Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2017 | Feb. 13, 2018 | |
OptionsToPurchaseSharesOfCommonStockMember | ||
Entity Registrant Name | LIVE VENTURES Inc | |
Entity Central Index Key | 1,045,742 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,972,136 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Assets | ||
Cash and cash equivalents | $ 1,783,041 | $ 3,972,539 |
Trade receivables, net | 7,884,255 | 10,636,925 |
Inventories | 43,675,593 | 34,501,801 |
Prepaid expenses and other current assets | 3,242,516 | 6,435,891 |
Total current assets | 56,585,405 | 55,547,156 |
Property and equipment, net | 27,479,364 | 22,817,860 |
Restricted cash | 1,285,747 | 0 |
Deposits and other assets | 275,734 | 77,520 |
Deferred taxes | 5,589,369 | 9,000,010 |
Intangible assets, net | 3,993,671 | 4,205,314 |
Goodwill | 36,946,735 | 36,946,735 |
Total assets | 132,156,025 | 128,594,595 |
Liabilities: | ||
Accounts payable | 6,607,702 | 8,224,057 |
Accrued liabilities | 15,314,194 | 8,986,734 |
Income tax payable | 350,545 | 351,689 |
Current portion of long-term debt | 42,994,795 | 48,877,536 |
Total current liabilities | 65,267,236 | 66,440,016 |
Long-term debt, net of current portion | 29,601,254 | 26,570,271 |
Note payable, related party | 2,000,000 | 2,000,000 |
Total Liabilities | 96,868,490 | 95,010,287 |
Stockholders' equity: | ||
Common stock, $0.001 par value, 10,000,000 shares authorized, 2,088,186 shares issued and 1,972,136 shares outstanding at December 31, 2017; 2,088,186 shares issued and 1,991,879 shares outstanding at September 30, 2017 | 2,088 | 2,088 |
Paid in capital | 63,236,534 | 63,157,178 |
Accumulated deficit | (26,698,453) | (28,575,716) |
Total stockholders' equity | 35,287,535 | 33,584,308 |
Total liabilities and stockholders' equity | 132,156,025 | 128,594,595 |
Common Stock | ||
Stockholders' equity: | ||
Treasury stock | (1,248,976) | (999,584) |
Series B Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock | 214 | 214 |
Series E Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock | 128 | 128 |
Treasury stock | $ (4,000) | $ 0 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2017 | Sep. 30, 2017 |
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 | 2,088,186 |
Common stock, shares outstanding | 1,972,136 | 1,991,879 |
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 | 214,244 |
Convertible preferred stock, outstanding | 214,244 | 214,244 |
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 | 77,840 | 127,840 |
Convertible preferred stock, liquidation preference per share | $ 0.30 | |
Treasury stock, shares | 50,000 | 0 |
Common Stock | ||
Stockholders' equity: | ||
Treasury stock, shares | 116,050 | 96,307 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 40,368,064 | $ 32,188,664 |
Cost of revenues | 23,972,174 | 19,543,432 |
Gross profit | 16,395,890 | 12,645,232 |
Operating expenses: | ||
General and administrative expenses | 10,399,130 | 7,058,674 |
Sales and marketing expenses | 2,075,972 | 1,907,490 |
Total operating expenses | 12,475,102 | 8,966,164 |
Operating income | 3,920,788 | 3,679,068 |
Other (expense) income: | ||
Interest expense, net | (2,468,312) | (1,449,476) |
Bargain purchase gain on acquisition | 3,773,486 | 0 |
Other income | 77,084 | 41,890 |
Total other (expense) income, net | 1,382,258 | (1,407,586) |
Income before provision for income taxes | 5,303,046 | 2,271,482 |
Provision (benefit) for income taxes | 3,425,491 | 842,909 |
Net income | $ 1,877,555 | $ 1,428,573 |
Earnings per share - basic | $ 0.95 | $ 0.71 |
Earnings per share - diluted | $ 0.5 | $ 0.37 |
Weighted average common shares outstanding - basic | 1,975,380 | 1,999,983 |
Weighted average common shares outstanding - diluted | 3,749,041 | 3,833,523 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING ACTIVITIES: | ||
Net income | $ 1,877,555 | $ 1,428,573 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of acquisition: | ||
Depreciation and amortization | 1,395,905 | 935,047 |
(Gain) on Bargain purchase of acquisition | (3,773,486) | 0 |
(Gain) Loss on disposal of property and equipment | (5,294) | 0 |
Amortization of debt issuance cost | 58,512 | 40,136 |
Stock based compensation expense | 79,356 | 1,443 |
Change in reserve for uncollectible accounts | 14,697 | 66 |
Change in reserve for obsolete inventory | 18,176 | 83,613 |
Change in deferred income taxes | 3,410,641 | 768,135 |
Changes in assets and liabilities: | ||
Trade receivables | 2,987,973 | 129,459 |
Inventories | (1,238,904) | (1,318,562) |
Prepaid expenses and other current assets | 3,262,722 | 140,826 |
Deposits and other assets | 6,627 | (55,565) |
Accounts payable | (1,616,355) | (221,388) |
Accrued liabilities | (172,832) | 1,246,047 |
Income tax payable | (1,144) | 0 |
Net cash provided by operating activities | 6,304,149 | 3,177,830 |
INVESTING ACTIVITIES: | ||
Acquisition of businesses, net of cash acquired and seller financing provided | 0 | (47,310,900) |
Purchase of intangible assets - Software | (24,675) | 0 |
Proceeds from the sale of property and equipment | 17,998 | 0 |
Purchases of property and equipment | (5,323,308) | (3,052,298) |
Net cash used in investing activities | (5,329,985) | (50,363,198) |
FINANCING ACTIVITIES: | ||
Net borrowings under revolver loans | (5,071,969) | 14,056,099 |
Payments on debt issuance costs | 0 | (1,155,000) |
Payment of series E preferred stock dividends | (4,000) | 0 |
Proceeds from issuance of notes payable | 3,931,591 | 35,889,321 |
Purchase of common treasury stock | (249,392) | 0 |
Payments on notes payable | (1,769,892) | (789,194) |
Net cash provided by (used in) financing activities | (3,163,662) | 48,001,226 |
INCREASE IN CASH AND CASH EQUIVALENTS | (2,189,498) | 815,858 |
CASH AND CASH EQUIVALENTS, beginning of period | 3,972,539 | 770,895 |
CASH AND CASH EQUIVALENTS, end of period | 1,783,041 | 1,586,753 |
Supplemental cash flow disclosures: | ||
Interest paid | 1,802,658 | 790,580 |
Noncash financing and investing activities: | ||
Notes payable issued to sellers of Vintage Stock | 0 | 10,000,000 |
Due to sellers of ApplianceSmart, Inc. | 6,500,000 | 0 |
Restated equipment deposit as a purchase of equipment | 0 | 1,816,555 |
Conversion of accrued expense liabilities into common stock | 0 | 3,384,500 |
Accrued and unpaid dividends | $ 292 | $ 479 |
1. Background and Basis of Pres
1. Background and Basis of Presentation | 3 Months Ended |
Dec. 31, 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. (“Marquis”), 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. With ApplianceSmart, Inc. (“ApplianceSmart”), the Company is engaged in the sale of new major appliances through a chain of company-owned retail stores. The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by 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 ended December 31, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2018. This financial information should be read in conjunction with the consolidated financial statements and related notes thereto as of September 30, 2017 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, 2017, as amended, filed with the U.S. Securities and Exchange Commission (the “SEC”) on January 18, 2018 (the “2017 10-K”). On November 22, 2016, the Company’s board of directors authorized a one-for-six (1:6) 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. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Principles of Consolidation The condensed consolidated financial statements represent the consolidated financial position, results of operations and cash flows of Live Ventures Incorporated and its wholly-owned subsidiaries. On July 6, 2015, the Company acquired 80% of Marquis Industries, Inc. and subsidiaries (“Marquis”). Effective November 30, 2015, the Company acquired the remaining 20% of Marquis. On November 3, 2016, the Company acquired 100% of Vintage Stock, Inc., a Missouri corporation (“Vintage Stock”), through its newly formed, wholly-owned subsidiary, Vintage Stock Affiliated Holdings LLC (“VSAH”). Effective December 30, 2017, the Company acquired 100% of ApplianceSmart Inc., a Minnesota corporation (“ApplianceSmart”), through its newly formed, wholly-owned subsidiary, ApplianceSmart Holdings LLC (“ASH”). All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP 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 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, sales return allowance, 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 long-term debt, 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). The carrying amounts of long-term debt at December 31, 2017 and September 30, 2017 approximate fair value. Cash and Restricted Cash Cash and cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Restricted cash consists of balances on deposit pledged as collateral. Fair value of cash equivalents and restricted cash 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. 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 $8,741,531 and $8,280,697 for the three months ended December 31, 2017 and 2016, respectively. Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts, which includes allowances for accounts and factored trade receivables, customer refunds, dilution and fees from local exchange carrier billing aggregators and other uncollectible accounts. The allowance for doubtful accounts is based upon historical bad debt experience and periodic evaluations of the aging and collectability of the trade receivables. This allowance is maintained at a level which the Company believes is sufficient to cover potential credit losses and trade 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 December 31, 2017 and September 30, 2017, the allowance for doubtful accounts was $1,105,920 and $1,091,223, respectively. Inventories Manufacturing Segment Inventories are valued at the lower of the inventory’s cost (first in, first out basis (“FIFO”)) or market. 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 December 31, 2017 and September 30, 2017, the reserve for obsolete inventory was $91,940. Retail and Online Segment Merchandise inventories are valued at the lower of cost or market using the average cost method which approximates 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 the lower of cost or 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 December 31, 2017 and September 30, 2017 were $1,259,805 and $1,256,629, 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. The useful lives of building and improvements are three to forty years, transportation equipment is five to ten years, machinery and equipment are five to ten years, furnishings and fixtures are three to five years and office and computer equipment are three to five years. Depreciation expense was $1,159,587 and $870,516 for the three months ended December 31, 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 The Company accounts for purchased goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other We test goodwill annually on July 1 of each fiscal year or more frequently if events arise or circumstances change that indicate that goodwill may be impaired. 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. Intangible Assets The Company’s intangible assets consist of customer relationship intangibles, trade names, licenses for the use of internet domain names, Universal Resource Locators, or URL’s, software, and marketing and technology related intangibles. Upon acquisition, critical estimates are made in valuing acquired intangible assets, which include but are not limited to: future expected cash flows from customer contracts, customer lists, and estimating cash flows from projects when completed; tradename and market position, as well as assumptions about the period of time that customer relationships will continue; and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from the assumptions used in determining the fair values. All intangible 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 – 7 to 15 years. Intangible amortization expense is $236,318 and $61,497 for the three months ended December 31, 2017 and 2016, respectively. 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 direct sales. Product revenue is recognized when the following revenue recognition criteria are met: there is persuasive evidence of an arrangement exists, delivery has occurred, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Currently, all direct product revenue is recorded on a gross basis, as the Company is the primary obligor. Revenues are recorded net of taxes collected from customers. 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. 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. Breakage income related to gift cards which are no longer reportable under state escheatment laws of $28,092 and $13,305 for the for the period of November 3, 2016 through December 31, 2016, and the three month period ended December 31, 2017, respectively, is recorded in other income in our consolidated financial statements. No amounts were recorded for breakage for any period prior to November 3, 2016. 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 The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company's assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not be realized. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its Consolidated Statements of Income. Significant management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Company uses a two-step process to evaluate tax positions. The first step requires an entity to determine whether it is more likely than not (greater than 50% chance) that the tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Company in future periods. 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 2024 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 rent 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 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. 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 rent 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 Concentration of Credit Risk The Company maintains cash balances at several banks in several states including, Arkansas, California, Colorado, Georgia, Idaho, Illinois, Kansas, Missouri, Nevada, New Mexico, New York, Oklahoma, Texas, and Utah. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 per institution as of December 31, 2017. At times, balances may exceed federally insured limits. 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 Subsequently, the FASB has issued the following standards related to ASU 2014-09 and ASU No. 2016-08: ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ASU 2016-02, Leases (Topic 842) ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products ASU 2016-09, Compensation- Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, ASU 2016-15, Statement of Cash Flows (Topic 230): Restricted Cash ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ASU 2017-04, Intangibles- Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment ASU 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivative and Hedging (Topic 815). The standard is intended to simplify the accounting for certain financial instruments with down round features. This ASU changes the classification analysis of particular equity-linked financial instruments (e.g. warrants, embedded conversion features) allowing the down round feature to be disregarded when determining whether the instrument is to be indexed to an entity’s own stock. Because of this, the inclusion of a down round feature by itself exempts an instrument from having to be remeasured at fair value each earnings period. The standard requires that entities recognize the effect of the down round feature on EPS when it is triggered (i.e., when the exercise price is adjusted downward due to the down round feature) equivalent to the change in the fair value of the instrument instantly before and after the strike price is modified. An adjustment to diluted EPS calculation may be required. The standard does not change the accounting for liability-classified instruments that occurred due to a different feature or term other than a down round feature. Additionally, entities must disclose the presence of down round features in financial instruments they issue, when the down round feature triggers a strike price adjustment, and the amount of the adjustment necessary. ASU 2017-11 is effective for all fiscal years beginning after December 15, 2018. The Company has decided to early adopt ASU 2017-11 and it did not have a significant impact on its consolidated results of operations, financial condition and cash flows. |
3. Comprehensive Income
3. Comprehensive Income | 3 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Comprehensive Income | Comprehensive income is the sum of net income and other items that must bypass the income statement because they have not been realized, including items like an unrealized holding gain or loss from available for sale securities and foreign currency translation gains or losses. For our Company, for three months ended December 31, 2017 and 2016, net income does not differ from comprehensive income. |
4. Balance Sheet Detail Informa
4. Balance Sheet Detail Information | 3 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block Supplement [Abstract] | |
Balance Sheet Detail Information | December 31, September 30, 2017 2017 (Unaudited) Trade receivables, current, net: Accounts receivable, current $ 8,645,603 $ 11,383,576 Less: Reserve for doubtful accounts (761,348 ) (746,651 ) $ 7,884,255 $ 10,636,925 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 receivables $ 8,990,175 $ 11,728,148 Less: Reserve for doubtful accounts (1,105,920 ) (1,091,223 ) $ 7,884,255 $ 10,636,925 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 881 978 Reserve for trade receivables 41,422 26,628 $ 1,105,920 $ 1,091,223 Inventory Raw materials $ 8,052,609 $ 7,709,969 Work in progress 1,030,973 987,689 Finished goods 5,128,820 3,922,362 Merchandise 30,829,936 23,230,350 45,042,338 35,850,370 Less: Inventory reserves (1,366,745 ) (1,348,569 ) $ 43,675,593 $ 34,501,801 Property and equipment, net: Building and improvements $ 9,122,625 $ 8,090,797 Transportation equipment 82,266 104,853 Machinery and equipment 22,082,982 17,402,064 Furnishings and fixtures 2,510,281 4,360,820 Office, computer equipment and other 2,189,406 224,822 35,987,560 30,183,356 Less: Accumulated depreciation (8,508,196 ) (7,365,496 ) $ 27,479,364 $ 22,817,860 Intangible assets, net: Domain name and marketing related intangibles $ 18,957 $ 18,957 Lease intangibles 1,033,412 1,033,412 Customer relationship intangibles 2,689,039 2,689,039 Purchased software 1,620,652 1,595,977 5,362,060 5,337,385 Less: Accumulated amortization (1,368,389 ) (1,132,071 ) $ 3,993,671 $ 4,205,314 Accrued liabilities: Accrued payroll and bonuses $ 2,200,981 $ 2,602,695 Due to seller of ApplianceSmart, Inc. 6,500,000 – Accrued sales and property taxes 1,031,985 824,206 Deferred rent 484,878 502,617 Accrued gift card liability 1,668,443 1,479,622 Accrued interest payable 547,405 464,184 Accrued bank overdraft 1,802,097 1,367,539 Customer deposits 197,967 182,052 Accrued expenses - other 880,438 1,563,819 $ 15,314,194 $ 8,986,734 |
5. Acquisition
5. Acquisition | 3 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition of Vintage Stock Inc. On November 3, 2016 (the “Vintage Stock 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 pre-owned movies, video games and music products, as well as ancillary products such as books, comics, toys and collectibles. Total consideration paid of $57,653,698 was paid through a combination of $8,000,000 of capital provided by the Company and debt financing provided by the TCB Revolver (as defined below) in the aggregate amount of approximately $12,000,000, mezzanine financing from the Capitala Term Loan (as defined below) of approximately $30 million, and the Company issued $10,000,000 in subordinated acquisition notes payable to the sellers of Vintage Stock, as more fully described in Note 8. The following table below summarizes our final purchase price 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 Vintage Stock Closing Date. The Company finalized its estimates after it determined that it had obtained all necessary information that existed as of the Vintage Stock Acquisition Date related to these matters. Cash and cash equivalents $ 272,590 Trade and other receivables 177,338 Inventory 18,711,192 Prepaid expenses and other current assets 814,201 Property and equipment 4,859,676 Intangible - leases 1,033,412 Intangible - trade names 1,200,000 Intangible - customer list 50,000 Intangible - customer relationship 1,000,000 Goodwill 36,946,735 Notes payable (542,074 ) Accounts payable (5,165,612 ) Accrued expenses (1,703,760 ) $ 57,653,698 In connection with the purchase of Vintage Stock, 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; all of which was recorded as general and administrative expense during the year ended September 30, 2017. Goodwill of $36,946,735 is the excess of total consideration less identifiable assets at fair value less debt assumed at fair value and is tax deductible. Goodwill is attributable to Vintage Stock’s management, assembled workforce, operating model, the number of stores, locations and competitive presence in each of its respective markets. The operating results of Vintage Stock have been included in our consolidated financial statements beginning on November 3, 2016 and are reported in our Retail and Online segment. The estimated fair value of the customer relationship intangible related to Vintage Stock was determined using the income approach, which discounts expected future cash flows to present value. The Company estimated the fair value of this intangible asset using the residual method and a present value discount rate of 17% or $1,000,000. Customer relationships relate to the Company’s ability to sell existing and future products. The Company is amortizing the Customer relationships intangible asset on a straight-line basis over an estimated life of 5 years. The estimated fair value of the trade names intangible that Vintage Stock uses – “Vintage Stock”, “EntertainMart” and “Movie Trading Company” was determined using a royalty income approach, which estimates an assumed royalty income stream and then discounts that expected future revenue or cash flow stream to present value. The Company estimated the fair value of this intangible asset using the residual method and a present value discount rate of 17% or $1,200,000. Trade names relate to the Company’s awareness by consumers in the market place. The Company is amortizing the trade names intangible asset on a straight-line basis over an estimated life of 7 years. The estimated fair value of the customer list intangible asset was determined using the cost approach, which estimates the cost to acquire each email address in the list. The Company estimated the fair value of this intangible asset to be $0.19 per acquired email address, less a discount 40% attributable to domain and trade names or a net cost per email address of $0.11 or approximately $50,000. The Company is amortizing the customer list intangible asset on a straight-line basis over an estimated life of 3 years. Acquisition of ApplianceSmart Inc. On December 30, 2017 (the “ApplianceSmart Closing Date”), the Company, through its newly formed, wholly-owned subsidiary, Appliancesmart Holdings LLC, entered into a series of agreements in connection with its purchase of Appliancesmart. Appliancesmart is a retailer engaged in the sale of new major appliances through a chain of company-owned retail stores. Total consideration of $6,500,000 is to be paid to the seller of Appliancesmart by March 31, 2018. The following table below summarizes our preliminary purchase price allocation of the consideration to be paid to the respective fair values of the assets acquired and liabilities assumed in the Appliancesmart acquisition as of the ApplianceSmart Closing Date. Trade receivables $ 250,000 Inventory 7,953,064 Prepaid expenses 69,347 Refundable deposits 204,841 Restricted cash 1,285,747 Property and equipment 510,487 Bargain gain on acquisition (3,773,486 ) $ 6,500,000 The preliminary purchase price allocation is subject to change. We will complete this analysis to determine the fair value of accounts receivable, inventory, prepaid expenses, property and equipment, intangibles, deposits, restricted cash and other assets and liabilities on the acquisition date. Once this analysis is complete, we will adjust, if necessary, the provisional amounts assigned to accounts receivable, inventory, prepaid expenses, property and equipment, intangibles, deposits, restricted cash and other assets and liabilities in the accounting period in which the analysis is completed. The operating results of Appliancesmart are included in our unaudited condensed consolidate financial statements beginning on December 31, 2017 and are reported in our Retail and Online Segment. |
6. Intangibles
6. Intangibles | 3 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | The Company’s intangible assets consist of customer relationship intangibles, trade names, licenses for the use of internet domain names, 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 – 7 to 15 years. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determined lives may be adjusted. Intangible amortization expense is $236,318 and $61,497 for the three months ended December 31, 2017 and 2016, respectively. The following summarizes estimated future amortization expense related to intangible assets that have net balances as of December 31, 2017: 2018 $ 952,310 2019 949,533 2020 782,320 2021 579,433 2022 358,411 Thereafter 371,664 $ 3,993,671 |
7. Goodwill
7. Goodwill | 3 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill is not amortized, but rather is evaluated for impairment on July 1 annually or when indicators of a potential impairment are present. The annual evaluation for impairment of goodwill is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. We believe such assumptions are also comparable to those that would be used by other marketplace participants. |
8. Long Term Debt
8. Long Term Debt | 3 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long Term Debt | 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 currently 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 BofA 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, 2017 through December 31, 2017, Marquis cumulatively borrowed $22,263,030 and repaid $25,516,014 under the BofA Revolver. Our maximum borrowings outstanding during the same period were $6,280,675. Our weighted average interest rate on those outstanding borrowings for the period of October 1, 2017 through December 31, 2017 was 3.89%. As of December 31, 2017, total additional availability under the BofA Revolver was $11,619,176; with $1,597,831 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 (the “December 21 Agreement”) modifying its then existing agreement between the parties. The December 21 Agreement, effective September 15, 2016, memorializes an October 2015 interim agreement to extend the maturity date by twelve months for 55,888 shares of Series B Convertible Preferred Stock 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 December 21 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 Kingston 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 of Series B Preferred Stock or any shares into which they may be converted or from which they may be exchanged. As a result of the December 15 Agreement, the Company recorded $2,800,000 as an outstanding accrued liability as of September 30, 2016. As of December 31, 2017, and September 30, 2017, 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 Stock 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. Note #5 is $3,931,591, secured by equipment. The Equipment Loan #5 is due December 28, 2024, payable in 84 monthly payments of $54,943 beginning January 28, 2018, with the final payment due December 28, 2024, interest at 4.67% per annum. Texas Capital Bank Revolver Loan On November 3, 2016, Vintage Stock entered into a $20 million credit agreement (as amended on January 23, 2017 and as further amended on September 20, 2017) 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 currently 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 Stock 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 Stock 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 October 1, 2017 through December 31, 2017, Vintage Stock cumulatively borrowed $18,424,451 and repaid $20,243,439 under the TCB Revolver. Our maximum borrowings outstanding during the period of October 1, 2017 through December 31, 2017 were $16,077,015. Our weighted average interest rate on those outstanding borrowings for the period of November 3, 2016 through June 30, 2017 was 4.02731%. As of December 31, 2017, total additional availability under the TCB Revolver was $6,214,324, with $10,701,449 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 Term Loans place certain restrictions and covenants on Vintage Stock, including a limitation on asset sales, additional liens, investment, loans, guarantees, acquisitions and incurrence of additional indebtedness for Vintage Stock. Vintage Stock is required to maintain a fixed charge coverage ratio of 1.3 for year ended September 30, 2017, 1.4 for year ended September 30, 2018 and 1.5 for all years thereafter. For years ended September 30, 2017 and thereafter, Vintage Stock is required to incur no more than $1.2 million in annual capital expenditures subject to certain cumulative quarter and year to date covenants. Vintage Stock is required to maintain a total leverage ratio of 3.25 for year ended September 30, 2017, 2.5 for year ended September 30, 2018 and 2.0 for all years thereafter. In addition, for quarter ended December 31, 2017, the total leverage ratio cannot exceed 3.0 and for quarters ended March 31, 2018 and June 30, 2018, the total leverage ratio cannot exceed 2.75. The Term Loans provide 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 Marquis or its subsidiaries, defaults relating to certain other indebtedness, imposition of certain judgments and mergers or the liquidation of Vintage Stock or certain of its subsidiaries. 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 October 1, 2017 through December 31, 2017 was 16.78%. In connection with the Capitala Term Loan, Vintage Stock 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. Loan Covenant Compliance We were in compliance with all covenants under our existing revolving and other loan agreements as of September 30, 2017 due to waivers granted by both Texas Capital Bank for the TCB Revolver and Capitala for the Capitala Term Loan. We are not in compliance as of December 31, 2017 with the Capitala Term Loan total leverage ratio and do not anticipate that we will regain compliance with this covenant until sometime in fiscal year ended September 30, 2019 based upon our current operating forecast. We are seeking alternatives to resolve the out of compliance condition, including negotiating with Capitala and seeking alternative credit sources. Resolution of the out of compliance condition has not occurred as of February 14, 2018, the date of issuance of these financial statements. The Capitala Term Loan has been classified as a short-term obligation at December 31, 2017 as a result of this default. Long-term debt as of December 31, 2017 and September 30, 2017 consisted of the following: December 31, September 30, 2017 2017 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 $ 1,597,832 $ 4,850,815 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 10,701,451 12,520,437 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 27,417,505 28,310,505 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 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 3,884,108 4,097,764 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 1,888,137 1,969,954 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. 3,226,294 3,341,642 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. 990,476 1,025,782 Note #5 Payable to Banc of America Leasing & Capital LLC - interest at 4.67% per annum, with interest and principal payable monthly in the amount of $54,943 for 84 months, beginning January 28, 2018, secured by equipment. 3,931,591 – 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 9,321,966 9,328,208 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 – 174,757 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 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 notes payable 73,890,889 76,801,159 Less unamortized debt issuance costs (1,294,840 ) (1,353,352 ) Net amount 72,596,049 75,447,807 Less current portion (42,994,795 ) (48,877,536 ) Long-term portion $ 29,601,254 $ 26,570,271 Future maturities of debt at December 31, 2017 are as follows which does not include related party debt separately stated: Years ending December 31, 2018 $ 42,994,795 2019 2,453,414 2020 2,565,333 2021 3,292,214 2022 11,376,961 Thereafter 11,208,172 Total $ 73,890,889 |
9. Note Payable, Related Party
9. Note Payable, Related Party | 3 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Note Payable, Related Party | In connection with the purchase of Marquis by the Company, the Company entered into a mezzanine loan in the amount of up to $7,000,000 with Isaac Capital Fund (“ICF”), a private lender whose managing member is Jon Isaac, our President and Chief Executive Officer. The ICF mezzanine loan bears interest at 12.5% per annum with payment obligations of interest each month and all principal due in January 2021. As of December 31, 2017 and September 30, 2017, there was $2,000,000 outstanding on this mezzanine loan. |
10. Stockholders' Equity
10. Stockholders' Equity | 3 Months Ended |
Dec. 31, 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 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 share of Series B Preferred Stock 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 Isaac Capital Group (“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 three months ended December 31, 2017, the Company did not issue any shares of Series B Convertible Preferred Stock. During the three months ended December 31, 2016, 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 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 December 31, 2017, there were 127,840 shares of Series E Convertible Preferred Stock and 77,840 shares 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. On November 18, 2017, the Company repurchased 50,000 shares of Series E Convertible Preferred Stock for an aggregate purchase price of $4,000. Series E Convertible Preferred Stock Dividends During the three months ended December 31, 2017 and December 31, 2016, the Company accrued dividends of $292 and $479, respectively, payable to holders of Series E preferred stock. As of December 31, 2017 and September 30, 2017, unpaid dividends were $292 and $959, respectively. Common Stock On November 22, 2016, the Company’s board of directors authorized a one-for-six (1:6) 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 footnotes has been retroactively adjusted to reflect the decreased number of shares resulting in this action. During the three months ended December 31, 2017, the Company did not issue any shares of common stock. During the three months ended December 31, 2016, the Company issued: 58,333 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. Treasury Stock For the year ended September 30, 2017, the Company purchased a total of 96,307 shares of its common stock in the open market (treasury shares) over a two-year period, for $999,584. For the three-month period ended December 31, 2017, the Company purchased 19,743 additional shares of its common stock in the open market (treasury shares) for $249,392. 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. |
11. Warrants
11. Warrants | 3 Months Ended |
Dec. 31, 2017 | |
Warrants and Rights Note Disclosure [Abstract] | |
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 at December 31, 2017: Number of units - Series B Convertible preferred warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Intrinsic Value Outstanding at December 31, 2017 118,029 $ 20.80 0.87 $ 6,974,953 Exercisable at December 31, 2017 118,029 $ 20.80 0.87 $ 6,974,953 As of September 30, 2016, the Company had 590,146 common stock warrants outstanding with weighted average exercise price, weighted average remaining contractual term and intrinsic value of $4.14, 1.73 years and $4,307,493, respectively. 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. Warrants for 10,914 and 12,383 shares of Series B Convertible Preferred Stock expired on September 10, 2017 and December 11, 2017, respectively. On January 16, 2018, the Company agreed to extend the expiration date on all warrants outstanding if not exercised prior to expiration date by an additional two years, including the September 10, 2017 and December 11, 2017 expired warrants. Warrants outstanding and exercisable as of December 31, 2017 and September 30, 2017 reflect the additional extension of time by two years for the 10,914 and 12,383 warrants previously expired. The exercise price for the Series B Convertible Preferred Stock warrants outstanding and exercisable at December 31, 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 |
12. Stock-based Compensation
12. Stock-based Compensation | 3 Months Ended |
Dec. 31, 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 three months ended December 31, 2017: Weighted Weighted Average Average Number of Exercise Remaining Shares Price Contractual Life Intrinsic Value Outstanding at September 30, 2017 211,668 $ 13.19 3.47 $ 454,417 Granted 20,000 32.24 10.00 Exercised – Forfeited – Outstanding at December 31, 2017 231,668 $ 14.84 4.04 $ 915,208 Exercisable at December 31, 2017 179,167 $ 8.68 2.15 $ 851,208 The Company recognized compensation expense of $79,356 and $1,436 during the three months ended December 31, 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 December 31, 2017, the Company has $434,366 of unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the company expects to recognize as compensation expense through October of 2022. The exercise price for stock options outstanding and exercisable outstanding at December 31, 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 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 8,000 23.41 8,000 27.60 8,000 31.74 8,000 36.50 8,000 41.98 231,668 179,167 The following table summarizes information about the Company’s non-vested shares outstanding as of December 31, 2017: Weighted Average Number of Grant-Date Non-vested Shares Shares Fair Value Non-vested at September 30, 2017 36,668 $ 17.70 Granted 20,000 $ 10.14 Vested (4,167 ) $ 8.41 Non-vested at December 31, 2017 52,501 $ 13.89 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% |
13. Earnings Per Share
13. Earnings Per Share | 3 Months Ended |
Dec. 31, 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: 2017 2016 Basic Net income $ 1,877,555 $ 1,428,573 Less: preferred stock dividends (292 ) (479 ) Net income applicable to common stock $ 1,877,263 $ 1,428,094 Weighted average common shares outstanding 1,975,380 1,999,983 Basic earnings per share $ 0.95 $ 0.71 Diluted Net income applicable to common stock $ 1,877,263 $ 1,428,094 Add: preferred stock dividends 292 479 Net income applicable for diluted earnings per share $ 1,877,555 $ 1,428,573 Weighted average common shares outstanding 1,975,380 1,999,983 Add: Options 34,476 44,355 Add: Common Stock Warrants – – 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 77,840 127,840 Assumed weighted average common shares outstanding 3,749,041 3,833,523 Diluted earnings per share $ 0.50 $ 0.37 There are 40,000 and 0 common stock options that are anti-dilutive that are not included in the three months ended December 31, 2017 and 2016, diluted earnings per share computations, respectively. |
14. Related Party Transactions
14. Related Party Transactions | 3 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | In connection with the purchase of Marquis Industries, Inc., the Company entered into a mezzanine loan in the amount of up to $7,000,000 with ICF, a private lender whose managing member is Jon Isaac, the Chief Executive Officer of the Company. The ICF mezzanine loan bears interest at a rate of 12.5% per annum with payment obligations of interest each month and all principal due in January 2021. As of December 31, 2017 and September 30, 2017, respectively, there was $2,000,000 outstanding on this mezzanine loan. During the three months ended December 31, 2017 and 2016, the Company recognized total interest expense of $63,889 and $63,889, respectively, associated with the ICF notes. Customer Connexx LLC, a wholly-owned subsidiary of Appliance Recycling Centers of America, Inc. (“ARCA”), rents approximately 9,879 square feet of office space from the Company at its Las Vegas office which totals 11,100 square feet. ARCA paid the Company $45,388 in rent and other common area reimbursed expenses for the three months ended December 31, 2017. Tony Isaac, a member of the Board of Directors of the Company and Virland Johnson, Chief Financial Officer of the Company are Chief Executive Officer and Board of Directors member and Chief Financial Officer of ARCA, respectively. Warrants for 10,914 and 12,383 shares of Series B Convertible Preferred Stock expired on September 10, 2017 and December 11, 2017, respectively. On January 16, 2018, the Company agreed to extend the expiration date on all warrants outstanding if not exercised prior to expiration date by an additional two years, including the September 10, 2017 and December 11, 2017 expired warrants. Warrants outstanding and exercisable as of December 31, 2017 and September 30, 2017 reflect the additional extension of time by two years for the 10,914 and 12,383 warrants previously expired. On December 30, 2017, ASH, a wholly owned subsidiary of the Company, entered into a Stock Purchase Agreement (the “Agreement”) with ARCA and ApplianceSmart, a subsidiary of ARCA. Pursuant to the Agreement, the Purchaser purchased from ARCA all of the issued and outstanding shares of capital stock (the “Stock”) of ApplianceSmart in exchange for $6,500,000 (the “Purchase Price”). The shares of Stock were delivered into escrow and will be released to the Purchaser upon Purchaser’s receipt of third-party financing in an amount sufficient to fund the Purchase Price, and the subsequent delivery of such funds to certain third-party lenders of ARCA and ApplianceSmart, all of which the parties expect to occur prior to March 31, 2018. In connection with the acquisition of Vintage Stock on November 3, 2016, Rodney Spriggs, President of Vintage Stock holds a 41.134752% interest in the $10,000,000 Seller Subordinated Acquisition Note payable by VSAH. The terms of payment are interest only, payable monthly on the 1 st Also see Note 5, 8, 9, 10 and 11. |
15. Commitments and Contingenci
15. Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Litigation The Company is involved in various claims and lawsuits arising in the normal course of 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 December 31, 2017, results of operations, cash flows or liquidity of the Company. |
16. Income Taxes
16. Income Taxes | 3 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The income tax rate for the three months ended December 31, 2017 and December 31, 2016 were 64.6% and 37.1%, respectively. The effective income tax rate differs from the U.S. federal statuary rate primarily due to state taxes, extraordinary gains, and certain non-deductible expenses. As of December 31, 2017, and December 31, 2016 the Company had no uncertain tax positions. 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 $27.6 million for U.S. income tax purposes, these net operating loss carryforwards are subject to IRC Section 382 limitations and can be carried forward indefinitely. During the first quarter, ended December 31, 2017, the Company revised its estimated annual effective rate to reflect a change in the federal statutory rate from 34% to 21%, resulting from legislation that was enacted on December 22, 2017. The rate change is administratively effective as of January 1, 2018, which requires the Company to use a blended rate for the annual period. As a result, the blended federal statutory rate for the year is 24.53%. In addition, we recognized a tax expense in our tax provision for the period related to adjusting our deferred tax balance to reflect the new corporate tax rate. As a result, income tax expense reported for the three months was adjusted to reflect the effects of the change in tax law and resulted in an increase in income tax expense of approximately $2.3 million for the three-month period ended December 31, 2017. |
17. Segment Reporting
17. Segment Reporting | 3 Months Ended |
Dec. 31, 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, ApplianceSmart, Modern Everyday and LiveDeal.com, and the Services segment consists of the directory services business. The following tables summarize segment information for the three months ended December 31, 2017 and 2016: Three Months Ended December 31, 2017 2016 (Unaudited) Revenues Retail and Online $ 21,293,471 $ 14,776,723 Manufacturing 18,878,535 17,187,534 Services 196,058 224,407 $ 40,368,064 $ 32,188,664 Gross profit Retail and Online $ 11,455,802 $ 8,067,608 Manufacturing 4,752,568 4,363,293 Services 187,520 214,331 $ 16,395,890 $ 12,645,232 Operating income Retail and Online $ 2,231,476 $ 1,743,967 Manufacturing 1,502,254 1,721,260 Services 187,058 213,841 $ 3,920,788 $ 3,679,068 Depreciation and amortization Retail and Online $ 677,461 $ 228,431 Manufacturing 718,444 706,616 Services – – $ 1,395,905 $ 935,047 Interest expense, net Retail and Online $ 2,022,407 $ 1,079,306 Manufacturing 445,905 370,170 Services – – $ 2,468,312 $ 1,449,476 Net income before provision for income taxes Retail and Online $ 4,052,595 $ 851,110 Manufacturing 1,063,393 1,206,531 Services 187,058 213,841 $ 5,303,046 $ 2,271,482 As of As of December 31, September 30, 2017 2017 Total assets Retail and Online $ 85,459,467 $ 81,703,371 Manufacturing 46,611,136 46,783,429 Services 85,422 107,795 $ 132,156,025 $ 128,594,595 Intangible assets and goodwill Retail and Online $ 40,574,539 $ 40,778,865 Manufacturing 365,867 373,184 Services – – $ 40,940,406 $ 41,152,049 Cost of revenue Retail and Online $ 9,837,669 $ 6,709,115 Manufacturing 14,125,967 12,824,241 Services 8,538 10,076 $ 23,972,174 $ 19,543,432 G&A Retail and Online $ 9,011,603 $ 6,063,363 Manufacturing 1,387,066 994,821 Services 461 490 $ 10,399,130 $ 7,058,674 Sales and marketing Retail and Online $ 212,723 $ 260,278 Manufacturing 1,863,248 1,647,212 Services 1 – $ 2,075,972 $ 1,907,490 Other income Retail and Online $ 3,843,526 $ 186,449 Manufacturing 7,044 (144,559 ) Services – – $ 3,850,570 $ 41,890 |
18. Subsequent Events
18. Subsequent Events | 3 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | None. |
2. Summary of Significant Acc24
2. Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements represent the consolidated financial position, results of operations and cash flows of Live Ventures Incorporated and its wholly-owned subsidiaries. On July 6, 2015, the Company acquired 80% of Marquis Industries, Inc. and subsidiaries (“Marquis”). Effective November 30, 2015, the Company acquired the remaining 20% of Marquis. On November 3, 2016, the Company acquired 100% of Vintage Stock, Inc., a Missouri corporation (“Vintage Stock”), through its newly formed, wholly-owned subsidiary, Vintage Stock Affiliated Holdings LLC (“VSAH”). Effective December 30, 2017, the Company acquired 100% of ApplianceSmart Inc., a Minnesota corporation (“ApplianceSmart”), through its newly formed, wholly-owned subsidiary, ApplianceSmart Holdings LLC (“ASH”). All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP 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 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, sales return allowance, 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 long-term debt, 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). The carrying amounts of long-term debt at December 31, 2017 and September 30, 2017 approximate fair value. |
Cash and Restricted Cash | Cash and Restricted Cash Cash and cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Restricted cash consists of balances on deposit pledged as collateral. Fair value of cash equivalents and restricted cash 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. 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 $8,741,531 and $8,280,697 for the three months ended December 31, 2017 and 2016, respectively. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts, which includes allowances for accounts and factored trade receivables, customer refunds, dilution and fees from local exchange carrier billing aggregators and other uncollectible accounts. The allowance for doubtful accounts is based upon historical bad debt experience and periodic evaluations of the aging and collectability of the trade receivables. This allowance is maintained at a level which the Company believes is sufficient to cover potential credit losses and trade 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 December 31, 2017 and September 30, 2017, the allowance for doubtful accounts was $1,105,920 and $1,091,223, respectively. |
Inventories | Inventories Manufacturing Segment Inventories are valued at the lower of the inventory’s cost (first in, first out basis (“FIFO”)) or market. 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 December 31, 2017 and September 30, 2017, the reserve for obsolete inventory was $91,940. Retail and Online Segment Merchandise inventories are valued at the lower of cost or market using the average cost method which approximates 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 the lower of cost or 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 December 31, 2017 and September 30, 2017 were $1,259,805 and $1,256,629, 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. The useful lives of building and improvements are three to forty years, transportation equipment is five to ten years, machinery and equipment are five to ten years, furnishings and fixtures are three to five years and office and computer equipment are three to five years. Depreciation expense was $1,159,587 and $870,516 for the three months ended December 31, 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 | Goodwill The Company accounts for purchased goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other We test goodwill annually on July 1 of each fiscal year or more frequently if events arise or circumstances change that indicate that goodwill may be impaired. 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. |
Intangible Assets | Intangible Assets The Company’s intangible assets consist of customer relationship intangibles, trade names, licenses for the use of internet domain names, Universal Resource Locators, or URL’s, software, and marketing and technology related intangibles. Upon acquisition, critical estimates are made in valuing acquired intangible assets, which include but are not limited to: future expected cash flows from customer contracts, customer lists, and estimating cash flows from projects when completed; tradename and market position, as well as assumptions about the period of time that customer relationships will continue; and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from the assumptions used in determining the fair values. All intangible 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 – 7 to 15 years. Intangible amortization expense is $236,318 and $61,497 for the three months ended December 31, 2017 and 2016, respectively. |
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 direct sales. Product revenue is recognized when the following revenue recognition criteria are met: there is persuasive evidence of an arrangement exists, delivery has occurred, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Currently, all direct product revenue is recorded on a gross basis, as the Company is the primary obligor. Revenues are recorded net of taxes collected from customers. 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. 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. Breakage income related to gift cards which are no longer reportable under state escheatment laws of $28,092 and $13,305 for the for the period of November 3, 2016 through December 31, 2016, and the three month period ended December 31, 2017, respectively, is recorded in other income in our consolidated financial statements. No amounts were recorded for breakage for any period prior to November 3, 2016. |
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 The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company's assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not be realized. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its Consolidated Statements of Income. Significant management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Company uses a two-step process to evaluate tax positions. The first step requires an entity to determine whether it is more likely than not (greater than 50% chance) that the tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Company in future periods. |
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 2024 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 rent 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 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. 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 rent 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 |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains cash balances at several banks in several states including, Arkansas, California, Colorado, Georgia, Idaho, Illinois, Kansas, Missouri, Nevada, New Mexico, New York, Oklahoma, Texas, and Utah. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 per institution as of December 31, 2017. At times, balances may exceed federally insured limits. |
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 Subsequently, the FASB has issued the following standards related to ASU 2014-09 and ASU No. 2016-08: ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ASU 2016-02, Leases (Topic 842) ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products ASU 2016-09, Compensation- Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, ASU 2016-15, Statement of Cash Flows (Topic 230): Restricted Cash ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ASU 2017-04, Intangibles- Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment ASU 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivative and Hedging (Topic 815). The standard is intended to simplify the accounting for certain financial instruments with down round features. This ASU changes the classification analysis of particular equity-linked financial instruments (e.g. warrants, embedded conversion features) allowing the down round feature to be disregarded when determining whether the instrument is to be indexed to an entity’s own stock. Because of this, the inclusion of a down round feature by itself exempts an instrument from having to be remeasured at fair value each earnings period. The standard requires that entities recognize the effect of the down round feature on EPS when it is triggered (i.e., when the exercise price is adjusted downward due to the down round feature) equivalent to the change in the fair value of the instrument instantly before and after the strike price is modified. An adjustment to diluted EPS calculation may be required. The standard does not change the accounting for liability-classified instruments that occurred due to a different feature or term other than a down round feature. Additionally, entities must disclose the presence of down round features in financial instruments they issue, when the down round feature triggers a strike price adjustment, and the amount of the adjustment necessary. ASU 2017-11 is effective for all fiscal years beginning after December 15, 2018. The Company has decided to early adopt ASU 2017-11 and it did not have a significant impact on its consolidated results of operations, financial condition and cash flows. |
4. Balance Sheet Detail Infor25
4. Balance Sheet Detail Information (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of trade and other receivables | December 31, September 30, 2017 2017 (Unaudited) Trade receivables, current, net: Accounts receivable, current $ 8,645,603 $ 11,383,576 Less: Reserve for doubtful accounts (761,348 ) (746,651 ) $ 7,884,255 $ 10,636,925 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 receivables $ 8,990,175 $ 11,728,148 Less: Reserve for doubtful accounts (1,105,920 ) (1,091,223 ) $ 7,884,255 $ 10,636,925 |
Components of allowance for doubtful accounts | December 31, September 30, 2017 2017 (Unaudited) 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 881 978 Reserve for trade receivables 41,422 26,628 $ 1,105,920 $ 1,091,223 |
Schedule of inventory | December 31, September 30, 2017 2017 (Unaudited) Inventory Raw materials $ 8,052,609 $ 7,709,969 Work in progress 1,030,973 987,689 Finished goods 5,128,820 3,922,362 Merchandise 30,829,936 23,230,350 45,042,338 35,850,370 Less: Inventory reserves (1,366,745 ) (1,348,569 ) $ 43,675,593 $ 34,501,801 |
Schedule of property and equipment | December 31, September 30, 2017 2017 (Unaudited) Property and equipment, net: Building and improvements $ 9,122,625 $ 8,090,797 Transportation equipment 82,266 104,853 Machinery and equipment 22,082,982 17,402,064 Furnishings and fixtures 2,510,281 4,360,820 Office, computer equipment and other 2,189,406 224,822 35,987,560 30,183,356 Less: Accumulated depreciation (8,508,196 ) (7,365,496 ) $ 27,479,364 $ 22,817,860 |
Schedule of intangible assets | December 31, September 30, 2017 2017 (Unaudited) Intangible assets, net: Domain name and marketing related intangibles $ 18,957 $ 18,957 Lease intangibles 1,033,412 1,033,412 Customer relationship intangibles 2,689,039 2,689,039 Purchased software 1,620,652 1,595,977 5,362,060 5,337,385 Less: Accumulated amortization (1,368,389 ) (1,132,071 ) $ 3,993,671 $ 4,205,314 |
Schedule of accrued liabilities | December 31, September 30, 2017 2017 (Unaudited) Accrued liabilities: Accrued payroll and bonuses $ 2,200,981 $ 2,602,695 Due to seller of ApplianceSmart, Inc. 6,500,000 – Accrued sales and property taxes 1,031,985 824,206 Deferred rent 484,878 502,617 Accrued gift card liability 1,668,443 1,479,622 Accrued interest payable 547,405 464,184 Accrued bank overdraft 1,802,097 1,367,539 Customer deposits 197,967 182,052 Accrued expenses - other 880,438 1,563,819 $ 15,314,194 $ 8,986,734 |
5. Acquisition (Tables)
5. Acquisition (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
VSAH [Member] | |
Schedule of acquired assets and liabilities | Cash and cash equivalents $ 272,590 Trade and other receivables 177,338 Inventory 18,711,192 Prepaid expenses and other current assets 814,201 Property and equipment 4,859,676 Intangible - leases 1,033,412 Intangible - trade names 1,200,000 Intangible - customer list 50,000 Intangible - customer relationship 1,000,000 Goodwill 36,946,735 Notes payable (542,074 ) Accounts payable (5,165,612 ) Accrued expenses (1,703,760 ) $ 57,653,698 |
ApplianceSmart Inc [Member] | |
Schedule of acquired assets and liabilities | Trade receivables $ 250,000 Inventory 7,953,064 Prepaid expenses 69,347 Refundable deposits 204,841 Restricted cash 1,285,747 Property and equipment 510,487 Bargain gain on acquisition (3,773,486 ) $ 6,500,000 |
6. Intangibles (Tables)
6. Intangibles (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Future amortization expense related to intangible assets | 2018 $ 952,310 2019 949,533 2020 782,320 2021 579,433 2022 358,411 Thereafter 371,664 $ 3,993,671 |
8. Long Term Debt (Tables)
8. Long Term Debt (Tables) | 3 Months Ended |
Dec. 31, 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 | December 31, September 30, 2017 2017 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 $ 1,597,832 $ 4,850,815 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 10,701,451 12,520,437 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 27,417,505 28,310,505 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 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 3,884,108 4,097,764 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 1,888,137 1,969,954 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. 3,226,294 3,341,642 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. 990,476 1,025,782 Note #5 Payable to Banc of America Leasing & Capital LLC - interest at 4.67% per annum, with interest and principal payable monthly in the amount of $54,943 for 84 months, beginning January 28, 2018, secured by equipment. 3,931,591 – 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 9,321,966 9,328,208 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 – 174,757 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 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 notes payable 73,890,889 76,801,159 Less unamortized debt issuance costs (1,294,840 ) (1,353,352 ) Net amount 72,596,049 75,447,807 Less current portion (42,994,795 ) (48,877,536 ) Long-term portion $ 29,601,254 $ 26,570,271 |
Future maturities of debt | Years ending December 31, 2018 $ 42,994,795 2019 2,453,414 2020 2,565,333 2021 3,292,214 2022 11,376,961 Thereafter 11,208,172 Total $ 73,890,889 |
11. Warrants (Tables)
11. Warrants (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrant activity | Number of units - Series B Convertible preferred warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Intrinsic Value Outstanding at December 31, 2017 118,029 $ 20.80 0.87 $ 6,974,953 Exercisable at December 31, 2017 118,029 $ 20.80 0.87 $ 6,974,953 |
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 |
12. Stock-based Compensation (T
12. Stock-based Compensation (Tables) | 3 Months Ended |
Dec. 31, 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, 2017 211,668 $ 13.19 3.47 $ 454,417 Granted 20,000 32.24 10.00 Exercised – Forfeited – Outstanding at December 31, 2017 231,668 $ 14.84 4.04 $ 915,208 Exercisable at December 31, 2017 179,167 $ 8.68 2.15 $ 851,208 |
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 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 8,000 23.41 8,000 27.60 8,000 31.74 8,000 36.50 8,000 41.98 231,668 179,167 |
Non-vested share activity | Weighted Average Number of Grant-Date Non-vested Shares Shares Fair Value Non-vested at September 30, 2017 36,668 $ 17.70 Granted 20,000 $ 10.14 Vested (4,167 ) $ 8.41 Non-vested at December 31, 2017 52,501 $ 13.89 |
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% |
13. Earnings Per Share (Tables)
13. Earnings Per Share (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Basic and diluted net loss per share | 2017 2016 Basic Net income $ 1,877,555 $ 1,428,573 Less: preferred stock dividends (292 ) (479 ) Net income applicable to common stock $ 1,877,263 $ 1,428,094 Weighted average common shares outstanding 1,975,380 1,999,983 Basic earnings per share $ 0.95 $ 0.71 Diluted Net income applicable to common stock $ 1,877,263 $ 1,428,094 Add: preferred stock dividends 292 479 Net income applicable for diluted earnings per share $ 1,877,555 $ 1,428,573 Weighted average common shares outstanding 1,975,380 1,999,983 Add: Options 34,476 44,355 Add: Common Stock Warrants – – 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 77,840 127,840 Assumed weighted average common shares outstanding 3,749,041 3,833,523 Diluted earnings per share $ 0.50 $ 0.37 |
17. Segment Reporting (Tables)
17. Segment Reporting (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment reporting | Three Months Ended December 31, 2017 2016 (Unaudited) Revenues Retail and Online $ 21,293,471 $ 14,776,723 Manufacturing 18,878,535 17,187,534 Services 196,058 224,407 $ 40,368,064 $ 32,188,664 Gross profit Retail and Online $ 11,455,802 $ 8,067,608 Manufacturing 4,752,568 4,363,293 Services 187,520 214,331 $ 16,395,890 $ 12,645,232 Operating income Retail and Online $ 2,231,476 $ 1,743,967 Manufacturing 1,502,254 1,721,260 Services 187,058 213,841 $ 3,920,788 $ 3,679,068 Depreciation and amortization Retail and Online $ 677,461 $ 228,431 Manufacturing 718,444 706,616 Services – – $ 1,395,905 $ 935,047 Interest expense, net Retail and Online $ 2,022,407 $ 1,079,306 Manufacturing 445,905 370,170 Services – – $ 2,468,312 $ 1,449,476 Net income before provision for income taxes Retail and Online $ 4,052,595 $ 851,110 Manufacturing 1,063,393 1,206,531 Services 187,058 213,841 $ 5,303,046 $ 2,271,482 |
2. Summary of Significant Acc33
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Trade receivables factored | $ 8,741,531 | $ 8,280,697 | |
Allowance for doubtful accounts | 1,105,920 | 1,091,223 | |
Depreciation expense | 1,159,587 | $ 870,516 | |
Intangible amortization expense | 236,318 | 61,497 | |
Allowance for obsolete inventory | 1,366,745 | $ 1,348,569 | |
Federal Deposit Insurance Corporation insured amount | 250,000 | ||
Breakage income related from gift cards | $ 13,305 | $ 28,092 | |
Domain Name and Marketing [Member] | |||
Useful lifes of intangible assets | 3-20 years | ||
Software [Member] | |||
Useful lifes of intangible assets | 3-5 years | ||
Customer Relationships [Member] | |||
Useful lifes of intangible assets | 7-15 years | ||
Marquis Affiliated Holdings, LLC [Member] | Marquis Industries, Inc. [Member] | |||
Percentage owned in subsidiary | 100.00% |
4. Balance Sheet Detail Infor34
4. Balance Sheet Detail Information (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Trade and other receivables, current, net: | ||
Accounts receivable, current | $ 8,645,603 | $ 11,383,576 |
Less: Allowance for doubtful accounts | (761,348) | (746,651) |
Trade and other receivables, current, net | 7,884,255 | 10,636,925 |
Trade and other receivables, long term, net: | ||
Accounts receivable, long term | 344,572 | 344,572 |
Less: Allowance for doubtful accounts | (344,572) | (344,572) |
Trade and other receivables, long term, net | ||
Total trade and other receivables, net: | ||
Gross receivables | 8,990,175 | 11,728,148 |
Less: Allowance for doubtful accounts | (1,105,920) | (1,091,223) |
Total trade and other receivables, net | 7,884,255 | 10,636,925 |
Components of reserve for doubtful accounts | ||
Reserve for dilution and fees on amounts due from billing aggregators | 1,063,617 | 1,063,617 |
Reserve for customer refunds | 881 | 978 |
Reserve for trade receivables | 41,422 | 26,628 |
Total reserve for doubtful accounts | 1,105,920 | 1,091,223 |
Inventory | ||
Raw materials | 8,052,609 | 7,709,969 |
Work in progress | 1,030,973 | 987,689 |
Finished goods | 5,128,820 | 3,922,362 |
Merchandise | 30,829,936 | 23,230,350 |
Total inventory, gross | 45,042,338 | 35,850,370 |
Less: obsolescence reserve | (1,366,745) | (1,348,569) |
Total inventory, net | 43,675,593 | 34,501,801 |
Property and equipment, net: | ||
Building and improvements | 9,122,625 | 8,090,797 |
Transportation equipment | 82,266 | 104,853 |
Machinery and equipment | 22,082,982 | 17,402,064 |
Furnishings and fixtures | 2,510,281 | 4,360,820 |
Office, computer equipment and other | 2,189,406 | 224,822 |
Plant Property and Equipment,Gross | 35,987,560 | 30,183,356 |
Less: Accumulated depreciation | (8,508,196) | (7,365,496) |
Property and equipment, net | 27,479,364 | 22,817,860 |
Intangible assets, net: | ||
Domain name and marketing related intangibles | 18,957 | 18,957 |
Lease intangibles | 1,033,412 | 1,033,412 |
Customer Relationships intangible | 2,689,039 | 2,689,039 |
Purchased software | 1,620,652 | 1,595,977 |
Intangible assets, gross | 5,362,060 | 5,337,385 |
Less: Accumulated amortization | (1,368,389) | (1,132,071) |
Intangible assets, net | 3,993,671 | 4,205,314 |
Accrued liabilities: | ||
Accrued software costs | 2,200,981 | 2,602,695 |
Accrued fee due Kingston Diversified Holdings LLC | 6,500,000 | |
Accrued sales and property taxes | 1,031,985 | 824,206 |
Deferred rent | 484,878 | 502,617 |
Accrued gift card liability | 1,668,443 | 1,479,622 |
Accrued interest payable | 547,405 | 464,184 |
Accrued uncashed checks | 1,802,097 | 1,367,539 |
Customer deposits | 197,967 | 182,052 |
Accrued expenses - other | 880,438 | 1,563,819 |
Total accrued liabilities | $ 15,314,194 | $ 8,986,734 |
5. Acquisitions (Details - Purc
5. Acquisitions (Details - Purchase allocation) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Goodwill | $ 36,946,735 | $ 36,946,735 |
Vintage Stock Inc [Member] | ||
Cash and cash equivalents | 272,590 | |
Accounts receivable | 177,338 | |
Inventory | 18,711,192 | |
Prepaid and other current assets | 814,201 | |
Property and equipment | 4,859,676 | |
Goodwill | 39,946,735 | |
Notes payable | (542,074) | |
Accounts payable | (5,165,612) | |
Accrued expenses | (1,703,760) | |
Purchase price | 57,653,698 | |
ApplianceSmart Inc [Member] | ||
Accounts receivable | 250,000 | |
Inventory | 7,953,064 | |
Prepaid and other current assets | 69,347 | |
Refundable deposits | 204,841 | |
Restricted cash | 1,285,747 | |
Property and equipment | 510,487 | |
Bargain purchase gain | (3,773,486) | |
Purchase price | 6,500,000 | |
Intangible - Trade Names [Member] | Vintage Stock Inc [Member] | ||
Intangibles | 1,200,000 | |
Intangible Leases [Member] | Vintage Stock Inc [Member] | ||
Intangibles | 1,033,412 | |
Intangible - Customer List [Member] | Vintage Stock Inc [Member] | ||
Intangibles | 50,000 | |
Intangible - Customer Relationship [Member] | Vintage Stock Inc [Member] | ||
Intangibles | $ 1,000,000 |
6. Intangibles (Details)
6. Intangibles (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense, 2018 | $ 952,310 | |
Amortization expense, 2019 | 949,533 | |
Amortization expense, 2020 | 782,320 | |
Amortization expense, 2021 | 579,433 | |
Amortization expense, 2022 | 358,411 | |
Amortization expense, thereafter | 371,664 | |
Total future amortization expense | $ 3,993,671 | $ 4,205,314 |
6. Intangibles (Details Narrati
6. Intangibles (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible amortization expense | $ 236,318 | $ 61,497 |
Domain Name and Marketing [Member] | ||
Useful lifes of intangible assets | 3-20 years | |
Software [Member] | ||
Useful lifes of intangible assets | 3-5 years | |
Customer Relationships [Member] | ||
Useful lifes of intangible assets | 7-15 years |
8. Long Term Debt (Details -
8. Long Term Debt (Details - Long Term Debt) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | |
Total Debt | $ 73,890,889 | $ 76,801,159 |
Less: unamortized debt issuance costs | (1,294,840) | (1,353,352) |
Net amount | 72,596,049 | 75,447,807 |
Current portion | (42,994,795) | (48,877,536) |
Long-term portion | 29,601,254 | 26,570,271 |
Term Loan [Member] | ||
Total Debt | $ 27,417,505 | 28,310,505 |
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 | 174,757 | |
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 | |
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 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 | 10,000,000 |
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 [Member] | ||
Total Debt | $ 3,884,108 | 4,097,764 |
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 | $ 1,888,137 | 1,969,954 |
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 | $ 3,226,294 | 3,341,642 |
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 #4 Payable to Bank of America Leasing [Member] | ||
Total Debt | $ 990,476 | 1,025,782 |
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 #5 Payable to Bank of America Leasing [Member] | ||
Total Debt | $ 3,931,591 | |
Debt maturity date | Jan. 28, 2018 | |
Debt interest rate description | 4.67% per annum | |
Periodic payment frequency | 84 monthly payments | |
Periodic principal and/or interest payments | $ 54,943 | |
Collateral | Secured by equipment | |
Note Payable - Store Capital [Member] | ||
Total Debt | $ 9,321,966 | 9,328,208 |
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 #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 | $ 1,597,832 | 4,850,815 |
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 | $ 10,701,451 | $ 12,520,437 |
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 |
8. Long Term Debt (Details - Fu
8. Long Term Debt (Details - Future Maturities) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Debt Disclosure [Abstract] | ||
Future maturity 2018 | $ 42,994,795 | |
Future maturity 2019 | 2,453,414 | |
Future maturity 2020 | 2,565,333 | |
Future maturity 2021 | 3,292,214 | |
Future maturity 2022 | 11,376,961 | |
Future maturity thereafter | 11,208,172 | |
Total | $ 73,890,889 | $ 76,801,159 |
8. Long Term Debt (Details Narr
8. Long Term Debt (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | |
Proceeds from note payable | $ 3,931,591 | $ 35,889,321 | ||
Note payable | 76,801,159 | |||
Term Loan [Member] | ||||
Credit line maximum | $ 29,871,650 | |||
Credit line weighted average interest rate | 16.78% | |||
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 [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 | |||
Note #5 Payable to Bank of America Leasing [Member] | ||||
Debt face amount | $ 3,931,591 | |||
Debt stated interest rate | 4.67% | |||
Debt maturity date | Jan. 28, 2018 | |||
Debt periodic payment | $ 54,943 | |||
Debt periodic frequency | 84 monthly payments | |||
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 | $ 18,424,451 | |||
Credit line repayments during period | 20,243,439 | |||
Maximum borrowings outstanding | $ 16,077,015 | |||
Credit line weighted average interest rate | 4.0273% | |||
Credit line amount available at period end | 3,250,393 | |||
Credit line outstanding | 12,520,437 | |||
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 | $ 22,263,030 | |||
Credit line repayments during period | 25,516,014 | |||
Maximum borrowings outstanding | $ 6,280,675 | |||
Credit line weighted average interest rate | 3.5789% | |||
Credit line amount available at period end | 4,923,530 | |||
Credit line outstanding | 4,850,815 | |||
Letters of credit | $ 72,715 |
9. Note Payable, Related Party
9. Note Payable, Related Party (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | |
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% |
10. Stockholders' Equity (Detai
10. Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accrued dividends | $ 292 | $ 479 | ||
Reverse stock split | 1-for-6 reverse stock split | |||
Treasury stock purchased, shares | 19,743 | 96,307 | ||
Payment for treasury stock | $ 249,392 | 0 | $ 999,584 | |
Series E Preferred Stock [Member] | ||||
Accrued dividends | $ 292 | $ 479 | ||
Unpaid dividends | $ 292 | $ 959 | ||
Isaac Capital Group [Member] | Common Stock | ||||
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 | |||
Various Holders [Member] | ||||
Fractional shares issued due to stock split, shares | 2,284 | |||
Novalk Apps [Member] | ||||
Stock issued for accrued liability, shares issued | 58,333 | |||
Stock issued for accrued liability, amount of liability | $ 584,500 |
11. Warrants (Details - Warrant
11. Warrants (Details - Warrants Outstanding) - Warrants [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | |
Number of units | ||
Outstanding, beginning of period | 118,029 | |
Outstanding, end of period | 118,029 | |
Exercisable, end of period | 118,029 | 118,029 |
Weighted Average Exercise Price | ||
Outstanding, beginning of period | $ 20.8 | |
Outstanding, end of period | 20.8 | |
Exercisable, end of period | $ 20.8 | $ 20.8 |
Weighted Average Remaining Contractual Term (in years) | ||
Outstanding | 10 months 14 days | |
Exercisable | 10 months 14 days | |
Intrinsic value outstanding, end of period | $ 6,974,953 | |
Exercisable, end of period | 6,974,953 |
11. Warrants (Details - Exercis
11. Warrants (Details - Exercise price) - Warrants [Member] - $ / shares | Dec. 31, 2017 | Sep. 30, 2017 |
Number of warrants outstanding | 118,029 | 118,029 |
Warrants exercise price, outstanding | $ 20.8 | $ 20.8 |
Number of warrants exercisable | 118,029 | |
$16.60 [Member] | ||
Number of warrants outstanding | 54,396 | |
Warrants exercise price, outstanding | $ 16.6 | |
Number of warrants exercisable | 54,396 | |
Warrants exercise price, exercisable | $ 16.6 | |
$16.80 [Member] | ||
Number of warrants outstanding | 17,857 | |
Warrants exercise price, outstanding | $ 16.8 | |
Number of warrants exercisable | 17,857 | |
Warrants exercise price, exercisable | $ 16.8 | |
$24.30 [Member] | ||
Number of warrants outstanding | 12,383 | |
Warrants exercise price, outstanding | $ 24.3 | |
Number of warrants exercisable | 12,383 | |
Warrants exercise price, exercisable | $ 24.3 | |
$28.50 [Member] | ||
Number of warrants outstanding | 33,393 | |
Warrants exercise price, outstanding | $ 28.5 | |
Number of warrants exercisable | 33,393 | |
Warrants exercise price, exercisable | $ 28.5 |
12. Stock-based Compensation (D
12. Stock-based Compensation (Details - Option activity) - Stock Options [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Shares | ||
Outstanding, beginning balance | 211,668 | |
Granted | 20,000 | |
Exercised | 0 | |
Forfeited | 0 | |
Outstanding, ending balance | 231,668 | |
Exercisable | 179,167 | |
Weighted Average Exercise Price | ||
Outstanding, beginning balance | $ 13.19 | |
Granted | 32.24 | |
Outstanding, ending balance | 14.84 | |
Exercisable | $ 8.68 | |
Weighed Average Remaining Contractual Life | ||
Outstanding, ending balance | 4 years 15 days | 3 years 5 months 20 days |
Granted | 10 years | |
Exercisable | 2 years 1 month 24 days | |
Intrinsic value outstanding, beginning balance | $ 454,417 | |
Intrinsic value outstanding, ending balance | 915,208 | |
Exercisable | $ 851,208 |
12. Stock-based Compensation 46
12. Stock-based Compensation (Details - Option price) - Stock Options [Member] - $ / shares | Dec. 31, 2017 | Sep. 30, 2017 |
Number of options outstanding | 231,668 | 211,668 |
Option exercise price outstanding | $ 14.84 | $ 13.19 |
Number of options exercisable | 179,167 | |
Option exercise price exercisable | $ 8.68 | |
$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 | |
$10.86 [Member] | ||
Number of options outstanding | 4,167 | |
Option exercise price outstanding | $ 10.86 | |
Number of options exercisable | 4,167 | |
Option exercise price exercisable | $ 10.86 | |
$10.86 [Member] | ||
Number of options outstanding | 4,167 | |
Option exercise price outstanding | $ 10.86 | |
$10.86 [Member] | ||
Number of options outstanding | 4,167 | |
Option exercise price outstanding | $ 10.86 | |
$10.86 [Member] | ||
Number of options outstanding | 4,167 | |
Option exercise price outstanding | $ 10.86 | |
$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 | |
$23.41 [Member] | ||
Number of options outstanding | 8,000 | |
Option exercise price outstanding | $ 23.41 | |
$27.60 [Member] | ||
Number of options outstanding | 8,000 | |
Option exercise price outstanding | $ 27.60 | |
$31.74 [Member] | ||
Number of options outstanding | 8,000 | |
Option exercise price outstanding | $ 31.74 | |
$36.50 [Member] | ||
Number of options outstanding | 8,000 | |
Option exercise price outstanding | $ 36.50 | |
$41.98 [Member] | ||
Number of options outstanding | 8,000 | |
Option exercise price outstanding | $ 41.98 |
12. Stock-based Compensation 47
12. Stock-based Compensation (Details - Non vested) - Stock Options [Member] | 3 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of shares | |
Outstanding, beginning balance | shares | 36,668 |
Granted | shares | 20,000 |
Vested | shares | (4,167) |
Outstanding, ending balance | shares | 52,501 |
Weighted-Average Grant-Date Fair Value | |
Per share price nonvested options outstanding, beginning of period | $ / shares | $ 17.7 |
Per share price nonvested options granted | $ / shares | 32.24 |
Per share price nonvested options vested | $ / shares | 8.41 |
Per share price nonvested options outstanding, end of period | $ / shares | $ 13.89 |
12. Stock-based Compensation 48
12. Stock-based Compensation (Details - Assumptions) - Stock Options [Member] | 3 Months Ended |
Dec. 31, 2017 | |
Risk-free interest rate | 1.25% |
Expected life of the options | 5.0 to 10 years |
Expected volatility | 107.00% |
Expected dividend yield | 0.00% |
12. Stock-based Compensation 49
12. Stock-based Compensation (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation [Abstract] | ||
Stock-based compensation expense | $ 79,356 | $ 1,443 |
Unrecognized compensation expense | $ 434,366 |
13. Earnings Per Share (Details
13. Earnings Per Share (Details - Computation of loss per share) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Basic | ||
Net income | $ 1,877,555 | $ 1,428,573 |
Less: preferred stock dividends | (292) | (479) |
Net income applicable to common stock | $ 1,877,263 | $ 1,428,094 |
Weighted average common shares outstanding | 1,975,380 | 1,999,983 |
Basic earnings per share | $ 0.95 | $ 0.71 |
Diluted | ||
Net income (loss) applicable to common stock | $ 1,877,263 | $ 1,428,094 |
Add: preferred stock dividends | 292 | 479 |
Net income applicable for diluted earnings per share | $ 1,877,555 | $ 1,428,573 |
Weighted average common shares outstanding | 1,975,380 | 1,999,983 |
Add: Options | 34,476 | 44,355 |
Add: Common Stock Warrants | 0 | 0 |
Assumed weighted average common shares outstanding | 3,749,041 | 3,833,523 |
Diluted earnings per share | $ 0.5 | $ 0.37 |
Series B Preferred Stock [Member] | ||
Diluted | ||
Add: Preferred Stock | 1,071,200 | 1,071,200 |
Series B Preferred Stock Warrants [Member] | ||
Diluted | ||
Add: Preferred Stock | 590,145 | 590,145 |
Series E Preferred Stock [Member] | ||
Basic | ||
Less: preferred stock dividends | $ (292) | $ (479) |
Diluted | ||
Add: Preferred Stock | 77,840 | 127,840 |
13. Earnings (Loss) Per Share (
13. Earnings (Loss) Per Share (Details Narrative) - shares | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share | 40,000 | 0 |
14. Related Party Transactions
14. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions [Abstract] | ||
Interest expense | $ 63,889 | $ 63,889 |
16. Income Taxes (Details Narra
16. Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Income tax rate | 64.60% | 37.10% |
Net operating loss carryforward | $ 27,600,000 | |
Federal statutory rate | 24.53% | |
Change in income tax expense | $ 2,300,000 |
17. Segment Reporting (Details)
17. Segment Reporting (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Revenues | $ 40,368,064 | $ 32,188,664 | |
Gross profit | 16,395,890 | 12,645,232 | |
Operating income | 3,920,788 | 3,679,068 | |
Depreciation and amortization | 1,395,905 | 935,047 | |
Interest expenses, net | 2,468,312 | 1,449,476 | |
Net income before provision for income taxes | 5,303,046 | 2,271,482 | |
Total Assets | 132,156,025 | $ 128,594,595 | |
Intangible assets and goodwill | 40,940,406 | 41,152,049 | |
Cost of revenue | 23,972,174 | 19,543,432 | |
G&A | 10,399,130 | 7,058,674 | |
Sales and marketing | 2,075,972 | 1,907,490 | |
Other income | 3,850,570 | 41,890 | |
Marketplace Platform [Member] | |||
Revenues | 21,293,471 | 14,776,723 | |
Gross profit | 11,455,802 | 8,067,608 | |
Operating income | 2,231,476 | 1,743,967 | |
Depreciation and amortization | 677,461 | 228,431 | |
Interest expenses, net | 2,022,407 | 1,079,306 | |
Net income before provision for income taxes | 4,052,595 | 851,110 | |
Total Assets | 85,459,467 | 81,703,371 | |
Intangible assets and goodwill | 40,574,539 | 40,778,865 | |
Cost of revenue | 9,837,669 | 6,709,115 | |
G&A | 9,011,603 | 6,063,363 | |
Sales and marketing | 212,723 | 260,278 | |
Other income | 3,843,526 | 186,449 | |
Manufacturing [Member] | |||
Revenues | 18,878,535 | 17,187,534 | |
Gross profit | 4,752,568 | 4,363,293 | |
Operating income | 1,502,254 | 1,721,260 | |
Depreciation and amortization | 718,444 | 706,616 | |
Interest expenses, net | 445,905 | 370,170 | |
Net income before provision for income taxes | 1,063,393 | 1,206,531 | |
Total Assets | 46,611,136 | 46,783,429 | |
Intangible assets and goodwill | 365,867 | 373,184 | |
Cost of revenue | 14,125,967 | 12,824,241 | |
G&A | 1,387,066 | 994,821 | |
Sales and marketing | 1,863,248 | 1,647,212 | |
Other income | 7,044 | (144,559) | |
Services [Member] | |||
Revenues | 196,058 | 224,407 | |
Gross profit | 187,520 | 214,331 | |
Operating income | 187,058 | 213,841 | |
Depreciation and amortization | 0 | 0 | |
Interest expenses, net | 0 | 0 | |
Net income before provision for income taxes | 187,058 | 213,841 | |
Total Assets | 85,422 | 107,795 | |
Intangible assets and goodwill | 0 | $ 0 | |
Cost of revenue | 8,538 | 10,076 | |
G&A | 461 | 490 | |
Sales and marketing | 1 | 0 | |
Other income | $ 0 | $ 0 |