Document and Entity Information
Document and Entity Information | 9 Months Ended |
Jun. 30, 2017shares | |
OptionsToPurchaseSharesOfCommonStockMember | |
Entity Registrant Name | LIVE VENTURES Inc |
Entity Central Index Key | 1,045,742 |
Document Type | 10-Q/A |
Document Period End Date | Jun. 30, 2017 |
Amendment Flag | true |
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 Common Stock, Shares Outstanding | 2,010,413 |
Document Fiscal Period Focus | Q3 |
Document Fiscal Year Focus | 2,017 |
Amendment Description | Restatement of certain accounts |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2017 | Sep. 30, 2016 |
Assets | ||
Cash and cash equivalents | $ 4,275,052 | $ 770,895 |
Trade receivables, net | 10,664,818 | 7,602,764 |
Inventories, net | 33,746,102 | 11,053,085 |
Prepaid expenses and other current assets | 4,527,243 | 5,792,018 |
Total current assets | 53,213,215 | 25,218,762 |
Property and equipment, net | 21,081,840 | 14,014,501 |
Deposits and other assets | 77,520 | 19,765 |
Deferred taxes | 9,504,029 | 12,524,582 |
Intangible assets, net | 2,779,351 | 1,689,790 |
Goodwill | 39,066,061 | 0 |
Total assets | 125,722,016 | 53,467,400 |
Liabilities: | ||
Accounts payable | 9,741,460 | 5,402,654 |
Accrued liabilities | 5,093,972 | 6,396,772 |
Income tax payable | 318,144 | 0 |
Current portion of long-term debt | 23,222,636 | 2,011,880 |
Total current liabilities | 38,376,212 | 13,811,306 |
Long-term debt, net of current portion | 52,729,003 | 13,460,282 |
Note payable, related party | 2,000,000 | 2,000,000 |
Total Liabilities | 93,105,215 | 29,271,588 |
Stockholders' equity: | ||
Common stock, $0.001 par value, 10,000,000 shares authorized, 2,088,186 shares issued and 2,010,413 shares outstanding at June 30, 2017; 2,819,327 shares issued and 2,789,205 shares outstanding at September 30, 2016 | 2,088 | 2,819 |
Paid in capital | 63,090,499 | 59,568,471 |
Treasury stock (77,773 shares) | (796,393) | (300,027) |
Accumulated deficit | (29,679,735) | (35,075,579) |
Total stockholders' equity | 32,616,801 | 24,195,812 |
Total liabilities and stockholders' equity | 125,722,016 | 53,467,400 |
Series B Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock | 214 | 0 |
Series E Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock | $ 128 | $ 128 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2017 | Sep. 30, 2016 |
Stockholders' equity: | ||
Common stock, par value | $ .001 | $ 0.001 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 2,088,186 | 2,819,327 |
Common stock, shares outstanding | 2,010,413 | 2,789,205 |
Treasury stock, shares | 77,773 | 77,773 |
Series B Preferred Stock [Member] | ||
Stockholders' equity: | ||
Convertible preferred stock, par value | $ .001 | $ 0.001 |
Convertible preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Convertible preferred stock, issued | 214,244 | 0 |
Convertible preferred stock, outstanding | 214,244 | 0 |
Series E Preferred Stock [Member] | ||
Stockholders' equity: | ||
Convertible preferred stock, par value | $ .001 | $ 0.001 |
Convertible preferred stock, shares authorized | 200,000 | 200,000 |
Convertible preferred stock, issued | 127,840 | 127,840 |
Convertible preferred stock, outstanding | 127,840 | 127,840 |
Convertible preferred stock, liquidation preference | $ 38,352 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenues | $ 41,377,493 | $ 19,994,363 | $ 112,102,582 | $ 59,938,720 |
Cost of revenues | 24,383,596 | 14,894,949 | 65,988,083 | 42,823,232 |
Gross profit | 16,993,897 | 5,099,414 | 46,114,499 | 17,115,488 |
Operating expenses: | ||||
General and administrative expenses | 9,335,904 | 2,172,366 | 25,544,443 | 6,696,637 |
Sales and marketing expenses | 2,274,866 | 1,869,830 | 6,237,004 | 7,115,903 |
Total operating expenses | 11,610,770 | 4,042,196 | 31,781,447 | 13,812,540 |
Operating income | 5,383,127 | 1,057,218 | 14,333,052 | 3,302,948 |
Other (expense) income: | ||||
Interest expense, net | (2,127,790) | (270,007) | (5,612,319) | (950,476) |
Other income | 12,652 | 326,708 | 197,814 | 694,277 |
Total other (expense) income, net | (2,115,138) | 56,701 | (5,414,505) | (256,199) |
Income before provision for income taxes | 3,267,989 | 1,113,919 | 8,918,547 | 3,046,749 |
Current tax expense: | ||||
Federal | 29,685 | 0 | 298,390 | 0 |
State | (40,998) | 0 | 202,322 | 0 |
Total Current tax expense | (11,313) | 0 | 500,712 | 0 |
Deferred tax expense (benefit): | ||||
Federal | 1,114,588 | (12,254,278) | 2,713,261 | (11,840,298) |
State | 36,671 | 0 | 307,292 | 0 |
Total Deferred tax expense (benefit) | 1,151,259 | (12,254,278) | 3,020,553 | (11,840,298) |
Total provision (benefit) for income taxes | 1,139,946 | (12,254,278) | 3,521,265 | (11,840,298) |
Net income | 2,128,043 | 13,368,197 | 5,397,282 | 14,887,047 |
Net income attributed to noncontrolling interest | 0 | 0 | 0 | 124,194 |
Net income attributed to Live Ventures Incorporated | $ 2,128,043 | $ 13,368,197 | $ 5,397,282 | $ 14,762,853 |
Earnings per share - basic | $ 1.04 | $ 4.76 | $ 2.36 | $ 5.25 |
Earnings per share - diluted | $ 0.55 | $ 4.05 | $ 1.31 | $ 4.48 |
Weighted average common shares outstanding - basic | 2,044,767 | 2,806,060 | 2,289,646 | 2,813,192 |
Weighted average common shares outstanding - diluted | 3,869,248 | 3,297,012 | 4,131,912 | 3,292,507 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
OPERATING ACTIVITIES: | ||
Net income | $ 5,397,282 | $ 14,887,047 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of acquisition: | ||
Depreciation and amortization | 3,112,786 | 1,623,013 |
Amortization of debt issuance cost | 157,158 | 0 |
Stock based compensation expense | 137,011 | 254,710 |
Loss on disposal of property and equipment | 55,703 | 71,614 |
Non-cash interest expense associated with convertible debt and warrants | 0 | 4,749 |
Non-cash issuance of common stock for services | 0 | 22,500 |
Change in reserve for uncollectible accounts | (39,865) | 30,073 |
Change in reserve for obsolete inventory | (771,971) | 703,532 |
Change in contingent liability | 0 | (316,000) |
Change in deferred income taxes | 3,020,553 | (12,254,278) |
Changes in assets and liabilities: | ||
Accounts receivable | (2,908,689) | (426,744) |
Prepaid expenses and other current assets | 308,373 | 55,849 |
Inventories | (1,760,954) | 1,868,343 |
Deposits and other assets | (57,755) | 16,325 |
Accounts payable | 495,296 | 556,916 |
Accrued liabilities | (449,799) | 333,874 |
Income tax payable | 318,144 | (376,000) |
Net cash provided by operating activities | 7,013,273 | 7,055,523 |
INVESTING ACTIVITIES: | ||
Acquisition of businesses, net of cash acquired and seller financing provided | (47,310,900) | 0 |
Purchase of intangible assets - Software | (124,230) | 0 |
Proceeds from the sale of property and equipment | 37,920 | 653,857 |
Purchases of property and equipment | (5,936,900) | (3,343,937) |
Net cash used in investing activities | (53,334,110) | (2,690,080) |
FINANCING ACTIVITIES: | ||
Net borrowings under revolver loans | 17,152,852 | (2,485,546) |
Payments on debt issuance costs | (1,155,000) | (415,757) |
Payment for the purchase of the noncontrolling interest | 0 | (2,000,000) |
Proceeds from issuance of notes payable | 36,984,434 | 10,050,521 |
Payment of series E preferred stock dividends | (959) | (959) |
Purchase of treasury stock | (496,366) | (202,005) |
Payments on notes payable | (2,659,967) | (4,400,114) |
Payments on notes payable, related party | 0 | (4,505,979) |
Net cash provided by (used in) financing activities | 49,824,994 | (3,959,839) |
INCREASE IN CASH AND CASH EQUIVALENTS | 3,504,157 | 405,604 |
CASH AND CASH EQUIVALENTS, beginning of period | 770,895 | 2,727,818 |
CASH AND CASH EQUIVALENTS, end of period | 4,275,052 | 3,133,422 |
Supplemental cash flow disclosures: | ||
Interest paid | 4,340,486 | 842,202 |
Income taxes paid | 103,704 | 466,000 |
Noncash financing and investing activities: | ||
Notes payable issued to sellers of Vintage Stock | 10,000,000 | 0 |
Conversion of accrued expense liabilities into common stock | 584,500 | 0 |
Conversion of accrued expense liability to Series B preferred stock | 2,800,000 | |
Accrued and unpaid dividends | 479 | 480 |
Note payable issued for purchase of noncontrolling interest | 0 | 500,000 |
Restated equipment deposit as a purchase of equipment in fiscal year 2016 | $ (1,816,855) | $ 0 |
1. Background and Basis of Pres
1. Background and Basis of Presentation | 9 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background and Basis of Presentation | The accompanying condensed 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 sized 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. The Company has three operating segments Manufacturing, Retail and Online (our new name for the previously named Marketplace Platform segment) and Services. With Marquis Industries, Inc., the Company is engaged in the manufacture and sale of carpet and the sale of vinyl and wood floorcoverings. With Vintage Stock, Inc. (“Vintage Stock”), the Company is engaged in the sale of new and used movies, music, collectibles, comics, books, games, game systems and components. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for audited financial statements. In the opinion of the Company’s management, this interim information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results of operations for three months and nine months ended June 30, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2017. This financial information should be read in conjunction with the consolidated financial statements and related notes thereto as of September 30, 2016 and for the fiscal year then ended included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 29, 2016 (the “2016 10-K”). All data for common stock, options and warrants have been adjusted to reflect the 1-for-6 reverse stock split (which took effect on December 5, 2016) for all periods presented. In addition, all common stock prices, and per share data for all periods presented have been adjusted to reflect the 1-for-6 reverse stock split. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 9 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Principles of Consolidation The accompanying condensed consolidated financial statements represent the consolidated financial position, results of operations and cash flows of Live Ventures Incorporated and its wholly-owned subsidiaries. O Non-Controlling Interest The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “ Consolidation, The net income (loss) 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, if applicable, 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 billings, the estimated reserve for doubtful current and long-term trade and other receivables, the estimated reserve for excess and obsolete inventory, estimated fair value and forfeiture rates for stock-based compensation, fair values in connection with the analysis of goodwill, other intangibles and long-lived assets for impairment, current portion of notes payable, valuation allowance against deferred tax assets and estimated useful lives for intangible assets and property and equipment. Financial Instruments Financial instruments consist primarily of cash equivalents, trade and other receivables, advances to affiliates and obligations under accounts payable, accrued expenses and notes payable. The carrying amounts of cash equivalents, trade receivables and other receivables, accounts payable, accrued expenses and short term notes payable approximate fair value because of the short maturity of these instruments. The fair value of the long-term debt is calculated based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements, unless quoted market prices were available (Level 2 inputs). Cash and Cash Equivalents Cash and Cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value. Trade Receivables The Company grants trade credit to customers under credit terms that it believes are customary in the industry it operates and does not require collateral to support customer trade receivables. Some of the Company’s trade receivables are factored primarily through two factors. Factored trade receivables are sold without recourse for substantially all of the balance receivable for credit approved accounts. The factor purchases the trade receivable(s) for the gross amount of the respective invoice(s), less factoring commissions, trade and cash discounts which is recorded as general and administrative expense. The factor charges the Company a factoring commission for each trade account, which is between 0.75-1.00% of the gross amount of the invoice(s) factored on the date of the purchase, plus interest calculated at 3.25%-6% per annum. The minimum annual commission due the factor is $75,000 per contract year. The total amount of trade receivables factored was $27,373,263 and $26,835,303 for the nine months ended June 30, 2017 and 2016, respectively. Reserve for Doubtful Accounts The Company maintains a reserve for doubtful accounts, which includes reserves for accounts and other receivables, customer refunds, dilution and fees from local exchange carrier billing aggregators and other uncollectible accounts. The reserve for doubtful accounts is based upon historical bad debt experience and periodic evaluations of the aging and collectability of the trade and other receivables. This reserve is maintained at a level which the Company believes is sufficient to cover potential credit losses and trade and other 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 trade and other receivables which helps reduce potential losses due to doubtful accounts. At June 30, 2017 and September 30, 2016, the allowance for doubtful accounts was $1,121,569 and $1,161,434, respectively. Inventories Manufacturing Segment Inventories are valued at the lower of the inventory’s cost (first in, first out basis) or the net realizable of the inventory. Management compares the cost of inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower. Management also reviews inventory to determine if excess or obsolete inventory is present and a reserve is made to reduce the carrying value for inventory for such excess and or obsolete inventory. At June 30, 2017 and September 30, 2016, the reserve for obsolete inventory was $91,940. Retail and Online Segment Merchandise Inventories are valued at the lower of cost or market generally using the average cost method which approximates first in first out or FIFO. Under the average cost method, as new product is received from vendors, its current cost is added to the existing cost of product on-hand and this amount is re-averaged over the cumulative units in inventory available for sale. Pre-owned products traded in by customers are recorded as merchandise inventory for the amount of cash consideration or store credit less any premiums given to the customer. Management reviews the merchandise inventory to make required adjustments to reflect potential obsolescence or over-valuation as a result of cost exceeding market. In valuing merchandise inventory, management considers quantities on hand, recent sales, potential price protections, returns to vendors and other factors. Management’s ability to assess these factors is dependent upon forecasting customer demand and to provide a well-balanced merchandise assortment. Merchandise Inventory valuation is adjusted based on anticipated physical inventory losses or shrinkage and actual losses resulting from periodic physical inventory counts. Merchandise inventory reserves as of June 30, 2017 and September 30, 2016 were $1,634,821 and $1,013,870, 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 using the straight-line method over the estimated useful lives of the assets ranging from three to forty years. Depreciation expense was $976,296 and $504,063 for the three months ended June 30, 2017 and 2016, respectively. Depreciation expense was $2,677,039 and $1,449,221 for the nine months ended June 30, 2017 and 2016, respectively. We periodically review our property and equipment when events or changes in circumstances indicate that their carrying amounts may not be recoverable or their depreciation or amortization periods should be accelerated. We assess recoverability based on several factors, including our intention with respect to our stores and those stores projected undiscounted cash flows. An impairment loss would be recognized for the amount by which the carrying amount of the assets exceeds their fair value, as approximated by the present value of their projected discounted cash flows. Goodwill and Intangibles The Company accounts for purchased goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed using a two-step approach required by ASC 350 to determine whether a goodwill impairment exists. The first step of the quantitative test is to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required and no impairment loss is recognized. If the carrying amount exceeds the fair value, then the second step is required to be completed, which involves allocating the fair value of the reporting unit to each asset and liability using the guidance in ASC 805 (“ Business Combinations, Accounting for Identifiable Intangible Assets in a Business Combination When performing the two-step quantitative impairment test, the Company's methodology includes the use of an income approach which discounts future net cash flows to their present value at a rate that reflects the Company's cost of capital, otherwise known as the discounted cash flow method ("DCF"). These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued market acceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the future cost structure of the businesses, and future technological changes. The Company also incorporates market multiples for comparable companies in determining the fair value of our reporting units. Any such impairment would be recognized in full in the reporting period in which it has been identified. The Company’s intangible assets consist of goodwill, customer relationships intangible, licenses for the use of internet domain names, Universal Resource Locators, or URL’s, software, and marketing and technology related intangibles. 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; software – 3 to 5 years, customer relationships – 15 years. Goodwill is not amortized, but evaluated for impairment on at least an annual basis. Intangible amortization expense is $113,245 and $435,747 for the three months and nine months ended June 30, 2017. Intangible amortization expense is $57,930 and $173,796 for the three months and nine months ended June 30, 2016. Revenue Recognition Manufacturing Segment The Manufacturing Segment derives revenue primarily from the sale of carpet products, including shipping and handling amounts, which 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. Retail and Online Segment The Retail and Online Segment derives product revenue primarily from in-store, direct online and fulfillment partner sales of new and used products. In-Store product revenue is recognized when the following revenue recognition criteria are met: the sales price is fixed or determinable, collection is reasonably assured and the customer takes possession of the merchandise. Revenue from the sales or our products is recognized at the time of sale, net of sales discounts and net of an estimated sales return reserve, based on historical return rates. We provide customers with the opportunity to trade in used merchandise in exchange for cash consideration or merchandise credit. Merchandise inventory is recorded at a cost equal to the cash offered to the customer. If a customer chooses merchandise credit, credit is issued for the amount of the cash offer plus a premium. Premiums associated with merchandise credit issued as a result of trade in transactions are recorded as expense in the period in which the credits are issued. Customer liabilities and other deferred revenues for our gift cards and customer credits are included in Accrued Liabilities. Currently, all direct online and fulfillment partner product revenue is recorded on a gross basis, as the Company is the primary obligor. In addition, the Retail and Online Segment derives 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 price to the buyer 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 remaining 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 recognizes revenue in 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. The Company evaluates the criteria outlined in ASC Topic 605-45, Principal Agent Considerations Revenues do not include sales taxes or other taxes collected from customers. Services Segment The Services Segment recognizes revenue from directory subscription services as billed for and accepted by the customer. Directory services revenue is billed and recognized monthly for directory services subscribed. The Company has utilized outside billing companies to perform direct ACH withdrawals. For billings via ACH withdrawals, revenue is recognized when such billings are accepted by the customer. Customer refunds are recorded as an offset to gross Services Segment revenue. Revenue for billings to certain customers that are billed directly by the Company and not through outside billing companies is recognized based on estimated future collections which are reasonably assured. The Company continuously reviews this estimate for reasonableness based on its collection experience. Shipping and Handling The Company classifies shipping and handling charged to customers as revenues and classifies costs relating to shipping and handling as cost of revenues. Customer Liabilities The Company establishes a liability upon the issuance of merchandise credits and the sale of gift cards. Revenue is subsequently recognized when the credits and gift cards are redeemed. In addition, breakage is recognized quarterly on unused customer liabilities older than two years to the extent that our management believes the likelihood of redemption by the customer is remote, based on historical redemption patterns. To the extent that future redemption patterns differ from those historically experienced, there will be variations in the recorded breakage. Breakage for the three months ended June 30, 2017 was $25,092. Breakage of $98,183 for the period of November 3, 2016 through June 30, 2017 is recorded in other income in our consolidated financial statements. 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 – 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. 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. 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. As of June 30, 2017 there are no uncertain tax positions for federal or state income tax purposes. The Company is not under audit in any jurisdiction. The Company’s policy is to record uncertain tax positions as a component of income tax expense. Lease Accounting We lease retail stores, warehouse facilities and office space. These assets and properties are generally leased under noncancelable agreements that expire at various dates through 2022 with various renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for minimum and, in some cases percentage rentals and require us to pay all insurance, taxes and other maintenance costs. Leases with step rent provisions, escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options and includes “rent holidays” (periods in which we are not obligated to pay rent). Cash or lease incentives received upon entering into certain store leases (“tenant improvement allowances”) are recognized on a straight-line basis as a reduction to rent expense over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options. We record the unamortized portion of tenant improvement allowances as a part of deferred rent. We do not have leases with capital improvement funding. Percentage rentals are based on sales performance in excess of specified minimums at various stores and are accounted for in the period in which the amount of percentage rentals can be accurately estimated. 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. Earnings Per Share Earnings per share is calculated in accordance with ASC 260, “ Earnings Per share Segment Reporting ASC Topic 280, “ Segment Reporting 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 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. There were no derivative financial instruments as of June 30, 2017 and September 30, 2016, respectively. Reclassifications Certain amounts in the prior year consolidated 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 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-08, Revenue from Contracts with customers In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products In February 2016, the FASB issued ASU 2016-02, Leases In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory ASU 2017-04 - ASU 2017-04, Simplifying the Test for Goodwill Impairment The ASU has staggered effective dates. A public business entity that is an SEC filer should prospectively adopt the ASU for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact that this standard will have on our consolidated financial statements. ASU 2016-18, Restricted Cash Statement of Cash Flows ASU 2016-09, Improvements to Employee Share-Based Payment Accounting ASU 2017-09, Scope of Modification Accounting Compensation – Stock Compensation 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 are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
3. Reclassifications and Restat
3. Reclassifications and Restatements | 9 Months Ended |
Jun. 30, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Reclassifications and Restatements | Our previously issued consolidated financial statements for quarter and nine months ended June 30, 2017 and September 30, 2016 have been reclassified and restated. Classification of Marquis and Vintage Stock lines of credit with both a subjective acceleration clause and lock box arrangement were not properly classified as current liabilities according to ASC 470. The Company determined that $17,375,442 of long-term debt should have been classified as a current liability in the condensed consolidated balance sheet. Characterization of deposits (advance payments) on the purchase of Marquis carpet manufacturing equipment and the related cash flow presentation (operating vs. investing) in the statement of cash flows was an error and not presented correctly. The Company determined that cash from operations was overstated and cash used in investing were overstated by $1,816,855 in the condensed consolidated statement of cash flows. Conversion features on convertible notes and related warrants issued in 2012, 2013 and 2014 required bifurcation and derivative liability accounting due to the down round protection features included within the agreements in accordance with ASC 815. On December 22, 2014, the Company executed an amendment to remove the down round provisions for the convertible notes and warrants. As a result of these errors, the Company determined that accumulated deficit and additional paid-in capital were understated by $6,238,516 of the condensed consolidated balance sheet. We reclassified $10,738 from Series E Preferred Stock to additional paid in capital. Other receivables of $711,668 have been reclassified to prepaid expenses and other current assets. Fiscal Quarter and Nine Months Ended June 30, 2017 As Previously Reported Change (Restated) Consolidated balance sheet as of June 30, 2017 Trade receivables, net $ 11,376,486 $ (711,668 ) $ 10,664,818 Prepaid expenses and other current assets 3,815,575 711,668 4,527,243 Total assets 125,722,016 125,722,016 Current portion of long- term debt 5,847,194 17,375,442 23,222,636 Long-term debt, net of current portion 70,104,445 (17,375,442 ) 52,729,003 Total liabilities 93,105,215 93,105,215 Paid in capital 56,841,245 6,249,254 63,090,499 Accumulated deficit (23,441,219 ) (6,238,516 ) (29,679,735 ) Series E convertible preferred stock 10,866 (10,738 ) 128 Total shareholders' equity 32,616,801 – 32,616,801 Consolidated statement of cash flows for the nine months ended June 30, 2017 Change in accounts receivable (2,888,320 ) (20,369 ) (2,908,689 ) Change in prepaid expenses and other current liabilities 2,104,859 (1,796,486 ) 308,373 Net cash provided by operations 8,830,128 (1,816,855 ) 7,013,273 Purchases of property and equipment (7,753,755 ) 1,816,855 (5,936,900 ) Net cash used in investing activities (55,150,965 ) 1,816,855 (53,334,110 ) |
4. Balance Sheet Detail Informa
4. Balance Sheet Detail Information | 9 Months Ended |
Jun. 30, 2017 | |
Disclosure Text Block Supplement [Abstract] | |
Balance Sheet Detail Information | June 30, September 30, 2017 2016 (Restated) Trade receivables, current, net: Accounts receivable, current $ 11,441,815 $ 8,419,626 Less: Reserve for doubtful accounts (776,997 ) (816,862 ) $ 10,664,818 $ 7,602,764 Trade receivables , long term, net: Accounts receivable, long term $ 344,572 $ 344,572 Less: Reserve for doubtful accounts (344,572 ) (344,572 ) $ – $ – Total trade receivables, net: Gross trade and other receivables $ 11,786,387 $ 8,764,198 Less: Reserve for doubtful accounts (1,121,569 ) (1,161,434 ) $ 10,664,818 $ 7,602,764 Components of reserve for doubtful accounts are as follows: Reserve for dilution and fees on amounts due from billing aggregators $ 1,063,617 $ 1,063,617 Reserve for customer refunds 1,042 1,230 Reserve for other trade receivables 56,910 96,587 $ 1,121,569 $ 1,161,434 Inventory Raw materials $ 7,708,749 $ 6,664,286 Work in progress 796,707 773,238 Finished goods, includes merchandise 26,967,407 4,721,371 35,472,863 12,158,895 Less: Inventory reserves (1,726,761 ) (1,105,810 ) $ 33,746,102 $ 11,053,085 Property and equipment, net: Building and improvements $ 7,515,236 $ 6,780,959 Transportation equipment 77,419 77,419 Machinery and equipment 17,317,941 10,211,565 Furnishings and fixtures 1,951,439 192,701 Office, computer equipment and other 214,807 216,793 27,076,842 17,479,437 Less: Accumulated depreciation (5,995,002 ) (3,464,936 ) $ 21,081,840 $ 14,014,501 Intangible assets, net: Domain name and marketing related intangibles $ 18,957 $ 18,957 Website and software related intangibles 1,525,308 – Customer Relationships intangible 439,039 439,039 Purchased software 1,500,000 1,500,000 3,483,304 1,957,996 Less: Accumulated amortization (703,953 ) (268,206 ) $ 2,779,351 $ 1,689,790 Accrued liabilities: Accrued payroll and bonuses $ 1,078,686 $ 922,299 Accrued software costs – 584,500 Accrued fee due Kingston Diversified Holdings LLC – 2,800,000 Accrued sales and property taxes 597,555 270,183 Deferred rent 440,684 4,092 Accrued gift card liability 289,520 – Accrued interest payable 467,506 – Accrued uncashed checks 815,338 – Customer deposits 303,568 169,965 Accrued expenses - other 1,101,115 1,645,733 $ 5,093,972 $ 6,396,772 |
5. Acquisition
5. Acquisition | 9 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisition | Vintage Stock Inc. On November 3, 2016 (the “Closing Date”), the Company, through its newly formed, wholly-owned subsidiary, VSAH, entered into a series of agreements in connection with its purchase of Vintage Stock. Vintage Stock is a retailer that sells, buys and trades new and used movies, books, collectibles, games, comics, music and other retail products. Total consideration paid was $57,653,698. The following table summarizes our preliminary allocation of the consideration paid to the respective fair values of the assets acquired and liabilities assumed in the Vintage Stock acquisition as of the closing date: Cash and cash equivalents $ 342,798 Trade and other receivables 113,500 Inventory 20,160,092 Prepaid expenses and other current assets 860,453 Property and equipment 2,084,246 Intangible - software 1,401,078 Goodwill 39,066,061 Notes payable (542,074 ) Accounts payable (3,843,510 ) Accrued expenses (1,988,946 ) Consideration paid $ 57,653,698 The preliminary purchase price allocation is subject to change. We will complete this analysis to determine the fair value of inventory, prepaid expenses and other current assets, property and equipment, intangibles, notes payable and accrued expenses on the acquisition date. The provisional goodwill recorded of $39,066,061 is the amount of the consideration given, less the preliminary purchase price allocation given to assets less liabilities assumed. Goodwill is not deductible for tax purposes. Once this analysis is complete, we will adjust, if necessary, the provisional amounts assigned to inventory, prepaid expenses and other current assets, property and equipment, intangibles, notes payable and accrued expenses in the accounting period in which the analysis is completed. In connection with the purchase of Vintage, there were no additional one-time expenses incurred during the last six months ended June 30, 2017. However, we incurred bank fees of $15,000, appraisal fees of $20,497, legal fees of $192,339 and consulting fees of $119,774 – for a total of $347,610 in one-time expenses; all of which was recorded as general and administrative expense during the first three months ended December 31, 2016. The Company issued $10,000,000 in subordinated acquisition notes payable to the sellers of Vintage Stock as more fully described in Note 6. The operating results of VSAH and Vintage Stock have been included in our unaudited condensed consolidated financial statements beginning on November 3, 2016 and are reported in our Retail and Online segment. The unaudited pro forma information below present statement of income data for the three and nine months ended June 30, 2016 as if the acquisition of Vintage took place on October 1, 2015. (Unaudited) Three Months Ended Nine Months Ended June 30, 2016 June 30, 2016 Net revenue $ 19,259,031 $ 58,632,726 Gross profit 11,080,557 32,739,140 Operating income 3,009,180 8,495,869 Net income 1,472,308 4,403,051 Earnings per basic common share $ 0.52 $ 1.57 |
6. Goodwill and Other Intangibl
6. Goodwill and Other Intangibles | 9 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles | The Company’s intangible assets consist of goodwill, customer relationships intangible, licenses for the use of internet domain names, Universal Resource Locators, or URL’s, software, and marketing and technology related intangibles. 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; software – 5 years, customer relationships – 15 years. Goodwill is not amortized, but evaluated for impairment on at least an annual basis. The following summarizes estimated future amortization expense related to intangible assets that have net balances as of June 30, 2017: 2018 $ 751,991 2019 751,991 2020 500,534 2021 243,555 2022 243,555 Thereafter (287,725 ) $ 2,779,351 |
7. Notes Payable
7. Notes Payable | 9 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | Bank of America Revolver Loan On July 6, 2015, Marquis entered into a $15 million revolving credit agreement with Bank of America Corporation (“BofA Revolver”). The BofA Revolver is a five-year, asset-based facility that is secured by substantially all of Marquis assets. Availability under the Bank of America Revolver is subject to a monthly borrowing base calculation. Payment obligations under the BofA Revolver include monthly payments of interest and all outstanding principal and accrued interest thereon due in July 2020, which is when the BofA Revolver loan agreement terminates. The BofA Revolver is recorded as a current liability due to a lockbox requirement, and a subjective acceleration clause as part of the agreement. Borrowing availability under the BofA Revolver is limited to a borrowing base which allows Marquis to borrow up to 85% of eligible accounts receivable, plus the lesser of 1) $7,500,000; 2) 65% of the value of eligible inventory; or 3) 85% of the appraisal value of the eligible inventory. For purposes of clarity and definition of the advance rate for inventory – it shall be 55.3% for raw materials, 0% for work-in-process and 70% for finished goods subject to eligibility, special reserves and advance limit. Letters of credit reduce the amount available to borrow under the BofA Revolver by an amount equal to the face value of the letters of credit. As of February 22, 2017, Marquis’s ability to make prepayments against Marquis subordinated debt including the related party loan with Isaac Capital Group and pay cash dividends is generally permitted if 1) excess availability under the BofA Revolver is more than $4 million, and has been for each of the 90 days preceding the requested distribution and 2) excess availability under the BofA Revolver is more than $4 million, and the fixed charge coverage ratio, as calculated on a pro-forma basis for the prior 12 months is 2:1 or greater. Restrictions apply to our ability to make additional prepayments against Marquis subordinated debt and pay cash dividends if the fixed charge coverage ratio, as calculated on a pro-forma basis for the prior 12 months is less than 2:1 and excess availability under the BofA Revolver is less than $4 million at the time of payment or distribution. There is no restriction on dividends that can be taken by the Company so long as Marquis maintains $4 million of current availability at the time of the dividend or distribution. This translates to having no restriction on Net Income so long as the Company retains sufficient assets to establish $4 million of current availability and continues to meet the required fixed charge coverage ratio of 2:1 as stated above. The BofA Revolver places certain restrictions and covenants on Marquis, including a limitation on asset sales, additional liens, investment, loans, guarantees, acquisitions, incurrence of additional indebtedness for Marquis 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. The Bank of America Revolver 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 determine the interest rate to be charged Marquis which is based on the fixed charge coverage ratio achieved. Level Fixed Charge Coverage Ratio Base Rate Revolver LIBOR Revolver Base Rate Term 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% 2.50% On October 20, 2016, it was agreed that Level IV interest rates would be applicable until October 20, 2017, and then the Level would be adjusted up or down on a quarterly basis going forward based upon the above fixed coverage ratio achieved by Marquis. The BofA Revolver provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with covenants, change in control of Marquis, a material representation or warranty made by us or the borrowers proving to be false in any material respect, certain bankruptcy, insolvency or receivership events affecting Marquis or its subsidiaries, defaults relating to certain other indebtedness, imposition of certain judgments and mergers or the liquidation of Marquis or certain of its subsidiaries. During the period of October 1, 2016 through June 30, 2017, Marquis cumulatively borrowed $68,597,210 and repaid $63,553,469 under the BofA Revolver. Our maximum borrowings outstanding during the same period were $7,770,651. Our weighted average interest rate on those outstanding borrowings for the period of October 1, 2016 through June 30, 2017 was 3.42%. As of June 30, 2017, total additional availability under the BofA Revolver was $6,989,630; with $5,266,331 outstanding, and outstanding standby letters of credit of $72,715. Real Estate Transaction On June 14, 2016, Marquis entered into a transaction with Store Capital Acquisitions, LLC. The transaction included a sale-leaseback of land owned by Marquis and a loan secured by the improvements on such land. The total aggregate proceeds received from the sale of the land and the loan was $10,000,000, which consisted of $644,479 from the sale of the land and a note payable of $9,355,521. In connection with the transaction, Marquis entered into a lease with a 15 year term commencing on the closing of the transaction, which provides Marquis an option to extend the lease upon the expiration of its term. The initial annual lease rate is $59,614. The proceeds from this transaction were used to pay down the Bank of America Revolver and Term loans, and related party loan, as well as purchasing a building from the previous owners of Marquis that was not purchased in the July 2015 transaction. The note payable bears interest at 9.25% per annum, with principal and interest due monthly. The note payable matures June 13, 2056. For the first five years of the note payable, there is a pre-payment penalty of 5%, which declines by 1% for each year the loan remains un-paid. At the end of 5 years, there is no pre-payment penalty. In connection with the note payable, Marquis incurred $457,757 in transaction costs that are being recognized as a debt issuance cost that is being amortized and recorded as interest expense over the term of the note payable. Kingston Diversified Holdings LLC Agreement ($2 Million Line of Credit) On December 21, 2016, the Company and Kingston Diversified Holdings LLC (“Kingston”) entered into an agreement modifying its agreement between the parties. This agreement, effective September 15, 2016, memorializes an October 2015 interim agreement to extend the maturity date by twelve months for 55,888 shares of to be issued and certificated Series B Convertible Preferred shares with a value on September 15, 2016 of $2,800,000 as a compromise between the parties in respect of certain of their respective rights and duties under the agreement. The agreement also decreases the maximum principal amount of the Notes from $10,000,000 in principal amount to $2,000,000 in principal amount, and eliminates any and all actual, contingent, or other obligations of the Company to issue to the Purchaser any shares of the Company’s common stock, or to grant any rights, warrants, options, or other derivatives that are exercisable or convertible into shares of the Company’s common stock. Kingston acknowledges that from the effective date through and including December 31, 2021, it shall not sell, transfer, assign, hypothecate, pledge, margin, hedge, trade, or otherwise obtain or attempt to obtain any economic value from any of the shares or any shares into which they may be converted or from which they may be exchanged. As a result of this agreement, the Company recorded $2,800,000 as an outstanding accrued liability as of September 30, 2016. As of June 30, 2017 and September 30, 2016, the Company had no borrowings on the Kingston line of credit. On December 29, 2016 the Company issued 55,888 shares of Series B Convertible Preferred shares in settlement of the outstanding accrued liability due Kingston of $2,800,000. Equipment Loans On June 20, 2016 and August 5, 2016, Marquis entered into a transaction which provided for a master agreement and separate loan schedules (“the Equipment Loans”) with Banc of America Leasing & Capital, LLC which provided: Note #1 is $5 million, secured by equipment. The Equipment Loan #1 is due September 23, 2021, payable in 59 monthly payments of $84,273 beginning September 23, 2016, with a final payment in the sum of $584,273, interest at 3.8905% per annum. Note #2 is $2,209,807, secured by equipment. The Equipment Loan #2 is due January 30, 2022, payable in 59 monthly payments of $34,768 beginning January 30, 2017, with a final payment in the sum of $476,729, interest at 4.63% per annum. Note #3 is $3,679,514, secured by equipment. The Equipment Loan #3 is due December 30, 2023, payable in 84 monthly payments of $51,658 beginning January 30, 2017, with a final payment due December 30, 2023, interest rate at 4.7985% per annum. Note #4 is $1,095,113, secured by equipment. The Equipment Loan#4 is due December 30, 2023, payable in 81 monthly payments of $15,901 beginning April 30, 2017, with final payment due December 30, 2023, interest at 4.8907% per annum. Texas Capital Bank Revolver Loan On November 3, 2016, Vintage Stock entered into a $20 million credit agreement with Texas Capital Bank (“TCB Revolver”). The TCB Revolver is a five-year, asset-based facility that is secured by substantially all of Vintage Stock’s assets. Availability under the TCB Revolver is subject to a monthly borrowing base calculation. Payment obligations under the TCB Revolver include monthly payments of interest and all outstanding principal and accrued interest thereon due in November 2020, which is when the TCB Revolver loan agreement terminates. The TCB Revolver has been classified as a current liability due to a lockbox requirement and a subjective acceleration clause as part of the agreement. Borrowing availability under the TCB Revolver is limited to a borrowing base which allows Vintage Stock to borrow up to 95% of the appraisal value of the inventory, plus 85% of eligible receivables, net of certain reserves. The borrowing base provides for borrowing up to 95% of the appraisal value for the period of November 4, 2016 through December 31, 2016, then 90% of the appraisal value during the fiscal months of January through September and 92.5% of the appraisal value during the fiscal months of October through December. Letters of credit reduce the amount available to borrow under the TCB Revolver by an amount equal to the face value of the letters of credit. Vintage Stock’s ability to make prepayments against Vintage Stock subordinated debt including the Capitala Term Loan and pay cash dividends is generally permitted if 1) excess availability under the TCB Revolver is more than $2 million, and is projected to be within 12 months after such payment and 2) excess availability under the TCB Revolver is more than $2 million, and the fixed charge coverage ratio, as calculated on a pro-forma basis for the prior 12 months is 1.2:1.0 or greater. Restrictions apply to our ability to make additional prepayments against Vintage subordinated debt including the Capitala Term Loan and pay cash dividends if the fixed charge coverage ratio, as calculated on a pro-forma basis for the prior 12 months is less than 1.2:1.0 and excess availability under the TCB Revolver is less than $2 million at the time of payment or distribution. There is no restriction on dividends that can be taken by the Company so long as Vintage maintains $2 million of current availability at the time of the dividend or distribution. This translates to having no restriction on Net Income so long as the Company retains sufficient assets to establish $2 million of current availability and continues to meet the required fixed charge coverage ratio of 1.2:1 as stated above. The TCB Revolver places certain restrictions on Vintage Stock, including a limitation on asset sales, a limitation of 25 new leases in any fiscal year, additional liens, investment, loans, guarantees, acquisitions and incurrence of additional indebtedness. The per annum interest rate under the TCB Revolver is variable and is equal to the one-month LIBOR rate for deposits in United States Dollars that appears on Thomson Reuters British Bankers Association LIBOR Rates Page (or the successor thereto) as of 11:00 a.m., London, England time, on the applicable determination date plus a margin of 2.75%. The TCB Revolver provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with covenants, change in control of Vintage Stock, a material representation or warranty made by us or the borrowers proving to be false in any material respect, certain bankruptcy, insolvency or receivership events affecting Vintage Stock, defaults relating to certain other indebtedness, imposition of certain judgments and mergers or the liquidation of Vintage Stock. During the period of November 3, 2016 through June 30, 2017, Vintage Stock cumulatively borrowed $59,904,850 and repaid $47,795,739 under the TCB Revolver. Our maximum borrowings outstanding during the period of November 3, 2016 through June 30, 2017 were $14,460,716. Our weighted average interest rate on those outstanding borrowings for the period of November 3, 2016 through June 30, 2017 was 3.45560%. As of June 30, 2017, total additional availability under the TCB Revolver was $2,789,415, with $12,109,111 outstanding; and outstanding standby letters of credit of $0. In connection with the TCB Revolver, Vintage incurred $25,000 in transaction cost that is being recognized as debt issuance cost that is being amortized and recorded as interest expense over the term of the TCB Revolver. Capitala Term Loan On November 3, 2016, the Company, through VSAH, entered into a series of agreements in connection with its purchase of Vintage Stock. As a part of those agreements, VSAH and Vintage Stock (the “Term Loan Borrowers”) obtained $29,871,650 of mezzanine financing from the Lenders as defined in the term loan agreement (the “Term Loan Lenders”), and Capitala Private Credit Fund V, L.P., in its capacity as lead arranger. Wilmington Trust, National Association, acts as administrative and collateral agent on behalf of the Term Loan Lenders (the “Term Loan Administrative Agent”). The Term loans under the term loan agreement (collectively the “Capitala Term Loan”) bear interest at the LIBO rate (as described below) or base rate, plus an applicable margin in each case. In their loan notice to the Term Loan Administrative Agent, the Term Loan Borrowers selected the LIBO rate for the initial term loans made under the term loan agreement on the Closing Date. The interest rate for LIBO rate loans under the term loan agreement is equal to the sum of (a) the greater of (i) a rate per annum equal to (A) the offered rate for deposits in United States Dollars for the applicable interest period and for the amount of the applicable loan that is a LIBOR loan that appears on Bloomberg ICE LIBOR Screen (or any successor thereto) that displays an average ICE Benchmark Administration Limited Interest Settlement Rate for deposits in United States Dollars (for delivery on the first day of such interest period) with a term equivalent to such interest period, determined as of approximately 11:00 a.m. (London time) two business days prior to the first day of such interest period, divided by (B) the sum of one minus the daily average during such interest period of the aggregate maximum reserve requirement (expressed as a decimal) then imposed under Regulation D of the Federal Reserve Board for “Eurocurrency Liabilities” (as defined therein), and (ii) 0.50% per annum, plus plus The interest rate for base rate loans under the term loan agreement is equal to the sum of (a) the highest of (with a minimum of 1.50%) (i) the federal funds rate plus 0.50%, (ii) the prime rate, and (iii) the LIBO rate plus 1.00%, plus plus The payment obligations under the term loan agreement include (i) monthly payments of interest and (ii) principal installment payments in an amount equal to $725,000 due on March 31, June 30, September 30, and December 31 of each year, with the first such payment due on December 31, 2016. The outstanding principal amounts of the term loans and all accrued interest thereon under the Term Loan Agreement are due and payable in November 2021. The Term Loan Borrowers may prepay the term loans under the term loan agreement from time to time, subject to the payment (with certain exceptions described below) of a prepayment premium of: (i) an amount equal to 2.0% of the principal amount of the term loan prepaid if prepaid during the period of time from and after the Closing Date up to the first anniversary of the Closing Date; (ii) 1.0% of the principal amount of the term loan prepaid if prepaid during the period of time from and after the first anniversary of the Closing Date up to the second anniversary of the Closing Date; and (iii) zero if prepaid from and after the second anniversary of the Closing Date. The Term Loan Borrowers may make the following prepayments of the term loans under term loan agreement without being required to pay any prepayment premium: (i) an amount not to exceed $3 million of the term loans; (ii) in addition to any amount prepaid in respect of item (i), an additional amount not to exceed $1.45 million, but only if that additional amount is paid prior to the first anniversary of the Closing Date; and (iii) in addition to any amount prepaid in respect of item (i), an additional amount not to exceed the difference between $2.9 million and any amount prepaid in respect of item (ii), but only if that additional amount is paid from and after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date. There are also various mandatory prepayment triggers under the term loan agreement, including in respect of excess cash flow, dispositions, equity and debt issuances, extraordinary receipts, equity contributions, change in control, and failure to obtain required landlord consents. Our weighted average interest rate on our Capitala Term Loan outstanding borrowings for the period of November 3, 2016 through June 30, 2017 was 16.31554%. In connection with the Capitala Term Loan, Vintage incurred $1,088,000 in transaction cost that is being recognized as debt issuance cost that is being amortized and recorded as interest expense over the term of the Capitala Term Loan. Sellers Subordinated Acquisition Note In connection with the purchase of Vintage Stock., on November 3, 2016, VSAH and Vintage Stock entered into a seller financed mezzanine loan in the amount of $10 million with the previous owners of Vintage Stock. The Sellers Subordinated Acquisition Note bears interest at 8% per annum, with interest payable monthly in arrears. The Sellers Subordinated Acquisition Note matures five years and six months from November 3, 2016. We are currently in compliance with all covenants under our existing revolving and other loan agreements. Long-term debt as of June 30, 2017 and September 30, 2016 consisted of the following: June 30, September 30, 2017 2016 (Restated) Bank of America Revolver Loan - variable interest rate based upon a base rate plus a margin, interest payable monthly, maturity date July 2020, secured by substantially all Marquis assets $ 5,266,331 $ 222,590 Texas Capital Bank Revolver Loan - variable interest rate based upon the one-month LIBOR rate plus a margin, interest payable monthly, maturity date November 2020, secured by substantially all Vintage Stock assets 12,109,111 – Note Payable Capitala Term Loan - variable interest rate based upon a base rate plus a margin, 3% per annum interest payable in kind, with the balance of interest payable monthly in cash, principal due quarterly in the amount of $725,000, maturity date November 2021, note subordinate to Texas Capital Bank Revolver Loan, secured by Vintage Stock Assets 28,415,651 – Note Payable to the Sellers of Vintage Stock, interest at 8% per annum, with interest payable monthly, maturity date May 2022, note subordinate to both Texas Capital Bank Revolver and Capitala Term Loan, secured by Vintage Stock Assets 10,000,000 – Note #1 Payable to Banc of America Leasing & Capital LLC - interest at 3.8905% per annum, with interest and principal payable monthly in the amount of $84,273 for 59 months, beginning September 23, 2016, with a final payment due in the amount of $584,273, maturity date September 2021, secured by equipment 4,309,354 4,931,937 Note #2 Payable to Banc of America Leasing & Capital LLC - interest at 4.63% per annum, with interest and principal payable monthly in the amount of $34,768 for 59 months, beginning January 30, 2017, with a final payment due in the amount of $476,729, maturity date January 2022, secured by equipment 2,050,830 – Note #3 Payable to Banc of America Leasing & Capital LLC - interest at 4.7985% per annum with interest and principal payable monthly in the amount of $51,658 for 84 months, beginning January 30, 2017, secured by equipment. 3,455,617 – Note #4 Payable to Banc of America Leasing & Capital LLC - interest at 4.8907% per annum, with interest and principal payable monthly in the amount of $15,901 for 81 months, beginning April 30, 2017, secured by equipment. 1,060,659 – Note Payable to Store Capital Acquisitions, LLC, - interest at 9.25% per annum, with interest and principal payable monthly in the amount of $73,970 for 480 months, beginning July 1, 2016, maturity date of June 2056, secured by Marquis land and buildings 9,334,312 9,351,796 Note Payable to Cathay Bank, variable interest rate, Prime Rate plus 2.50%, with interest payable monthly, maturity date December 2017, secured by substantially all Modern Everyday assets 180,346 198,569 Note Payable to Cathay Bank, variable interest rate, Prime Rate plus 1.50%, with interest payable monthly, maturity date December 2017, secured by substantially all Modern Everyday assets 249,766 249,766 Note payable to individual, interest at 11% per annum, payable on a 90 day written notice, unsecured 206,529 206,529 Note payable to individual, interest at 10% per annum, payable on a 90 day written notice, unsecured 500,000 500,000 Note payable to individual, interest at 8.25% per annum, payable on a 120 day written demand notice, unsecured 225,000 225,000 Total long-term debt 77,363,506 15,886,187 Less unamortized debt issuance costs (1,411,867 ) (414,025 ) Net amount 75,951,639 15,472,162 Less current portion (23,222,636 ) (2,011,880 ) Long-term portion $ 52,729,003 $ 13,460,282 Future maturities of debt at June 30, 2017 are as follows which does not include related party debt separately stated: Years ending June 30, 2018 $ 23,456,680 2019 4,801,499 2020 4,887,193 2021 4,976,861 2022 18,889,319 Thereafter 20,351,954 Total $ 77,363,506 |
8. Note Payable, Related Party
8. Note Payable, Related Party | 9 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Note Payable, Related Party | In connection with the purchase of Marquis by the Company, Marquis entered into a mezzanine loan in the amount of up to $7,000,000 with 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. As of June 30, 2017 and September 30, 2016, there was $2,000,000 outstanding on this mezzanine loan. |
9. Stockholders' Equity
9. Stockholders' Equity | 9 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Series B Convertible Preferred Stock On December 27, 2016 the Company established a new series of preferred stock, Series B Convertible Preferred Stock. The shares, as a series, are entitled to dividends on our Common Stock as declared by the Board of Directors, in an amount equal to $1.00 (in the aggregate for all then-issued and outstanding shares of Series B Convertible Preferred Stock). The series does not have any redemption rights [or Stock basis, except as otherwise required by the Nevada Revised Statutes. The series does not provide for any specific allocation of seats on the Board of Directors. At any time and from time to time, the shares of Series B Convertible Preferred Stock are convertible into shares of Common Stock at a ratio of one series B preferred share into five shares of common stock, subject to equitable adjustment in the event of forward stock splits and reverse stock splits. The holders of shares of the Series B Convertible Stock have agreed not to sell transfer, assign, hypothecate, pledge, margin, hedge, trade, or otherwise obtain or attempt to obtain any economic value from any of such shares or any shares into which they may be converted (e.g., common stock) or for which they may be exchanged. This “lockup” agreement expires on December 31, 2021. Our Warrant Agreements with ICG have been amended to provide that the shares underlying those warrants are exercisable into shares of Series B Convertible Preferred Stock, which warrant shares are also subject to the same “lockup” agreement as the currently outstanding shares of Series B Convertible Preferred Stock. During the nine months ended June 30, 2017, the Company issued: 55,888 shares of Series B Convertible Preferred Stock were issued to Kingston Diversified Holdings LLC on December 29, 2016 to settle and pay for an outstanding accrued liability in the amount of $2,800,000. The 55,888 shares of Series B Convertible Preferred Stock issued is convertible at an exchange ratio of (five) shares of common stock for each share of Series B Convertible Preferred Stock, or 279,440 shares of common stock. 158,356 shares of Series B Convertible Preferred Stock were issued to Isaac Capital Group (“ICG”) on December 27, 2016 in exchange for 791,758 shares of our common stock at an exchange ratio of (five) shares of common stock for each share of Series B Convertible Preferred Stock. Series E Convertible Preferred Stock As of June 30, 2017, there were 127,840 shares of series E convertible preferred stock issued and outstanding. The shares accrue dividends at the rate of 5% per annum on the liquidation preference per share, payable quarterly from legally available funds. The shares carry a cash liquidation preference of $0.30 per share, plus any accrued but unpaid dividends. 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 shares of our common stock on a one-to-one basis together with payment of $85.50 per converted share. Series E Convertible Preferred Stock Dividends During the nine months ended June 30, 2017 and June 30, 2016, the Company accrued dividends of $1,438 and $1,438, respectively, payable to holders of Series E preferred stock. As of June 30, 2017 and September 30, 2016 unpaid dividends were $479 and $959, respectively. Common Stock On November 22, 2016, the Company’s board of directors authorized a one-for-six reverse stock split and a contemporaneous one-for-six (1:6) reduction in the number of authorized shares of common stock from 60,000,000 to 10,000,000 shares, to take effect for stockholders of record as of December 5, 2016. No fractional shares were issued. All share, option and warrant related information presented in these financial statements and accompanying footnotes has been retroactively adjusted to reflect the decreased number of shares resulting in this action. During the three months ended June 30, 2017, the Company did not issue any common shares. During the nine months ended June 30, 2017, the Company issued: 58,334 of common stock were issued to Novalk Apps S.A.S. on December 28, 2016 to settle and pay for an outstanding accrued liability in the amount of $584,500. The value was based on the market value of the Company’s common stock on the date of issuance. 2,284 of common stock were issued to various holders of fractional shares of the Company’s common stock pursuant to the 1:6 stock split effective for stockholders of record on December 5, 2016. All fractional shares of the Company’s common stock were eliminated. During the nine months ended June 30, 2016, the Company issued: 2,158 shares of common stock for services rendered at $20,000. The value was based on the market value of the Company’s common stock on the date of issuance. Treasury Stock For the year ended September 30, 2016, the Company purchased 30,122 shares of its common stock in the open market (treasury shares) for $300,027. For the three month and nine month periods ended June 30, 2017, the Company purchased 47,651 additional shares of its common stock in the open market (treasury shares) for $496,366. The Company accounted for the purchase of these treasury shares using the cost method. 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 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 directors, officer, employees, consultants and advisors. The Company has reserved up to 300,000 shares of common stock for issuance under the 2014 Plan. The Company’s stockholders approved the 2014 Plan on July 11, 2014. |
10. Series B Convertible Prefer
10. Series B Convertible Preferred Stock Warrants | 9 Months Ended |
Jun. 30, 2017 | |
Warrants and Rights Note Disclosure [Abstract] | |
Series B Convertible Preferred Stock Warrants | 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 outstanding at June 30, 2017: Number of units - Series B Convertible preferred warrants Weighted Average Exercise Weighted Average Remaining Contractual Term (in years) Intrinsic Value Outstanding at September 30, 2016 118,029 $ 20.80 1.73 $ 4,307,493 Granted – Exercised – Outstanding at June 30, 2017 118,029 $ 10.34 0.98 $ 3,646,530 Exercisable at June 30, 2017 118,029 $ 10.34 0.98 $ 3,646,530 Most of the above warrants were issued in connection with the conversion of convertible notes from ICG. When the debts were converted and warrants were issued; the Company determined the fair value of the warrants using the Black-Scholes-Merton model and took a charge to interest expense at the date of issuance. On December 27, 2016, ICG and the Company agreed to amend and exchange the common stock warrants for warrants to purchase shares of Series B Convertible Preferred Stock, and the number of warrants held adjusted by an exchange ratio of 5:1 shares of common stock for shares of Series B Convertible Preferred Stock. ICG, the holder of the warrants outstanding, is not permitted to sell, transfer, assign, hypothecate, pledge, margin, hedge, trade or otherwise obtain or attempt to obtain any economic value from the shares of Series B Convertible Preferred Stock should the warrants be exercised prior to December 31, 2021. All warrant related information presented in these condensed consolidated financial statements and accompanying footnotes has been retroactively adjusted to reflect the conversion of all common stock warrants outstanding to warrants to purchase shares of Series B Convertible Preferred Stock resulting in this action. The exercise price for the warrants outstanding and exercisable into shares of Series B Convertible Preferred Stock at June 30, 2017 is as follows: Series B Convertible Preferred Outstanding Exercisable Number of Exercise Number of Exercise Warrants Price Warrants Price 54,396 $ 16.60 54,396 $ 16.60 17,857 16.80 17,857 16.80 12,383 24.30 12,383 24.30 33,393 28.50 33,393 28.50 118,029 118,029 |
11. Stock-based Compensation
11. Stock-based Compensation | 9 Months Ended |
Jun. 30, 2017 | |
Share-based Compensation [Abstract] | |
Stock-based Compensation | From time to time, the Company grants stock options and restricted stock awards to directors, officers and employees. These awards are valued at the grant date by determining the 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 nine months ended June 30, 2017: Weighted Weighted Average Average Number of Exercise Remaining Shares Price Contractual Life Intrinsic Value Outstanding at September 30, 2016 175,000 $ 11.22 3.75 $ 346,500 Granted 36,668 Exercised – Forfeited – Outstanding at June 30, 2017 211,668 $ 13.19 3.73 $ 248,500 Exercisable at June 30, 2017 175,000 $ 9.29 2.49 $ 248,500 The Company recognized compensation expense of $43,028 and $163,482 for the three months ended June 30, 2017 and 2016, respectively. The Company recognized compensation expense of $137,011 and $254,710 during the nine months ended June 30, 2017 and 2016, respectively, related to stock option awards granted to certain employees and officers based on the grant date fair value of the awards, net of estimated forfeitures. At June 30, 2017, the Company has $428,306 of unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the company expects to recognize as compensation expense through December of 2021. The exercise price for stock options outstanding and exercisable outstanding at June 30, 2017 is as follows: Outstanding Exercisable Number of Exercise Number of Exercise Options Price Options Price 31,250 $ 5.00 31,250 $ 5.00 25,000 7.50 25,000 7.50 31,250 10.00 31,250 10.00 4,167 10.86 4,167 10.86 4,167 10.86 4,167 10.86 6,250 12.50 6,250 12.50 6,250 15.00 6,250 15.00 75,000 15.18 75,000 15.18 4,000 23.41 4,000 27.60 4,000 31.74 4,000 36.50 4,000 41.98 211,668 175,000 The following table summarizes information about the Company’s non-vested shares outstanding as of June 30, 2017: Weighted Average Number of Grant-Date Non-vested Shares Shares Fair Value Non-vested at September 30, 2016 6,250 $ 14.22 Granted 36,668 $ 17.70 Vested (6,250 ) $ 14.22 Non-vested at June 30, 2017 36,668 $ 17.70 Options were granted during 2017 and 2016, where the exercise price was less than the common stock price at the date of grant or where the exercise price was greater than the common stock price at the date of grant. The assumptions used in calculating the fair value of stock options granted use the Black-Scholes option pricing model for options granted were as follows: Risk-free interest rate 1.25% Expected life of the options 5.0 to 10.0 years Expected volatility 107% Expected dividend yield 0% |
12. Earnings Per Share
12. Earnings Per Share | 9 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Net earnings per share is calculated using the weighted average number of shares of common stock outstanding during the applicable period. Basic weighted average shares of common stock 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 earnings per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential shares of common stock consist of the additional shares of common stock issuable in respect of restricted share awards, stock options and convertible preferred stock. Preferred stock dividends are subtracted from net earnings to determine the amount available to common stockholders. The following table presents the computation of basic and diluted net earnings per share: Three Months Ended June 30, Nine Months Ended June 30, 2017 2016 2017 2016 Basic Net income attributed to Live Ventures Incorporated $ 2,128,043 $ 13,368,197 $ 5,397,282 $ 14,762,853 Less: preferred stock dividends (479 ) (479 ) (1,438 ) (1,438 ) Net income applicable to common stock $ 2,127,564 $ 13,367,718 $ 5,395,844 $ 14,761,415 Weighted average common shares outstanding 2,044,767 2,806,060 2,289,646 2,813,192 Basic earnings per share $ 1.04 $ 4.76 $ 2.36 $ 5.25 Diluted Net income (loss) applicable to common stock $ 2,127,564 $ 13,367,718 $ 5,395,844 $ 14,761,415 Add: preferred stock dividends 479 479 1,438 1,438 Net income applicable for diluted earnings per share $ 2,128,043 $ 13,368,197 $ 5,397,282 $ 14,762,853 Weighted average common shares outstanding 2,044,767 2,806,060 2,289,646 2,813,192 Add: Options 35,296 21,396 53,081 19,964 Add: Common Stock Warrants – 341,716 – 331,511 Add: Series B Preferred Stock 1,071,200 – 1,071,200 – Add: Series B Preferred Stock Warrants 590,145 – 590,145 – Add: Series E Preferred Stock 127,840 127,840 127,840 127,840 Assumed weighted average common shares outstanding 3,869,248 3,297,012 4,131,912 3,292,507 Diluted earnings per share $ 0.55 $ 4.05 $ 1.31 $ 4.48 There are 124,168 and 111,668 common stock options that are anti-dilutive that are not included in the three month and nine months ended June 30, 2017 diluted earnings per share computations, respectively. |
13. Related Party Transactions
13. Related Party Transactions | 9 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | For the three months ended June 30, 2017 and 2016, the Company recognized total interest expense of $63,194 and $127,280, respectively. During the nine months ended June 30, 2017 and June 30, 2016, the Company recognized total interest expense of $189,583 and $498,510, respectively, associated with the ICG notes. The two outstanding Cathay Bank notes are guaranteed by Tony Isaac, a director of the company. Also see Notes 7, 8 and 9. |
14. Commitments and Contingenci
14. Commitments and Contingencies | 9 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 dames 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 which a ruling or settlement occurs. However, based on information available to the Company’s management to date, the Company’s management does not expect that the outcome of any matter pending against us is likely to have a materially adverse effect on the Company’s consolidated financial position as of June 30, 2017, results of operations, cash flows or liquidity of the Company. |
15. Income Taxes
15. Income Taxes | 9 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The income tax rate for the six months ended June 30, 2017 and June 30, 2016 was 39.5% and (388.6)% respectively. The effective income tax rate differs than the U.S. federal statuary rate primarily due to state taxes, changes in valuation allowances, and certain non-deductible expenses. As of June 30, 2017, and June 30, 2016 the Company had no uncertain tax positions. There was no goodwill impairment. The Company is subject to taxation and files income tax returns in the U.S., and various state jurisdictions. The Company is subject to audit for U.S. purposes for the current and prior three years; and for state purposes the current and prior four years. The Company has net operating loss carry-forwards of approximately $23.3 million for U.S. income tax purposes, these net operating loss carryforwards are subject to IRC Section 382 limitations and begin to expire in 2027. In June of 2016, the Company removed and released $12,174,931 of valuation allowance relative to its deferred tax assets. ASC 740-10-30 provides that a valuation allowance should be recorded for any portion of a company’s deferred tax assets not expected to be realized in the future. All available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets. Future realization of the tax benefit ultimately depends on the existence of sufficient taxable income. In consideration of all of the available evidence, management made the decision that it is more likely than not the Company’s entire deferred tax asset will be realized in future years and the valuation allowance should be removed. |
16. Concentration of Credit Ris
16. Concentration of Credit Risk | 9 Months Ended |
Jun. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | The Company maintains cash balances at banks in California, Idaho, New Mexico, Colorado, Texas, Missouri, Nevada, Oklahoma, Illinois, Arkansas and Georgia. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 per institution as of June 30, 2017. At times, balances may exceed federally insured limits. |
17. Segment Reporting
17. Segment Reporting | 9 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting | The Company operates in three segments which are characterized as: (1) Manufacturing, (2) Retail and Online and (3) Services. The Manufacturing Segment consists of Marquis Industries, the Retail and Online segment consists of Vintage Stock, Modern Everyday and LiveDeal.com, and the Services segment consists of the directory services business. The following tables summarize segment information for the three and nine months ended June 30, 2017 and 2016: Three Months Ended June 30, Nine Months Ended June 30, 2017 2016 2017 2016 Revenues Retail and Online $ 19,267,959 $ 508,099 $ 54,020,215 $ 5,284,851 Manufacturing 21,898,645 19,243,019 57,429,871 53,881,143 Services 210,889 243,245 652,496 772,726 $ 41,377,493 $ 19,994,363 $ 112,102,582 $ 59,938,720 Gross profit Retail and Online $ 10,953,602 $ (616,754 ) $ 30,105,864 $ 1,233,705 Manufacturing 5,839,412 5,483,896 15,388,787 15,143,363 Services 200,883 232,272 619,848 738,420 $ 16,993,897 $ 5,099,414 $ 46,114,499 $ 17,115,488 Operating income (loss) Retail and Online $ 2,268,438 $ (2,228,857 ) $ 6,547,564 $ (4,378,431 ) Manufacturing 2,915,516 3,055,516 7,168,164 6,946,781 Services 199,173 230,559 617,324 734,598 $ 5,383,127 $ 1,057,218 $ 14,333,052 $ 3,302,948 Depreciation and amortization Retail and Online $ 329,416 $ 65,404 $ 884,522 $ 201,647 Manufacturing 760,125 496,591 2,228,264 1,421,366 Services – – – – $ 1,089,541 $ 561,995 $ 3,112,786 $ 1,623,013 Interest expenses Retail and Online $ 1,600,589 $ 10,346 $ 4,283,015 $ 121,319 Manufacturing 527,201 259,661 1,329,304 829,157 Services – – – – $ 2,127,790 $ 270,007 $ 5,612,319 $ 950,476 Net income (loss) before provision for income taxes Retail and Online $ 797,504 $ (1,573,841 ) $ 2,842,206 $ (3,319,139 ) Manufacturing 2,175,749 2,457,201 5,363,455 5,643,733 Services 294,736 230,559 712,886 722,155 $ 3,267,989 $ 1,113,919 $ 8,918,547 $ 3,046,749 As of As of June 30, September 30, 2017 2016 Total assets Retail and Online $ 41,070,216 $ 15,053,993 Manufacturing 49,717,336 38,333,437 Services 34,934,464 79,970 $ 125,722,016 $ 53,467,400 Goodwill and intangible assets Retail and Online $ 41,464,911 $ 1,287,338 Manufacturing 380,501 402,452 Services – – $ 41,845,412 $ 1,689,790 |
18. Subsequent Events
18. Subsequent Events | 9 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | None. |
2. Summary of Significant Acc24
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements represent the consolidated financial position, results of operations and cash flows of Live Ventures Incorporated and its wholly-owned subsidiaries. O |
Noncontrolling Interest | Non-Controlling Interest The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “ Consolidation, The net income (loss) 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, if applicable, 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 billings, the estimated reserve for doubtful current and long-term trade and other receivables, the estimated reserve for excess and obsolete inventory, estimated fair value and forfeiture rates for stock-based compensation, fair values in connection with the analysis of goodwill, other intangibles and long-lived assets for impairment, current portion of notes payable, valuation allowance against deferred tax assets and estimated useful lives for intangible assets and property and equipment. |
Financial Instruments | Financial Instruments Financial instruments consist primarily of cash equivalents, trade and other receivables, advances to affiliates and obligations under accounts payable, accrued expenses and notes payable. The carrying amounts of cash equivalents, trade receivables and other receivables, accounts payable, accrued expenses and short term notes payable approximate fair value because of the short maturity of these instruments. The fair value of the long-term debt is calculated based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements, unless quoted market prices were available (Level 2 inputs). |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and Cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value. |
Trade Receivables | Trade Receivables The Company grants trade credit to customers under credit terms that it believes are customary in the industry it operates and does not require collateral to support customer trade receivables. Some of the Company’s trade receivables are factored primarily through two factors. Factored trade receivables are sold without recourse for substantially all of the balance receivable for credit approved accounts. The factor purchases the trade receivable(s) for the gross amount of the respective invoice(s), less factoring commissions, trade and cash discounts which is recorded as general and administrative expense. The factor charges the Company a factoring commission for each trade account, which is between 0.75-1.00% of the gross amount of the invoice(s) factored on the date of the purchase, plus interest calculated at 3.25%-6% per annum. The minimum annual commission due the factor is $75,000 per contract year. The total amount of trade receivables factored was $27,373,263 and $26,835,303 for the nine months ended June 30, 2017 and 2016, respectively. |
Reserve for Doubtful Accounts | Reserve for Doubtful Accounts The Company maintains a reserve for doubtful accounts, which includes reserves for accounts and other receivables, customer refunds, dilution and fees from local exchange carrier billing aggregators and other uncollectible accounts. The reserve for doubtful accounts is based upon historical bad debt experience and periodic evaluations of the aging and collectability of the trade and other receivables. This reserve is maintained at a level which the Company believes is sufficient to cover potential credit losses and trade and other 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 trade and other receivables which helps reduce potential losses due to doubtful accounts. At June 30, 2017 and September 30, 2016, the allowance for doubtful accounts was $1,121,569 and $1,161,434, respectively. |
Inventories | Inventories Manufacturing Segment Inventories are valued at the lower of the inventory’s cost (first in, first out basis) or the net realizable of the inventory. Management compares the cost of inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower. Management also reviews inventory to determine if excess or obsolete inventory is present and a reserve is made to reduce the carrying value for inventory for such excess and or obsolete inventory. At June 30, 2017 and September 30, 2016, the reserve for obsolete inventory was $91,940. Retail and Online Segment Merchandise Inventories are valued at the lower of cost or market generally using the average cost method which approximates first in first out or FIFO. Under the average cost method, as new product is received from vendors, its current cost is added to the existing cost of product on-hand and this amount is re-averaged over the cumulative units in inventory available for sale. Pre-owned products traded in by customers are recorded as merchandise inventory for the amount of cash consideration or store credit less any premiums given to the customer. Management reviews the merchandise inventory to make required adjustments to reflect potential obsolescence or over-valuation as a result of cost exceeding market. In valuing merchandise inventory, management considers quantities on hand, recent sales, potential price protections, returns to vendors and other factors. Management’s ability to assess these factors is dependent upon forecasting customer demand and to provide a well-balanced merchandise assortment. Merchandise Inventory valuation is adjusted based on anticipated physical inventory losses or shrinkage and actual losses resulting from periodic physical inventory counts. Merchandise inventory reserves as of June 30, 2017 and September 30, 2016 were $1,634,821 and $1,013,870, 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 using the straight-line method over the estimated useful lives of the assets ranging from three to forty years. Depreciation expense was $976,296 and $504,063 for the three months ended June 30, 2017 and 2016, respectively. Depreciation expense was $2,677,039 and $1,449,221 for the nine months ended June 30, 2017 and 2016, respectively. We periodically review our property and equipment when events or changes in circumstances indicate that their carrying amounts may not be recoverable or their depreciation or amortization periods should be accelerated. We assess recoverability based on several factors, including our intention with respect to our stores and those stores projected undiscounted cash flows. An impairment loss would be recognized for the amount by which the carrying amount of the assets exceeds their fair value, as approximated by the present value of their projected discounted cash flows. |
Goodwill and Intangibles | Goodwill and Intangibles The Company accounts for purchased goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed using a two-step approach required by ASC 350 to determine whether a goodwill impairment exists. The first step of the quantitative test is to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required and no impairment loss is recognized. If the carrying amount exceeds the fair value, then the second step is required to be completed, which involves allocating the fair value of the reporting unit to each asset and liability using the guidance in ASC 805 (“ Business Combinations, Accounting for Identifiable Intangible Assets in a Business Combination When performing the two-step quantitative impairment test, the Company's methodology includes the use of an income approach which discounts future net cash flows to their present value at a rate that reflects the Company's cost of capital, otherwise known as the discounted cash flow method ("DCF"). These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued market acceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the future cost structure of the businesses, and future technological changes. The Company also incorporates market multiples for comparable companies in determining the fair value of our reporting units. Any such impairment would be recognized in full in the reporting period in which it has been identified. The Company’s intangible assets consist of goodwill, customer relationships intangible, licenses for the use of internet domain names, Universal Resource Locators, or URL’s, software, and marketing and technology related intangibles. 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; software – 3 to 5 years, customer relationships – 15 years. Goodwill is not amortized, but evaluated for impairment on at least an annual basis. Intangible amortization expense is $113,245 and $435,747 for the three months and nine months ended June 30, 2017. Intangible amortization expense is $57,930 and $173,796 for the three months and nine months ended June 30, 2016. |
Revenue Recognition | Revenue Recognition Manufacturing Segment The Manufacturing Segment derives revenue primarily from the sale of carpet products, including shipping and handling amounts, which 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. Retail and Online Segment The Retail and Online Segment derives product revenue primarily from in-store, direct online and fulfillment partner sales of new and used products. In-Store product revenue is recognized when the following revenue recognition criteria are met: the sales price is fixed or determinable, collection is reasonably assured and the customer takes possession of the merchandise. Revenue from the sales or our products is recognized at the time of sale, net of sales discounts and net of an estimated sales return reserve, based on historical return rates. We provide customers with the opportunity to trade in used merchandise in exchange for cash consideration or merchandise credit. Merchandise inventory is recorded at a cost equal to the cash offered to the customer. If a customer chooses merchandise credit, credit is issued for the amount of the cash offer plus a premium. Premiums associated with merchandise credit issued as a result of trade in transactions are recorded as expense in the period in which the credits are issued. Customer liabilities and other deferred revenues for our gift cards and customer credits are included in Accrued Liabilities. Currently, all direct online and fulfillment partner product revenue is recorded on a gross basis, as the Company is the primary obligor. In addition, the Retail and Online Segment derives 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 price to the buyer 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 remaining 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 recognizes revenue in 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. The Company evaluates the criteria outlined in ASC Topic 605-45, Principal Agent Considerations Revenues do not include sales taxes or other taxes collected from customers. Services Segment The Services Segment recognizes revenue from directory subscription services as billed for and accepted by the customer. Directory services revenue is billed and recognized monthly for directory services subscribed. The Company has utilized outside billing companies to perform direct ACH withdrawals. For billings via ACH withdrawals, revenue is recognized when such billings are accepted by the customer. Customer refunds are recorded as an offset to gross Services Segment revenue. Revenue for billings to certain customers that are billed directly by the Company and not through outside billing companies is recognized based on estimated future collections which are reasonably assured. The Company continuously reviews this estimate for reasonableness based on its collection experience. |
Shipping and Handling | Shipping and Handling The Company classifies shipping and handling charged to customers as revenues and classifies costs relating to shipping and handling as cost of revenues. |
Customer Liabilities | Customer Liabilities The Company establishes a liability upon the issuance of merchandise credits and the sale of gift cards. Revenue is subsequently recognized when the credits and gift cards are redeemed. In addition, breakage is recognized quarterly on unused customer liabilities older than two years to the extent that our management believes the likelihood of redemption by the customer is remote, based on historical redemption patterns. To the extent that future redemption patterns differ from those historically experienced, there will be variations in the recorded breakage. Breakage for the three months ended June 30, 2017 was $25,092. Breakage of $98,183 for the period of November 3, 2016 through June 30, 2017 is recorded in other income in our consolidated financial statements. |
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 – 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. |
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. 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. As of June 30, 2017 there are no uncertain tax positions for federal or state income tax purposes. The Company is not under audit in any jurisdiction. The Company’s policy is to record uncertain tax positions as a component of income tax expense. |
Lease Accounting | Lease Accounting We lease retail stores, warehouse facilities and office space. These assets and properties are generally leased under noncancelable agreements that expire at various dates through 2022 with various renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for minimum and, in some cases percentage rentals and require us to pay all insurance, taxes and other maintenance costs. Leases with step rent provisions, escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options and includes “rent holidays” (periods in which we are not obligated to pay rent). Cash or lease incentives received upon entering into certain store leases (“tenant improvement allowances”) are recognized on a straight-line basis as a reduction to rent expense over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options. We record the unamortized portion of tenant improvement allowances as a part of deferred rent. We do not have leases with capital improvement funding. Percentage rentals are based on sales performance in excess of specified minimums at various stores and are accounted for in the period in which the amount of percentage rentals can be accurately estimated. |
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. |
Earnings Per Share | Earnings Per Share Earnings per share is calculated in accordance with ASC 260, “ Earnings Per share |
Segment Reporting | Segment Reporting ASC Topic 280, “ Segment Reporting |
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 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. There were no derivative financial instruments as of June 30, 2017 and September 30, 2016, respectively. |
Reclassifications | Reclassifications Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the previously reported net income or stockholders’ equity. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-08, Revenue from Contracts with customers In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products In February 2016, the FASB issued ASU 2016-02, Leases In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory ASU 2017-04 - ASU 2017-04, Simplifying the Test for Goodwill Impairment The ASU has staggered effective dates. A public business entity that is an SEC filer should prospectively adopt the ASU for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact that this standard will have on our consolidated financial statements. ASU 2016-18, Restricted Cash Statement of Cash Flows ASU 2016-09, Improvements to Employee Share-Based Payment Accounting ASU 2017-09, Scope of Modification Accounting Compensation – Stock Compensation 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 are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
3. Reclassifications and Rest25
3. Reclassifications and Restatements (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement schedule | Fiscal Quarter and Nine Months Ended June 30, 2017 As Previously Reported Change (Restated) Consolidated balance sheet as of June 30, 2017 Trade receivables, net $ 11,376,486 $ (711,668 ) $ 10,664,818 Prepaid expenses and other current assets 3,815,575 711,668 4,527,243 Total assets 125,722,016 125,722,016 Current portion of long- term debt 5,847,194 17,375,442 23,222,636 Long-term debt, net of current portion 70,104,445 (17,375,442 ) 52,729,003 Total liabilities 93,105,215 93,105,215 Paid in capital 56,841,245 6,249,254 63,090,499 Accumulated deficit (23,441,219 ) (6,238,516 ) (29,679,735 ) Series E convertible preferred stock 10,866 (10,738 ) 128 Total shareholders' equity 32,616,801 – 32,616,801 Consolidated statement of cash flows for the nine months ended June 30, 2017 Change in accounts receivable (2,888,320 ) (20,369 ) (2,908,689 ) Change in prepaid expenses and other current liabilities 2,104,859 (1,796,486 ) 308,373 Net cash provided by operations 8,830,128 (1,816,855 ) 7,013,273 Purchases of property and equipment (7,753,755 ) 1,816,855 (5,936,900 ) Net cash used in investing activities (55,150,965 ) 1,816,855 (53,334,110 ) |
4. Balance Sheet Detail Infor26
4. Balance Sheet Detail Information (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of trade receivables | June 30, September 30, 2017 2016 (Restated) Trade receivables, current, net: Accounts receivable, current $ 11,441,815 $ 8,419,626 Less: Reserve for doubtful accounts (776,997 ) (816,862 ) $ 10,664,818 $ 7,602,764 Trade receivables , long term, net: Accounts receivable, long term $ 344,572 $ 344,572 Less: Reserve for doubtful accounts (344,572 ) (344,572 ) $ – $ – Total trade receivables, net: Gross trade and other receivables $ 11,786,387 $ 8,764,198 Less: Reserve for doubtful accounts (1,121,569 ) (1,161,434 ) $ 10,664,818 $ 7,602,764 |
Components of allowance for doubtful accounts | June 30, September 30, 2017 2016 Components of reserve for doubtful accounts are as follows: Reserve for dilution and fees on amounts due from billing aggregators $ 1,063,617 $ 1,063,617 Reserve for customer refunds 1,042 1,230 Reserve for other trade receivables 56,910 96,587 $ 1,121,569 $ 1,161,434 |
Schedule of inventory | June 30, September 30, 2017 2016 Inventory Raw materials $ 7,708,749 $ 6,664,286 Work in progress 796,707 773,238 Finished goods, includes merchandise 26,967,407 4,721,371 35,472,863 12,158,895 Less: Inventory reserves (1,726,761 ) (1,105,810 ) $ 33,746,102 $ 11,053,085 |
Schedule of property and equipment | June 30, September 30, 2017 2016 Property and equipment, net: Building and improvements $ 7,515,236 $ 6,780,959 Transportation equipment 77,419 77,419 Machinery and equipment 17,317,941 10,211,565 Furnishings and fixtures 1,951,439 192,701 Office, computer equipment and other 214,807 216,793 27,076,842 17,479,437 Less: Accumulated depreciation (5,995,002 ) (3,464,936 ) $ 21,081,840 $ 14,014,501 |
Schedule of intangible assets | June 30, September 30, 2017 2016 Intangible assets, net: Domain name and marketing related intangibles $ 18,957 $ 18,957 Website and software related intangibles 1,525,308 – Customer Relationships intangible 439,039 439,039 Purchased software 1,500,000 1,500,000 3,483,304 1,957,996 Less: Accumulated amortization (703,953 ) (268,206 ) $ 2,779,351 $ 1,689,790 |
Schedule of accrued liabilities | June 30, September 30, 2017 2016 Accrued liabilities: Accrued payroll and bonuses $ 1,078,686 $ 922,299 Accrued software costs – 584,500 Accrued fee due Kingston Diversified Holdings LLC – 2,800,000 Accrued sales and property taxes 597,555 270,183 Deferred rent 440,684 4,092 Accrued gift card liability 289,520 – Accrued interest payable 467,506 – Accrued uncashed checks 815,338 – Customer deposits 303,568 169,965 Accrued expenses - other 1,101,115 1,645,733 $ 5,093,972 $ 6,396,772 |
5. Acquisition (Tables)
5. Acquisition (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of acquired assets and liabilities | Cash and cash equivalents $ 342,798 Trade and other receivables 113,500 Inventory 20,160,092 Prepaid expenses and other current assets 860,453 Property and equipment 2,084,246 Intangible - software 1,401,078 Goodwill 39,066,061 Notes payable (542,074 ) Accounts payable (3,843,510 ) Accrued expenses (1,988,946 ) Consideration paid $ 57,653,698 |
Schedule of statement of income | (Unaudited) Three Months Ended Nine Months Ended June 30, 2016 June 30, 2016 Net revenue $ 19,259,031 $ 58,632,726 Gross profit 11,080,557 32,739,140 Operating income 3,009,180 8,495,869 Net income 1,472,308 4,403,051 Earnings per basic common share $ 0.52 $ 1.57 |
6. Goodwill and Other Intangi28
6. Goodwill and Other Intangibles (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Future amortization expense related to intangible assets | 2018 $ 751,991 2019 751,991 2020 500,534 2021 243,555 2022 243,555 Thereafter (287,725 ) $ 2,779,351 |
7. Notes Payable (Tables)
7. Notes Payable (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Fixed coverage ratio table | Level Fixed Charge Coverage Ratio Base Rate Revolver LIBOR Revolver Base Rate Term 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% 2.50% |
Schedule of debt | June 30, September 30, 2017 2016 (Restated) Bank of America Revolver Loan - variable interest rate based upon a base rate plus a margin, interest payable monthly, maturity date July 2020, secured by substantially all Marquis assets $ 5,266,331 $ 222,590 Texas Capital Bank Revolver Loan - variable interest rate based upon the one-month LIBOR rate plus a margin, interest payable monthly, maturity date November 2020, secured by substantially all Vintage Stock assets 12,109,111 – Note Payable Capitala Term Loan - variable interest rate based upon a base rate plus a margin, 3% per annum interest payable in kind, with the balance of interest payable monthly in cash, principal due quarterly in the amount of $725,000, maturity date November 2021, note subordinate to Texas Capital Bank Revolver Loan, secured by Vintage Stock Assets 28,415,651 – Note Payable to the Sellers of Vintage Stock, interest at 8% per annum, with interest payable monthly, maturity date May 2022, note subordinate to both Texas Capital Bank Revolver and Capitala Term Loan, secured by Vintage Stock Assets 10,000,000 – Note #1 Payable to Banc of America Leasing & Capital LLC - interest at 3.8905% per annum, with interest and principal payable monthly in the amount of $84,273 for 59 months, beginning September 23, 2016, with a final payment due in the amount of $584,273, maturity date September 2021, secured by equipment 4,309,354 4,931,937 Note #2 Payable to Banc of America Leasing & Capital LLC - interest at 4.63% per annum, with interest and principal payable monthly in the amount of $34,768 for 59 months, beginning January 30, 2017, with a final payment due in the amount of $476,729, maturity date January 2022, secured by equipment 2,050,830 – Note #3 Payable to Banc of America Leasing & Capital LLC - interest at 4.7985% per annum with interest and principal payable monthly in the amount of $51,658 for 84 months, beginning January 30, 2017, secured by equipment. 3,455,617 – Note #4 Payable to Banc of America Leasing & Capital LLC - interest at 4.8907% per annum, with interest and principal payable monthly in the amount of $15,901 for 81 months, beginning April 30, 2017, secured by equipment. 1,060,659 – Note Payable to Store Capital Acquisitions, LLC, - interest at 9.25% per annum, with interest and principal payable monthly in the amount of $73,970 for 480 months, beginning July 1, 2016, maturity date of June 2056, secured by Marquis land and buildings 9,334,312 9,351,796 Note Payable to Cathay Bank, variable interest rate, Prime Rate plus 2.50%, with interest payable monthly, maturity date December 2017, secured by substantially all Modern Everyday assets 180,346 198,569 Note Payable to Cathay Bank, variable interest rate, Prime Rate plus 1.50%, with interest payable monthly, maturity date December 2017, secured by substantially all Modern Everyday assets 249,766 249,766 Note payable to individual, interest at 11% per annum, payable on a 90 day written notice, unsecured 206,529 206,529 Note payable to individual, interest at 10% per annum, payable on a 90 day written notice, unsecured 500,000 500,000 Note payable to individual, interest at 8.25% per annum, payable on a 120 day written demand notice, unsecured 225,000 225,000 Total long-term debt 77,363,506 15,886,187 Less unamortized debt issuance costs (1,411,867 ) (414,025 ) Net amount 75,951,639 15,472,162 Less current portion (23,222,636 ) (2,011,880 ) Long-term portion $ 52,729,003 $ 13,460,282 |
Future maturities of debt | Years ending June 30, 2018 $ 23,456,680 2019 4,801,499 2020 4,887,193 2021 4,976,861 2022 18,889,319 Thereafter 20,351,954 Total $ 77,363,506 |
10. Series B Convertible Pref30
10. Series B Convertible Preferred Stock Warrants (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrant activity | Number of units - Series B Convertible preferred warrants Weighted Average Exercise Weighted Average Remaining Contractual Term (in years) Intrinsic Value Outstanding at September 30, 2016 118,029 $ 20.80 1.73 $ 4,307,493 Granted – Exercised – Outstanding at June 30, 2017 118,029 $ 10.34 0.98 $ 3,646,530 Exercisable at June 30, 2017 118,029 $ 10.34 0.98 $ 3,646,530 |
Warrants outstanding and exercisable | Series B Convertible Preferred Outstanding Exercisable Number of Exercise Number of Exercise Warrants Price Warrants Price 54,396 $ 16.60 54,396 $ 16.60 17,857 16.80 17,857 16.80 12,383 24.30 12,383 24.30 33,393 28.50 33,393 28.50 118,029 118,029 |
11. Stock-based Compensation (T
11. Stock-based Compensation (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Share-based Compensation [Abstract] | |
Stock option activity | Weighted Weighted Average Average Number of Exercise Remaining Shares Price Contractual Life Intrinsic Value Outstanding at September 30, 2016 175,000 $ 11.22 3.75 $ 346,500 Granted 36,668 Exercised – Forfeited – Outstanding at June 30, 2017 211,668 $ 13.19 3.73 $ 248,500 Exercisable at June 30, 2017 175,000 $ 9.29 2.49 $ 248,500 |
Stock option exercise price | Outstanding Exercisable Number of Exercise Number of Exercise Options Price Options Price 31,250 $ 5.00 31,250 $ 5.00 25,000 7.50 25,000 7.50 31,250 10.00 31,250 10.00 4,167 10.86 4,167 10.86 4,167 10.86 4,167 10.86 6,250 12.50 6,250 12.50 6,250 15.00 6,250 15.00 75,000 15.18 75,000 15.18 4,000 23.41 4,000 27.60 4,000 31.74 4,000 36.50 4,000 41.98 211,668 175,000 |
Non-vested share activity | Weighted Average Number of Grant-Date Non-vested Shares Shares Fair Value Non-vested at September 30, 2016 6,250 $ 14.22 Granted 36,668 $ 17.70 Vested (6,250 ) $ 14.22 Non-vested at June 30, 2017 36,668 $ 17.70 |
Assumptions used | Risk-free interest rate 1.25% Expected life of the options 5.0 to 10.0 years Expected volatility 107% Expected dividend yield 0% |
12. Earnings Per Share (Tables)
12. Earnings Per Share (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Basic and diluted net loss per share | Three Months Ended June 30, Nine Months Ended June 30, 2017 2016 2017 2016 Basic Net income attributed to Live Ventures Incorporated $ 2,128,043 $ 13,368,197 $ 5,397,282 $ 14,762,853 Less: preferred stock dividends (479 ) (479 ) (1,438 ) (1,438 ) Net income applicable to common stock $ 2,127,564 $ 13,367,718 $ 5,395,844 $ 14,761,415 Weighted average common shares outstanding 2,044,767 2,806,060 2,289,646 2,813,192 Basic earnings per share $ 1.04 $ 4.76 $ 2.36 $ 5.25 Diluted Net income (loss) applicable to common stock $ 2,127,564 $ 13,367,718 $ 5,395,844 $ 14,761,415 Add: preferred stock dividends 479 479 1,438 1,438 Net income applicable for diluted earnings per share $ 2,128,043 $ 13,368,197 $ 5,397,282 $ 14,762,853 Weighted average common shares outstanding 2,044,767 2,806,060 2,289,646 2,813,192 Add: Options 35,296 21,396 53,081 19,964 Add: Common Stock Warrants – 341,716 – 331,511 Add: Series B Preferred Stock 1,071,200 – 1,071,200 – Add: Series B Preferred Stock Warrants 590,145 – 590,145 – Add: Series E Preferred Stock 127,840 127,840 127,840 127,840 Assumed weighted average common shares outstanding 3,869,248 3,297,012 4,131,912 3,292,507 Diluted earnings per share $ 0.55 $ 4.05 $ 1.31 $ 4.48 |
17. Segment Reporting (Tables)
17. Segment Reporting (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment reporting | Three Months Ended June 30, Nine Months Ended June 30, 2017 2016 2017 2016 Revenues Retail and Online $ 19,267,959 $ 508,099 $ 54,020,215 $ 5,284,851 Manufacturing 21,898,645 19,243,019 57,429,871 53,881,143 Services 210,889 243,245 652,496 772,726 $ 41,377,493 $ 19,994,363 $ 112,102,582 $ 59,938,720 Gross profit Retail and Online $ 10,953,602 $ (616,754 ) $ 30,105,864 $ 1,233,705 Manufacturing 5,839,412 5,483,896 15,388,787 15,143,363 Services 200,883 232,272 619,848 738,420 $ 16,993,897 $ 5,099,414 $ 46,114,499 $ 17,115,488 Operating income (loss) Retail and Online $ 2,268,438 $ (2,228,857 ) $ 6,547,564 $ (4,378,431 ) Manufacturing 2,915,516 3,055,516 7,168,164 6,946,781 Services 199,173 230,559 617,324 734,598 $ 5,383,127 $ 1,057,218 $ 14,333,052 $ 3,302,948 Depreciation and amortization Retail and Online $ 329,416 $ 65,404 $ 884,522 $ 201,647 Manufacturing 760,125 496,591 2,228,264 1,421,366 Services – – – – $ 1,089,541 $ 561,995 $ 3,112,786 $ 1,623,013 Interest expenses Retail and Online $ 1,600,589 $ 10,346 $ 4,283,015 $ 121,319 Manufacturing 527,201 259,661 1,329,304 829,157 Services – – – – $ 2,127,790 $ 270,007 $ 5,612,319 $ 950,476 Net income (loss) before provision for income taxes Retail and Online $ 797,504 $ (1,573,841 ) $ 2,842,206 $ (3,319,139 ) Manufacturing 2,175,749 2,457,201 5,363,455 5,643,733 Services 294,736 230,559 712,886 722,155 $ 3,267,989 $ 1,113,919 $ 8,918,547 $ 3,046,749 As of As of June 30, September 30, 2017 2016 Total assets Retail and Online $ 41,070,216 $ 15,053,993 Manufacturing 49,717,336 38,333,437 Services 34,934,464 79,970 $ 125,722,016 $ 53,467,400 Goodwill and intangible assets Retail and Online $ 41,464,911 $ 1,287,338 Manufacturing 380,501 402,452 Services – – $ 41,845,412 $ 1,689,790 |
2. Summary of Significant Acc34
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Sep. 30, 2016 | |
Trade receivables factored | $ 27,373,263 | $ 26,835,303 | ||||
Allowance for doubtful accounts | $ 1,121,569 | $ 1,121,569 | 1,121,569 | $ 1,161,434 | ||
Inventory reserves | 1,726,761 | 1,726,761 | 1,726,761 | 1,105,810 | ||
Depreciation expense | 976,296 | $ 504,063 | 2,677,039 | 1,449,221 | ||
Amortization expense | 113,245 | 57,930 | 435,747 | 173,796 | ||
Other income | 12,652 | $ 326,708 | 197,814 | $ 694,277 | ||
Derivative instruments | 0 | 0 | 0 | 0 | ||
Breakage Income [Member] | ||||||
Other income | 25,092 | 98,183 | ||||
Manufacturing Segment [Member] | ||||||
Inventory reserves | 91,940 | 91,940 | 91,940 | 91,940 | ||
Retail and Online Segment [Member] | ||||||
Inventory reserves | $ 1,634,821 | $ 1,634,821 | $ 1,634,821 | $ 1,013,870 | ||
Domain Name and Marketing [Member] | ||||||
Finite lived useful lives | 3 to 20 yars | |||||
Customer Relationships [Member] | ||||||
Finite lived useful lives | 15 years | |||||
Software [Member] | ||||||
Finite lived useful lives | 5 years |
3. Reclassifications and Rest35
3. Reclassifications and Restatements (Details) - USD ($) | 9 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Sep. 30, 2016 | |
Trade receivables, net | $ 10,664,818 | $ 7,602,764 | |
Prepaid expenses and other current assets | 4,527,243 | 5,792,018 | |
Total assets | 125,722,016 | 53,467,400 | |
Current portion of long-term debt | 23,222,636 | 2,011,880 | |
Long-term debt, net of current portion | 52,729,003 | 13,460,282 | |
Total liabilities | 93,105,215 | 29,271,588 | |
Paid in capital | 63,090,499 | 59,568,471 | |
Accumulated deficit | (29,679,735) | (35,075,579) | |
Total shareholders' equity | 32,616,801 | 24,195,812 | |
Change in accounts receivable | (2,908,689) | $ (426,744) | |
Change in prepaid expenses and other current liabilities | 308,373 | 55,849 | |
Net cash provided by operations | 7,013,273 | 7,055,523 | |
Purchases of property and equipment | (5,936,900) | (3,343,937) | |
Net cash used in investing activities | (53,334,110) | $ (2,690,080) | |
Series E Preferred Stock [Member] | |||
Series E convertible preferred stock | 128 | $ 128 | |
As Previously Reported [Member] | |||
Trade receivables, net | 11,376,486 | ||
Prepaid expenses and other current assets | 3,815,575 | ||
Total assets | 125,722,016 | ||
Current portion of long-term debt | 5,847,194 | ||
Long-term debt, net of current portion | 70,104,445 | ||
Total liabilities | 93,105,215 | ||
Paid in capital | 56,841,245 | ||
Accumulated deficit | (23,441,219) | ||
Series E convertible preferred stock | 10,866 | ||
Total shareholders' equity | 32,616,801 | ||
Change in accounts receivable | (2,888,320) | ||
Change in prepaid expenses and other current liabilities | 2,104,859 | ||
Net cash provided by operations | 8,830,128 | ||
Purchases of property and equipment | (7,753,755) | ||
Net cash used in investing activities | (55,150,965) | ||
Change [Member] | |||
Trade receivables, net | (711,668) | ||
Prepaid expenses and other current assets | 711,668 | ||
Current portion of long-term debt | 17,375,442 | ||
Long-term debt, net of current portion | (17,375,442) | ||
Total liabilities | 0 | ||
Paid in capital | 6,249,254 | ||
Accumulated deficit | (6,238,516) | ||
Series E convertible preferred stock | (10,738) | ||
Total shareholders' equity | 0 | ||
Change in accounts receivable | (20,369) | ||
Change in prepaid expenses and other current liabilities | (1,796,486) | ||
Net cash provided by operations | (1,816,855) | ||
Purchases of property and equipment | 1,816,855 | ||
Net cash used in investing activities | $ 1,816,855 |
4. Balance Sheet Detail Infor36
4. Balance Sheet Detail Information (Details) - USD ($) | Jun. 30, 2017 | Sep. 30, 2016 |
Trade receivables, current, net: | ||
Accounts receivable, current | $ 11,441,815 | $ 8,419,626 |
Less: Reserve for doubtful accounts | (776,997) | (816,862) |
Trade and other receivables, current, net | 10,664,818 | 7,602,764 |
Trade receivables, long term, net: | ||
Accounts receivable, long term | 344,572 | 344,572 |
Less: Reserve for doubtful accounts | (344,572) | (344,572) |
Trade receivables, long term, net | 0 | 0 |
Total trade receivables, net: | ||
Gross trade and other receivables | 11,786,387 | 8,764,198 |
Less: Reserve for doubtful accounts | (1,121,569) | (1,161,434) |
Total trade and other receivables, net | 10,664,818 | 7,602,764 |
Reserve for dilution and fees on amounts due from billing aggregators | 1,063,617 | 1,063,617 |
Reserve for customer refunds | 1,042 | 1,230 |
Reserve for other trade receivables | 56,910 | 96,587 |
Total allowances | 1,121,569 | 1,161,434 |
Inventory | ||
Raw materials | 7,708,749 | 6,664,286 |
Work in progress | 796,707 | 773,238 |
Finished goods, includes merchandise | 26,967,407 | 4,721,371 |
Total inventory, gross | 35,472,863 | 12,158,895 |
Less: obsolescence reserve | (1,726,761) | (1,105,810) |
Total inventory, net | 33,746,102 | 11,053,085 |
Property and equipment, net: | ||
Building and improvements | 7,515,236 | 6,780,959 |
Transportation equipment | 77,419 | 77,419 |
Machinery and equipment | 17,317,941 | 10,211,565 |
Furnishings and fixtures | 1,951,439 | 192,701 |
Office, computer equipment and other | 214,807 | 216,793 |
Plant Property and Equipment,Gross | 27,076,842 | 17,479,437 |
Less: Accumulated depreciation | (5,995,002) | (3,464,936) |
Property and equipment, net | 21,081,840 | 14,014,501 |
Intangible assets, net: | ||
Domain name and marketing related intangibles | 18,957 | 18,957 |
Website and technology related intangibles | 1,525,308 | 0 |
Customer Relationships intangible | 439,039 | 439,039 |
Purchased software | 1,500,000 | 1,500,000 |
Intangible assets, gross | 3,483,304 | 1,957,996 |
Less: Accumulated amortization | (703,953) | (268,206) |
Intangible assets, net | 2,779,351 | 1,689,790 |
Accrued liabilities: | ||
Accrued payroll and bonuses | 1,078,686 | 922,299 |
Accrued software costs | 0 | 584,500 |
Accrued fee due Kingston Diversified Holdings LLC | 0 | 2,800,000 |
Accrued sales and property taxes | 597,555 | 270,183 |
Deferred rent | 440,684 | 4,092 |
Accrued gift card liability | 289,520 | 0 |
Accrued interest payable | 467,506 | 0 |
Accrued uncashed checks | 815,338 | 0 |
Customer deposits | 303,568 | 169,965 |
Accrued expenses - other | 1,101,115 | 1,645,733 |
Total accrued liabilities | $ 5,093,972 | $ 6,396,772 |
5. Acquisitions (Details - Purc
5. Acquisitions (Details - Purchase allocation) - USD ($) | Jun. 30, 2017 | Nov. 03, 2016 | Sep. 30, 2016 |
Goodwill | $ 39,066,061 | $ 0 | |
VSAH [Member] | |||
Cash and cash equivalents | $ 342,798 | ||
Trade and other receivables | 113,500 | ||
Inventory | 20,160,092 | ||
Prepaid expenses and other current assets | 860,453 | ||
Property and equipment | 2,084,246 | ||
Intangible - Software | 1,401,078 | ||
Goodwill | 39,066,061 | ||
Notes payable | (542,074) | ||
Accounts payable | (3,843,510) | ||
Accrued expenses | (1,988,946) | ||
Purchase price | $ 57,653,698 |
5. Acquisition (Details - Pro f
5. Acquisition (Details - Pro forma information) - VSAH [Member] - USD ($) | 3 Months Ended | 9 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Net revenue | $ 19,259,031 | $ 58,632,726 |
Gross profit | 11,080,557 | 32,739,140 |
Operating income | 3,009,180 | 8,495,869 |
Net income | $ 1,472,308 | $ 4,403,051 |
Earnings per basic common share | $ 0.52 | $ 1.57 |
5. Acquisitions (Details Narrat
5. Acquisitions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
General and administrative expense | $ 9,335,904 | $ 2,172,366 | $ 25,544,443 | $ 6,696,637 | |
VSAH [Member] | |||||
General and administrative expense | $ 347,610 | ||||
VSAH [Member] | Bank fees [Member] | |||||
General and administrative expense | 15,000 | ||||
VSAH [Member] | Appraisal fees [Member] | |||||
General and administrative expense | 20,497 | ||||
VSAH [Member] | Legal fees [Member] | |||||
General and administrative expense | 192,339 | ||||
VSAH [Member] | Consulting fees [Member] | |||||
General and administrative expense | $ 119,774 |
6. Goodwill and Other Intangi40
6. Goodwill and Other Intangibles (Details) - USD ($) | Jun. 30, 2017 | Sep. 30, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense, 2018 | $ 751,991 | |
Amortization expense, 2019 | 751,991 | |
Amortization expense, 2020 | 500,534 | |
Amortization expense, 2021 | 243,555 | |
Amortization expense, 2022 | 243,555 | |
Amortization expense, thereafter | (287,725) | |
Intangible assets, net | $ 2,779,351 | $ 1,689,790 |
6. Goodwill and Other Intangi41
6. Goodwill and Other Intangibles (Details Narrative) | 9 Months Ended |
Jun. 30, 2017 | |
Domain Name and Marketing [Member] | |
Useful lifes of intangible assets | 3 to 20 yars |
Software [Member] | |
Useful lifes of intangible assets | 5 years |
Customer Relationships [Member] | |
Useful lifes of intangible assets | 15 years |
7. Notes Payable (Details - Not
7. Notes Payable (Details - Note Payable) - USD ($) | 9 Months Ended | |
Jun. 30, 2017 | Sep. 30, 2016 | |
Total Debt | $ 77,363,506 | $ 15,886,186 |
Less: unamortized debt issuance costs | (1,411,867) | (414,025) |
Net amount | 75,951,639 | 15,472,162 |
Current portion | (23,222,636) | (2,011,880) |
Long-term portion | 52,729,003 | 13,460,282 |
Capitala Term Loan [Member] | ||
Total Debt | $ 28,415,651 | 0 |
Debt maturity date | Nov. 30, 2021 | |
Debt interest rate description | Variable, base rate plus margin | |
Periodic payment frequency | quarterly | |
Periodic principal and/or interest payments | $ 725,000 | |
Collateral | Secured by Vintage Stock assets | |
Note Payable - Cathay Bank [Member] | ||
Total Debt | $ 180,346 | 198,569 |
Debt maturity date | Dec. 31, 2017 | |
Debt interest rate description | Prime plus 2.25% | |
Periodic payment frequency | interest monthly | |
Collateral | Secured by substantially all Modern Everyday assets | |
Note Payable #2 - Cathay Bank [Member] | ||
Total Debt | $ 249,766 | 249,766 |
Debt maturity date | Dec. 31, 2017 | |
Debt interest rate description | Prime plus 1.5% | |
Periodic payment frequency | interest monthly | |
Collateral | Secured by substantially all Modern Everyday assets | |
Note payable to individual [Member] | ||
Total Debt | $ 206,529 | 206,529 |
Debt interest rate description | 11% per annum | |
Collateral | Unsecured | |
Note Payable - Individual [Member] | ||
Total Debt | $ 500,000 | 500,000 |
Debt interest rate description | 10% per annum | |
Collateral | Unsecured | |
Note Payable - Individual 3 [Member] | ||
Total Debt | $ 225,000 | 225,000 |
Debt interest rate description | 8.25% per annum | |
Collateral | Unsecured | |
Note Payable to the Sellers of Vintage Stock [Member] | ||
Total Debt | $ 10,000,000 | 0 |
Debt maturity date | May 31, 2022 | |
Debt interest rate description | 8% per annum | |
Periodic payment frequency | monthly | |
Collateral | Secured by Vintage Stock assets | |
Note Payable to Bank of America Leasing [Member] | ||
Total Debt | $ 4,309,354 | 4,931,937 |
Debt maturity date | Sep. 30, 2021 | |
Debt interest rate description | 3.8905% per annum | |
Periodic payment frequency | monthly | |
Periodic principal and/or interest payments | $ 84,273 | |
Collateral | Secured by equipment | |
Note #2 Payable to Bank of America Leasing [Member] | ||
Total Debt | $ 2,050,830 | 0 |
Debt maturity date | Jan. 30, 2022 | |
Debt interest rate description | 4.63% per annum | |
Periodic payment frequency | 59 monthly payments | |
Periodic principal and/or interest payments | $ 34,768 | |
Collateral | Secured by equipment | |
Note #3 Payable to Bank of America Leasing [Member] | ||
Total Debt | $ 3,455,617 | 0 |
Debt maturity date | Dec. 30, 2023 | |
Debt interest rate description | Variable, base rate plus a margin | |
Periodic payment frequency | 84 monthly payments | |
Periodic principal and/or interest payments | $ 51,658 | |
Note Payable - Store Capital [Member] | ||
Total Debt | $ 9,334,312 | 9,351,796 |
Debt maturity date | Jun. 30, 2056 | |
Debt interest rate description | 9.25% per annum | |
Periodic payment frequency | monthly | |
Periodic principal and/or interest payments | $ 73,970 | |
Collateral | Secured by Marquis land and buildings | |
Note #4 Payable to Bank of America Leasing [Member] | ||
Total Debt | $ 1,060,659 | 0 |
Debt maturity date | Dec. 30, 2023 | |
Debt interest rate description | 4.8907% per annum | |
Periodic payment frequency | 81 monthly payments | |
Periodic principal and/or interest payments | $ 15,901 | |
Collateral | Secured by equipment | |
Note #1 Payable to Bank of America Leasing [Member] | ||
Debt maturity date | Sep. 23, 2021 | |
Periodic payment frequency | 59 monthy payments | |
Periodic principal and/or interest payments | $ 84,273 | |
Bank of America Revolver Loan [Member] | ||
Total Debt | $ 5,266,331 | 222,590 |
Debt maturity date | Jul. 31, 2020 | |
Debt interest rate description | Variable, base rate plus a margin | |
Periodic payment frequency | monthly | |
Collateral | Secured by substantially all Marquis assets | |
Texas Capital Bank Revolver Loan [Member] | ||
Total Debt | $ 12,109,111 | $ 0 |
Debt maturity date | Nov. 30, 2020 | |
Debt interest rate description | Variable, one-month LIBOR plus a margin | |
Periodic payment frequency | monthly | |
Collateral | Secured by substantially all Vintage Stock assets |
7. Notes Payable (Details - Fut
7. Notes Payable (Details - Future Maturities) - USD ($) | Jun. 30, 2017 | Sep. 30, 2016 |
Debt Disclosure [Abstract] | ||
Future maturity 2018 | $ 23,456,680 | |
Future maturity 2019 | 4,801,499 | |
Future maturity 2020 | 4,887,193 | |
Future maturity 2021 | 4,976,861 | |
Future maturity 2022 | 18,889,319 | |
Future maturity thereafter | 20,351,954 | |
Total future maturities | $ 77,363,506 | $ 15,886,186 |
7. Notes Payable (Details Narra
7. Notes Payable (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | Sep. 30, 2016 | |
Proceeds from note payable | $ 36,984,434 | $ 10,050,521 | |
Note payable | 75,951,639 | $ 15,472,162 | |
Capitala Term Loan [Member] | |||
Credit line maximum | $ 29,871,650 | ||
Credit line weighted average interest rate | 16.3155% | ||
Debt maturity date | Nov. 30, 2021 | ||
Debt periodic payment | $ 725,000 | ||
Debt periodic frequency | quarterly | ||
Debt issuance cost | $ 1,088,000 | ||
Note Payable - Cathay Bank [Member] | |||
Debt maturity date | Dec. 31, 2017 | ||
Debt periodic frequency | interest monthly | ||
Note Payable #2 - Cathay Bank [Member] | |||
Debt maturity date | Dec. 31, 2017 | ||
Debt periodic frequency | interest monthly | ||
Note #2 Payable to Bank of America Leasing [Member] | |||
Debt face amount | $ 2,209,807 | ||
Debt initial payment date | Jan. 30, 2017 | ||
Debt stated interest rate | 4.63% | ||
Debt maturity date | Jan. 30, 2022 | ||
Debt periodic payment | $ 34,768 | ||
Debt periodic frequency | 59 monthly payments | ||
Debt final payment | $ 476,729 | ||
Note #3 Payable to Bank of America Leasing [Member] | |||
Debt face amount | $ 3,679,514 | ||
Debt initial payment date | Jan. 30, 2017 | ||
Debt stated interest rate | 4.7985% | ||
Debt maturity date | Dec. 30, 2023 | ||
Debt periodic payment | $ 51,658 | ||
Debt periodic frequency | 84 monthly payments | ||
Note #4 Payable to Bank of America Leasing [Member] | |||
Debt face amount | $ 1,095,113 | ||
Debt initial payment date | Apr. 30, 2017 | ||
Debt stated interest rate | 4.8907% | ||
Debt maturity date | Dec. 30, 2023 | ||
Debt periodic payment | $ 15,901 | ||
Debt periodic frequency | 81 monthly payments | ||
Note #1 Payable to Bank of America Leasing [Member] | |||
Debt face amount | $ 5,000,000 | ||
Debt initial payment date | Sep. 23, 2016 | ||
Debt stated interest rate | 3.8905% | ||
Debt maturity date | Sep. 23, 2021 | ||
Debt periodic payment | $ 84,273 | ||
Debt periodic frequency | 59 monthy payments | ||
Debt final payment | $ 584,273 | ||
Note Payable to the Sellers of Vintage Stock [Member] | |||
Debt maturity date | May 31, 2022 | ||
Debt periodic frequency | monthly | ||
Note Payable to Bank of America Leasing [Member] | |||
Debt maturity date | Sep. 30, 2021 | ||
Debt periodic payment | $ 84,273 | ||
Debt periodic frequency | monthly | ||
Note Payable - Store Capital [Member] | |||
Debt maturity date | Jun. 30, 2056 | ||
Debt periodic payment | $ 73,970 | ||
Debt periodic frequency | monthly | ||
Bank of America Revolver Loan [Member] | |||
Debt maturity date | Jul. 31, 2020 | ||
Debt periodic frequency | monthly | ||
Texas Capital Bank [Member] | |||
Credit line maximum | $ 20,000,000 | ||
Credit line maturity date | Nov. 30, 2020 | ||
Credit line borrowings during period | $ 59,904,850 | ||
Credit line repayments during period | 47,795,739 | ||
Maximum borrowings outstanding | $ 14,460,716 | ||
Credit line weighted average interest rate | 3.4556% | ||
Credit line amount available at period end | $ 2,789,415 | ||
Credit line outstanding | 12,109,111 | ||
Letters of credit | 0 | ||
Kingston Line of Credit [Member] | |||
Credit line maximum | 2,000,000 | ||
Letters of credit | 0 | ||
Preferred shares issued in settlement of debt, amount | $ 2,800,000 | ||
Kingston Line of Credit [Member] | Series B Preferred Stock [Member] | |||
Preferred shares issued in settlement of debt, shares issued | 55,888 | ||
Preferred shares issued in settlement of debt, amount | $ 2,800,000 | ||
Texas Capital Bank Revolver Loan [Member] | |||
Debt maturity date | Nov. 30, 2020 | ||
Debt periodic frequency | monthly | ||
Sellers Subordinated Acquisition Note [Member] | |||
Subordinated debt | $ 10,000,000 | ||
Subordinated debt interest rate | 8.00% | ||
Store Capital Acquisitions, LLC [Member] | |||
Proceeds from sale of land | 644,479 | ||
Proceeds from note payable | 9,355,521 | ||
Debt issuance costs | 457,757 | ||
Annual lease rate | 59,614 | ||
Note payable | $ 10,000,000 | ||
Debt stated interest rate | 9.25% | ||
Debt maturity date | Jun. 13, 2056 | ||
Marquis [Member] | Bank of America Revolver Loan [Member] | |||
Credit line maximum | $ 15,000,000 | ||
Credit line maturity date | Jul. 20, 2020 | ||
Credit line borrowings during period | $ 68,597,210 | ||
Credit line repayments during period | 63,553,469 | ||
Maximum borrowings outstanding | $ 7,770,651 | ||
Credit line weighted average interest rate | 3.42% | ||
Credit line amount available at period end | $ 6,989,630 | ||
Credit line outstanding | 5,266,331 | ||
Letters of credit | $ 72,715 |
7. Note Payable, Related Party
7. Note Payable, Related Party (Details Narrative) - USD ($) | 9 Months Ended | |
Jun. 30, 2017 | Sep. 30, 2016 | |
Loan outstanding | $ 2,000,000 | $ 2,000,000 |
Mezzanine Loan [Member] | ||
Loan maximum borrowing amount | 7,000,000 | |
Loan outstanding | $ 2,000,000 | $ 2,000,000 |
Maturity date | Jan. 31, 2021 | |
Interest rate | 12.50% |
8. Stockholders' Equity (Detail
8. Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Sep. 30, 2016 | |
Accrued dividends | $ 479 | $ 479 | $ 1,438 | $ 1,438 | |
Reverse stock split | 1-for-6 reverse stock split | ||||
Treasury stock purchased, shares | 47,651 | 30,122 | |||
Payment for treasury stock | $ 496,366 | $ 202,005 | $ 300,027 | ||
Stock for Services [Member] | |||||
Issuance of common stock for services, shares | 2,158 | ||||
Issuance of common stock for services, value | $ 20,000 | ||||
Series E Preferred Stock [Member] | |||||
Accrued dividends | 1,438 | $ 1,438 | |||
Unpaid dividends | $ 479 | $ 479 | $ 959 | ||
Isaac Capital Group [Member] | Series B Preferred Stock [Member] | |||||
Common stock exchanged for preferred stock, common shares exchanged | 791,758 | ||||
Common stock exchanged for preferred stock, preferred shares issued | 158,356 | ||||
Kingston Line of Credit [Member] | |||||
Preferred shares issued in settlement of debt, amount | $ 2,800,000 | ||||
Kingston Line of Credit [Member] | Series B Preferred Stock [Member] | |||||
Preferred shares issued in settlement of debt, shares issued | 55,888 | ||||
Preferred shares issued in settlement of debt, amount | $ 2,800,000 | ||||
Tender offer holders [Member] | Series E Preferred Stock [Member] | |||||
Common stock exchanged for preferred stock, common shares exchanged | 2,197 | ||||
Common stock exchanged for preferred stock, preferred shares issued | 127,840 | ||||
Various Holders [Member] | |||||
Fractional shares issued due to stock split, shares | 2,284 | ||||
Novalk Apps [Member] | |||||
Stock issued for accrued liability, shares issued | 58,334 | ||||
Stock issued for accrued liability, amount of liability | $ 584,500 |
10. Series B Convertible Pref47
10. Series B Convertible Preferred Stock Warrants (Details - Warrants Outstanding) - Warrants [Member] | 9 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Number of units | |
Outstanding, beginning of period | 118,029 |
Granted | 0 |
Exercised | 0 |
Outstanding, end of period | 118,029 |
Exercisable, end of period | 118,029 |
Weighted Average Exercise Price | |
Outstanding, beginning of period | $ / shares | $ 20.80 |
Granted | $ / shares | |
Outstanding, end of period | $ / shares | 10.34 |
Exercisable, end of period | $ / shares | $ 10.34 |
Weighted Average Remaining Contractual Term (in years) | |
Outstanding, beginning of period | 1 year 8 months 23 days |
Outstanding, end of period | 11 months 23 days |
Exercisable, end of period | 11 months 23 days |
Intrinsic value outstanding, beginning of period | $ | $ 4,307,493 |
Intrinsic value outstanding, end of period | $ | $ 3,646,530 |
Exercisable, end of period | 3,646,530 |
10. Series B Convertible Pref48
10. Series B Convertible Preferred Stock Warrants (Details - Exercise price) - Warrants [Member] - $ / shares | Jun. 30, 2017 | Sep. 30, 2016 |
Number of warrants outstanding | 118,029 | 118,029 |
Warrants exercise price, outstanding | $ 10.34 | $ 20.80 |
$16.60 [Member] | ||
Number of warrants outstanding | 54,396 | |
Warrants exercise price, outstanding | $ 16.60 | |
Number of warrants exercisable | 54,396 | |
Warrants exercise price, exercisable | $ 16.60 | |
$16.80 [Member] | ||
Number of warrants outstanding | 17,857 | |
Warrants exercise price, outstanding | $ 16.80 | |
Number of warrants exercisable | 17,857 | |
Warrants exercise price, exercisable | $ 16.80 | |
$24.30 [Member] | ||
Number of warrants outstanding | 12,383 | |
Warrants exercise price, outstanding | $ 24.30 | |
Number of warrants exercisable | 12,383 | |
Warrants exercise price, exercisable | $ 24.30 | |
$28.50 [Member] | ||
Number of warrants outstanding | 33,393 | |
Warrants exercise price, outstanding | $ 28.50 | |
Number of warrants exercisable | 33,393 | |
Warrants exercise price, exercisable | $ 28.50 |
11. Stock-based Compensation (D
11. Stock-based Compensation (Details - Option activity) - Stock Options [Member] | 9 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding, beginning balance | 175,000 |
Granted | 36,668 |
Exercised | 0 |
Forfeited | 0 |
Outstanding, ending balance | 211,668 |
Exercisable | 175,000 |
Weighted Average Exercise Price | |
Outstanding, beginning balance | $ / shares | $ 11.22 |
Exercised | $ / shares | |
Forfeited | $ / shares | |
Outstanding, ending balance | $ / shares | 13.19 |
Exercisable | $ / shares | $ 9.29 |
Weighed Average Remaining Contractual Life | |
Outstanding, beginning term | 3 years 9 months |
Outstanding, ending balance | 3 years 8 months 23 days |
Exercisable | 2 years 5 months 27 days |
Intrinsic value outstanding, beginning balance | $ | $ 346,500 |
Intrinsic value outstanding, ending balance | $ | 248,500 |
Exercisable | $ | $ 248,500 |
11. Stock-based Compensation 50
11. Stock-based Compensation (Details - Option price) - Stock Options [Member] - $ / shares | Jun. 30, 2017 | Sep. 30, 2016 |
Number of options outstanding | 211,668 | 175,000 |
Option exercise price outstanding | $ 13.19 | $ 11.22 |
Number of options exercisable | 175,000 | |
Option exercise price exercisable | $ 9.29 | |
$5.00 [Member] | ||
Number of options outstanding | 31,250 | |
Option exercise price outstanding | $ 5 | |
Number of options exercisable | 31,250 | |
Option exercise price exercisable | $ 5 | |
$7.50 [Member] | ||
Number of options outstanding | 25,000 | |
Option exercise price outstanding | $ 7.50 | |
Number of options exercisable | 25,000 | |
Option exercise price exercisable | $ 7.50 | |
$10.00 [Member] | ||
Number of options outstanding | 31,250 | |
Option exercise price outstanding | $ 10 | |
Number of options exercisable | 31,250 | |
Option exercise price exercisable | $ 10 | |
$12.50 [Member] | ||
Number of options outstanding | 6,250 | |
Option exercise price outstanding | $ 12.50 | |
Number of options exercisable | 6,250 | |
Option exercise price exercisable | $ 12.50 | |
$15.00 [Member] | ||
Number of options outstanding | 6,250 | |
Option exercise price outstanding | $ 15 | |
Number of options exercisable | 6,250 | |
Option exercise price exercisable | $ 15 | |
$15.18 [Member] | ||
Number of options outstanding | 75,000 | |
Option exercise price outstanding | $ 15.18 | |
Number of options exercisable | 75,000 | |
Option exercise price exercisable | $ 15.18 | |
$36.50 [Member] | ||
Number of options outstanding | 4,000 | |
Option exercise price outstanding | $ 36.50 | |
$10.86 [Member] | ||
Number of options outstanding | 16,668 | |
Option exercise price outstanding | $ 10.86 | |
$23.41 [Member] | ||
Number of options outstanding | 4,000 | |
Option exercise price outstanding | $ 23.41 | |
$27.60 [Member] | ||
Number of options outstanding | 4,000 | |
Option exercise price outstanding | $ 27.60 | |
$31.74 [Member] | ||
Number of options outstanding | 4,000 | |
Option exercise price outstanding | $ 31.74 | |
$41.98 [Member] | ||
Number of options outstanding | 4,000 | |
Option exercise price outstanding | $ 41.98 |
11. Stock-based Compensation 51
11. Stock-based Compensation (Details - Non vested) - Stock Options [Member] | 9 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Number of shares | |
Outstanding, beginning balance | shares | 6,250 |
Granted | shares | 36,668 |
Vested | shares | (6,250) |
Outstanding, ending balance | shares | 36,668 |
Weighted-Average Grant-Date Fair Value | |
Per share price nonvested options outstanding, beginning of period | $ / shares | $ 14.22 |
Per share price nonvested options granted | $ / shares | 17.7 |
Per share price vested options | $ / shares | 14.22 |
Per share price nonvested options outstanding, end of period | $ / shares | $ 17.7 |
11. Stock-based Compensation 52
11. Stock-based Compensation (Details - Assumptions) - Stock Options [Member] | 9 Months Ended |
Jun. 30, 2017 | |
Risk-free interest rate | 1.25% |
Expected life of the options | 5.0 to 10.0 years |
Expected volatility | 107.00% |
Expected dividend yield | 0.00% |
11. Stock-based Compensation 53
11. Stock-based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation [Abstract] | ||||
Stock-based compensation expense | $ 43,028 | $ 163,482 | $ 137,011 | $ 254,710 |
Unrecognized compensation expense | $ 428,306 | $ 428,306 | ||
Unrecognized compensation amortization period | 3 years 6 months |
12. Earnings Per Share (Details
12. Earnings Per Share (Details - Computation of loss per share) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Basic | ||||
Net income attributed to Live Ventures Incorporated | $ 2,128,043 | $ 13,368,197 | $ 5,397,282 | $ 14,762,853 |
Less: preferred stock dividends | (479) | (479) | (1,438) | (1,438) |
Net income applicable to common stock | $ 2,127,564 | $ 13,367,718 | $ 5,395,844 | $ 14,761,415 |
Weighted average common shares outstanding | 2,044,767 | 2,806,060 | 2,289,646 | 2,813,192 |
Basic earnings per share | $ 1.04 | $ 4.76 | $ 2.36 | $ 5.25 |
Diluted | ||||
Net income (loss) applicable to common stock | $ 2,127,564 | $ 13,367,718 | $ 5,395,844 | $ 14,761,415 |
Add: preferred stock dividends | 479 | 479 | 1,438 | 1,438 |
Net income applicable for diluted earnings per share | $ 2,128,043 | $ 13,368,197 | $ 5,397,282 | $ 14,762,853 |
Weighted average common shares outstanding | 2,044,767 | 2,806,060 | 2,289,646 | 2,813,192 |
Add: Options | 35,296 | 21,396 | 53,081 | 19,964 |
Add: Common Stock Warrants | 0 | 341,716 | 0 | 331,511 |
Assumed weighted average common shares outstanding | 3,869,248 | 3,297,012 | 4,131,912 | 3,292,507 |
Diluted earnings per share | $ 0.55 | $ 4.05 | $ 1.31 | $ 4.48 |
Series B Preferred Stock [Member] | ||||
Diluted | ||||
Add: Preferred Stock | 1,071,200 | 0 | 1,071,200 | 0 |
Series B Preferred Stock Warrants [Member] | ||||
Diluted | ||||
Add: Preferred Stock | 590,145 | 0 | 590,145 | 0 |
Series E Preferred Stock [Member] | ||||
Basic | ||||
Less: preferred stock dividends | $ (1,438) | $ (1,438) | ||
Diluted | ||||
Add: Preferred Stock | 127,840 | 127,840 | 127,840 | 127,840 |
12. Earnings Per Share (Detai55
12. Earnings Per Share (Details Narrative) - shares | 4 Months Ended | 9 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Common Stock Options [Member] | ||
Antidilutive shares not included in EPS calculation | 124,168 | 111,668 |
13. Related Party Transactions
13. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Related Party Transactions [Abstract] | ||||
Interest expense | $ 63,194 | $ 127,280 | $ 189,583 | $ 498,510 |
15. Income Taxes (Details Narra
15. Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 39.50% | (388.60%) |
Estimated effective tax rate | 37.70% | |
Net operating loss carryforward | $ 23,300,000 | |
Operating loss carryforward expiration date | Dec. 31, 2027 |
17. Segment Reporting (Details)
17. Segment Reporting (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Sep. 30, 2016 | |
Net revenues | $ 41,377,493 | $ 19,994,363 | $ 112,102,582 | $ 59,938,720 | |
Gross profit | 16,993,897 | 5,099,414 | 46,114,499 | 17,115,488 | |
Operating income (loss) | 5,383,127 | 1,057,218 | 14,333,052 | 3,302,948 | |
Depreciation and amortization | 1,089,541 | 561,995 | 3,112,786 | 1,623,013 | |
Interest expenses | 2,127,790 | 270,007 | 5,612,319 | 950,476 | |
Net income (loss) before provision for income taxes | 3,267,989 | 1,113,919 | 8,918,547 | 3,046,749 | |
Total Assets | 125,722,016 | 125,722,016 | $ 53,467,400 | ||
Goodwill and intangible assets | 41,845,412 | 41,845,412 | 1,689,790 | ||
Retail and Online Segment [Member] | |||||
Net revenues | 19,267,959 | 508,099 | 54,020,215 | 5,284,851 | |
Gross profit | 10,953,602 | (616,754) | 30,105,864 | 1,233,705 | |
Operating income (loss) | 2,268,438 | (2,228,857) | 6,547,564 | (4,378,431) | |
Depreciation and amortization | 329,416 | 65,404 | 884,522 | 201,647 | |
Interest expenses | 1,600,589 | 10,346 | 4,283,015 | 121,319 | |
Net income (loss) before provision for income taxes | 797,504 | (1,573,841) | 2,842,206 | (3,319,139) | |
Total Assets | 41,070,216 | 41,070,216 | 15,053,993 | ||
Goodwill and intangible assets | 41,464,911 | 41,464,911 | 1,287,338 | ||
Manufacturing Segment [Member] | |||||
Net revenues | 21,898,645 | 19,243,019 | 57,429,871 | 53,881,143 | |
Gross profit | 5,839,412 | 5,483,896 | 15,388,787 | 15,143,363 | |
Operating income (loss) | 2,915,516 | 3,055,516 | 7,168,164 | 6,946,781 | |
Depreciation and amortization | 760,125 | 496,591 | 2,228,264 | 1,421,366 | |
Interest expenses | 527,201 | 259,661 | 1,329,304 | 829,157 | |
Net income (loss) before provision for income taxes | 2,175,749 | 2,457,201 | 5,363,455 | 5,643,733 | |
Total Assets | 49,717,336 | 49,717,336 | 38,333,437 | ||
Goodwill and intangible assets | 380,501 | 380,501 | 402,452 | ||
Services [Member] | |||||
Net revenues | 210,889 | 243,245 | 652,496 | 772,726 | |
Gross profit | 200,883 | 232,272 | 619,848 | 738,420 | |
Operating income (loss) | 199,173 | 230,559 | 617,324 | 734,598 | |
Depreciation and amortization | 0 | 0 | 0 | 0 | |
Interest expenses | 0 | 0 | 0 | 0 | |
Net income (loss) before provision for income taxes | 294,736 | $ 230,559 | 712,886 | $ 722,155 | |
Total Assets | 34,934,464 | 34,934,464 | 79,970 | ||
Goodwill and intangible assets | $ 0 | $ 0 | $ 0 |