4. Gain on Sale of Assets

Effective July 21, 2016, we entered into an agreement with the joint venture we formed in 2015, Wagley-EnergyTEK J.V. LLC (the “Wagley J.V.”), our subsidiary Texas Gulf Exploration & Production, Inc. (“TGEP”), Damon Wagley, the former president of TGEP, our subsidiary Legal Capital Corp., and our former director and executive officer, Mr. Craig Crawford, among other parties. Pursuant to the agreement, the Wagley J.V. was dissolved, and the 2,000,000 shares we contributed to the Wagley J.V. were cancelled. Litigation Capital, Inc. redeemed its Series B Preferred Stock in exchange for 30,000 shares of the Company’s common stock. Pursuant to this agreement, Mr. Crawford also resigned as an executive officer and director of the Company.

TGEP assumed $180,248 of the Company’s debt, which consisted of approximately $174,000 in notes payable and $6,000 in accounts payable. Additionally, per this agreement, TGEP and Legal Capital Corp. would become wholly-owned subsidiaries of Litigation Capital, Inc. once certain requirements had been met, and the debt would be assumed by that entity. In December 2016, the requirements were met, and the subsidiaries and related debt were transferred to Litigation Capital, Inc. This was recorded as a gain on sale of asset.