Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 19, 2014 | Mar. 31, 2014 | |
OptionsToPurchaseSharesOfCommonStockMember | |||
Entity Registrant Name | LIVEDEAL INC | ||
Entity Central Index Key | 1045742 | ||
Document Type | 10-K | ||
Document Period End Date | 30-Sep-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -21 | ||
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 | $64,542,541 | ||
Entity Common Stock, Shares Outstanding | 14,552,748 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Assets | ||
Cash and cash equivalents | $8,114,682 | $761,458 |
Accounts receivable, net | 854,583 | 174,901 |
Inventory | 4,277,145 | 0 |
Prepaid expenses and other current assets | 583,647 | 67,126 |
Total current assets | 13,830,057 | 1,003,485 |
Accounts receivable, long term portion, net | 0 | 44,639 |
Property and equipment, net | 153,114 | 71,162 |
Deposits and other assets | 65,161 | 25,563 |
Intangible assets, net | 3,071,210 | 2,848,401 |
Goodwill | 1,169,904 | 0 |
Total assets | 18,289,446 | 3,993,250 |
Liabilities and Stockholders' Equity | ||
Accounts payable | 2,282,887 | 524,053 |
Accrued liabilities | 1,046,030 | 299,464 |
Derivative liability | 83,580 | 0 |
Note payable, net of debt discount | 920,360 | 0 |
Total current liabilities | 4,332,857 | 823,517 |
Long-term loans | 638,969 | 0 |
Total Liabilities | 4,971,826 | 823,517 |
Commitments and contingencies | 251,000 | 0 |
Stockholders' equity: | ||
Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 127,840 shares issued and outstanding at September 30, 2014 and September 30, 2013, liquidation preference $38,203 | 10,866 | 10,866 |
Common stock, $0.001 par value, 30,000,000 shares authorized, 14,525,248 and 11,335,674 shares issued and outstanding at September 30, 2014 and 2013, respectively | 14,531 | 11,335 |
Paid in capital | 45,038,176 | 30,481,179 |
Accumulated deficit | -31,996,953 | -27,333,647 |
Total stockholders' equity | 13,066,620 | 3,169,733 |
Total liabilities and stockholders' equity | $18,289,446 | $3,993,250 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
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 | $38,203 | $38,203 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 14,525,248 | 11,335,674 |
Common stock, shares outstanding | 14,525,248 | 11,335,674 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Income Statement [Abstract] | ||
Revenues | $7,265,276 | $2,351,868 |
Cost of revenues | 5,226,637 | 916,331 |
Gross profit | 2,038,639 | 1,435,537 |
Operating expenses: | ||
General and administrative expenses | 5,644,218 | 4,114,843 |
Sales and marketing expenses | 893,705 | 58,788 |
Total operating expenses | 6,537,923 | 4,173,631 |
Operating loss | -4,499,284 | -2,738,094 |
Other expense: | ||
Interest expense, net | -458,934 | -3,291,031 |
Other income | 240,565 | 279,403 |
Gain on deriative liability | 56,272 | 0 |
Total other expense, net | -162,097 | -3,011,628 |
Loss from continuing operations | -4,661,381 | -5,749,722 |
Discontinued operations | ||
Income from discontinued component, including disposal costs | 0 | 2,708 |
Income from discontinued operations | 0 | 2,708 |
Net loss | ($4,661,381) | ($5,747,014) |
Earnings per share - basic and diluted: | ||
Loss from continuing operations | ($0.35) | ($0.61) |
Discontinued operations | $0 | $0 |
Net loss | ($0.35) | ($0.61) |
Weighted average common shares outstanding: | ||
Basic and diluted | 13,144,248 | 9,394,260 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (USD $) | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings / Accumulated Deficit [Member] | Total |
Beginning balance, value at Sep. 30, 2012 | $7,861 | $10,866 | $24,395,242 | ($21,584,715) | $2,829,254 |
Beginning balance, shares at Sep. 30, 2012 | 7,861,458 | 127,840 | |||
Series E preferred stock dividends | -1,918 | -1,918 | |||
Stock based compensation | 173,073 | 173,073 | |||
Issuance of common stock for services, shares | 202,428 | ||||
Issuance of common stock for services, value | 202 | 227,510 | 227,712 | ||
Issuance of common stock for cash, shares | 132,699 | ||||
Issuance of common stock for cash, value | 133 | 152,027 | 152,160 | ||
Issuance of common stock for intangibles, shares | 600,000 | ||||
Issuance of common stock for intangibles, value | 600 | 993,400 | 994,000 | ||
Beneficial conversion feature on convertible debt and warrants | 3,291,466 | 3,291,466 | |||
Conversion of note payable, shares | 2,539,089 | ||||
Conversion of note payable, value | 2,539 | 1,248,461 | 1,251,000 | ||
Net loss | -5,747,014 | -5,747,014 | |||
Ending balance, value at Sep. 30, 2013 | 11,335 | 10,866 | 30,481,179 | -27,333,647 | 3,169,733 |
Ending balance, shares at Sep. 30, 2013 | 11,335,674 | 127,840 | |||
Series E preferred stock dividends | -1,925 | -1,925 | |||
Stock based compensation | 167,985 | 167,985 | |||
Issuance of common stock for services, shares | 24,427 | ||||
Issuance of common stock for services, value | 31 | 9,623 | 9,654 | ||
Issuance of common stock for cash, shares | 3,115,147 | ||||
Issuance of common stock for cash, value | 3,115 | 13,677,939 | 13,681,054 | ||
Issuance of common stock for intangibles, value | 0 | ||||
Beneficial conversion feature on convertible debt and warrants | 500,000 | 500,000 | |||
Issuance of common stock for MEI purchase, shares | 50,000 | ||||
Issuance of common stock for MEI purchase, value | 50 | 201,450 | 201,500 | ||
Net loss | -4,661,381 | -4,661,381 | |||
Ending balance, value at Sep. 30, 2014 | $14,531 | $10,866 | $45,038,176 | ($31,996,953) | $13,066,620 |
Ending balance, shares at Sep. 30, 2014 | 14,525,248 | 127,840 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
OPERATING ACTIVITIES: | ||
Net loss | ($4,661,381) | ($5,747,014) |
Depreciation and amortization | 490,256 | 264,112 |
Non-cash interest expense associated with convertible debt and warrants | 423,968 | 3,291,466 |
Non-cash change in fair value of derivative liability | -56,272 | 0 |
Stock based compensation expense | 167,985 | 173,073 |
Writedown of assets | 315,306 | 0 |
Non-cash issuance of common stock for services | 9,654 | 227,712 |
Loss on disposal of property and equipment | 7,210 | 0 |
Provision for uncollectible accounts | 11,972 | -293,876 |
Changes in assets and liabilities: | ||
Accounts receivable | -296,520 | 888,754 |
Prepaid expenses and other current assets | -400,301 | -14,512 |
Inventory | -2,984,031 | 0 |
Deposits and other assets | 1,204 | 10,144 |
Accounts payable | 1,444,820 | -493,310 |
Accrued liabilities | 331,476 | -111,558 |
Net cash used in operating activities | -5,194,654 | -1,805,009 |
INVESTING ACTIVITIES: | ||
Acquisition of businesses, net of cash acquired | -1,259,483 | 0 |
Expenditures for intangible assets | -19,265 | -91,483 |
Proceeds from the sale of equipment | 1,400 | 0 |
Purchases of property and equipment | -79,808 | -49,995 |
Net cash used in investing activities | -1,357,156 | -141,478 |
FINANCING ACTIVITIES: | ||
Issuance of common stock for cash | 13,681,054 | 152,160 |
Payment of preferred stock dividends | -17,267 | 0 |
Payments on notes payable | -582,348 | 0 |
Proceeds from issuance of convertible debt | 823,595 | 1,250,000 |
Net cash provided by financing activities | 13,905,034 | 1,402,160 |
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 7,353,224 | -544,327 |
CASH AND CASH EQUIVALENTS, beginning of period | 761,458 | 1,305,785 |
CASH AND CASH EQUIVALENTS, end of period | 8,114,682 | 761,458 |
Supplemental cash flow disclosures: | ||
Interest paid | 754 | 150 |
Income taxes paid | 0 | 0 |
Noncash financing and investing activities: | ||
Recognition of contingent beneficial conversion feature | 500,000 | 0 |
Issuance of common stock for intangibles | 0 | 994,000 |
Conversion of notes payable and accrued interest into common stock | 0 | 1,251,000 |
Accrued and unpaid dividends | $1,917 | $1,918 |
1_Organization_and_Basis_of_Pr
1. Organization and Basis of Presentation | 12 Months Ended | ||
Sep. 30, 2014 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
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 provides specialized online marketing solutions to small-to-medium sized local businesses, or SMBs, that boost customer awareness and merchant visibility. The Company offers affordable tools for SMBs to extend their marketing reach to relevant prospective customers via the internet. The Company also provides SMBs promotional marketing with the ability to offer special deals and activities through LiveDeal.com, mobile applications for iOS and Android users and our online publishing partners. | ||
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. | |||
· | 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. | ||
· | On March 7, 2014, the Company incorporated Live Goods, LLC (“Live Goods”), a California limited liability company, which became a wholly-owned subsidiary of the Company. Also, on March 7, 2014, the Company signed an agreement for the acquisition of substantially all of the assets of DA Stores, LLC, through its Live Goods. The acquisition of the assets is intended to assist in the implementation of the Company’s new business line of selling furniture online. The acquisition was accounted for as a business combination. See Note 17. | ||
· | On May 6, 2014, the Company, through Live Goods, acquired all of the issued and outstanding shares in the capital of DealTicker Inc., a Canadian corporation (“DealTicker”). This acquisition increased the Company’s ability to sell consumer goods online. | ||
· | On August 24, 2014, the Company entered into a Stock Purchase Agreement with Modern Everyday Inc., a Delaware corporation (“MEI”). MEI sells consumer products online and this acquisition further enhanced the Company ability to offer a larger array of products to consumers online. | ||
Liquidity | |||
The Company had a net loss of $4.6 million and $5.7 million for the years ended September 30, 2014 and 2013, respectively. The Company had an operating cash outflow of approximately $(5.2) million and $(1.8) million for the years ended September 30, 2014 and 2013. The Company was sold shares of its common stock during the year ended September 30, 2014 for $13.7 million. The Company had cash of $8.1 million as of September 30, 2014. 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. | |||
While the Company believes that its existing cash on hand is sufficient to finance our operations for the next twelve months, there can be no assurance that we will generate profitability or positive operating cash flows in the near future. To the extent that we cannot achieve profitability or positive operating cash flows, our business will be materially and adversely affected. Further, our business is likely to experience significant volatility in its revenues, operating losses, personnel involved, products or services for sale, and other business parameters, as management implements and revises our strategies and responds to operating results and market conditions. | |||
All data for common stock, options and warrants have been retroactively reflected the 3-for-1 forward stock split (which took effect on February 11, 2014) for all periods presented. In addition, all common stock prices, and per share data for all periods presented have been adjusted to reflect the 3-for-1 forward stock split. See Note 8 for details. |
2_Summary_of_Significant_Accou
2. Summary of Significant Accounting Policies | 12 Months Ended | ||
Sep. 30, 2014 | |||
Accounting Policies [Abstract] | |||
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., Velocity Local Inc., Modern Everyday, Inc. and its wholly owned subsidiaries, Modern Everyday, LLC and Super Nova, LLC, Live Goods, LLC and its wholly owned subsidiaries, DealTicker, Inc. and DA Stores, LLC. The results of operations for DA Stores, LLC,, DealTicker, Inc. and Modern Everyday, Inc. have only been included since the date of acquisition of March 7, 2014, May 5, 2014 and August 24, 2014, respectively. 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, long term loans, 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. At September 30, 2014, the amount the Company had on deposit that exceeded the FDIC-insured limits was $7,508,924. | |||
Property and Equipment | |||
Property and equipment, which consists of office equipment, computer equipment, and furniture and fixtures, 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 $48,278 and $29,357 for the years ended September 30, 2014 and 2013, 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. | |||
Product Revenue | |||
The Company derives product revenue primarily from direct revenue and fulfillment partner revenue from product sales Product revenue is recognized when the following revenue recognition criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or the service has been provided; (3) the selling price or fee revenue earned is fixed or determinable; and (4) collection of the resulting receivable is reasonably assured. Revenue related to product sales is recognized when the above four criteria are met. | |||
The Company evaluates the criteria outlined in ASC Topic 605-45, Principal Agent Considerations, in determining whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. When the Company is the primary obligor in a transaction, are subject to inventory risk, have latitude in establishing prices and selecting suppliers, or have several but not all of these indicators, revenue is recorded gross. If we are not the primary obligor in the transaction and amounts earned are determined using a fixed percentage, revenue is recorded on a net basis. Currently, all direct revenue and fulfillment partner revenue is recorded on a gross basis, as the Company is the primary obligor. The Company presents revenue net of sales taxes. | |||
Inventory | |||
Inventory is valued at the lower of the inventory’s cost (first in, first out basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. All inventory at September 30, 2014 consists of finished goods inventory. At September 30, 2014, the allowance for obsolete inventory was $252,569. | |||
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 92.3% of gross accounts receivable at September 30, 2014 as compared to 82.9% of gross accounts receivable at September 30, 2013. 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, 2014 and 2013, approximately 76% and 57%, respectively, 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 23% and 68%, respectively. | |||
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”. | |||
Long-lived Assets | |||
The Company assesses long-lived assets, including intangible 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. The Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. There were no impairment losses recorded on intangible assets for the years ended September 30, 2014 and 2013. | |||
Goodwill | |||
Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. As of September 30, 2014, the Company performed the required impairment review which resulted in no impairment adjustments. | |||
Segment Reporting | |||
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has two reportable segments (See Note 18). | |||
Derivative Financial Instruments | |||
The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of September 30, 2014, the Company’s only derivative financial instrument was a convertible note due to the “reset” and “dilutive issuance” clause in the note relating to the conversion price from dilutive share issuance. See Note 6. | |||
Fair Value Measurements | |||
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows: | |||
· | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. | ||
· | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | ||
· | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. | ||
At September 30, 2014, the Company’s derivative instruments were reported at fair value using Level 2 inputs as discussed in Note 6. Also, the Company has a purchase price contingency that is discussed in Note 14. | |||
Reclassifications | |||
Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the previously reported net income or stockholders’ equity. | |||
Recently Issued Accounting Pronouncements | |||
FASB Accounting Standards Update No. 2014-08 | |||
In April 2014, the FASB issued ASU 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)." ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of consolidated operations or consolidated financial condition. | |||
FASB Accounting Standards Update No. 2014-09 | |||
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard beginning January 1, 2017. | |||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
3_Discontinued_Operations
3. Discontinued Operations | 12 Months Ended |
Sep. 30, 2014 | |
Discontinued Operations and Disposal Groups [Abstract] | |
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 recast 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. The direct sales business segment accounted for $0 net revenues for the years ended September 30, 2013 and 2014. Net revenues from this business segment are now included as part of income from discontinued operations in the accompanying consolidated statements of operations. There was no net income/loss from discontinued operations for the year ended September 30, 2014 and net income for the year ended September 30, 2013 consisted of a recovery on a bad debt from a previous period. |
4_Balance_Sheet_Information
4. Balance Sheet Information | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Balance Sheet Information | Balance sheet information is as follows: | ||||||||
September 30, | September 30, | ||||||||
2014 | 2013 | ||||||||
Receivables, current, net: | |||||||||
Accounts receivable, current | $ | 1,611,269 | $ | 904,197 | |||||
Less: Allowance for doubtful accounts | (756,686 | ) | (729,296 | ) | |||||
$ | 854,583 | $ | 174,901 | ||||||
Receivables, long term, net: | |||||||||
Accounts receivable, long term | $ | 344,572 | $ | 374,708 | |||||
Less: Allowance for doubtful accounts | (344,572 | ) | (330,069 | ) | |||||
$ | – | $ | 44,639 | ||||||
Total receivables, net: | |||||||||
Gross receivables | $ | 1,955,841 | $ | 1,278,905 | |||||
Less: Allowance for doubtful accounts | (1,101,258 | ) | (1,059,365 | ) | |||||
$ | 854,583 | $ | 219,540 | ||||||
Components of allowance for doubtful accounts are as follows: | |||||||||
Allowance for dilution and fees on amounts due from billing aggregators | $ | 1,063,633 | $ | 730,777 | |||||
Allowance for customer refunds | 2,107 | 6,281 | |||||||
Allowance for other trade receivables | 35,518 | 322,307 | |||||||
$ | 1,101,258 | $ | 1,059,365 | ||||||
Property and equipment, net: | |||||||||
Furnishings and fixtures | $ | 162,642 | $ | 101,611 | |||||
Office, computer equipment and other | 192,063 | 404,580 | |||||||
354,705 | 506,191 | ||||||||
Less: Accumulated depreciation | (201,591 | ) | (435,029 | ) | |||||
$ | 153,114 | $ | 71,162 | ||||||
Intangible assets, net: | |||||||||
Domain name and marketing related intangibles | $ | 1,521,015 | $ | 1,513,708 | |||||
Website and technology related intangibles | 2,545,114 | 2,335,728 | |||||||
Covenant not to compete | 120,000 | – | |||||||
4,504,524 | 3,849,436 | ||||||||
Less: Accumulated amortization | (1,433,314 | ) | (1,001,035 | ) | |||||
$ | 3,071,210 | $ | 2,848,401 | ||||||
Accrued liabilities: | |||||||||
Deferred revenue | $ | 548,004 | $ | 2,829 | |||||
Accrued payroll and bonuses | 107,224 | 27,330 | |||||||
Accruals under revenue sharing agreements | 688 | 44,167 | |||||||
Accrued expenses - other | 390,114 | 225,138 | |||||||
$ | 1,046,030 | $ | 299,464 | ||||||
5_Intangible_Assets
5. Intangible Assets | 12 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||
5. 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, a covenant not to compete, and marketing and technology related intangibles acquired through the acquisition of LiveDeal, Inc. In addition as a result of the acquisition of MEI, the Company recorded goodwill of $1,169,904. All such assets are capitalized at their original cost and amortized over their estimated useful lives as follows: domain name and marketing - 3 to 20 years; website and technology - 3 to 5 years; and covenant not to compete – 4 years. Goodwill is not amortized, but evaluated for impairment on at least an annual basis. | ||||||
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, 2014 and 2013. | |||||||
The following summarizes estimated future amortization expense related to intangible assets that have net balances as of September 30, 2014: | |||||||
2016 | $ | 599,505 | |||||
2017 | 574,070 | ||||||
2018 | 512,745 | ||||||
2019 | 347,142 | ||||||
2020 | 338,992 | ||||||
Thereafter | 698,756 | ||||||
$ | 3,071,210 | ||||||
Total amortization expense related to intangible assets was $441,978 and $234,751 for the years ended September 30, 2014 and 2013, respectively. |
6_Derivative_Liability
6. Derivative Liability | 12 Months Ended | ||
Sep. 30, 2014 | |||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Derivative Liability | The February 2014 Convertible Note of $335,245 discussed in Note 7 has a reset provision and a dilutive issuance clause that gave rise to a derivative liability. The reset provision provides for the conversion price to be adjusted downward in the event that the Company issues any securities at a price per share lower than the then-current conversion price; provided, however, that in no event shall the conversion price per share be less than $1.00. | ||
The fair value of the derivative liability is recorded and shown separately under current liabilities. Changes in the fair value of the derivative liability are recorded in the consolidated statement of income under other income (expense). | |||
The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. | |||
The range of significant assumptions which the Company used to measure the fair value of derivative liabilities at September 30, 2014 is as follows: | |||
Inception | 30-Sep-14 | ||
Stock price | $7.14 | $2.98 | |
Risk free rate | 0.11% | 0.13% | |
Volatility | 142% | 94% | |
Exercise prices | $8.12 | $2.93 | |
Term (years) | 1 | 0.42 | |
The following table represents the Company’s derivative liability activity for both the embedded conversion features for the year ended September 30, 2014: | |||
Amount | |||
Derivative liability balance, September 30, 2013 | $ | – | |
Issuance of derivative liability during the year ended September 30, 2014 | 139,852 | ||
Change in derivative liability during the year ended September 30, 2014 | -56,272 | ||
Derivative liability balance, September 30, 2014 | $ | 83,580 | |
7_Debt
7. Debt | 12 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Debt Disclosure [Abstract] | |||||||
Debt | ICG Convertible Note Transaction | ||||||
On April 3, 2012 (“Closing Date”), the Company entered into a Note Purchase Agreement (the “ ICG Purchase Agreement”) with Isaac Capital Group, LLC (“ICG”), 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 1,209,675 shares, or 16.8% of the Company’s outstanding common stock. The ICG Purchase Agreement and the Notes, which are unsecured, provide that all amounts payable by the Company to ICG under the Notes were due and payable on April 3, 2013 (“Maturity Date”), provided that the Company had 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 ICG Purchase Agreement) had occurred and was 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. The Company exercised such option prior to the Maturity Date. | |||||||
Effective as of April 3, 2012, the Company and ICG amended the ICG Purchase Agreement to clarify ambiguities 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 ICG 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 $0.33 per share, regardless if the Company’s stock is trading below that amount at the time ICG elects to convert a Note. | |||||||
The ICG Purchase Agreement and the Notes, as amended, provided that: | |||||||
· | The Notes accrued interest at an annual interest rate equal to 8%. All interest was payable on the Maturity Date or upon the conversion of the applicable Note. | ||||||
· | The Company had the option to prepay each Note, in whole or in part, at any time without premium or penalty. | ||||||
· | If ICG elected 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 was subject to adjustment in the event of stock splits or combinations, stock dividends, certain pro rata distributions, and certain fundamental transactions. Each Contingent Warrant was 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 provided that they would be exercised in whole or in part and include a cashless exercise feature. | ||||||
· | The Notes provided that, upon the occurrence of any Event of Default, all amounts payable to ICG would become immediately due and payable without any demand or notice. | ||||||
· | The Company would 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) was 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 ICG 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 ICG 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 triggered 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 ICG 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 (“Note No. 1”) on the Closing Date. Because the conversion price of $0.84 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 on the Closing Date. The discount to Note No. 1 is being amortized to interest expense until maturity or its earlier repayment or conversion. | |||||||
As mentioned above, the ICG Purchase Agreement, as amended, contained contingent provisions for the adjustment of the conversion ratio and conversion price, and the issuance of Contingent Warrants upon conversion. | |||||||
On September 10, 2012, ICG elected to convert Note No. 1 with a conversion price of $0.79 per share, resulting in the issuance of 327,417 shares. In accordance with the terms of the agreement, warrants to acquire 327,417 shares were issued upon conversion with an exercise price of ($0.79 x 120%) $0.95 per share. Upon conversion of Note No. 1, 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 of Note No. 1 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 (“Note No. 2”), pursuant to the ICG Purchase Agreement. Because the conversion price of $0.67 was less than the stock price, this gave rise to a beneficial conversion feature valued at $200,738. The Company recognized this beneficial conversion feature as a debt discount and additional paid in capital on December 11, 2012. On December 17, 2012, ICG elected to convert Note No. 2, resulting in the issuance of 371,487 shares of the Company’s common stock and a warrant to acquire 371,487 additional shares of the Company’s common stock at an exercise price of $0.81 per share. Upon conversion of the Note No. 2, the remaining debt discount of $196,556 was immediately recognized as interest expense. The fair value of the warrants issued in connection with the conversion of Note No. 2 was $550,016 and was immediately recognized as interest expense. | |||||||
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 (“Note No. 3”) and $250,000 (“Note No. 4”), respectively, pursuant to the ICG Purchase Agreement. Because the conversion price of $0.46 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 Note Nos. 3 and 4, resulting in the issuance of 1,631,886 shares of the Company’s common stock and a warrant to acquire 1,631,886 additional shares of the Company’s common stock at an exercise price of $0.55 per share. Upon conversion of Note Nos. 3 and 4, 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 Note Nos. 3 and 4 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 (“Note No. 5”), pursuant to the ICG Purchase Agreement. Because the conversion price of $0.47 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 Note No. 5, resulting in the issuance of 535,716 additional shares of the Company’s common stock and a warrant to acquire 535,716 shares at an exercise price of $0.56 per share. Upon conversion of Note No. 6, 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 Note No. 5 was $589,442 and was immediately recognized as interest expense. | |||||||
On January 23, 2014, the Company issued a Note to ICG in the principal amount of $500,000. Because the conversion price of $2.29 was less than the stock price, this gave rise to a beneficial conversion feature valued at $500,000. The Company recognized this beneficial conversion feature as a debt discount and additional paid in capital. The debt discount is being amortized over the one year term and therefore $341,781 of interest expense was recognized during the year ended September 30, 2014. | |||||||
Kingston Convertible Note Transaction ($5 Million Line of Credit) | |||||||
On January 7, 2014, the Company entered into a Note Purchase Agreement (the “Kingston Purchase Agreement”) with Kingston Diversified Holdings LLC (“Kingston”), 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 Kingston Purchase Agreement and the Notes, which are unsecured, provide that all amounts payable by the Company to Kingston under the Notes will be due and payable on the second (2nd) anniversary of the date of the Kingston Purchase Agreement (the “Maturity Date”). | |||||||
The Kingston Purchase Agreement and the Notes provide that: | |||||||
· | Either the Company or Kingston will have the right to cause the sale and issuance of Notes pursuant to the Kingston Purchase Agreement, provided that NASDAQ’s approval of the Kingston Purchase Agreement and transactions contemplated thereby is a condition precedent to each party’s right to cause any borrowings to occur under the Kingston 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 Kingston 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 Kingston Purchase Agreement (i.e., $3.12 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 $0.33. For example, if the Average Price is $0.17 per share, then for purposes of calculating the conversion price, the Average Price per share would be $0.33 per share instead of $0.17 per share. | ||||||
· | If either party elects to convert all or any portion of any Note, the Company must issue to Kingston 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 Kingston 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 Kingston 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 Kingston 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 Kingston 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 Kingston Purchase Agreement. Unless and until any such stockholder approvals are obtained, in no event will Kingston be entitled to convert any Notes and/or exercise any Contingent Warrants to the extent that any such conversion or exercise would result in Kingston 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 Kingston Purchase Agreement. | ||||||
· | Kingston 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 Kingston 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 $0.23 per share). If any such dilutive issuance occurs after the conversion of one or more Notes, Kingston 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 Kingston Purchase Agreement, Kinston’s anti-dilution rights will expire two (2) years following the date of issuance. | ||||||
As of September 30, 2014, there were no advances from this line of credit (See Note 19). | |||||||
February 2014 Convertible Note Transaction | |||||||
On February 27, 2014, the Company issued a one year convertible note to an otherwise unaffiliated, non-institutional third party in the principal amount of $323,595. The note (i) is unsecured, (ii) bears interest at the rate of six percent per annum, and (iii) was issued without any original issue discount. | |||||||
The principal is convertible into shares of the Company’s common stock at any time and from time-to-time at the instance of either the Company or the holder. The per-share conversion price is an amount equal to ninety percent (90%) of the 10-day volume weighted average closing bid price for the Company’s common stock, as reported by The NASDAQ Stock Market, Inc. for the ten (10) trading days immediately preceding the date of the notice of conversion, subject to downward adjustment in the event that the Company issues any securities at a price per share lower than the then-current conversion price; provided, however, that in no event shall the conversion price per share be less than $1.00. The Company provided the holder with certain negative covenants and events of default, each standard for transactions of this nature. | |||||||
Due to the “reset” and “dilutive issuance” clause in this note relating to the conversion price from dilutive share issuance, the Company has determined that the conversion feature is considered a derivative liability for the Company, which is detailed in Note 6. | |||||||
The Company determined an initial derivative liability value of $139,852, which is recorded as a derivative liability as of the date of issuance while also recording an $139,852 debt discount on its balance sheet in relation to the bifurcation of the embedded conversion options of the note. The debt discount is being amortized over the one year term and therefore $82,187 of interest expense was recognized during the year ended September 30, 2014. The Company recorded $56,272 of non-cash “change in fair value of derivative” income during the year ended September 30, 2014, related to this note. | |||||||
Credit line | |||||||
In connection with the purchase of Modern Everyday, Inc., the Company assumed a credit line from a bank. The credit line is collateralized by all the assets of Modern Everyday, Inc., accrues interest at prime plus 2% and is due on September 28, 2019. | |||||||
Notes payable of Modern Everyday, Inc. | |||||||
In connection with the purchase of Modern Everyday, Inc., the Company assumed certain notes payable. Subsequent to the closing of the acquisition, the Company repaid $582,348 of these notes payable. | |||||||
Outstanding debt at September 30, 2014 consisted of the following: | |||||||
Note payable to individual, payable on demand, interest at 10.0% per annum, unsecured | $ | 90,168 | |||||
Convertible note payable to individual, due February 27, 2015, interest at 6.0% per annum, unsecured | 335,245 | ||||||
Convertible note payable to ICG, due January 23, 2015, interest at 8.0% per annum, unsecured | 527,889 | ||||||
Acquisition note payable (See Note 17), $200,000 due February 28, 2015 and $400,000 due February 28, 2016, non-interest bearing with interest imputed at 2.87% per annum | 581,707 | ||||||
Credit line due September 28, 2019, with interest rate at prime plus 2% | 240,204 | ||||||
Less Debt Discount | (215,884 | ) | |||||
Total Debt | 1,559,329 | ||||||
Current portion | 920,360 | ||||||
Long-term portion | $ | 638,969 | |||||
Future maturities of debt at September 30, 2014 are as follows: | |||||||
Years ending September 30, | |||||||
2015 | $ | 920,360 | |||||
2016 | 400,000 | ||||||
2017 | – | ||||||
2018 | – | ||||||
2019 | 238,969 | ||||||
Thereafter | – | ||||||
$ | 1,559,329 | ||||||
8_Stockholders_Equity
8. Stockholders' Equity | 12 Months Ended |
Sep. 30, 2014 | |
Equity [Abstract] | |
Stockholders' Equity | August 2013 Equity Issuance |
On August 22, 2013, the Company agreed to issue 47,319 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 $1.06, 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 600,000 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 $1.66, 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 132,699 shares of common stock to John Kocmur, a former member of our Board of Directors, in exchange for a cash payment of $152,160. The per share purchase price for such shares was $1.15, 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 7. | |
For the year ended September 30, 2014, 21,465 shares of the Company’s common stock were recorded but not yet issued to members of the Board of Directors in exchange for services. See Note 10. | |
At-The-Market Offerings of Common Stock (Chardan Capital Markets LLC) | |
On January 7, 2014, the Company entered into an Engagement Agreement (the “January 2014 Engagement Agreement”) with Chardan Capital Markets LLC (“Chardan”) pursuant to which the Company agreed to issue and sell up to a maximum aggregate amount of 1,980,000 shares of its common stock from time to time through Chardan as its sales agent, under its shelf Registration Statement on Form S-3 (File No. 333-187397) (the “First Registration Statement”) previously filed with the SEC. During the quarter that ended on March 31, 2014, the Company sold 2,214,612 shares of its common stock under the First Registration Statement, resulting in gross proceeds of $10,000,000, in an at-the-market offering, in which Chardan was its agent. The Company received net proceeds of $9,696,013. The Company paid Chardan a total commission of $299,882 pursuant to the January 2014 Engagement Agreement. | |
On May 16, 2014, the Company entered into an Engagement Agreement (the “May 2014 Engagement Agreement”) with Chardan pursuant to which the Company may issue and sell up to a maximum aggregate amount of 10,000,000 shares of its common stock from time to time through Chardan as its sales agent, under its shelf Registration Statement on Form S-3 (File No. 333-193971) (the “Second Registration Statement”) previously filed with the SEC, pursuant to which any shares that are issued under the May 2014 Engagement Agreement will be sold. | |
Upon delivery of a placement notice by the Company, and subject to the terms and conditions of the May 2014 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 the Company. 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 May 2014 Engagement Agreement will terminate upon the earlier of (i) the sale of all shares of common stock subject to the May 2014 Engagement Agreement, or (ii) termination of the May 2014 Engagement Agreement as permitted therein. The Engagement Agreement may be terminated by Chardan or us at any time upon 15 days’ written notice to the other party. | |
The Company 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 May 2014 Engagement Agreement and reimburse Chardan up to $15,000 in expenses. No assurance can be given that the Company will sell any shares under the May 2014 Engagement Agreement, or, if the Company does, as to the price or amount of shares that we will sell, or the dates on which any such sales will take place. | |
For the quarter ended June 30, 2014, the Company sold 790,236 shares of its common stock under the Second Registration Statement, resulting in gross proceeds of $3,599,774, in an at-the-market offering, in which Chardan was its agent. The Company received net proceeds of $3,491,702. The Company paid Chardan a total commission of $107,993 pursuant to the May 2014 Engagement Agreement. | |
For the quarter ended September 30, 2014, the Company sold 110,300 shares of its common stock under the Second Registration Statement, resulting in gross proceeds of $508,598, in an at-the-market offering, in which Chardan was its agent. The Company received net proceeds of $493,340. The Company paid Chardan a total commission of $15,258 pursuant to the May 2014 Engagement Agreement. | |
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 1,800,000 shares of common stock for issuance under the 2014 Plan. As required under Nasdaq Listing Rule 5635(c), the Company included a proposal at its 2014 Annual Meeting of Stockholders, which was held on July 11, 2014, to obtain approval of the 2014 Plan. The 2014 Plan was approved. | |
3-for-1 Forward Stock Split | |
On January 16, 2014, our Board of Directors approved a 3-for-1 forward stock split with respect to the Company’s common stock. Stockholders received three shares of common stock for every one share of common stock owned on the record date of February 3, 2014. The forward stock split was effective as of the close of trading on February 11, 2014. The additional shares were distributed as of the close of business on February 11, 2014. In connection with the forward stock split, the Company’s authorized shares of common stock also increased from 10,000,000 shares to 30,000,000 shares. All data for common stock, options and warrants have been adjusted to reflect the 3-for-1 forward stock split for all periods presented. In addition, all common stock prices, and per share data for all periods presented have been adjusted to reflect the 3-for-1 forward stock split. | |
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, 2014 and 2013, the Company accrued dividends of $1,925 and $1,918, respectively, payable to holders of Series E preferred stock. The Company paid dividends of $17,267 and $0 in 2014 or 2013, respectively. |
9_Warrants
9. Warrants | 12 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | |||||||||||||||||||
Warrants | As discussed in Note 7, the Company issued several Notes in prior periods and converted them resulting in the issuance of warrants. The following table summarizes information about the Company’s warrants at September 30, 2014: | ||||||||||||||||||
Weighted | |||||||||||||||||||
Weighted | Average | ||||||||||||||||||
Average | Remaining | ||||||||||||||||||
Number of | Exercise | Contractual | Intrinsic | ||||||||||||||||
Units | Price | Term (in years) | Value | ||||||||||||||||
Outstanding at September 30, 2012 | 327,417 | $ | 0.95 | 4.95 | $ | 253,202 | |||||||||||||
Granted | 2,539,089 | 0.59 | |||||||||||||||||
Exercised | – | ||||||||||||||||||
Outstanding at September 30, 2013 | 2,866,506 | 0.63 | 4.39 | 1,471,998 | |||||||||||||||
Granted | – | ||||||||||||||||||
Exercised | – | ||||||||||||||||||
Outstanding at September 30, 2014 | 2,866,506 | 0.63 | 3.39 | 6,732,700 | |||||||||||||||
Exercisable at September 30, 2014 | 2,866,506 | 0.63 | 3.39 | 6,732,700 | |||||||||||||||
Most of the above warrants were issued in connection with conversion of convertible notes (See Note 7). When the debt is converted and warrants are issued, the Company determines the fair value of the warrants using the Black-Scholes model and takes a charge to interest expense at the date of issuance. |
10_Stockbased_Compensation
10. Stock-based Compensation | 12 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||
Stock-based Compensation | From time to time, the Company grants stock options and restricted stock awards to officers, directors and employees. These 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 requisite service period. | ||||||||||||||||||
Stock Options | |||||||||||||||||||
The following table summarizes stock option activity for the years ended September 30, 2014 and 2013: | |||||||||||||||||||
Weighted | |||||||||||||||||||
Weighted | Average | ||||||||||||||||||
Average | Remaining | ||||||||||||||||||
Number of | Exercise | Contractual | Intrinsic | ||||||||||||||||
Shares | Price | Life | Value | ||||||||||||||||
Outstanding at September 30, 2012 | – | ||||||||||||||||||
Granted | 675,000 | ||||||||||||||||||
Exercised | – | ||||||||||||||||||
Forfeited | – | ||||||||||||||||||
Outstanding at September 30, 2013 | 675,000 | $ | 2.82 | $ | – | ||||||||||||||
Granted | – | ||||||||||||||||||
Exercised | – | ||||||||||||||||||
Forfeited | (75,000 | ) | |||||||||||||||||
Outstanding at September 30, 2014 | 600,000 | 2.76 | 4.9 | 318,250 | |||||||||||||||
Exercisable at September 30, 2014 | 150,000 | $ | 4.43 | 5.5 | 246,250 | ||||||||||||||
The following table summarizes information about the Company’s non-vested shares as of September 30, 2014: | |||||||||||||||||||
Weighted-Average | |||||||||||||||||||
Number of | Grant-Date | ||||||||||||||||||
Non-vested Shares | Shares | Fair Value | |||||||||||||||||
Nonvested at September 30, 2013 | 600,000 | $ | 0.73 | ||||||||||||||||
Granted | – | ||||||||||||||||||
Vested | (150,000 | ) | |||||||||||||||||
Nonvested at September 30, 2014 | 450,000 | $ | 0.73 | ||||||||||||||||
The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options granted with the following assumptions: | |||||||||||||||||||
Year Ended | |||||||||||||||||||
30-Sep-13 | |||||||||||||||||||
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. The Company recognized compensation expense of $167,985 and $173,073 during the year ended September 30, 2014 and 2013, respectively, related to stock option awards granted to certain employees and executives based on the grant date fair value of the awards, net of estimated forfeitures. | |||||||||||||||||||
At September 30, 2014, the Company had $105,997 of unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the Company expects will be recognized over a weighted-average period of 1.33 years. | |||||||||||||||||||
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. | |||||||||||||||||||
The Company has previously granted shares of restricted stock to certain individuals. The following table sets forth changes in compensation-related restricted stock awards during the year ended September 30, 2014: | |||||||||||||||||||
Outstanding (unvested) at September 30, 2013 | – | ||||||||||||||||||
Granted | 21,000 | ||||||||||||||||||
Forfeited | – | ||||||||||||||||||
Vested | (21,000 | ) | |||||||||||||||||
Outstanding (unvested) at September 30, 2014 | – | ||||||||||||||||||
On January 6, 2014, the Company issued 21,000 shares of common stock in exchange for professional services. As of September 30, 2014, all 21,000 shares were fully vested. |
11_Net_Loss_Per_Share
11. Net Loss Per Share | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Net Loss Per Share | Net loss per share is calculated using the weighted average number of shares of common stock outstanding during the applicable period. 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 net 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 additional common shares issuable in respect of restricted share awards, stock options 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 net loss per share: | |||||||||
Year Ended September 30, | |||||||||
2014 | 2013 | ||||||||
Loss from continuing operations | $ | (4,661,381 | ) | $ | (5,749,722 | ) | |||
Less: preferred stock dividends | (1,925 | ) | (1,918 | ) | |||||
Loss from continuing operations applicable to common stock | (4,663,306 | ) | (5,751,640 | ) | |||||
Income from discontinued operations | – | 2,708 | |||||||
Net loss applicable to common stock | $ | (4,663,306 | ) | $ | (5,748,932 | ) | |||
Weighted average common shares outstanding - basic and diluted | 13,144,248 | 9,394,260 | |||||||
Earnings per share - basic and diluted: | |||||||||
Loss from continuing operations | $ | (0.35 | ) | $ | (0.61 | ) | |||
Discontinued operations | – | – | |||||||
Net loss | $ | (0.35 | ) | $ | (0.61 | ) | |||
The following potentially dilutive securities were excluded from the calculation of diluted net loss per share because the effects were anti-dilutive based on the application of the treasury stock method and because the Company incurred net losses during the period: | |||||||||
Year Ended September 30, | |||||||||
2014 | 2013 | ||||||||
Options to purchase shares of common stock | 600,000 | 675,000 | |||||||
Warrants to purchase shares of common stock | 2,866,506 | 2,866,506 | |||||||
Series E convertible preferred stock | 127,840 | 127,840 | |||||||
Convertible notes | 739,601 | – | |||||||
Total potentially dilutive shares | 4,333,947 | 3,669,346 | |||||||
12_Restructuring_Activities
12. Restructuring Activities | 12 Months Ended |
Sep. 30, 2014 | |
Restructuring and Related Activities [Abstract] | |
12. Restructuring Activities | In May 2011 the Company ceased the Direct Sales business and migrated the remaining customers to Reach Local in exchange for 10% of gross revenues derived from such customers during the first and second year, respectively. The Company recorded $0 and $816 in revenues for this agreement during the years ended September 30, 2014 and 2013, respectively. In connection with the discontinued Direct Sales business, seven employees were terminated. |
13_Related_Party_Transactions
13. Related Party Transactions | 12 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Convertible Notes with ICG |
As described in Note 7, during 2012 and 2013 the Company entered into a Note Purchase Agreement with ICG, an entity owned by Jon Isaac, the Company’s President and Chief Executive Officer and a director of the Company, and subsequently issued a series of Subordinated Convertible Notes thereunder to ICG. In connection with these transactions, the Company received gross proceeds of $500,000 and $1,250,000 during the year ended September 30, 2014 and 2013, respectively. | |
Under the terms of the Note Purchase Agreement and the Subordinated Convertible Notes, ICG executed its conversion option on all then-outstanding notes during the quarter ended December 31, 2012. In exchange for the conversion of $250,000 of convertible notes during the quarter ended December 31, 2012, ICG received an aggregate of 371,487 of shares of common stock and, upon conversion ICG also received warrants to acquire an additional 371,487 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 year ended September 30, 2013 and 2014, the Company recognized total interest expense of $369,670 and $3,291,466, respectively, associated with the ICG notes. |
14_Commitments_and_Contingenci
14. Commitments and Contingencies | 12 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||
Commitments and Contingencies | Purchase price contingency | ||||||
In connection with acquisition of Modern Everyday, Inc. (see Note 17), the Company issued 50,000 shares of the Company’s common stock as part of the consideration for the acquisition. The Company has guaranteed the holder of the 50,000 shares that the value of those shares will be at least $8.00 per shares 30 months after the acquisition date. The Company has agreed to compensate the holder, if the share price is less than $8.00 at the 30 months anniversary of the acquisition, the difference between $8.00 and the share price at the 30 month anniversary times the number of shares still owned by the holder. As of September 30, 2014, the Company as recorded a liability of $251,000 related to this guarantee. The value of these shares was included as part of the purchase price consideration. The Company will adjust this guarantee at the end of each balance sheet date based on the current price of the Company’s common stock. | |||||||
Litigation | |||||||
The Company is party to certain legal proceedings from time to time incidental to the conduct of its business. These proceedings could result in fines, penalties, compensatory or treble damages or non-monetary relief. The nature of legal proceedings is such that the Company cannot assure the outcome of any particular matter, and an unfavorable ruling or development could have a materially adverse effect on our consolidated financial position, results of operations and cash flows in the period in which a ruling or settlement occurs. However, based on information available to the Company’s management to date and other than as noted below, the Company’s management does not expect that the outcome of any matter pending against us is likely to have a materially adverse effect on our consolidated financial position as of September 30, 2014, our annual results of operations, cash flows or liquidity of the Company. | |||||||
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. 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 and attorneys’ fees of $5,624, with post-judgment interest from October 3, 2012. There is no further basis for appeal by the Company. As of September 30, 2014, the payment of this judgment has not been paid and the Company recorded an accrual of $52,261 related to this matter. | |||||||
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 $446,780 and $152,372 for the years ended September 30, 2014 and 2013, respectively. The Company has also entered into several non-cancelable service contracts. | |||||||
As of September 30, 2014, future minimum annual payments under operating lease agreements for fiscal years ending September 30 are as follows: | |||||||
2015 | 489,767 | ||||||
2016 | 272,960 | ||||||
2017 | 53,946 | ||||||
2018 | – | ||||||
2019 | – | ||||||
Thereafter | – | ||||||
$ | 816,673 | ||||||
15_Provision_for_Income_Taxes
15. Provision for Income Taxes | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||
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, 2014 and 2013 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 years ended September 30, 2014 and 2013. | |||||||||||||||||
A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||
Federal statutory rates | $ | (1,584,870 | ) | 34% | $ | (1,953,982 | ) | 34% | |||||||||
State income taxes | (40,088 | ) | 1% | (193,167 | ) | 3% | |||||||||||
Permanent differences | 200,518 | (4% | ) | 15,967 | (0% | ) | |||||||||||
Valuation allowance against net deferred tax assets | 1,424,439 | (31% | ) | 2,131,182 | (37% | ) | |||||||||||
Effective rate | $ | – | –% | $ | – | –% | |||||||||||
At September 30, deferred income tax assets and liabilities were comprised of: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Deferred income tax asset, current: | |||||||||||||||||
Book to tax differences in accounts receivable | $ | 259,448 | $ | 382,218 | |||||||||||||
Book to tax differences in prepaid assets and accrued expenses | (21,450 | ) | 8,425 | ||||||||||||||
Total deferred income tax asset, current | 237,998 | 390,643 | |||||||||||||||
Less: valuation allowance | (237,998 | ) | (390,643 | ) | |||||||||||||
Deferred income tax asset, current, net | – | – | |||||||||||||||
Deferred income tax asset, long-term: | |||||||||||||||||
Net operation loss carryforwards | 8,668,250 | 12,821,092 | |||||||||||||||
Book to tax differences for stock based compensation | – | 6,407 | |||||||||||||||
Book to tax differences in intangible assets | 928,222 | 6,693,536 | |||||||||||||||
Book to tax differences in other | – | 326 | |||||||||||||||
Book to tax differences in depreciation | 5,710 | – | |||||||||||||||
Total deferred income tax asset, long-term | 9,602,182 | (2,297,221 | ) | ||||||||||||||
Less: valuation allowance | (9,602,182 | ) | (17,224,140 | ) | |||||||||||||
Deferred income tax asset, net | – | – | |||||||||||||||
Total deferred income tax asset | $ | – | $ | – | |||||||||||||
The Company has recorded as of September 30, 2014 and 2013 a valuation allowance of $9,602,182 and $17,224,140, respectively, 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, 2014. | |||||||||||||||||
The Company has net operating loss carry-forwards of approximately $24.9 million. Such amounts are subject to IRS code section 382 limitations and expire in 2023. The 2009 to 2012 tax years are still subject to audit. |
16_Concentration_of_Credit_Ris
16. Concentration of Credit Risk | 12 Months Ended |
Sep. 30, 2014 | |
Risks and Uncertainties [Abstract] | |
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, 2014. At times, balances may exceed federally insured limits. At September 30, 2014, the amount the Company had on deposit that exceeded the FDIC-insured limits was $7,508,924. |
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 Local Exchange Carrier (“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 LEC’s 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, 2014 and September 30, 2013 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 23%, 14% and 10% of gross receivables at September 30, 2014 and 44%, 25%, and 18% of gross receivables at September 30, 2013, respectively. |
17_Business_Combination
17. Business Combination | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||
Business Combination | Asset Purchase Agreement – DA Stores, LLC | ||||||||||||||||
On March 7, 2014, the Company incorporated Live Goods, LLC (“Live Goods”), a California limited liability company, which became a wholly-owned subsidiary of the Company. Also, on March 7, 2014, the Company signed an agreement for the acquisition of substantially all of the assets of DA Stores, LLC, through its Live Goods. The acquisition of the assets is intended to assist in the implementation of the Company’s new business line. Under the terms of the acquisition, the Company acquired DA Stores, LLC’s retail store inventory and equipment, furniture, software, hardware, and domain names in exchange for $200,000 cash. The purchase price for the assets of DA Stores was determined to be the fair market value thereof. On May 16, 2014, DA Stores, LLC, executed the Deed of Transfer in respect of all the assets. | |||||||||||||||||
In connection with the transaction, the Company paid to the benefit of each of Akmal Hodjaev and David Rashidov the sum of $150,000 as retention compensation. The Company, through Live Goods LLC, also agreed to employ each of such individuals for a three-year term, commencing as of the date of the transaction. However, in the event that either or both of such individuals voluntarily terminates their respective employment prior to the expiration of such three-year term, such terminating individual has agreed to return such $150,000 sum. | |||||||||||||||||
Further, and in connection with such individual’s employment but subject to the achievement of certain performance metrics at the one-year anniversary of the acquisition of such assets, the Company will pay an aggregate, additional amount to Messrs. Hodjaev and Rashidov, in cash or stock options (based on the price of the Company’s common stock on March 7, 2014), as follows: | |||||||||||||||||
i. | $300,000 if the operations of the purchased assets of DA Stores, LLC, achieve $15,000,000 in revenue during such 12-month period with 5% profitability margin; | ||||||||||||||||
ii. | $250,000 if the operations of the purchased assets of DA Stores, LLC, achieve $12,000,000 in revenue during such 12-month period, with 5% profitability margin; or | ||||||||||||||||
iii. | $200,000 if the operations of the purchased assets of DA Stores, LLC, achieve $10,000,000 in revenue during such 12-month period with 5% profitability margin. | ||||||||||||||||
The Company will recognize this additional, conditional payment to such individuals, if, when, and any such performance metric has been achieved. | |||||||||||||||||
Share Purchase Agreement -- DealTicker, Inc. | |||||||||||||||||
On May 6, 2014, the Company, through Live Goods, acquired all of the issued and outstanding shares in the capital of DealTicker Inc., a Canadian corporation (“DealTicker”), from Julian Gleizer and Daniel Abramov, the shareholders of DealTicker (collectively the “Sellers”). Upon the closing of the transaction, the Sellers sold all of the shares of DealTicker to Live Goods for a purchase price in the aggregate amount of CAN$246,000 (US$228,000). Pursuant to the terms of the Agreement, Live Goods may, in its absolute discretion, increase the purchase price taking into account the financial performance and operation of the DealTicker business during the one-year period following the closing compared to historical performance. Subsequently the Company wrote off all the assets that were purchased except for the customer list. | |||||||||||||||||
Share Purchase Agreement – Modern Everyday, Inc. | |||||||||||||||||
On August 24, 2014, the Company entered into a Stock Purchase Agreement with Modern Everyday Inc., a Delaware corporation (“MEI”), and Byron Hsu, as the sole stockholder of MEI. Pursuant to the Agreement, LiveDeal acquired 100% of the issued and outstanding shares of common stock (the “Shares”) of MEI from Mr. Hsu. | |||||||||||||||||
The purchase price paid for the shares consisted of three components: shares of the Company’s common stock, cash and a promissory note: | |||||||||||||||||
i. | 50,000 shares of LiveDeal restricted common stock valued at $395,500; | ||||||||||||||||
ii. | $1,100,000 of cash paid to Mr. Hsu; and | ||||||||||||||||
iii. | A $600,000 promissory note that bears no interest, with $200,000 due February 28, 2015, with the balance due on February 28, 2016, and is secured by a second-position security interest in the fair value of inventory, accounts receivable, and cash and deposit accounts of MEI. | ||||||||||||||||
In connection with the Agreement, the Company and Mr. Hsu also entered into an employment agreement pursuant to which Mr. Hsu is employed to serve as President, Chief Executive Officer and Chief Technical Officer of MEI. The initial term of the employment agreement is for eighteen months, and Mr. Hsu’s base annual salary will be $160,000. | |||||||||||||||||
A summary of the purchase price allocations is below: | |||||||||||||||||
Modern | |||||||||||||||||
DA Stores | DealTicker | Everyday | Total | ||||||||||||||
Cash | $ | – | $ | 103,884 | 164,633 | $ | 268,517 | ||||||||||
Accounts receivable | – | 27,193 | 349,860 | 377,053 | |||||||||||||
Inventory | 110,375 | 55,691 | 1,232,398 | 1,398,464 | |||||||||||||
Other current assets | – | – | 229,400 | 229,400 | |||||||||||||
Property and equipment | 48,500 | 12,855 | 7,755 | 69,110 | |||||||||||||
Developed technology | – | – | 310,000 | 310,000 | |||||||||||||
Covenant not to compete | – | – | 120,000 | 120,000 | |||||||||||||
Customer list | – | 175,823 | – | 175,823 | |||||||||||||
Other intangible assets | 30,000 | 69,839 | – | 99,839 | |||||||||||||
Goodwill | – | – | 1,169,904 | 1,169,904 | |||||||||||||
Other assets | 11,125 | 10,285 | 19,392 | 40,802 | |||||||||||||
Accounts payable | – | (28,106 | ) | (285,908 | ) | (314,014 | ) | ||||||||||
Notes payable | – | – | (463,398 | ) | (463,398 | ) | |||||||||||
Line of credit | – | – | (490,568 | ) | (490,568 | ) | |||||||||||
Other liabilities | – | (199,464 | ) | (287,968 | ) | (487,432 | ) | ||||||||||
Purchase price | $ | 200,000 | $ | 228,000 | $ | 2,075,500 | $ | 2,503,500 | |||||||||
The developed technology, covenant not to compete and the customer list are being amortized over 3, 4 and 3 years, respectively. | |||||||||||||||||
The revenue from the acquisitions of DA Stores, DealTicker and Modern Everyday included in the results of operations from the respective dates of acquisition to September 30, 2014 were $3,297,206, 2,154 and $1,183,172, respectively | |||||||||||||||||
The pro forma information below present statement of operations data as if the acquisition of MEI (the most significant acquisition) took place on October 1, 2012. | |||||||||||||||||
Years Ended September 30, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Net revenue | $ | 16,765,798 | $ | 9,511,211 | |||||||||||||
Gross profit | 6,366,758 | 4,866,537 | |||||||||||||||
Operating loss | (4,581,470 | ) | (2,753,240 | ) | |||||||||||||
Net income | (4,824,945 | ) | (5,054,123 | ) | |||||||||||||
Loss per share | (0.37 | ) | (0.54 | ) | |||||||||||||
18_Segment_Reporting
18. Segment Reporting | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Segment Reporting [Abstract] | |||||||||
18. Segment Reporting | The Company operates in two segments which are characterized as: (1) legacy merchant’s services and (2) online marketplace platform. The legacy/merchants’ services consists of LEC business and Velocity Local and the online marketplace platform consists of livedeal.com and the recent acquisitions of consumer products entities. | ||||||||
The following tables summarize segment information for the years ended September 30, 2014 and 2013: | |||||||||
Year Ended September 30, | |||||||||
2014 | 2013 | ||||||||
Net revenues | |||||||||
Marketplace platform | $ | 5,270,508 | $ | 0 | |||||
Services | 1,994,768 | 2,351,868 | |||||||
$ | 7,265,276 | $ | 2,351,868 | ||||||
Gross profit | |||||||||
Marketplace platform | $ | 435,830 | $ | 0 | |||||
Services | 1,602,809 | 1,435,537 | |||||||
$ | 2,038,639 | $ | 1,435,537 | ||||||
Operating income (loss) | |||||||||
Marketplace platform | $ | (5,535,360 | ) | $ | (3,052,935 | ) | |||
Services | 1,036,076 | 314,841 | |||||||
$ | (4,499,284 | ) | $ | (2,738,094 | ) | ||||
Depreciation and amortization | |||||||||
Marketplace platform | $ | 473,292 | $ | 247,473 | |||||
Services | 16,964 | 16,639 | |||||||
$ | 490,256 | $ | 264,112 | ||||||
Interest Expenses | |||||||||
Marketplace platform | $ | 458,934 | $ | 3,291,031 | |||||
Services | 0 | 0 | |||||||
$ | 458,934 | $ | 3,291,031 | ||||||
Net income (loss) | |||||||||
Marketplace platform | $ | (5,822,732 | ) | $ | (6,156,289 | ) | |||
Services | 1,161,351 | 409,275 | |||||||
$ | (4,661,381 | ) | $ | (5,747,014 | ) | ||||
As of September 30, | |||||||||
2014 | 2013 | ||||||||
Total Assets | |||||||||
Marketplace platform | $ | 18,118,425 | $ | 3,670,208 | |||||
Services | 171,021 | 323,042 | |||||||
$ | 18,289,446 | $ | 3,993,250 | ||||||
Intangible assets | |||||||||
Marketplace platform | $ | 4,234,692 | $ | 2,839,557 | |||||
Services | 6,422 | 8,844 | |||||||
$ | 4,241,114 | $ | 2,848,401 | ||||||
19_Subsequent_Events
19. Subsequent Events | 12 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | |
19. Subsequent Events | ICG |
On December 3, 2014, ICG converted its note payable of $500,000 plus $35,001 of accrued interest into shares of the common stock. | |
Kingston | |
On October 16, 2014, the Company issued to Kingston a convertible note in the amount of $100,000 and on November 7, 2014, Kingston converted the entire principal balance plus interest into shares of the Company’s Common stock. | |
In addition, on October 29, 2014, the Company entered into an amended convertible note purchase agreement with Kingston whereby the Company and Kinston agreed to (i) increase the maximum principal amount of the notes from $5 million to $10,000,000 in principal amount, (ii) eliminate the original issue discount provision of the Agreement and replaces it with an execution payment equal to 5% of the maximum loan amount to be paid in January 2015, and (iii) provides certain additional adjustments to the note conversion price and to the warrant exercise price. | |
Software Purchase Agreement | |
In October 2014, the Company entered into a purchase agreement to purchase from the seller a products engine infrastructure system software, including without limitation all computer programs in source code, object code, algorithms, flow charts and other code in any format or media, and any and all related documentation and all “Intellectual Property” embodied in such software. The purchase price of $1.5 million is payable in cash or shares of the Company’s common stock. |
2_Summary_of_Significant_Accou1
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||
Sep. 30, 2014 | |||
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., Velocity Local Inc., Modern Everyday, Inc. and its wholly owned subsidiaries, Modern Everyday, LLC and Super Nova, LLC, Live Goods, LLC and its wholly owned subsidiaries, DealTicker, Inc. and DA Stores, LLC. The results of operations for DA Stores, LLC,, DealTicker, Inc. and Modern Everyday, Inc. have only been included since the date of acquisition of March 7, 2014, May 5, 2014 and August 24, 2014, respectively. 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, long term loans, 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. At September 30, 2014, the amount the Company had on deposit that exceeded the FDIC-insured limits was $7,508,924. | |||
Property and Equipment | Property and Equipment | ||
Property and equipment, which consists of office equipment, computer equipment, and furniture and fixtures, 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 $48,278 and $29,357 for the years ended September 30, 2014 and 2013, 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 | |||
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. | |||
Product Revenue | |||
The Company derives product revenue primarily from direct revenue and fulfillment partner revenue from product sales Product revenue is recognized when the following revenue recognition criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or the service has been provided; (3) the selling price or fee revenue earned is fixed or determinable; and (4) collection of the resulting receivable is reasonably assured. Revenue related to product sales is recognized when the above four criteria are met. | |||
The Company evaluates the criteria outlined in ASC Topic 605-45, Principal Agent Considerations, in determining whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. When the Company is the primary obligor in a transaction, are subject to inventory risk, have latitude in establishing prices and selecting suppliers, or have several but not all of these indicators, revenue is recorded gross. If we are not the primary obligor in the transaction and amounts earned are determined using a fixed percentage, revenue is recorded on a net basis. Currently, all direct revenue and fulfillment partner revenue is recorded on a gross basis, as the Company is the primary obligor. The Company presents revenue net of sales taxes. | |||
Inventory | Inventory | ||
Inventory is valued at the lower of the inventory’s cost (first in, first out basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. All inventory at September 30, 2014 consists of finished goods inventory. At September 30, 2014, the allowance for obsolete inventory was $252,569. | |||
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 92.3% of gross accounts receivable at September 30, 2014 as compared to 82.9% of gross accounts receivable at September 30, 2013. 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, 2014 and 2013, approximately 76% and 57%, respectively, 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 23% and 68%, respectively. | |||
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”. | |||
Long-lived Assets | Long-lived Assets | ||
The Company assesses long-lived assets, including intangible 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. The Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. There were no impairment losses recorded on intangible assets for the years ended September 30, 2014 and 2013. | |||
Goodwill | Goodwill | ||
Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. As of September 30, 2014, the Company performed the required impairment review which resulted in no impairment adjustments. | |||
Segment Reporting | Segment Reporting | ||
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has two reportable segments (See Note 18). | |||
Derivative Financial Instruments | Derivative Financial Instruments | ||
The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of September 30, 2014, the Company’s only derivative financial instrument was a convertible note due to the “reset” and “dilutive issuance” clause in the note relating to the conversion price from dilutive share issuance. See Note 6. | |||
Fair Value Measurements | Fair Value Measurements | ||
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows: | |||
· | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. | ||
· | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | ||
· | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. | ||
At September 30, 2014, the Company’s derivative instruments were reported at fair value using Level 2 inputs as discussed in Note 6. Also, the Company has a purchase price contingency that is discussed in Note 14. | |||
Reclassifications | Reclassifications | ||
Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the previously reported net income or stockholders’ equity. | |||
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements | ||
FASB Accounting Standards Update No. 2014-08 | |||
In April 2014, the FASB issued ASU 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)." ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of consolidated operations or consolidated financial condition. | |||
FASB Accounting Standards Update No. 2014-09 | |||
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard beginning January 1, 2017. | |||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements, |
4_Balance_Sheet_Information_Ta
4. Balance Sheet Information (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Balance sheet information | September 30, | September 30, | |||||||
2014 | 2013 | ||||||||
Receivables, current, net: | |||||||||
Accounts receivable, current | $ | 1,611,269 | $ | 904,197 | |||||
Less: Allowance for doubtful accounts | (756,686 | ) | (729,296 | ) | |||||
$ | 854,583 | $ | 174,901 | ||||||
Receivables, long term, net: | |||||||||
Accounts receivable, long term | $ | 344,572 | $ | 374,708 | |||||
Less: Allowance for doubtful accounts | (344,572 | ) | (330,069 | ) | |||||
$ | – | $ | 44,639 | ||||||
Total receivables, net: | |||||||||
Gross receivables | $ | 1,955,841 | $ | 1,278,905 | |||||
Less: Allowance for doubtful accounts | (1,101,258 | ) | (1,059,365 | ) | |||||
$ | 854,583 | $ | 219,540 | ||||||
Components of allowance for doubtful accounts | |||||||||
Components of allowance for doubtful accounts are as follows: | |||||||||
Allowance for dilution and fees on amounts due from billing aggregators | $ | 1,063,633 | $ | 730,777 | |||||
Allowance for customer refunds | 2,107 | 6,281 | |||||||
Allowance for other trade receivables | 35,518 | 322,307 | |||||||
$ | 1,101,258 | $ | 1,059,365 | ||||||
Property and equipment, net | |||||||||
Property and equipment, net: | |||||||||
Furnishings and fixtures | $ | 162,642 | $ | 101,611 | |||||
Office, computer equipment and other | 192,063 | 404,580 | |||||||
354,705 | 506,191 | ||||||||
Less: Accumulated depreciation | (201,591 | ) | (435,029 | ) | |||||
$ | 153,114 | $ | 71,162 | ||||||
Intangible assets, net | |||||||||
Intangible assets, net: | |||||||||
Domain name and marketing related intangibles | $ | 1,521,015 | $ | 1,513,708 | |||||
Website and technology related intangibles | 2,545,114 | 2,335,728 | |||||||
Covenant not to compete | 120,000 | – | |||||||
4,504,524 | 3,849,436 | ||||||||
Less: Accumulated amortization | (1,433,314 | ) | (1,001,035 | ) | |||||
$ | 3,071,210 | $ | 2,848,401 | ||||||
Accrued liabilities | |||||||||
Accrued liabilities: | |||||||||
Deferred revenue | $ | 548,004 | $ | 2,829 | |||||
Accrued payroll and bonuses | 107,224 | 27,330 | |||||||
Accruals under revenue sharing agreements | 688 | 44,167 | |||||||
Accrued expenses - other | 390,114 | 225,138 | |||||||
$ | 1,046,030 | $ | 299,464 |
5_Intangible_Assets_Tables
5. Intangible Assets (Tables) | 12 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||
Future amortization expense related to intangible assets | 2016 | $ | 599,505 | ||||
2017 | 574,070 | ||||||
2018 | 512,745 | ||||||
2019 | 347,142 | ||||||
2020 | 338,992 | ||||||
Thereafter | 698,756 | ||||||
$ | 3,071,210 |
6_Derivative_Liability_Tables
6. Derivative Liability (Tables) | 12 Months Ended | ||
Sep. 30, 2014 | |||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Fair value assumptions | Inception | 30-Sep-14 | |
Stock price | $7.14 | $2.98 | |
Risk free rate | 0.11% | 0.13% | |
Volatility | 142% | 94% | |
Exercise prices | $8.12 | $2.93 | |
Term (years) | 1 | 0.42 | |
Schedule of derivative liability activity | Amount | ||
Derivative liability balance, September 30, 2013 | $ | – | |
Issuance of derivative liability during the year ended September 30, 2014 | 139,852 | ||
Change in derivative liability during the year ended September 30, 2014 | -56,272 | ||
Derivative liability balance, September 30, 2014 | $ | 83,580 |
7_Debt_Tables
7. Debt (Tables) | 12 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Debt Disclosure [Abstract] | |||||||
Notes payable of Modern Everyday, Inc. | Note payable to individual, payable on demand, interest at 10.0% per annum, unsecured | $ | 90,168 | ||||
Convertible note payable to individual, due February 27, 2015, interest at 6.0% per annum, unsecured | 335,245 | ||||||
Convertible note payable to ICG, due January 23, 2015, interest at 8.0% per annum, unsecured | 527,889 | ||||||
Acquisition note payable (See Note 17), $200,000 due February 28, 2015 and $400,000 due February 28, 2016, non-interest bearing with interest imputed at 2.87% per annum | 581,707 | ||||||
Credit line due September 28, 2019, with interest rate at prime plus 2% | 240,204 | ||||||
Less Debt Discount | (215,884 | ) | |||||
Total Debt | 1,559,329 | ||||||
Current portion | 920,360 | ||||||
Long-term portion | $ | 638,969 | |||||
Future maturities of debt | Years ending September 30, | ||||||
2015 | $ | 920,360 | |||||
2016 | 400,000 | ||||||
2017 | – | ||||||
2018 | – | ||||||
2019 | 238,969 | ||||||
Thereafter | – | ||||||
$ | 1,559,329 |
9_Warrants_Tables
9. Warrants (Tables) | 12 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | |||||||||||||||||||
Warrant activity | Weighted | ||||||||||||||||||
Weighted | Average | ||||||||||||||||||
Average | Remaining | ||||||||||||||||||
Number of | Exercise | Contractual | Intrinsic | ||||||||||||||||
Units | Price | Term (in years) | Value | ||||||||||||||||
Outstanding at September 30, 2012 | 327,417 | $ | 0.95 | 4.95 | $ | 253,202 | |||||||||||||
Granted | 2,539,089 | 0.59 | |||||||||||||||||
Exercised | – | ||||||||||||||||||
Outstanding at September 30, 2013 | 2,866,506 | 0.63 | 4.39 | 1,471,998 | |||||||||||||||
Granted | – | ||||||||||||||||||
Exercised | – | ||||||||||||||||||
Outstanding at September 30, 2014 | 2,866,506 | 0.63 | 3.39 | 6,732,700 | |||||||||||||||
Exercisable at September 30, 2014 | 2,866,506 | 0.63 | 3.39 | 6,732,700 | |||||||||||||||
10_Stockbased_Compensation_Tab
10. Stock-based Compensation (Tables) | 12 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||
Stock option activity | Weighted | ||||||||||||||||||
Weighted | Average | ||||||||||||||||||
Average | Remaining | ||||||||||||||||||
Number of | Exercise | Contractual | Intrinsic | ||||||||||||||||
Shares | Price | Life | Value | ||||||||||||||||
Outstanding at September 30, 2012 | – | ||||||||||||||||||
Granted | 675,000 | ||||||||||||||||||
Exercised | – | ||||||||||||||||||
Forfeited | – | ||||||||||||||||||
Outstanding at September 30, 2013 | 675,000 | $ | 2.82 | $ | – | ||||||||||||||
Granted | – | ||||||||||||||||||
Exercised | – | ||||||||||||||||||
Forfeited | (75,000 | ) | |||||||||||||||||
Outstanding at September 30, 2014 | 600,000 | 2.76 | 4.9 | 318,250 | |||||||||||||||
Exercisable at September 30, 2014 | 150,000 | $ | 4.43 | 5.5 | 246,250 | ||||||||||||||
Non-vested share activity | Weighted-Average | ||||||||||||||||||
Number of | Grant-Date | ||||||||||||||||||
Non-vested Shares | Shares | Fair Value | |||||||||||||||||
Nonvested at September 30, 2013 | 600,000 | $ | 0.73 | ||||||||||||||||
Granted | – | ||||||||||||||||||
Vested | (150,000 | ) | |||||||||||||||||
Nonvested at September 30, 2014 | 450,000 | $ | 0.73 | ||||||||||||||||
Assumptions used | Year Ended | ||||||||||||||||||
30-Sep-13 | |||||||||||||||||||
Volatility | 124%-127% | ||||||||||||||||||
Risk-free interest rate | .08%-.66% | ||||||||||||||||||
Expected term | 1-3.77 years | ||||||||||||||||||
Forfeiture rate | 10% | ||||||||||||||||||
Dividend yield rate | 0% | ||||||||||||||||||
Restricted stock award activity | Outstanding (unvested) at September 30, 2013 | – | |||||||||||||||||
Granted | 21,000 | ||||||||||||||||||
Forfeited | – | ||||||||||||||||||
Vested | (21,000 | ) | |||||||||||||||||
Outstanding (unvested) at September 30, 2014 | – |
11_Net_Loss_Per_Share_Tables
11. Net Loss Per Share (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Basic and diluted net loss per share | Year Ended September 30, | ||||||||
2014 | 2013 | ||||||||
Loss from continuing operations | $ | (4,661,381 | ) | $ | (5,749,722 | ) | |||
Less: preferred stock dividends | (1,925 | ) | (1,918 | ) | |||||
Loss from continuing operations applicable to common stock | (4,663,306 | ) | (5,751,640 | ) | |||||
Income from discontinued operations | – | 2,708 | |||||||
Net loss applicable to common stock | $ | (4,663,306 | ) | $ | (5,748,932 | ) | |||
Weighted average common shares outstanding - basic and diluted | 13,144,248 | 9,394,260 | |||||||
Earnings per share - basic and diluted: | |||||||||
Loss from continuing operations | $ | (0.35 | ) | $ | (0.61 | ) | |||
Discontinued operations | – | – | |||||||
Net loss | $ | (0.35 | ) | $ | (0.61 | ) | |||
Potentially dilutive securities | Year Ended September 30, | ||||||||
2014 | 2013 | ||||||||
Options to purchase shares of common stock | 600,000 | 675,000 | |||||||
Warrants to purchase shares of common stock | 2,866,506 | 2,866,506 | |||||||
Series E convertible preferred stock | 127,840 | 127,840 | |||||||
Convertible notes | 739,601 | – | |||||||
Total potentially dilutive shares | 4,333,947 | 3,669,346 |
14_Commitments_and_Contingenci1
14. Commitments and Contingencies (Tables) | 12 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||
Future minimum annual payments under operating lease agreements | 2015 | 489,767 | |||||
2016 | 272,960 | ||||||
2017 | 53,946 | ||||||
2018 | – | ||||||
2019 | – | ||||||
Thereafter | – | ||||||
$ | 816,673 | ||||||
15_Provision_for_Income_Taxes_
15. Provision for Income Taxes (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||
Reconciliation of income tax rates | 2014 | 2013 | |||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||
Federal statutory rates | $ | (1,584,870 | ) | 34% | $ | (1,953,982 | ) | 34% | |||||||||
State income taxes | (40,088 | ) | 1% | (193,167 | ) | 3% | |||||||||||
Permanent differences | 200,518 | (4% | ) | 15,967 | (0% | ) | |||||||||||
Valuation allowance against net deferred tax assets | 1,424,439 | (31% | ) | 2,131,182 | (37% | ) | |||||||||||
Effective rate | $ | – | –% | $ | – | –% | |||||||||||
Schedule of deferred tax assets and liabilities | 2014 | 2013 | |||||||||||||||
Deferred income tax asset, current: | |||||||||||||||||
Book to tax differences in accounts receivable | $ | 259,448 | $ | 382,218 | |||||||||||||
Book to tax differences in prepaid assets and accrued expenses | (21,450 | ) | 8,425 | ||||||||||||||
Total deferred income tax asset, current | 237,998 | 390,643 | |||||||||||||||
Less: valuation allowance | (237,998 | ) | (390,643 | ) | |||||||||||||
Deferred income tax asset, current, net | – | – | |||||||||||||||
Deferred income tax asset, long-term: | |||||||||||||||||
Net operation loss carryforwards | 8,668,250 | 12,821,092 | |||||||||||||||
Book to tax differences for stock based compensation | – | 6,407 | |||||||||||||||
Book to tax differences in intangible assets | 928,222 | 6,693,536 | |||||||||||||||
Book to tax differences in other | – | 326 | |||||||||||||||
Book to tax differences in depreciation | 5,710 | – | |||||||||||||||
Total deferred income tax asset, long-term | 9,602,182 | (2,297,221 | ) | ||||||||||||||
Less: valuation allowance | (9,602,182 | ) | (17,224,140 | ) | |||||||||||||
Deferred income tax asset, net | – | – | |||||||||||||||
Total deferred income tax asset | $ | – | $ | – |
17_Business_Combination_Tables
17. Business Combination (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||
Purchase Price Allocation | Modern | ||||||||||||||||
DA Stores | DealTicker | Everyday | Total | ||||||||||||||
Cash | $ | – | $ | 103,884 | 164,633 | $ | 268,517 | ||||||||||
Accounts receivable | – | 27,193 | 349,860 | 377,053 | |||||||||||||
Inventory | 110,375 | 55,691 | 1,232,398 | 1,398,464 | |||||||||||||
Other current assets | – | – | 229,400 | 229,400 | |||||||||||||
Property and equipment | 48,500 | 12,855 | 7,755 | 69,110 | |||||||||||||
Developed technology | – | – | 310,000 | 310,000 | |||||||||||||
Covenant not to compete | – | – | 120,000 | 120,000 | |||||||||||||
Customer list | – | 175,823 | – | 175,823 | |||||||||||||
Other intangible assets | 30,000 | 69,839 | – | 99,839 | |||||||||||||
Goodwill | – | – | 1,169,904 | 1,169,904 | |||||||||||||
Other assets | 11,125 | 10,285 | 19,392 | 40,802 | |||||||||||||
Accounts payable | – | (28,106 | ) | (285,908 | ) | (314,014 | ) | ||||||||||
Notes payable | – | – | (463,398 | ) | (463,398 | ) | |||||||||||
Line of credit | – | – | (490,568 | ) | (490,568 | ) | |||||||||||
Other liabilities | – | (199,464 | ) | (287,968 | ) | (487,432 | ) | ||||||||||
Purchase price | $ | 200,000 | $ | 228,000 | $ | 2,075,500 | $ | 2,503,500 | |||||||||
Schedule of pro forma information | Years Ended September 30, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Net revenue | $ | 16,765,798 | $ | 9,511,211 | |||||||||||||
Gross profit | 6,366,758 | 4,866,537 | |||||||||||||||
Operating loss | (4,581,470 | ) | (2,753,240 | ) | |||||||||||||
Net income | (4,824,945 | ) | (5,054,123 | ) | |||||||||||||
Loss per share | (0.37 | ) | (0.54 | ) |
18_Segment_Reporting_Tables
18. Segment Reporting (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Segment Reporting [Abstract] | |||||||||
Segment reporting | Year Ended September 30, | ||||||||
2014 | 2013 | ||||||||
Net revenues | |||||||||
Marketplace platform | $ | 5,270,508 | $ | 0 | |||||
Services | 1,994,768 | 2,351,868 | |||||||
$ | 7,265,276 | $ | 2,351,868 | ||||||
Gross profit | |||||||||
Marketplace platform | $ | 435,830 | $ | 0 | |||||
Services | 1,602,809 | 1,435,537 | |||||||
$ | 2,038,639 | $ | 1,435,537 | ||||||
Operating income (loss) | |||||||||
Marketplace platform | $ | (5,535,360 | ) | $ | (3,052,935 | ) | |||
Services | 1,036,076 | 314,841 | |||||||
$ | (4,499,284 | ) | $ | (2,738,094 | ) | ||||
Depreciation and amortization | |||||||||
Marketplace platform | $ | 473,292 | $ | 247,473 | |||||
Services | 16,964 | 16,639 | |||||||
$ | 490,256 | $ | 264,112 | ||||||
Interest Expenses | |||||||||
Marketplace platform | $ | 458,934 | $ | 3,291,031 | |||||
Services | 0 | 0 | |||||||
$ | 458,934 | $ | 3,291,031 | ||||||
Net income (loss) | |||||||||
Marketplace platform | $ | (5,822,732 | ) | $ | (6,156,289 | ) | |||
Services | 1,161,351 | 409,275 | |||||||
$ | (4,661,381 | ) | $ | (5,747,014 | ) | ||||
As of September 30, | |||||||||
2014 | 2013 | ||||||||
Total Assets | |||||||||
Marketplace platform | $ | 18,118,425 | $ | 3,670,208 | |||||
Services | 171,021 | 323,042 | |||||||
$ | 18,289,446 | $ | 3,993,250 | ||||||
Intangible assets | |||||||||
Marketplace platform | $ | 4,234,692 | $ | 2,839,557 | |||||
Services | 6,422 | 8,844 | |||||||
$ | 4,241,114 | $ | 2,848,401 |
1_Organization_and_Basis_of_Pr1
1. Organization and Basis of Presentation (Details Narrative) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net loss | ($4,661,381) | ($5,747,014) | |
Net cash used in operations | -5,194,654 | -1,805,009 | |
Proceeds from sale of common stock | 13,681,054 | 152,160 | |
Cash and cash equivalents | $8,114,682 | $761,458 | $1,305,785 |
2_Summary_of_Significant_Accou2
2. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Accounting Policies [Abstract] | ||
Cash above FDIC-insured limits | $7,508,924 | |
Property and equipment useful lives | 3-5 years | |
Depreciation expense | 48,278 | 29,357 |
Allowance for obsolete inventory | $252,569 | |
Allowance for doubtful accounts as a percentage of gross accounts receivable | 92.30% | 82.90% |
Allowance for doubtful accounts as a percentage of gross accounts receivable in dispute | 76.00% | 57.00% |
Allowance for doubtful accounts as a percentage of gross accounts receivable increases | 23.00% | 68.00% |
4_Balance_Sheet_Information_De
4. Balance Sheet Information (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Receivables, current, net: | ||
Accounts receivable, current | $1,611,269 | $904,197 |
Less: Allowance for doubtful accounts | -756,686 | -729,296 |
Receivables, current, net | 854,583 | 174,901 |
Receivables, long term, net: | ||
Accounts receivable, long term | 344,572 | 374,708 |
Less: Allowance for doubtful accounts | -344,572 | -330,069 |
Receivables, long term, net | 0 | 44,639 |
Total receivables, net: | ||
Gross receivables | 1,955,841 | 1,278,905 |
Less: Allowance for doubtful accounts | -1,101,258 | -1,059,365 |
Total receivables, net | 854,583 | 219,540 |
Allowance for dilution and fees on amounts due from billing aggregators | 1,063,633 | 730,777 |
Allowance for customer refunds | 2,107 | 6,281 |
Allowance for other trade receivables | 35,518 | 322,307 |
Total allowances | 1,101,258 | 1,059,365 |
Property and equipment, net: | ||
Furnishings and fixtures | 162,642 | 101,611 |
Office, computer equipment and other | 192,063 | 404,580 |
Plant Property and Equipment,Gross | 354,705 | 506,191 |
Less: Accumulated depreciation | -201,591 | -435,029 |
Property and equipment, net | 153,114 | 71,162 |
Intangible assets, net: | ||
Domain name and marketing related intangibles | 1,521,015 | 1,513,708 |
Website and technology related intangibles | 2,545,114 | 2,335,728 |
Covenant not to compete | 120,000 | 0 |
Intangible assets, gross | 4,504,524 | 3,849,436 |
Less: Accumulated amortization | -1,433,314 | -1,001,035 |
Intangible assets and goodwill, net | 3,071,210 | 2,848,401 |
Accrued liabilities: | ||
Deferred revenue | 548,004 | 2,829 |
Accrued payroll and bonuses | 107,224 | 27,330 |
Accruals under revenue sharing agreements | 688 | 44,167 |
Accrued expenses - other | 390,114 | 225,138 |
Total accrued liabilities | $1,046,030 | $299,464 |
5_Intangible_Assets_Details
5. Intangible Assets (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense, next year | $599,505 | |
Amortization expense, year two | 574,070 | |
Amortization expense, year three | 512,745 | |
Amortization expense, year four | 347,142 | |
Amortization expense, year five | 338,992 | |
Amortization expense, thereafter | 698,756 | |
Total future amortization expense | $3,071,210 | $2,848,401 |
5_Intangible_Assets_Details_Na
5. Intangible Assets (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Goodwill | $1,169,904 | $0 |
Amortization expense | $441,978 | $234,751 |
Domain Name and Marketing [Member] | ||
Useful lifes of intangible assets | 3-20 years | |
Website and Technology [Member] | ||
Useful lifes of intangible assets | 3-5 years | |
Covenant Not To Compete [Member] | ||
Useful lifes of intangible assets | 4 years |
6_Derivative_Liability_Details
6. Derivative Liability (Details - Assumptions for fair value) (Fair Value, Inputs, Level 3 [Member], USD $) | 5 Months Ended | 12 Months Ended |
Feb. 28, 2014 | Sep. 30, 2014 | |
Fair Value, Inputs, Level 3 [Member] | ||
Stock price | $7.14 | $2.98 |
Risk free rate | 0.11% | 0.13% |
Volatility | 142.00% | 94.00% |
Exercise prices | $8.12 | $2.93 |
Term | 1 year | 5 months 1 day |
6_Derivative_Liability_Details1
6. Derivative Liability (Details - Rollfoward) (USD $) | 12 Months Ended |
Sep. 30, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative liability, beginning balance | $0 |
Issuance of derivative liability | 139,852 |
Change in derivative liability | -56,272 |
Derivative liability, ending balance | $83,580 |
7_Debt_Details_Debt_from_MEI
7. Debt (Details - Debt from MEI) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Convertible note payable to individual, due February 27, 2015, interest at 6.0% per annum, unsecured | $323,595 | |
Current portion | 920,360 | 0 |
Long-term portion | 638,969 | 0 |
Payments on notes payable | 582,348 | 0 |
Modern Everyday, Inc. [Member] | ||
Note payable to individual, payable on demand, interest at 10.0% per annum, unsecured | 90,168 | |
Convertible note payable to individual, due February 27, 2015, interest at 6.0% per annum, unsecured | 335,245 | |
Convertible note payable to ICG, due January 23, 2015, interest at 8.0% per annum, unsecured | 527,889 | |
Acquisition note payable (See Note 17), $200,000 due February 28, 2015 and $400,000 due February 28, 2016, non-interest bearing with interest imputed at 2.87% per annum | 581,707 | |
Credit line due September 28, 2019, with interest rate at prime plus 2% | 240,204 | |
Less Debt Discount | -215,884 | |
Total Debt | 1,559,329 | |
Current portion | 920,360 | |
Long-term portion | $638,969 |
7_Debt_Details_Future_maturiti
7. Debt (Details - Future maturities of debt) (Modern Everyday, Inc. [Member], USD $) | Sep. 30, 2014 |
Modern Everyday, Inc. [Member] | |
Debt due next twelve months | $920,360 |
Debt due year two | 400,000 |
Debt due year three | 0 |
Debt due year four | 0 |
Debt due year five | 238,969 |
Debt due thereafter | 0 |
Total debt | $1,559,329 |
7_Debt_Details_Narrative
7. Debt (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Line of credit | $0 | |
Convertible note issued | 323,595 | |
Initial derivative liability on convertible note | 139,852 | |
Interest expense | 82,187 | |
Change in fair value of derivative | 56,272 | 0 |
ICG Note Jan 23-2014 [Member] | ||
Note issued | 500,000 | |
Debt discount, interest expense | $341,781 |
8_Equity_Details_Narrative
8. Equity (Details Narrative) (USD $) | 12 Months Ended | 3 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Jun. 30, 2014 | |
Stock recorded but not yet issued in exchange for services | 21,465 | 21,465 | ||
Proceeds from sale of stock | $13,681,054 | $152,160 | ||
Stock reserved for future issuance | 1,800,000 | 1,800,000 | ||
Stock split information | 3-for-1 forward stock split effective on February 11, 2014 | |||
Accrued dividends | 1,925 | 1,918 | 1,925 | |
Dividends paid | 17,267 | 0 | ||
January 2014 Engagement Agreement [Member] | ||||
Proceeds from sale of stock | 9,696,013 | |||
Commission paid on sale of stock | 299,882 | |||
May 2014 Engagement Agreement [Member] | ||||
Proceeds from sale of stock | 508,598 | 3,599,774 | ||
Commission paid on sale of stock | $15,258 | $107,993 | ||
Stock issued for cash, shares issued | 110,300 | 790,236 |
9_Warrants_Details_Warrants_Ou
9. Warrants (Details - Warrants Outstanding) (Warrants [Member], USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Warrants [Member] | ||
Number of units | ||
Outstanding, beginning of period | 2,866,506 | 327,417 |
Granted | 0 | 2,539,089 |
Exercised | 0 | 0 |
Outstanding, end of period | 2,866,506 | 2,866,506 |
Exercisable, end of period | 2,866,506 | |
Outstanding, beginning of period | $0.63 | $0.95 |
Granted | $0.59 | |
Outstanding, end of period | $0.63 | $0.63 |
Exercisable, end of period | $0.63 | |
Weighted Average Remaining Contractual Term (in years) | ||
Outstanding, beginning of period | 4 years 4 months 20 days | 4 years 4 months 20 days |
Outstanding, end of period | 3 years 4 months 20 days | |
Exercisable, end of period | 3 years 4 months 20 days | |
Outstanding, beginning of period | $1,471,998 | $253,202 |
Outstanding, end of period | $6,732,700 | $1,471,998 |
Exercisable, end of period | 6,732,700 |
10_Stockbased_Compensation_Det
10. Stock-based Compensation (Details - Option activity) (Stock Options [Member], USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Options [Member] | ||
Number of Shares | ||
Outstanding, beginning balance | 675,000 | 0 |
Granted | 0 | 675,000 |
Exercised | 0 | 0 |
Forfeited | -75,000 | 0 |
Outstanding, ending balance | 600,000 | 675,000 |
Exercisable | 150,000 | |
Weighted Average Exercise Price | ||
Outstanding, beginning balance | $2.82 | |
Outstanding, ending balance | $2.76 | $2.82 |
Exercisable | $4.43 | |
Weighed Average Remaining Contractual Life | ||
Outstanding, ending balance | 4 years 10 months 24 days | |
Exercisable | 5 years 6 months | |
Outstanding, ending balance | $318,250 | |
Exercisable | $248,250 |
10_Stockbased_Compensation_Det1
10. Stock-based Compensation (Details - Non vested) (Stock Options [Member], USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Options [Member] | ||
Number of shares | ||
Outstanding, beginning balance | 600,000 | |
Granted | 0 | 675,000 |
Vested | -150,000 | |
Outstanding, ending balance | 450,000 | 600,000 |
Weighted-Average Grant-Date Fair Value | ||
Outstanding, beginning of period | $0.73 | |
Outstanding, end of period | $0.73 | $0.73 |
10_Stockbased_Compensation_Det2
10. Stock-based Compensation (Details - Assumptions) (Stock Options [Member]) | 12 Months Ended |
Sep. 30, 2014 | |
Stock Options [Member] | |
Assumptions | |
Volatility, minimum | 124.00% |
Volatility, maximum | 127.00% |
Risk-free interest rate, minimum | 0.08% |
Risk-free interest rate, maximum | 0.66% |
Expected term | 1-3.77 years |
Forfeiture rate | 10.00% |
Dividend rate | 0.00% |
10_Stockbased_Compensation_Det3
10. Stock-based Compensation (Details - Restricted stock) (Restricted Stock Awards [Member]) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Restricted Stock Awards [Member] | ||
Restricted stock | ||
Restricted stock granted | 21,000 | |
Restricted stock forfeited | 0 | |
Restricted stock vested | -21,000 | |
Restricted Stock Awards [Member] | ||
Restricted stock | ||
Outstanding, beginning balance | 0 | |
Outstanding, ending balance | 0 | 0 |
10_Stockbased_Compensation_Det4
10. Stock-based Compensation (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Stock-based compensation | $167,985 | $173,073 |
Unrecognized compensation expense | $105,997 | |
Weighted-average period for unrecognized compensation expense | 1 year 3 months 29 days | |
Restricted Stock Awards [Member] | ||
Stock issued for services | 21,000 |
11_Net_Loss_Per_Share_Details_
11. Net Loss Per Share (Details - Computation of loss per share) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Net Loss Per Share | ||
Loss from continuing operations | ($4,661,381) | ($5,749,722) |
Less: preferred stock dividends | -1,925 | -1,918 |
Loss from continuing operations applicable to common stock | -4,663,306 | -5,751,640 |
Income from discontinued operations | 0 | 2,708 |
Net loss applicable to common stock | ($4,663,306) | ($5,748,932) |
Weighted average common shares outstanding - basic and diluted | 13,144,248 | 9,394,260 |
Earnings per share - basic and diluted: | ||
Loss from continuing operations | ($0.35) | ($0.61) |
Discontinued operations | $0 | $0 |
Net loss | ($0.35) | ($0.61) |
11_Net_Loss_Per_Share_Details_1
11. Net Loss Per Share (Details - Antidilutive securities) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 4,333,947 | 3,669,346 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 600,000 | 675,000 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 2,866,506 | 2,866,506 |
Series E Convertible Preferred Stock [Member] | ||
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 |
Convertible Notes [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 739,601 | 0 |
12_Restructuring_Activities_De
12. Restructuring Activities (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Restructuring and Related Activities [Abstract] | ||
Revenues from contract | $0 | $816 |
13_Related_Party_Transactions_
13. Related Party Transactions (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ||
Gross proceeds from related party debt | $500,000 | $1,250,000 |
Interest expense associated with ICG Notes | $369,670 | $3,291,466 |
14_Commitments_and_Contingenci2
14. Commitments and Contingencies (Details - Operating lease) (USD $) | Sep. 30, 2014 |
Commitments and Contingencies | |
2015 | $489,767 |
2016 | 272,960 |
2017 | 53,946 |
2018 | 0 |
2019 | 0 |
Thereafter | 0 |
Total | $816,673 |
14_Commitments_and_Contingenci3
14. Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Guarantee liability | $251,000 | $0 |
Rent expense | 446,780 | 152,372 |
J3 Harmon [Member] | ||
Litigation settlement | $52,261 | |
Modern Everyday, Inc. [Member] | ||
Shares issued for acquisition | 50,000 |
15_Provision_for_Income_Taxes_1
15. Provision for Income Taxes (Details - reconciliation) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Income tax reconciliation | ||
Federal statutory rates | ($1,584,870) | ($1,953,982) |
State income taxes | -40,088 | -193,167 |
Permanent differences | 200,518 | 15,967 |
Valuation allowance against net deferred tax assets | 1,424,439 | 2,131,182 |
Effective rate | $0 | $0 |
Income tax rate reconciliation | ||
Federal statutory rates | 34.00% | 34.00% |
State income taxes | 1.00% | 3.00% |
Permanent differences | -4.00% | 0.00% |
Valuation allowance against net deferred tax assets | -31.00% | -37.00% |
Effective rate | 0.00% | 0.00% |
15_Provision_for_Income_Taxes_2
15. Provision for Income Taxes (Details - Deferred tax assets) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Deferred income tax asset, current: | ||
Book to tax differences in accounts receivable | $259,448 | $382,218 |
Book to tax differences in prepaid assets and accrued expenses | -21,450 | 8,425 |
Total deferred income tax asset, current | 237,998 | 390,643 |
Less: valuation allowance | -237,998 | -390,643 |
Deferred income tax asset, current, net | 0 | 0 |
Deferred income tax asset, long-term: | ||
Net operation loss carryforwards | 8,668,250 | 12,821,092 |
Book to tax differences for stock based compensation | 0 | 6,407 |
Book to tax differences in intangible assets | 928,222 | 6,693,536 |
Book to tax differences in other | 0 | 326 |
Book to tax differences in depreciation | 5,710 | 0 |
Total deferred income tax asset, long-term | 9,602,182 | -2,297,221 |
Less: valuation allowance | -9,602,182 | -17,224,140 |
Deferred income tax asset, net | 0 | 0 |
Total deferred income tax asset | $0 | $0 |
15_Provision_for_Income_Taxes_3
15. Provision for Income Taxes (Details Narrative) (USD $) | 12 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforward | $24,900,000 |
Carryforward expiration date | 31-Dec-23 |
16_Concentration_of_Credit_Ris1
16. Concentration of Credit Risk (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Concentration Risk [Line Items] | ||
Cash over the FDIC insured limit | 7,508,924 | |
Accounts Receivable [Member] | LEC 1 [Member] | ||
Concentration Risk [Line Items] | ||
Concentration of receivables | 23.00% | 44.00% |
Accounts Receivable [Member] | LEC 2 [Member] | ||
Concentration Risk [Line Items] | ||
Concentration of receivables | 14.00% | 25.00% |
Accounts Receivable [Member] | LEC 3 [Member] | ||
Concentration Risk [Line Items] | ||
Concentration of receivables | 10.00% | 18.00% |
17_Business_Combinations_Detai
17. Business Combinations (Details - Purchase allocation) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 | Mar. 07, 2014 | 6-May-14 | Aug. 24, 2014 |
Goodwill | $1,169,904 | $0 | |||
DA Stores [Member] | |||||
Cash | 0 | ||||
Accounts receivable | 0 | ||||
Inventory | 110,375 | ||||
Other current assets | 0 | ||||
Property and equipment | 48,500 | ||||
Developed technology | 0 | ||||
Covenant not to compete | 0 | ||||
Customer list | 0 | ||||
Other intangible assets | 30,000 | ||||
Goodwill | 0 | ||||
Other assets | 11,125 | ||||
Accounts payable | 0 | ||||
Notes payable | 0 | ||||
Line of credit | 0 | ||||
Other liabilities | 0 | ||||
Purchase price | 200,000 | ||||
DealTicker [Member] | |||||
Cash | 103,884 | ||||
Accounts receivable | 27,193 | ||||
Inventory | 55,691 | ||||
Other current assets | 0 | ||||
Property and equipment | 12,855 | ||||
Developed technology | 0 | ||||
Covenant not to compete | 0 | ||||
Customer list | 175,823 | ||||
Other intangible assets | 69,839 | ||||
Goodwill | 0 | ||||
Other assets | 10,285 | ||||
Accounts payable | -28,106 | ||||
Notes payable | 0 | ||||
Line of credit | 0 | ||||
Other liabilities | -199,464 | ||||
Purchase price | 228,000 | ||||
Modern Everyday, Inc. [Member] | |||||
Cash | 164,633 | ||||
Accounts receivable | 349,860 | ||||
Inventory | 1,232,398 | ||||
Other current assets | 229,400 | ||||
Property and equipment | 7,755 | ||||
Developed technology | 310,000 | ||||
Covenant not to compete | 120,000 | ||||
Customer list | 0 | ||||
Other intangible assets | 0 | ||||
Goodwill | 1,169,904 | ||||
Other assets | 19,392 | ||||
Accounts payable | -285,908 | ||||
Notes payable | -463,398 | ||||
Line of credit | -490,568 | ||||
Other liabilities | -287,968 | ||||
Purchase price | 2,075,500 | ||||
All Acquisitions [Member] | |||||
Cash | 268,517 | ||||
Accounts receivable | 377,053 | ||||
Inventory | 1,398,464 | ||||
Other current assets | 229,400 | ||||
Property and equipment | 69,110 | ||||
Developed technology | 310,000 | ||||
Covenant not to compete | 120,000 | ||||
Customer list | 175,823 | ||||
Other intangible assets | 99,839 | ||||
Goodwill | 1,169,904 | ||||
Other assets | 40,802 | ||||
Accounts payable | -314,014 | ||||
Notes payable | -463,398 | ||||
Line of credit | -490,568 | ||||
Other liabilities | -487,432 | ||||
Purchase price | $2,503,500 |
17_Business_Combinations_Detai1
17. Business Combinations (Details - Proforma) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Proforma information | ||
Net revenue | $16,765,798 | $9,511,211 |
Gross profit | 6,366,758 | 4,866,537 |
Operating loss | -4,581,470 | -2,753,240 |
Net income | ($4,824,945) | ($5,054,123) |
Loss per share | ($0.37) | ($0.54) |
17_Business_Combinations_Detai2
17. Business Combinations (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Revenues | $7,265,276 | $2,351,868 |
DA Stores [Member] | ||
Revenues | 3,297,206 | |
DealTicker [Member] | ||
Revenues | 2,154 | |
Modern Everyday, Inc. [Member] | ||
Revenues | $1,183,172 |
18_Segment_Reporting_Details
18. Segment Reporting (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Net revenues | $7,265,276 | $2,351,868 |
Gross profit | 2,038,639 | 1,435,537 |
Operating income (loss) | -4,499,284 | -2,738,094 |
Depreciation and amortization | 490,256 | 264,112 |
Interest expenses | 458,934 | 3,291,031 |
Net income (loss) | -4,661,381 | -5,747,014 |
Total Assets | 18,289,446 | 3,993,250 |
Intangible assets | 3,071,210 | 2,848,401 |
Online Marketplace Platform [Member] | ||
Net revenues | 5,270,508 | 0 |
Gross profit | 435,830 | 0 |
Operating income (loss) | -5,535,360 | -3,052,935 |
Depreciation and amortization | 473,292 | 247,473 |
Interest expenses | 458,934 | 3,291,031 |
Net income (loss) | -5,822,732 | -6,156,289 |
Total Assets | 18,118,425 | 3,670,208 |
Intangible assets | 4,234,692 | 2,839,557 |
Legacy Merchant Services [Member] | ||
Net revenues | 1,994,768 | 2,351,868 |
Gross profit | 1,602,809 | 1,435,537 |
Operating income (loss) | 1,036,076 | 314,841 |
Depreciation and amortization | 16,964 | 16,639 |
Interest expenses | 0 | 0 |
Net income (loss) | 1,161,351 | 409,275 |
Total Assets | 171,021 | 323,042 |
Intangible assets | $6,422 | $8,844 |