

DISCONTINUED OPERATIONS

v3.20.4
DISCONTINUED OPERATIONS
12 Months Ended
Sep. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS

NOTE 11 – DISCONTINUED OPERATIONS

 

In March 2018, the Company approved the spin-off VoiceInterop into a separate company under a Form S-1 registration to be filed with the United States Securities and Exchange Commission.

 

On April 23, 2018, the board of Directors declared a stock dividend for certain shareholders of the Company. The Company will distribute to its shareholders owning Common Stock and Series C and D Preferred stock an aggregate of 17,819,827 shares of shares of Common Stock of VoiceInterop. That each common shareholder would receive .075 shares of VoiceInterop common stock for each one (1) share of Cleartronic stock held by the shareholder, and that each shareholder of Series C and D Preferred stock shall receive .375 shares of VoiceInterop common stock for each one (1) share of Series C or Series D Preferred stock held by the shareholder.

 

The record date of the dividend distribution shall be defined as the first business day following an effective statement from the United States Securities and Exchange Commission ("SEC") regarding a pending S-1 filing. On May 13, 2019 VoiceInterop filed an S-1 registration statement with the SEC.  On November 14, 2019, VoiceInterop, Inc's., S-1 Registration Statement was declared effective by Securities and Exchange Commission.

 

The Company's history is being reviewed by the Financial Industry Regulatory Authority ("FINRA") and as of the date of this filing the review is not been completed. No dividends can be distributed until that review is completed and approved by FINRA.  On February 14, 2020, the distribution of shares was approved by FINRA and completed and deconsolidation was completed. 

 

The following table illustrates the reporting of the discontinued operations included in the Statements of Operations for the period from October 1, 2019 to February 14, 2020 and for the year ended September 30, 2019.

 

For the period from October 1, 2019 to February 14, 2020

(Deconsolidation Date)

For the Year

Ended

September 30, 2019

Revenue

 $                 27,698

 $               87,254

Cost of Revenue

                    12,383

                    38,910

Gross Profit

                    15,315

                    48,344

 

 

 

Operating Expenses:

 

 

   Selling expenses

                     3,862

                     17,032

   Administrative expenses

                    24,151

                    71,770

   Professional Fees

                    50,007

                           66,968

   Total Operating Expenses

                    78,020

                    155,770

 

 

 

Loss from operations

                   (62,705)

                   (107,426)

 

 

 

Other Income (Expense)

 

 

Other Income

                     5,750

                    23,358

Interest and other expense

                    (7,981)

                    (20,479)

Total Other Income (Expense)

                    (2,231)

2,879

 

 

 

Loss Before Income Taxes

                   (64,936)

                   (104,547)

Provision for Income Taxes

                            -

                            -

Loss from discontinued operations

    $               (64,936)

     $              (104,547)

 

On February 14, 2020, the Company recorded $225,316 to additional paid in capital for deconsolidation of VoiceInterop, Inc. and discontinued operations are not presented.  

       

 

February 14,

 

September 30,

 

2020

 

2019

 

(Deconsolidation Date)

 

 

Current assets:

 

 

 

Cash

 $        2,279

 

 $          4,136

Accounts Receivable

            4,780

 

                     -

Operating lease asset, net

          62,226

 

                     -

 

 

 

 

Total Assets from discontinued operations

 $     69,285

 

 $         4,136

 

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

 $       92,236

 

 $        77,584

Operating lease liability, current

          33,941

 

                     -

Deferred revenue, current portion

          17,357

 

             23,492

Deferred rent, current portion

                   -

 

                 896

Installment loan, net, current portion

          31,269

 

             14,587

Due to related parties

          11,362

 

                     -

Due to unrelated parties

          68,000

 

             68,000

Total Current liabilities from discontinued operations

        254,165

 

           184,559

 

 

 

 

Long Term Liabilities

 

 

 

Deferred revenue, net of current

                8,263

 

                    9,987

Deferred rent, long term portion

                   -

 

                 680

Operating lease liability, net of current

          32,173

 

                     -

Deferred revenue, current portion

                   -

 

                     -

Total Long term liabilities from discontinued operations

          40,436

 

             10,667

 

 

 

 

Total Liabilities from discontinued operations

 $   294,601

 

 $    195,226

 

Due to related party

 

During the year ended September 30, 2020, the Company owed $20,362 to two officers, of which $7,262 is included in liabilities from discontinued operations.  The loan is non-interest bearing and payable on demand.  As of September 30, 2020, the loan balance of $9,000 was paid in full. The remaining balance of $11,362 included in liabilities from discontinued operations was deconsolidated as of February 14, 2020.    

 

Installment Loan Payable

 

On December 14, 2018, VoiceInterop entered into a Business Loan Agreement with WebBank whereby VoiceInterop borrowed $59,751, of this amount $15,491 was recorded as debt issuance cost. The agreement calls for 308 installments of $194 paid over 432 days. The debt issuance cost is amortized over the life of the loan. As of September 30, 2020, the remaining loan balance of $18,429 was paid in full from the note payable dated October 8, 2019.

 

On October 8, 2019, VoiceInterop entered into a Business Loan Agreement with WebBank whereby VoiceInterop borrowed $56,680, of this amount $13,080 was recorded as debt issuance cost. The debt issuance cost is amortized over the life of the loan. The agreement calls for 308 installments of $184 paid over 432 days. The Company used $18,429 of loan proceeds to pay off the remaining loan balance of WebBank loan dated December 14, 2018. As of February 14, 2020, the loan balance is $31,269, net of debt issuance cost of $10,688. The amount is included in VoiceInterop deconsolidation as of February 14, 2020.

 

Subscription Agreements between VoiceInterop, Inc. and private investors

 

During the year ended September 30, 2018, VoiceInterop committed to sell 600,000 shares of its common stock to private investors for $68,000. The shares issuance is contingent upon a spin-off of the Company from Cleartronic, Inc. into a separate company. As of February 14, 2020, the spin-off has been completed and the shares have been issued.

 

Operating lease asset and liability

 

VoiceInterop subleases part of its office space to two entities for approximately $1,150 per month and is included in income from discontinued operations. Sublease rental income received during the period from October 1, 2019 through February 14, 2020 (deconsolidation date), was $5,750.  

 

The Company adopted the new lease guidance effective October 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before October 1. 2019.  We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. The adoption of the new guidance resulted in the recognition of operating lease assets of $75,078 and lease liability of $79,171.

 

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the October 1, 2019 adoption date. This rate was determined to be 23% and the Company determined the initial present value, at inception, of $79,171.

 

Operating lease asset and operating lease liability are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any.

 

The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as operating lease asset, current operating lease liability and non-current operating lease liability.

 

The new standard also provides practical expedients and certain exemptions for an entity's ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the operating lease asset at inception is deemed immaterial, we will not recognize operating lease asset or lease liability. Those leases are expensed on a straight line basis over the term of the lease.

 

As of February 14, 2020 the operating lease liabilities of $66,114 and lease assets of $62,226 were included in liabilities from discontinued operations and were deconsolidated.  

 

Future lease commitments are as follows for the years ended September 30:

   

2021

46,812

2022

7,852

 

$54,644