Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Jan. 06, 2014 | Mar. 31, 2013 | |
OptionsToPurchaseSharesOfCommonStockMember | ' | ' | ' |
Entity Registrant Name | 'LIVEDEAL INC | ' | ' |
Entity Central Index Key | '0001045742 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 30-Sep-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--09-30 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $6,124,445 |
Entity Common Stock, Shares Outstanding | ' | 3,787,269 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Assets | ' | ' |
Cash and cash equivalents | $761,458 | $1,305,785 |
Accounts receivable, net | 174,901 | 439,848 |
Prepaid expenses and other current assets | 67,126 | 52,614 |
Total current assets | 1,003,485 | 1,798,247 |
Accounts receivable, long term portion, net | 44,639 | 374,570 |
Property and equipment, net | 71,162 | 50,526 |
Deposits and other assets | 25,563 | 35,707 |
Intangible assets, net | 2,848,401 | 1,997,671 |
Total assets | 3,993,250 | 4,256,721 |
Liabilities and Stockholders' Equity | ' | ' |
Accounts payable | 524,053 | 1,017,363 |
Accrued liabilities | 299,464 | 410,104 |
Total liabilities | 823,517 | 1,427,467 |
Stockholders' equity: | ' | ' |
Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 127,840 issued and outstanding, liquidation preference $38,202 | 10,866 | 10,866 |
Common stock, $0.001 par value, 10,000,000 shares authorized, 3,778,558 and 2,620,486 shares issued and outstanding at September 30, 2013 and September 30, 2012, respectively | 3,779 | 2,620 |
Paid in capital | 30,488,735 | 24,400,483 |
Accumulated deficit | -27,333,647 | -21,584,715 |
Total stockholders' equity | 3,169,733 | 2,829,254 |
Total liabilities and stockholders' equity | $3,993,250 | $4,256,721 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Stockholders' equity: | ' | ' |
Series E convertible preferred stock, par value | $0.00 | $0.00 |
Series E convertible preferred stock, shares authorized | 200,000 | 200,000 |
Series E convertible preferred stock, issued | 127,840 | 127,840 |
Series E convertible preferred stock, outstanding | 127,840 | 127,840 |
Series E convertible preferred stock, liquidation preference | $38,202 | $38,202 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 3,778,558 | 2,620,486 |
Common stock, shares outstanding | 3,778,558 | 2,620,486 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Consolidated Statements Of Operations | ' | ' |
Net revenues | $2,351,868 | $3,070,503 |
Cost of services | 916,331 | 715,457 |
Gross profit | 1,435,537 | 2,355,046 |
Operating expenses: | ' | ' |
General and administrative expenses | 4,114,843 | 3,290,002 |
Sales and marketing expenses | 58,788 | 12,310 |
Total operating expenses | 4,173,631 | 3,302,312 |
Operating loss | -2,738,094 | -947,266 |
Other expense: | ' | ' |
Interest expense, net | -3,291,031 | -610,485 |
Other income | 279,403 | -29,890 |
Total other expense, net | -3,011,628 | -640,375 |
Loss from continuing operations | -5,749,722 | -1,587,641 |
Discontinued operations | ' | ' |
Income from discontinued component, including disposal costs | 2,708 | 12,433 |
Income from discontinued operations | 2,708 | 12,433 |
Net loss | ($5,747,014) | ($1,575,208) |
Earnings per share - basic and diluted: | ' | ' |
Loss from continuing operations | ($1.84) | ($0.77) |
Discontinued operations | $0 | $0.01 |
Net loss | ($1.84) | ($0.76) |
Weighted average common shares outstanding: | ' | ' |
Basic & diluted | 3,131,420 | 2,068,828 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Common Stock | Preferred Stock | Treasury Stock | Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, value at Sep. 30, 2011 | $698 | $10,866 | ($70,923) | $20,813,082 | ($20,007,589) | $746,134 |
Beginning balance, shares at Sep. 30, 2011 | 698,491 | 127,840 | ' | ' | ' | ' |
Series E preferred stock dividends | ' | ' | ' | ' | -1,918 | -1,918 |
Stock based compensation | ' | ' | ' | 16,942 | ' | 16,942 |
Issuance of common stock for cash, shares | 1,694,529 | ' | ' | ' | ' | ' |
Issuance of common stock for cash, value | 1,694 | ' | ' | 2,348,306 | ' | 2,350,000 |
Restricted stock cancellations, shares | -25 | ' | ' | ' | ' | ' |
Issuance of common stock for services, shares | 47,827 | ' | ' | ' | ' | ' |
Issuance of common stock for services, value | 48 | ' | ' | 124,718 | ' | 124,766 |
Issuance of common stock for intangibles, shares | 75,000 | ' | ' | ' | ' | ' |
Issuance of common stock for intangibles, value | 75 | ' | ' | 419,925 | ' | 420,000 |
Beneficial conversion feature on convertible debt and warrants | ' | ' | ' | 489,594 | ' | 489,594 |
Conversion of note payable, shares | 109,139 | ' | ' | ' | ' | ' |
Conversion of note payable, value | 109 | ' | ' | 258,835 | ' | 258,944 |
Treasury stock retired, shares | -4,475 | ' | ' | ' | ' | ' |
Treasury stock retired, value | -4 | ' | 70,923 | -70,919 | ' | ' |
Net loss | ' | ' | ' | ' | -1,575,208 | -1,575,208 |
Ending balance, value at Sep. 30, 2012 | 2,620 | 10,866 | 0 | 24,400,483 | -21,584,715 | 2,829,254 |
Ending balance, shares at Sep. 30, 2012 | 2,620,486 | 127,840 | ' | ' | ' | ' |
Series E preferred stock dividends | ' | ' | ' | ' | -1,918 | -1,918 |
Stock based compensation | ' | ' | ' | 173,073 | ' | 173,073 |
Issuance of common stock for cash, shares | 44,233 | ' | ' | ' | ' | ' |
Issuance of common stock for cash, value | 44 | ' | ' | 152,116 | ' | 152,160 |
Issuance of common stock for services, shares | 67,476 | ' | ' | ' | ' | ' |
Issuance of common stock for services, value | 68 | ' | ' | 227,644 | ' | 227,712 |
Issuance of common stock for intangibles, shares | 200,000 | ' | ' | ' | ' | ' |
Issuance of common stock for intangibles, value | 200 | ' | ' | 993,800 | ' | 994,000 |
Beneficial conversion feature on convertible debt and warrants | ' | ' | ' | 3,291,466 | ' | 3,291,466 |
Conversion of note payable, shares | 846,363 | ' | ' | ' | ' | ' |
Conversion of note payable, value | 847 | ' | ' | 1,250,153 | ' | 1,251,000 |
Net loss | ' | ' | ' | ' | -5,747,014 | -5,747,014 |
Ending balance, value at Sep. 30, 2013 | $3,779 | $10,866 | $0 | $30,488,735 | ($27,333,647) | $3,169,733 |
Ending balance, shares at Sep. 30, 2013 | 3,778,558 | 127,840 | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($5,747,014) | ($1,575,208) |
Depreciation and amortization | 264,112 | 259,975 |
Non-cash interest expense associated with convertible debt and warrants | 3,291,466 | 489,594 |
Stock based compensation expense | 173,073 | 16,942 |
Non-cash issuance of common stock for services | 227,712 | 124,766 |
Provision for uncollectible accounts | -293,876 | -81,026 |
Loss on disposal of property and equipment | 0 | 36,040 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | 888,754 | 292,902 |
Prepaid expenses and other current assets | -14,512 | 60,709 |
Deposits and other assets | 10,144 | -4,700 |
Accounts payable | -493,310 | 416,455 |
Accrued liabilities | -111,558 | -7,465 |
Net cash provided by (used in) operating activities | -1,805,009 | 28,984 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Expenditures for intangible assets | -91,483 | -482,413 |
Purchases of property and equipment | -49,995 | -48,264 |
Net cash used in investing activities | -141,478 | -530,677 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Payments on notes payable | 0 | -1,000,000 |
Principal repayments on capital lease obligations | 0 | -36,992 |
Issuance of common stock for cash | 152,160 | 2,350,000 |
Proceeds from issuance of convertible debt and warrants | 1,250,000 | 250,000 |
Net cash provided by financing activities | 1,402,160 | 1,563,008 |
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | -544,327 | 1,061,315 |
CASH AND CASH EQUIVALENTS, beginning of period | 1,305,785 | 244,470 |
CASH AND CASH EQUIVALENTS, end of period | 761,458 | 1,305,785 |
Noncash financing and investing activities: | ' | ' |
Issuance of common stock in connection with the acquisition of LiveOpenly | 0 | 420,000 |
Issuance of common stock for intangibles | 994,000 | 0 |
Conversion of notes payable and accrued interest into common stock | 1,251,000 | 258,944 |
Accrued and unpaid dividends | 1,918 | 1,918 |
Interest paid | $150 | $97,895 |
Note_1_Organization_and_Basis_
Note 1: Organization and Basis of Presentation | 12 Months Ended | ||
Sep. 30, 2013 | |||
Note 1 Organization And Basis Of Presentation | ' | ||
Note 1: Organization and Basis of Presentation | ' | ||
The accompanying consolidated financial statements include the accounts of LiveDeal, Inc. (formerly YP Corp.), a Nevada corporation, and its wholly owned subsidiaries (collectively the “Company”). The Company delivers local customer acquisition services for small and medium-sized businesses combined with online listing services to deliver an affordable way for businesses to extend their marketing reach to local, relevant customers via the Internet. | |||
The Company’s new strategic focus is on developing and marketing a suite of affordable products and services designed to meet the online marketing needs of small and medium-sized businesses by boosting customer awareness and merchant visibility on the internet. The Company primarily sells this suite of products and services via telemarketing. | |||
The following sets forth historical transactions with respect to the Company’s organizational development: | |||
· | Telco Billing, Inc. was formed in April 1998 to provide advertising and directory listings for businesses on its Internet website in a “Yellow Pages” format. Telco provides those services to its subscribers for a monthly fee. These services are provided primarily to businesses throughout the United States. Telco became a wholly owned subsidiary of the Company after the June 1999 acquisition. | ||
· | At the time that the transaction was agreed to, the Company had 12,567,770 common shares issued and outstanding. As a result of the merger transaction with Telco, there were 29,567,770 common shares outstanding, and the former Telco stockholders held approximately 57% of the Company’s voting stock. For financial accounting purposes, the acquisition was a reverse acquisition of the Company by Telco, under the purchase method of accounting, and was treated as a recapitalization with Telco as the acquirer. Consistent with reverse acquisition accounting, (i) all of Telco’s assets, liabilities, and accumulated deficit were reflected at their combined historical cost (as the accounting acquirer) and (ii) the preexisting outstanding shares of the Company (the accounting acquiree) were reflected at their net asset value as if issued on June 16, 1999. | ||
· | On June 6, 2007, the Company completed its acquisition of LiveDeal, Inc. (“LiveDeal”), a California corporation. LiveDeal operated an online local classifieds marketplace, www.livedeal.com, which listed millions of goods and services for sale across the United States. The technology acquired in the acquisition offered such classifieds functionality as fraud protection, identity protection, e-commerce, listing enhancements, photos, community-building, package pricing, premium stores, featured Yellow Page business listings and advanced local search capabilities. This business has since been discontinued. See Note 4. | ||
· | On July 10, 2007, the Company acquired substantially all of the assets and assumed certain liabilities of OnCall Subscriber Management Inc., a Manila, Philippines-based company that provided telemarketing services. The acquisition took place through the Company’s wholly-owned subsidiary, 247 Marketing LLC, a Nevada limited liability company, which remains in existence but is inactive. | ||
· | On August 10, 2007, the Company filed amended and restated articles of incorporation with the Office of the Secretary of State of the State of Nevada, pursuant to which the Company’s name was changed to LiveDeal, Inc., effective August 15, 2007. The name change was approved by the Company’s Board of Directors pursuant to discretion granted to it by the Company’s stockholders at a special meeting on August 2, 2007. | ||
· | During 2010, the Company evaluated its business and adopted a new business strategy that addressed each of the Company’s business segments as separate entities and re-launched and restructured the Company’s legacy line of business. This evaluation was necessitated by the challenges facing the Company’s Direct Sales business lines that provide Internet-based customer acquisition strategies for small business, as well as declining revenues from the Company’s traditional business line (i.e. directory services). | ||
· | During 2011, as part of the Company’s strategy to evaluate each of the Company’s business segments as separate entities, management noted that the Direct Sales business segment had incurred operating losses and declining revenues and did not fit with the Company’s change in strategic direction. Accordingly, in March 2011, the Company made the strategic decision to discontinue our Direct Sales business and product offerings. Prior year financial statements have been restated to present the Direct Sales business segment as a discontinued operation. | ||
· | On August 16, 2012, the Company acquired substantially all of the assets of LiveOpenly, Inc., a California corporation (“LiveOpenly”), which sourced, published and sold discounted offers for goods and services through local retail merchants, in exchange for the issuance of 75,000 shares of the Company’s common stock. In connection with the acquisition, the Company recorded $420,000 of net assets, consisting entirely of intangible assets. No goodwill was recognized as the purchase price equaled the net assets received. | ||
· | During 2012, the Company also launched two new business lines under new management after a period of re-evaluating our sales program, products, distribution methods and vendor programs. First, we commenced the sale of marketing tools that help local businesses manage their online presence under our Velocity Local™ brand, which we refer to as online presence marketing, in November 2012. Second, we commenced sourcing local deal and activities to strategic publishing partners under our LiveDeal® brand, which we refer to as promotional marketing, in August 2012. We continue to actively develop, revise and evaluate these products and services. | ||
· | During 2013, the Company launched LiveDeal.com, which redefined the Company’s strategy and direction, centering its focus on the new LiveDeal.com platform and growing the base of restaurants utilizing the LiveDeal platform to attract new customers. LiveDeal.com is a unique, real-time “deal engine” connecting merchants with consumers. The Company believes that it has developed the first-of-its-kind web/mobile platform providing restaurants with full control and flexibility to instantly publish customized offers whenever they wish to attract customers. | ||
The Company had a net loss of $5.7 million for the year ended September 30, 2013 and $1.6 million for the year ended September 30, 2012. The Company had an operating cash outflow of approximately $(1.8) million for the year ended September 30, 2013 and operating cash inflow of approximately $29,000 for the year ended September 30, 2012. The Company had cash of $761,458 as of September 30, 2013. Management believes the Company’s cash on hand and additional cash generated from operations together with potential sources of cash such through the issuance of debt or equity will provide the Company with sufficient liquidity for the next 12 months. |
Note_2_Summary_of_Significant_
Note 2: Summary of Significant Accounting Policies | 12 Months Ended | ||
Sep. 30, 2013 | |||
Accounting Policies [Abstract] | ' | ||
Note 2: Summary of Significant Accounting Policies | ' | ||
Principles of Consolidation | |||
The accompanying consolidated financial statements represent the consolidated financial position and results of operations of the Company and include the accounts and results of operations of the Company, LiveDeal, Local Marketing Experts, Inc., Velocity Marketing Concepts, Inc., 247 Marketing Inc., Telco Billing, Inc. Telco of Canada, Inc., and Velocity Local Inc. ,the Company’s wholly owned subsidiaries, for the years ended September 30, 2013 and 2012, as applicable. All intercompany transactions and balances have been eliminated in consolidation. | |||
Use of Estimates | |||
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Significant estimates made in connection with the accompanying consolidated financial statements include the estimate of dilution and fees associated with LEC billings, the estimated reserve for doubtful accounts receivable, estimated forfeiture rates for stock-based compensation, fair values in connection with the analysis of goodwill and long-lived assets for impairment, valuation allowances against net deferred tax assets and estimated useful lives for intangible assets and property and equipment. | |||
Financial Instruments | |||
Financial instruments consist primarily of cash, cash equivalents, accounts receivable, advances to affiliates and obligations under accounts payable, accrued expenses and notes payable. The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable approximate fair value because of the short maturity of those instruments. | |||
Cash and Cash Equivalents | |||
This includes all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. At times, cash deposits may exceed FDIC-insured limits. | |||
Property and Equipment | |||
Property and equipment is stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets ranging from three to five years. Depreciation expense was $29,357 and $132,899 for the years ended September 30, 2013 and 2012, respectively. | |||
Revenue Recognition | |||
Directory Services | |||
Revenue is billed and recognized monthly for services subscribed in that specific month. The Company has historically utilized outside billing companies to perform billing services through two primary channels: | |||
· | direct ACH withdrawals; and | ||
· | inclusion on the customer’s local telephone bill provided by their Local Exchange Carriers, or LECs. | ||
For billings via ACH withdrawals, revenue is recognized when such billings are accepted. For billings via LECs, the Company recognizes revenue based on net billings accepted by the LECs. Due to the periods of time for which adjustments may be reported by the LECs and the billing companies, the Company estimates and accrues for dilution and fees reported subsequent to year-end for initial billings related to services provided for periods within the fiscal year. Such dilution and fees are reported in cost of services in the accompanying consolidated statements of operations. Customer refunds are recorded as an offset to gross revenue. | |||
Revenue for billings to certain customers that are billed directly by the Company and not through the outside billing companies is recognized based on estimated future collections. The Company continuously reviews this estimate for reasonableness based on its collection experience. | |||
Deals Revenue | |||
The Company recognizes revenue from its sales through its strategic publishing partners of discounted goods and services offered by its merchant clients (“Deals”) when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. These criteria are met when the number of customers who purchase the daily deal exceeds the predetermined threshold, where, if applicable, the Deal has been electronically delivered to the purchaser and a listing of Deals sold has been made available to the merchant. At that time, the Company's obligations to the merchant, for which it is serving as an agent, are substantially complete. The Company's remaining obligations, which are limited to remitting payment to the merchant, are inconsequential or perfunctory. The Company records as revenue an amount equal to the net amount it retains from the sale of Deals after paying an agreed upon percentage of the purchase price to the featured merchant excluding any applicable taxes. Revenue is recorded on a net basis because the Company is acting as an agent of the merchant in the transaction. | |||
Deferred Revenue | |||
In some instances, the Company receives payments in advance of rendering services, whereupon such revenues are deferred until the related services are rendered. Deferred revenue was $2,829 and $2,310 at September 30, 2013 and 2012, respectively. | |||
Allowance for Doubtful Accounts | |||
The Company maintains an allowance for doubtful accounts, which includes allowances for customer refunds, dilution and fees from LEC billing aggregators and other uncollectible accounts. The Company has increased its allowances for doubtful accounts to 82.8% of gross accounts receivable at September 30, 2013 as compared to 65.7% of gross accounts receivable at September 30, 2012. The determination of the allowance for doubtful accounts is dependent on many factors, including regulatory activity, changes in fee schedules by LEC service providers and recent historical trends. | |||
As of September 30, 2013, approximately 57% of the Company’s allowance for doubtful accounts is an allowance against an outstanding receivable balance that is in dispute. After excluding these reserves from the related accounts receivable balances the allowance for doubtful accounts as a percentage of gross accounts receivable increases to 68%. As of September 30, 2012, approximately 93% of the Company’s allowance for doubtful accounts is an allowance against accounts receivable balances and reserves held by a LEC that is in bankruptcy and an allowance against an outstanding receivable balance that is in dispute. After excluding these reserves from the related accounts receivable balances, the allowance for doubtful accounts as a percentage of gross accounts receivable decreases to 12.6%. See Note 17. | |||
Legal Costs | |||
The Company expenses legal costs associated with loss contingencies as they are incurred. | |||
Income Taxes | |||
Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be provided for those deferred tax assets for which if it is more likely than not that the related benefit will not be realized. The Company classifies tax-related penalties and interest as a component of income tax expense for financial statement presentation. | |||
Stock-Based Compensation | |||
The Company from time to time grants restricted stock awards and options to employees and executives. Such awards are valued based on the grant date fair-value of the instruments, net of estimated forfeitures. The value of each award is amortized on a straight-line basis over the vesting period. | |||
Net Loss Per Share | |||
Net loss per share is calculated in accordance with FASB ASC 260, “Earnings Per Share”. Under ASC 260 basic net loss per share is computed using the weighted average number of common shares outstanding during the period except that it does not include unvested restricted stock subject to cancellation. Diluted net loss per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of warrants, restricted shares and convertible preferred stock. The dilutive effect of outstanding restricted shares and warrants is reflected in diluted earnings per share by application of the treasury stock method. Convertible preferred stock is reflected on an if-converted basis. | |||
Internally Developed Software and Website Development Costs | |||
The Company incurs internal and external costs to develop software and websites to support its core business functions. The Company capitalizes internally generated software and website development costs in accordance with the provisions of the FASB ASC 350, “Intangibles – Goodwill and Other”. | |||
Impairment of Long-lived Assets | |||
The Company assesses long-lived assets for impairment in accordance with the provisions of FASB ASC 360 “Property, Plant and Equipment”. A long-lived asset (or group of assets) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of a long lived asset is not recoverable if it exceeds the sum of the undiscounted net cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the net book value of the asset and its estimated fair value. For purposes of these tests, long-lived assets must be grouped with other assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. | |||
Recently Issued Accounting Pronouncements | |||
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the FASB determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 has not had a material impact on our financial position or results of operations. | |||
In October 2012, the FASB issued ASU No. 2012-04, “Technical Corrections and Improvements, (“ASU 2012-04”).” This update includes source literature amendments, guidance clarification, reference corrections and relocated guidance affecting a variety of topics in the Codification. The update also includes conforming amendments to the Codification to reflect ASC 820’s fair value measurement and disclosure requirements. The amendments in this update that will not have transition guidance are effective upon issuance. The amendments in this update that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. This ASU is effective for reporting periods beginning on or after January 1, 2013. Our adoption of ASU 2011-11 on January 1, 2013, did not have a material impact our financial statement. |
Note_3_Going_Concern
Note 3: Going Concern | 12 Months Ended |
Sep. 30, 2013 | |
Risks and Uncertainties [Abstract] | ' |
Note 3: Going Concern | ' |
The accompanying Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying Consolidated Financial Statements, the Company had a net loss of $5,747,014 for the year ended September 30, 2013 and had an accumulated deficit of $27,333,647 as of September 30, 2013 | |
Because of the infancy of the Company’s new lines of business, the Company has yet to generate significant revenue from its online presence marketing or promotional marketing lines of business. Given that the Company has not been accepting new customers for its legacy product offerings since July 2011 and that it did not launch its new product offerings until August 2012, the Company’s revenues declined for fiscal 2013 as compared to fiscal 2012 as the Company continued to build a foundation for its new products and services and position the Company for future growth through its LiveDeal.com and Velocity Local™ offerings. | |
The Company will require additional capital to finance its planned business operations as it continues to build and market its LiveDeal.com and Velocity Local™ offerings and develop other new products. In addition, the Company may require additional capital to finance acquisitions or other strategic investments in its business. Other sources of financing may include stock issuances (for example, pursuant to our Engagement Agreement with Chardan Capital Markets LLC, under which we may issue and sell up to a maximum aggregate amount of 660,000 shares of our common stock from time to time through Chardan as our sales agent, using our shelf registration statement on Form S-3 (File No. 333-187397) previously filed with the SEC); additional loans (for example, through our sale and issuance of convertible notes pursuant to the $5 million line of credit that we entered into in January 2014); or other forms of financing. Any financing obtained may further dilute or otherwise impair the ownership interest of the Company’s existing stockholders. If the Company is unable to generate positive cash flows or raise additional capital in a timely manner or on acceptable terms, the Company may (i) not be able to make acquisitions or other strategic investments in its business, (ii) modify, delay or abandon some or all of its business plans, and/or (iii) be forced to cease operations. | |
The accompanying Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. |
Note_4_Discontinued_Operations
Note 4: Discontinued Operations | 12 Months Ended | ||
Sep. 30, 2013 | |||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||
Note 4: Discontinued Operations | ' | ||
As part of the Company’s strategy to evaluate each of its business segments as separate entities, management noted that the Direct Sales business segment had incurred operating losses and declining revenues and did not fit with the Company’s change in strategic direction. Accordingly, in March 2011, the Company made the strategic decision to discontinue its Direct Sales business and product offerings. Prior year financial statements have been restated to present the Direct Sales business segment as a discontinued operation. | |||
The Company initiated shutdown activities in March 2011 and closed the Direct Sales business segment in May 2011. In conjunction with the discontinued operations, the Company recorded the following charges in the year ended September 30, 2011: | |||
· | Employee contract termination charges of $7,083 reflecting the reduction in force of 7 employees; and | ||
· | Non cash impairment charges of $367,588 consisting of the write-off of net intangible assets. | ||
The direct sales business segment accounted for $0 net revenues for the years ended September 30, 2013 and 2012. Net revenues from this business segment are now included as part of income from discontinued operations in the accompanying consolidated statements of operations. Net income for the year ended September 30, 2013 and 2012 consisted of a recovery on a bad debt from a previous period. |
Note_5_Business_Combination
Note 5: Business Combination | 12 Months Ended |
Sep. 30, 2013 | |
Business Combinations [Abstract] | ' |
Note 5: Business Combination | ' |
On August 16, 2012 (the “Acquisition Date”), the Company completed its acquisition of substantially all of the assets of LiveOpenly, Inc., a California corporation (“LiveOpenly”), which sourced, published and sold discounted offers for goods and services through local retail merchants. The Company acquired the assets of LiveOpenly to assist in the implementation its new business line. Under the terms of the acquisition, the Company acquired LiveOpenly’s sourcing contracts, software, customer lists, trademarks, domain names, and related assets in exchange for the issuance of 75,000 shares of our common stock. The purchase price for the assets of LiveOpenly was determined by using the value of the stock on the Acquisition Date, which was $420,000. The purchase price was allocated to a customer list and marketing related intangibles of $252,000 and $168,000, respectively. The intangibles will be amortized over their estimated useful life of seven years. No goodwill was recognized as the purchase price equaled the fair value of the net assets received. | |
In connection with the purchased business from LiveOpenly, the Company engaged Ejimofor Umenyiora, the former Director of Sales of LiveOpenly, and Akeem Adeteju, the former Chief Technology Officer of LiveOpenly, as independent contractors. | |
Note_6_Balance_Sheet_Informati
Note 6: Balance Sheet Information | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||
Note 6: Balance Sheet Information | ' | ||||||||
Balance sheet information is as follows: | |||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Receivables, current, net: | |||||||||
Accounts receivable, current | $ | 904,197 | $ | 1,863,067 | |||||
Less: Allowance for doubtful accounts | (729,296 | ) | (1,423,219 | ) | |||||
$ | 174,901 | $ | 439,848 | ||||||
Receivables, long term, net: | |||||||||
Accounts receivable, long term | $ | 374,708 | $ | 510,587 | |||||
Less: Allowance for doubtful accounts | (330,069 | ) | (136,017 | ) | |||||
$ | 44,639 | $ | 374,570 | ||||||
Total receivables, net: | |||||||||
Gross receivables | $ | 1,278,905 | $ | 2,373,654 | |||||
Less: Allowance for doubtful accounts | (1,059,365 | ) | (1,559,236 | ) | |||||
$ | 219,540 | $ | 814,418 | ||||||
Long term receivables consist of reserves held by LEC processors that are not expected to be settled within 12 months. | |||||||||
As of September 30, 2013, approximately 57% of the Company’s allowance for doubtful accounts was an allowance against an outstanding receivable balance that is in dispute. After excluding these reserves from the related accounts receivable balances the allowance for doubtful accounts as a percentage of gross accounts receivable increases to 68%. As of September 30, 2012, approximately 93% of the Company’s allowance for doubtful accounts was an allowance against accounts receivable balances and reserves held by a LEC that is in bankruptcy and an allowance against an outstanding receivable balance that is in dispute. After excluding these reserves from the related accounts receivable balances, the allowance for doubtful accounts as a percentage of gross accounts receivable decreases to 12.6%. See Note 17. | |||||||||
Components of allowance for doubtful accounts are as follows: | |||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Allowance for dilution and fees on amounts due from billing aggregators | $ | 730,777 | $ | 1,525,126 | |||||
Allowance for customer refunds | 6,281 | 34,111 | |||||||
$ | 737,058 | $ | 1,559,237 | ||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Property and equipment, net: | |||||||||
Furnishings and fixtures | $ | 101,611 | $ | 94,511 | |||||
Office, computer equipment and other | 404,580 | 361,685 | |||||||
506,191 | 456,196 | ||||||||
Less: Accumulated depreciation | (435,029 | ) | (405,670 | ) | |||||
$ | 71,162 | $ | 50,526 | ||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Intangible assets, net: | |||||||||
Domain name and marketing related intangibles | $ | 1,513,708 | $ | 1,511,650 | |||||
Website and technology related intangibles | 2,335,728 | 1,252,304 | |||||||
3,849,436 | 2,763,954 | ||||||||
Less: Accumulated amortization | (1,001,035 | ) | (766,283 | ) | |||||
$ | 2,848,401 | $ | 1,997,671 | ||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Accrued liabilities: | |||||||||
Deferred revenue | $ | 2,829 | $ | 2,310 | |||||
Accrued payroll and bonuses | 27,330 | 28,968 | |||||||
Accruals under revenue sharing agreements | 44,167 | 67,601 | |||||||
Accrued expenses - other | 225,138 | 311,225 | |||||||
$ | 299,464 | $ | 410,104 | ||||||
Note_7_Intangible_Assets
Note 7: Intangible Assets | 12 Months Ended | ||||
Sep. 30, 2013 | |||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||
Note 7: Intangible Assets | ' | ||||
The Company’s intangible assets consist of licenses for the use of Internet domain names, Universal Resource Locators, or URLs, capitalized website development costs, other information technology licenses and marketing and technology related intangibles acquired through the acquisition of LiveDeal, Inc. All such assets are capitalized at their original cost and amortized over their estimated useful lives ranging from three to 20 years. | |||||
Based in part on a third party appraisal of the Company’s long-lived assets, the Company determined that no impairment of its long-lived intangible assets existed at September 30, 2013 and 2012. | |||||
The following summarizes estimated future amortization expense related to intangible assets that have net balances as of September 30, 2013: | |||||
2014 | 416,211 | ||||
2015 | 406,550 | ||||
2016 | 362,316 | ||||
2017 | 358,352 | ||||
2018 | 324,389 | ||||
Thereafter | 991,583 | ||||
$ | 2,859,401 | ||||
Total amortization expense related to intangible assets was $234,751 and $140,667 for the years ended September 30, 2013 and 2012, respectively. |
Note_8_LongTerm_Debt
Note 8: Long-Term Debt | 12 Months Ended | ||
Sep. 30, 2013 | |||
Debt Disclosure [Abstract] | ' | ||
Note 8: Long-Term Debt | ' | ||
Everest Group Loan | |||
On May 13, 2011, the Company, certain of the Company’s wholly owned subsidiaries (collectively with the Company, the “Borrowers”), and Everest Group LLC (“Lender”) entered into a Loan Agreement (the “Loan Agreement”), pursuant to which the Lender agreed to loan the Borrowers an aggregate amount not to exceed $1,000,000 (the “Loan”). The Loan was funded to the Borrowers on May 16, 2011. The Borrowers used the proceeds of the Loan for working capital and other general corporate purposes. | |||
The Loan Agreement provided for a one-year term, unless terminated earlier pursuant to its terms or extended upon the mutual agreement of all parties. The Borrowers paid an annual interest rate equal to 18% on the unpaid principal balance of the Loan. Interest will be payable monthly in arrears commencing on June 1, 2011. Commencing on November 1, 2011, and on the first day of each subsequent calendar month, the Borrowers were required to make $50,000 monthly installment payments of principal on the Loan, with the unpaid principal balance was due and payable on the termination date of the Loan. The Loan was paid off in May 2012. | |||
ICG Convertible Note Transaction | |||
On April 3, 2012 (the “Closing Date”), the Company entered into a Note Purchase Agreement (the “ICG Purchase Agreement”) with Isaac Capital Group, LLC (“ICG”), which is a related party, pursuant to which ICG agreed to purchase for cash up to $2,000,000 in aggregate principal amount of the Company’s unsecured Subordinated Convertible Notes (“Notes”). ICG is owned by Jon Isaac, the Company’s President and Chief Executive Officer and a director on the Company’s Board. Prior to this transaction, Mr. Isaac owned 403,225 shares, or 16.8% of the Company’s outstanding common stock. The Purchase Agreement and the Notes, which are unsecured, provide that all amounts payable by the Company to ICG under the Notes will be due and payable on April 3, 2013 (“Maturity Date”), provided that the Company has the option in its discretion to extend the Maturity Date by up to one (1) year if no Event of Default (as defined in the Purchase Agreement) has occurred and is continuing, and the Company is in material compliance with its agreements and covenants under the Purchase Agreement and the Notes, as of the Maturity Date. | |||
On January 14, 2013, the Company and ICG amended the Purchase Agreement to clarify ambiguities and correct inadvertent mistakes related to the warrant issuance timing and the conversion price of a Note, and to amend various anti-dilution features. These changes were consistent with the intent of the parties at the time they entered into the Purchase Agreement and are consistent with the Company’s past practices related to the Notes and warrants. In particular, the amendment clarifies that the warrants will be issued upon conversion (rather than upon issuance) of the Notes and provides that the conversion price of a Note shall be based upon a floor price of $1.00 per share, regardless if the Company’s stock is trading below that amount at the time ICG elects to convert a Note. | |||
The Purchase Agreement and the Notes, as amended, provide that: | |||
· | The Notes will accrue interest at an annual interest rate equal to 8%. All interest will be payable on the Maturity Date or upon the conversion of the applicable Note. | ||
· | The Company has the option to prepay each Note, in whole or in part, at any time without premium or penalty. | ||
· | If ICG elects to convert all or any portion of any Note, the Company must issue to ICG on the date of the conversion a warrant (“Contingent Warrant”) to purchase a number of shares of the Company’s common stock equal to the number of shares issuable upon conversion. This number of shares is subject to adjustment in the event of stock splits or combinations, stock dividends, certain pro rata distributions, and certain fundamental transactions. Each Contingent Warrant will be exercisable for a period of five (5) years following the date of its issuance at an exercise price equal to 120% of the conversion price of the applicable Note (with the exercise price being subject to adjustment under the same conditions as the number of shares for which the warrant is exercisable.) The Contingent Warrants provide that they may be exercised in whole or in part and include a cashless exercise feature. | ||
· | The Notes provide that, upon the occurrence of any Event of Default, all amounts payable to ICG will become immediately due and payable without any demand or notice. | ||
· | The Company may issue additional Notes in an aggregate principal amount of up to $1,750,000 to ICG from time to time upon notice to ICG prior to April 3, 2013, provided that each Note must be in a principal amount of at least $100,000. | ||
· | The Company (i) is required to provide certain financial and other information to ICG from time to time, (ii) must maintain its corporate existence, business, assets, properties, insurance and records in accordance with the requirements set forth in the Purchase Agreement, (iii) with certain exceptions, must not incur or suffer to exist any liens or other encumbrances with respect to the Company’s property or assets, (iv) must not make certain loans or investments except in compliance with the terms of the Purchase Agreement, and (v) must not enter into certain types of transactions, including dispositions of its assets or business. | ||
The events of default (“Events of Default”) which trigger the acceleration of the Notes include (among other things): (i) the Company’s failure to make any payment required under the Notes when due (subject to a three-day cure period), (ii) the Company’s failure to comply with its covenants and agreements under the Purchase Agreement, the Notes and any other transaction documents, and (iii) the occurrence of a change of control with respect to the Company. | |||
The Company issued an initial Note in the principal amount of $250,000 to ICG on the Closing Date. Because the conversion price of $2.53 was less than the stock price, this gave rise to a beneficial conversion feature valued at $166,667. The Company recognized this beneficial conversion feature as a debt discount and additional paid in capital. The discount to the Note is being amortized to interest expense until maturity or its earlier repayment or conversion. | |||
On September 10, 2012, ICG elected to convert a Note with a conversion price of $2.38 per share, resulting in the issuance of 109,139 shares. In accordance with the terms of the agreement, warrants to acquire 109,139 shares were issued upon conversion with an exercise price of ($2.38 x 120%) $2.85 per share. Upon conversion of the convertible debt instrument, the remaining debt discount of $97,222 was immediately recognized as interest expense. The fair value of the warrants issued in connection with the debt conversion was $322,927 and was immediately recognized as interest expense. | |||
On December 11, 2012, the Company issued a second Note to ICG in the principal amount of $250,000, pursuant to the Purchase Agreement. On December 17, 2012, ICG elected to convert that Note with a conversion price of $2.02 per share, resulting in the issuance of 123,829 shares of the Company’s common stock and a warrant to acquire 123,829 additional shares of the Company’s common stock at an exercise price of $2.43 per share. Upon conversion of the convertible debt instrument, the remaining debt discount was immediately recognized as interest expense so that the original amount related to the beneficial conversion feature of 200,738 was fully expensed. | |||
On March 22, 2013 and March 25, 2013, the Company issued a third and fourth Note to ICG in the principal amount of $500,000 and $250,000 respectively, pursuant to the Purchase Agreement. Because the conversion price of $1.38 was less than the stock price, this gave rise to beneficial conversion features valued at $401,386. The Company recognized this beneficial conversion feature as a debt discount and additional paid in capital on March 25, 2013. On March 27, 2013, ICG elected to convert these Notes, resulting in the issuance of 543,962 shares of the Company’s common stock and a warrant to acquire 543,962 additional shares of the Company’s common stock at an exercise price of $1.66 per share. Upon conversion of such Notes, the remaining debt discount of $396,977 was immediately recognized as interest expense. The fair value of the warrants issued in connection with the conversion of these Notes was $1,299,884 and was immediately recognized as interest expense. | |||
On March 28, 2013, the Company issued a fifth Note to ICG in the principal amount of $250,000 pursuant to the Purchase Agreement. Because the conversion price of $1.40 was less than the stock price, this gave rise to a beneficial conversion feature valued at $250,000. The Company recognized this beneficial conversion feature as a debt discount and additional paid in capital on March 28, 2013. On March 28, 2013, ICG elected to convert the Note, resulting in the issuance of 178,572 additional shares of the Company’s common stock and a warrant to acquire 178,572 shares at an exercise price of $1.68 per share. Upon conversion of such Note, the debt discount of $250,000 was immediately recognized as interest expense. The fair value of the warrants issued in connection with the conversion of the Note was $589,442 and was immediately recognized as interest expense. | |||
The Company intends to use the proceeds of all Notes issued in connection with the Purchase Agreement for working capital and other general corporate purposes. |
Note_9_Stockholders_Equity
Note 9: Stockholder's Equity | 12 Months Ended | ||
Sep. 30, 2013 | |||
Equity [Abstract] | ' | ||
Note 9: Stockholder's Equity | ' | ||
Issuances of Common Stock | |||
December 2011 Equity Issuance | |||
On December 12, 2011, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with each of Isaac Capital Group LLC (“ICG”), which is a related party, John Kocmur (“Kocmur”), Kingston Diversified Holdings LLC (“Kingston”), Augustus Gardini, L.P. (“Augustus”) and Lausanne LLC (“Lausanne” and collectively with ICG, Kocmur, Kingston and Augustus, the “Purchasers”) pursuant to which the Company’s issued and sold an aggregate of 1,612,899 shares (the “Shares”) of the Company’s common stock for an aggregate purchase price equal to $2.0 million. Each of ICG, Kocmur and Kingston (the “Lead Purchasers”) invested $500,000 and were issued 403,225 shares of the Company’s Common Stock, and each of Augustus and Lausanne invested $250,000 and were issued 201,612 shares of the Company’s Common Stock. | |||
Pursuant to the Purchase Agreement: | |||
· | The per share purchase price was $1.24, which was the closing bid price of the Company’s common stock, as reported by the NASDAQ Capital Market, on December 12, 2011, the date of the closing of the purchase and sale. | ||
· | Each Lead Purchaser was given the right, until the date that purchaser beneficially owns less than 5% of the Company’s issued and outstanding common stock, to nominate one director for election by the Company’s stockholders at each meeting of the stockholders at which directors are to be elected, and to designate a replacement director to fill any vacancy if the director previously designated or nominated by that purchaser ceases for any reason to be a director. | ||
March 2012 Equity Issuance | |||
In March 2012, the Company issued 45,180 shares of its common stock in exchange for a cash payment of $150,000. | |||
June 2012 Equity Issuance | |||
In June 2012, the Company issued 36,364 shares of its common stock in exchange for a cash payment of $200,000. | |||
August 2013 Equity Issuance | |||
On August 22, 2013, the Company agreed to issue 15,773 shares of common stock to a software developer in exchange for professional services valued at an aggregate of $50,000. The per share valuation associated with the issuance was $3.17, which was equal to the closing price of our common stock as reported on the NASDAQ Capital Market on the date of the transaction. Pursuant to applicable NASDAQ Listing Rules, the share issuance is subject to stockholder approval of our new 2013 Omnibus Equity Incentive Plan, which the Company intends to seek at our 2014 Annual Meeting of Stockholders. | |||
September 2013 Equity Issuance | |||
On September 9, 2013, we issued 200,000 shares to Novalk Apps S.A.S. in exchange for certain customer relationship manager, or CRM, software assets acquired pursuant to an Asset Purchase Agreement dated as of the same date. Such assets were valued at an aggregate of $994,000. The per share purchase price for such shares was $4.97, which was equal to the closing price of our common stock as reported on the NASDAQ Capital Market on the date of the transaction. | |||
On September 30, 2013, we issued 44,233 shares of common stock to John Kocmur, a member of our Board of Directors, in exchange for a cash payment of $152,160. The per share purchase price for such shares was $3.44, which was equal to the closing price of our common stock as reported on the NASDAQ Capital Market on the date of the transaction. | |||
Note Conversions | |||
In September and December 2012 and March 2013, ICG elected to convert five Notes, resulting in the issuance of shares of the Company’s common stock and warrants to acquire additional shares of the Company’s common stock. See Note 10. | |||
Form S-3 Shelf Registration Statement | |||
On March 20, 2013, the Company filed a Registration Statement on Form S-3 with the Securities and Exchange Commission (the “SEC”). On May 6, 2013, the Company filed an amendment to such Registration Statement on Form S-3 (as amended, the “Shelf Registration Statement”). Pursuant to the Shelf Registration Statement, which became effective May 16, 2013, the Company may offer and sell, from time to time in one or more offerings, any combination of common stock, preferred stock, debt securities, warrants, or units having a maximum aggregate offering price of $10,000,000. The Company intends to use the net proceeds from any sale of securities covered by the Shelf Registration Statement and the prospectus contained therein for general corporate purposes. | |||
Increase in Shares Under Amended and Restated 2003 Stock Plan | |||
At the Company’s 2012 Annual Meeting of Stockholders, our stockholders approved a proposal to increase the number of shares of the Company’s common stock available for issuance under the Company’s Amended and Restated 2003 Stock Plan from 140,000 to 340,000 shares. | |||
Series E Convertible Preferred Stock | |||
During the year ended September 30, 2002, pursuant to an existing tender offer, holders of 13,184 shares of the Company’s common stock exchanged said shares for 131,840 shares of Series E Convertible Preferred Stock, at the then $0.85 market value of the common stock. The shares carry a $0.30 per share liquidation preference and accrue dividends at the rate of 5% per annum on the liquidation preference per share, payable quarterly from legally available funds. If such funds are not available, dividends shall continue to accumulate until they can be paid from legally available funds. Holders of the preferred shares are entitled, after two years from issuance, to convert them into common shares on a hundred-to-one basis together with payment of $0.45 per converted share. | |||
Dividends | |||
During each of the years ended September 30, 2013 and 2012, the Company accrued dividends of $1,918, payable to holders of Series E preferred stock. No dividends were paid in 2013 or 2012. |
Note_10_Warrants
Note 10. Warrants | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | ' | ||||||||||||||||
Note 10. Warrants | ' | ||||||||||||||||
As discussed in Note 8, the Company issued several Notes and converted them into shares of common stock, resulting in the issuance of warrants. The following table summarizes information about the Company’s warrants at September 30, 2013: | |||||||||||||||||
Number of Units | Weighted | Weighted | Intrinsic Value | ||||||||||||||
Average | Average | ||||||||||||||||
Exercise Price | Remaining | ||||||||||||||||
Contractual | |||||||||||||||||
Term (in years) | |||||||||||||||||
Outstanding at September 30, 2012 | 109,139 | $ | 2.85 | 4.95 | 253,202 | ||||||||||||
Granted | 846,363 | 1.78 | |||||||||||||||
Exercised | – | – | |||||||||||||||
Outstanding at September 30, 2013 | 955,502 | $ | 1.9 | 4.39 | 1,471,998 | ||||||||||||
Exerciseable at September 30, 2013 | 955,502 | $ | 1.9 | 4.39 | 1,471,998 | ||||||||||||
The warrants were valued using the Black-Scholes pricing model with the following assumptions: | |||||||||||||||||
Volatility | 121%-127% | ||||||||||||||||
Risk-free interest rate | .74% -.89% | ||||||||||||||||
Expected term | 5 years | ||||||||||||||||
Forfeiture rate | 0% | ||||||||||||||||
Dividend yield rate | 0% | ||||||||||||||||
Note_11_Stockbased_Compensatio
Note 11: Stock-based Compensation | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Share-based Compensation [Abstract] | ' | ||||||||||||||||
Note 11: Stock-based Compensation | ' | ||||||||||||||||
Restricted Stock Awards | |||||||||||||||||
The Company previously maintained the 2003 Amended and Restated 2003 Stock Plan (“2003 Plan”), which was approved by the Company’s stockholders, for the issuance of stock-based compensation awards. As amended, the Company was permitted to issue an aggregate of 340,000 shares of common stock under the 2003 Plan. All Company personnel and contractors are eligible to participate in the 2003 Plan. By its terms, the 2003 Plan expired on July 21, 2013 (which was the tenth anniversary of the effective date of the 2003 Plan), and no new awards were made thereafter. The Company anticipates implementing a new equity incentive plan to replace the 2003 Plan. | |||||||||||||||||
In September 2011, in an effort to preserve cash, the Board, after consultation with the Compensation Committee, entered into an agreement to compensate the members of the Board for their monthly retainer and other services as directors and/or members of the Board’s various standing committees through the award of shares of the Company’s common stock under the 2003 Plan. Since inception an aggregate of 83,495 shares were issued to members of the Board of Directors. During the year ended September 30, 2013, 26,484 shares were issued to the Board of Directors. | |||||||||||||||||
As of September 30, 2013, there were 134,816 shares authorized under the 2003 Plan that were granted and remain outstanding and fully vested. | |||||||||||||||||
The following table sets forth the activity with respect to unvested restricted stock grants (results reported in post-split amounts): | |||||||||||||||||
Outstanding (unvested) at September 30, 2011 | 1,342 | ||||||||||||||||
Granted | – | ||||||||||||||||
Forfeited | (26 | ) | |||||||||||||||
Vested | (1,053 | ) | |||||||||||||||
Outstanding (unvested) at September 30, 2012 | 263 | ||||||||||||||||
Granted | – | ||||||||||||||||
Forfeited | – | ||||||||||||||||
Vested | (263 | ) | |||||||||||||||
Outstanding (unvested) at September 30, 2013 | 0 | ||||||||||||||||
Stock Option Awards | |||||||||||||||||
From time to time, the Company grants stock option awards to officers and employees. Such awards are valued based on the grant date fair value of the instruments, net of estimated forfeitures, using a Black-Scholes option pricing model with the following assumptions: | |||||||||||||||||
Year Ended | Year Ended | ||||||||||||||||
30-Sep-13 | 30-Sep-12 | ||||||||||||||||
Volatility | 124%-127% | – | |||||||||||||||
Risk-free interest rate | .08%-.66% | – | |||||||||||||||
Expected term | 1-3.77 years | – | |||||||||||||||
Forfeiture rate | 10% | – | |||||||||||||||
Dividend yield rate | 0% | – | |||||||||||||||
The volatility used was based on historical volatility of the Company’s common stock, which management considers to be the best indicator of expected future volatility. The risk free interest rate was determined based on treasury securities with maturities equal to the expected term of the underlying award. The expected term was determined based on the simplified method outlined in Staff Accounting Bulletin No. 110. | |||||||||||||||||
Stock option awards are expensed on a straight-line basis over the requisite service period. During the years ended September 30, 2013 and 2012, the Company recognized expense of $173,073 and $16,942, respectively, associated with stock option awards. At September 30, 2013, all stock compensation expense associated with issued awards has been recognized. | |||||||||||||||||
The following summarizes stock option activity for the year ended September 30, 2013: | |||||||||||||||||
Weighted | Weighted | ||||||||||||||||
Average | Average | ||||||||||||||||
Number of | Exercise | Remaining | |||||||||||||||
Shares | Price | Contractual Life | Intrinsic Value | ||||||||||||||
Outstanding at September 30, 2012 | – | ||||||||||||||||
Granted | 225,000 | $ | 8.47 | ||||||||||||||
Exercised | – | ||||||||||||||||
Forfeited | – | ||||||||||||||||
Outstanding at September 30, 2013 | 225,000 | $ | 8.47 | 5.9 | – | ||||||||||||
Exercisable at September 30, 2013 | 25,000 | $ | 10 | 0.6 | – | ||||||||||||
The following table summarizes information about the Company’s non-vested shares as of September 30, 2013: | |||||||||||||||||
Weighted-Average | |||||||||||||||||
Number of | Grant-Date | ||||||||||||||||
Non-vested Shares | Shares | Fair Value | |||||||||||||||
Nonvested at September 30, 2012 | – | ||||||||||||||||
Granted | 200,000 | $ | 2.18 | ||||||||||||||
Nonvested at September 30, 2013 | 200,000 | $ | 2.18 | ||||||||||||||
Note_12_Net_Loss_Per_Share
Note 12: Net Loss Per Share | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Note 12: Net Loss Per Share | ' | ||||||||
Net loss per share is calculated using the weighted average number of shares of common stock outstanding during the year. Basic weighted average common shares outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s consolidated balance sheet. Diluted loss per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable from restricted shares, stock options, convertible debt and convertible preferred stock. Preferred stock dividends are subtracted from net loss to determine the amount available to common stockholders. | |||||||||
The following table presents the computation of basic and diluted loss per share: | |||||||||
Year Ended September 30, | |||||||||
2013 | 2012 | ||||||||
Loss from continuing operations | $ | (5,749,722 | ) | $ | (1,587,641 | ) | |||
Less: preferred stock dividends | (1,918 | ) | (1,918 | ) | |||||
Loss from continuing operations applicable to common stock | (5,751,640 | ) | (1,589,559 | ) | |||||
Income (loss) from discontinued operations | 2,708 | 12,433 | |||||||
Net loss applicable to common stock | $ | (5,748,932 | ) | $ | (1,577,126 | ) | |||
Weighted average common shares outstanding - basic and diluted | 3,131,420 | 2,068,828 | |||||||
Earnings per share - basic and diluted: | |||||||||
Loss from continuing operations | $ | (1.84 | ) | $ | (0.77 | ) | |||
Discontinued operations | 0 | 0.01 | |||||||
Net loss | $ | (1.84 | ) | $ | (0.76 | ) | |||
The following potentially dilutive securities were excluded from the calculation of net loss per share because the effects are antidilutive based on the application of the treasury stock method and/or because the Company incurred net losses during the period: | |||||||||
Year Ended September 30, | |||||||||
2013 | 2012 | ||||||||
Options to purchase shares of common stock | 225,000 | – | |||||||
Warrants to purchase shares of common stock | 955,502 | 109,139 | |||||||
Series E convertible preferred stock | 127,840 | 127,840 | |||||||
Shares of non-vested restricted stock | – | 263 | |||||||
Total potentially dilutive shares | 1,308,342 | 237,242 | |||||||
Note_13_Restructuring_Activiti
Note 13: Restructuring Activities | 12 Months Ended |
Sep. 30, 2013 | |
Restructuring and Related Activities [Abstract] | ' |
Note 13: Restructuring Activities | ' |
In May 2011 the Company ceased the Direct Sales business and migrated the remaining customers to Reach Local in exchange for 10% and 5% of gross revenues derived from such customers during the first and second year, respectively. The Company recorded $816 and $6,053 in revenues for this agreement during the years ended September 30, 2013 and 2012, respectively. In connection with the discontinued Direct Sales business, seven employees were terminated. See Note 4. |
Note_14_Related_Party_Transact
Note 14: Related Party Transactions | 12 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Note 14: Related Party Transactions | ' |
Convertible Notes with ICG | |
As described in Note 8, during 2012 and 2013 the Company entered into a series of convertible note purchase agreements with ICG, an entity owned by Jon Isaac, the Company’s President and Chief Executive Officer and a director on the Company’s Board group. Under these agreements, the Company received gross proceeds of $1,250,000 and $250,000 during the years ended September 30, 2013 and 2012, respectively. | |
Under the terms of these agreements, ICG executed its conversion option on all then-outstanding notes during the years ended September 30, 2013 and 2012. In exchange for the conversion of $1,250,000 of convertible notes during the year ended September 30, 2013, ICG received an aggregate of 846,363 of shares of common stock and, upon conversion, ICG also received warrants to acquire an additional 846,363 shares of common stock. In exchange for the conversion of $250,000 of convertible notes during the year ended September 30, 2012, ICG received an aggregate of 109,139 of shares of common stock and, upon conversion, ICG also received warrants to acquire an additional 109,139 shares of common stock. | |
Because the conversion price under ICG’s notes was less than the fair market value of the stock on the date of issuance, the Company recognized a beneficial conversion feature which was treated as a debt discount and amortized on a straight line basis as interest expense until the date of conversion, at which time all remaining debt discount was recognized as interest expense. Additionally, the fair value of the warrants that were contingently issuable to ICG upon conversion were recognized as additional interest expense. | |
During the years ended September 30, 2013 and 2012, the Company recognized total interest expense of $3,291,466 and $489,594 associated with the ICG notes. | |
Issuance of Common Stock with ICG | |
As described in Note 9, during the year ended September 30, 2012, the Company issued 403,225 shares of common stock to ICG in exchange for gross proceeds of $500,000. |
Note_15_Commitments_and_Contin
Note 15: Commitments and Contingencies | 12 Months Ended | ||||
Sep. 30, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Note 15: Commitments and Contingencies | ' | ||||
Operating Leases and Service Contracts | |||||
The Company leases its office space and certain equipment under long-term operating leases expiring through fiscal year 2016. Rent expense under these leases was $152,372 and $350,822 for the years ended September 30, 2013 and 2012, respectively. The Company has also entered into several non-cancelable service contracts. | |||||
As of September 30, 2013, future minimum annual lease payments under operating lease agreements and non-cancelable service contracts for fiscal years ended September 30 are as follows: | |||||
2014 | 211,767 | ||||
2015 | 201,630 | ||||
2016 | 57,283 | ||||
2017 | – | ||||
2018 | – | ||||
Thereafter | – | ||||
$ | 470,680 | ||||
Litigation | |||||
The Company is party to certain legal proceedings incidental to the conduct of its business. Management believes that the outcome of pending legal proceedings will not, either individually or in the aggregate, have a material adverse effect on its business, financial position, and results of operations, cash flows or liquidity. | |||||
Except as described below, as of September 30, 2013, the Company was not a party to any pending material legal proceedings other than claims that arise in the normal conduct of its business. While management currently believes that the ultimate outcome of these routine proceedings will not have a material adverse effect on its consolidated financial condition or results of operations, litigation is subject to inherent uncertainties. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the Company’s net income in the period in which a ruling occurs. The Company’s estimate of the potential impact of the following legal proceedings on its financial position and its results of operation could change in the future. | |||||
Global Education Services, Inc. v. LiveDeal, Inc. | |||||
On June 6, 2008, Global Education Services, Inc., which we refer to as GES, filed a consumer fraud lawsuit against us in the King County Superior Court in the State of Washington, alleging that our use of activator checks violated the Washington Consumer Protection Act and seeking class certification pursuant to Washington law. GES sought injunctive relief against our use of activator checks, damages in an amount equal to three times the damages allegedly sustained by the members of the putative class, exemplary damages for the alleged violation of law, and its fees and costs. We denied the allegations of the complaint and commenced defending the litigation. | |||||
Early in 2010, the Court denied both parties’ dispositive motions, at which time they commenced settlement discussions. The parties reached a settlement and entered into a settlement agreement on or about November 5, 2012. | |||||
The settlement agreement required $150,000 to be paid to plaintiff’s counsel, $10,000 to be paid to GES as the “representative plaintiff,” and $70 to be paid to each eligible class member. The Court granted final approval of the settlement on April 26, 2013 and the Court’s order became final on May 27, 2013. All class member claims have been paid and the last attorneys’ fee payment was made on November 23, 2013. Accordingly, the litigation is fully resolved and the matter closed. | |||||
J3 Harmon LLC v. LiveDeal, Inc. | |||||
On February 9, 2012, J3 Harmon LLC, which we refer to as J3, filed a lawsuit against us in the Superior Court for Maricopa County in the State of Arizona, alleging breach of a commercial lease agreement. J3 sought damages for alleged unpaid rents during the lease term as well as alleged damages for storage costs after the expiration of the lease term. We denied the allegations and asserted various affirmative defenses. In September 2012, the Maricopa County Superior Court entered a judgment in favor of J3 in the sum of $62,886.13. We appealed this judgment. | |||||
On October 1, 2013, the Arizona Court of Appeals affirmed in part and reversed in part on the principal damages and remanded the matter for judgment. Subsequently, the Maricopa County Superior Court entered Judgment on Mandate against the Company in the principal sum of $46,636.31 and attorneys’ fees of $5,624.40, with post-judgment interest from October 3, 2012. There is no further basis for appeal by the Company. The Company anticipates paying the judgment during the fiscal quarter ending March 31, 2014 and, upon such payment, the matter will be resolved. As of September 30, 2013, the Company maintained an accrual of $52,261 related to this. | |||||
LEC Billings | |||||
The Company has historically billed a significant amount of our legacy business revenues through LEC billing channels. The largest LEC billing companies ceased billing for third parties in 2012. .If we are not able to obtain alternative billing methods for these customers, the number of legacy subscribers and our revenues will decline, which could materially and adversely affect our operating results and financial condition. The Company had approximately $73,000 of revenues billed through LEC billing channels for the year ended September 30, 2013. LEC billing channel costs related to those revenues equaled approximately $171,000 for the year ended September 30, 2013. | |||||
Except as referenced above, the Company has not recorded any accruals pertaining to its legal proceedings as they do not meet the criteria for accrual under FASB ASC 450. |
Note_16_Provision_for_Income_T
Note 16: Provision for Income Taxes | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||||||
Note 16: Provision for Income Taxes | ' | ||||||||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A full valuation allowance is established against all net deferred tax assets as of September 30, 2013 and 2012 based on estimates of recoverability. While the Company has optimistic plans for its business strategy, it determined that such a valuation allowance was necessary given the current and expected near term losses and the uncertainty with respect to its ability to generate sufficient profits from its new business model. | |||||||||||||||||
Because of the impacts of the valuation allowance, there was no income tax expense or benefit for the year ended September 30, 2013. | |||||||||||||||||
A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30, is as follows: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||
Federal statutory rates | $ | (1,953,982 | ) | 34% | $ | (535,573 | ) | 34% | |||||||||
State income taxes | (193,167 | ) | 3% | (52,946 | ) | 3% | |||||||||||
Write off of deferred tax asset related to vested restricted stock | – | 0% | 10,670 | (1% | ) | ||||||||||||
Permanent differences | 15,967 | (0% | ) | 3,411 | (0% | ) | |||||||||||
Valuation allowance against net deferred tax assets | 2,131,183 | (37% | ) | 574,438 | (36% | ) | |||||||||||
Other | 0% | 0% | |||||||||||||||
Effective rate | $ | – | 0% | $ | – | 0% | |||||||||||
At September 30, deferred income tax assets and liabilities were comprised of: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Deferred income tax asset, current: | |||||||||||||||||
Book to tax differences in accounts receivable | $ | 382,218 | $ | 582,549 | |||||||||||||
Book to tax differences in prepaid assets and accrued expenses | 8,425 | (7,774 | ) | ||||||||||||||
Total deferred income tax asset, current | 390,643 | 574,775 | |||||||||||||||
Less: valuation allowance | (390,643 | ) | (574,775 | ) | |||||||||||||
Deferred income tax asset, current, net | – | – | |||||||||||||||
Deferred income tax asset, long-term: | |||||||||||||||||
Net operating loss carryforwards | 12,821,092 | 10,012,906 | |||||||||||||||
Book to tax differences for stock based compensation | 6,407 | 6,407 | |||||||||||||||
Book to tax differences in intangible assets | 6,693,536 | 6,961,861 | |||||||||||||||
Book to tax differences in other | 326 | 326 | |||||||||||||||
Book to tax differences in depreciation | (2,297,221 | ) | (2,072,674 | ) | |||||||||||||
Total deferred income tax asset, long-term | 17,224,140 | 14,908,825 | |||||||||||||||
Less: valuation allowance | (17,224,140 | ) | (14,908,825 | ) | |||||||||||||
Deferred income tax asset, net | – | – | |||||||||||||||
Total deferred income tax asset | $ | – | $ | – | |||||||||||||
The Company has recorded as of September 30, 2013 a valuation allowance of $17,224,140, as it believes that it is more likely than not that the deferred tax assets will not be realize in future years. Management has based its assessment on available historical and projected operating results. | |||||||||||||||||
The Company annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of September 30, 2013. | |||||||||||||||||
As part of its deferred tax assets, the Company has net operating loss carry-forwards resulting from its acquisition of LiveDeal, Inc. in fiscal 2007. Such amounts are subject to IRS code section 382 limitations and expire in 2027. The 2007 to 2010 tax years are still subject to audit. |
Note_17_Concentration_of_Credi
Note 17: Concentration of Credit Risk | 12 Months Ended |
Sep. 30, 2013 | |
Risks and Uncertainties [Abstract] | ' |
Note 17: Concentration of Credit Risk | ' |
The Company maintains cash balances at banks in California and Nevada. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 per institution as of September 30, 2013. At times, balances may exceed federally insured limits. | |
Financial instruments that potentially subject the Company to concentrations of credit risk are primarily trade accounts receivable. The trade accounts receivable are due primarily from business customers over widespread geographical locations within the LEC billing areas across the United States. The Company historically has experienced significant dilution and customer credits due to billing difficulties and uncollectible trade accounts receivable. The Company estimates and provides an allowance for uncollectible accounts receivable. The handling and processing of cash receipts pertaining to trade accounts receivable is maintained primarily by three third-party billing companies. The Company is dependent upon these billing companies for collection of its accounts receivable. The billing companies and LECs charge fees for their services, which are netted against the gross accounts receivable balance. The billing companies also apply holdbacks to the remittances for potentially uncollectible accounts. These amounts will vary due to numerous factors and the Company may not be certain as to the actual amounts on any specific billing submittal until several months after that submittal. The Company estimates the amount of these charges and holdbacks based on historical experience and subsequent information received from the billing companies. The Company also estimates uncollectible account balances and provides an allowance for such estimates. The billing companies retain certain holdbacks that may not be collected by the Company for a period extending beyond one year. Additionally, certain other billings’ channels consisting of billings submitted to LEC Processors through third parties were discontinued. As such, a significant portion of the receivables at September 30, 2013 and 2012 pertaining to LEC service providers represent the holdbacks described above. | |
The Company has concentrations of receivables with respect to certain wholesale accounts and remaining holdbacks with LEC service providers. Three such entities accounted for 44%, 25% and 18% of gross receivables at September 30, 2013 as compared to 35%, 27% and 15% of gross receivables at September 30, 2012. |
Note_18_Segment_Reporting
Note 18: Segment Reporting | 12 Months Ended |
Sep. 30, 2013 | |
Segment Reporting [Abstract] | ' |
Note 18: Segment Reporting | ' |
After discontinuing the Company’s Direct Sales business as described in Note 4, as of September 30, 2013, the Company only operated one business segment. All of the Company’s revenues are with external customers, are derived from operations in the United States, and no single customer accounts for more than 10% of the Company’s revenues. |
Note_19_Subsequent_Events_Disc
Note 19: Subsequent Events Disclosure | 12 Months Ended | ||
Sep. 30, 2013 | |||
Subsequent Events [Abstract] | ' | ||
Note 19: Subsequent Events Disclosure | ' | ||
Engagement Agreement with Chardan Capital Markets LLC (At-The-Market Offering) | |||
On January 7, 2014, we entered into an Engagement Agreement (the “Engagement Agreement”) with Chardan Capital Markets LLC (“Chardan”) pursuant to which we may issue and sell up to a maximum aggregate amount of 660,000 shares of our common stock from time to time through Chardan as our sales agent, under our shelf registration statement on Form S-3 (File No. 333-187397) previously filed with the SEC, pursuant to which any shares that are issued under the Engagement Agreement will be sold. | |||
Upon delivery of a placement notice by the Company, and subject to the terms and conditions of the Engagement Agreement, Chardan may sell the common stock by any method that is deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including by means of ordinary brokers’ transactions at market prices on the NASDAQ Capital Market, in block transactions, through privately negotiated transactions, or as otherwise agreed by Chardan and us. Chardan will act as sales agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of NASDAQ. | |||
The offering pursuant to the Engagement Agreement will terminate upon the earlier of (i) the sale of all shares of common stock subject to the Engagement Agreement, or (ii) termination of the Engagement Agreement as permitted therein. The Engagement Agreement may be terminated by Chardan or us at any time upon 15 days’ notice to the other party. | |||
We will pay Chardan a commission equal to up to 3% of the gross proceeds from the sale of the common stock sold through Chardan pursuant to the Engagement Agreement and reimburse Chardan up to $15,000 in expenses. We have also provided Chardan with customary indemnification rights. No assurance can be given that we will sell any shares under the Engagement Agreement, or, if we do, as to the price or amount of shares that we will sell, or the dates on which any such sales will take place. | |||
The foregoing description of the Engagement Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the complete text of the Engagement Agreement, a copy of which is attached to this Annual Report on Form 10-K as Exhibit 1.1 and incorporated herein by reference. This Annual Report on Form 10-K also incorporates by reference the Engagement Agreement into our shelf registration statement on Form S-3 (File No. 333-187397) previously filed with the SEC, pursuant to which any shares that are issued under the Engagement Agreement will be sold. | |||
Convertible Note Transaction ($5 Million Line of Credit) | |||
On January 7, 2014, the Company entered into a Note Purchase Agreement (“Purchase Agreement”) with Kingston Diversified Holdings LLC (the “Investor”), pursuant to which the Investor agreed to purchase for cash up to $5,000,000 in aggregate principal amount of the Company’s Convertible Notes (“Notes”). The Purchase Agreement and the Notes, which are unsecured, provide that all amounts payable by the Company to the Investor under the Notes will be due and payable on the second (2nd) anniversary of the date of the Purchase Agreement (the “Maturity Date”). | |||
The Purchase Agreement and the Notes provide that: | |||
— | Either the Company or the Investor will have the right to cause the sale and issuance of Notes pursuant to the Purchase Agreement, provided that NASDAQ’s approval of the Purchase Agreement and transactions contemplated thereby is a condition precedent to each party’s right to cause any borrowings to occur under the Purchase Agreement. | ||
— | Each Note must be in a principal amount of at least $100,000. | ||
— | The Notes are issuable at a 5% discount and will accrue interest at an annual interest rate equal to 8%. All interest will be payable on the Maturity Date or upon the conversion of the applicable Note. | ||
— | The Company has the option to prepay each Note, in whole or in part, at any time without premium or penalty. | ||
— | the Company or the Investor may elect at any time on or before the Maturity Date to convert the principal and accrued but unpaid interest due under any Note into shares of the Company’s common stock. The conversion price applicable to any such conversion will be an amount equal to 70% of the lesser of: (i) the closing bid price of the common stock on the date of the Purchase Agreement (i.e., $9.35 per share); or (ii) the 10-day volume weighted average closing bid price for the common stock, as listed on NASDAQ for the 10 business days immediately preceding the date of conversion (the “Average Price”); provided, however, that in no event will the Average Price per share be less than $1.00. For example, if the Average Price is $0.50 per share, then for purposes of calculating the conversion price, the Average Price per share would be $1.00 per share instead of $0.50 per share. | ||
— | If either party elects to convert all or any portion of any Note, the Company must issue to the Investor on the date of the conversion a warrant (“Contingent Warrant”) to purchase a number of shares of the Company’s common stock equal to the number of shares issuable upon conversion. This number of shares is subject to adjustment in the event of stock splits or combinations, stock dividends, certain pro rata distributions, and certain fundamental transactions. Each Contingent Warrant will be exercisable for a period of five (5) years following the date of its issuance at an exercise price equal to 110% of the conversion price of the applicable Note (with the exercise price being subject to adjustment under the same conditions as the number of shares for which the warrant is exercisable.) The Contingent Warrants provide that they may be exercised in whole or in part and include a cashless exercise feature. | ||
— | The Notes provide that, upon the occurrence of any Event of Default, all amounts payable to the Investor will become immediately due and payable without any demand or notice. The events of default (“Events of Default”) which trigger the acceleration of the Notes include (among other things): (i) the Company’s failure to make any payment required under the Notes when due (subject to a three-day cure period), (ii) the Company’s failure to comply with its covenants and agreements under the Purchase Agreement, the Notes and any other transaction documents, and (iii) the occurrence of a change of control with respect to the Company. | ||
— | The Company (i) is required to provide certain financial and other information to the Investor from time to time, (ii) must maintain its corporate existence, business, assets, properties, insurance and records in accordance with the requirements set forth in the Purchase Agreement, (iii) with certain exceptions, must not incur or suffer to exist any liens or other encumbrances with respect to the Company’s property or assets, (iv) must not make certain loans or investments except in compliance with the terms of the Purchase Agreement, and (v) must not enter into certain types of transactions, including dispositions of its assets or business. | ||
— | The Company agreed to use commercially reasonable efforts to obtain, as promptly as practicable, any approvals of the Company’s stockholders required under applicable law or NASDAQ Listing Rules in connection with the transactions contemplated by the Purchase Agreement. Unless and until any such stockholder approvals are obtained, in no event will the Investor be entitled to convert any Notes and/or exercise any Contingent Warrants to the extent that any such conversion or exercise would result in the Investor acquiring in such transactions a number of shares of the Company’s common stock exceeding 19.99% of the number of shares of common stock issued and outstanding immediately prior to the Company’s entry into the Purchase Agreement. | ||
— | The Investor will be entitled to certain anti-dilution adjustments if the Company issues shares of its common stock at a lower price per share than the applicable conversion price for any Note(s) issued pursuant to the Purchase Agreement. If any such dilutive issuance occurs prior to the conversion of one or more Notes, the conversion price for such Note(s) will be adjusted downward pursuant to its terms (subject to a floor of $0.70 per share). If any such dilutive issuance occurs after the conversion of one or more Notes, the Investor will be entitled to be issued additional shares of common stock for no consideration, and to an adjustment of the exercise price payable under the applicable Contingent Warrant(s). With respect to each Note actually issued pursuant to the Purchase Agreement, the Investor’s anti-dilution rights will expire two (2) years following the date of issuance. | ||
The foregoing description of the Purchase Agreement, the Notes and the Contingent Warrants contained herein does not purport to be complete and is qualified in its entirety by reference to the complete text of such documents, copies of which are attached to this Annual Report on Form 10-K as Exhibits 10.10, 10.11 and 10.12, respectively, and incorporated herein by reference | |||
2014 Omnibus Equity Incentive Plan | |||
On January 7, 2014, our Board of Directors adopted the 2014 Omnibus Equity Incentive Plan (the “2014 Plan”), which authorizes the issuance of distribution equivalent rights, incentive stock options, non-qualified stock options, performance stock, performance units, restricted ordinary shares, restricted stock units, stock appreciation rights, tandem stock appreciation rights and unrestricted ordinary shares to our officers, employees, directors, consultants and advisors. The Company has reserved up to 600,000 shares of common stock for issuance under the 2014 Plan. Pursuant to Nasdaq Listing Rule 5635(c), the Company intends to seek stockholder approval of the 2014 Plan at our 2014 Annual Meeting of Stockholders. | |||
Resignation of Director | |||
On January 9, 2014, John Kocmur informed the Board of Directors of his decision to resign as a director of the Company, effective immediately. Mr. Kocmur did not resign because of any disagreement relating to the Company’s operations, policies or practices. |
Note_20_Selected_Quarterly_Fin
Note 20: Selected Quarterly Financial Data | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||
Note 20: Selected Quarterly Financial Data | ' | ||||||||||||||||
Quarterly financial information for 2013 and 2012 follows: | |||||||||||||||||
Quarter Ended | |||||||||||||||||
December 31, | March 31, | June 30, | September 30, | ||||||||||||||
2011 | 2012 | 2012 | 2012 | ||||||||||||||
Net revenues | $ | 851,413 | $ | 821,701 | $ | 777,857 | $ | 619,532 | |||||||||
Gross profit | 615,594 | 595,093 | 669,196 | 475,163 | |||||||||||||
Loss from continuing operations | (195,218 | ) | (259,222 | ) | (289,714 | ) | (843,487 | ) | |||||||||
Income (loss) from discontinued operations | 3,580 | 229 | 7,944 | 680 | |||||||||||||
Net loss | $ | (191,638 | ) | $ | (258,993 | ) | $ | (281,770 | ) | $ | (842,807 | ) | |||||
Earnings per share information- basic and diluted: | |||||||||||||||||
Loss from continuing operations | $ | (0.18 | ) | $ | (0.11 | ) | $ | (0.12 | ) | $ | (0.36 | ) | |||||
Discontinued operations | |||||||||||||||||
Net loss | $ | (0.18 | ) | (0.11 | ) | $ | (0.12 | ) | $ | (0.35 | ) | ||||||
Weighted Avg common shares outstanding | 1,043,960 | 2,345,253 | 2,402,168 | 2,487,911 | |||||||||||||
Quarter Ended | |||||||||||||||||
December 31, | March 31, | June 30, | September 30, | ||||||||||||||
2012 | 2013 | 2013 | 2013 | ||||||||||||||
Net revenues | $ | 572,535 | $ | 555,084 | $ | 606,867 | $ | 617,382 | |||||||||
Gross profit | 469,899 | 438,171 | 427,946 | $ | 99,521 | ||||||||||||
Loss from continuing operations | (1,062,472 | ) | (3,215,467 | ) | (511,464 | ) | $ | (960,319 | ) | ||||||||
Income (loss) from discontinued operations | 1,963 | 450 | 295 | $ | – | ||||||||||||
Net loss | $ | (1,060,509 | ) | $ | (3,215,017 | ) | $ | (511,169 | ) | $ | (960,319 | ) | |||||
Earnings per share information- basic and diluted: | |||||||||||||||||
Loss from continuing operations | $ | (0.40 | ) | $ | (1.15 | ) | $ | (0.15 | ) | $ | (0.27 | ) | |||||
Discontinued operations | |||||||||||||||||
Net loss | $ | (0.40 | ) | (1.15 | ) | $ | (0.15 | ) | $ | (0.27 | ) | ||||||
Weighted Avg common shares outstanding | 2,653,937 | 2,793,023 | 3,437,736 | 3,570,410 | |||||||||||||
Note_2_Summary_of_Significant_1
Note 2: Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||
Sep. 30, 2013 | |||
Accounting Policies [Abstract] | ' | ||
Principles of Consolidation | ' | ||
Principles of Consolidation | |||
The accompanying consolidated financial statements represent the consolidated financial position and results of operations of the Company and include the accounts and results of operations of the Company, LiveDeal, Local Marketing Experts, Inc., Velocity Marketing Concepts, Inc., 247 Marketing Inc., Telco Billing, Inc. Telco of Canada, Inc., and Velocity Local Inc. ,the Company’s wholly owned subsidiaries, for the years ended September 30, 2013 and 2012, as applicable. All intercompany transactions and balances have been eliminated in consolidation. | |||
Use of Estimates | ' | ||
Use of Estimates | |||
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Significant estimates made in connection with the accompanying consolidated financial statements include the estimate of dilution and fees associated with LEC billings, the estimated reserve for doubtful accounts receivable, estimated forfeiture rates for stock-based compensation, fair values in connection with the analysis of goodwill and long-lived assets for impairment, valuation allowances against net deferred tax assets and estimated useful lives for intangible assets and property and equipment. | |||
Financial Instruments | ' | ||
Financial Instruments | |||
Financial instruments consist primarily of cash, cash equivalents, accounts receivable, advances to affiliates and obligations under accounts payable, accrued expenses and notes payable. The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable approximate fair value because of the short maturity of those instruments. | |||
Cash and Cash Equivalents | ' | ||
Cash and Cash Equivalents | |||
This includes all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. At times, cash deposits may exceed FDIC-insured limits. | |||
Property and Equipment | ' | ||
Property and Equipment | |||
Property and equipment is stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets ranging from three to five years. Depreciation expense was $29,357 and $132,899 for the years ended September 30, 2013 and 2012, respectively. | |||
Revenue Recognition | ' | ||
Revenue Recognition | |||
Directory Services | |||
Revenue is billed and recognized monthly for services subscribed in that specific month. The Company has historically utilized outside billing companies to perform billing services through two primary channels: | |||
· | direct ACH withdrawals; and | ||
· | inclusion on the customer’s local telephone bill provided by their Local Exchange Carriers, or LECs. | ||
For billings via ACH withdrawals, revenue is recognized when such billings are accepted. For billings via LECs, the Company recognizes revenue based on net billings accepted by the LECs. Due to the periods of time for which adjustments may be reported by the LECs and the billing companies, the Company estimates and accrues for dilution and fees reported subsequent to year-end for initial billings related to services provided for periods within the fiscal year. Such dilution and fees are reported in cost of services in the accompanying consolidated statements of operations. Customer refunds are recorded as an offset to gross revenue. | |||
Revenue for billings to certain customers that are billed directly by the Company and not through the outside billing companies is recognized based on estimated future collections. The Company continuously reviews this estimate for reasonableness based on its collection experience. | |||
Deals Revenue | ' | ||
Deals Revenue | |||
The Company recognizes revenue from its sales through its strategic publishing partners of discounted goods and services offered by its merchant clients (“Deals”) when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. These criteria are met when the number of customers who purchase the daily deal exceeds the predetermined threshold, where, if applicable, the Deal has been electronically delivered to the purchaser and a listing of Deals sold has been made available to the merchant. At that time, the Company's obligations to the merchant, for which it is serving as an agent, are substantially complete. The Company's remaining obligations, which are limited to remitting payment to the merchant, are inconsequential or perfunctory. The Company records as revenue an amount equal to the net amount it retains from the sale of Deals after paying an agreed upon percentage of the purchase price to the featured merchant excluding any applicable taxes. Revenue is recorded on a net basis because the Company is acting as an agent of the merchant in the transaction. | |||
Deferred Revenue | ' | ||
Deferred Revenue | |||
In some instances, the Company receives payments in advance of rendering services, whereupon such revenues are deferred until the related services are rendered. Deferred revenue was $2,829 and $2,310 at September 30, 2013 and 2012, respectively. | |||
Allowance for Doubtful Accounts | ' | ||
Allowance for Doubtful Accounts | |||
The Company maintains an allowance for doubtful accounts, which includes allowances for customer refunds, dilution and fees from LEC billing aggregators and other uncollectible accounts. The Company has increased its allowances for doubtful accounts to 82.8% of gross accounts receivable at September 30, 2013 as compared to 65.7% of gross accounts receivable at September 30, 2012. The determination of the allowance for doubtful accounts is dependent on many factors, including regulatory activity, changes in fee schedules by LEC service providers and recent historical trends. | |||
As of September 30, 2013, approximately 57% of the Company’s allowance for doubtful accounts is an allowance against an outstanding receivable balance that is in dispute. After excluding these reserves from the related accounts receivable balances the allowance for doubtful accounts as a percentage of gross accounts receivable increases to 68%. As of September 30, 2012, approximately 93% of the Company’s allowance for doubtful accounts is an allowance against accounts receivable balances and reserves held by a LEC that is in bankruptcy and an allowance against an outstanding receivable balance that is in dispute. After excluding these reserves from the related accounts receivable balances, the allowance for doubtful accounts as a percentage of gross accounts receivable decreases to 12.6%. See Note 17. | |||
Legal Costs | ' | ||
Legal Costs | |||
The Company expenses legal costs associated with loss contingencies as they are incurred. | |||
Income Taxes | ' | ||
Income Taxes | |||
Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be provided for those deferred tax assets for which if it is more likely than not that the related benefit will not be realized. The Company classifies tax-related penalties and interest as a component of income tax expense for financial statement presentation. | |||
Stock-Based Compensation | ' | ||
Stock-Based Compensation | |||
The Company from time to time grants restricted stock awards and options to employees and executives. Such awards are valued based on the grant date fair-value of the instruments, net of estimated forfeitures. The value of each award is amortized on a straight-line basis over the vesting period. | |||
Net Loss Per Share | ' | ||
Net Loss Per Share | |||
Net loss per share is calculated in accordance with FASB ASC 260, “Earnings Per Share”. Under ASC 260 basic net loss per share is computed using the weighted average number of common shares outstanding during the period except that it does not include unvested restricted stock subject to cancellation. Diluted net loss per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of warrants, restricted shares and convertible preferred stock. The dilutive effect of outstanding restricted shares and warrants is reflected in diluted earnings per share by application of the treasury stock method. Convertible preferred stock is reflected on an if-converted basis. | |||
Internally Developed Software and Website Development Costs | ' | ||
Internally Developed Software and Website Development Costs | |||
The Company incurs internal and external costs to develop software and websites to support its core business functions. The Company capitalizes internally generated software and website development costs in accordance with the provisions of the FASB ASC 350, “Intangibles – Goodwill and Other”. | |||
Impairment of Long-lived Assets | ' | ||
Impairment of Long-lived Assets | |||
The Company assesses long-lived assets for impairment in accordance with the provisions of FASB ASC 360 “Property, Plant and Equipment”. A long-lived asset (or group of assets) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of a long lived asset is not recoverable if it exceeds the sum of the undiscounted net cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the net book value of the asset and its estimated fair value. For purposes of these tests, long-lived assets must be grouped with other assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. | |||
Recently Issued Accounting Pronouncements | ' | ||
Recently Issued Accounting Pronouncements | |||
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the FASB determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 has not had a material impact on our financial position or results of operations. | |||
In October 2012, the FASB issued ASU No. 2012-04, “Technical Corrections and Improvements, (“ASU 2012-04”).” This update includes source literature amendments, guidance clarification, reference corrections and relocated guidance affecting a variety of topics in the Codification. The update also includes conforming amendments to the Codification to reflect ASC 820’s fair value measurement and disclosure requirements. The amendments in this update that will not have transition guidance are effective upon issuance. The amendments in this update that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. This ASU is effective for reporting periods beginning on or after January 1, 2013. Our adoption of ASU 2011-11 on January 1, 2013, did not have a material impact our financial statement. |
Note_6_Balance_Sheet_Informati1
Note 6: Balance Sheet Information (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||
Balance sheet information | ' | ||||||||
Balance sheet information is as follows: | |||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Receivables, current, net: | |||||||||
Accounts receivable, current | $ | 904,197 | $ | 1,863,067 | |||||
Less: Allowance for doubtful accounts | (729,296 | ) | (1,423,219 | ) | |||||
$ | 174,901 | $ | 439,848 | ||||||
Receivables, long term, net: | |||||||||
Accounts receivable, long term | $ | 374,708 | $ | 510,587 | |||||
Less: Allowance for doubtful accounts | (330,069 | ) | (136,017 | ) | |||||
$ | 44,639 | $ | 374,570 | ||||||
Total receivables, net: | |||||||||
Gross receivables | $ | 1,278,905 | $ | 2,373,654 | |||||
Less: Allowance for doubtful accounts | (1,059,365 | ) | (1,559,236 | ) | |||||
$ | 219,540 | $ | 814,418 | ||||||
Components of allowance for doubtful accounts | ' | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Allowance for dilution and fees on amounts due from billing aggregators | $ | 730,777 | $ | 1,525,126 | |||||
Allowance for customer refunds | 6,281 | 34,111 | |||||||
$ | 737,058 | $ | 1,559,237 | ||||||
Property and equipment, net | ' | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Property and equipment, net: | |||||||||
Furnishings and fixtures | $ | 101,611 | $ | 94,511 | |||||
Office, computer equipment and other | 404,580 | 361,685 | |||||||
506,191 | 456,196 | ||||||||
Less: Accumulated depreciation | (435,029 | ) | (405,670 | ) | |||||
$ | 71,162 | $ | 50,526 | ||||||
Intangible assets, net | ' | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Intangible assets, net: | |||||||||
Domain name and marketing related intangibles | $ | 1,513,708 | $ | 1,511,650 | |||||
Website and technology related intangibles | 2,335,728 | 1,252,304 | |||||||
3,849,436 | 2,763,954 | ||||||||
Less: Accumulated amortization | (1,001,035 | ) | (766,283 | ) | |||||
$ | 2,848,401 | $ | 1,997,671 | ||||||
Accrued liabilities | ' | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Accrued liabilities: | |||||||||
Deferred revenue | $ | 2,829 | $ | 2,310 | |||||
Accrued payroll and bonuses | 27,330 | 28,968 | |||||||
Accruals under revenue sharing agreements | 44,167 | 67,601 | |||||||
Accrued expenses - other | 225,138 | 311,225 | |||||||
$ | 299,464 | $ | 410,104 |
Note_7_Intangible_Assets_Table
Note 7: Intangible Assets (Tables) | 12 Months Ended | ||||
Sep. 30, 2013 | |||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||
Estimated future amortization expense | ' | ||||
2014 | 416,211 | ||||
2015 | 406,550 | ||||
2016 | 362,316 | ||||
2017 | 358,352 | ||||
2018 | 324,389 | ||||
Thereafter | 991,583 | ||||
$ | 2,859,401 |
Note_10_Warrants_Tables
Note 10. Warrants (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of warrants issued | ' | ||||||||||||||||
Number of Units | Weighted | Weighted | Intrinsic Value | ||||||||||||||
Average | Average | ||||||||||||||||
Exercise Price | Remaining | ||||||||||||||||
Contractual | |||||||||||||||||
Term (in years) | |||||||||||||||||
Outstanding at September 30, 2012 | 109,139 | $ | 2.85 | 4.95 | 253,202 | ||||||||||||
Granted | 846,363 | 1.78 | |||||||||||||||
Exercised | – | – | |||||||||||||||
Outstanding at September 30, 2013 | 955,502 | $ | 1.9 | 4.39 | 1,471,998 | ||||||||||||
Exerciseable at September 30, 2013 | 955,502 | $ | 1.9 | 4.39 | 1,471,998 | ||||||||||||
Fair value assumptions | ' | ||||||||||||||||
Volatility | 121%-127% | ||||||||||||||||
Risk-free interest rate | .74% -.89% | ||||||||||||||||
Expected term | 5 years | ||||||||||||||||
Forfeiture rate | 0% | ||||||||||||||||
Dividend yield rate | 0% |
Note_11_Stockbased_Compensatio1
Note 11: Stock-based Compensation (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Share-based Compensation [Abstract] | ' | ||||||||||||||||
Stock option activity | ' | ||||||||||||||||
Outstanding (unvested) at September 30, 2011 | 1,342 | ||||||||||||||||
Granted | – | ||||||||||||||||
Forfeited | (26 | ) | |||||||||||||||
Vested | (1,053 | ) | |||||||||||||||
Outstanding (unvested) at September 30, 2012 | 263 | ||||||||||||||||
Granted | – | ||||||||||||||||
Forfeited | – | ||||||||||||||||
Vested | (263 | ) | |||||||||||||||
Outstanding (unvested) at September 30, 2013 | 0 | ||||||||||||||||
Assumptions used to calculate weighted average fair values of the options granted | ' | ||||||||||||||||
Year Ended | Year Ended | ||||||||||||||||
30-Sep-13 | 30-Sep-12 | ||||||||||||||||
Volatility | 124%-127% | – | |||||||||||||||
Risk-free interest rate | .08%-.66% | – | |||||||||||||||
Expected term | 1-3.77 years | – | |||||||||||||||
Forfeiture rate | 10% | – | |||||||||||||||
Dividend yield rate | 0% | – | |||||||||||||||
Stock options | ' | ||||||||||||||||
Weighted | Weighted | ||||||||||||||||
Average | Average | ||||||||||||||||
Number of | Exercise | Remaining | |||||||||||||||
Shares | Price | Contractual Life | Intrinsic Value | ||||||||||||||
Outstanding at September 30, 2012 | – | ||||||||||||||||
Granted | 225,000 | $ | 8.47 | ||||||||||||||
Exercised | – | ||||||||||||||||
Forfeited | – | ||||||||||||||||
Outstanding at September 30, 2013 | 225,000 | $ | 8.47 | 5.9 | – | ||||||||||||
Exercisable at September 30, 2013 | 25,000 | $ | 10 | 0.6 | – | ||||||||||||
Restricted stock awards | ' | ||||||||||||||||
Weighted-Average | |||||||||||||||||
Number of | Grant-Date | ||||||||||||||||
Non-vested Shares | Shares | Fair Value | |||||||||||||||
Nonvested at September 30, 2012 | – | ||||||||||||||||
Granted | 200,000 | $ | 2.18 | ||||||||||||||
Nonvested at September 30, 2013 | 200,000 | $ | 2.18 |
Note_12_Net_Loss_Per_Share_Tab
Note 12: Net Loss Per Share (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Basic and diluted net loss per share | ' | ||||||||
Year Ended September 30, | |||||||||
2013 | 2012 | ||||||||
Loss from continuing operations | $ | (5,749,722 | ) | $ | (1,587,641 | ) | |||
Less: preferred stock dividends | (1,918 | ) | (1,918 | ) | |||||
Loss from continuing operations applicable to common stock | (5,751,640 | ) | (1,589,559 | ) | |||||
Income (loss) from discontinued operations | 2,708 | 12,433 | |||||||
Net loss applicable to common stock | $ | (5,748,932 | ) | $ | (1,577,126 | ) | |||
Weighted average common shares outstanding - basic and diluted | 3,131,420 | 2,068,828 | |||||||
Earnings per share - basic and diluted: | |||||||||
Loss from continuing operations | $ | (1.84 | ) | $ | (0.77 | ) | |||
Discontinued operations | 0 | 0.01 | |||||||
Net loss | $ | (1.84 | ) | $ | (0.76 | ) | |||
Potentially dilutive securities | ' | ||||||||
Year Ended September 30, | |||||||||
2013 | 2012 | ||||||||
Options to purchase shares of common stock | 225,000 | – | |||||||
Warrants to purchase shares of common stock | 955,502 | 109,139 | |||||||
Series E convertible preferred stock | 127,840 | 127,840 | |||||||
Shares of non-vested restricted stock | – | 263 | |||||||
Total potentially dilutive shares | 1,308,342 | 237,242 |
Note_15_Commitments_and_Contin1
Note 15: Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Sep. 30, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Operating Leases and Service Contracts | ' | ||||
2014 | 211,767 | ||||
2015 | 201,630 | ||||
2016 | 57,283 | ||||
2017 | – | ||||
2018 | – | ||||
Thereafter | – | ||||
$ | 470,680 |
Note_16_Provision_for_Income_T1
Note 16: Provision for Income Taxes (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||||||
Reconciliation of income tax rates | ' | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||
Federal statutory rates | $ | (1,953,982 | ) | 34% | $ | (535,573 | ) | 34% | |||||||||
State income taxes | (193,167 | ) | 3% | (52,946 | ) | 3% | |||||||||||
Write off of deferred tax asset related to vested restricted stock | – | 0% | 10,670 | (1% | ) | ||||||||||||
Permanent differences | 15,967 | (0% | ) | 3,411 | (0% | ) | |||||||||||
Valuation allowance against net deferred tax assets | 2,131,183 | (37% | ) | 574,438 | (36% | ) | |||||||||||
Other | 0% | 0% | |||||||||||||||
Effective rate | $ | – | 0% | $ | – | 0% | |||||||||||
Schedule of deferred income tax | ' | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Deferred income tax asset, current: | |||||||||||||||||
Book to tax differences in accounts receivable | $ | 382,218 | $ | 582,549 | |||||||||||||
Book to tax differences in prepaid assets and accrued expenses | 8,425 | (7,774 | ) | ||||||||||||||
Total deferred income tax asset, current | 390,643 | 574,775 | |||||||||||||||
Less: valuation allowance | (390,643 | ) | (574,775 | ) | |||||||||||||
Deferred income tax asset, current, net | – | – | |||||||||||||||
Deferred income tax asset, long-term: | |||||||||||||||||
Net operating loss carryforwards | 12,821,092 | 10,012,906 | |||||||||||||||
Book to tax differences for stock based compensation | 6,407 | 6,407 | |||||||||||||||
Book to tax differences in intangible assets | 6,693,536 | 6,961,861 | |||||||||||||||
Book to tax differences in other | 326 | 326 | |||||||||||||||
Book to tax differences in depreciation | (2,297,221 | ) | (2,072,674 | ) | |||||||||||||
Total deferred income tax asset, long-term | 17,224,140 | 14,908,825 | |||||||||||||||
Less: valuation allowance | (17,224,140 | ) | (14,908,825 | ) | |||||||||||||
Deferred income tax asset, net | – | – | |||||||||||||||
Total deferred income tax asset | $ | – | $ | – |
Note_20_Selected_Quarterly_Fin1
Note 20: Selected Quarterly Financial Data (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||
Quarterly Financial Data | ' | ||||||||||||||||
Quarter Ended | |||||||||||||||||
December 31, | March 31, | June 30, | September 30, | ||||||||||||||
2011 | 2012 | 2012 | 2012 | ||||||||||||||
Net revenues | $ | 851,413 | $ | 821,701 | $ | 777,857 | $ | 619,532 | |||||||||
Gross profit | 615,594 | 595,093 | 669,196 | 475,163 | |||||||||||||
Loss from continuing operations | (195,218 | ) | (259,222 | ) | (289,714 | ) | (843,487 | ) | |||||||||
Income (loss) from discontinued operations | 3,580 | 229 | 7,944 | 680 | |||||||||||||
Net loss | $ | (191,638 | ) | $ | (258,993 | ) | $ | (281,770 | ) | $ | (842,807 | ) | |||||
Earnings per share information- basic and diluted: | |||||||||||||||||
Loss from continuing operations | $ | (0.18 | ) | $ | (0.11 | ) | $ | (0.12 | ) | $ | (0.36 | ) | |||||
Discontinued operations | |||||||||||||||||
Net loss | $ | (0.18 | ) | (0.11 | ) | $ | (0.12 | ) | $ | (0.35 | ) | ||||||
Weighted Avg common shares outstanding | 1,043,960 | 2,345,253 | 2,402,168 | 2,487,911 | |||||||||||||
Quarter Ended | |||||||||||||||||
December 31, | March 31, | June 30, | September 30, | ||||||||||||||
2012 | 2013 | 2013 | 2013 | ||||||||||||||
Net revenues | $ | 572,535 | $ | 555,084 | $ | 606,867 | $ | 617,382 | |||||||||
Gross profit | 469,899 | 438,171 | 427,946 | $ | 99,521 | ||||||||||||
Loss from continuing operations | (1,062,472 | ) | (3,215,467 | ) | (511,464 | ) | $ | (960,319 | ) | ||||||||
Income (loss) from discontinued operations | 1,963 | 450 | 295 | $ | – | ||||||||||||
Net loss | $ | (1,060,509 | ) | $ | (3,215,017 | ) | $ | (511,169 | ) | $ | (960,319 | ) | |||||
Earnings per share information- basic and diluted: | |||||||||||||||||
Loss from continuing operations | $ | (0.40 | ) | $ | (1.15 | ) | $ | (0.15 | ) | $ | (0.27 | ) | |||||
Discontinued operations | |||||||||||||||||
Net loss | $ | (0.40 | ) | (1.15 | ) | $ | (0.15 | ) | $ | (0.27 | ) | ||||||
Weighted Avg common shares outstanding | 2,653,937 | 2,793,023 | 3,437,736 | 3,570,410 |
Note_2_Summary_of_Significant_2
Note 2: Summary of Significant Accounting Policies (Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Accounting Policies [Abstract] | ' | ' |
Depreciation expense | $29,357 | $132,899 |
Deferred revenue | $2,829 | $2,310 |
Note_3_Going_Concern_Narrative
Note 3: Going Concern (Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | |
Risks and Uncertainties [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | ($960,319) | ($511,169) | ($3,215,017) | ($1,060,509) | ($960,319) | ($511,169) | ($3,215,017) | ($1,060,509) | ($5,747,014) | ($1,575,208) |
Accumulated deficit | ($27,333,647) | ' | ' | ' | ($21,584,715) | ' | ' | ' | ($27,333,647) | ($21,584,715) |
Note_5_Business_Combination_Na
Note 5: Business Combination (Narrative) (USD $) | 12 Months Ended |
Sep. 30, 2013 | |
Business Combinations [Abstract] | ' |
Common stock issued for acquisition, shares | 75,000 |
Value of acquisition | $420,000 |
Customer list value from acquisition | 252,000 |
Intangibles value from acquisition | $168,000 |
Note_6_Balance_Sheet_Informati2
Note 6. Balance Sheet Information (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Receivables, current, net: | ' | ' |
Accounts receivable, current | $904,197 | $1,863,067 |
Less: Allowance for doubtful accounts | -729,296 | -1,423,219 |
Receivables, current, net | 174,901 | 439,848 |
Receivables, long term, net: | ' | ' |
Accounts receivable, long term | 374,708 | 510,587 |
Less: Allowance for doubtful accounts | -330,069 | -136,017 |
Receivables, long term, net | 44,639 | 374,570 |
Total receivables, net: | ' | ' |
Gross receivables | 1,278,905 | 2,373,654 |
Less: Allowance for doubtful accounts | -1,059,365 | -1,559,236 |
Total receivables, net | 219,540 | 814,418 |
Allowance for dilution and fees on amounts due from billing aggregators | 730,777 | 1,525,126 |
Allowance for customer refunds | 6,281 | 34,111 |
Total allowances | 737,058 | 1,559,237 |
Property and equipment, net: | ' | ' |
Furnishings and fixtures | 101,611 | 94,511 |
Office, computer equipment and other | 404,580 | 361,685 |
Plant Property and Equipment,Gross | 506,191 | 456,196 |
Less: Accumulated depreciation | -435,029 | -405,670 |
Property and equipment, net | 71,162 | 50,526 |
Intangible assets, net: | ' | ' |
Domain name and marketing related intangibles | 1,513,708 | 1,511,650 |
Website and technology related intangibles | 2,335,728 | 1,252,304 |
Intangible assets, gross | 3,849,436 | 2,763,954 |
Less: Accumulated amortization | -1,001,035 | -766,283 |
Intangible assets, net | 2,848,401 | 1,997,671 |
Accrued liabilities: | ' | ' |
Deferred revenue | 2,829 | 2,310 |
Accrued payroll and bonuses | 27,330 | 28,968 |
Accruals under revenue sharing agreements | 44,167 | 67,601 |
Accrued expenses - other | 225,138 | 311,225 |
Total accrued liabilities | $299,464 | $410,104 |
Note_7_Intangible_Assets_Detai
Note 7: Intangible Assets (Details) (USD $) | Sep. 30, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
Future amortization expense - 2014 | $416,211 |
Future amortization expense - 2015 | 406,550 |
Future amortization expense - 2016 | 362,316 |
Future amortization expense - 2017 | 358,352 |
Future amortization expense - 2018 | 324,389 |
Future amortization expense - Thereafter | 991,583 |
Future amortization expense | $2,859,401 |
Note_8_LongTerm_Debt_Narrative
Note 8: Long-Term Debt (Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Beneficial conversion feature | $3,291,466 | $489,594 |
ICG Note 1 | ' | ' |
Note issued | 250,000 | ' |
Beneficial conversion feature | 166,667 | ' |
Shares issued upon conversion | 109,139 | ' |
Debt discount recognized as interest expense | 97,222 | ' |
Fair value of warrants recognized as interest expense | 322,927 | ' |
ICG Note 2 | ' | ' |
Note issued | 250,000 | ' |
Shares issued upon conversion | 123,829 | ' |
Debt discount recognized as interest expense | 200,738 | ' |
ICG Note 3 | ' | ' |
Note issued | 500,000 | ' |
Shares issued upon conversion | 543,962 | ' |
Debt discount recognized as interest expense | 396,977 | ' |
Fair value of warrants recognized as interest expense | 1,299,884 | ' |
ICG Note 4 | ' | ' |
Note issued | 250,000 | ' |
ICG Note 5 | ' | ' |
Note issued | 250,000 | ' |
Beneficial conversion feature | 250,000 | ' |
Shares issued upon conversion | 178,572 | ' |
Debt discount recognized as interest expense | 250,000 | ' |
Fair value of warrants recognized as interest expense | $589,442 | ' |
Note_9_Stockholders_Equity_Nar
Note 9: Stockholder's Equity (Narrative) (USD $) | 12 Months Ended | 1 Months Ended | |||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Aug. 31, 2013 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |
Equity [Member] | Equity [Member] | Equity [Member] | Equity [Member] | Equity [Member] | |||
Stock issued for cash, shares | ' | ' | 44,233 | ' | 36,364 | 45,180 | 1,612,899 |
Stock issued for cash, value | $152,160 | $2,350,000 | $152,160 | ' | $200,000 | $150,000 | $2,000,000 |
Stock issued for services, shares | ' | ' | ' | 15,773 | ' | ' | ' |
Stock issued for services, value | 227,712 | 124,766 | ' | 50,000 | ' | ' | ' |
Stock issued for assets, shares | ' | ' | 200,000 | ' | ' | ' | ' |
Stock issued for assets, value | 994,000 | 420,000 | 994,000 | ' | ' | ' | ' |
Shares available for issuance under Company Stock Plan | 340,000 | ' | ' | ' | ' | ' | ' |
Dividends accrued | $1,918 | ' | ' | ' | ' | ' | ' |
Note_10_Warrants_Details_Warra
Note 10. Warrants (Details - Warrants Outstanding) (Warrants, USD $) | 12 Months Ended |
Sep. 30, 2013 | |
Warrants | ' |
Number of units | ' |
Outstanding, beginning of period | 109,139 |
Granted | 846,363 |
Exercised | ' |
Outstanding, end of period | 955,502 |
Exercisable, end of period | 955,502 |
Outstanding, beginning of period | $2.85 |
Granted | $1.78 |
Outstanding, end of period | $1.90 |
Exercisable, end of period | $1.90 |
Weighted Average Remaining Contractual Term (in years) | ' |
Outstanding, beginning of period | '4 years 11 months 12 days |
Outstanding, end of period | '4 years 7 months 20 days |
Exercisable, end of period | '4 years 7 months 20 days |
Outstanding, beginning of period | $253,202 |
Outstanding, end of period | $1,471,998 |
Exercisable, end of period | 1,471,998 |
Note_10_Warrants_Details_Assum
Note 10. Warrants (Details - Assumptions) (Warrants) | 12 Months Ended |
Sep. 30, 2013 | |
Minimum | ' |
Volatility | 121.00% |
Risk-free interest rate | 0.74% |
Expected term | '5 years |
Forfeiture rate | 0.00% |
Dividend yield rate | 0.00% |
Maximum | ' |
Volatility | 127.00% |
Risk-free interest rate | 0.89% |
Expected term | '5 years |
Forfeiture rate | 0.00% |
Dividend yield rate | 0.00% |
Note_11_Stock_Based_Compensati
Note 11: Stock Based Compensation (Details - Restricted Stock Activity) (Restricted Stock Awards) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Restricted Stock Awards | ' | ' |
Restricted Stock Awards | ' | ' |
Outstanding, beginning balance | 263 | 1,342 |
Granted | ' | ' |
Forfeited | ' | -26 |
Vested | -263 | -1,053 |
Outstanding, ending balance | 0 | 263 |
Note_11_Stockbased_Compensatio2
Note 11: Stock-based Compensation (Details - Option Assumptions) (Options Granted) | 12 Months Ended |
Sep. 30, 2013 | |
Minimum | ' |
Volatility | 124.00% |
Risk-free interest rate | 0.08% |
Expected term | '1 year |
Forfeiture rate | 10.00% |
Dividend yield rate | 0.00% |
Maximum | ' |
Volatility | 127.00% |
Risk-free interest rate | 0.66% |
Expected term | '3 years 9 months 7 days |
Forfeiture rate | 10.00% |
Dividend yield rate | 0.00% |
Note_11_Stockbased_Compensatio3
Note 11: Stock-based Compensation (Details - Stock Option Activity) (Stock Options, USD $) | 12 Months Ended |
Sep. 30, 2013 | |
Stock Options | ' |
Number of Shares | ' |
Outstanding, beginning balance | 0 |
Granted | 225,000 |
Exercised | ' |
Forfeited | ' |
Outstanding, ending balance | 225,000 |
Exercisable | 25,000 |
Granted | $8.47 |
Outstanding, ending balance | $8.47 |
Exercisable | $10 |
Weighted Average Remaining Contractual Life | ' |
Outstanding, end of period | '5 years 10 months 24 days |
Exercisable | '7 months 6 days |
Note_11_Stockbased_Compensatio4
Note 11. Stock-based Compensation (Details - Non-Vested Shares) (Nonvested Shares) | 12 Months Ended |
Sep. 30, 2013 | |
Nonvested Shares | ' |
Number of Shares, Nonvested | ' |
Outstanding, beginning balance | 0 |
Granted | 200,000 |
Outstanding, ending balance | 200,000 |
Weighted-Average Grant Date Fair Value | ' |
Granted | '2 years 2 months 5 days |
Nonvested, ending balance | '2 years 2 months 5 days |
Note_11_Stockbased_Compensatio5
Note 11. Stock-based Compensation (Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Stock based compensation expense | $173,073 | $16,942 |
Restricted Stock Awards | ' | ' |
Shares outstanding and fully vested | 134,816 | ' |
Note_12_Net_Loss_Per_Share_Det
Note 12. Net Loss Per Share (Details - Computation of loss per share) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | |
Net Loss Per Share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loss from continuing operations | ($960,319) | ($511,464) | ($3,215,467) | ($1,062,472) | ($960,319) | ($511,464) | ($3,215,467) | ($1,062,472) | ($5,749,722) | ($1,587,641) |
Less: preferred stock dividends | ' | ' | ' | ' | ' | ' | ' | ' | -1,918 | -1,918 |
Loss from continuing operations applicable to common stock | ' | ' | ' | ' | ' | ' | ' | ' | -5,751,640 | -1,589,559 |
Income (loss) from discontinued operations | 0 | 295 | 450 | 1,963 | 0 | 295 | 450 | 1,963 | 2,708 | 12,433 |
Net loss applicable to common stock | ' | ' | ' | ' | ' | ' | ' | ' | ($5,748,932) | ($1,577,126) |
Weighted average common shares outstanding - basic and diluted | 3,570,410 | 3,437,736 | 2,793,023 | 2,653,937 | 3,570,410 | 3,437,736 | 2,793,023 | 2,653,937 | 3,131,420 | 2,068,828 |
Earnings per share - basic and diluted: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loss from continuing operations | ($0.27) | ($0.15) | ($1.15) | ($0.40) | ($0.27) | ($0.15) | ($1.15) | ($0.40) | ($1.84) | ($0.77) |
Discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | $0 | $0.01 |
Net loss | ($0.27) | ($0.15) | ($1.15) | ($0.40) | ($0.27) | ($0.15) | ($1.15) | ($0.40) | ($1.84) | ($0.76) |
Note_12_Net_Loss_Per_Share_Det1
Note 12. Net Loss Per Share (Details - Antidilutive securities) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 1,308,342 | 237,242 |
Options | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 225,000 | ' |
Warrants | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 955,502 | 109,139 |
Series E Convertible Preferred Stock | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 127,840 | 127,840 |
Shares Of Nonvested Restricted Stock | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | ' | 263 |
Note_13_Restructuring_Acivitie
Note 13. Restructuring Acivities (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Restructuring and Related Activities [Abstract] | ' | ' |
Revenue associated with restructuring agreement | $816 | $6,053 |
Note_14_Related_Party_Transact1
Note 14: Related Party Transactions (Narrative) (ICG Notes, USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
ICG Notes | ' | ' |
Interest expense associated with ICG Notes | $3,291,466 | $489,594 |
Note_15_Commitments_and_Contin2
Note 15. Commitments and Contingencies (Details) (USD $) | Sep. 30, 2013 |
Commitments and Contingencies Disclosure [Abstract] | ' |
2014 | $211,767 |
2015 | 201,630 |
2016 | 57,283 |
2017 | 0 |
2018 | 0 |
Thereafter | 0 |
Total | $470,680 |
Note_15_Commitments_and_Contin3
Note 15: Commitments and Contingencies (Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Lease expense | $152,372 | $350,822 |
Note_16_Provision_for_Income_T2
Note 16: Provision for Income Taxes (Details - Effective tax rate) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Amount | ' | ' |
Federal statutory rates | ($1,953,982) | ($535,573) |
State income taxes | -193,167 | -52,946 |
Write off of deferred tax asset related to vested restricted stock | 0 | 10,670 |
Permanent differences | 15,967 | 3,411 |
Valuation allowance against net deferred tax assets | 2,131,183 | 574,438 |
Other | 0 | 0 |
Effective rate | $0 | $0 |
Percent | ' | ' |
Federal statutory rates | 34.00% | 34.00% |
State income taxes | 3.00% | 3.00% |
Write off of deferred tax asset related to vested restricted stock | 0.00% | -1.00% |
Permanent differences | 0.00% | 0.00% |
Valuation allowance against net deferred tax assets | -37.00% | -36.00% |
Other | 0.00% | 0.00% |
Effective rate | 0.00% | 0.00% |
Note_16_Provision_for_Income_T3
Note 16: Provision for Income Taxes (Details - Deferred Income Tax Assets) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Deferred income tax asset, current: | ' | ' |
Book to tax differences in accounts receivable | $382,218 | $582,549 |
Book to tax differences in prepaid assets and accrued expenses | 8,425 | -7,774 |
Total deferred income tax asset, current | 390,643 | 574,775 |
Less: valuation allowance | -390,643 | -574,775 |
Deferred income tax asset, current, net | 0 | 0 |
Deferred income tax asset, long-term: | ' | ' |
Net operating loss carryforwards | 12,821,092 | 10,012,906 |
Book to tax differences for stock based compensation | 6,407 | 6,407 |
Book to tax differences in intangible assets | 6,693,536 | 6,961,861 |
Book to tax differences in other | 326 | 326 |
Book to tax differences in depreciation | -2,297,221 | -2,072,674 |
Total deferred income tax asset, long-term | 17,224,140 | 14,908,825 |
Less: valuation allowance | -17,224,140 | -14,908,825 |
Deferred income tax asset, net | 0 | 0 |
Total deferred income tax asset | $0 | $0 |
Note_17_Concentration_of_Credi1
Note 17: Concentration of Credit Risk (Details Narrative) (Accounts Receivable [Member]) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
LEC 1 | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Concentration of receivables | 44.00% | 35.00% |
LEC 2 | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Concentration of receivables | 25.00% | 27.00% |
LEC 3 | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Concentration of receivables | 18.00% | 15.00% |
Note_20_Selected_Quarterly_Fin2
Note 20: Selected Quarterly Financial Data (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | |
Quarterly Financial Information Disclosure [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenues | $617,382 | $606,867 | $555,084 | $572,535 | $617,382 | $606,867 | $555,084 | $572,535 | $2,351,868 | $3,070,503 |
Gross profit | 99,521 | 427,946 | 438,171 | 469,899 | 99,521 | 427,946 | 438,171 | 469,899 | 1,435,537 | 2,355,046 |
Loss from continuing operations | -960,319 | -511,464 | -3,215,467 | -1,062,472 | -960,319 | -511,464 | -3,215,467 | -1,062,472 | -5,749,722 | -1,587,641 |
Income (loss) from discontinued operations | 0 | 295 | 450 | 1,963 | 0 | 295 | 450 | 1,963 | 2,708 | 12,433 |
Net loss | ($960,319) | ($511,169) | ($3,215,017) | ($1,060,509) | ($960,319) | ($511,169) | ($3,215,017) | ($1,060,509) | ($5,747,014) | ($1,575,208) |
Earnings per share information- basic and diluted: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loss from continuing operations | ($0.27) | ($0.15) | ($1.15) | ($0.40) | ($0.27) | ($0.15) | ($1.15) | ($0.40) | ($1.84) | ($0.77) |
Discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | $0 | $0.01 |
Net loss | ($0.27) | ($0.15) | ($1.15) | ($0.40) | ($0.27) | ($0.15) | ($1.15) | ($0.40) | ($1.84) | ($0.76) |
Weighted Avg common shares outstanding | 3,570,410 | 3,437,736 | 2,793,023 | 2,653,937 | 3,570,410 | 3,437,736 | 2,793,023 | 2,653,937 | 3,131,420 | 2,068,828 |