Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 31, 2019 | May 10, 2019 | |
OptionsToPurchaseSharesOfCommonStockMember | ||
Entity Registrant Name | LIVE VENTURES Inc | |
Entity Central Index Key | 0001045742 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 1,901,900 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2019 | Sep. 30, 2018 |
Assets | ||
Cash | $ 3,292,440 | $ 1,991,622 |
Trade receivables, net | 12,407,550 | 13,839,422 |
Inventories, net | 43,429,090 | 46,527,039 |
Income taxes receivable | 305,048 | 248,702 |
Prepaid expenses and other current assets | 2,936,435 | 3,308,017 |
Total current assets | 62,370,563 | 65,914,802 |
Property and equipment, net | 23,897,940 | 27,991,060 |
Restricted cash | 0 | 750,447 |
Deposits and other assets | 260,196 | 283,143 |
Deferred taxes | 2,531,075 | 3,220,362 |
Intangible assets, net | 5,841,152 | 6,665,847 |
Goodwill | 36,946,735 | 36,946,735 |
Total assets | 131,847,661 | 141,772,396 |
Liabilities: | ||
Accounts payable | 11,631,904 | 14,588,355 |
Accrued liabilities | 8,860,475 | 8,570,905 |
Current portion of long-term debt | 12,284,002 | 13,958,355 |
Current portion of notes payable related parties | 0 | 391,949 |
Total current liabilities | 32,776,381 | 37,509,564 |
Long-term debt, net of current portion | 51,312,213 | 58,805,468 |
Notes payable related parties, net of current portion | 5,721,507 | 5,429,558 |
Other non-current obligations | 828,901 | 579,217 |
Total Liabilities | 90,639,002 | 102,323,807 |
Stockholders' equity: | ||
Common stock, $0.001 par value, 10,000,000 shares authorized, 2,088,186 shares issued and 1,901,900 shares outstanding at March 31, 2019; 2,088,186 shares issued and 1,945,247 shares outstanding at September 30, 2018 | 2,088 | 2,088 |
Paid in capital | 63,732,536 | 63,654,335 |
Treasury stock | (1,871,473) | (1,550,011) |
Accumulated deficit | (20,650,834) | (22,654,165) |
Total stockholders' equity | 41,208,659 | 39,448,589 |
Total liabilities and stockholders' equity | 131,847,661 | 141,772,396 |
Series B Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock | 214 | 214 |
Series E Convertible Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock | 128 | 128 |
Series E Treasury Stock [Member] | ||
Stockholders' equity: | ||
Treasury stock | $ (4,000) | $ (4,000) |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2019 | Sep. 30, 2018 |
Stockholders' equity: | ||
Common stock, par value | $ 0.001 | $ 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 | 1,901,900 | 1,945,247 |
Treasury stock, shares | 186,286 | 142,939 |
Series B Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, issued | 214,244 | 214,244 |
Preferred stock, outstanding | 214,244 | 214,244 |
Series E Convertible Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 200,000 | 200,000 |
Preferred stock, issued | 127,840 | 127,840 |
Preferred stock, outstanding | 77,840 | 77,840 |
Series E Treasury Stock [Member] | ||
Stockholders' equity: | ||
Treasury stock, shares | 50,000 | 50,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||||
Revenues | $ 46,973,151 | $ 52,179,928 | $ 100,169,091 | $ 92,547,992 |
Cost of revenues | 28,322,002 | 32,529,227 | 62,180,864 | 56,501,401 |
Gross profit | 18,651,149 | 19,650,701 | 37,988,227 | 36,046,591 |
Operating expenses: | ||||
General and administrative expenses | 12,793,674 | 11,856,575 | 25,694,346 | 22,255,705 |
Sales and marketing expenses | 3,811,100 | 3,720,163 | 8,157,014 | 5,796,135 |
Total operating expenses | 16,604,774 | 15,576,738 | 33,851,360 | 28,051,840 |
Operating income | 2,046,375 | 4,073,963 | 4,136,867 | 7,994,751 |
Other (expense) income: | ||||
Interest expense, net | (1,535,997) | (1,821,720) | (3,188,730) | (4,290,032) |
Bargain purchase gain on acquisition | 0 | 0 | 0 | 3,773,486 |
Other income | 164,954 | 106,286 | 1,825,065 | 183,370 |
Total other (expense) income, net | (1,371,043) | (1,715,434) | (1,363,665) | (333,176) |
Income before provision for income taxes | 675,332 | 2,358,529 | 2,773,202 | 7,661,575 |
Provision for income taxes | 201,926 | 435,256 | 769,287 | 3,860,747 |
Net income | 473,406 | 1,923,273 | 2,003,915 | 3,800,828 |
Dividends declared - series B convertible preferred stock | 0 | 0 | 0 | 0 |
Dividends declared - series E convertible preferred stock | $ 292 | $ 292 | $ 584 | $ 584 |
Dividends declared - common stock | $ 0 | $ 0 | $ 0 | $ 0 |
Earnings per share - basic | 0.25 | 0.98 | 1.03 | 1.93 |
Earnings per share - diluted | $ 0.13 | $ 0.5 | $ 0.53 | $ 1.01 |
Weighted average common shares outstanding - basic | 1,925,972 | 1,970,136 | 1,935,610 | 1,972,758 |
Weighted average common shares outstanding - diluted | 3,667,412 | 3,811,672 | 3,746,084 | 3,756,114 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
OPERATING ACTIVITIES: | ||
Net income | $ 2,003,915 | $ 3,800,828 |
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition: | ||
Depreciation and amortization | 2,974,189 | 2,703,164 |
Non-cash asset retirements | 104,185 | 0 |
Gain on Bargain purchase of acquisition | 0 | (3,773,486) |
Loss on disposal of property and equipment | (1,507,479) | 14,158 |
Amortization of debt issuance cost | 193,288 | 117,024 |
Stock based compensation expense | 78,201 | 140,185 |
Deferred rent | 17,343 | 0 |
Change in reserve for uncollectible accounts | 391,264 | 9,907 |
Change in reserve for obsolete inventory | (613,646) | 36,353 |
Change in deferred income taxes | 689,287 | 3,807,451 |
Change in other | 232,341 | 0 |
Changes in assets and liabilities: | ||
Trade receivables | 1,040,608 | (115,768) |
Inventories | 3,711,595 | (2,641,360) |
Income taxes receivable | (56,346) | 0 |
Prepaid expenses and other current assets | 371,582 | 2,418,461 |
Deposits and other assets | 22,947 | 831 |
Accounts payable | (2,956,451) | 343,499 |
Accrued liabilities | 288,986 | 193,781 |
Income taxes payable | 0 | (13,920) |
Net cash provided by operating activities | 6,985,809 | 7,041,108 |
INVESTING ACTIVITIES: | ||
Purchase of intangible assets | (66,854) | (397,204) |
Proceeds from the sale of property and equipment | 4,377,249 | 10,000 |
Purchases of property and equipment | (963,475) | (6,526,110) |
Net cash provided by (used in) investing activities | 3,346,920 | (6,913,314) |
FINANCING ACTIVITIES: | ||
Net payments under revolver loans | (2,515,997) | (775,668) |
Purchase of series E preferred treasury stock | 0 | (4,000) |
Proceeds from issuance of notes payable | 0 | 3,931,591 |
Purchase of common treasury stock | (321,462) | (377,447) |
Payment of debt issuance costs | (118,457) | 0 |
Payments on related party notes payable | (100,000) | 0 |
Payments on notes payable | (6,726,442) | (3,839,798) |
Net cash used in financing activities | (9,782,358) | (1,065,322) |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 550,371 | (937,528) |
Restricted Cash, beginning of period | 750,447 | 0 |
Unrestricted cash and cash equivalents, beginning of period | 1,991,622 | 3,972,539 |
TOTAL CASH AND CASH EQUIVALENTS, beginning of period | 2,742,069 | 3,972,539 |
Restricted Cash, end of period | 0 | 535,747 |
Unrestricted cash and cash equivalents, end of period | 3,292,440 | 2,499,264 |
TOTAL CASH AND CASH EQUIVALENTS, end of period | 3,292,440 | 3,035,011 |
Supplemental cash flow disclosures: | ||
Interest paid | 2,953,160 | 3,638,625 |
Income taxes paid (refunded) | 90,572 | 0 |
Noncash financing and investing activities: | ||
Due to sellers of ApplianceSmart, Inc. less liabilities assumed post acquisition | 0 | 4,598,205 |
Accrued and unpaid dividends | $ 584 | $ 584 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock | Series B Preferred Stock | Series E Preferred Stock | Paid-In Capital | Series E Preferred StockTreasury Stock | Common Stock Treasury Stock | Accumulated Deficit | Total |
Beginning balance, shares at Sep. 30, 2017 | 2,088,186 | 214,244 | 127,840 | |||||
Beginning balance, value at Sep. 30, 2017 | $ 2,088 | $ 214 | $ 128 | $ 63,157,178 | $ (999,584) | $ (28,575,716) | $ 33,584,308 | |
Series E preferred stock dividends | (1,168) | (1,168) | ||||||
Stock based compensation | 497,157 | 497,157 | ||||||
Purchase of Series E preferred treasury stock | (4,000) | (4,000) | ||||||
Purchase of common treasury stock | (550,427) | (550,427) | ||||||
Net income | 5,922,719 | 5,922,719 | ||||||
Ending balance, shares at Mar. 31, 2018 | 2,088,186 | 214,244 | 127,840 | |||||
Ending balance, value at Mar. 31, 2018 | $ 2,088 | $ 214 | $ 128 | 63,654,335 | (4,000) | (1,550,011) | (22,654,165) | 39,448,589 |
Beginning balance, shares at Sep. 30, 2018 | 2,088,186 | 214,244 | 127,840 | |||||
Beginning balance, value at Sep. 30, 2018 | $ 2,088 | $ 214 | $ 128 | 63,654,335 | (4,000) | (1,550,011) | (22,654,165) | 39,448,589 |
Series E preferred stock dividends | (584) | (584) | ||||||
Stock based compensation | 78,201 | 78,201 | ||||||
Purchase of common treasury stock | (321,462) | (321,462) | ||||||
Net income | 2,003,915 | 2,003,915 | ||||||
Ending balance, shares at Mar. 31, 2019 | 2,088,186 | 214,244 | 127,840 | |||||
Ending balance, value at Mar. 31, 2019 | $ 2,088 | $ 214 | $ 128 | $ 63,732,536 | $ (4,000) | $ (1,871,473) | $ (20,650,834) | $ 41,208,659 |
1. Background and Basis of Pres
1. Background and Basis of Presentation | 6 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background and Basis of Presentation | Note 1: 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 and six months ended March 31, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2019. This financial information should be read in conjunction with the consolidated financial statements and related notes thereto as of September 30, 2018 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, 2018, as amended, filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 27, 2018 (the “2018 10-K”). |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 6 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2: Summary of Significant Accounting Policies Principles of Consolidation The accompanying condensed consolidated financial statements represent the consolidated financial position, results of operations and cash flows of Live Ventures Incorporated and its wholly-owned subsidiaries. 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 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 March 31, 2019 and September 30, 2018 approximate fair 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 receivables 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 $112,500 per contract year. Total commissions paid to factors were $70,980 and $75,398 for three months ended March 31, 2019 and 2018, respectively. Total commissions paid to factors were $133,029 and $144,157 for the six months ended March 31, 2019 and 2018, 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 March 31, 2019 and September 30, 2018, the allowance for doubtful accounts was $1,246,973 and $855,709, respectively. Inventories Manufacturing Segment Inventories are valued at the lower of the inventory’s cost (first in, first out basis (“FIFO”)) or market of the inventory. Management compares the cost of inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower. Management also reviews inventory to determine if excess or obsolete inventory is present and a reserve is made to reduce the carrying value for inventory for such excess and or obsolete inventory. At March 31, 2019 and September 30, 2018, 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 March 31, 2019 and September 30, 2018 were $497,083 and $1,110,729, 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 $954,768 and $1,067,607 for the three months ended March 31, 2019 and 2018, respectively. Depreciation expense was $2,082,640 and $2,227,194 for the six months ended March 31, 2019 and 2018, 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, favorable leases, 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, favorable leases – over the life of the lease, customer lists – to 20 years, trade names – to 20 years. Intangible amortization expense is $537,652 and $236,318 for the three months ended March 31, 2019 and 2018, respectively. Intangible amortization expense is $891,549 and $475,970 for the six months ended March 31, 2019 and 2018, respectively. Revenue Recognition We provide carpet, hard surface products, synthetic turf products, used movies, music, games and accessories, new movies, music, games and accessories, we rent movies and provide concession products, we provide new and out of the box appliances, appliance and installation services, third-party extended warranties, appliance accessories and directory services. We adopted Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606) and related ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12 and ASU No. 2016-20, which provide supplementary guidance, and clarifications, effective October 1, 2018. We adopted ASC 606 using the modified retrospective method. The results for the reporting periods beginning after October 1, 2018, are presented in accordance with the new standard, although comparative information for the prior year has not been restated and continues to be reported under the accounting standards and policies in effect for those periods. Adoption of the new standard did not have a significant impact on the current period revenues or on the prior year Consolidated Financial Statements. No transition adjustment was required to our retained earnings as of October 1, 2018. Under the new standard revenue is recognized as follows: We determine revenue recognition through the following steps: a. Identification of the contract, or contracts, with a customer, b. Identification of the performance obligations in the contract, c. Determination of the transaction price, d. Allocation of the transaction price to the performance obligations in the contract, and e. Recognition of revenue when, or as, we satisfy a performance obligation. As part of its assessment of each contract, the Company evaluates certain factors including the customer’s ability to pay, or credit risk. For each contract, the Company considers the promise to transfer products or services, each of which is distinct, to be the identified performance obligations. In determining the transaction price, the price stated on the contract is typically fixed and represents the net consideration to which the Company expects to be entitled per order, and therefore there is no variable consideration. As the Company’s standard payment terms are less than 90 days, the Company has elected, as a practical expedient, to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product or service based on its relative standalone selling price. The product or service price as specified on the contract is considered the standalone selling price as it is an observable source that depicts the price as if sold to a similar customer in similar circumstances. Carpet, Hard Surface Products, Synthetic Turf Products, New Appliance and Accessories Revenue We generate revenue by selling carpet, hard surface products and synthetic turf products to dealers nationwide within the confines of the United States. We also generate revenue by selling new appliances and appliance accessories direct to contractors and property owners and through retail locations. We recognize revenue at the point in time when control over the product is transferred to the customer, when our performance obligations are satisfied, which typically occur upon delivery from our facility to our customer or pickup from our facility by our customer. New and Used Movies, Books, Music, Games and Accessories We generate revenue by selling at point of sale used movies, books, music, games and accessories. We recognize revenue at the point of sale when control over the product is transferred to the customer, when our performance obligations are satisfied, which typically occur at point of sale within our stores. Appliance Service and Installation Revenue We generate revenue by selling appliance service and installation revenue. We recognize revenue as service or installation is performed and our obligations are satisfied, which typically occur as the service is provided. Hours and units are used as input methods for measurement of performance. Directory Service Revenue We generate directory services 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. We recognize revenue when the customer accepts and remits payment for services and all performance obligations are satisfied. Loyalty Programs We do not have any loyalty programs whereby a customer can accumulate a future accrued benefit. Vintage Stock has a “Cooler than Cash” program whereby the customer is provided with some variable gift card consideration in exchange for selling to the Company used products and receiving payment from the Company on a Vintage gift card instead of receiving cash. The excess gift card consideration over fair value of the used product sold to the Company is expensed as advertising and promotion expense in the period the consideration is provided. Gift Card Breakage Vintage Stock provides customers the ability to purchase gift cards. The Company has adopted ASU 2016-04 Liabilities – Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products. The Company derecognizes gift card amounts in amounts related to expected breakage in proportion to the pattern of rights expected to be exercised by the card holder only to the extent that it is probable that a significant reversal of the recognized breakage amount will not subsequently occur. Gift Card breakage amounts taken back into income are recorded as other income. Right of Return To the extent a right of return exists as more fully described below, the Company establishes up front a reserve for anticipated net returns and records this as a deduction from gross revenue recorded each period. Vintage Stock Original receipt and customer identification are required for all returns and or exchanges. A thirty-day return policy is solely for defective new music, movies and video games. Defective products shall be exchanged for a duplicate item. If a duplicate item is not in stock, a refund or store credit will be given to the customer. No exchange or full refund will be made on any item due to price change, dislike of content or game play. Credit card refunds are issued only to the card use for purchase. All comic, concession, rental, card, book, toy and new LP sales are final. Marquis Returns are only allowed for defective product. Customer is responsible for shipping charges to return product. ApplianceSmart Most products include a one year, parts and labor warranty from the product manufacturer. All shipments are 100 percent insured for loss. Product(s) damaged during shipping are eligible for exchange at no charge to the customer. If the product is damaged, the customer has the right to refuse the delivery. If the customer is not satisfied with their purchase, the customer may return the product within 14 days of receiving it. Products must be returned in brand new condition and packaged in their original box including all packing materials, manuals, blank warranty cards and accessories included. Products returned must also be free of any cosmetic damage. Products returned that do not meet these requirements may not be eligible for return or will incur a 25 percent restocking fee. Any product that has been installed or attempted to be installed cannot be returned. Shipping and handling charges from our warehouse are non-refundable. Customers are responsible for shipping charges incurred when returning a product. Special order merchandise is not eligible for return or exchange unless it is damaged or defective. The Company reserves the right to cancel open unfilled orders at any time. Warranties Marquis provides assurance-type warranties and the warranty provided varies according to product. Warranty claims can only be made for defective product. ApplianceSmart generates revenue by providing third-party service type warranties. The performance obligation on behalf of the ApplianceSmart is limited to procuring the third-party maintenance contract, registering the customer and the product with the insurance provider. Vintage Stock No warranties are provided other than manufacturer only warranties if applicable. Marquis No additional warranties are provided other than the manufacturer’s warranty. ApplianceSmart Most appliance products include a one year, parts and labor warranty from the product manufacturer. ApplianceSmart sells third-party provided extended warranties for appliances. Deferred Revenue Receivables are recognized in the period we ship the product or provide the service. Payment terms on invoiced amounts are based on contractual terms with each customer. When we receive consideration, or such consideration is unconditionally due, prior to transferring goods or services to the customer under the terms of a sales contract, we record deferred revenue, which represents a contract liability. We recognize deferred revenue as net sales once control of goods and/or services have been transferred to the customer and all revenue recognition criteria have been met and any constraints have been resolved. We defer the product costs until recognition of the related revenue occurs. Assets Recognized from Costs to Obtain a Contract with a Customer We recognize an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. We have concluded that none of the costs we have incurred to obtain and fulfill our FASB Accounting Standards Codification, or ASC 606 contracts, meet the capitalization criteria, and as such, there are no costs deferred and recognized as assets on the consolidated balance sheet at March 30, 2019, December 31, 2018 and September 30, 2018. Revenue recognized for Company contracts - $919,202 and $1,547,305 for the three and six months ended March 30, 2019, respectively, and $441,318 for the three and six months ended March 31, 2018. Practical Expedients and Exemptions: a. Taxes collected from customers and remitted to government authorities and that are related to sales of our products are excluded from revenues. b. Sales commissions are expensed when incurred because the amortization period would have been one year or less. These costs are recorded in Selling, general and administrative expense in the Condensed Consolidated Financial Statements of Income. c. We do not disclose the value of unsatisfied performance obligations for (i) contracts with original expected lengths of one year or less or (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for the services performed. d. We have elected to treat shipping and handling as a fulfillment activity not as a separate performance obligation when shipment occurs subsequent to a customer taking control of the product. Shipping and Handling The Company classifies shipping and handling costs incurred as fulfillment costs and records them as cost of revenues. Any charges to customers for delivery charges are netted against fulfillment costs. 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 for the three months ended March 31, 2019 and 2018, was $14,844 and $66,531, respectively. Breakage income for the six months ended March 31, 2019 and 2018, was $128,844 and $93,143, respectively. Breakage income is recorded in other income in our consolidated financial statements. The gift card liability at March 31, 2019 and September 30, 2018 is $1,582,604 and $1,498,125, respectively, and is recorded in accrued liabilities in our consolidated financial statements. Fair Value Measurements ASC Topic 820 (“ Fair Value Measurements and Disclosures Income Taxes The Company accounts for income taxes using the asset and liability method. The asset and liability method require 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. The Company records 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 multiple states including, Arkansas, California, Colorado, Georgia, Idaho, Illinois, Kansas, Missouri, Minnesota, Nevada, New Mexico, New York, Ohio, Oklahoma, Texas, and Utah. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 per institution as of March 31, 2019. At times, balances may exceed federally insured limits. 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 ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ASU 2016-02, Leases (Topic 842) |
3. Comprehensive Income
3. Comprehensive Income | 6 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Comprehensive Income | Note 3: 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 the three months and six months ended March 31, 2019 and 2018, net income does not differ from comprehensive income. |
4. Balance Sheet Detail Informa
4. Balance Sheet Detail Information | 6 Months Ended |
Mar. 31, 2019 | |
Disclosure Text Block Supplement [Abstract] | |
Balance Sheet Detail Information | Note 4: Balance Sheet Detail Information March 31, September 30, 2019 2018 Trade receivables, current, net: Accounts receivable, current $ 13,309,951 $ 14,350,559 Less: Reserve for doubtful accounts (902,401 ) (511,137 ) $ 12,407,550 $ 13,839,422 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 $ 13,654,523 $ 14,695,131 Less: Reserve for doubtful accounts (1,246,973 ) (855,709 ) $ 12,407,550 $ 13,839,422 Inventory, net Raw materials $ 7,581,506 $ 9,712,839 Work in progress 1,794,705 1,141,486 Finished goods 7,742,672 5,414,072 Merchandise 26,899,230 31,461,311 44,018,113 47,729,708 Less: Inventory reserves (589,023 ) (1,202,669 ) $ 43,429,090 $ 46,527,039 Property and equipment, net: Building and improvements $ 11,147,976 $ 10,954,843 Transportation equipment 82,266 82,266 Machinery and equipment 19,832,827 23,295,315 Furnishings and fixtures 2,727,896 2,639,616 Office, computer equipment and other 2,391,928 2,530,410 36,182,893 39,502,450 Less: Accumulated depreciation (12,284,953 ) (11,511,390 ) $ 23,897,940 $ 27,991,060 Intangible assets, net: Domain name and marketing related intangibles $ 59,313 $ 59,313 Lease intangibles 2,239,008 2,239,008 Customer relationship intangibles 4,709,241 4,709,241 Purchased software 2,257,791 2,190,937 9,265,353 9,198,499 Less: Accumulated amortization (3,424,201 ) (2,532,652 ) $ 5,841,152 $ 6,665,847 Accrued liabilities: Accrued payroll and bonuses $ 2,067,433 $ 2,384,041 Accrued sales and use taxes 1,247,645 1,007,284 Accrued property taxes 138,391 362,388 Accrued rent 478,655 506,989 Deferred revenue – 354,227 Accrued gift card and escheatment liability 1,678,165 1,593,688 Accrued interest payable 191,939 195,907 Accrued accounts payable and bank overdrafts 1,171,435 942,600 Accrued professional fees 195,638 470,726 Customer deposits 995,581 508,252 Accrued expenses - other 695,593 244,803 $ 8,860,475 $ 8,570,905 |
5. Acquisitions
5. Acquisitions | 6 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Note 5: Acquisitions Acquisition of ApplianceSmart Inc. On December 30, 2017 (the “ApplianceSmart Closing Date”), the Company, through its wholly-owned subsidiary, ApplianceSmart Affiliated Holdings LLC (“ASH”), 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 was $6,500,000, with no liabilities assumed by ASH. On December 30, 2017, ASH agreed to pay the $6,500,000 no later than March 31, 2018. Effective April 1, 2018, ASH issued an interest-bearing promissory note to the Seller, with interest at 5% per annum, with a three-year term in the original amount of $3,919,494 for the balance of the purchase price. Interest is payable monthly in arrears. Ten percent of the outstanding principal amount is due to be repaid annually on a quarterly basis, with any remainder due and payable on maturity, April 1, 2021. This promissory note is guaranteed by ApplianceSmart. The remaining $2,580,506 was paid in cash by ASH to the Seller. ASH may reborrow funds, and pay interest on such re-borrowings, from the Seller up to the Original Principal amount. On December 31, 2017, ASH offset certain liabilities and was provided certain assets from the Seller in the net amount of $1,607,369, against the amount due to the Seller. ASH and Seller agreed to the offset as if it were payment in cash against the purchase price. On December 26, 2018, ASH and the Seller amended and restated the ApplianceSmart Note to, among other things, grant the Seller a security interest in the assets of ASH and ApplianceSmart in accordance with the terms of separate security agreements entered into between ASH and ApplianceSmart, respectively, and the Seller. In addition, ASH and the Seller modified the terms of when interest and principal would be due. Outstanding principal and accrued and un-paid interest at 5% per annum is now all due and payable on April 1, 2021. At March 31, 2019 and September 30, 2018, the net amount owing to the Seller was $3,721,507 and $3,821,507, respectively, and is included in long term debt, related parties. See Note 9. Net liabilities assumed by ASH on December 31, 2017: Accounts payable $ 1,374,647 Accrued expenses 1,080,255 Capital leases 29,631 Credit card receivables (255,301 ) Cash (621,863 ) Total net liabilities assumed by ASH $ 1,607,369 The table below summarizes our final purchase price allocation of the consideration paid to the respective fair values of the assets acquired in the ApplianceSmart acquisition as of the ApplianceSmart Closing Date. The Company finalized its estimates after it determined that it had obtained all necessary information that existed as of the ApplianceSmart Closing Date related to these matters. Trade receivables $ 1,805,545 Inventory 7,444,282 Prepaid expenses 69,347 Refundable deposits 1,003,841 Intangible asset - trade names 2,015,000 Intangible asset - customer list 5,202 Intangible asset - leases 1,205,596 Restricted cash 750,000 Property and equipment 1,094,503 Deferred income tax (1,599,560 ) Bargain gain on acquisition (7,293,756 ) $ 6,500,000 The operating results of ApplianceSmart are included in our audited consolidated financial statements beginning on December 31, 2017 and are reported in our Retail and Online Segment. 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 $0.10 per acquired active contact email or approximately $5,202. The Company is amortizing the customer list intangible asset on a straight-line basis over an estimated life of 20 years. The estimated fair value of the trade names intangible that ApplianceSmart uses – “ApplianceSmart” 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 of 0.5% and a present value discount rate of 18.6%, or $2,015,000. Trade name relates to the Company’s brand awareness by consumers in the market place. The Company is amortizing the trade name intangible asset on a straight-line basis over an estimated life of 20 years. The estimated fair value of the lease assets that ApplianceSmart leases was determined comparing the existing leases assumed to current market rates within a three-mile radius of existing stores. These market rates were then compared to existing ApplianceSmart contracted lease rates over the remaining lease terms. If the lease contract began within six months of acquisition date or the square footage price difference was within 10% of the contracted lease rate, or the overall discounted cash flow effect of the difference was less than $150,000, the lease was excluded for intangible valuation purposes. The remaining leases that were included were then compared to market rates, with the differences discounted using a discount rate of 7.50% to determine the discounted present value of the lease intangibles. The Company is amortizing the lease intangibles on a straight-line basis over the remaining life of each lease ranging between two and ten years. The unaudited pro forma information below presents statement of income data for the three and six months ended March 31, 2018, as if the acquisition of ApplianceSmart took place on October 1, 2017. Actual unaudited consolidated results of ApplianceSmart are also shown. ApplianceSmart was acquired on December 30, 2017 with only one day of consolidated results for the quarter ended December 31, 2017. Proforma Actual Proforma Actual Three months Three months Six months Unaudited Ended Ended Ended Results through March 31, 2018 March 31, 2018 March 31, 2018 March 31, 2018 Net revenue $ 11,191,842 $ 11,191,842 $ 22,512,817 $ 11,260,516 Gross profit 3,449,105 3,449,105 4,561,178 3,468,305 Operating income (loss) 272,563 272,563 (1,782,413 ) 292,218 Net income (loss) 372,690 372,690 (1,717,082 ) 392,345 Earnings (loss) per basic common share $ 0.19 $ 0.19 $ (0.87 ) $ 0.20 |
6. Intangibles
6. Intangibles | 6 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | Note 6: 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, favorable leases – over the life of the lease, outstanding lists – 20 years, trade names – 20 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 $537,652 and $236,318 for the three months ended March 31, 2019 and 2018, respectively. Intangible amortization expense is $891,549 and $475,970 for the six months ended March 31, 2019 and 2018, respectively. The following table summarizes estimated future amortization expense related to intangible assets that have net balances as of March 31, 2019: 2020 $ 1,245,597 2021 1,106,076 2022 952,941 2023 658,838 2024 305,872 Thereafter 1,571,828 $ 5,841,152 |
7. Goodwill
7. Goodwill | 6 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Note 7: 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 | 6 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 8: 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 BofA 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 (i) $7,500,000; (ii) 65% of the value of eligible inventory; or (iii) 85% of the appraisal value of the eligible inventory. For purposes of clarity, the advance rate for inventory is 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 December 24, 2018, Marquis’s ability to make prepayments against Marquis subordinated debt, including the related party loan with Isaac Capital Group, LLC (“ICG”) and pay cash dividends is generally permitted if (i) excess availability under the BofA Revolver is more than $4 million, and has been for each of the 60 days preceding the requested distribution and (ii) 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 1.1:1 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 1.1:1 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 1.1:1 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. As of December 24, 2018, 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 (i) Bank of America prime rate, (ii) the current federal funds rate plus 0.50%, or (iii) 30-day LIBOR plus 1.00% plus the margin. 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. On September 30, 2018, total additional availability under the BofA Revolver was $7,326,680, with $7,600,605 outstanding, and outstanding standby letters of credit of $72,715. During the period of October 1, 2018 through March 31, 2019, Marquis cumulatively borrowed $44,740,439 and repaid $48,120,216 under the BofA Revolver. Maximum borrowing under the BofA Revolver is $15,000,000. Our maximum borrowings outstanding during the same period was $8,070,635. Our weighted average interest rate on those outstanding borrowings for the period of October 1, 2018 through March 31, 2019 was 4.19%. As of March 31, 2019, total additional availability under the BofA Revolver was $10,660,628; with $4,220,827 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 BofA 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 five 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 of notes issued by Kingston to the Company (the “Kingston Notes”) by twelve months for 55,888 shares of the Company’s 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 Kingston 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 21 Agreement, the Company recorded $2,800,000 as an outstanding accrued liability as of September 30, 2016. As of March 31, 2019, and September 30, 2018, 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, bearing 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, bearing interest at 4.63% per annum. This Note #2 was paid in full, with the sale of the Synthetic Turf line within the quarter ended December 31, 2018. 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, bearing 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, bearing 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 $54,944 beginning January 28, 2018, with the final payment due December 28, 2024, bearing interest at 4.66% 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. On June 7, 2018, the credit agreement was amended reducing the maximum revolving facility to $12 million. The TCB Revolver matures November 3, 2020. 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 non-current liability due to the removal of the subjective acceleration clause as part of the credit agreement amendment on June 7, 2018. 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 Comvest Term Loan and pay cash dividends is generally permitted if (i) excess availability under the TCB Revolver is more than $2 million, and is projected to be within 12 months after such payment and (ii) 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 Comvest 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 2.25%, effective June 7, 2018. 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, 2018 through March 31, 2019, Vintage Stock cumulatively borrowed $39,643,737 and repaid $40,895,006 under the TCB Revolver. Our maximum borrowings outstanding during the period of October 1, 2018 through March 31, 2019 was $11,931,977. Our weighted average interest rate on those outstanding borrowings for the period of October 1, 2018 through March 31, 2019 was 4.7027%. As of March 31, 2019, total additional availability under the TCB Revolver was $1,358,674, with $10,641,326 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 (the “Term Loan Lenders”) as defined in the term loan agreement (the “Term Loan Agreement”) between the Term Loan Borrowers 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”) bore 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 were 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 was 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 placed 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 was 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 was 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 was 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 could not exceed 3.0 and for quarters ended March 31, 2018 and June 30, 2018, the total leverage ratio could not exceed 2.75. The Capitala Term Loans provided 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 included (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 was due on December 31, 2016. The outstanding principal amounts of the term loans and all accrued interest thereon under the Term Loan Agreement were due and payable in November 2021. The Term Loan Borrowers could 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 were 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 June 7, 2018 was 16.94%. In connection with the Capitala Term Loan, Vintage Stock incurred $1,088,000 in transaction cost that was being recognized as debt issuance cost that was being amortized and recorded as interest expense over the term of the Capitala Term Loan. On June 7, 2018, the Capitala Term Loan was paid in full, and the Company recorded as additional interest expense $742,000 of un-amortized debt issuance cost related to 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 originally had a maturity date of five years and six months from November 3, 2016. On June 7, 2018, in connection with the Comvest Term Loan refinance of the Capitala Term Loan, the Sellers Subordinated Acquisition Note was amended and restated to have a maturity date of September 23, 2023. Crossroads Revolver On March 15, 2019, ApplianceSmart, Inc. (the “Borrower”), entered into a Loan and Security Agreement (the “Cross Roads Revolver”) with Crossroads Financing, LLC (“Crossroads”), providing for a $4.0 million revolving credit facility, subject to a borrowing base limitation (the “ABL Facility”). The borrowing base for the ABL Facility at any time equals the lower of (i) up to 75% of inventory cost or (ii) up to 85% of net orderly liquidation value, in each case as further described in the Loan Agreement. The proceeds of the ABL Facility will be used by the Borrower to repay a portion of the outstanding loan owed by ApplianceSmart Holdings LLC, Borrower’s parent (“Parent”), to Appliance Recycling Centers of America, Inc., to pay transaction costs, and for working capital and other general corporate purposes. Advances under the Crossroads Revolver bear interest at an interest rate equal to the greater of (i) the three-month London Interbank Offered Rate plus 2.19% or (ii) 5.0%. In addition to paying interest on the outstanding principal under the ABL Facility, the Borrower is required to pay Lender a servicing fee equal to 1.0% per month of the amount of the Borrower’s outstanding obligations under the Crossroads Revolver that accrue interest, an annual loan fee of $80,000, an early termination fee described below, and other fees described in the Crossroads Revolver. Unless terminated early in accordance with its terms, the Crossroads Revolver terminates on March 15, 2021 (the “Maturity Date”). If the Crossroads Revolver is terminated by the Borrower prior to the Maturity Date, Borrower is required to pay Crossroads (i) a fee in an amount equal to $120,000 if the Crossroads Revolver is terminated prior to March 15, 2020 and (b) if the Crossroads Revolver is terminated on or after March 15, 2020, a fee in an amount equal to $80,000. Advances under the Crossroads Revolver are guaranteed by Parent and ApplianceSmart Contracting, Inc., a wholly-owned subsidiary of Parent. In addition, certain executive officers of the Borrower have agreed to provide validity guarantees. Advances under the Crossroads Revolver are secured by a pledge of substantially all of the assets of the Borrower. The Company is not a guarantor under the Crossroads Revolver. The Crossroads Revolver contains representations and warranties, events of default, affirmative and negative covenants and indemnities customary for loans of this nature. As of March 31, 2019, the Crossroads Revolver had an balance outstanding of $2,115,050. Comvest Term Loan On June 7, 2018, Vintage Stock Affiliated Holdings LLC (“Holdings”) and Vintage Stock, Inc. (the “Borrower”), entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) by and among Borrower, Holdings, the lenders party thereto and Comvest Capital IV, L.P. (“Comvest”), as agent. The Credit Agreement provides for a $24,000,000 secured term loan (the “Term Loan”). The proceeds of the Term Loan, together with a cash equity contribution of approximately $4.0 million from the Company to the Borrower, will be used by the Borrower (i) to refinance and terminate the Borrower’s credit facility (the “Prior Credit Facility”) with Capitala Private Credit Fund and certain of its affiliates, as lenders, and Wilmington Trust National Association (the “Term Loan Administrative Agent”), as agent, (ii) to pay transaction costs, and (iii) for the Borrower’s working capital and other general corporate purposes. In connection with the closing of the refinancing transaction with Comvest, all defaults under the Prior Credit Facility were extinguished. The Term Loan bears interest at the base or LIBOR rates (as described below) plus an applicable margin in each case. The applicable margin ranges from 8.00% to 9.50% per annum (subject to a LIBOR floor of 1.00%) and is determined based on the Borrower’s senior leverage ratio pricing grid. The applicable margin during the first six months following the June 7, 2018 closing is 9.50%. The base rate under the Comvest Credit Agreement is equal to the greatest of (i) the per annum rate of interest which is identified as the “Prime Rate” and normally published in the Money Rates section of The Wall Street Journal (or, if such rate ceases to be so published, as quoted from such other generally available and recognizable source as Agent may select), (ii) the sum of the Federal Funds Rate plus one half percent (0.50%), (iii) the most recently used LIBO Rate and (iv) two percent (2.00%) per annum. LIBOR rate is defined as the greater of (a) a rate per annum equal to the London interbank offered rate for deposits in Dollars for a period of one month and for the outstanding principal amount of the Term Loan as published in the “Money Rates” section of The Wall Street Journal (or another national publication selected by Agent if such rate is not so published), two Business Days prior to the first day of such one month period and (b) one percent (1.00%) per annum. The Term Loan matures on May 26, 2023 and is subject to amortization of 12.5% (decreasing to 10% upon the Borrower’s senior leverage ratio being less than 1.50 times the Borrower’s EBITDA (as defined in the Credit Agreement)) of principal per annum payable in equal quarterly installments due on March 31, June 30, September 30, and December 31 of each year, with the first such payment due on June 30, 2018; plus, to the extent the Borrower generates excess cash flow (as defined in the Credit Agreement), a percent of such excess cash flow (ranging from 50% to 100%), all in accordance with the terms of the Credit Agreement. Under the Credit Agreement, any and all mandatory prepayments arising from any voluntary act of the Borrower are subject to a prepayment premium, ranging from 5.00% of the principal amount prepaid plus a make-whole amount to 1.00%, depending on when the mandatory prepayment is made. There is no prepayment premium after June 7, 2021. The Term Loan is secured by a pledge of substantially all of the assets of the Borrower and a pledge of the capital stock of the Borrower. In addition, the Company is guaranteeing (the “Sponsor Guaranty”) that portion of the Term Loan that results in the Borrower’s senior leverage ratio being greater than 2.30:1.00, and only for so long as such ratio exceeds 2.30:1.00. The Sponsor Guaranty terminates on the date that the Borrower’s senior leverage ratio is less than 2.30:1.00 for two consecutive fiscal quarters. 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 minimum of $12,000,000 of EBITDA on a trailing twelve months basis as measured quarterly starting June 30, 2018 through December 31, 2018. Beginning quarter ending March 31, 2019 and thereafter, Vintage Stock is required to maintain a minimum of $12,500,000 of EBITDA on a trailing twelve months basis. So long as the Senior leverage ratio is greater than 2.0 to 1.0, Vintage Stock is required to spend no more than $1,000,000 on capital expenditures in fiscal year 2018, $1,500,000 in fiscal year 2019, $2,000,000 in fiscal year 2020, $1,750,000 in fiscal year 2021, and $1,500,000 in fiscal years 2022 and thereafter. Vintage Stock is required to maintain a declining maximum senior leverage ratio on a trailing twelve month basis beginning June 30, 2018 of 2.85:1.00, September 30, 2018 2.85:1.00, December 31, 2018 2.65:1.00, March 31, 2019 2.60:1.00, June 30, 2019 2.40:1.00, September 30, 2019 2.10:1.00, December 31, 2019 1.90:1.00, March 31, 2020 1.80:1.00, June 30, 2020 1.75:1.00 and September 30, 2020 and each fiscal quarter thereafter 1.50:1.00. Vintage Stock is required to maintain on a trailing twelve-month basis a minimum fixed charge ratio of no less than 1.30:1.00 for quarters ending June 30, 2018, September 30, 2018 and December 31, 2018. For quarter ending March 31, 2019 1.10:1.00. For quarters ending June 30, 2019, September 30, 2019 and December 31, 2019 1.30:1.00. For quarter ending March 31, 2020 and each fiscal quarter thereafter 1.40:1.00. Vintage Stock may only open three new retail locations within a twelve-month period so long as the senior leverage ratio is 2.00:1.00 or more. If the senior leverage ratio is less than 2.00:1.00, Vintage Stock may only open no more than four new retail locations within a twelve-month period. At all times that the senior leverage ratio is greater than or equal to 1.50:1.00, Vintage Stock cannot have the same store sales percentage to be less than or equal to a negative 5.5 percent as of the last day of any fiscal quarter. Vintage Stock may cure both payment and financial covenant defaults through infusion of equity cures as determined by the Credit Agreement. EBITDA, senior leverage ratio, same store sales decline percentage and fixed charge ratio are terms defined within the Credit Agreement. In connection with the Comvest Term Loan, Vintage Stock incurred $1,318,069 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 Comvest Term Loan. Loan Covenant Compliance We are in compliance as of March 31, 2019 and September 30, 2018 with all covenants under our existing revolving and other loan agreements. Long-term debt as of March 31, 2019 and September 30, 2018 consisted of the following: March 31, September 30, 2019 2018 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 $ 4,220,827 $ 7,600,605 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 and common stock 10,641,326 11,892,595 Crossroads Financial Revolver Loan - variable interest rate based upon the three-month LIBOR rate plus a margin, interest payable monthly, maturity date March 2021, secured by substantially all ApplianceSmart assets 2,115,050 – Note Payable Comvest Term Loan - variable interest rate based upon LIBOR rate plus a margin, interest payable monthly in cash, principal due quarterly March 31, June 30, September 30, December 31, subject to a variable amortization of principal, maturity date May 26, 2023 note subordinate to Texas Capital Bank Revolver Loan, secured by Vintage Stock Assets 18,763,031 22,500,000 Note Payable to the Sellers of Vintage Stock, interest at 8% per |
9. Notes payable, related parti
9. Notes payable, related parties | 6 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Note Payable, Related Party | Note 9: Notes Payable, Related Parties Appliance Recycling Centers of America, Inc. Note On December 30, 2017, ASH entered into a Stock Purchase Agreement (the “Agreement”) with Appliance Recycling Centers of America, Inc. (the “Seller”) and ApplianceSmart, Inc. (“ApplianceSmart”), a subsidiary of the Seller. Pursuant to the Agreement, ASH purchased (the “Transaction”) from the Seller all of the issued and outstanding shares of capital stock of ApplianceSmart in exchange for $6,500,000 (the “Purchase Price”). ASH was required to deliver the Purchase Price, and a portion of the Purchase Price was delivered, to the Seller prior to March 31, 2018. Between March 31, 2018 and April 24, 2018, ASH and the Seller negotiated in good faith the method of payment of the remaining outstanding balance of the Purchase Price. On April 25, 2018, ASH delivered to the Seller that certain Promissory Note (the “ApplianceSmart Note”) in the original principal amount of $3,919,494 (the “Original Principal Amount”), as such amount may be adjusted per the terms of the ApplianceSmart Note. The ApplianceSmart Note is effective as of April 1, 2018 and matures on April 1, 2021 (the “Maturity Date”). The ApplianceSmart Note bears interest at 5% per annum with interest accruing from April 1, 2018, payable at maturity, April 1, 2021, in arrears. ApplianceSmart has agreed to guaranty repayment of the ApplianceSmart Note. The remaining $2,580,506 of the Purchase Price was paid in cash by ASH to the Seller. ASH may reborrow funds, and pay interest on such re-borrowings, from the Seller up to the Original Principal Amount. As of March 31, 2019 and September 30, 2018, there was $3,721,507 and $3,821,507 outstanding on the ApplianceSmart Note, respectively. On December 26, 2018, ASH and the Seller amended and restated the ApplianceSmart Note to, among other things, grant the Seller a security interest in the assets of ASH and ApplianceSmart in accordance with the terms of separate security agreements entered into between ASH and ApplianceSmart, respectively, and the Seller. In addition, ASH and the Seller modified the terms of when interest and principal would be due. Outstanding principal and accrued and un-paid interest at 5% per annum is now all due and payable on April 1, 2021. On March 15, 2019, the ApplianceSmart entered into agreements with the Seller and Cross Roads Financial pursuant to which the Seller agreed to subordinate the payment of indebtedness under the ApplianceSmart Note and the Seller’s security interest in the assets of ApplianceSmart and other related parties in exchange for up to $1,200,000. ApplianceSmart paid $1,200,000 to the Seller $100,000 on March 29, 2019, $250,000 on April 5, 2019 and $850,000 on April 15, 2019 as principal payments on the ApplianceSmart Note – see Note 18. Isaac Capital Fund Note In connection with the acquisition 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 March 31, 2019, and September 30, 2018, there was $2,000,000 outstanding on this mezzanine loan. Notes payable, related parties as of March 31, 2019 and September 30, 2018 consisted of the following: March 31, September 30, 2019 2018 Note Payable and revolving line of credit to the Sellers of ApplianceSmart, Inc., interest rate is 5% per annum, with interest payable monthly, maturity date April 1, 2021, accrued interest and principal all due at maturity. ApplianceSmart may reborrow funds up to the Original Principal amount during the term of the note. $ 3,721,507 $ 3,821,507 Note Payable to Isaac Capital Fund, interest rate is 12.5% per annum, with interest payable monthly, maturity date January 2021. 2,000,000 2,000,000 Total notes payable - related parties 5,721,507 5,821,507 Less unamortized debt issuance costs – – Net amount 5,721,507 5,821,507 Less current portion – (391,949 ) Long-term portion $ 5,721,507 $ 5,429,558 Future maturities of notes payable, related parties at March 31, 2019 are as follows: Years ending March 31, 2020 $ – 2021 2,000,000 2022 3,721,507 2023 – 2024 – Thereafter – Total $ 5,721,507 |
10. Stockholders' Equity
10. Stockholders' Equity | 6 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Note 10: 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 as declared by the board of directors in an amount equal to $1.00 (in the aggregate for all then-issued and outstanding shares of Series B Convertible Preferred Stock). The series does not have any redemption rights or Stock basis, except as otherwise required by the Nevada Revised Statutes. The series does not provide for any specific allocation of seats on the Board of Directors. At any time and from time to time, the shares of Series B Convertible Preferred Stock are convertible into shares of common stock at a ratio of one 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. On March 31, 2019, and September 30, 2018, there were 1,000,000 authorized and 214,244 shares issued and outstanding of Series B Convertible Preferred Stock, with a par value of $0.001 per share. The holders of shares of the Series B Convertible Stock have agreed not to sell transfer, assign, hypothecate, pledge, margin, hedge, trade, or otherwise obtain or attempt to obtain any economic value from any of such shares or any shares into which they may be converted (e.g., common stock) or for which they may be exchanged. This “lockup” agreement expires on December 31, 2021. Our Warrant Agreements with ICG have been amended to provide that the shares underlying those warrants are exercisable into shares of Series B Convertible Preferred Stock, which warrant shares are also subject to the same “lockup” agreement as the currently outstanding shares of Series B Convertible Preferred Stock. During the three and six months ended March 31, 2019 and 2018, respectively, the Company did not issue any shares of Series B Convertible Preferred Stock. Series E Convertible Preferred Stock As of March 31, 2019, and September 30, 2018, there were 200,000 shares authorized, 127,840 shares issued and 77,840 shares outstanding of Series a Preferred Stock, with a par value of $0.001 per share. 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. During the three months ended March 31, 2019 and 2018, the Company accrued dividends of $292 and $292, respectively, payable to holders of Series E preferred stock. During the six months ended March 31, 2019 and 2018, the Company accrued dividends of $584 and $584, respectively, payable to holders of Series E preferred stock. As of March 31, 2019, and September 30, 2018, unpaid dividends were $584 and $1,168, respectively. Common Stock On December 31, 2018, and September 30, 2018, there was 10,000,000 shares authorized, 2,088,186 shares outstanding, and 1,942,428 and 1,945,247 shares issued, respectively, of Common Stock, with a par value of $0.001 per share. During the three months ended December 31, 2018 and 2017, respectively, the Company did not issue any shares of common stock. Treasury Stock For the three months ended March 31, 2019 and 2018, the Company purchased 40,528 and 10,000 shares of its common stock on the open market (treasury shares for $302,384 and $128,055, respectively). For the six months ended March 31, 2019 and 2018, the Company purchased 43,347 and 29,743 of its common stock on the open market (treasury shares for $321,462 and $377,447, respectively). The Company accounted for the purchase of these treasury shares using the cost method. At March 31, 2019, the Company held 186,286 shares of its common stock as treasury shares at a cost of $1,871,473. At September 30, 2018, the Company held 142,939 shares of its common stock as treasury shares at a cost of $1,550,011. 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 | 6 Months Ended |
Mar. 31, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | Note 11: 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 March 31, 2019 and September 30, 2018, respectively: Number of units - Series B Convertible preferred warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Intrinsic Value Outstanding at September 30, 2018 118,029 $ 20.80 1.35 $ 2,855,734 Exercisable at September 30, 2018 118,029 $ 20.80 1.35 $ 2,855,734 Outstanding at March 31, 2019 118,029 $ 20.80 0.85 $ 2,147,559 Exercisable at March 31, 2019 118,029 $ 20.80 0.85 $ 2,147,559 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. As of March 31, 2019, the Company had 118,029 common stock warrants outstanding with a weighted average exercise price, weighted average remaining contractual term and intrinsic value of $20.80, 0.85 years and $2,147,559, respectively. As of September 30, 2018, the Company had 118,029 common stock warrants outstanding with weighted average exercise price, weighted average remaining contractual term and intrinsic value of $20.80, 1.35 years and $2,855,734, respectively. Warrants for 10,914, 12,383, 54,396 and 17,857 shares of Series B Convertible Preferred Stock were set to expire on September 10, 2017, December 11, 2017, March 27, 2018 and March 28, 2018, respectively. On January 16, 2018, the Company memorialized an agreement reached prior to any of the warrants expiring, to extend the expiration date for two years, just prior to expiration for all warrants listed. Warrants outstanding and exercisable as of September 30, 2018 and September 30, 2017 reflect the time extended warrants in addition to 22,479 warrants for shares of Series B Convertible Preferred Stock with an original expiration date of December 3, 2019. The Company did not recognize any compensation expense during the six months ended March 31, 2019 and 2018, respectively, related to warrant awards granted to certain employees and officers based on the grant date fair value of the awards, net of estimated forfeitures. No forfeitures are estimated. The exercise price for the Series B Convertible Preferred Stock warrants outstanding and exercisable at March 31, 2019 and September 30, 2018, are 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 | 6 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stock-based Compensation | Note 12: 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 twelve months ended September 30, 2018 and the six months ended March 31, 2019: 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 9.02 Exercised – Forfeited – Outstanding at September 30, 2018 231,668 $ 14.84 3.04 $ 162,500 Exercisable at September 30, 2018 190,639 $ 11.89 2.08 $ 162,500 Outstanding at September 30, 2018 231,668 $ 14.84 3.04 $ 162,500 Granted – Exercised – Forfeited (25,000 ) Outstanding at March 31, 2019 206,668 $ 16.03 2.87 $ 25,000 Exercisable at March 31, 2019 176,070 $ 13.29 1.82 $ 25,000 The Company recognized compensation expense of $31,602 and $68,084 during the three months ended March 31, 2019 and 2018, 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. The Company recognized compensation expense of $78,201 and $140,185 during the six months ended March 31, 2019 and 2018, respectively. At March 31, 2019, the Company has $208,604 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 March 31, 2019 is as follows: Outstanding Exercisable Number of Exercise Number of Exercise Options Price Options Price 6,250 $ 5.00 6,250 $ 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 1,736 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 23.41 8,000 27.60 8,000 27.60 8,000 31.74 8,000 36.50 8,000 41.98 206,668 176,070 The following table summarizes information about the Company’s non-vested shares outstanding as of March 31, 2019 and September 30, 2018: 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 (15,639 ) $ 15.72 Non-vested at September 30, 2018 41,029 $ 12.88 Non-vested at September 30, 2018 41,029 $ 12.88 Granted – $ – Vested (10,431 ) $ 14.21 Non-vested at March 31, 2019 30,598 $ 14.14 Options were granted during fiscal 2018, 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. There have been no options granted in fiscal 2019 through March 31, 2019. The assumptions used in calculating the fair value of stock options granted in fiscal 2018 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 and 10 years Expected volatiility 107% Expected dividend yield 0% |
13. Earnings Per Share
13. Earnings Per Share | 6 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 13: Earnings Per Share Net earnings per share is calculated using the weighted average number of shares of common stock outstanding during the applicable period. Basic weighted average shares of common stock outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s Consolidated Balance Sheet. Diluted net earnings per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential shares of common stock consist of the additional shares of common stock issuable in respect of restricted share awards, stock options and convertible preferred stock. Preferred stock dividends are subtracted from net earnings to determine the amount available to common stockholders. The following table presents the computation of basic and diluted net earnings per share: Three Months Ended March 31, Six Months Ended March 31, 2019 2018 2019 2018 Basic Net income $ 473,406 $ 1,923,273 $ 2,003,915 $ 3,800,828 Less: preferred stock dividends (292 ) (292 ) (584 ) (584 ) Net income applicable to common stock $ 473,114 $ 1,922,981 $ 2,003,331 $ 3,800,244 Weighted average common shares outstanding 1,925,972 1,970,136 1,935,610 1,972,758 Basic earnings per share $ 0.25 $ 0.98 $ 1.03 $ 1.93 Diluted Net income applicable to common stock $ 473,114 $ 1,922,981 $ 2,003,331 $ 3,800,244 Add: preferred stock dividends 292 292 584 584 Net income applicable for diluted earnings per share $ 473,406 $ 1,923,273 $ 2,003,915 $ 3,800,828 Weighted average common shares outstanding 1,925,972 2,027,564 1,999,983 1,972,758 Add: Options 2,255 44,923 6,916 44,171 Add: Series B Preferred Stock 1,071,200 1,071,200 1,071,200 1,071,200 Add: Series B Preferred Stock Warrants 590,145 590,145 590,145 590,145 Add: Series E Preferred Stock 77,840 77,840 77,840 77,840 Assumed weighted average common shares outstanding 3,667,412 3,811,672 3,746,084 3,756,114 Diluted earnings per share $ 0.13 $ 0.50 $ 0.53 $ 1.01 There are 175,418 and 121,250 common stock options that are anti-dilutive that are not included in the three months ended March 31, 2019 and 2018, diluted earnings per share computations, respectively. |
14. Related Party Transactions
14. Related Party Transactions | 6 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 14: Related Party Transactions In connection with its purchase of Marquis, Marquis entered into a mezzanine loan in the amount of up to $7,000,000 with ICF. 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 March 31, 2019, and September 30, 2018, respectively, there was $2,000,000 outstanding on this mezzanine loan. During the three months ended March 31, 2019 and 2018, the Company recognized total interest expense of $62,501, associated with the ICF notes. During the six months ended March 31, 2019 and 2018, the Company recognized total interest expense of $126,389, 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 $138,872 and $29,929 in rent and other reimbursed expenses for the three months ended March 31, 2019 and 2018, respectively. ARCA paid the Company $183,437 and $75,317 in rent and other reimbursed expenses for the six months ended March 31, 2019 and 2018, respectively. 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, 12,383, 54,396 and 17,857 shares of Series B Convertible Preferred Stock were set to expire on September 10, 2017, December 11, 2017, March 27, 2018 and March 28, 2018, respectively. On January 16, 2018, the Company memorialized an agreement reached prior to any of the warrants expiring, to extend the expiration date for two years, just prior to expiration for all warrants listed. Warrants outstanding and exercisable as of March 31, 2019 and September 30, 2018 reflect the time extended warrants in addition to 22,479 warrants for shares of Series B Convertible Preferred Stock with an original expiration date of December 3, 2019. 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”). Effective April 1, 2018, ASH issued an interest-bearing promissory note, with interest at 5% per annum, with a three-year term in the original amount of $3,919,494 for the balance of the purchase price. Under a transition service agreement between ARCA and ApplianceSmart, ARCA would provide healthcare benefits to ApplianceSmart employees from January 1, 2018 thru December 31, 2018 for a monthly fee of $22,500. ApplianceSmart paid ARCA transition services fees of $0 for the three and six months ended March 31, 2019. Transition service fees expensed by ApplianceSmart were $0 and $67,500 for the three and six months ended March 31, 2019. The transaction service fees liability at March 31, 2019 and September 30, 2018 are $90,000 and $135,000, respectively. On December 26, 2018, ASH and the Seller amended and restated the ApplianceSmart Note to, among other things, grant the Seller a security interest in the assets of ASH and ApplianceSmart in accordance with the terms of separate security agreements entered into between ASH and ApplianceSmart, respectively, and the Seller. At March 31, 2019 and September 30, 2018, respectively, there was $3,721,507 and $3,821,507 outstanding on this ApplianceSmart Note, respectively. 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 | 6 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 15: 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 March 31, 2019, results of operations, cash flows or liquidity of the Company. |
16. Income Taxes
16. Income Taxes | 6 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 16: Income Taxes The income tax rate for the six months ended March 31, 2019 and March 31, 2018 were 27.7% and 50.1%, respectively. The effective income tax rate differs from the U.S. federal statuary rate primarily due to state taxes and certain non-deductible expenses. As of March 31, 2019, and March 31, 2018 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. 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 | 6 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 17: 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 and six months ended March 31, 2019 and 2018: Three Months Ended March 31, Six Months Ended March 31, 2018 2017 2018 2017 Revenues Retail and Online $ 25,747,635 $ 31,183,512 $ 56,392,650 $ 52,476,983 Manufacturing 21,062,147 20,808,622 43,444,432 39,687,157 Services 163,369 187,794 332,009 383,852 $ 46,973,151 $ 52,179,928 $ 100,169,091 $ 92,547,992 Gross profit Retail and Online $ 12,741,758 $ 14,536,885 $ 26,318,041 $ 25,992,687 Manufacturing 5,755,461 4,936,246 11,357,119 9,688,814 Services 153,930 177,570 313,067 365,090 $ 18,651,149 $ 19,650,701 $ 37,988,227 $ 36,046,591 Operating income (loss) Retail and Online $ (129,237 ) $ 2,391,848 $ (367,889 ) $ 4,623,324 Manufacturing 2,022,072 1,504,823 4,192,549 3,007,077 Services 153,540 177,292 312,207 364,350 $ 2,046,375 $ 4,073,963 $ 4,136,867 $ 7,994,751 Depreciation and amortization Retail and Online $ 882,227 $ 440,503 $ 1,670,478 $ 1,117,964 Manufacturing 610,193 866,756 1,303,711 1,585,200 Services – – – – $ 1,492,420 $ 1,307,259 $ 2,974,189 $ 2,703,164 Interest expenses Retail and Online $ 1,120,205 $ 1,349,291 $ 2,295,996 $ 3,371,698 Manufacturing 415,792 472,429 892,734 918,334 Services – – – – $ 1,535,997 $ 1,821,720 $ 3,188,730 $ 4,290,032 Net income before provision for income taxes Retail and Online $ (1,332,758 ) $ 1,161,581 $ (2,605,175 ) $ 5,214,176 Manufacturing 1,854,486 1,019,656 5,066,106 2,083,049 Services 153,604 177,292 312,271 364,350 $ 675,332 $ 2,358,529 $ 2,773,202 $ 7,661,575 As of As of March 31, September 30, 2019 2018 Total assets Retail and Online $ 83,439,817 $ 88,799,584 Manufacturing 48,335,629 52,915,109 Services 72,215 57,703 $ 131,847,661 $ 141,772,396 Goodwill and intangible assets Retail and Online $ 42,458,607 $ 43,268,668 Manufacturing 329,280 343,914 Services – – $ 42,787,887 $ 43,612,582 |
18. Subsequent Events
18. Subsequent Events | 6 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 18: Subsequent Events ApplianceSmart Note On March 15, 2019, ApplianceSmart entered into subordination agreements with the Seller and Crossroads pursuant to which it agreed to subordinate the payment of indebtedness under the ApplianceSmart Note and the Seller’s security interest in the assets of ApplianceSmart and other related parties in exchange for up to $1,200,000 payable within 15 days of the agreement. ApplianceSmart paid $1,200,000 to the Company $100,000 on March 29, 2019, $250,000 on April 5, 2019 and $850,000 on April 15, 2019 as principal payments on the ApplianceSmart Note. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements represent the consolidated financial position, results of operations and cash flows of Live Ventures Incorporated and its wholly-owned subsidiaries. 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 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 March 31, 2019 and September 30, 2018 approximate fair 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 receivables 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 $112,500 per contract year. Total commissions paid to factors were $70,980 and $75,398 for three months ended March 31, 2019 and 2018, respectively. Total commissions paid to factors were $133,029 and $144,157 for the six months ended March 31, 2019 and 2018, 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 March 31, 2019 and September 30, 2018, the allowance for doubtful accounts was $1,246,973 and $855,709, respectively. |
Inventories | Inventories Manufacturing Segment Inventories are valued at the lower of the inventory’s cost (first in, first out basis (“FIFO”)) or market of the inventory. Management compares the cost of inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower. Management also reviews inventory to determine if excess or obsolete inventory is present and a reserve is made to reduce the carrying value for inventory for such excess and or obsolete inventory. At March 31, 2019 and September 30, 2018, 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 March 31, 2019 and September 30, 2018 were $497,083 and $1,110,729, 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 $954,768 and $1,067,607 for the three months ended March 31, 2019 and 2018, respectively. Depreciation expense was $2,082,640 and $2,227,194 for the six months ended March 31, 2019 and 2018, 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, favorable leases, 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, favorable leases – over the life of the lease, customer lists – to 20 years, trade names – to 20 years. Intangible amortization expense is $537,652 and $236,318 for the three months ended March 31, 2019 and 2018, respectively. Intangible amortization expense is $891,549 and $475,970 for the six months ended March 31, 2019 and 2018, respectively. |
Revenue Recognition | Revenue Recognition We provide carpet, hard surface products, synthetic turf products, used movies, music, games and accessories, new movies, music, games and accessories, we rent movies and provide concession products, we provide new and out of the box appliances, appliance and installation services, third-party extended warranties, appliance accessories and directory services. We adopted Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606) and related ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12 and ASU No. 2016-20, which provide supplementary guidance, and clarifications, effective October 1, 2018. We adopted ASC 606 using the modified retrospective method. The results for the reporting periods beginning after October 1, 2018, are presented in accordance with the new standard, although comparative information for the prior year has not been restated and continues to be reported under the accounting standards and policies in effect for those periods. Adoption of the new standard did not have a significant impact on the current period revenues or on the prior year Consolidated Financial Statements. No transition adjustment was required to our retained earnings as of October 1, 2018. Under the new standard revenue is recognized as follows: We determine revenue recognition through the following steps: a. Identification of the contract, or contracts, with a customer, b. Identification of the performance obligations in the contract, c. Determination of the transaction price, d. Allocation of the transaction price to the performance obligations in the contract, and e. Recognition of revenue when, or as, we satisfy a performance obligation. As part of its assessment of each contract, the Company evaluates certain factors including the customer’s ability to pay, or credit risk. For each contract, the Company considers the promise to transfer products or services, each of which is distinct, to be the identified performance obligations. In determining the transaction price, the price stated on the contract is typically fixed and represents the net consideration to which the Company expects to be entitled per order, and therefore there is no variable consideration. As the Company’s standard payment terms are less than 90 days, the Company has elected, as a practical expedient, to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product or service based on its relative standalone selling price. The product or service price as specified on the contract is considered the standalone selling price as it is an observable source that depicts the price as if sold to a similar customer in similar circumstances. Carpet, Hard Surface Products, Synthetic Turf Products, New Appliance and Accessories Revenue We generate revenue by selling carpet, hard surface products and synthetic turf products to dealers nationwide within the confines of the United States. We also generate revenue by selling new appliances and appliance accessories direct to contractors and property owners and through retail locations. We recognize revenue at the point in time when control over the product is transferred to the customer, when our performance obligations are satisfied, which typically occur upon delivery from our facility to our customer or pickup from our facility by our customer. New and Used Movies, Books, Music, Games and Accessories We generate revenue by selling at point of sale used movies, books, music, games and accessories. We recognize revenue at the point of sale when control over the product is transferred to the customer, when our performance obligations are satisfied, which typically occur at point of sale within our stores. Appliance Service and Installation Revenue We generate revenue by selling appliance service and installation revenue. We recognize revenue as service or installation is performed and our obligations are satisfied, which typically occur as the service is provided. Hours and units are used as input methods for measurement of performance. Directory Service Revenue We generate directory services 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. We recognize revenue when the customer accepts and remits payment for services and all performance obligations are satisfied. Loyalty Programs We do not have any loyalty programs whereby a customer can accumulate a future accrued benefit. Vintage Stock has a “Cooler than Cash” program whereby the customer is provided with some variable gift card consideration in exchange for selling to the Company used products and receiving payment from the Company on a Vintage gift card instead of receiving cash. The excess gift card consideration over fair value of the used product sold to the Company is expensed as advertising and promotion expense in the period the consideration is provided. Gift Card Breakage Vintage Stock provides customers the ability to purchase gift cards. The Company has adopted ASU 2016-04 Liabilities – Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products. The Company derecognizes gift card amounts in amounts related to expected breakage in proportion to the pattern of rights expected to be exercised by the card holder only to the extent that it is probable that a significant reversal of the recognized breakage amount will not subsequently occur. Gift Card breakage amounts taken back into income are recorded as other income. Right of Return To the extent a right of return exists as more fully described below, the Company establishes up front a reserve for anticipated net returns and records this as a deduction from gross revenue recorded each period. Vintage Stock Original receipt and customer identification are required for all returns and or exchanges. A thirty-day return policy is solely for defective new music, movies and video games. Defective products shall be exchanged for a duplicate item. If a duplicate item is not in stock, a refund or store credit will be given to the customer. No exchange or full refund will be made on any item due to price change, dislike of content or game play. Credit card refunds are issued only to the card use for purchase. All comic, concession, rental, card, book, toy and new LP sales are final. Marquis Returns are only allowed for defective product. Customer is responsible for shipping charges to return product. ApplianceSmart Most products include a one year, parts and labor warranty from the product manufacturer. All shipments are 100 percent insured for loss. Product(s) damaged during shipping are eligible for exchange at no charge to the customer. If the product is damaged, the customer has the right to refuse the delivery. If the customer is not satisfied with their purchase, the customer may return the product within 14 days of receiving it. Products must be returned in brand new condition and packaged in their original box including all packing materials, manuals, blank warranty cards and accessories included. Products returned must also be free of any cosmetic damage. Products returned that do not meet these requirements may not be eligible for return or will incur a 25 percent restocking fee. Any product that has been installed or attempted to be installed cannot be returned. Shipping and handling charges from our warehouse are non-refundable. Customers are responsible for shipping charges incurred when returning a product. Special order merchandise is not eligible for return or exchange unless it is damaged or defective. The Company reserves the right to cancel open unfilled orders at any time. Warranties Marquis provides assurance-type warranties and the warranty provided varies according to product. Warranty claims can only be made for defective product. ApplianceSmart generates revenue by providing third-party service type warranties. The performance obligation on behalf of the ApplianceSmart is limited to procuring the third-party maintenance contract, registering the customer and the product with the insurance provider. Vintage Stock No warranties are provided other than manufacturer only warranties if applicable. Marquis No additional warranties are provided other than the manufacturer’s warranty. ApplianceSmart Most appliance products include a one year, parts and labor warranty from the product manufacturer. ApplianceSmart sells third-party provided extended warranties for appliances. Deferred Revenue Receivables are recognized in the period we ship the product or provide the service. Payment terms on invoiced amounts are based on contractual terms with each customer. When we receive consideration, or such consideration is unconditionally due, prior to transferring goods or services to the customer under the terms of a sales contract, we record deferred revenue, which represents a contract liability. We recognize deferred revenue as net sales once control of goods and/or services have been transferred to the customer and all revenue recognition criteria have been met and any constraints have been resolved. We defer the product costs until recognition of the related revenue occurs. Assets Recognized from Costs to Obtain a Contract with a Customer We recognize an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. We have concluded that none of the costs we have incurred to obtain and fulfill our FASB Accounting Standards Codification, or ASC 606 contracts, meet the capitalization criteria, and as such, there are no costs deferred and recognized as assets on the consolidated balance sheet at March 30, 2019, December 31, 2018 and September 30, 2018. Revenue recognized for Company contracts - $919,202 and $1,547,305 for the three and six months ended March 30, 2019, respectively, and $441,318 for the three and six months ended March 31, 2018. Practical Expedients and Exemptions: a. Taxes collected from customers and remitted to government authorities and that are related to sales of our products are excluded from revenues. b. Sales commissions are expensed when incurred because the amortization period would have been one year or less. These costs are recorded in Selling, general and administrative expense in the Condensed Consolidated Financial Statements of Income. c. We do not disclose the value of unsatisfied performance obligations for (i) contracts with original expected lengths of one year or less or (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for the services performed. d. We have elected to treat shipping and handling as a fulfillment activity not as a separate performance obligation when shipment occurs subsequent to a customer taking control of the product. |
Shipping and Handling | Shipping and Handling The Company classifies shipping and handling costs incurred as fulfillment costs and records them as cost of revenues. Any charges to customers for delivery charges are netted against fulfillment costs. |
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 for the three months ended March 31, 2019 and 2018, was $14,844 and $66,531, respectively. Breakage income for the six months ended March 31, 2019 and 2018, was $128,844 and $93,143, respectively. Breakage income is recorded in other income in our consolidated financial statements. The gift card liability at March 31, 2019 and September 30, 2018 is $1,582,604 and $1,498,125, respectively, and is recorded in accrued liabilities in our consolidated financial statements. |
Fair Value Measurements | Fair Value Measurements ASC Topic 820 (“ Fair Value Measurements and Disclosures |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. The asset and liability method require 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. The Company records 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 multiple states including, Arkansas, California, Colorado, Georgia, Idaho, Illinois, Kansas, Missouri, Minnesota, Nevada, New Mexico, New York, Ohio, Oklahoma, Texas, and Utah. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 per institution as of March 31, 2019. At times, balances may exceed federally insured limits. |
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 ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ASU 2016-02, Leases (Topic 842) |
4. Balance Sheet Detail Infor_2
4. Balance Sheet Detail Information (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of receivables | March 31, September 30, 2019 2018 Trade receivables, current, net: Accounts receivable, current $ 13,309,951 $ 14,350,559 Less: Reserve for doubtful accounts (902,401 ) (511,137 ) $ 12,407,550 $ 13,839,422 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 $ 13,654,523 $ 14,695,131 Less: Reserve for doubtful accounts (1,246,973 ) (855,709 ) $ 12,407,550 $ 13,839,422 |
Schedule of inventory | March 31, September 30, 2019 2018 Inventory, net Raw materials $ 7,581,506 $ 9,712,839 Work in progress 1,794,705 1,141,486 Finished goods 7,742,672 5,414,072 Merchandise 26,899,230 31,461,311 44,018,113 47,729,708 Less: Inventory reserves (589,023 ) (1,202,669 ) $ 43,429,090 $ 46,527,039 |
Schedule of property and equipment | March 31, September 30, 2019 2018 Property and equipment, net: Building and improvements $ 11,147,976 $ 10,954,843 Transportation equipment 82,266 82,266 Machinery and equipment 19,832,827 23,295,315 Furnishings and fixtures 2,727,896 2,639,616 Office, computer equipment and other 2,391,928 2,530,410 36,182,893 39,502,450 Less: Accumulated depreciation (12,284,953 ) (11,511,390 ) $ 23,897,940 $ 27,991,060 |
Schedule of intangible assets | March 31, September 30, 2019 2018 Intangible assets, net: Domain name and marketing related intangibles $ 59,313 $ 59,313 Lease intangibles 2,239,008 2,239,008 Customer relationship intangibles 4,709,241 4,709,241 Purchased software 2,257,791 2,190,937 9,265,353 9,198,499 Less: Accumulated amortization (3,424,201 ) (2,532,652 ) $ 5,841,152 $ 6,665,847 |
Schedule of accrued liabilities | March 31, September 30, 2019 2018 Accrued liabilities: Accrued payroll and bonuses $ 2,067,433 $ 2,384,041 Accrued sales and use taxes 1,247,645 1,007,284 Accrued property taxes 138,391 362,388 Accrued rent 478,655 506,989 Deferred revenue – 354,227 Accrued gift card and escheatment liability 1,678,165 1,593,688 Accrued interest payable 191,939 195,907 Accrued accounts payable and bank overdrafts 1,171,435 942,600 Accrued professional fees 195,638 470,726 Customer deposits 995,581 508,252 Accrued expenses - other 695,593 244,803 $ 8,860,475 $ 8,570,905 |
5. Acquisition (Tables)
5. Acquisition (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
ApplianceSmart Inc [Member] | |
Schedule of acquired assets and liabilities | Trade receivables $ 1,805,545 Inventory 7,444,282 Prepaid expenses 69,347 Refundable deposits 1,003,841 Intangible asset - trade names 2,015,000 Intangible asset - customer list 5,202 Intangible asset - leases 1,205,596 Restricted cash 750,000 Property and equipment 1,094,503 Deferred income tax (1,599,560 ) Bargain gain on acquisition (7,293,756 ) $ 6,500,000 |
Pro forma table related to acquisition | Proforma Actual Proforma Actual Three months Three months Six months Unaudited Ended Ended Ended Results through March 31, 2018 March 31, 2018 March 31, 2018 March 31, 2018 Net revenue $ 11,191,842 $ 11,191,842 $ 22,512,817 $ 11,260,516 Gross profit 3,449,105 3,449,105 4,561,178 3,468,305 Operating income (loss) 272,563 272,563 (1,782,413 ) 292,218 Net income (loss) 372,690 372,690 (1,717,082 ) 392,345 Earnings (loss) per basic common share $ 0.19 $ 0.19 $ (0.87 ) $ 0.20 |
ASH [Member] | |
Schedule of acquired assets and liabilities | Net liabilities assumed by ASH on December 31, 2017: Accounts payable $ 1,374,647 Accrued expenses 1,080,255 Capital leases 29,631 Credit card receivables (255,301 ) Cash (621,863 ) Total net liabilities assumed by ASH $ 1,607,369 |
6. Intangibles (Tables)
6. Intangibles (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Future amortization expense related to intangible assets | The following table summarizes estimated future amortization expense related to intangible assets that have net balances as of March 31, 2019: 2020 $ 1,245,597 2021 1,106,076 2022 952,941 2023 658,838 2024 305,872 Thereafter 1,571,828 $ 5,841,152 |
8. Long-Term Debt (Tables)
8. Long-Term Debt (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of credit line debt | Long-term debt as of March 31, 2019 and September 30, 2018 consisted of the following: March 31, September 30, 2019 2018 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 $ 4,220,827 $ 7,600,605 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 and common stock 10,641,326 11,892,595 Crossroads Financial Revolver Loan - variable interest rate based upon the three-month LIBOR rate plus a margin, interest payable monthly, maturity date March 2021, secured by substantially all ApplianceSmart assets 2,115,050 – Note Payable Comvest Term Loan - variable interest rate based upon LIBOR rate plus a margin, interest payable monthly in cash, principal due quarterly March 31, June 30, September 30, December 31, subject to a variable amortization of principal, maturity date May 26, 2023 note subordinate to Texas Capital Bank Revolver Loan, secured by Vintage Stock Assets 18,763,031 22,500,000 Note Payable to the Sellers of Vintage Stock, interest at 8% per annum, with interest payable monthly, amended maturity date of September 6, 2023, 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 2,458,846 3,230,555 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 – 1,636,940 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. 2,628,379 2,871,849 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. 807,339 881,937 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. 3,320,022 3,568,925 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 9,288,493 9,302,346 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 8.5% per annum, payable on a 120 day written demand notice, unsecured 225,000 225,000 Total notes payable 65,174,842 74,417,281 Less unamortized debt issuance costs (1,578,627 ) (1,653,458 ) Net amount 63,596,215 72,763,823 Less current portion (12,284,002 ) (13,958,355 ) Long-term portion $ 51,312,213 $ 58,805,468 |
Future maturities of debt | Future maturities of long-term debt at March 31, 2019 are as follows which does not include related party debt separately stated: Years ending March 31, 2020 $ 12,284,002 2021 15,749,991 2022 5,130,673 2023 4,393,814 2024 18,022,902 Thereafter 9,593,460 Total $ 65,174,842 |
9. Notes payable, related par_2
9. Notes payable, related parties (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term debt, related parties | Notes payable, related parties as of March 31, 2019 and September 30, 2018 consisted of the following: March 31, September 30, 2019 2018 Note Payable and revolving line of credit to the Sellers of ApplianceSmart, Inc., interest rate is 5% per annum, with interest payable monthly, maturity date April 1, 2021, accrued interest and principal all due at maturity. ApplianceSmart may reborrow funds up to the Original Principal amount during the term of the note. $ 3,721,507 $ 3,821,507 Note Payable to Isaac Capital Fund, interest rate is 12.5% per annum, with interest payable monthly, maturity date January 2021. 2,000,000 2,000,000 Total notes payable - related parties 5,721,507 5,821,507 Less unamortized debt issuance costs – – Net amount 5,721,507 5,821,507 Less current portion – (391,949 ) Long-term portion $ 5,721,507 $ 5,429,558 |
Future maturities of long term debt related party | Future maturities of notes payable, related parties at March 31, 2019 are as follows: Years ending March 31, 2020 $ – 2021 2,000,000 2022 3,721,507 2023 – 2024 – Thereafter – Total $ 5,721,507 |
11. Warrants (Tables)
11. Warrants (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrant activity | The following table summarizes information about the Company’s warrants at March 31, 2019 and September 30, 2018, respectively: Number of units - Series B Convertible preferred warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Intrinsic Value Outstanding at September 30, 2018 118,029 $ 20.80 1.35 $ 2,855,734 Exercisable at September 30, 2018 118,029 $ 20.80 1.35 $ 2,855,734 Outstanding at March 31, 2019 118,029 $ 20.80 0.85 $ 2,147,559 Exercisable at March 31, 2019 118,029 $ 20.80 0.85 $ 2,147,559 |
Warrants outstanding and exercisable | The exercise price for the Series B Convertible Preferred Stock warrants outstanding and exercisable at March 31, 2019 and September 30, 2018, are 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 (T
12. Stock-Based Compensation (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stock option activity | The following table summarizes stock option activity for the twelve months ended September 30, 2018 and the six months ended March 31, 2019: 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 9.02 Exercised – Forfeited – Outstanding at September 30, 2018 231,668 $ 14.84 3.04 $ 162,500 Exercisable at September 30, 2018 190,639 $ 11.89 2.08 $ 162,500 Outstanding at September 30, 2018 231,668 $ 14.84 3.04 $ 162,500 Granted – Exercised – Forfeited (25,000 ) Outstanding at March 31, 2019 206,668 $ 16.03 2.87 $ 25,000 Exercisable at March 31, 2019 176,070 $ 13.29 1.82 $ 25,000 |
Stock option exercise price | The exercise price for stock options outstanding and exercisable outstanding at March 31, 2019 is as follows: Outstanding Exercisable Number of Exercise Number of Exercise Options Price Options Price 6,250 $ 5.00 6,250 $ 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 1,736 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 23.41 8,000 27.60 8,000 27.60 8,000 31.74 8,000 36.50 8,000 41.98 206,668 176,070 |
Non-vested share activity | The following table summarizes information about the Company’s non-vested shares outstanding as of March 31, 2019 and September 30, 2018: 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 (15,639 ) $ 15.72 Non-vested at September 30, 2018 41,029 $ 12.88 Non-vested at September 30, 2018 41,029 $ 12.88 Granted – $ – Vested (10,431 ) $ 14.21 Non-vested at March 31, 2019 30,598 $ 14.14 |
Assumptions used | The assumptions used in calculating the fair value of stock options granted in fiscal 2018 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 and 10 years Expected volatiility 107% Expected dividend yield 0% |
13. Earnings Per Share (Tables)
13. Earnings Per Share (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Basic and diluted net loss per share | The following table presents the computation of basic and diluted net earnings per share: Three Months Ended March 31, Six Months Ended March 31, 2019 2018 2019 2018 Basic Net income $ 473,406 $ 1,923,273 $ 2,003,915 $ 3,800,828 Less: preferred stock dividends (292 ) (292 ) (584 ) (584 ) Net income applicable to common stock $ 473,114 $ 1,922,981 $ 2,003,331 $ 3,800,244 Weighted average common shares outstanding 1,925,972 1,970,136 1,935,610 1,972,758 Basic earnings per share $ 0.25 $ 0.98 $ 1.03 $ 1.93 Diluted Net income applicable to common stock $ 473,114 $ 1,922,981 $ 2,003,331 $ 3,800,244 Add: preferred stock dividends 292 292 584 584 Net income applicable for diluted earnings per share $ 473,406 $ 1,923,273 $ 2,003,915 $ 3,800,828 Weighted average common shares outstanding 1,925,972 2,027,564 1,999,983 1,972,758 Add: Options 2,255 44,923 6,916 44,171 Add: Series B Preferred Stock 1,071,200 1,071,200 1,071,200 1,071,200 Add: Series B Preferred Stock Warrants 590,145 590,145 590,145 590,145 Add: Series E Preferred Stock 77,840 77,840 77,840 77,840 Assumed weighted average common shares outstanding 3,667,412 3,811,672 3,746,084 3,756,114 Diluted earnings per share $ 0.13 $ 0.50 $ 0.53 $ 1.01 |
17. Segment Reporting (Tables)
17. Segment Reporting (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment reporting | The following tables summarize segment information for the three and six months ended March 31, 2019 and 2018: Three Months Ended March 31, Six Months Ended March 31, 2018 2017 2018 2017 Revenues Retail and Online $ 25,747,635 $ 31,183,512 $ 56,392,650 $ 52,476,983 Manufacturing 21,062,147 20,808,622 43,444,432 39,687,157 Services 163,369 187,794 332,009 383,852 $ 46,973,151 $ 52,179,928 $ 100,169,091 $ 92,547,992 Gross profit Retail and Online $ 12,741,758 $ 14,536,885 $ 26,318,041 $ 25,992,687 Manufacturing 5,755,461 4,936,246 11,357,119 9,688,814 Services 153,930 177,570 313,067 365,090 $ 18,651,149 $ 19,650,701 $ 37,988,227 $ 36,046,591 Operating income (loss) Retail and Online $ (129,237 ) $ 2,391,848 $ (367,889 ) $ 4,623,324 Manufacturing 2,022,072 1,504,823 4,192,549 3,007,077 Services 153,540 177,292 312,207 364,350 $ 2,046,375 $ 4,073,963 $ 4,136,867 $ 7,994,751 Depreciation and amortization Retail and Online $ 882,227 $ 440,503 $ 1,670,478 $ 1,117,964 Manufacturing 610,193 866,756 1,303,711 1,585,200 Services – – – – $ 1,492,420 $ 1,307,259 $ 2,974,189 $ 2,703,164 Interest expenses Retail and Online $ 1,120,205 $ 1,349,291 $ 2,295,996 $ 3,371,698 Manufacturing 415,792 472,429 892,734 918,334 Services – – – – $ 1,535,997 $ 1,821,720 $ 3,188,730 $ 4,290,032 Net income before provision for income taxes Retail and Online $ (1,332,758 ) $ 1,161,581 $ (2,605,175 ) $ 5,214,176 Manufacturing 1,854,486 1,019,656 5,066,106 2,083,049 Services 153,604 177,292 312,271 364,350 $ 675,332 $ 2,358,529 $ 2,773,202 $ 7,661,575 As of As of March 31, September 30, 2019 2018 Total assets Retail and Online $ 83,439,817 $ 88,799,584 Manufacturing 48,335,629 52,915,109 Services 72,215 57,703 $ 131,847,661 $ 141,772,396 Goodwill and intangible assets Retail and Online $ 42,458,607 $ 43,268,668 Manufacturing 329,280 343,914 Services – – $ 42,787,887 $ 43,612,582 |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2018 | |
Total commissions paid to factors | $ 70,980 | $ 75,398 | $ 133,029 | $ 144,157 | |
Allowance for doubtful accounts | 1,246,973 | 1,246,973 | $ 855,709 | ||
Allowance for obsolete inventory | 589,023 | 589,023 | 1,202,669 | ||
Depreciation expense | 954,768 | 1,067,607 | 2,082,640 | 2,227,194 | |
Intangible amortization expense | 537,652 | 236,318 | 891,549 | 475,970 | |
Revenue with contract | 919,202 | 441,318 | 1,547,305 | 441,318 | |
Breakage income related from gift cards | 14,844 | $ 66,531 | 128,844 | $ 93,143 | |
Accrued gift card and escheatment liability | 1,678,165 | 1,678,165 | $ 1,593,688 | ||
Federal Deposit Insurance Corporation insured amount | $ 250,000 | $ 250,000 | |||
Customer Lists [Member] | |||||
Useful lifes of intangible assets | 1-20 years | ||||
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 | ||||
Trade Names [Member] | |||||
Useful lifes of intangible assets | 1-20 years | ||||
Leases [Member] | |||||
Useful lifes of intangible assets | 1-10 years | ||||
Marquis Affiliated Holdings, LLC [Member] | Marquis Industries, Inc. [Member] | |||||
Percentage owned in subsidiary | 100.00% | 100.00% |
4. Balance Sheet Detail Infor_3
4. Balance Sheet Detail Information (Details) - USD ($) | Mar. 31, 2019 | Sep. 30, 2018 |
Trade and other receivables, current, net: | ||
Accounts receivable, current | $ 13,309,951 | $ 14,350,559 |
Less: Allowance for doubtful accounts | (902,401) | (511,137) |
Trade and other receivables, current, net | 12,407,550 | 13,839,422 |
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 | 0 | 0 |
Total trade and other receivables, net: | ||
Gross receivables | 13,654,523 | 14,695,131 |
Less: Allowance for doubtful accounts | (1,246,973) | (855,709) |
Total trade and other receivables, net | 12,407,550 | 13,839,422 |
Inventory, net | ||
Raw materials | 7,581,506 | 9,712,839 |
Work in progress | 1,794,705 | 1,141,486 |
Finished goods | 7,742,672 | 5,414,072 |
Merchandise | 26,899,230 | 31,461,311 |
Total inventory, gross | 44,018,113 | 47,729,708 |
Less: obsolescence reserve | (589,023) | (1,202,669) |
Total inventory, net | 43,429,090 | 46,527,039 |
Property and equipment, net: | ||
Building and improvements | 11,147,976 | 10,954,843 |
Transportation equipment | 82,266 | 82,266 |
Machinery and equipment | 19,832,827 | 23,295,315 |
Furnishings and fixtures | 2,727,896 | 2,639,616 |
Office, computer equipment and other | 2,391,928 | 2,530,410 |
Plant Property and Equipment, gross | 36,182,893 | 39,502,450 |
Less: Accumulated depreciation | (12,284,953) | (11,511,390) |
Property and equipment, net | 23,897,940 | 27,991,060 |
Intangible assets, net: | ||
Domain name and marketing related intangibles | 59,313 | 59,313 |
Lease intangibles | 2,239,008 | 2,239,008 |
Customer relationships intangibles | 4,709,241 | 4,709,241 |
Purchased software | 2,257,791 | 2,190,937 |
Intangible assets, gross | 9,265,353 | 9,198,499 |
Less: Accumulated amortization | (3,424,201) | (2,532,652) |
Intangible assets, net | 5,841,152 | 6,665,847 |
Accrued liabilities: | ||
Accrued payroll and bonuses | 2,067,433 | 2,384,041 |
Accrued sales and use taxes | 1,247,645 | 1,007,284 |
Accrued property taxes | 138,391 | 362,388 |
Accrued rent | 478,655 | 506,989 |
Deferred revenue | 354,227 | |
Accrued gift card and escheatment liability | 1,678,165 | 1,593,688 |
Accrued interest payable | 191,939 | 195,907 |
Accrued accounts payable and bank overdrafts | 1,171,435 | 942,600 |
Accrued professional fees | 195,638 | 470,726 |
Customer deposits | 995,581 | 508,252 |
Accrued expenses - other | 695,593 | 244,803 |
Total accrued liabilities | $ 8,860,475 | $ 8,570,905 |
5. Acquisitions (Details - Purc
5. Acquisitions (Details - Purchase allocation) - ApplianceSmart Inc [Member] | Dec. 30, 2017USD ($) |
Accounts payable | $ 1,374,647 |
Accrued expenses | 1,080,255 |
Capital leases | 29,631 |
Credit card receivables | (255,301) |
Cash | (621,863) |
Total net liabilities assumed by ASH | 1,607,369 |
Trade receivables | 1,805,545 |
Inventory | 7,444,282 |
Prepaid expenses | 69,347 |
Refundable deposits | 1,003,841 |
Restricted cash | 750,000 |
Property and equipment | 1,094,503 |
Deferred income tax | (1,599,560) |
Bargain gain on acquisition | (7,293,756) |
Purchase price | 6,500,000 |
Intangible - Customer List [Member] | |
Intangibles | 5,202 |
Intangible - Trade Names [Member] | |
Intangibles | 2,015,000 |
Intangible Leases [Member] | |
Intangibles | $ 1,205,596 |
5. Acquisitions (Details - Pro
5. Acquisitions (Details - Pro forma information) - ApplianceSmart Inc [Member] - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2018 | Mar. 31, 2018 | |
Net revenue | $ 11,191,842 | $ 11,191,842 | $ 11,260,516 | $ 22,512,817 |
Gross profit | 3,449,105 | 3,449,105 | 3,468,305 | 4,561,178 |
Operating income | 272,563 | 272,563 | 292,218 | (1,782,413) |
Net income (loss) | $ 372,690 | $ 372,690 | $ 392,345 | $ (1,717,082) |
Earnings (loss) per basic common share | $ 0.19 | $ 0.19 | $ 0.2 | $ (0.87) |
6. Intangibles (Details)
6. Intangibles (Details) | Mar. 31, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization expense, 2020 | $ 1,245,597 |
Amortization expense, 2021 | 1,106,076 |
Amortization expense, 2022 | 952,941 |
Amortization expense, 2023 | 658,838 |
Amortization expense, 2024 | 305,872 |
Amortization expense, thereafter | 1,571,828 |
Total future amortization expense | $ 5,841,152 |
6. Intangibles (Details Narrati
6. Intangibles (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Intangible amortization expense | $ 537,652 | $ 236,318 | $ 891,549 | $ 475,970 |
Software [Member] | ||||
Useful lifes of intangible assets | 3-5 years | |||
Customer Relationships [Member] | ||||
Useful lifes of intangible assets | 7-15 years | |||
Leases [Member] | ||||
Useful lifes of intangible assets | 1-10 years | |||
Trade Names [Member] | ||||
Useful lifes of intangible assets | 1-20 years | |||
Customer Lists [Member] | ||||
Useful lifes of intangible assets | 1-20 years | |||
Domain Name and Marketing [Member] | ||||
Useful lifes of intangible assets | 3-20 years |
8. Long Term Debt (Details - Lo
8. Long Term Debt (Details - Long Term Debt) - USD ($) | 6 Months Ended | |
Mar. 31, 2019 | Sep. 30, 2018 | |
Total Debt | $ 65,174,842 | $ 74,417,281 |
Less: unamortized debt issuance costs | (1,578,627) | (1,653,458) |
Net amount | 63,596,215 | 72,763,823 |
Current portion | (12,284,002) | (13,958,355) |
Long-term portion | $ 51,312,213 | 58,805,468 |
Capitala Term Loan [Member] | ||
Debt maturity date | Nov. 30, 2021 | |
Periodic payment frequency | quarterly | |
Periodic principal and/or interest payments | $ 725,000 | |
Note payable to individual [Member] | ||
Total Debt | $ 206,529 | 206,529 |
Debt interest rate description | 11% per annum | |
Collateral | Unsecured | |
Note payable to individual 2 [Member] | ||
Total Debt | $ 500,000 | 500,000 |
Debt interest rate description | 10% per annum | |
Collateral | Unsecured | |
Note payable to individual 3 [Member] | ||
Total Debt | $ 225,000 | 225,000 |
Debt interest rate description | 8.5% per annum | |
Collateral | Unsecured | |
Comvest Term Loan [Member] | ||
Total Debt | $ 18,763,031 | 22,500,000 |
Debt maturity date | May 26, 2023 | |
Debt interest rate description | Variable, base rate plus margin | |
Periodic payment frequency | quarterly | |
Note Payable to the Sellers of Vintage Stock [Member] | ||
Total Debt | $ 10,000,000 | 10,000,000 |
Debt maturity date | Sep. 6, 2023 | |
Debt interest rate description | 8% per annum | |
Periodic payment frequency | monthly | |
Collateral | Secured by Vintage Stock assets | |
Note #1 to Banc of America Leasing & Capital [Member] | ||
Total Debt | $ 2,458,846 | 3,230,555 |
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 Banc of America Leasing & Capital [Member] | ||
Total Debt | $ 0 | 1,636,940 |
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 Banc of America Leasing & Capital [Member] | ||
Total Debt | $ 2,628,379 | 2,871,849 |
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 Banc of America Leasing & Capital [Member] | ||
Total Debt | $ 807,339 | 881,937 |
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 | $ 3,320,022 | 3,568,925 |
Debt maturity date | Jan. 28, 2025 | |
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 to Store Capital Acquisitions [Member] | ||
Total Debt | $ 9,288,493 | 9,302,346 |
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 | |
Bank of America Revolver Loan [Member] | ||
Total Debt | $ 4,220,827 | 7,600,605 |
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 | $ 10,641,326 | 11,892,595 |
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 | |
Crossroads Financial Revolver Loan [Member] | ||
Total Debt | $ 2,115,050 | $ 0 |
Debt maturity date | Mar. 31, 2021 | |
Debt interest rate description | Variable, three-month LIBOR rate plus a margin | |
Periodic payment frequency | monthly | |
Collateral | Secured by substantially all ApplianceSmart assets |
8. Long Term Debt (Details - Fu
8. Long Term Debt (Details - Future Maturities) - USD ($) | Mar. 31, 2019 | Sep. 30, 2018 |
Debt Disclosure [Abstract] | ||
Future maturity 2020 | $ 12,284,002 | |
Future maturity 2021 | 15,749,991 | |
Future maturity 2022 | 5,130,673 | |
Future maturity 2023 | 4,393,814 | |
Future maturity 2024 | 18,022,902 | |
Future maturity thereafter | 9,593,460 | |
Total | $ 65,174,842 | $ 74,417,281 |
8. Long Term Debt (Details Narr
8. Long Term Debt (Details Narrative) - USD ($) | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2018 | |
Credit line outstanding | $ 750,000 | ||
Proceeds from note payable | 0 | $ 3,931,591 | |
Capitala Term Loan [Member] | |||
Credit line maximum | $ 29,871,650 | ||
Credit line weighted average interest rate | 16.94% | ||
Debt maturity date | Nov. 30, 2021 | ||
Debt periodic payment | $ 725,000 | ||
Debt periodic frequency | quarterly | ||
Debt issuance cost | $ 1,088,000 | ||
Unamortized debt issuance cost | $ 742,000 | ||
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 | ||
Comvest Term Loan [Member] | |||
Credit line maximum | $ 24,000,000 | ||
Debt issuance cost | 1,318,069 | ||
Crossroads Financial Revolver Loan [Member] | |||
Credit line maximum | $ 4,000,000 | ||
Debt issuance cost | 118,457 | ||
Note #2 Payable to Banc of America Leasing & Capital [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 Banc of America Leasing & Capital [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 Banc of America Leasing & Capital [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 frequency | 59 monthy payments | ||
Debt final payment | $ 584,273 | ||
ApplianceSmart Note [Member] | |||
Debt face amount | $ 6,500,000 | ||
Debt stated interest rate | 5.00% | ||
Debt maturity date | Apr. 1, 2021 | ||
Comvest Term Loan [Member] | |||
Debt maturity date | May 26, 2023 | ||
Debt periodic frequency | quarterly | ||
Note Payable to the Sellers of Vintage Stock [Member] | |||
Debt maturity date | Sep. 6, 2023 | ||
Debt periodic frequency | monthly | ||
Note #1 to Banc of America Leasing & Capital [Member] | |||
Debt maturity date | Sep. 30, 2021 | ||
Debt periodic payment | $ 84,273 | ||
Debt periodic frequency | monthly | ||
Note Payable to Store Capital Acquisitions [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, 2025 | ||
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 | $ 12,000,000 | ||
Credit line maturity date | Nov. 30, 2020 | ||
Credit line borrowings during period | $ 39,643,737 | ||
Credit line repayments during period | 40,895,006 | ||
Maximum borrowings outstanding | $ 11,931,977 | ||
Credit line weighted average interest rate | 4.7027% | ||
Credit line amount available at period end | $ 1,358,674 | ||
Credit line outstanding | 10,641,326 | ||
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 | ||
Crossroads Financial Revolver Loan [Member] | |||
Debt maturity date | Mar. 31, 2021 | ||
Debt periodic frequency | monthly | ||
Store Capital Acquisitions[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% | ||
Sellers Subordinated Acquisition Note [Member] | |||
Subordinated debt | $ 10,000,000 | ||
Subordinated debt interest rate | 8.00% | ||
Marquis [Member] | Bank of America Revolver Loan [Member] | |||
Credit line maximum | $ 15,000,000 | 15,000,000 | |
Credit line maturity date | Jul. 20, 2020 | ||
Credit line borrowings during period | $ 44,740,439 | ||
Credit line repayments during period | 48,120,216 | ||
Maximum borrowings outstanding | $ 8,070,635 | ||
Credit line weighted average interest rate | 4.19% | ||
Credit line amount available at period end | $ 10,660,628 | 7,326,680 | |
Credit line outstanding | 4,220,827 | 7,600,605 | |
Letters of credit | $ 72,715 | $ 72,715 |
9. Notes payable, related par_3
9. Notes payable, related parties (Details - Long-term debt, related parties) - USD ($) | Mar. 31, 2019 | Sep. 30, 2018 |
Total notes payable - related parties | $ 5,721,507 | $ 5,821,507 |
Less unamortized debt issuance costs | 0 | 0 |
Net amount | 5,721,507 | 5,821,507 |
Less current portion | 0 | (391,949) |
Long-term portion | 5,721,507 | 5,429,558 |
Sellers of ApplianceSmart, Inc [Member] | ||
Total notes payable - related parties | 3,721,507 | 3,821,507 |
Isaac Capital Fund [Member] | ||
Total notes payable - related parties | $ 2,000,000 | $ 2,000,000 |
9. Notes payable, related par_4
9. Notes payable, related parties (Details - Future maturities) | Mar. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
Future maturity 2020 | $ 0 |
Future maturity 2021 | 2,000,000 |
Future maturity 2022 | 3,721,507 |
Future maturity 2023 | 0 |
Future maturity 2024 | 0 |
Future maturity thereafter | 0 |
Total | $ 5,721,507 |
9. Notes payable, related par_5
9. Notes payable, related parties (Details Narrative) - USD ($) | 6 Months Ended | |
Mar. 31, 2019 | Sep. 30, 2018 | |
Loan outstandings | $ 5,721,507 | $ 5,821,507 |
Crossroads Financial Revolver Loan [Member] | ||
Maturity date | Mar. 31, 2021 | |
Mezzanine Loan [Member] | ||
Loan maximum borrowing amount | $ 7,000,000 | |
Loan outstandings | $ 2,000,000 | 2,000,000 |
Maturity date | Jan. 31, 2021 | |
Interest rate | 12.50% | |
ApplianceSmart Note [Member] | ||
Loan maximum borrowing amount | $ 6,500,000 | |
Original principal amount | 3,919,494 | |
Loan outstandings | 3,721,507 | $ 3,821,507 |
Cash paid puchase price | $ 2,580,506 | |
Maturity date | Apr. 1, 2021 | |
Interest rate | 5.00% | |
Comvest Term Loan [Member] | ||
Maturity date | May 26, 2023 | |
Note Payable to the Sellers of Vintage Stock [Member] | ||
Maturity date | Sep. 6, 2023 | |
Note #1 to Banc of America Leasing & Capital [Member] | ||
Maturity date | Sep. 30, 2021 | |
Note #2 Payable to Banc of America Leasing & Capital [Member] | ||
Loan maximum borrowing amount | $ 2,209,807 | |
Maturity date | Jan. 30, 2022 | |
Interest rate | 4.63% | |
Note #3 Payable to Banc of America Leasing & Capital [Member] | ||
Loan maximum borrowing amount | $ 3,679,514 | |
Maturity date | Dec. 30, 2023 | |
Interest rate | 4.7985% | |
Note #4 Payable to Banc of America Leasing & Capital [Member] | ||
Loan maximum borrowing amount | $ 1,095,113 | |
Maturity date | Dec. 30, 2023 | |
Interest rate | 4.8907% | |
Note Payable to Store Capital Acquisitions [Member] | ||
Maturity date | Jun. 30, 2056 | |
Note #1 Payable to Bank of America Leasing [Member] | ||
Loan maximum borrowing amount | $ 5,000,000 | |
Maturity date | Sep. 23, 2021 | |
Interest rate | 3.8905% | |
Note #5 Payable to Bank of America Leasing [Member] | ||
Loan maximum borrowing amount | $ 3,931,591 | |
Maturity date | Jan. 28, 2025 | |
Interest rate | 4.67% |
10. Stockholders' Equity (Detai
10. Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2018 | |
Accrued dividends | $ 584 | $ 1,168 | |||
Treasury stock purchased, shares | 40,528 | 10,000 | 43,347 | 29,743 | |
Payment for treasury stock | $ 302,384 | $ 128,055 | $ 321,462 | $ 377,447 | |
Treasury shares | 186,286 | 186,286 | 142,939 | ||
Treasury shares, cost | $ 1,871,473 | $ 1,871,473 | $ 1,550,011 | ||
Series E Convertible Preferred Stock [Member] | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||
Preferred stock, shares authorized | 200,000 | 200,000 | 200,000 | ||
Preferred stock, issued | 127,840 | 127,840 | 127,840 | ||
Preferred stock, outstanding | 77,840 | 77,840 | 77,840 | ||
Accrued dividends | $ (292) | $ (292) | $ (584) | $ (584) | |
Unpaid dividends | $ 584 | $ 584 | |||
Series B Preferred Stock [Member] | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | ||
Preferred stock, issued | 214,244 | 214,244 | 214,244 | ||
Preferred stock, outstanding | 214,244 | 214,244 | 214,244 | ||
Unpaid dividends | $ 1,168 |
11. Warrants (Details - Warrant
11. Warrants (Details - Warrants Outstanding) - Warrants [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Sep. 30, 2018 | |
Number of units | ||
Outstanding, beginning of period | 118,029 | 118,029 |
Outstanding, end of period | 118,029 | 118,029 |
Exercisable, end of period | 118,029 | 118,029 |
Weighted Average Exercise Price | ||
Outstanding, beginning of period | $ 20.80 | $ 20.80 |
Outstanding, end of period | 20.80 | 20.80 |
Exercisable, end of period | $ 20.80 | $ 20.80 |
Weighted Average Remaining Contractual Term (in years) | ||
Outstanding | 10 months 6 days | 1 year 4 months 6 days |
Exercisable | 10 months 6 days | 1 year 4 months 6 days |
Intrinsic value outstanding, end of period | $ 2,147,559 | $ 2,855,734 |
Exercisable, end of period | 2,147,559 | 2,855,734 |
11. Warrants (Details - Exercis
11. Warrants (Details - Exercise price) - Warrants [Member] - $ / shares | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2017 |
Number of warrants outstanding | 118,029 | 118,029 | 118,029 |
Warrants exercise price, outstanding | $ 20.80 | $ 20.80 | $ 20.80 |
Number of warrants exercisable | 118,029 | ||
$28.50 [Member] | |||
Number of warrants outstanding | 33,393 | ||
Warrants exercise price, outstanding | $ 28.50 | ||
Number of warrants exercisable | 33,393 | ||
Warrants exercise price, exercisable | $ 28.50 | ||
$16.60 [Member] | |||
Number of warrants outstanding | 54,396 | ||
Warrants exercise price, outstanding | $ 16.60 | ||
Number of warrants exercisable | 54,396 | ||
Warrants exercise price, exercisable | $ 16.60 | ||
$16.80 [Member] | |||
Number of warrants outstanding | 17,857 | ||
Warrants exercise price, outstanding | $ 16.80 | ||
Number of warrants exercisable | 17,857 | ||
Warrants exercise price, exercisable | $ 16.80 | ||
$24.30 [Member] | |||
Number of warrants outstanding | 12,383 | ||
Warrants exercise price, outstanding | $ 24.30 | ||
Number of warrants exercisable | 12,383 | ||
Warrants exercise price, exercisable | $ 24.30 |
12. Stock-based Compensation (D
12. Stock-based Compensation (Details - Option activity) - Stock Options [Member] - USD ($) | 6 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Number of Shares | |||
Outstanding, beginning balance | 231,668 | 211,668 | |
Granted | 0 | 20,000 | |
Exercised | 0 | ||
Forfeited | (25,000) | 0 | |
Outstanding, ending balance | 206,668 | 231,668 | 211,668 |
Exercisable | 176,070 | 190,639 | |
Weighted Average Exercise Price | |||
Outstanding, beginning balance | $ 14.84 | $ 13.19 | |
Granted | 32.24 | ||
Outstanding, ending balance | 16.03 | 14.84 | $ 13.19 |
Exercisable | $ 13.29 | $ 11.89 | |
Weighed Average Remaining Contractual Life | |||
Outstanding, ending balance | 2 years 10 months 14 days | 3 years 15 days | 3 years 5 months 20 days |
Granted | 9 years 7 days | ||
Exercisable | 1 year 9 months 25 days | 2 years 29 days | |
Intrinsic value outstanding, beginning balance | $ 162,500 | $ 454,417 | |
Intrinsic value outstanding, ending balance | 25,000 | 162,500 | $ 454,417 |
Exercisable | $ 25,000 | $ 162,500 |
12. Stock-based Compensation _2
12. Stock-based Compensation (Details - Option price) - Stock Options [Member] - $ / shares | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2017 |
Number of options outstanding | 206,668 | 231,668 | 211,668 |
Option exercise price outstanding | $ 16.03 | $ 14.84 | $ 13.19 |
Number of options exercisable | 176,070 | 190,639 | |
Option exercise price exercisable | $ 13.29 | $ 11.89 | |
$5.00 [Member] | |||
Number of options outstanding | 6,250 | ||
Option exercise price outstanding | $ 5 | ||
Number of options exercisable | 6,250 | ||
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 | ||
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 | ||
Number of options exercisable | 1,736 | ||
Option exercise price exercisable | $ 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 | $ 12.5 | ||
Number of options exercisable | 6,250 | ||
Option exercise price exercisable | $ 12.5 | ||
$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 | ||
Number of options exercisable | 8,000 | ||
Option exercise price exercisable | $ 23.41 | ||
$27.60 [Member] | |||
Number of options outstanding | 8,000 | ||
Option exercise price outstanding | $ 27.6 | ||
Number of options exercisable | 8,000 | ||
Option exercise price exercisable | $ 27.6 | ||
$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 | $ 36.5 | ||
$41.98 [Member] | |||
Number of options outstanding | 8,000 | ||
Option exercise price outstanding | $ 41.98 |
12. Stock-based Compensation _3
12. Stock-based Compensation (Details - Non vested) - Stock Options [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Sep. 30, 2018 | |
Number of shares | ||
Outstanding, beginning balance | 41,029 | 36,668 |
Granted | 0 | 20,000 |
Vested | (10,431) | (15,639) |
Outstanding, ending balance | 30,598 | 41,029 |
Weighted-Average Grant-Date Fair Value | ||
Per share price nonvested options outstanding, beginning of period | $ 12.88 | $ 17.7 |
Per share price nonvested options granted | 0 | 10.14 |
Per share price nonvested options vested | 14.21 | 15.72 |
Per share price nonvested options outstanding, end of period | $ 14.14 | $ 12.88 |
12. Stock-based Compensation _4
12. Stock-based Compensation (Details - Assumptions) - Stock Options [Member] | 6 Months Ended |
Mar. 31, 2019 | |
Risk-free interest rate | 1.25% |
Expected life of the options | 5 and 10 years |
Expected volatility | 107.00% |
Expected dividend yield | 0.00% |
12. Stock-based Compensation _5
12. Stock-based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | ||||
Stock-based compensation expense | $ 31,602 | $ 68,084 | $ 78,201 | $ 140,185 |
Unrecognized compensation expense | $ 208,604 | $ 208,604 |
13. Earnings Per Share (Details
13. Earnings Per Share (Details - Computation of loss per share) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Basic | ||||
Net income | $ 473,406 | $ 1,923,273 | $ 2,003,915 | $ 3,800,828 |
Less: preferred stock dividends | 584 | 1,168 | ||
Net income applicable to common stock | $ 473,114 | $ 1,922,981 | $ 2,003,331 | $ 3,800,244 |
Weighted average common shares outstanding | 1,925,972 | 1,970,136 | 1,935,610 | 1,972,758 |
Basic earnings per share | $ 0.25 | $ 0.98 | $ 1.03 | $ 1.93 |
Diluted | ||||
Net income (loss) applicable to common stock | $ 473,114 | $ 1,922,981 | $ 2,003,331 | $ 3,800,244 |
Add: preferred stock dividends | 292 | 292 | 584 | 584 |
Net income applicable for diluted earnings per share | $ 473,406 | $ 1,923,273 | $ 2,003,915 | $ 3,800,828 |
Weighted average common shares outstanding | 1,925,972 | 1,970,136 | 1,935,610 | 1,972,758 |
Add: Options | 2,255 | 44,923 | 6,916 | 44,171 |
Assumed weighted average common shares outstanding | 3,667,412 | 3,811,672 | 3,746,084 | 3,756,114 |
Diluted earnings per share | $ 0.13 | $ 0.5 | $ 0.53 | $ 1.01 |
Series B Preferred Stock [Member] | ||||
Diluted | ||||
Add: Preferred Stock | 1,071,200 | 1,071,200 | 1,071,200 | 1,071,200 |
Series B Preferred Stock Warrants [Member] | ||||
Diluted | ||||
Add: Preferred Stock | 590,145 | 590,145 | 590,145 | 590,145 |
Series E Convertible Preferred Stock [Member] | ||||
Basic | ||||
Less: preferred stock dividends | $ (292) | $ (292) | $ (584) | $ (584) |
Diluted | ||||
Add: Preferred Stock | 77,840 | 77,840 | 77,840 | 77,840 |
13. Earnings (Loss) Per Share (
13. Earnings (Loss) Per Share (Details Narrative) - shares | 6 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share | 175,418 | 121,250 |
14. Related Party Transactions
14. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Related Party Transactions [Abstract] | ||||
Interest expense | $ 62,501 | $ 62,501 | $ 126,389 | $ 126,389 |
Interest Paid | $ 82,270 | $ 82,270 | $ 165,454 | $ 165,454 |
16. Income Taxes (Details Narra
16. Income Taxes (Details Narrative) - USD ($) | 6 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax rate | 27.70% | 50.10% |
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 | 6 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2018 | |
Revenues | $ 46,973,151 | $ 52,179,928 | $ 100,169,091 | $ 92,547,992 | |
Gross profit | 18,651,149 | 19,650,701 | 37,988,227 | 36,046,591 | |
Operating income (loss) | 2,046,375 | 4,073,963 | 4,136,867 | 7,994,751 | |
Depreciation and amortization | 1,492,420 | 1,307,259 | 2,974,189 | 2,703,164 | |
Interest expenses | 1,535,997 | 1,821,720 | 3,188,730 | 4,290,032 | |
Net income (loss) before provision for income taxes | 675,332 | 2,358,529 | 2,773,202 | 7,661,575 | |
Total Assets | 131,847,661 | 141,772,396 | 131,847,661 | 141,772,396 | $ 141,772,396 |
Intangible assets and goodwill | 42,787,887 | 43,612,582 | 42,787,887 | 43,612,582 | |
Retail And Online [Member] | |||||
Revenues | 25,747,635 | 31,183,512 | 56,392,650 | 52,476,983 | |
Gross profit | 12,741,758 | 14,536,885 | 26,318,041 | 25,992,687 | |
Operating income (loss) | (129,237) | 2,391,848 | (367,889) | 4,623,324 | |
Depreciation and amortization | 882,227 | 440,503 | 1,670,478 | 1,117,964 | |
Interest expenses | 1,120,205 | 1,349,291 | 2,295,996 | 3,371,698 | |
Net income (loss) before provision for income taxes | (1,332,758) | 1,161,581 | (2,605,175) | 5,214,176 | |
Total Assets | 83,439,817 | 88,799,584 | 83,439,817 | 88,799,584 | |
Intangible assets and goodwill | 42,458,607 | 43,268,668 | 42,458,607 | 43,268,668 | |
Manufacturing [Member] | |||||
Revenues | 21,062,147 | 20,808,622 | 43,444,432 | 39,687,157 | |
Gross profit | 5,755,461 | 4,936,246 | 11,357,119 | 9,688,814 | |
Operating income (loss) | 2,022,072 | 1,504,823 | 4,192,549 | 3,007,077 | |
Depreciation and amortization | 610,193 | 866,756 | 1,303,711 | 1,585,200 | |
Interest expenses | 415,792 | 472,429 | 892,734 | 918,334 | |
Net income (loss) before provision for income taxes | 1,854,486 | 1,019,656 | 5,066,106 | 2,083,049 | |
Total Assets | 48,335,629 | 52,915,109 | 48,335,629 | 52,915,109 | |
Intangible assets and goodwill | 329,280 | 343,914 | 329,280 | 343,914 | |
Services [Member] | |||||
Revenues | 163,369 | 187,794 | 332,009 | 383,852 | |
Gross profit | 153,930 | 177,570 | 313,067 | 365,090 | |
Operating income (loss) | 153,540 | 177,292 | 312,207 | 364,350 | |
Depreciation and amortization | 0 | 0 | 0 | 0 | |
Interest expenses | 0 | 0 | 0 | 0 | |
Net income (loss) before provision for income taxes | 153,604 | 177,292 | 312,271 | 364,350 | |
Total Assets | 72,215 | 57,703 | 72,215 | 57,703 | |
Intangible assets and goodwill | $ 0 | $ 0 | $ 0 | $ 0 |