Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2015 | Mar. 31, 2015 | |
OptionsToPurchaseSharesOfCommonStockMember | |||
Entity Registrant Name | LIVE VENTURES Inc | ||
Entity Central Index Key | 1,045,742 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-30 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 11,217,554 | ||
Entity Common Stock, Shares Outstanding | 16,909,933 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Assets | ||
Cash and cash equivalents | $ 2,727,818 | $ 8,114,682 |
Accounts receivable, net | 8,243,992 | 854,583 |
Inventories, net | 13,335,598 | 4,277,145 |
Prepaid expenses and other current assets | 1,522,027 | 583,647 |
Total current assets | 25,829,435 | 13,830,057 |
Property and equipment, net | 12,481,901 | 153,114 |
Deposits and other assets | 36,090 | 65,161 |
Intangible assets, net | 1,516,930 | 3,071,210 |
Goodwill | 800,000 | 1,169,904 |
Total assets | 40,664,356 | 18,289,446 |
Liabilities: | ||
Accounts payable | 5,536,796 | 2,282,887 |
Accrued liabilities | 3,660,949 | 1,046,030 |
Income tax payable | 376,000 | 0 |
Derivative liability | 0 | 83,580 |
Note payable, net of debt discount | 1,443,036 | 920,360 |
Total current liabilities | 11,016,781 | 4,332,857 |
Notes payable, net of current portion | 14,568,190 | 638,969 |
Note payable, related party | 6,495,825 | 0 |
Contingent consideration from business combination | 316,000 | 251,000 |
Total Liabilities | $ 32,396,796 | $ 5,222,826 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 127,840 shares issued and outstanding at September 30, 2015 and September 30, 2014, liquidation preference $38,203 | $ 10,866 | $ 10,866 |
Common stock, $0.001 par value, 30,000,000 shares authorized, 16,903,014 and 14,525,248 shares issued and outstanding at September 30, 2015 and 2014, respectively | 16,908 | 14,531 |
Paid in capital | 52,950,945 | 45,038,176 |
Accumulated deficit | (46,665,003) | (31,996,953) |
Total Live Ventures stockholders' equity | 6,313,716 | 13,066,620 |
Noncontrolling interest | 1,953,844 | 0 |
Total Equity | 8,267,560 | 13,066,620 |
Total liabilities and equity | $ 40,664,356 | $ 18,289,446 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Stockholders' equity: | ||
Series E convertible preferred stock, par value | $ 0.001 | $ 0.001 |
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 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 16,903,014 | 14,525,248 |
Common stock, shares outstanding | 16,903,014 | 14,525,248 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||
Revenues | $ 33,369,866 | $ 7,265,276 |
Cost of revenues | 22,115,472 | 5,226,637 |
Gross profit | 11,254,394 | 2,038,639 |
Operating expenses: | ||
General and administrative expenses | 10,992,356 | 5,644,218 |
Sales and marketing expenses | 6,684,833 | 893,705 |
Impairment of intangible assets | 3,713,472 | 0 |
Total operating expenses | 21,390,661 | 6,537,923 |
Operating loss | (10,136,267) | (4,499,284) |
Other expense: | ||
Interest expense, net | (4,485,661) | (458,934) |
Other income | 202,063 | 240,565 |
Gain on deriative liability | 83,580 | 56,272 |
Total other expense, net | (4,200,018) | (162,097) |
Loss before provision for income taxes | (14,336,285) | (4,661,381) |
Provision for income taxes | 376,000 | 0 |
Net loss | (14,712,285) | (4,661,381) |
Net income attributed to noncontrolling interest | (46,156) | 0 |
Net loss attributed to Live Ventures, Inc. | $ (14,666,129) | $ (4,661,381) |
Earnings per share - basic and diluted: | ||
Loss per share - basic and diluted: | $ (0.93) | $ (0.35) |
Weighted average common shares outstanding: | ||
Basic and diluted | 15,765,818 | 13,144,248 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | Total |
Beginning balance, shares at Sep. 30, 2013 | 11,335,674 | ||||
Beginning balance, value at Sep. 30, 2013 | $ 11,335 | $ 30,481,179 | $ (27,333,647) | $ 3,169,733 | $ 3,169,733 |
Series E preferred stock dividends | (1,925) | (1,925) | (1,925) | ||
Stock based compensation | 167,985 | 167,985 | 167,985 | ||
Beneficial conversion feature on convertible debt | 500,000 | 500,000 | 500,000 | ||
Issuance of common stock for services, shares | 24,427 | ||||
Issuance of common stock for services, value | $ 31 | 9,623 | 9,654 | 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 | 13,681,054 | |
Issuance of common stock for MEI purchase, shares | 50,000 | ||||
Issuance of common stock for MEI purchase, value | $ 50 | 201,450 | 201,500 | 201,500 | |
Net loss | (4,661,381) | (4,661,381) | (4,661,381) | ||
Ending balance, shares at Sep. 30, 2014 | 14,525,248 | ||||
Ending balance, value at Sep. 30, 2014 | $ 14,531 | 45,038,176 | (31,996,953) | 13,066,620 | 13,066,620 |
Series E preferred stock dividends | (1,921) | (1,921) | (1,921) | ||
Stock based compensation | 712,538 | 712,538 | 712,538 | ||
Beneficial conversion feature on convertible debt | 100,000 | 100,000 | 100,000 | ||
Issuance of common stock for services, shares | 791,136 | ||||
Issuance of common stock for services, value | $ 791 | 2,015,268 | 2,016,059 | 2,016,059 | |
Issuance of common stock for cash, shares | 155,000 | ||||
Issuance of common stock for cash, value | $ 155 | 538,286 | 538,441 | 538,441 | |
Repricing of stock option exercise price | 54,677 | 54,677 | 54,677 | ||
Value of warrants issued with debt conversion | 1,853,473 | 1,853,473 | 1,853,473 | ||
Issuance of common stock for conversion of debt, shares | 801,378 | ||||
Issuance of common stock for conversion of debt, value | $ 801 | 634,955 | 635,756 | 635,756 | |
Issuance of common stock for loan fees, shares | 630,252 | ||||
Issuance of common stock for loan fees, value | $ 630 | 2,003,572 | 2,004,202 | 2,004,202 | |
Fair value of noncontrolling interest | 2,000,000 | ||||
Net loss | (14,666,129) | (14,666,129) | (14,712,285) | ||
Ending balance, shares at Sep. 30, 2015 | 16,903,014 | ||||
Ending balance, value at Sep. 30, 2015 | $ 16,908 | $ 52,950,945 | $ (46,665,003) | $ 6,313,716 | $ 8,267,560 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (14,712,285) | $ (4,661,381) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,047,752 | 490,256 |
Non-cash interest expense associated with convertible debt and warrants | 2,198,003 | 423,968 |
Non-cash interest expense associated with loan fees | 2,004,202 | 0 |
Non-cash change in fair value of derivative liability | (83,580) | (56,272) |
Stock based compensation expense | 712,538 | 167,985 |
Repricing of stock option exercise price | 54,677 | 0 |
Writedown of assets | 0 | 315,306 |
Non-cash issuance of common stock for services | 2,016,059 | 9,654 |
Provision for uncollectible accounts | 24,819 | 11,972 |
Reserve for obsolete inventory | 255,110 | 0 |
Gain/Loss on disposal ofassets | (104,966) | 7,210 |
Impairment of intangible assets | 3,713,472 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | (152,040) | (296,520) |
Prepaid expenses and other current assets | (124,550) | (400,301) |
Inventories | 1,913,796 | (2,984,031) |
Deposits and other assets | 29,071 | 1,204 |
Accounts payable | (885,921) | 1,444,820 |
Accrued liabilities | 698,525 | 331,476 |
Income tax payable | 376,000 | 0 |
Net cash used in operating activities | (1,019,318) | (5,194,654) |
INVESTING ACTIVITIES: | ||
Acquisition of businesses, net of cash acquired | (5,503,056) | (1,259,483) |
Expenditures for intangible assets | (64,820) | (19,265) |
Proceeds from the sale of assets | 153,500 | 1,400 |
Purchases of property and equipment | (151,937) | (79,808) |
Net cash used in investing activities | (5,566,313) | (1,357,156) |
FINANCING ACTIVITIES: | ||
Issuance of common stock for cash, net of issuance costs | 538,441 | 13,681,054 |
Proceeds from notes payable | 1,247,185 | 0 |
Payments on notes payable | (1,886,859) | (582,348) |
Payment of preferred stock dividends | 0 | (17,267) |
Contribution by noncontrolling interest | 1,200,000 | 0 |
Proceeds from issuance of convertible debt | 100,000 | 823,595 |
Net cash provided by financing activities | 1,198,767 | 13,905,034 |
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | (5,386,864) | 7,353,224 |
CASH AND CASH EQUIVALENTS, beginning of period | 8,114,682 | 761,458 |
CASH AND CASH EQUIVALENTS, end of period | 2,727,818 | 8,114,682 |
Supplemental cash flow disclosures: | ||
Interest paid | 24,312 | 754 |
Income taxes paid | 0 | 0 |
Noncash financing and investing activities: | ||
Recognition of contingent beneficial conversion feature | 100,000 | 500,000 |
Conversion of notes payable and accrued interest into common stock | 635,756 | 0 |
Accrued and unpaid dividends | $ 1,921 | $ 1,925 |
1. Organization and Basis of Pr
1. Organization and Basis of Presentation | 12 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | The accompanying consolidated financial statements include the accounts of Live Ventures, Incorporated, a Nevada corporation, and its subsidiaries (collectively the “Company”). Commencing in fiscal year 2015, the Company began a strategic shift in its business plan away from providing online marketing solutions for small and medium business to acquiring profitable companies in various industries that have demonstrated a strong history of earnings power. The Company continues to actively develop, revise and evaluate its products, services and its marketing strategies in its businesses. Under the Live Ventures brand the Company seeks opportunities to acquire profitable and well-managed companies. The Company believes that with the proper positioning and its investment capital these companies can become very profitable. Although the Company will continue to operate LiveDeal.com and our other subsidiaries that are online consumer products retailers, the Company will no longer limit its operations to the online marketplace. W ith its recent acquisition of Marquis Industries, Inc., the Company became engaged in the manufacture and sale of carpet and the sale of vinyl and wood floorcoverings. Effective October 7, 2015, the Company changed its corporate name from LiveDeal, Inc. to Live Ventures Incorporated. Liquidity The Company had a net loss of $14.7 million and $4.7 million for the years ended September 30, 2015 and 2014, respectively. The Company had approximately an operating cash outflow of approximately $(1.0) million and $(5.2) million for the years ended September 30, 2015 and 2014. The Company sold shares of its common stock during the years ended September 30, 2015 and 2014 for $0.5 million and $13.7 million, respectively. The Company had cash of $2.7 million as of September 30, 2015. Management believes the Company’s cash on hand and additional cash generated from operations, including the operations of Marquis, together with potential sources of cash 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 plus cash generated from operations are sufficient to finance our operations for the next twelve months, there can be no assurance that the Company will generate profitability or positive operating cash flows in the near future. To the extent that the Company cannot achieve profitability or positive operating cash flows, the Company’s business will be materially and adversely affected. Further, the Company’s 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, 2015 | |
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 its subsidiaries as follows: Percentage Company Owned Parent Live Ventures, Inc. 100% Live Ventures, Incorporated Telco Billing, Inc. 100% Live Ventures, Incorporated Telco of Canada, Inc.* 100% Telco Billing, Inc. LiveDeal, Inc. - Santa Clara* 100% Live Ventures, Incorporated Local Marketing Experts, Inc.* 100% Live Ventures, Incorporated Velocity Marketing Concepts, Inc. 100% Live Ventures, Incorporated 247 Marketing, Inc.* 100% Live Ventures, Incorporated Velocity Local, Inc. 100% Live Ventures, Incorporated Modern Everyday, Inc. 100% Live Ventures, Incorporated Modern Everyday, LLC 100% Modern Everyday, Inc. Super Nova, LLC 100% Modern Everyday, Inc. Live Goods, LLC 100% Live Ventures, Incorporated DealTicker, Inc.* 100% Live Goods, LLC Marquis Affiliated Holdings, LLC 80% Live Ventures, Inc. Marquis Industries, Inc. 100% Marquis Affiliated Holdings, LLC A-O Industries, LLC 100% Marquis Industries, Inc. Astro Carpet Mills, LLC 100% Marquis Industries, Inc. Constellation Industries, LLC 100% Marquis Industries, Inc. S F Commercial Properties, LLC 100% Marquis Industries, Inc. * these entities were inactive for more than a year and subsequently closed in October 2015 as approved by the Board of Directors on September 30, 2015. The results of operations for Live Goods, LLC, DealTicker, Inc., Modern Everyday, Inc. and Marquis Industries, Inc. have only been included since the date of acquisition of March 7, 2014, May 5, 2014, August 24, 2014 and July 6, 2015, respectively. All intercompany transactions and balances have been eliminated in consolidation. Noncontrolling Interest On July 6, 2015, the Company, through MAH, acquired 80% interest in Marquis. The transaction was accounted for under the acquisition method of accounting, with the purchase price allocated based on the fair value of the individual assets acquired and liabilities assumed. The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “ Consolidation The net income attributed to the NCI is separately designated in the accompanying consolidated statements of operations. Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity. The excess attributable to the NCI is attributed to those interests. The NCI shall continue to attribute its share of losses even if that attribution results in a deficit NCI balance. 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, fair value of derivative liability, current portion of note payable, 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, 2015 and 2014, the amount the Company had on deposit that exceeded the FDIC-insured limits was $2,471,259 and $7,508,924, respectively. The Company has not experienced any losses related to a concentration of cash or cash equivalents in an FDIC insured financial institution. Accounts Receivable The Company grants credit to customers under credit terms that it believes are customary in the industry and does not require collateral to support customer receivables. This allowance is maintained at a level which the Company believes is sufficient to cover potential credit losses and receivables are only written off to bad debt expense as uncollectible after all reasonable collection efforts have been made. Pursuant to the terms of the arrangement, the Company, from time to time, shall sell to the Factor certain of its accounts receivable balances on a non-recourse basis for credit approved accounts. The Factor shall purchase the account receivable for the gross amount of the respective invoices, less factoring commissions, trade and cash discounts. The factor shall be entitled to charge the Company with a factoring commission for each account which equal to 0.75%-1% of the gross amount of the account as of the date of purchase, plus interest to be calculated at 3.25%-6% per annum. The minimum annual commission of $75,000 per contract year. The total amount of accounts receivable factored was $4,772,004 and $0 as of September 30, 2015 and 2014, respectively. Factored receivables are sold without recourse with substantially all of the balance receivable from two factors. The Company performs ongoing credit evaluations of its customers' financial conditions and does not require collateral to support customer receivables. The Company establishes an allowance for claims and doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts, which includes allowances for accounts and factored receivables, customer refunds, dilution and fees from LEC billing aggregators and other uncollectible accounts. The allowance for doubtful accounts is based upon historical bad debt experience and periodic evaluations of the aging and collectability of the accounts receivable. This allowance is maintained at a level which the Company believes is sufficient to cover potential credit losses and receivables are only written off to bad debt expense as uncollectible after all reasonable collection efforts have been made. The Company has also purchased accounts receivable credit insurance to cover non-factored receivables which helps reduce potential losses due to doubtful accounts. Inventories Inventories are 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. At September 30, 2015 and 2014, the allowance for obsolete inventory was $402,278 and $252,569, respectively. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of assets are capitalized. Upon sale or other retirement of depreciable property, the cost and accumulated depreciation are removed from the related accounts and any gain or loss is reflected in operations. Depreciation is computed on the straight-line method over the estimated useful lives of the assets ranging from three to forty years. Depreciation expense was $472,220 and $48,278 for the years ended September 30, 2015 and 2014, 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 which is reasonably assured. 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. There is no deferred revenue as of September 30, 2015 and 2014. 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. The Company evaluates the criteria outlined in ASC Topic 605-45, Principal Agent Considerations Manufacturing Revenue Revenues from the sale of carpet products, including shipping and handling amounts, are recognized when the following criteria are met: there is persuasive evidence that a sales agreement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Delivery is not considered to have occurred until the customer takes title to the goods and assumes the risks and rewards of ownership, which is generally on the date of shipment. At the time revenue is recognized, the Company records a provision for the estimated amount of future returns based primarily on historical experience and any known trends or conditions that exist at the time revenue is recognized. Revenues are recorded net of taxes collected from customers. Shipping and Handling The Company classifies shipping and handling billed to customers as sales and classifies costs relating to shipping and handling as cost of revenues. Advertising Costs Advertising costs are charged to operations when incurred. Advertising expense totaled $177,249 and $12,974 for the years ended September 30, 2015 and 2014, 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. For the period from July 7, 2015 to September 30, 2015, Marquis Industries, Inc. and subsidiaries is required to file a separate income tax return, and therefore, the income generated by these subsidiaries cannot be offset against the Company’s net operating losses. Stock-Based Compensation The Company from time to time grants restricted stock awards and options to employees, non-employees and Company executives and directors. 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” 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. During the year ended September 30, 2015, the Company determined that based on future cash flows generated that certain of its intangible assets were impaired and took a charge to earnings of $2,543,568. There were no impairment losses recorded on intangible assets for the year ended September 30, 2014. 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. The Company recorded goodwill of $1,169,904 related to its acquisition of Modern Everyday, Inc. in fiscal 2014 and $800,000 related to its acquisition of Marquis Industries, Inc. in fiscal 2015. As of September 30, 2015 and 2014, the Company performed the required impairment review. During the impairment review at September 30, 2015, the Company determined that based on future cash flows generated that its goodwill was impaired and took a charge to earnings of $1,169,904. 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 three reportable segments (See Note 17). 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 5. There were no derivative instruments as of September 30, 2015. 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. The Company’s derivative instruments were reported at fair value using Level 2 inputs as discussed in Note 5. Also, the Company has a purchase price contingency that is discussed in Note 13. The Company uses Level 2 inputs for its valuation methodology for the warrant derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liability is adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. At September 30, 2015 and 2014, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value: Description Fair Value Fair Value Measurements at Level 1 Level 2 Level 3 Derivative liability $ – $ – – – Contingent consideration for business combination 316,000 316,000 – – Total $ 316,000 $ 316,000 – – Description Fair Value Fair Value Measurements at Level 1 Level 2 Level 3 Derivative liability $ 83,580 $ – 83,580 – Contingent consideration for business combination 251,000 251,000 – – Total $ 334,580 $ 251,000 83,580 – 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 In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09) In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. In January 2015, the FASB issued Accounting Standards Update No. 2015-01, Income Statement – Extraordinary and Unusual items (Subtopic 225-20) In February, 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. In September, 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805). Topic 805 requires that an acquirer retrospectively adjust provisional amounts recognized in a business combination, during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in the Update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. 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 financial statements. |
3. Balance Sheet Information
3. Balance Sheet Information | 12 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Information | Balance sheet information is as follows: September 30, September 30, 2015 2014 Receivables, current, net: Accounts receivable, current $ 9,007,127 $ 1,611,269 Less: Allowance for doubtful accounts (763,135 ) (756,686 ) $ 8,243,992 $ 854,583 Receivables, long term, net: Accounts receivable, long term $ 344,572 $ 344,572 Less: Allowance for doubtful accounts (344,572 ) (344,572 ) $ – $ – Total receivables, net: Gross receivables $ 9,351,699 $ 1,955,841 Less: Allowance for doubtful accounts (1,107,707 ) (1,101,258 ) $ 8,243,992 $ 854,583 Components of allowance for doubtful accounts are as follows: Allowance for dilution and fees on amounts due from billing aggregators $ 1,063,617 $ 1,063,633 Allowance for customer refunds 1,715 2,107 Allowance for other trade receivables 42,375 35,518 $ 1,107,707 $ 1,101,258 Inventory Raw materials $ 6,715,298 $ – Work in progress 836,837 – Finished goods 6,185,741 4,529,714 13,737,876 4,529,714 Less: Obsolescence reserve (402,278 ) (252,569 ) $ 13,335,598 $ 4,277,145 Property and equipment, net: Land and improvements $ 687,999 $ – Building and improvements 4,202,000 – Transportation equipment 77,419 – Machinery and equipment 7,676,561 – Furnishings and fixtures 211,701 162,642 Office, computer equipment and other 244,674 192,063 13,100,354 354,705 Less: Accumulated depreciation (618,453 ) (201,591 ) $ 12,481,901 $ 153,114 Intangible assets, net: Domain name and marketing related intangibles $ 18,957 $ 1,521,015 Website and technology related intangibles 25,300 2,863,509 Purchased software 1,500,000 – Covenant not to compete – 120,000 1,544,257 4,504,524 Less: Accumulated amortization (27,327 ) (1,433,314 ) $ 1,516,930 $ 3,071,210 Accrued liabilities: Accrued payroll and bonuses $ 731,782 $ 107,224 Deferred revenue 243,082 548,004 Accrued software costs 1,500,000 – Accrued expenses - other 1,186,085 390,802 $ 3,660,949 $ 1,046,030 |
4. Intangible Assets
4. Intangible Assets | 12 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
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, software, a covenant not to compete, and marketing and technology related intangibles acquired through the acquisition of LiveDeal, Inc. As a result of the acquisition of Modern Everyday Inc., the Company recorded goodwill of $1,169,904. In addition as a result of the acquisition of Marquis Industries, Inc., the Company recorded goodwill of $800,000. 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; software - 5 years, and covenant not to compete – 4 years. Goodwill is not amortized, but evaluated for impairment on at least an annual basis. During the year ended September 30, 2015, the Company purchased software for $1,500,000. The Company has the option to pay for the software in cash or in 800,000 shares of the Company’s common stock. The Company has until June 30, 2016 to pay for the software either in cash or common stock. At September 30, 2015, the Company had not made any payments towards the purchase of this software and has reflected the $1,500,000 purchase price for the software in accrued liabilities in the accompanying condensed consolidated balance sheet. During the year ended September 30, 2015, the Company determined that certain its long-lived intangible assets and goodwill were impaired and took a charge to earnings of $2,543,568 and $1,169,904, respectively. The following summarizes estimated future amortization expense related to intangible assets that have net balances as of September 30, 2015: 2016 $ 230,471 2017 216,721 2018 214,286 2019 214,286 2020 214,286 Thereafter 426,880 $ 1,516,930 Total amortization expense related to intangible assets was $575,532 and $441,978 for the years ended September 30, 2015 and 2014, respectively. |
5. Derivative Liability
5. Derivative Liability | 12 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | The convertible note discussed in Note 6 had a reset provision and a dilutive issuance clause that gave rise to a derivative liability. The reset provision provided for the conversion price to be adjusted downward in the event that the Company issued 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 was recorded and shown separately under current liabilities. Changes in the fair value of the derivative liability were recorded in the consolidated statement of operations 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 the derivative liability at September 30, 2014 was as follows: Inception September 30, 2014 Stock price $ 7.14 $ 2.98 Risk free rate .11% .13% Volatility 142% 94% Exercise prices $ 8.12 $ 2.93 Term (years) 1.00 .42 The convertible note was repaid during the year ended September 30, 2015; therefore there was not a related derivative liability at September 30, 2015. The following table represents the Company’s derivative liability activity for the embedded conversion features for the years ended September 30, 2015 and 2014: 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 Change in derivative liability during the year ended September 30, 2015 (83,580 ) Derivative liability balance, September 30, 2015 $ – |
6. Notes Payable
6. Notes Payable | 12 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | Revolver Loan and Term Loan In connection with the purchase of Marquis Industries Inc., the Company entered into an agreement with Bank of America for a Term and Revolving Loan for approximately $7.8 million for the term component and approximately $15 million for the revolving component. As part of the Bank of America Revolving Loan, Marquis Industries may borrow up to $15 million (based on eligibility). The Bank of America term loan bears interest at a variable rate based on a base rate plus a margin. The current base rate is the greater of (a) Bank of America prime rate, (b) the current federal funds rate plus 0.50%, or (c) 30-day LIBOR plus 1.00% plus the margin, which varies, depending on the fixed coverage ratio table below. Levels I – IV which determine the interest rate to be charge is based on the fixed charge coverage ratio. Fixed Coverage Ratio Table Level Fixed Charge Coverage Ratio Base Rate Revolver Loan LIBOR Revolver Loans Base Rate Term Loans LIBOR Term Loans I >2.00 to 1.00 0.50% 1.50% 0.75% 1.75% II <2.00 to 1.00 but >1.50 to 1.00 0.75% 1.75% 1.00% 2.00% III <1.50 to 1.00 but >1.20 to 1.00 1.00% 2.00% 1.25% 2.25% IV <1.2 to 1.00 1.25% 2.25% 1.50% 2.5% The loans are cross-collateralized with substantially all real and personal property of Marquis Industries, Inc. As of September 30, 2015, the Company was at Level II with the fixed coverage ratio. Monthly payments to Bank of America are approximately $79,000 plus accrued interest. The term component is due and payable in July 2020, which is when the revolving component terminates. The loans contain certain covenants that require, among other things, for the Company to maintain a fixed charge coverage ratio of at least 1.05 to 1, tested as of the last day of each month for the twelve consecutive months ending on such day. Since the loan was obtained on July 6, 2015, the Company still has until July 5, 2016 to be in compliance with this ratio. 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 5. 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. The note was repaid during the year ended September 30, 2015, therefore the remaining unamortized debt discount of $57,665 was written off to interest expense. Also, as a result of the note being repaid, the derivative liability associated with this convertible note was reduced to $0. The Company recorded $83,580 of non-cash “change in fair value of derivative” income during the year ended September 30, 2015. ICG Convertible Note Transaction On January 23, 2014, the Company issued a note to Isaac Capital Group (“ICG”), a related party, 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. On December 3, 2014, ICG converted the note into 674,370 shares of common stock, therefore the remaining debt discount of $158,219 was written off and recognized as interest expense. In addition, upon the conversion of note, the Company issued to ICG a warrant to acquire 674,370 additional shares of the Company’s common stock at an exercise price of $0.95 per share. The fair value of the warrants issued in connection with the conversion of note was $1,853,473 and was immediately recognized as interest expense. Kingston Convertible Note Transaction ($10 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 provides for a 5% discount to the note amount, interest at 8% per annum and convertible into shares of the Company’s common stock 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. On October 29, 2014, the Company entered into an amended convertible note purchase agreement with Kingston whereby the Company and Kingston agreed to (i) i ncrease the maximum principal amount of the notes from $5 million to $10 million 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, and (iii) provides certain additional adjustments to the note conversion price. On October 16, 2014, the Company issued a Note to Kingston in the principal amount of $100,000. Because the conversion price of $0.79 was less than the stock price on the date of issuance, this gave rise to a beneficial conversion feature valued at $100,000. 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. On November 17, 2014, Kingston converted the note into 127,008 shares of common stock, therefore the debt discount of $100,000 was written off and recognized as interest expense. In addition, as a result of the October 29, 2014 amendment, the Company was required to issue to Kingston, the original issue discount payment equal to 5% of the maximum loan in shares of the Company’s common stock based upon the conversion price of the first conversion which was $0.79 per shares. The Company issued 630,252 shares of common stock that had a fair value of $2,004,202 which 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 January 1, 2024. Notes payable as of September 30, 2015 and 2014 consisted of the following: September 30, September 30, 2015 2014 Base Rate Revolver Loan- interest rate based on prime rate adjusted for fixed coverage ratio (table above), maturity date July 6, 2020. $ 7,225,745 $ – Base Rate Term Loan- interest rate based on prime rate adjusted for fixed coverage ratio (table above), maturity date July 6, 2020. 7,628,438 – Note payable to individual, payable on demand, interest at 10.0% per annum, unsecured 92,441 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, $200,000 due February 28, 2015 and $400,000 due February 28, 2016, non-interest bearing with interest imputed at 2.87% per annum 395,251 581,707 Credit line due January 1, 2024, with interest rate of 2.75% 669,351 240,204 Less Debt Discount – (215,884 ) Total Debt 16,011,226 1,559,329 Current portion 1,443,036 920,360 Long-term portion $ 14,568,190 $ 638,969 Future maturities of debt at September 30, 2015 are as follows: Years ending September 30, 2016 $ 1,443,036 2017 955,344 2018 955,344 2019 955,344 2020 11,032,807 Thereafter 669,351 $ 16,011,226 |
7. Note Payable, Related Party
7. Note Payable, Related Party | 12 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Note Payable, Related Party | In connection with the purchase of Marquis Industries Inc., the Company entered into a mezzanine loan in an amount of up to $7,000,000 provided by Isaac Capital Fund, a private lender whose managing member is Jon Isaac, the chief executive officer of the Company. The Isaac Capital Fund mezzanine loan bears interest at 12.5% with payment obligations of interest each month and all principal due in January 2021 (six months after the final payments are due under the Bank of America Term and Revolving Loan). As of September 30, 2015, there was $6,495,825 outstanding on this mezzanine loan. |
8. Equity
8. Equity | 12 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Equity | During the year ended September 30, 2015, the Company issued: · 191,136 shares of common stock for services rendered valued at $498,059. The value was based on the market value of the Company’s common stock on the date of issuance; · 600,000 shares of common stock issued to officers of the Company as bonuses for services rendered in fiscal years 2012, 2013 and 2014 valued at $1,518,000. The value was based on the market value of the Company’s common stock on the date of issuance; · 155,000 shares of common stock for net cash proceeds of $538,441; · 801,378 share of common stock for the conversion of convertible notes and accrued interest of $635,756; and · 630,252 shares of common stock as payment for the original issue discount fees associated with the Kingston agreement. The value of the shares was $2,004,202 based on the market value of the Company’s common stock at the date of issuance. During the year ended September 30, 2014, the Company issued: · 24,427 shares of common stock for services rendered valued at $9,654. The value was based on the market value of the Company’s common stock on the date of issuance; · 3,115,147 shares of common stock for net cash proceeds of $13,681,054; and · 50,000 share of common stock valued at $201,500 in connection with the acquisition of Modern Everyday, Inc. 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. On May 16, 2014, the Company entered into another 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. The Company will pay Chardan a commission equal to up to 3% of the gross proceeds from the sale of the common stock. Such commissions were $8,211 and $412,528 for the years ended September 30, 2015 and 2014, respectively. During the years ended September 30, 2015 and 2014, the Company sold 155,000 and 3,115,147 shares, respectively, of its common stock for net proceeds of $538,441 and $13,681,054, respectively. 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 Pursuant to an existing tender offer, holders of 13,184 shares of the Company’s common stock exchanged said shares for 127,840 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 the years ended September 30, 2015 and 2014, the Company accrued dividends of $1,921 and $1,925, respectively, payable to holders of Series E preferred stock. At September 30, 2015 unpaid dividends were $959. |
9. Warrants
9. Warrants | 12 Months Ended |
Sep. 30, 2015 | |
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, 2015: Number of Units Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Intrinsic Value 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 Granted 674,370 0.95 Exercised – Outstanding at September 30, 2015 3,540,876 $ 0.69 2.73 $ 3,498,531 Exercisable at September 30, 2015 3,540,876 $ 0.69 2.73 $ 3,498,531 Most of the above warrants were issued in connection with conversion of convertible notes from ICG (See Note 6). 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. The exercise price for warrants outstanding and exercisable at September 30, 2015 is as follows: Outstanding Exercisable Number of Exercise Number of Exercise Warrants Price Warrants Price 1,631,886 $ 0.55 1,631,886 $ 0.55 535,716 0.56 535,716 0.56 371,487 0.81 371,487 0.81 1,001,787 0.95 1,001,787 0.95 3,540,876 3,540,876 |
10. Stock-based Compensation
10. Stock-based Compensation | 12 Months Ended |
Sep. 30, 2015 | |
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, 2015 and 2014: Weighted Weighted Average Average Remaining Number of Exercise Contractual Intrinsic Shares Price Life Value Outstanding at September 30, 2013 675,000 $ 2.82 Granted – Exercised – Forfeited (75,000 ) Outstanding at September 30, 2014 600,000 $ 2.76 4.90 $ 318,250 Granted 450,000 $ 2.53 Exercised – Forfeited – Outstanding at September 30, 2015 1,050,000 $ 1.87 4.76 $ 225,750 Exercisable at September 30, 2015 675,000 $ 1.73 4.26 $ 223,750 The Company recognized compensation expense of $712,538 and $167,985 during the years ended September 30, 2015 and 2014, 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, 2015, the Company had $259,798 of unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the Company expects will be recognized through June 2017. During the year ended September 30, 2015, the Company reduced the exercise price by 50% for the 600,000 options then outstanding. The Company recognized compensation expense of $54,677 related to the re-pricing of the exercise for these options. The exercise price for options outstanding and exercisable at September 30, 2015 is as follows: Outstanding Exercisable Number of Exercise Number of Exercise Options Price Options Price 187,500 $ 0.83 187,500 $ 0.83 150,000 1.25 150,000 1.25 187,500 1.67 37,500 1.67 37,500 2.08 0 2.08 37,500 2.50 0 2.50 450,000 2.53 300,000 2.53 1,050,000 675,000 The following table summarizes information about the Company’s non-vested shares as of September 30, 2015: 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 Granted 450,000 $ 1.92 Vested (525,000 ) Nonvested at September 30, 2015 375,000 $ 1.44 For options granted during 2015 where the exercise price equaled the stock price at the date of the grant, the weighted-average fair value of such options was $1.92 and the weighted-average exercise price of such options was $2.53. No options were granted during 2015, where the exercise price was less than the stock price at the date of grant or where the exercise price was greater than the stock price at the date of grant. The assumptions used in calculating the fair value of options granted using the Black-Scholes option- pricing model for options granted in 2015 are as follows: Risk-free interest rate 1.01% Expected life of the options 2.5 to 3.5 years Expected volatility 140% Expected dividend yield 0% |
11. Net Loss Per Share
11. Net Loss Per Share | 12 Months Ended |
Sep. 30, 2015 | |
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: Years Ended September 30, 2015 2014 Net loss attributable to Live Ventures, Inc. $ (14,666,129 ) $ (4,661,381 ) Less: preferred stock dividends (1,921 ) (1,438 ) Net loss applicable to common stock $ (14,668,050 ) $ (4,662,819 ) Weighted average common shares outstanding - basic and diluted 15,765,818 13,144,248 Loss per share - basic and diluted: $ (0.93 ) $ (0.35 ) 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: Years Ended September 30, 2015 2014 Options to purchase shares of common stock 1,050,000 600,000 Warrants to purchase shares of common stock 3,540,876 2,866,506 Series E convertible preferred stock 127,840 127,840 Shares of non-vested restricted stock – 739,601 Total potentially dilutive shares 4,718,716 4,333,947 |
12. Related Party Transactions
12. Related Party Transactions | 12 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | The Company entered into a Note Purchase Agreement with ICG, an entity owned by Jon Isaac, the CompanyÂ’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 during the year ended September 30, 2014. Because the conversion price under ICGÂ’s notes was less than the fair market value of the stock on the date of issuance, the Company recognized a beneficial conversion feature which was treated as a debt discount and amortized on a straight line basis as interest expense until the date of conversion, at which time all remaining debt discount was recognized as interest expense. Additionally, the fair value of the warrants that were contingently issuable to ICG upon conversion were recognized as additional interest expense. During the years ended September 30, 2015 and 2014, the Company recognized total interest expense of $2,018,803 and $369,670, respectively, associated with the ICG notes. Also see Note 6, 7 and 13. |
13. Commitments and Contingenci
13. Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Purchase price contingency In connection with acquisition of Modern Everyday, Inc., the Company issued 50,000 shares of the CompanyÂ’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, 2015, the Company as recorded a liability of $316,000 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 CompanyÂ’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 CompanyÂ’s management to date and other than as noted below, the CompanyÂ’s management does not expect that the outcome of any matter pending against us is likely to have a materially adverse effect on the CompanyÂ’s consolidated financial position as of September 30, 2015, results of operations, cash flows or liquidity of the Company. Operating Leases and Service Contracts The Company leases its office space, certain equipment and a building (from a related party) under long-term operating leases expiring through fiscal year 2016. Rent expense under these leases was $581,750 and $446,780 for the years ended September 30, 2015 and 2014, respectively. The Company has also entered into several non-cancelable service contracts. The building lease from a related party is $18,562 per month and expires in July 2020. As of September 30, 2015, future minimum annual payments under operating lease agreements for fiscal years ending September 30 are as follows: 2016 $ 420,704 2017 276,690 2018 222,744 2019 222,744 2020 185,620 $ 1,328,502 |
14. Provision for Income Taxes
14. Provision for Income Taxes | 12 Months Ended |
Sep. 30, 2015 | |
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, 2015 and 2014 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. For the period from July 7, 2015 to September 30, 2015, Marquis Industries, Inc. and subsidiaries is required to file a separate income return, and therefore, the income generated by these subsidiaries cannot be offset against the Company’s net operating losses. Income tax expense for the years ended September 30, 2015 and 2014 is as follows: 2015 2014 Current expense: Federal $ 320,000 $ – State 56,000 – 376,000 – Deferred expense: Federal – – State – – – – Total income tax expense $ 376,000 $ – A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30: 2015 2014 Amount Percent Amount Percent Federal statutory rates $ (4,874,337 ) 34% $ (1,584,870 ) 34% State income taxes (123,292 ) 1% (40,088 ) 1% Permanent differences 2,794,987 -19% 200,518 -4% Income not offset by net operating losses 327,477 -2% – 0% Valuation allowance against net deferred tax assets 2,251,165 -16% 1,424,439 -31% Effective rate $ 376,000 -3% $ – 0% At September 30, deferred income tax assets and liabilities were comprised of: 2015 2014 Deferred income tax asset, current: Book to tax differences in accounts receivable $ 374,621 $ 259,448 Book to tax differences in prepaid assets and accrued expenses 210,428 (21,450 ) Total deferred income tax asset, current 585,049 237,998 Less: valuation allowance (585,049 ) (237,998 ) Deferred income tax asset, current, net – – Deferred income tax asset, long-term: Net operation loss carryforwards 10,801,243 8,668,250 Book to tax differences in intangible assets 632,557 928,222 Book to tax differences in organizational costs 272,239 – Book to tax differences in depreciation (6,810 ) 5,710 Total deferred income tax asset, long-term 11,669,229 9,602,182 Less: valuation allowance (11,669,229 ) (9,602,182 ) Deferred income tax asset, net – – Total deferred income tax asset $ – $ – The Company has recorded as of September 30, 2015 and 2014 a valuation allowance of $12,284,278 and $9,840,180, 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, 2015. The Company has net operating loss carry-forwards of approximately $40.0 million. Such amounts are subject to IRS code section 382 limitations and expire in 2027. The 2010 to 2013 tax years are still subject to audit. |
15. Concentration of Credit Ris
15. Concentration of Credit Risk | 12 Months Ended |
Sep. 30, 2015 | |
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, 2015. At September 30, 2015 and 2014, the amount the Company had on deposit that exceeded the FDIC-insured limits was $2,471,259 and $7,508,924, respectively. 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, 2015 and September 30, 2014 pertaining to LEC service providers represent the holdbacks described above. |
16. Business Combinations
16. Business Combinations | 12 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Business Combinations | On July 6 and July 7, 2015, the Company, through its newly formed, wholly-owned subsidiary, Live Ventures, Inc., entered into a series of agreements in connection with its indirect purchase of Marquis Industries, Inc., a Georgia corporation, and its subsidiaries. The purchase was effectuated between Marquis Affiliated Holdings LLC, a Delaware limited liability company that is 80% owned by Live Ventures, and the shareholders of Marquis Industries. The remaining 20% of Marquis Holdings is owned by the former owners of Marquis Industries. In connection with the purchase and finance transaction, various persons and entities entered into a series of agreements (each of which is dated on or about July 6, 2015, with funding occurring on July 6 and July 7, 2015). The purchase price was paid through a combination of debt financing that was provided by (i) the Bank of America Term and Revolving Loan in the aggregate amount of (x) approximately $7.8 million for the term component and (y) approximately $15 million for the revolving component and (ii) a mezzanine loan in an amount of up to $7,000,000 provided by Isaac Capital Fund, a private lender whose managing member is Jon Isaac, the chief executive officer of the Company. In connection with operations of Marquis Industries after the closing of the purchase transaction, and as part of the Bank of America Term and Revolving Loan, Marquis Industries may borrow up to $15 million (based on eligibility). The Bank of America term loan bears interest at a variable rate based on a base rate plus a margin. The current base rate is the greatest of (a) Bank of America prime rate, (b) the current federal funds rate plus 0.50%, or (c) 30-day LIBOR plus 1.00% plus the margin, which varies, depending on circumstances and as of closing was for the term component: 1.00% in excess of the base rate or 2.00% in excess of LIBOR, and for the revolving component: 0.75% in excess of the base rate or 1.75% in excess of LIBOR. Monthly payments to Bank of America are approximately $79,000 plus accrued interest. The term component is due and payable in July 2020, which is when the revolving component terminates. The Isaac Capital Fund mezzanine loan bears interest at 12.5% with payment obligations of interest each month and all principal due in January 2021 (six months after the final payments are due under the Bank of America Term and Revolving Loan). The Company acquired Marquis Industries as part of its acquisition strategy to acquire profitable and well-managed companies and finance those A summary of the purchase price allocations at fair value is below. The purchase price allocation is a preliminary and subject to change. The Company has not yet completed its analysis to determine the fair value of inventory, property and equipment and a mezzanine loan on the acquisition date. Once this analysis is complete, the Company will adjust, if necessary, the provisional amounts assigned to inventory, property and equipment and a mezzanine loan in the accounting period in which the analysis is completed. Total Cash $ 496,944 Accounts receivable 7,262,188 Inventory 11,227,359 Other current assets 813,830 Property and equipment 12,697,604 Goodwill 800,000 Accounts payable (4,139,830 ) Accrued expenses (479,473 ) Noncontrolling interest (2,000,000 ) Purchase price (1) $ 26,678,622 (1) - includes $4,800,000 of cash, $6,495,825 from a mezzanine loan from Isaac Capital Fund, and $15,382,797 from bank financing. The noncontrolling interest was valued at the price paid by the Company when it subsequently purchased the remaining 20% of Marquis Industries. See Note 18. The revenue from the acquisition of Marquis Industries included in the results of operations from the date of acquisition on July 7, 2015 to September 30, 2015 was $16,006,683. The unaudited pro forma information below present statement of operations data as if the acquisition of Marquis Industries took place on October 1, 2013. Years Ended September 30, 2015 2014 (unaudited) (unaudited) Net revenue $ 81,322,724 $ 63,686,515 Gross profit 23,805,842 16,789,944 Operating income (loss) (4,505,060 ) 1,140,348 Net loss (10,997,970 ) (1,533,148 ) Loss per share (0.70 ) (0.12 ) |
17. Segment Reporting
17. Segment Reporting | 12 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting | The Company operates in three segments which are characterized as: (1) legacy merchant’s services, (2) online marketplace platform and (3) manufacturing. The legacy merchants’ services consists of LEC business and Velocity Local, the online marketplace platform consists of livedeal.com and the fiscal 2014 acquisitions of consumer products entities and the manufacturing segment consists of the recent acquisition of Marquis Industries. The following tables summarize segment information for the years ended September 30, 2015 and 2014: Years Ended September 30, 2015 2014 Revenues Marketplace platform $ 15,868,448 $ 5,270,508 Manufacturing 16,006,683 – Services 1,494,735 1,994,768 $ 33,369,866 $ 7,265,276 Gross profit Marketplace platform $ 5,724,186 $ 435,830 Manufacturing 4,187,026 – Services 1,343,182 1,602,809 $ 11,254,394 $ 2,038,639 Operating income (loss) Marketplace platform $ (11,507,737 ) $ (5,535,360 ) Manufacturing 563,503 – Services 807,967 1,036,076 $ (10,136,267 ) $ (4,499,284 ) Depreciation and amortization Marketplace platform $ 633,732 $ 473,292 Manufacturing 402,250 – Services 11,770 16,964 $ 1,047,752 $ 490,256 Interest Expenses Marketplace platform $ 4,214,097 $ 458,934 Manufacturing 271,564 – Services – – $ 4,485,661 $ 458,934 Provision for income taxes Marketplace platform $ – $ – Manufacturing 376,000 – Services – – $ 376,000 $ – Net income (loss) applicable to Live Ventures, Inc. Marketplace platform $ (15,435,765 ) $ (5,822,732 ) Manufacturing (184,841 ) – Services 954,477 1,161,351 $ (14,666,129 ) $ (4,661,381 ) As of As of September 30, September 30, 2015 2014 Total Assets Marketplace platform $ 6,811,977 $ 18,118,425 Manufacturing 33,714,344 – Services 138,035 171,021 $ 40,664,356 $ 18,289,446 Intangible assets (including goodwill) Marketplace platform $ 1,516,930 $ 4,234,692 Manufacturing 800,000 – Services – 6,422 $ 2,316,930 $ 4,241,114 |
18. Subsequent Events
18. Subsequent Events | 12 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | On November 30, 2015, the Company purchased the remaining 20% ownership of Marquis Affiliated Holdings, LLC. With the completion of this transaction, Marquis Affiliated Holdings, LLC became a wholly-owned subsidiary of the Company. The purchase price for the remaining 20% was $2 million of which $1.5 million was paid in December 2015 and the remaining $0.5 million in promissory note with fixed rate of 2% per annum will be paid on or before February 1, 2016. On December 3, 2015, the Bank of America consented to Marquis Affiliated Holdings LLC to repay a principal amount of $846,247 on the Issac Capital Fund I, LLC loan. On December 11, 2015, the Company entered into a reinstatement and first amendment with Chardan Capital Markets LLC (“ Chardan |
2. Summary of Significant Acc25
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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 its subsidiaries as follows: Percentage Company Owned Parent Live Ventures, Inc. 100% Live Ventures, Incorporated Telco Billing, Inc. 100% Live Ventures, Incorporated Telco of Canada, Inc.* 100% Telco Billing, Inc. LiveDeal, Inc. - Santa Clara* 100% Live Ventures, Incorporated Local Marketing Experts, Inc.* 100% Live Ventures, Incorporated Velocity Marketing Concepts, Inc. 100% Live Ventures, Incorporated 247 Marketing, Inc.* 100% Live Ventures, Incorporated Velocity Local, Inc. 100% Live Ventures, Incorporated Modern Everyday, Inc. 100% Live Ventures, Incorporated Modern Everyday, LLC 100% Modern Everyday, Inc. Super Nova, LLC 100% Modern Everyday, Inc. Live Goods, LLC 100% Live Ventures, Incorporated DealTicker, Inc.* 100% Live Goods, LLC Marquis Affiliated Holdings, LLC 80% Live Ventures, Inc. Marquis Industries, Inc. 100% Marquis Affiliated Holdings, LLC A-O Industries, LLC 100% Marquis Industries, Inc. Astro Carpet Mills, LLC 100% Marquis Industries, Inc. Constellation Industries, LLC 100% Marquis Industries, Inc. S F Commercial Properties, LLC 100% Marquis Industries, Inc. * these entities were inactive for more than a year and subsequently closed in October 2015 as approved by the Board of Directors on September 30, 2015. The results of operations for Live Goods, LLC, DealTicker, Inc., Modern Everyday, Inc. and Marquis Industries, Inc. have only been included since the date of acquisition of March 7, 2014, May 5, 2014, August 24, 2014 and July 6, 2015, respectively. All intercompany transactions and balances have been eliminated in consolidation. |
Noncontrolling Interest | Noncontrolling Interest On July 6, 2015, the Company, through MAH, acquired 80% interest in Marquis. The transaction was accounted for under the acquisition method of accounting, with the purchase price allocated based on the fair value of the individual assets acquired and liabilities assumed. The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “ Consolidation The net income attributed to the NCI is separately designated in the accompanying consolidated statements of operations. Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity. The excess attributable to the NCI is attributed to those interests. The NCI shall continue to attribute its share of losses even if that attribution results in a deficit NCI balance. |
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, fair value of derivative liability, current portion of note payable, 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, 2015 and 2014, the amount the Company had on deposit that exceeded the FDIC-insured limits was $2,471,2594 and $7,508,924, respectively. The Company has not experienced any losses related to a concentration of cash or cash equivalents in an FDIC insured financial institution. |
Accounts Receivable | Accounts Receivable The Company grants credit to customers under credit terms that it believes are customary in the industry and does not require collateral to support customer receivables. This allowance is maintained at a level which the Company believes is sufficient to cover potential credit losses and receivables are only written off to bad debt expense as uncollectible after all reasonable collection efforts have been made. Pursuant to the terms of the arrangement, the Company, from time to time, shall sell to the Factor certain of its accounts receivable balances on a non-recourse basis for credit approved accounts. The Factor shall purchase the account receivable for the gross amount of the respective invoices, less factoring commissions, trade and cash discounts. The factor shall be entitled to charge the Company with a factoring commission for each account which equal to 0.75%-1% of the gross amount of the account as of the date of purchase, plus interest to be calculated at 3.25%-6% per annum. The minimum annual commission of $75,000 per contract year. The total amount of accounts receivable factored was $4,772,004 and $0 as of September 30, 2015 and 2014, respectively. Factored receivables are sold without recourse with substantially all of the balance receivable from two factors. The Company performs ongoing credit evaluations of its customers' financial conditions and does not require collateral to support customer receivables. The Company establishes an allowance for claims and doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts, which includes allowances for accounts and factored receivables, customer refunds, dilution and fees from LEC billing aggregators and other uncollectible accounts. The allowance for doubtful accounts is based upon historical bad debt experience and periodic evaluations of the aging and collectability of the accounts receivable. This allowance is maintained at a level which the Company believes is sufficient to cover potential credit losses and receivables are only written off to bad debt expense as uncollectible after all reasonable collection efforts have been made. The Company has also purchased accounts receivable credit insurance to cover non-factored receivables which helps reduce potential losses due to doubtful accounts. |
Inventories | Inventories Inventories are valued at the lower of the inventoryÂ’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. At September 30, 2015 and 2014, the allowance for obsolete inventory was $402,278 and $252,569, respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of assets are capitalized. Upon sale or other retirement of depreciable property, the cost and accumulated depreciation are removed from the related accounts and any gain or loss is reflected in operations. Depreciation is computed on the straight-line method over the estimated useful lives of the assets ranging from three to forty years. Depreciation expense was $472,220 and $48,278 for the years ended September 30, 2015 and 2014, 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 which is reasonably assured. 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. There is no deferred revenue as of September 30, 2015 and 2014. 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. The Company evaluates the criteria outlined in ASC Topic 605-45, Principal Agent Considerations Manufacturing Revenue Revenues from the sale of carpet products, including shipping and handling amounts, are recognized when the following criteria are met: there is persuasive evidence that a sales agreement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Delivery is not considered to have occurred until the customer takes title to the goods and assumes the risks and rewards of ownership, which is generally on the date of shipment. At the time revenue is recognized, the Company records a provision for the estimated amount of future returns based primarily on historical experience and any known trends or conditions that exist at the time revenue is recognized. Revenues are recorded net of taxes collected from customers. |
Shipping and Handling | Shipping and Handling The Company classifies shipping and handling billed to customers as sales and classifies costs relating to shipping and handling as cost of revenues. |
Advertising Costs | Advertising Costs Advertising costs are charged to operations when incurred. Advertising expense totaled $177,249 and $12,974 for the years ended September 30, 2015 and 2014, 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. For the period from July 7, 2015 to September 30, 2015, Marquis Industries, Inc. and subsidiaries is required to file a separate income tax return, and therefore, the income generated by these subsidiaries cannot be offset against the CompanyÂ’s net operating losses. |
Stock-Based Compensation | Stock-Based Compensation The Company from time to time grants restricted stock awards and options to employees, non-employees and Company executives and directors. 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” |
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. During the year ended September 30, 2015, the Company determined that based on future cash flows generated that certain of its intangible assets were impaired and took a charge to earnings of $2,543,568. There were no impairment losses recorded on intangible assets for the year ended September 30, 2014. |
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. The Company recorded goodwill of $1,169,904 related to its acquisition of Modern Everyday, Inc. in fiscal 2014 and $800,000 related to its acquisition of Marquis Industries, Inc. in fiscal 2015. As of September 30, 2015 and 2014, the Company performed the required impairment review. During the impairment review at September 30, 2015, the Company determined that based on future cash flows generated that its goodwill was impaired and took a charge to earnings of $1,169,904. |
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 three reportable segments (See Note 17). |
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 5. There were no derivative instruments as of September 30, 2015. |
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. The Company’s derivative instruments were reported at fair value using Level 2 inputs as discussed in Note 5. Also, the Company has a purchase price contingency that is discussed in Note 13. The Company uses Level 2 inputs for its valuation methodology for the warrant derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liability is adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. At September 30, 2015 and 2014, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value: Description Fair Value Fair Value Measurements at Level 1 Level 2 Level 3 Derivative liability $ – $ – – – Contingent consideration for business combination 316,000 316,000 – – Total $ 316,000 $ 316,000 – – Description Fair Value Fair Value Measurements at Level 1 Level 2 Level 3 Derivative liability $ 83,580 $ – 83,580 – Contingent consideration for business combination 251,000 251,000 – – Total $ 334,580 $ 251,000 83,580 – |
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 stockholdersÂ’ equity. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09) In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. In January 2015, the FASB issued Accounting Standards Update No. 2015-01, Income Statement – Extraordinary and Unusual items (Subtopic 225-20) In February, 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. In September, 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805). Topic 805 requires that an acquirer retrospectively adjust provisional amounts recognized in a business combination, during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in the Update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. 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 financial statements. |
2. Summary of Significant Acc26
2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
List of subsidiaries | Percentage Company Owned Parent Live Ventures, Inc. 100% Live Ventures, Incorporated Telco Billing, Inc. 100% Live Ventures, Incorporated Telco of Canada, Inc.* 100% Telco Billing, Inc. LiveDeal, Inc. - Santa Clara* 100% Live Ventures, Incorporated Local Marketing Experts, Inc.* 100% Live Ventures, Incorporated Velocity Marketing Concepts, Inc. 100% Live Ventures, Incorporated 247 Marketing, Inc.* 100% Live Ventures, Incorporated Velocity Local, Inc. 100% Live Ventures, Incorporated Modern Everyday, Inc. 100% Live Ventures, Incorporated Modern Everyday, LLC 100% Modern Everyday, Inc. Super Nova, LLC 100% Modern Everyday, Inc. Live Goods, LLC 100% Live Ventures, Incorporated DealTicker, Inc.* 100% Live Goods, LLC Marquis Affiliated Holdings, LLC 80% Live Ventures, Inc. Marquis Industries, Inc. 100% Marquis Affiliated Holdings, LLC A-O Industries, LLC 100% Marquis Industries, Inc. Astro Carpet Mills, LLC 100% Marquis Industries, Inc. Constellation Industries, LLC 100% Marquis Industries, Inc. S F Commercial Properties, LLC 100% Marquis Industries, Inc. |
Fair value of liabilities | At September 30, 2015 and 2014, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value: Description Fair Value Fair Value Measurements at Level 1 Level 2 Level 3 Derivative liability $ – $ – – – Contingent consideration for business combination 316,000 316,000 – – Total $ 316,000 $ 316,000 – – Description Fair Value Fair Value Measurements at Level 1 Level 2 Level 3 Derivative liability $ 83,580 $ – 83,580 – Contingent consideration for business combination 251,000 251,000 – – Total $ 334,580 $ 251,000 83,580 – |
3. Balance Sheet Information (T
3. Balance Sheet Information (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance sheet information | September 30, September 30, 2015 2014 Receivables, current, net: Accounts receivable, current $ 9,007,127 $ 1,611,269 Less: Allowance for doubtful accounts (763,135 ) (756,686 ) $ 8,243,992 $ 854,583 Receivables, long term, net: Accounts receivable, long term $ 344,572 $ 344,572 Less: Allowance for doubtful accounts (344,572 ) (344,572 ) $ – $ – Total receivables, net: Gross receivables $ 9,351,699 $ 1,955,841 Less: Allowance for doubtful accounts (1,107,707 ) (1,101,258 ) $ 8,243,992 $ 854,583 |
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 $ 1,063,617 $ 1,063,633 Allowance for customer refunds 1,715 2,107 Allowance for other trade receivables 42,375 35,518 $ 1,107,707 $ 1,101,258 |
Inventory | Inventory Raw materials $ 6,715,298 $ – Work in progress 836,837 – Finished goods 6,185,741 4,529,714 13,737,876 4,529,714 Less: Obsolescence reserve (402,278 ) (252,569 ) $ 13,335,598 $ 4,277,145 |
Property and equipment, net | Property and equipment, net: Land and improvements $ 687,999 $ – Building and improvements 4,202,000 – Transportation equipment 77,419 – Machinery and equipment 7,676,561 – Furnishings and fixtures 211,701 162,642 Office, computer equipment and other 244,674 192,063 13,100,354 354,705 Less: Accumulated depreciation (618,453 ) (201,591 ) $ 12,481,901 $ 153,114 |
Intangible assets, net | Intangible assets, net: Domain name and marketing related intangibles $ 18,957 $ 1,521,015 Website and technology related intangibles 25,300 2,863,509 Purchased software 1,500,000 – Covenant not to compete – 120,000 1,544,257 4,504,524 Less: Accumulated amortization (27,327 ) (1,433,314 ) $ 1,516,930 $ 3,071,210 |
Accrued liabilities | Accrued liabilities: Accrued payroll and bonuses $ 731,782 $ 107,224 Deferred revenue 243,082 548,004 Accrued software costs 1,500,000 – Accrued expenses - other 1,186,085 390,802 $ 3,660,949 $ 1,046,030 |
4. Intangible Assets (Tables)
4. Intangible Assets (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Future amortization expense related to intangible assets | 2016 $ 230,471 2017 216,721 2018 214,286 2019 214,286 2020 214,286 Thereafter 426,880 $ 1,516,930 |
5. Derivative Liability (Tables
5. Derivative Liability (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value assumptions | Inception September 30, 2014 Stock price $ 7.14 $ 2.98 Risk free rate .11% .13% Volatility 142% 94% Exercise prices $ 8.12 $ 2.93 Term (years) 1.00 .42 |
Schedule of derivative liability activity | 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 Change in derivative liability during the year ended September 30, 2015 (83,580 ) Derivative liability balance, September 30, 2015 $ – |
6. Notes Payable (Tables)
6. Notes Payable (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Fixed coverage ratio table | Level Fixed Charge Coverage Ratio Base Rate Revolver Loan LIBOR Revolver Loans Base Rate Term Loans LIBOR Term Loans I >2.00 to 1.00 0.50% 1.50% 0.75% 1.75% II <2.00 to 1.00 but >1.50 to 1.00 0.75% 1.75% 1.00% 2.00% III <1.50 to 1.00 but >1.20 to 1.00 1.00% 2.00% 1.25% 2.25% IV <1.2 to 1.00 1.25% 2.25% 1.50% 2.5% |
Notes payable of Modern Everyday, Inc. | September 30, September 30, 2015 2014 Base Rate Revolver Loan- interest rate based on prime rate adjusted for fixed coverage ratio (table above), maturity date July 6, 2020. $ 7,225,745 $ – Base Rate Term Loan- interest rate based on prime rate adjusted for fixed coverage ratio (table above), maturity date July 6, 2020. 7,628,438 – Note payable to individual, payable on demand, interest at 10.0% per annum, unsecured 92,441 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, $200,000 due February 28, 2015 and $400,000 due February 28, 2016, non-interest bearing with interest imputed at 2.87% per annum 395,251 581,707 Credit line due January 1, 2024, with interest rate of 2.75% 669,351 240,204 Less Debt Discount – (215,884 ) Total Debt 16,011,226 1,559,329 Current portion 1,443,036 920,360 Long-term portion $ 14,568,190 $ 638,969 |
Future maturities of debt | Years ending September 30, 2016 $ 1,443,036 2017 955,344 2018 955,344 2019 955,344 2020 11,032,807 Thereafter 669,351 $ 16,011,226 |
9. Warrants (Tables)
9. Warrants (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrant activity | Number of Units Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Intrinsic Value 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 Granted 674,370 0.95 Exercised – Outstanding at September 30, 2015 3,540,876 $ 0.69 2.73 $ 3,498,531 Exercisable at September 30, 2015 3,540,876 $ 0.69 2.73 $ 3,498,531 |
Schedule of warrants by exercise price | Outstanding Exercisable Number of Exercise Number of Exercise Warrants Price Warrants Price 1,631,886 $ 0.55 1,631,886 $ 0.55 535,716 0.56 535,716 0.56 371,487 0.81 371,487 0.81 1,001,787 0.95 1,001,787 0.95 3,540,876 3,540,876 |
10. Stock-based Compensation (T
10. Stock-based Compensation (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
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, 2013 675,000 $ 2.82 Granted – Exercised – Forfeited (75,000 ) Outstanding at September 30, 2014 600,000 $ 2.76 4.90 $ 318,250 Granted 450,000 $ 2.53 Exercised – Forfeited – Outstanding at September 30, 2015 1,050,000 $ 1.87 4.76 $ 225,750 Exercisable at September 30, 2015 675,000 $ 1.73 4.26 $ 223,750 |
Stock option exercise price | Outstanding Exercisable Number of Exercise Number of Exercise Options Price Options Price 187,500 $ 0.83 187,500 $ 0.83 150,000 1.25 150,000 1.25 187,500 1.67 37,500 1.67 37,500 2.08 0 2.08 37,500 2.50 0 2.50 450,000 2.53 300,000 2.53 1,050,000 675,000 |
Non-vested share activity | 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 Granted 450,000 $ 1.92 Vested (525,000 ) Nonvested at September 30, 2015 375,000 $ 1.44 |
Assumptions used | Risk-free interest rate 1.01% Expected life of the options 2.5 to 3.5 years Expected volatility 140% Expected dividend yield 0% |
11. Net Loss Per Share (Tables)
11. Net Loss Per Share (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Basic and diluted net loss per share | Years Ended September 30, 2015 2014 Net loss attributable to Live Ventures, Inc. $ (14,666,129 ) $ (4,661,381 ) Less: preferred stock dividends (1,921 ) (1,438 ) Net loss applicable to common stock $ (14,668,050 ) $ (4,662,819 ) Weighted average common shares outstanding - basic and diluted 15,765,818 13,144,248 Loss per share - basic and diluted: $ (0.93 ) $ (0.35 ) |
Potentially dilutive securities | Years Ended September 30, 2015 2014 Options to purchase shares of common stock 1,050,000 600,000 Warrants to purchase shares of common stock 3,540,876 2,866,506 Series E convertible preferred stock 127,840 127,840 Shares of non-vested restricted stock – 739,601 Total potentially dilutive shares 4,718,716 4,333,947 |
13. Commitments and Contingen34
13. Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum annual payments under operating lease agreements | 2016 $ 420,704 2017 276,690 2018 222,744 2019 222,744 2020 185,620 $ 1,328,502 |
14. Provision for Income Taxes
14. Provision for Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of income tax expense | 2015 2014 Current expense: Federal $ 320,000 $ – State 56,000 – 376,000 – Deferred expense: Federal – – State – – – – Total income tax expense $ 376,000 $ – |
Reconciliation between effective and statutory income tax rates | 2015 2014 Amount Percent Amount Percent Federal statutory rates $ (4,874,337 ) 34% $ (1,584,870 ) 34% State income taxes (123,292 ) 1% (40,088 ) 1% Permanent differences 2,794,987 -19% 200,518 -4% Income not offset by net operating losses 327,477 -2% – 0% Valuation allowance against net deferred tax assets 2,251,165 -16% 1,424,439 -31% Effective rate $ 376,000 -3% $ – 0% |
Schedule of deferred income tax assets and liabilities | 2015 2014 Deferred income tax asset, current: Book to tax differences in accounts receivable $ 374,621 $ 259,448 Book to tax differences in prepaid assets and accrued expenses 210,428 (21,450 ) Total deferred income tax asset, current 585,049 237,998 Less: valuation allowance (585,049 ) (237,998 ) Deferred income tax asset, current, net – – Deferred income tax asset, long-term: Net operation loss carryforwards 10,801,243 8,668,250 Book to tax differences in intangible assets 632,557 928,222 Book to tax differences in organizational costs 272,239 – Book to tax differences in depreciation (6,810 ) 5,710 Total deferred income tax asset, long-term 11,669,229 9,602,182 Less: valuation allowance (11,669,229 ) (9,602,182 ) Deferred income tax asset, net – – Total deferred income tax asset $ – $ – |
16. Business Combination (Table
16. Business Combination (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Purchase Price Allocation | Total Cash $ 496,944 Accounts receivable 7,262,188 Inventory 11,227,359 Other current assets 813,830 Property and equipment 12,697,604 Goodwill 800,000 Accounts payable (4,139,830 ) Accrued expenses (479,473 ) Noncontrolling interest (2,000,000 ) Purchase price (1) $ 26,678,622 |
Schedule of pro forma information | Years Ended September 30, 2015 2014 (unaudited) (unaudited) Net revenue $ 81,322,724 $ 63,686,515 Gross profit 23,805,842 16,789,944 Operating income (loss) (4,505,060 ) 1,140,348 Net loss (10,997,970 ) (1,533,148 ) Loss per share (0.70 ) (0.12 ) |
17. Segment Reporting (Tables)
17. Segment Reporting (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment reporting | Years Ended September 30, 2015 2014 Revenues Marketplace platform $ 15,868,448 $ 5,270,508 Manufacturing 16,006,683 – Services 1,494,735 1,994,768 $ 33,369,866 $ 7,265,276 Gross profit Marketplace platform $ 5,724,186 $ 435,830 Manufacturing 4,187,026 – Services 1,343,182 1,602,809 $ 11,254,394 $ 2,038,639 Operating income (loss) Marketplace platform $ (11,507,737 ) $ (5,535,360 ) Manufacturing 563,503 – Services 807,967 1,036,076 $ (10,136,267 ) $ (4,499,284 ) Depreciation and amortization Marketplace platform $ 633,732 $ 473,292 Manufacturing 402,250 – Services 11,770 16,964 $ 1,047,752 $ 490,256 Interest Expenses Marketplace platform $ 4,214,097 $ 458,934 Manufacturing 271,564 – Services – – $ 4,485,661 $ 458,934 Provision for income taxes Marketplace platform $ – $ – Manufacturing 376,000 – Services – – $ 376,000 $ – Net income (loss) applicable to Live Ventures, Inc. Marketplace platform $ (15,435,765 ) $ (5,822,732 ) Manufacturing (184,841 ) – Services 954,477 1,161,351 $ (14,666,129 ) $ (4,661,381 ) As of As of September 30, September 30, 2015 2014 Total Assets Marketplace platform $ 6,811,977 $ 18,118,425 Manufacturing 33,714,344 – Services 138,035 171,021 $ 40,664,356 $ 18,289,446 Intangible assets (including goodwill) Marketplace platform $ 1,516,930 $ 4,234,692 Manufacturing 800,000 – Services – 6,422 $ 2,316,930 $ 4,241,114 |
1. Organization and Basis of 38
1. Organization and Basis of Presentation (Details Narrative) - USD ($) | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net loss | $ (14,666,129) | $ (4,661,381) | |
Net cash used in operations | (1,019,318) | (5,194,654) | |
Proceeds from sale of common stock | 538,441 | 13,681,054 | |
Cash and cash equivalents | $ 2,727,818 | $ 8,114,682 | $ 761,458 |
2. Summary of Significant Acc39
2. Summary of Significant Accounting Policies (Details - List of subsidiaries) | Sep. 30, 2015 |
Live Ventures, Inc. | |
Percentage owned in subsidiary | 100.00% |
Telco Billing, Inc. | |
Percentage owned in subsidiary | 100.00% |
Telco of Canada, Inc. | |
Percentage owned in subsidiary | 100.00% |
LiveDeal, Inc. - Santa Clara | |
Percentage owned in subsidiary | 100.00% |
Local Marketing Experts, Inc. | |
Percentage owned in subsidiary | 100.00% |
Velocity Marketing Concepts, Inc. | |
Percentage owned in subsidiary | 100.00% |
247 Marketing, Inc. | |
Percentage owned in subsidiary | 100.00% |
Velocity Local, Inc. | |
Percentage owned in subsidiary | 100.00% |
Modern Everyday, Inc. | |
Percentage owned in subsidiary | 100.00% |
Modern Everyday, LLC | |
Percentage owned in subsidiary | 100.00% |
Super Nova, LLC | |
Percentage owned in subsidiary | 100.00% |
Live Goods, LLC | |
Percentage owned in subsidiary | 80.00% |
DealTicker, Inc. | |
Percentage owned in subsidiary | 100.00% |
Marquis Affiliated Holdings, LLC | |
Percentage owned in subsidiary | 100.00% |
Marquis Industries, Inc. | |
Percentage owned in subsidiary | 100.00% |
A-O Industries, LLC | |
Percentage owned in subsidiary | 100.00% |
Astro Carpet Mills, LLC | |
Percentage owned in subsidiary | 100.00% |
Constellation Industries, LLC | |
Percentage owned in subsidiary | 100.00% |
S F Commercial Properties, LLC | |
Percentage owned in subsidiary | 100.00% |
2. Summary of Significant Acc40
2. Summary of Significant Accounting Policies (Details - Fair value) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Derivative liability | $ 0 | $ 83,580 |
Contingent consideration for business combination | 316,000 | 251,000 |
Total | 316,000 | 334,580 |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative liability | 0 | 0 |
Contingent consideration for business combination | 316,000 | 251,000 |
Total | 316,000 | 251,000 |
Fair Value, Inputs, Level 2 [Member] | ||
Derivative liability | 0 | 83,580 |
Contingent consideration for business combination | 0 | 0 |
Total | 0 | 83,580 |
Fair Value, Inputs, Level 3 [Member] | ||
Derivative liability | 0 | 0 |
Contingent consideration for business combination | 0 | 0 |
Total | $ 0 | $ 0 |
2. Summary of Significant Acc41
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Accounting Policies [Abstract] | ||
Cash above FDIC-insured limits | $ 2,471,259 | $ 7,508,924 |
Accounts receivable factored | 4,772,004 | 0 |
Allowance for doubtful accounts | 1,107,707 | 1,101,258 |
Allowance for obsolete inventory | 402,278 | 252,569 |
Depreciation expense | 472,220 | 48,278 |
Deferred Revenue | 0 | 0 |
Advertising Costs | 177,249 | 12,974 |
Impairment loss recorded on intangible assets | 2,543,568 | 0 |
Goodwill | 800,000 | $ 1,169,904 |
Goodwill impairment loss | $ 1,169,904 | |
Property and equipment useful lives | 3-40 years |
3. Balance Sheet Information (D
3. Balance Sheet Information (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Receivables, current, net: | ||
Accounts receivable, current | $ 9,007,127 | $ 1,611,269 |
Less: Allowance for doubtful accounts | (763,135) | (756,686) |
Receivables, current, net | 8,243,992 | 854,583 |
Receivables, long term, net: | ||
Accounts receivable, long term | 344,572 | 344,572 |
Less: Allowance for doubtful accounts | (344,572) | (344,572) |
Receivables, long term, net | 0 | 0 |
Total receivables, net: | ||
Gross receivables | 9,351,699 | 1,955,841 |
Less: Allowance for doubtful accounts | (1,107,707) | (1,101,258) |
Total receivables, net | 8,243,992 | 854,583 |
Allowance for dilution and fees on amounts due from billing aggregators | 1,063,617 | 1,063,633 |
Allowance for customer refunds | 1,715 | 2,107 |
Allowance for other trade receivables | 42,375 | 35,518 |
Total allowances | 1,107,707 | 1,101,258 |
Inventory | ||
Raw materials | 6,715,298 | 0 |
Work in progress | 836,837 | 0 |
Finished goods | 6,185,741 | 4,529,714 |
Total inventory, gross | 13,737,876 | 4,529,714 |
Less: obsolescence reserve | (402,278) | (252,569) |
Total inventory, net | 13,335,598 | 4,277,145 |
Property and equipment, net: | ||
Land and improvements | 687,999 | 0 |
Building and improvements | 4,202,000 | 0 |
Transportation equipment | 77,419 | 0 |
Machinery and equipment | 7,676,561 | 0 |
Furnishings and fixtures | 211,701 | 162,642 |
Office, computer equipment and other | 244,674 | 192,063 |
Plant Property and Equipment,Gross | 13,100,354 | 354,705 |
Less: Accumulated depreciation | (618,453) | (201,591) |
Property and equipment, net | 12,481,901 | 153,114 |
Intangible assets, net: | ||
Domain name and marketing related intangibles | 18,957 | 1,521,015 |
Website and technology related intangibles | 25,300 | 2,863,509 |
Purchased software | 1,500,000 | 0 |
Covenant not to compete | 0 | 120,000 |
Intangible assets, gross | 1,544,257 | 4,504,524 |
Less: Accumulated amortization | (27,327) | (1,433,314) |
Intangible assets, net | 1,516,930 | 3,071,210 |
Accrued liabilities: | ||
Accrued payroll and bonuses | 731,782 | 107,224 |
Deferred revenue | 243,082 | 548,004 |
Accrued software costs | 1,500,000 | 0 |
Accrued expenses - other | 1,186,085 | 390,802 |
Total accrued liabilities | $ 3,660,949 | $ 1,046,030 |
4. Intangible Assets (Details)
4. Intangible Assets (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense, 2016 | $ 230,471 | |
Amortization expense, 2017 | 216,721 | |
Amortization expense, 2018 | 214,286 | |
Amortization expense, 2019 | 214,286 | |
Amortization expense, 2020 | 214,286 | |
Amortization expense, thereafter | 426,880 | |
Total future amortization expense | $ 1,516,930 | $ 3,071,210 |
4. Intangible Assets (Details N
4. Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Goodwill | $ 800,000 | $ 1,169,904 |
Software purchased | 1,500,000 | |
Amortization expense | 575,532 | 441,978 |
Long-lived intangible assets impaired | 2,543,568 | 0 |
Goodwill impaired | 1,169,904 | |
Modern Everyday, Inc. [Member] | ||
Goodwill | $ 800,000 | |
Marquis Industries, Inc. | ||
Goodwill | $ 1,169,904 | |
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 |
5. Derivative Liability (Detail
5. Derivative Liability (Details - Assumptions for fair value) - Fair Value, Inputs, Level 3 [Member] - $ / shares | 5 Months Ended | 12 Months Ended |
Feb. 28, 2014 | Sep. 30, 2015 | |
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 |
5. Derivative Liability (Deta46
5. Derivative Liability (Details - Rollfoward) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative liability, beginning balance | $ 83,580 | $ 0 |
Issuance of derivative liability | 0 | 139,852 |
Change in derivative liability | (83,580) | (56,272) |
Derivative liability, ending balance | $ 0 | $ 83,580 |
6. Notes Payable (Details)
6. Notes Payable (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Total Debt | $ 16,011,226 | $ 1,559,329 |
Debt discount | 0 | (215,884) |
Current portion | 1,443,036 | 920,360 |
Long-term portion | 14,568,190 | 638,969 |
Term Loan | ||
Total Debt | 7,628,438 | 0 |
Note payable to individual | ||
Total Debt | 92,441 | 90,168 |
Convertible note payable to individual | ||
Total Debt | 0 | 335,245 |
Convertible note payable to ICG | ||
Total Debt | 0 | 527,889 |
Acquisition note payable | ||
Total Debt | 395,251 | 581,707 |
Credit line | ||
Total Debt | 669,351 | 240,204 |
Revolver Loan | ||
Total Debt | $ 7,225,745 | $ 0 |
6. Notes Payable (Details - Fut
6. Notes Payable (Details - Future maturities of debt) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Debt Disclosure [Abstract] | ||
Debt due 2016 | $ 1,443,036 | |
Debt due 2017 | 955,344 | |
Debt due 2018 | 955,344 | |
Debt due 2019 | 955,344 | |
Debt due 2020 | 11,032,807 | |
Debt due thereafter | 669,351 | |
Total debt | $ 16,011,226 | $ 1,559,329 |
6. Notes Payable (Details Narr
6. Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative liability | $ 0 | $ 83,580 |
Change in fair value of derivative | 83,580 | 56,272 |
Fair value of warrant issued in conversion of note | 1,853,473 | |
Issuance of common stock for loan fees, value | 2,004,202 | |
February 2014 Convertible Note | ||
Convertible note | 323,595 | |
Derivative liability | 139,852 | |
Debt discount from embedded conversion feature | 139,852 | |
Unamortized debt discount recorded as interest expense | 57,665 | |
Change in fair value of derivative | 83,580 | |
IGC Convertible Note | ||
Convertible note | 500,000 | |
Debt discount from embedded conversion feature | $ 500,000 | |
Unamortized debt discount recorded as interest expense | $ 158,219 | |
Stock issued in conversion of note, shares issued | 674,370 | |
Fair value of warrant issued in conversion of note | $ 1,853,473 | |
Kingston Convertible Note | ||
Convertible note | 100,000 | |
Debt discount from embedded conversion feature | 100,000 | |
Unamortized debt discount recorded as interest expense | $ 100,000 | |
Stock issued in conversion of note, shares issued | 1,270,085 | |
Issuance of common stock for loan fees, shares | 630,252 | |
Issuance of common stock for loan fees, value | $ 2,004,202 | |
Term loan | ||
Credit line maximum | $ 7,800,000 | |
Credit line maturity date | Jul. 31, 2020 | |
Revolving Loan | ||
Credit line maximum | $ 15,000,000 |
7. Note Payable, Related Party
7. Note Payable, Related Party (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Loan outstanding | $ 6,495,825 | $ 0 |
Mezzanine Loan | ||
Loan maximum borrowing amount | 7,000,000 | |
Loan outstanding | $ 6,495,825 | |
Maturity date | Jan. 31, 2021 | |
Interest rate | 12.50% |
8. Equity (Details Narrative)
8. Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Issuance of common stock for services, value | $ 2,016,059 | $ 9,654 |
Issuance of common stock for cash, value | 538,441 | 13,681,054 |
Issuance of common stock for conversion of debt, value | 635,756 | |
Issuance of common stock for loan fees, value | 2,004,202 | |
Issuance of common stock for MEI purchase, value | 201,500 | |
Commission paid on sale of stock | $ 8,211 | 412,528 |
Stock reserved for future issuance | 1,800,000 | |
Stock split information | 3-for-1 forward stock split effective on February 11, 2014 | |
Accrued dividends | $ 1,921 | $ 1,925 |
Unpaid dividends | $ 959 | |
Modern Everyday, Inc. [Member] | ||
Issuance of common stock for MEI purchase, shares | 50,000 | |
Issuance of common stock for MEI purchase, value | $ 201,500 | |
Kingston Convertible Note | ||
Issuance of common stock for conversion of debt, shares | 1,270,085 | |
Issuance of common stock for loan fees, shares | 630,252 | |
Issuance of common stock for loan fees, value | $ 2,004,202 | |
Stock for Services | ||
Issuance of common stock for services, shares | 191,136 | 24,427 |
Issuance of common stock for services, value | $ 498,059 | $ 9,654 |
Officers | ||
Issuance of common stock for services, shares | 600,000 | |
Issuance of common stock for services, value | $ 1,518,000 | |
Stock issued for cash | ||
Issuance of common stock for cash, shares | 155,000 | 3,115,147 |
Issuance of common stock for cash, value | $ 538,441 | $ 13,681,054 |
Conversion of convertible notes | ||
Issuance of common stock for conversion of debt, shares | 801,378 |
9. Warrants (Details - Warrants
9. Warrants (Details - Warrants Outstanding) - Warrants [Member] - $ / shares | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Number of units | ||
Outstanding, beginning of period | 2,866,506 | 2,866,506 |
Granted | 674,370 | 0 |
Exercised | 0 | 0 |
Outstanding, end of period | 3,540,876 | 2,866,506 |
Exercisable, end of period | 3,540,876 | |
Outstanding, beginning of period | $ 0.63 | $ 0.63 |
Granted | 0.95 | |
Outstanding, end of period | 0.69 | $ 0.63 |
Exercisable, end of period | $ 0.69 | |
Weighted Average Remaining Contractual Term (in years) | ||
Outstanding, beginning of period | 3 years 4 months 20 days | 4 years 4 months 20 days |
Outstanding, end of period | 2 years 8 months 23 days | |
Exercisable, end of period | 2 years 8 months 23 days | |
Outstanding, beginning of period | $ 6,732,700 | $ 1,471,998 |
Outstanding, end of period | $ 3,498,531 | $ 6,732,700 |
Exercisable, end of period | 3,498,531 |
9. Warrants (Details - Exercise
9. Warrants (Details - Exercise price) - Warrants [Member] - $ / shares | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Number of warrants outstanding | 3,540,876 | 2,866,506 | 2,866,506 |
Number of warrants exercisable | 3,540,876 | ||
$ 0.55 | |||
Number of warrants outstanding | 1,631,886 | ||
Warrants exercise price, outstanding | $ 0.55 | ||
Number of warrants exercisable | 1,631,886 | ||
Warrants exercise price, exercisable | $ 0.55 | ||
$ 0.56 | |||
Number of warrants outstanding | 535,716 | ||
Warrants exercise price, outstanding | $ 0.56 | ||
Number of warrants exercisable | 535,716 | ||
Warrants exercise price, exercisable | $ 0.56 | ||
$ 0.81 | |||
Number of warrants outstanding | 371,487 | ||
Warrants exercise price, outstanding | $ 0.81 | ||
Number of warrants exercisable | 371,487 | ||
Warrants exercise price, exercisable | $ 0.81 | ||
$ 0.95 | |||
Number of warrants outstanding | 1,001,787 | ||
Warrants exercise price, outstanding | $ 0.95 | ||
Number of warrants exercisable | 1,001,787 | ||
Warrants exercise price, exercisable | $ 0.95 |
10. Stock-based Compensation (D
10. Stock-based Compensation (Details - Option activity) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Number of Shares | ||
Outstanding, beginning balance | 600,000 | 675,000 |
Granted | 450,000 | 0 |
Exercised | 0 | 0 |
Forfeited | 0 | (75,000) |
Outstanding, ending balance | 1,050,000 | 600,000 |
Exercisable | 675,000 | |
Weighted Average Exercise Price | ||
Outstanding, beginning balance | $ 2.76 | $ 2.82 |
Granted | 2.53 | |
Outstanding, ending balance | 1.87 | $ 2.76 |
Exercisable | $ 1.73 | |
Weighed Average Remaining Contractual Life | ||
Outstanding, ending balance | 4 years 9 months 4 days | 4 years 10 months 24 days |
Exercisable | 4 years 3 months 4 days |
10. Stock-based Compensatin (De
10. Stock-based Compensatin (Details - Option price) - Stock Options [Member] - $ / shares | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Number of options outstanding | 1,050,000 | 600,000 | 675,000 |
Option exercise price outstanding | $ 1.87 | $ 2.76 | $ 2.82 |
Number of options exercisable | 675,000 | ||
Option exercise price exercisable | $ 1.73 | ||
$ 0.83 | |||
Number of options outstanding | 187,500 | ||
Option exercise price outstanding | $ 0.83 | ||
Number of options exercisable | 187,500 | ||
Option exercise price exercisable | $ 0.83 | ||
$ 1.25 | |||
Number of options outstanding | 150,000 | ||
Option exercise price outstanding | $ 1.25 | ||
Number of options exercisable | 150,000 | ||
Option exercise price exercisable | $ 1.25 | ||
$ 1.67 | |||
Number of options outstanding | 187,500 | ||
Option exercise price outstanding | $ 1.67 | ||
Number of options exercisable | 37,500 | ||
Option exercise price exercisable | $ 1.67 | ||
$ 2.08 | |||
Number of options outstanding | 37,500 | ||
Option exercise price outstanding | $ 2.08 | ||
Number of options exercisable | 0 | ||
Option exercise price exercisable | $ 2.08 | ||
$ 2.50 | |||
Number of options outstanding | 37,500 | ||
Option exercise price outstanding | $ 2.50 | ||
Number of options exercisable | 0 | ||
Option exercise price exercisable | $ 2.50 | ||
$ 2.53 | |||
Number of options outstanding | 450,000 | ||
Option exercise price outstanding | $ 2.53 | ||
Number of options exercisable | 300,000 | ||
Option exercise price exercisable | $ 2.53 |
10. Stock-based Compensation 56
10. Stock-based Compensation (Details - Non vested) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Number of shares | ||
Outstanding, beginning balance | 450,000 | 600,000 |
Granted | 450,000 | 0 |
Vested | (525,000) | (150,000) |
Outstanding, ending balance | 375,000 | 450,000 |
Weighted-Average Grant-Date Fair Value | ||
Outstanding, beginning of period | $ 0.73 | $ 0.73 |
Weighted-average grant date fair value | 1.92 | |
Outstanding, end of period | $ 1.44 | $ 0.73 |
10. Stock-based Compensation 57
10. Stock-based Compensation (Details - Assumptions) - Stock Options [Member] | 12 Months Ended |
Sep. 30, 2015 | |
Assumptions | |
Risk-free interest rate | 1.01% |
Expected term | 2.5 to 3.5 years |
Expected volatility | 140.00% |
Dividend rate | 0.00% |
10. Stock-based Compensation 58
10. Stock-based Compensation (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Stock-based compensation | $ 712,538 | $ 167,985 |
Unrecognized compensation expense | 259,798 | |
Compensation expense related to re-pricing of options | $ 54,677 | |
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, 2015 | Sep. 30, 2014 | |
Net Loss Per Share | ||
Net loss attributable to Live Ventures, Inc. | $ (14,666,129) | $ (4,661,381) |
Less: preferred stock dividends | (1,921) | (1,438) |
Net loss applicable to common stock | $ (14,668,050) | $ (4,662,819) |
Weighted average common shares outstanding - basic and diluted | 15,765,818 | 13,144,248 |
Loss per share - basic and diluted | $ (0.93) | $ (0.35) |
11. Net Loss Per Share (Detai60
11. Net Loss Per Share (Details - Antidilutive securities) - shares | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 4,718,716 | 4,333,947 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 1,050,000 | 600,000 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 3,540,876 | 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 |
Non-vested restricted stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount | 0 | 739,601 |
12. Related Party Transactions
12. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ||
Gross proceeds from related party debt | $ 500,000 | |
Interest expense associated with ICG Notes | $ 2,018,803 | $ 369,670 |
13. Commitments and Contingen62
13. Commitments and Contingencies (Details - Operating lease) | Sep. 30, 2015USD ($) |
Commitments and Contingencies | |
2,016 | $ 420,704 |
2,017 | 276,690 |
2,018 | 222,744 |
2,019 | 222,744 |
2,020 | 185,620 |
Total | $ 1,328,502 |
13. Commitments and Contingen63
13. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Rent expense | $ 581,750 | $ 446,780 |
Modern Everyday, Inc. [Member] | ||
Shares issued for acquisition | 50,000 | |
Guarantee liability | $ 316,000 |
14. Provision for Income Taxe64
14. Provision for Income Taxes (Details - Income tax expense) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Current expense: | ||
Federal | $ 320,000 | $ 0 |
State | 56,000 | 0 |
Total current | $ 376,000 | 0 |
Deferred expense: | ||
Federal | 0 | |
State | $ 0 | 0 |
Total deferred | 0 | 0 |
Total income tax expense | $ 376,000 | $ 0 |
14. Provision for Income Taxe65
14. Provision for Income Taxes (Details - reconciliation) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Income tax reconciliation | ||
Federal statutory rates | $ (4,874,337) | $ (1,584,870) |
State income taxes | (123,292) | (40,088) |
Permanent differences | 2,794,987 | 200,518 |
Income not offset by net operating losses | 327,477 | 0 |
Valuation allowance against net deferred tax assets | 2,251,165 | 1,424,439 |
Effective rate | $ 376,000 | $ 0 |
Income tax rate reconciliation | ||
Federal statutory rates | 34.00% | 34.00% |
State income taxes | 1.00% | 1.00% |
Permanent differences | (19.00%) | (4.00%) |
Income not offset by net operating losses | (2.00%) | 0.00% |
Valuation allowance against net deferred tax assets | (16.00%) | (31.00%) |
Effective rate | (3.00%) | 0.00% |
14. Provision for Income Taxe66
14. Provision for Income Taxes (Details - Deferred tax assets) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Deferred income tax asset, current: | ||
Book to tax differences in accounts receivable | $ 374,621 | $ 259,448 |
Book to tax differences in prepaid assets and accrued expenses | 210,428 | (21,450) |
Total deferred income tax asset, current | 585,049 | 237,998 |
Less: valuation allowance | (585,049) | (237,998) |
Deferred income tax asset, current, net | 0 | 0 |
Deferred income tax asset, long-term: | ||
Net operation loss carryforwards | 10,801,243 | 8,668,250 |
Book to tax differences in intangible assets | 632,557 | 928,222 |
Book to tax differences in organizational costs | 272,239 | 0 |
Book to tax differences in depreciation | (6,810) | 5,710 |
Total deferred income tax asset, long-term | 11,669,229 | 9,602,182 |
Less: valuation allowance | (11,669,229) | (9,602,182) |
Deferred income tax asset, net | 0 | 0 |
Total deferred income tax asset | $ 0 | $ 0 |
14. Provision for Income Taxe67
14. Provision for Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 40,000,000 | |
Operating loss valuation allowance | $ 12,284,278 | $ 9,840,180 |
Carryforward expiration date | Dec. 31, 2027 |
15. Concentration of Credit R68
15. Concentration of Credit Risk (Details Narrative) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Risks and Uncertainties [Abstract] | ||
Cash over the FDIC insured limit | $ 2,471,259 | $ 7,508,924 |
16. Business Combinations (Deta
16. Business Combinations (Details - Purchase allocation) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Goodwill | $ 800,000 | $ 1,169,904 |
All Acquisitions [Member] | ||
Cash | 496,944 | |
Accounts receivable | 7,262,188 | |
Inventory | 11,227,359 | |
Other current assets | 813,830 | |
Property and equipment | 12,697,604 | |
Goodwill | 800,000 | |
Accounts payable | (4,139,830) | |
Accrued expenses | (479,473) | |
Noncontrolling interest | (2,000,000) | |
Purchase price | $ 26,678,622 |
16. Business Combinations (De70
16. Business Combinations (Details - Proforma) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Proforma information | ||
Net revenue | $ 81,322,724 | $ 63,686,515 |
Gross profit | 23,805,842 | 16,789,944 |
Operating income (loss) | (4,505,060) | 1,140,348 |
Net loss | $ (10,997,970) | $ (1,533,148) |
Loss per share | $ (0.70) | $ (0.12) |
16. Business Combinations (De71
16. Business Combinations (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues | $ 33,369,866 | $ 7,265,276 |
Marquis Industries, Inc. | ||
Revenues | $ 16,006,683 |
17. Segment Reporting (Details)
17. Segment Reporting (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Net revenues | $ 33,369,866 | $ 7,265,276 |
Gross profit | 11,254,394 | 2,038,639 |
Operating income (loss) | (10,136,267) | (4,499,284) |
Depreciation and amortization | 1,047,752 | 490,256 |
Interest expenses | 4,485,661 | 458,934 |
Provision for income taxes | 376,000 | 0 |
Net income (loss) | (14,666,129) | (4,661,381) |
Total Assets | 40,664,356 | 18,289,446 |
Intangible assets (including goodwill) | 2,316,930 | 4,241,114 |
Marketplace Platform [Member] | ||
Net revenues | 15,868,448 | 5,270,508 |
Gross profit | 5,724,186 | 435,830 |
Operating income (loss) | (11,507,737) | (5,535,360) |
Depreciation and amortization | 633,732 | 473,292 |
Interest expenses | 4,214,097 | 458,934 |
Provision for income taxes | 0 | 0 |
Net income (loss) | (15,435,765) | (5,822,732) |
Total Assets | 6,811,977 | 18,118,425 |
Intangible assets (including goodwill) | 1,516,930 | 4,234,692 |
Manufacturing [Member] | ||
Net revenues | 16,006,683 | 0 |
Gross profit | 4,187,026 | 0 |
Operating income (loss) | 563,503 | 0 |
Depreciation and amortization | 402,250 | 0 |
Interest expenses | 271,564 | 0 |
Provision for income taxes | 376,000 | 0 |
Net income (loss) | (184,841) | 0 |
Total Assets | 33,714,344 | 0 |
Intangible assets (including goodwill) | 800,000 | 0 |
Services [Member] | ||
Net revenues | 1,494,735 | 1,994,768 |
Gross profit | 1,343,182 | 1,602,809 |
Operating income (loss) | 807,967 | 1,036,076 |
Depreciation and amortization | 11,770 | 16,964 |
Interest expenses | 0 | 0 |
Provision for income taxes | 0 | 0 |
Net income (loss) | 954,477 | 1,161,351 |
Total Assets | 138,035 | 171,021 |
Intangible assets (including goodwill) | $ 0 | $ 6,422 |