Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Dec. 15, 2016 | Dec. 12, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | CREATIVE LEARNING Corp | ||
Entity Central Index Key | 1,394,638 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-30 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 1.4 | ||
Entity Common Stock, Shares Outstanding | 12,100,409 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Current Assets: | ||
Cash | $ 276,685 | $ 2,450,609 |
Restricted cash (marketing fund) | 162,447 | 248,777 |
Accounts receivable, less allowance for doubtful accounts of approximately $218,000 and $165,000, respectively | 240,640 | 407,270 |
Prepaid expenses | 120,000 | 11,278 |
Notes receivables - current portion, less allowance for doubtful accounts of approximately $26,000 | 16,595 | 97,794 |
Income tax receivable | 424,938 | 254,527 |
Assets of discontinued operations | 57,199 | |
Total Current Assets | 1,241,305 | 3,527,454 |
Notes receivables - net of current portion | 60,150 | 86,670 |
Property and equipment, net of accumulated depreciation of approximately $188,000 and $134,000, respectively | 299,320 | 283,955 |
Intangible assets | 100,504 | 100,504 |
Deposits | 1,425 | 11,425 |
Deferred tax assets, net | 343,444 | 81,583 |
Total Assets | 2,046,148 | 4,091,591 |
Current Liabilities: | ||
Accounts payable - related party | 240 | |
Accounts payable - other | 171,828 | 119,113 |
Payroll accruals | 15,844 | 36,490 |
Accrued liabilities | 346,623 | 428,058 |
Unearned revenue | 188 | 35,900 |
Accrued marketing fund | 147,227 | 248,777 |
Customer deposits | 5,000 | 19,982 |
Liabilities classified as held for sale | 9,016 | |
Total Current Liabilities | 686,710 | 897,576 |
Commitments and Contingencies - Note 8 | ||
Creative Learning Corporation stockholders' equity: | ||
Preferred stock, $.0001 par value; 10,000,000 shares authorized; None issued and outstanding | ||
Common stock, $.0001 par value; 50,000,000 shares authorized; 12,001,409 issued and outstanding | 1,200 | 1,200 |
Additional paid-in capital | 2,534,554 | 2,534,554 |
Treasury Stock 65,100 shares and 15,100 shares, respectively (cost method) | (34,626) | (18,126) |
(Accumulated Deficit) / Retained earnings | (1,141,690) | 676,387 |
Total Stockholders' Equity | 1,359,438 | 3,194,015 |
Total Liabilities and Stockholders' Equity | $ 2,046,148 | $ 4,091,591 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Current Assets: | ||
Allowance for doubtful accounts receivable | $ 218,000 | $ 165,000 |
Allowance for doubtful notes receivable | 26,000 | 26,000 |
Accumulated depreciation | $ 187,918 | $ 134,207 |
Stockholders' Equity | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, Authorized | 50,000,000 | 50,000,000 |
Common stock, Issued | 12,001,409 | 12,001,409 |
Common stock, outstanding | 12,001,409 | 12,001,409 |
Treasury stock, shares | 65,100 | 15,100 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues: | ||
Initial franchise fees | $ 931,638 | $ 2,860,165 |
Royalties fees | 2,306,124 | 2,845,472 |
Merchandise Sales | 597 | 4,082 |
Total revenues | 3,238,359 | 5,709,719 |
Operating expenses: | ||
Franchise consulting and commissions - Related parties | 472,437 | |
Franchise consulting and commissions - Other | 537,109 | 701,288 |
Franchise training and expenses | 207,399 | 366,615 |
Salaries and payroll taxes | 888,477 | 1,321,237 |
Advertising | 435,221 | 876,394 |
Professional fees | 2,583,949 | 1,052,695 |
Office expense | 34,202 | 114,934 |
Bad debt expense | 87,837 | 306,118 |
Depreciation | 53,711 | 41,301 |
Other general and administrative expenses | 679,418 | 826,207 |
Total operating expenses | 5,507,323 | 6,079,226 |
Loss from operations | (2,268,964) | (369,507) |
Other income (expense): | ||
Interest income - net | 3,323 | 6,581 |
Legal settlements | (126,750) | (84,897) |
Other income | 23,144 | 6,528 |
Total other income (expense) | (100,283) | (71,788) |
Loss before benefit from income taxes | (2,369,247) | (441,295) |
Benefit from income taxes | 560,398 | 129,317 |
Net loss from continuing operations | (1,808,849) | (311,978) |
Discontinued operations: | ||
Impairment loss on assets held for sale | (27,606) | |
Operating loss from discontinued operations | (12,087) | (207,556) |
Income tax benefit | 2,859 | 90,200 |
Loss from discontinued operations | (9,228) | (144,962) |
Net Loss | $ (1,818,077) | $ (456,940) |
Basic and diluted | ||
Continuing operations | $ (0.15) | $ (0.03) |
Discontinued operations | 0 | (0.01) |
Total | $ (0.15) | $ (0.04) |
Basic and diluted weighted average number of common shares outstanding | 12,001,409 | 11,952,252 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net Loss | $ (1,818,077) | $ (456,940) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Loss from discontinued operations | 9,228 | 144,962 |
Depreciation | 53,711 | 41,301 |
Bad debt expense | 87,837 | 306,119 |
Deferred income taxes | (261,861) | (77,636) |
Stock issued for services | 15,120 | |
Changes in operating assets and liabilities: | ||
Restricted cash | 86,330 | (71,923) |
Accounts receivable | 43,962 | (393,477) |
Prepaid expenses | (108,722) | (7,928) |
Notes receivable | 89,684 | (133,709) |
Deposits | 10,000 | |
Accounts payable - related parties | (240) | (41,994) |
Accounts payable - 3rd Parties | 52,715 | (221,064) |
Payment of legal settlement | (55,000) | |
Accrued liabilities | (81,435) | 434,358 |
Unearned revenue | (35,712) | 35,900 |
Payroll accruals | (20,646) | 6,417 |
Accrued marketing | (48,684) | 71,923 |
Customer deposits | (14,982) | (76,755) |
Income tax receivable | (167,552) | (151,959) |
Net cash used in operating activates | (2,124,444) | (632,285) |
Net cash (used in) provided by discontinued operations | 19,596 | (12,093) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (69,076) | (7,870) |
Repayment of loan from related party - AudioFlix LLC | 70,000 | |
Net cash (used in) provided in investing activities | (69,076) | 62,130 |
Cash flows from financing activities: | ||
Purchase of treasury stock | (18,126) | |
Net cash used in financing activities | (18,126) | |
Net change in cash | (2,173,924) | (600,374) |
Cash, beginning of period | 2,450,609 | 3,050,983 |
Cash, end of period | 276,685 | 2,450,609 |
Supplemental non-cash investing and financing activities: | ||
Issuance of 85,000 shares on February 18, 2015 for Sew Fun Mediation | 106,250 | |
Acquisition of treasury stock in connection with disposition of CI | $ 16,500 |
Consolidated Statements of Cas6
Consolidated Statements of Cash Flows (Parenthetical) - shares | 1 Months Ended | 12 Months Ended |
Feb. 28, 2015 | Sep. 30, 2016 | |
Common Stock [Member] | ||
Stock issued as part of mediated settlement agreement, shares | 85,000 | 85,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholder's Equity - USD ($) | Treasury Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings / (Accumulated Deficit) [Member] | Total |
Balance at Sep. 30, 2014 | $ 1,187 | $ 2,361,897 | $ 1,133,327 | $ 3,496,411 | |
Balance (shares) at Sep. 30, 2014 | 11,869,409 | 11,869,409 | |||
Purchase agreements stock issuance | $ 3 | 44,997 | $ 45,000 | ||
Purchase agreements stock issuance (shares) | 25,000 | ||||
Mediated settlement stock issuance | $ 8 | 106,242 | 106,250 | ||
Mediated settlement stock issuance (shares) | 85,000 | ||||
Advisory fee stock issuance | $ 1 | 15,119 | 15,120 | ||
Advisory fee stock issuance (shares) | 12,000 | ||||
Compensatory stock issuances | $ 1 | 6,299 | 6,300 | ||
Compensatory stock issuances (shares) | 10,000 | ||||
Treasury stock (cost) | $ (18,126) | (18,126) | |||
Treasury stock (cost) (shares) | (15,100) | ||||
Net loss | (456,940) | (456,940) | |||
Balance at Sep. 30, 2015 | $ (18,126) | $ 1,200 | 2,534,554 | 676,387 | $ 3,194,015 |
Balance (shares) at Sep. 30, 2015 | (15,100) | 12,001,409 | 12,001,409 | ||
Treasury stock (cost) | $ (16,500) | $ (16,500) | |||
Treasury stock (cost) (shares) | (50,000) | ||||
Net loss | (1,818,077) | (1,818,077) | |||
Balance at Sep. 30, 2016 | $ (34,626) | $ 1,200 | $ 2,534,554 | $ (1,141,690) | $ 1,359,438 |
Balance (shares) at Sep. 30, 2016 | (65,100) | 12,001,409 | 12,001,409 |
Nature of Organization and Summ
Nature of Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Organization and Summary of Significant Accounting Policies | (1) Nature of Organization and Summary of Significant Accounting Policies Nature of Organization Creative Learning Corporation (“CLC”), formerly B2 Health, Inc., was incorporated March 8, 2006 in the State of Delaware. BFK Franchise Company LLC (“BFK”) was formed in the State of Nevada on May 19, 2009. Effective July 2, 2010, CLC was acquired by BFK in a transaction classified as a reverse acquisition. CLC concurrently changed its name from B2 Health, Inc. to Creative Learning Corporation. BFK and CLC are hereinafter referred to collectively as the "Company". In addition to the accounts of CLC and BFK, the accompanying consolidated financial statements include the accounts of CLC’s subsidiaries, BFK Development Company LLC (“BFKD”), Sew Fun Franchise Company LLC (SF), and SF LLC (“Sew Fun Studios”). The organizational documents for BFK Development Company LLC, Sew Fun Franchise Company LLC, and SF LLC do not specify a termination date. Each of the above listed LLC’s has a single member, controlled 100% by the Company. CLC operates wholly owned subsidiaries BFK and SF under the trade names Bricks 4 Kidz® and Sew Fun Studios™ respectively, that offer children's enrichment and education franchises. BFK Franchisees operated in 698 territories in 43 states and 38 countries. SF Franchisees operated in 11 territories in 5 states and 2 countries. Until December 2015, CLC operated the wholly-owned subsidiary CI Franchise Company, LLC (“CI”) under the trade name Challenge Island®. The Company sold the CI concept on December 9, 2015, and as a result the Company is reporting CI as Discontinued Operations in the consolidated financial statements - see Note 12. Basis of Presentation This summary of significant accounting policies is presented to assist the reader in understanding and evaluating the Company’s financial statements. The financial statements and notes are representation of the Company’s management, which is responsible for their integrity and objectivity. The Company uses the accrual basis of accounting and is presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes that the disclosures made are adequate to make the information presented not misleading. The information reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods set forth herein. The Company has franchisees in 38 countries. International franchise fees vary and are set relative to the potential of the franchised territories. In addition, the Company awards master agreements outside of the US and Canada. The royalty structure is the same for both our US and International franchisees. We recognize our revenue from foreign operations in US Dollars. We do not have international subsidiaries. The Company operates multiple franchise concepts but all concepts are managed centrally as one segment based upon the Company’s organizational structure, the way in which the operations and investments are managed and evaluated by the COO as well as the lack of availability of discrete financial information at a lower level. The Company’s COO reviews revenue by franchise concept but operating expenses such as rent, overhead and management salaries and other corporate expense are not allocated among the franchise concepts and net income is measured at the Company wide level to allocate resources and assess the Company’s overall performance. The Company shares common, centralized support functions, including finance, human resources, legal, information technology, and corporate marketing, all of which report directly to the COO. Accordingly, decision-making regarding the Company’s overall operating performance and allocation of Company resources is assessed on a consolidated basis. As such, the Company operates as one reporting segment. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Fiscal year The Company operates on a September 30 fiscal year-end. Related Parties The company has been involved in transactions with related parties. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates and assumptions made by management include allowance for doubtful accounts, allowance for deferred tax assets, depreciation of property and equipment, amortization of intangible assets, recoverability of long lived assets and fair market value of equity instruments. Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. Cash and Cash Equivalents The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. We had no cash equivalents at September 30, 2016 and 2015. The Company has restricted cash of approximately $162,000 and $249,000, respectively at fiscal years ended September 30, 2016 and 2015 associated with marketing funds collected from the franchisees. Per the franchise agreements, a marketing fund of 2% of franchisees’ gross cash receipts is collected by the Company and held to be spent on the promotion of the brand (see Note 6). The Company maintains cash balances which at times exceed the federally insured limit of $250,000. The Company believes there is no significant risk with respect to these deposits. Accounts and Note Receivables The Company reviews accounts and notes receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. The Company records an allowance for doubtful accounts and notes that is based on historical trends, customer knowledge, any known disputes, and considers the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Receivables and notes are written off against the allowance after all attempts to collect a receivable have failed. The Company believes its allowance for doubtful accounts at September 30, 2016 and 2015 are adequate, but actual write-offs could exceed the recorded allowance. During the year ended September 30, 2016 and September 30, 2015, the values of accounts written-off to the reserve were approximately $89,000 and $155,000, respectively. Long-Lived Assets The Company’s long-lived assets consist of property and equipment, and intangible assets. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. However, there can be no assurances that demand for the Company’s products or services will continue, which could result in an impairment of long-lived assets in the future. In Connection with the Sale of CI, in 2015 the Company recorded a loss on assets held for sale (see Note 12 “Assets Held for Sale”). Property, Equipment and Depreciation Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal. Fixed Assets Useful Life Equipment 5 years Furniture and Fixtures 5 years Property Improvements 15-40 years Software 3 years Fair Value of Financial Instruments The carrying amounts of cash, accounts receivable, deposits, and accounts payable approximate fair value because of the relative short-term maturity of these items and current payment, expected. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments. Note receivable are recorded at par value less allowance for uncollectible notes. The carrying amount is consistent with fair value based upon similar notes issued to other franchisees. ASC 825, Financial Instruments, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a recurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Revenue Recognition Revenue is recognized on an accrual basis after services have been performed under contract terms and in accordance with regulatory requirements, the service price to the client is fixed or determinable, and collectability is reasonably assured Since the Company’s franchises are primarily a mobile concept and do not require finding locations or construction, the franchisees can begin operations as soon as they complete training. The franchise fees are fully collectible and nonrefundable as of the date of the signing of the franchise agreement, but the franchise fees are not recognized as revenue until initial training has been completed and when substantially all of the services required by the franchise agreement have been fulfilled by the Company in accordance with ASC Topic 952-605 Revenue Recognition-Franchisor At September 30, 2016 and 2015 the Company had approximately $200 and $36,000, respectively, in unearned revenue for franchise fees collected but not yet earned per the revenue recognition policy. Advertising Costs Advertising costs are expensed as incurred. The Company incurred advertising costs for the years ended September 30, 2016 and 2015 of approximately $435,000 and $876,000, respectively. Income Taxes The provision for income taxes and deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability that its net deferred tax assets, if any, will be recovered. If after evaluating all of the positive and negative evidence, a conclusion is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance is provided by a charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized. The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution. Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at September 30, 2016 and 2015, respectively, and has not recognized interest and/or penalties during the years ended September 30, 2016 and 2015, respectively, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax benefits will occur within in the next twelve months. The tax years subject to examination by major tax jurisdictions include the years 2013 and forward by the U.S. Internal Revenue Service, and the years 2012 and forward for various states. Net earnings (loss) per share Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation. Stock-based compensation The Company accounts for employee stock awards for services based on the grant date fair value of the instrument issued and those issued to non-employees are recorded based on the grant date fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Stock Awards are expensed over the service period. Recent accounting pronouncements Revenue from Contracts with Customers (Topic 606) has been discussed in several recent ASU including ASU 2016-12, 2016-11, 2016-10 and 2016-8. In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements and feels the adoption of the standard will not materially affect its financial statements. In March 2016 the FASB issued ASU No. 2016-09, C ompensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”. The guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The guidance becomes effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. The Company adopted this guidance retrospectively as of October 1, 2015 and reclassified $90,727 and $78,988 from deferred costs to long-term deferred tax liability in September of 2016 and 2015, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (2) Related Party Transactions During the years ended September 30, 2016 and 2015, the Company incurred the following related party consulting fees and commissions: Commissions and Consulting Fiscal Year Ending September 30 Related Party 2016 2015 FranVentures, LLC (owned by Brian Pappas)(1) $ — $ 142,358 MC Logic, LLC (owned by Michelle Cote)(2) $ — $ 43,000 Leap Ahead Learning Company (owned by Dan O'Donnell)(3) $ 2,275 $ 38,000 Bottom Line Group (4) $ — $ 156,752 Jeffery Ball and J. Ball Group LLC (5) $ — $ 86,255 Jacqueline Pappas-Ball (6) $ — $ 6,072 $ 2,275 $ 472,437 ——————— (1) Brian Pappas, is a director and former chief executive officer of the Company. Mr. Pappas is the Managing Director and a minority owner of FranVentures, LLC. FranVentures, LLC received a 5% commission on BFK franchise sales by the Company prior to April 8, 2015. There was no related party payable at September 30, 2016 and 2015 respectively. Not included above are travel and expense charges for Mr. Pappas for the twelve months ending September 30, 2016 and 2015, respectively of approximately $-0- and $35,400. The wife of Mr. Pappas, Chris Pappas, was the human resources and payroll manager for the Company with compensation for the fiscal periods ended September 30, 2016 and 2015, respectively of approximately $-0- and $48,000. At August 6, 2015, Mrs. Pappas was no longer employed by the Company and did not receive compensation subsequent to her leaving employment with the Company. Not included above are expense reimbursements for Mrs. Pappas for the twelve months ended September 30, 2016 and 2015 of approximately $-0- and $3,000, respectively. Also see note receivable from related party. (2) MC Logic, LLC (“MC Logic”) is 100% owned by Michelle Cote, who is the Company’s President and Secretary and a former director and founder of the Company. Not included above are travel and expense reimbursements paid of approximately $-0- and $4,600, respectively for the twelve month periods ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 and 2015 respectively. During the quarter ended December 31, 2013, the Company made a non-interest bearing loan in the amount of $125,000 to MC Logic. Later in that same quarter, management determined that the loan could be deemed a violation of Section 13(k) of the Exchange Act and Section 402 of the Sarbanes-Oxley Act and immediately sought repayment in full of the loan. MC Logic promptly repaid the entire amount of the loan before the end of the fiscal quarter ended December 31, 2013. Subsequent to the end of fiscal year 2015, the Company has recorded a related party receivable of $7,500 which resulted from activities that occurred in 2016. The receivable is a net amount due resulting from pre-approved activities at an MC Logic Sew Fun Franchise location, which involved using the space for initial evaluation of a potential new franchise concept and for the Company’s use of the location to consider taking the Sew Fun franchise as a company store. During this time, MC Logic had been reimbursed for expended funds and had tendered to the Company certain revenues. The Company later changed strategy, resulting in the reversal of reimbursements to MC Logic and the return of revenues to MC Logic. The net result was $10,217.73 due from MC Logic. MC Logic paid the balance in June of 2016. In addition, the Company has entered into an arrangement with MC Logic under which MC Logic has agreed to pay the standard Sew Fun Studios monthly royalty fee due for this territory effective June 1, 2016, and MC Logic is current on those payments as of September 30, 2016. (3) Leap Ahead Learning Company is 100% owned by Dan O’Donnell, who was a director and the Chief Operating Officer of the Company until his resignation on April 6 2016. Until April 15, 2015, the Company had paid Leap Ahead Learning $5,000 per month for consulting services provided through Mr. O'Donnell. Not included above are travel and expense reimbursements paid of approximately $4,000 and $79,000, respectively for the twelve month periods ended September 30, 2016 and 2015. The related party payable was approximately $2,275 and $-0-, respectively at September 30, 2016 and 2015. (4) Bottom Line Group is owned by Jeff Pappas, a brother to Brian Pappas. The Business Consulting and Development Agreement between Bottom Line Group and the Company was terminated on September 25, 2015. Bottom Line Group served as one of the Company’s brokers in the sale of franchises. Payments to Bottom Line Group include commissions and consulting fees reflected in the table above. Not included above are travel and expense reimbursements paid of approximately $-0- and $23,000, respectively for the twelve months ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 and 2015 respectively. Not included in the related party schedule above are payments made to Michael Pappas (son to Jeff Pappas). The Business Consulting and Development Agreement between Michael Pappas and the Company has been terminated effective September 26, 2015. Payments made to Michael Pappas in the twelve months ended September 30, 2016 and 2014 were approximately $-0- and $15,700, respectively. (5) J. Ball Group LLC is owned by Jeffery Ball, a son-in-law to Brian Pappas. The Independent Contractor Agreement between Jeffrey Ball and J Ball Group, LLC and the Company was terminated on September 30, 2015. The J Ball Group LLC served as one of the Company’s brokers in the sale of franchises. Payments reflected in the table above include commissions and consulting fees. Not included above are travel and expense reimbursements paid of approximately $-0- and $12,700, respectively for the twelve months ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 or 2015. In January 2015, Jeffery Ball formed J. Ball Group LLC, which in these financial statements and disclosures have been presented as one business activity with amounts paid to either entity combined. (6) Jacqueline Pappas-Ball, is a daughter to Brian Pappas. The consulting relationship between Jacqueline Pappas-Ball and the Company was ended on September 30, 2015. Ms. Pappas-Ball provided social media marketing and development. She also provided support in the development of photo and video presentation for the social media environment. Payments reflected in the table above include consulting fees. Not included above are expense reimbursements paid of approximately $-0- and $500 for the twelve months ended September 30, 2016 and 2015 respectively. In addition, all franchisees pay fees directly to Leap Ahead Learning Company for set-up and monthly support of a FMT. The set-up fee is a one-time charge of $250 for domestic and Canadian franchisees and a range of $250 to $3,000 for international franchisees. The monthly support fee, for all franchisees, is $75 which amounts reflect support services provided to the franchisees pursuant to the franchise agreements. In addition, all domestic franchisees that wish to accept credit card payments must be set-up for processing credit cards through a third-party servicer, authorize.net. Leap Ahead Learning Company receives a monthly administrative fee of $7.95 for each franchisee using the credit card processing services of authorize.net. Leap Ahead Learning Company is the broker and administrator on behalf of authorize.net. Leap Ahead Learning Company, the developer of the FMT, is wholly owned by Dan O’Donnell, who was a director and the Chief Operating Officer of the Company until his resignation on April 6, 2016. Shortly prior to the replacement of Brian Pappas as Chief Operating Officer of the Company, Pappas caused the Company to issue a Sew Fun Studios local territory to MC Logic (owned by Michelle Cote) to assist in the development and possible improvement of that franchise concept. MC Logic was granted the territory with no franchise fee, royalty fee obligation, or marketing fee obligation. This territory was one of the original 12 granted at the start of the business concept. After completing all of the training, development, and signatory requirements necessary to become operational, the franchise became active on July 10, 2015. The Company has entered into an arrangement with MC Logic under which MC Logic has agreed to pay the standard Sew Fun Studios monthly royalty fee due for this territory effective June 1, 2016, and MC Logic is current on those payments |
Property and Equipment
Property and Equipment | 12 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | (3) Property and Equipment Property and equipment consisted of the following: September 30, Description 2016 2015 Depreciable Fixed Assets: Equipment $ 71,889 $ 50,330 Furniture and Fixtures 83,427 81,510 Property Improvements 233,615 233,615 Software 98,307 21,813 Total Depreciable Fixed Assets 487,238 387,268 Accumulated Depreciation (187,918 ) (134,207 ) Total Net Depreciable Fixed Assets 299,320 253,061 Non-depreciable Fixed Assets: Work In Progress (1) — 30,894 Total Net Fixed Assets $ 299,320 $ 283,955 ——————— (1) This is website development and was completed in 2016. Depreciation expense totaled approximately $54,000 and $41,000, respectively, for the years ended September 30, 2016 and 2015. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | (4) Intangible Assets Intangible Assets consist of purchased franchise rights and trademarks. |
Notes and Other Receivables
Notes and Other Receivables | 12 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Notes and Other Receivables | (5) Notes and Other Receivables In July 2013, the Company loaned $70,000 to a related party company owned by Brian Pappas, AudioFlix, Inc. (“AudioFlix”), in the form of a convertible note at 6% interest, with monthly interest only payments and fully due and payable not before July 1, 2015. The note was personally guaranteed by Brian Pappas and was convertible up to the maturity date to unrestricted shares in AudioFlix for any unpaid balance at $0.35 per share. Management subsequently determined the note could be deemed a violation of Section 13(k) of the Exchange Act and Section 402 of the Sarbanes-Oxley Act and sought repayment of the note in full. On July 31, 2015, the Company, through legal counsel, issued a formal demand to pay the note and interest due. Full payment of the note plus interest was received by the Company on August 12, 2015 (principal of $70,000 and interest of $8,400). At September 30, 2016 and 2015 respectively, the Company held certain notes receivable totaling approximately $102,000 and $210,000 respectively for extended payment terms of franchise fees. The notes were generally non-interest bearing notes with monthly payments, payable within one to two years. 2017 2018 2019 2020 2021 Thereafter Total Payment schedule for Notes Receivable $ 42,176 $ 20,000 $ 12,950 $ 12,950 $ 12,950 $ 1,300 $ 102,326 |
Accrued Marketing Fund
Accrued Marketing Fund | 12 Months Ended |
Sep. 30, 2016 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Marketing Fund | (6) Accrued Marketing Fund Per the terms of the franchise agreements, the Company collects 2% of franchiseeÂ’s gross revenues for a marketing fund, managed by the Company, to allocate towards national branding of the CompanyÂ’s concepts to benefit the franchisees. The marketing fund amounts are accounted for as a liability on the balance sheet and the actual collections are deposited into a marketing fund bank account. Expenses pertaining to the marketing fund activities are paid from the marketing fund and reduce the liability account. At September 30, 2016 and 2015, the accrued marketing fund liability balances were approximately $147,000 and $249,000 respectively. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | (7) Accrued Liabilities The Company had accrued liabilities at September 30, 2016, and September 30, 2015 as follows: September 30, Accrued Liabilities 2016 2015 Accrued Audit Fees $ 13,753 $ 8,581 Accrued Legal Fees 131,504 213,130 Accrued Legal Settlements 17,000 101,897 Accrued State Regulatory Settlement 149,366 104,450 Accrued Other 35,000 — $ 346,623 $ 428,058 The Company accrued $149,366 for state regulatory settlements, which included $35,500 in state penalties and costs and $113,866 in reimbursement of 5 franchisees. |
Common Stock Issuances
Common Stock Issuances | 12 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Common Stock Issuances | (8) Common Stock Issuances On November 11, 2014, the Company issued 25,000 shares of CLC common stock valued at $45,000 to Kidsplorations, LLC, as part of a purchase agreement for CI. (See Note 12). On January 26, 2015, the Company’s board of directors approved a plan pursuant to Securities and Exchange Commission Rule 10b-18 to purchase 100,000 shares of its common stock in the secondary market. At September 30, 2016 the Company has purchased 15,100 shares of CLC common stock at a cumulative cost of approximately $18,000. The value of the treasury stock, based upon cost, is recorded in the equity section of the condensed consolidated balance sheet at September 30, 2015. On February 18, 2015, the Company issued 85,000 shares of CLC common stock to Sew Fun, LLC (“SFLLC”) as part of a mediated settlement agreement. This settlement terminated the Letter of Intent between CLC and SFLLC, dated October 25, 2012, regarding the purchase and sale of assets between the parties effective December 17, 2012. CLC was relieved of any obligation to pay any sums to SFLLC after January 1, 2015 (See note 10). In November 2015, Sew Fun filed a grievance regarding the market value of the stock received in the mediated settlement agreement. The Company accrued approximately $85,000 as the value for the subsequent settlement, and on November 23, 2015, the funds were paid by the Company. On March 25, 2015, the Company issued 4,000 shares of CLC common stock as an advisory fee valued at $5,040 ($1.26 market value per share) to The Brewer Group, Inc. (the “Brewer Group”) for an agreement for business development and marketing services. The $5,040 was charged to consulting expense during the month of March 2015. On May 1, 2015, the Company issued 8,000 shares of CLC common stock as an advisory fee valued at $10,080 ($1.26 market value per share) to the Brewer Group for an agreement for business development and marketing services. The $10,080 was charged to accrued liability during the month of May, 2015. The issuances of stock on March 25, 2015 and May 1, 2015, completed the advisory fee agreement between the Brewer Group and the Company. On June 18, 2015 the Company issued 10,000 shares of CLC common stock as a commission for selling master franchises. The shares were valued at the stock value as of the date of issue, which totaled $6,300. |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options and Warrants | (9) Stock Options and Warrants The following are activity of options: Weighted Weighted Average Average Aggregate Number of Exercise Remaining Intrinsic Shares Price Life Value Outstanding October 1, 2014 120,000 1.15 Granted Fiscal Year 2015 — — Outstanding September 30, 2015 120,000 1.15 Granted Fiscal Year 2016 — — Forfeited shares (100,000 ) 1.55 Vested and Exercisable at September 30, 2016 20,000 1.55 3 Months — As of December 1, 2016, 10,000 options are remain outstanding. No additional stock based compensation is to be recognized on these stock options. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (10) Commitments and Contingencies Lease Commitments The following table summarizes the Company’s contractual lease obligations at September 30, 2016: Obligation 2017 2018 2019 Total Commercial Lease (Suite 114) $ 17,100 $ 17,100 $ 12,113 $ 46,313 Commercial Lease (Suite 103B) — — — — $ 17,100 $ 17,100 $ 12,113 $ 46,313 Rent expense was approximately $26,000 and $29,000, respectively, for the years ended September 30, 2016 and 2015. Litigation From time to time, the Company has been and may become involved in legal proceedings arising in the ordinary course of its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. The Company was involved in arbitration with Sew Fun, LLC (SFLLC), from which the Company previously purchased intellectual property to establish a new sewing franchise concept. In 2015 the Company and SFLLC entered into a settlement agreement which provided for a payment of $106,000 in stock (which was granted in 2014) and $85,000 in cash (which was accrued in 2015 and paid subsequent to year end) as well as agreements on trademarks and license usage. The prior owner of SFLLC has a suit outstanding with a claim for an additional $42,000, which the Company is contesting. The Court denied the Company’s Motion to Dismiss and both sides have filed for summary judgment, each of which the Court has denied. No amount has been accrued for this additional claim. In February 2015, the Company was sued for defamation by a former officer of the Company in relation to the Company’s statements in an SEC Form 8-K filing that the employee had been terminated. The pertinent 8-K filing occurred prior to the ascension to the Board any of the company’s current directors. The former officer alleged that the claimed misstatement in the SEC filing was false, was maliciously designed to injure the plaintiff in retribution for his having reported problems and pressed for changes at the company, and injured the reputation of the individual. The former officer seeks lost wages and income, compensatory damages, other damages and requests that a replacement Form 8-K be filed. The case is in the discovery phase. The company is in settlement negotiations with the plaintiff. On October 2, 2015, the Company filed suit against its former Chief Executive Officer Brian Pappas, Christine Pappas, its former Human Resources officer, and an independent company controlled by Mr. Pappas named Franchise Ventures. The lawsuit seeks return of company emails and other electronic materials in the possession of the defendants, company control over the process by which the company’s documents are identified and a court judgment that the property is the Company’s. Mr. and Mrs. Pappas have returned certain company documents that they have identified, but other issues remain. In April, 2015, the United States Securities & Exchange Commission (“SEC”) issued a subpoena to Creative Learning Corporation seeking a variety of documents. The documents sought include without limitation materials regarding Brian Pappas, certain members of Mr. Pappas’ family, other company employees, board members and third-parties, company books and accounting procedures as well as other material regarding company affairs. In or about that time, it came to the attention of the Company that the SEC had initiated an investigation into possible violations of the securities laws by the Company and/or its officers, directors and/or others as of at least January 14, 2014. In late April 2015, the Company’s Board elected two new independent directors, and created an Audit Committee, which included the two new directors. In addition, in July 2015, the Board removed Brian Pappas as Chief Executive Officer. The Company has taken a number of steps to address compliance issues regarding its books and records. The Company is fully cooperating with the staff of the SEC in this matter. On March 7, 2016, Franchise Ventures (“FV”), a company operated by Brian Pappas, filed suit in state court in St. Johns County, Florida against the Company and its affiliate BFK Franchise Company, LLC (collectively “the Company”) alleging breach of contract and seeking a declaratory judgment. The complaint does not state an amount of damages. FV claims that the Company has an ongoing contractual obligation to pay FV compensation in the form of commissions and other payments per the original LLC operating agreement under which BFK LLC was formed (“BFK Operating Agreement”). FV acknowledges that the Company terminated the LLC operating agreement and stopped paying FV in October 2015. FV’s complaint seeks recovery of compensation allegedly due after the termination date. Although the complaint is unclear, it appears to allege that the Company has no right ever to terminate the operating agreement. The Company contends that neither FV nor Mr. Pappas had any continuing right to franchise sales commissions under the BKF LLC operating agreement after FV ceased serving as managing member of BFK LLC when the Company acquired it. The Company further contends that: (a) the terms of the BFK Operating Agreement clearly provide that FV was owed compensation strictly for providing BFK LLC services as its managing member; (b) FV’s term as managing member of BFK LLC ended when CLC acquired it and CLC supplanted FV as the sole managing member of BFK LLC; and (c) in any event, under the terms of the BFK Operative Agreement, CLC had the full right to terminate the BKF LLC operating agreement on October 1, 2015, thereby eviscerating any conceivable legal rights FV might assert under that agreement thereafter. The Company contends that neither FV nor Mr. Pappas had any continuing right to franchise sales commissions under the BKF LLC operating agreement after FV ceased serving as managing member of BFK LLC when the Company acquired it on July 2, 2010. On October 27, 2016, plaintiff FranVentures filed a motion seeking leave to amend its complaint to add a claim alleging that the Company had entered into an oral contract or one implied by the parties’ conduct. The amended complaint does not address the Company’s position that even if a contract had been in place it had been terminated. The Court denied the Company’s motion to dismiss FV’s complaint, and discovery continues. The Company intends to vigorously litigate FranVentures’ complaint against the company. On June 23, 2016, the Company filed a counterclaim against its FV, which also included a complaint against former Chairman of the Board and Chief Executive Officer Brian Pappas and also named Christine Pappas as a defendant. The counterclaim and complaint seeks redress for losses and expenditures caused by alleged fraud, conversion of company assets, and breaches of fiduciary duty that the Company alleges that defendants perpetrated upon CLC, including assertions regarding actions by Brian Pappas that the Company alleges occurred while Pappas was serving as the Chief Executive Officer of CLC and a member of its board of directors. The counterclaim and/or complaint alleges the following: a. First in perpetuity never b. Second c. Third i. In particular, Pappas breached his fiduciary duty of loyalty by causing CLC to engage in repeated financial transactions with brother, Jeff Pappas including: (i) causing CLC to pay Jeff Pappas and/or his company approximately $560,000 in commissions and retainer payments from in or about 2010 to in or about 2015 including for handling CLC franchise sales, knowing or having reason to know that Jeff Pappas would and did do so in a reckless manner that exposed CLC to regulatory risk, liability, financial loss and reputational damage; and (ii) causing CLC to provide various financial benefits to Jeff Pappas to the financial detriment of CLC, including causing CLC to make loans and extensions of credit to Jeff Pappas and his company totaling approximately $40,000 in or about 2011-12 and thereafter causing CLC to write-off these loans and credit extensions as bad debt prior to their due date, notwithstanding that Pappas was during the same time causing CLC to pay retainer and commission payments to Jeff Pappas and his companies of at least $89,000. Pappas intentionally paid his brother these sums instead of setting off Jeff Pappas’ debt against the commissions and retainers purportedly owed to him. ii. Pappas also breached his fiduciary duty of loyalty by causing CLC to pay at least $95,000 in charges incurred by Pappas and his wife, Christine Pappas, on a CLC American Express credit card from in or about 2013 to in or about July 2015 without maintaining at the time, and thereafter in 2016 refusing to provide, proper and adequate business records and documentation for those expenditures. As a result, CLC is unable to verify that these expenditures were incurred for a proper business purpose and cannot deduct these payments as business expenses. d. Fourth e. Fifth f. Sixth g. Seventh On October 27, 2016, Brian Pappas filed a motion to amend the complaint to add a claim alleging that the Company slandered him by virtue of a press release issued on or about August 1, 2016, in which the Company reported to shareholders on steps it had taken and improvements it had implemented. The Company intends to vigorously litigate this matter as well. On October 7, 2016, a franchisee filed a demand for arbitration against the Company’s affiliate BFK Franchise Company, LLC alleging that BFK had engaged in contract breaches and fraud in relation to numerous franchise agreements signed by Brian Pappas, Managing Director, or Dan O’Donnell, VP Operations between September 22, 2012 and November 1, 2015, with all but 1 of the agreements executed by or before March 2, 2015. The arbitration demand’s allegations include that misstatements and misrepresentations were made at or about the time of the purchase of the franchises. The complaint also assails other items such as the above-referenced SEC investigation, the Company’s settlements with the State of Virginia, Virginia’s “investigation and …settlement with Brian Pappas as a result of his conduct and actions during the time he served as Managing Director of BFK Franchise Co, and CEO of CLCN,” and self-dealing by corporate officers including commissions paid to officers upon sale of each new franchise. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (11) Income Taxes Components of Deferred Taxes are: 2016 2015 Deferred tax assets: Depreciation timing difference $ — $ 2,595 Allowance for bad debt 87,542 68,870 Charitable contributions 180 180 Benefit from net operating loss carryover 525,283 — Total gross deferred tax asset 613,004 81,583 Less: Valuation allowances (262,642 ) — Total deferred tax asset 350,362 81,583 Deferred tax liabilities: Depreciation timing difference (6,919 ) — Total deferred liability (6,919 ) — Net deferred tax asset $ 343,444 $ 81,583 The Company has recorded various deferred tax assets and liabilities as reflected above. In assessing the ability to realize the deferred tax assets, management considers, whether it is more likely than not, that some portion, or all of the deferred tax assets and liabilities will be realized. The ultimate realization is dependent on generating sufficient taxable income in future years. In the judgement of management and based upon projected future earnings, the company established a valuation allowance of $262,642 in the fourth quarter of 2016. The components of the provisions for income taxes for fiscal years 2016 and 2015 are as follows: 2016 2015 Current: Federal Continuing operations $ (176,492 ) $ (31,082 ) Discontinued operations (2,287 ) (75,937 ) Total (178,779 ) (107,019 ) State Continuing operations (121,988 ) (20,599 ) Discontinued operations (615 ) (14,263 ) Total (121,603 ) (34,862 ) Total Continuing operations (298,480 ) (51,681 ) Discontinued operations (2,902 ) (90,200 ) Total Current Tax (301,382 ) (141,881 ) Deferred: Additional deferred tax related to book tax differences (524,316 ) (77,636 ) Valuation allowance on net operating loss carryover 262,642 — Total Tax Provision $ (563,256 ) $ (219,517 ) A reconciliation of the provisions for income taxes for the fiscal years ended September 2016 and 2015 as compared to statutory rates is as follows: 2016 2015 Amount % Amount % Provision at statutory rates $ (789,534 ) 34.00 % $ (230,008 ) 34.00 % State income tax, net of federal benefit (84,294 ) 3.63 % (24,557 ) 3.63 % Non-Deductible items Penalties 48,165 -2.07 % 24,624 -3.64 % Meals & Entertainment 1,440 -0.06 % 8,073 -1.19 % Other permanent items (1,674 ) 0.07 % 2,351 -0.35 % Valuation allowance on net operating loss carryover 262,641 -11.31 % — 0.00 % Total income tax provision $ (563,256 ) 24.26 % $ (219,517 ) 32.45 % |
Assets Held For Sale
Assets Held For Sale | 12 Months Ended |
Sep. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Assets Held For Sale | (12) Assets Held For Sale In September 2015, management committed to a plan to sell the CI concept because it was not a strategic fit with the Company’s existing BFK franchise brand. The Company executed a purchase and sale agreement on December 9, 2015. The sale included substantially all of the assets of the CI business, which were sold on an “as is where is” basis, with no Company representations or warranties surviving the consummation of the sale. The purchase price for the assets consisted of the transfer to the Company of 50,000 shares of the Company’s common stock that had been held by the purchaser, reversal of an accrual to issue 25,000 shares of the Company’s common stock and the assumption of certain liabilities related to the acquired assets. The following table lists the assets held for sale and liabilities held for sale of CI at September 30, 2015 and the operating loss on the assets held for sale for September 30, 2016 and 2015. As of CI Franchise Company LLC 09/30/15 Assets of discontinued operations Cash 24,032 Accounts receivable 16,667 Notes receivable 16,500 Total Assets of discontinued operations 57,199 Liabilities of discontinued operations Accounts payable 9,016 Total Liabilities of discontinued operations 9,016 FY ended FY ended Operating Loss on discontinued operations 09/30/16 09/30/15 Revenue $ 10,785 $ 355,843 Advertising and promotion (7,635 ) (128,561 ) Bad debt — (73,118 ) Commissions and consulting — (240,201 ) Franchisee expense — (67,409 ) General and administrative expenses (15,237 ) (54,110 ) Operating Loss on discontinued operations $ (12,087 ) $ (207,556 ) |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Sep. 30, 2016 | |
Net loss per share | |
Earnings Per Share | (13) Earnings Per Share The following table sets for the computation of basic and diluted net income (loss) per share: Fiscal Years Ended September 30, 2016 2015 Net loss attributed to common stockholders Net loss from continuing operations $ (1,808,849 ) $ (311,978 ) Net loss from discontinued operations (9,185 ) (144,962 ) Net loss $ (1,818,077 ) $ (456,940 ) Net loss per share Continuing operations $ (0.15 ) $ (0.03 ) Discontinued operations (0.00 ) (0.01 ) Total $ (0.15 ) $ (0.04 ) Basic weighted average number of common shares outstanding 12,001,409 11,952,252 Potentially dilutive shares were excluded as the items were anti-dilutive as of September 30, 2016 and September 30, 2015. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | (14) Subsequent Events On December 9, 2016, Brian Pappas, through his controlled company FranVentures, LLC, filed with the U.S. Securities and Exchange Commission a preliminary consent statement on Schedule 14A asking the shareholders of the Company to remove the current members of the Board of Directors and to replace them with three individuals proposed by Mr. Pappas. As a result, shareholders may have received, or may receive in the future, consent solicitation materials from FranVentures and/or Mr. Pappas seeking their written consent to remove the current Board members and elect the three individuals proposed by Mr. Pappas. On December 16, 2016, we announced that our Board of Directors had determined that the consent solicitation commenced by Mr. Pappas and FranVentures is not in the best interests of all of the CompanyÂ’s stockholders. The Company intends to file with the SEC a preliminary consent revocation statement in connection with the consent solicitation being conducted by Mr. Pappas and FranVentures, which will explain in more detail the BoardÂ’s reasons for opposing Mr. PappasÂ’ attempt to gain control of the Company. |
Nature of Organization and Su22
Nature of Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation This summary of significant accounting policies is presented to assist the reader in understanding and evaluating the Company’s financial statements. The financial statements and notes are representation of the Company’s management, which is responsible for their integrity and objectivity. The Company uses the accrual basis of accounting and is presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes that the disclosures made are adequate to make the information presented not misleading. The information reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods set forth herein. The Company has franchisees in 38 countries. International franchise fees vary and are set relative to the potential of the franchised territories. In addition, the Company awards master agreements outside of the US and Canada. The royalty structure is the same for both our US and International franchisees. We recognize our revenue from foreign operations in US Dollars. We do not have international subsidiaries. The Company operates multiple franchise concepts but all concepts are managed centrally as one segment based upon the Company’s organizational structure, the way in which the operations and investments are managed and evaluated by the COO as well as the lack of availability of discrete financial information at a lower level. The Company’s COO reviews revenue by franchise concept but operating expenses such as rent, overhead and management salaries and other corporate expense are not allocated among the franchise concepts and net income is measured at the Company wide level to allocate resources and assess the Company’s overall performance. The Company shares common, centralized support functions, including finance, human resources, legal, information technology, and corporate marketing, all of which report directly to the COO. Accordingly, decision-making regarding the Company’s overall operating performance and allocation of Company resources is assessed on a consolidated basis. As such, the Company operates as one reporting segment. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Fiscal year | Fiscal year The Company operates on a September 30 fiscal year-end. |
Related Parties | Related Parties The company has been involved in transactions with related parties. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates and assumptions made by management include allowance for doubtful accounts, allowance for deferred tax assets, depreciation of property and equipment, amortization of intangible assets, recoverability of long lived assets and fair market value of equity instruments. Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. We had no cash equivalents at September 30, 2016 and 2015. The Company has restricted cash of approximately $162,000 and $249,000, respectively at fiscal years ended September 30, 2016 and 2015 associated with marketing funds collected from the franchisees. Per the franchise agreements, a marketing fund of 2% of franchiseesÂ’ gross cash receipts is collected by the Company and held to be spent on the promotion of the brand (see Note 6). The Company maintains cash balances which at times exceed the federally insured limit of $250,000. The Company believes there is no significant risk with respect to these deposits. |
Accounts and Note Receivables | Accounts and Note Receivables The Company reviews accounts and notes receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. The Company records an allowance for doubtful accounts and notes that is based on historical trends, customer knowledge, any known disputes, and considers the aging of the accounts receivable balances combined with managementÂ’s estimate of future potential recoverability. Receivables and notes are written off against the allowance after all attempts to collect a receivable have failed. The Company believes its allowance for doubtful accounts at September 30, 2016 and 2015 are adequate, but actual write-offs could exceed the recorded allowance. During the year ended September 30, 2016 and September 30, 2015, the values of accounts written-off to the reserve were approximately $89,000 and $155,000, respectively. |
Long-Lived Assets | Long-Lived Assets The Company’s long-lived assets consist of property and equipment, and intangible assets. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. However, there can be no assurances that demand for the Company’s products or services will continue, which could result in an impairment of long-lived assets in the future. In Connection with the Sale of CI, in 2015 the Company recorded a loss on assets held for sale (see Note 12 “Assets Held for Sale”). |
Property, Equipment and Depreciation | Property, Equipment and Depreciation Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal. Fixed Assets Useful Life Equipment 5 years Furniture and Fixtures 5 years Property Improvements 15-40 years Software 3 years |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash, accounts receivable, deposits, and accounts payable approximate fair value because of the relative short-term maturity of these items and current payment, expected. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments. Note receivable are recorded at par value less allowance for uncollectible notes. The carrying amount is consistent with fair value based upon similar notes issued to other franchisees. ASC 825, Financial Instruments, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a recurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. |
Revenue Recognition | Revenue Recognition Revenue is recognized on an accrual basis after services have been performed under contract terms and in accordance with regulatory requirements, the service price to the client is fixed or determinable, and collectability is reasonably assured Since the CompanyÂ’s franchises are primarily a mobile concept and do not require finding locations or construction, the franchisees can begin operations as soon as they complete training. The franchise fees are fully collectible and nonrefundable as of the date of the signing of the franchise agreement, but the franchise fees are not recognized as revenue until initial training has been completed and when substantially all of the services required by the franchise agreement have been fulfilled by the Company in accordance with ASC Topic 952-605 Revenue Recognition-Franchisor At September 30, 2016 and 2015 the Company had approximately $200 and $36,000, respectively, in unearned revenue for franchise fees collected but not yet earned per the revenue recognition policy. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. The Company incurred advertising costs for the years ended September 30, 2016 and 2015 of approximately $435,000 and $876,000, respectively. |
Income Taxes | Income Taxes The provision for income taxes and deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability that its net deferred tax assets, if any, will be recovered. If after evaluating all of the positive and negative evidence, a conclusion is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance is provided by a charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized. The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution. Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at September 30, 2016 and 2015, respectively, and has not recognized interest and/or penalties during the years ended September 30, 2016 and 2015, respectively, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax benefits will occur within in the next twelve months. The tax years subject to examination by major tax jurisdictions include the years 2013 and forward by the U.S. Internal Revenue Service, and the years 2012 and forward for various states. |
Net earnings (loss) per share | Net earnings (loss) per share Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation. |
Stock-based compensation | Stock-based compensation The Company accounts for employee stock awards for services based on the grant date fair value of the instrument issued and those issued to non-employees are recorded based on the grant date fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Stock Awards are expensed over the service period. |
Recent accounting pronouncements | Recent accounting pronouncements Revenue from Contracts with Customers (Topic 606) has been discussed in several recent ASU including ASU 2016-12, 2016-11, 2016-10 and 2016-8. In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements and feels the adoption of the standard will not materially affect its financial statements. In March 2016 the FASB issued ASU No. 2016-09, C ompensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”. The guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The guidance becomes effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. The Company adopted this guidance retrospectively as of October 1, 2015 and reclassified $90,727 and $78,988 from deferred costs to long-term deferred tax liability in September of 2016 and 2015, respectively. |
Nature of Organization and Su23
Nature of Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Property and Equipment Useful Lifes | Fixed Assets Useful Life Equipment 5 years Furniture and Fixtures 5 years Property Improvements 15-40 years Software 3 years |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | During the years ended September 30, 2016 and 2015, the Company incurred the following related party consulting fees and commissions: Commissions and Consulting Fiscal Year Ending September 30 Related Party 2016 2015 FranVentures, LLC (owned by Brian Pappas)(1) $ — $ 142,358 MC Logic, LLC (owned by Michelle Cote)(2) $ — $ 43,000 Leap Ahead Learning Company (owned by Dan O'Donnell)(3) $ 2,275 $ 38,000 Bottom Line Group (4) $ — $ 156,752 Jeffery Ball and J. Ball Group LLC (5) $ — $ 86,255 Jacqueline Pappas-Ball (6) $ — $ 6,072 $ 2,275 $ 472,437 ——————— (1) Brian Pappas, is a director and former chief executive officer of the Company. Mr. Pappas is the Managing Director and a minority owner of FranVentures, LLC. FranVentures, LLC received a 5% commission on BFK franchise sales by the Company prior to April 8, 2015. There was no related party payable at September 30, 2016 and 2015 respectively. Not included above are travel and expense charges for Mr. Pappas for the twelve months ending September 30, 2016 and 2015, respectively of approximately $-0- and $35,400. The wife of Mr. Pappas, Chris Pappas, was the human resources and payroll manager for the Company with compensation for the fiscal periods ended September 30, 2016 and 2015, respectively of approximately $-0- and $48,000. At August 6, 2015, Mrs. Pappas was no longer employed by the Company and did not receive compensation subsequent to her leaving employment with the Company. Not included above are expense reimbursements for Mrs. Pappas for the twelve months ended September 30, 2016 and 2015 of approximately $-0- and $3,000, respectively. Also see note receivable from related party. (2) MC Logic, LLC (“MC Logic”) is 100% owned by Michelle Cote, who is the Company’s President and Secretary and a former director and founder of the Company. Not included above are travel and expense reimbursements paid of approximately $-0- and $-0-, respectively for the twelve month periods ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 and 2015 respectively. During the quarter ended December 31, 2013, the Company made a non-interest bearing loan in the amount of $125,000 to MC Logic. Later in that same quarter, management determined that the loan could be deemed a violation of Section 13(k) of the Exchange Act and Section 402 of the Sarbanes-Oxley Act and immediately sought repayment in full of the loan. MC Logic promptly repaid the entire amount of the loan before the end of the fiscal quarter ended December 31, 2013. Subsequent to the end of fiscal year 2015, the Company has recorded a related party receivable of $7,500 which resulted from activities that occurred in 2016. The receivable is a net amount due resulting from pre-approved activities at an MC Logic Sew Fun Franchise location, which involved using the space for initial evaluation of a potential new franchise concept and for the Company’s use of the location to consider taking the Sew Fun franchise as a company store. During this time, MC Logic had been reimbursed for expended funds and had tendered to the Company certain revenues. The Company later changed strategy, resulting in the reversal of reimbursements to MC Logic and the return of revenues to MC Logic. The net result was $10,217.73 due from MC Logic. MC Logic paid the balance in June of 2016. In addition, the Company has entered into an arrangement with MC Logic under which MC Logic has agreed to pay the standard Sew Fun Studios monthly royalty fee due for this territory effective June 1, 2016, and MC Logic is current on those payments as of September 30, 2016. (3) Leap Ahead Learning Company is 100% owned by Dan O’Donnell, who was a director and the Chief Operating Officer of the Company until his resignation on April 6 2016. Until April 15, 2015, the Company had paid Leap Ahead Learning $5,000 per month for consulting services provided through Mr. O'Donnell. Not included above are travel and expense reimbursements paid of approximately $4,000 and $79,000, respectively for the twelve month periods ended September 30, 2016 and 2015. The related party payable was approximately $2,275 and $-0-, respectively at September 30, 2016 and 2015. (4) Bottom Line Group is owned by Jeff Pappas, a brother to Brian Pappas. The Business Consulting and Development Agreement between Bottom Line Group and the Company was terminated on September 25, 2015. Bottom Line Group served as one of the Company’s brokers in the sale of franchises. Payments to Bottom Line Group include commissions and consulting fees reflected in the table above. Not included above are travel and expense reimbursements paid of approximately $-0- and $23,000, respectively for the twelve months ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 and 2015 respectively. Not included in the related party schedule above are payments made to Michael Pappas (son to Jeff Pappas). The Business Consulting and Development Agreement between Michael Pappas and the Company has been terminated effective September 26, 2015. Payments made to Michael Pappas in the twelve months ended September 30, 2016 and 2014 were approximately $-0- and $15,700, respectively. (5) J. Ball Group LLC is owned by Jeffery Ball, a son-in-law to Brian Pappas. The Independent Contractor Agreement between Jeffrey Ball and J Ball Group, LLC and the Company was terminated on September 30, 2015. The J Ball Group LLC served as one of the Company’s brokers in the sale of franchises. Payments reflected in the table above include commissions and consulting fees. Not included above are travel and expense reimbursements paid of approximately $-0- and $12,700, respectively for the twelve months ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 or 2015. In January 2015, Jeffery Ball formed J. Ball Group LLC, which in these financial statements and disclosures have been presented as one business activity with amounts paid to either entity combined. (6) Jacqueline Pappas-Ball, is a daughter to Brian Pappas. The consulting relationship between Jacqueline Pappas-Ball and the Company was ended on September 30, 2015. Ms. Pappas-Ball provided social media marketing and development. She also provided support in the development of photo and video presentation for the social media environment. Payments reflected in the table above include consulting fees. Not included above are expense reimbursements paid of approximately $-0- and $500 for the twelve months ended September 30, 2016 and 2015 respectively. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following: September 30, Description 2016 2015 Depreciable Fixed Assets: Equipment $ 71,889 $ 50,330 Furniture and Fixtures 83,427 81,510 Property Improvements 233,615 233,615 Software 98,307 21,813 Total Depreciable Fixed Assets 487,238 387,268 Accumulated Depreciation (187,918 ) (134,207 ) Total Net Depreciable Fixed Assets 299,320 253,061 Non-depreciable Fixed Assets: Work In Progress (1) — 30,894 Total Net Fixed Assets $ 299,320 $ 283,955 ——————— (1) This is website development and was completed in 2016. |
Notes and Other Receivables (Ta
Notes and Other Receivables (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Schedule of Future Payments for Notes and Other Receivables | 2017 2018 2019 2020 2021 Thereafter Total Payment schedule for Notes Receivable $ 42,176 $ 20,000 $ 12,950 $ 12,950 $ 12,950 $ 1,300 $ 102,326 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | September 30, Accrued Liabilities 2016 2015 Accrued Audit Fees $ 13,753 $ 8,581 Accrued Legal Fees 131,504 213,130 Accrued Legal Settlements 17,000 101,897 Accrued State Regulatory Settlement 149,366 104,450 Accrued Other 35,000 — $ 346,623 $ 428,058 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | Weighted Weighted Average Average Aggregate Number of Exercise Remaining Intrinsic Shares Price Life Value Outstanding October 1, 2014 120,000 1.15 Granted Fiscal Year 2015 — — Outstanding September 30, 2015 120,000 1.15 Granted Fiscal Year 2016 — — Forfeited shares (100,000 ) 1.55 Vested and Exercisable at September 30, 2016 20,000 1.55 3 Months — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Contractual Lease Obligations | The following table summarizes the Company’s contractual lease obligations at September 30, 2016: Obligation 2017 2018 2019 Total Commercial Lease (Suite 114) $ 17,100 $ 17,100 $ 12,113 $ 46,313 Commercial Lease (Suite 103B) — — — — $ 17,100 $ 17,100 $ 12,113 $ 46,313 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Deferred Taxes | 2016 2015 Deferred tax assets: Depreciation timing difference $ — $ 2,595 Allowance for bad debt 87,542 68,870 Charitable contributions 180 180 Benefit from net operating loss carryover 525,283 — Total gross deferred tax asset 613,004 81,583 Less: Valuation allowances (262,642 ) — Total deferred tax asset 350,362 81,583 Deferred tax liabilities: Depreciation timing difference (6,919 ) — Total deferred liability (6,919 ) — Net deferred tax asset $ 343,444 $ 81,583 |
Schedule of Components of Provision For Income Taxes | 2016 2015 Current: Federal Continuing operations $ (176,492 ) $ (31,082 ) Discontinued operations (2,287 ) (75,937 ) Total (178,779 ) (107,019 ) State Continuing operations (121,988 ) (20,599 ) Discontinued operations (615 ) (14,263 ) Total (121,603 ) (34,862 ) Total Continuing operations (298,480 ) (51,681 ) Discontinued operations (2,902 ) (90,200 ) Total Current Tax (301,382 ) (141,881 ) Deferred: Additional deferred tax related to book tax differences (524,316 ) (77,636 ) Valuation allowance on net operating loss carryover 262,642 — Total Tax Provision $ (563,256 ) $ (219,517 ) |
Schedule of Reconciliation of Income Tax Provision | 2016 2015 Amount % Amount % Provision at statutory rates $ (789,534 ) 34.00 % $ (230,008 ) 34.00 % State income tax, net of federal benefit (84,294 ) 3.63 % (24,557 ) 3.63 % Non-Deductible items Penalties 48,165 -2.07 % 24,624 -3.64 % Meals & Entertainment 1,440 -0.06 % 8,073 -1.19 % Other permanent items (1,674 ) 0.07 % 2,351 -0.35 % Valuation allowance on net operating loss carryover 262,641 -11.31 % — 0.00 % Total income tax provision $ (563,256 ) 24.26 % $ (219,517 ) 32.45 % |
Assets Held For Sale (Tables)
Assets Held For Sale (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Assets Held For Sale | As of CI Franchise Company LLC 09/30/15 Assets of discontinued operations Cash 24,032 Accounts receivable 16,667 Notes receivable 16,500 Total Assets of discontinued operations 57,199 Liabilities of discontinued operations Accounts payable 9,016 Total Liabilities of discontinued operations 9,016 FY ended FY ended Operating Loss on discontinued operations 09/30/16 09/30/15 Revenue $ 10,785 $ 355,843 Advertising and promotion (7,635 ) (128,561 ) Bad debt — (73,118 ) Commissions and consulting — (240,201 ) Franchisee expense — (67,409 ) General and administrative expenses (15,237 ) (54,110 ) Operating Loss on discontinued operations $ (12,087 ) $ (207,556 ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Net loss per share | |
Schedule of Computation of Basic and Diluted Net Income (Loss) Per Share | Fiscal Years Ended September 30, 2016 2015 Net loss attributed to common stockholders Net loss from continuing operations $ (1,808,849 ) $ (311,978 ) Net loss from discontinued operations (9,185 ) (144,962 ) Net loss $ (1,818,077 ) $ (456,940 ) Net loss per share Continuing operations $ (0.15 ) $ (0.03 ) Discontinued operations (0.00 ) (0.01 ) Total $ (0.15 ) $ (0.04 ) Basic weighted average number of common shares outstanding 12,001,409 11,952,252 |
Nature of Organization and Su33
Nature of Organization and Summary of Significant Accounting Policies (Cash and Cash Equivalents) (Details) - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cash equivalents | ||
Restricted cash | 162,447 | $ 248,777 |
Cash amount insured by FDIC | $ 250,000 |
Nature of Organization and Su34
Nature of Organization and Summary of Significant Accounting Policies (Accounts Receivable) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Value of accounts written-off to reserve during period | $ 89,000 | $ 155,000 |
Nature of Organization and Su35
Nature of Organization and Summary of Significant Accounting Policies (Property, Equipment and Depreciation) (Details) | 12 Months Ended |
Sep. 30, 2016 | |
Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful lives | 5 years |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful lives | 5 years |
Property Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful lives | 15 years |
Property Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful lives | 40 years |
Software [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment useful lives | 3 years |
Nature of Organization and Su36
Nature of Organization and Summary of Significant Accounting Policies (Revenue Recognition) (Details) - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Unearned revenue | $ 188 | $ 35,900 |
Nature of Organization and Su37
Nature of Organization and Summary of Significant Accounting Policies (Advertising Costs) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Advertising costs | $ 435,221 | $ 876,394 |
Nature of Organization and Su38
Nature of Organization and Summary of Significant Accounting Policies (Income Taxes) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Contingency [Line Items] | ||
Accrual for interest or penalties | ||
Interest and/or penalties expense recognized | ||
Minimum [Member] | U.S. Internal Revenue Service [Member] | ||
Income Tax Contingency [Line Items] | ||
Tax years subject to examination by major tax jurisdictions | 2,013 | |
Minimum [Member] | Various States [Member] | ||
Income Tax Contingency [Line Items] | ||
Tax years subject to examination by major tax jurisdictions | 2,012 |
Nature of Organization and Su39
Nature of Organization and Summary of Significant Accounting Policies (Recent accounting pronouncements) (Details) (USD $) - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Nature Of Organization And Summary Of Significant Accounting Policies Recent Accounting Pronouncements Details Usd | ||
Long-term deferred tax liability | $ 90,727 | $ 78,988 |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2013 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2016 | |
Related Party Transaction [Line Items] | ||||
Related party payable | $ 240 | |||
Brian Pappas [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses incurred | $ 0 | 35,400 | ||
Commission percentage paid to related party for franchise sales | 5.00% | |||
Chris Pappas [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses incurred | $ 0 | 3,000 | ||
Related party salaries paid during period | 0 | 48,000 | ||
FranVentures, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party salaries paid during period | 66,000 | |||
MC Logic, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from related party | 7,500 | $ 10,218 | ||
Related party expenses incurred | 0 | 4,600 | ||
Related party salaries paid during period | 1,500 | 16,000 | ||
Issuance of loan to related party | $ 125,000 | |||
Repayment of loan from related party | $ 125,000 | |||
Leap Ahead Learning Company [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party payable | 2,275 | 0 | ||
Related party expenses incurred | 4,000 | 79,000 | ||
Related party salaries paid during period | 27,500 | 30,000 | ||
Monthly amount paid to related party for consulting services | 5,000 | |||
One-time set-up fee charge paid by all domestic franchisees to related party | 250 | |||
Monthly support fee owed by all franchisees to related party | 75 | |||
Leap Ahead Learning Company [Member] | Minimum [Member] | ||||
Related Party Transaction [Line Items] | ||||
One-time set-up fee charge paid by all domestic franchisees to related party | 250 | |||
Leap Ahead Learning Company [Member] | Maximum [Member] | ||||
Related Party Transaction [Line Items] | ||||
One-time set-up fee charge paid by all domestic franchisees to related party | 3,000 | |||
Jeffrey Ball and J. Ball Group LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses incurred | 0 | 12,700 | ||
Michael Pappas [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses incurred | 0 | 15,700 | ||
Bottom Line Group [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses incurred | 0 | 23,000 | ||
Jacqueline Pappas - Ball [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party expenses incurred | $ 0 | $ 500 |
Related Party Transactions (Sch
Related Party Transactions (Schedule of Related Party Expenses) (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | ||
Related Party Transaction [Line Items] | |||
Commissions and consulting fees incurred with related parties | $ 2,275 | $ 472,437 | |
FranVentures, LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Commissions and consulting fees incurred with related parties | [1] | 142,358 | |
MC Logic, LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Commissions and consulting fees incurred with related parties | [2] | 43,000 | |
Leap Ahead Learning Company [Member] | |||
Related Party Transaction [Line Items] | |||
Commissions and consulting fees incurred with related parties | [3] | 2,275 | 38,000 |
Bottom Line Group [Member] | |||
Related Party Transaction [Line Items] | |||
Commissions and consulting fees incurred with related parties | [4] | 156,752 | |
Jeffrey Ball and J. Ball Group LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Commissions and consulting fees incurred with related parties | [5] | 86,255 | |
Jacqueline Pappas - Ball [Member] | |||
Related Party Transaction [Line Items] | |||
Commissions and consulting fees incurred with related parties | [6] | $ 6,072 | |
[1] | Brian Pappas, is a director and former chief executive officer of the Company. Mr. Pappas is the Managing Director and a minority owner of FranVentures, LLC. FranVentures, LLC received a 5% commission on BFK franchise sales by the Company prior to April 8, 2015. There was no related party payable at September 30, 2016 and 2015 respectively. Not included above are travel and expense charges for Mr. Pappas for the twelve months ending September 30, 2016 and 2015, respectively of approximately $-0- and $35,400. The wife of Mr. Pappas, Chris Pappas, was the human resources and payroll manager for the Company with compensation for the fiscal periods ended September 30, 2016 and 2015, respectively of approximately $-0- and $48,000. At August 6, 2015, Mrs. Pappas was no longer employed by the Company and did not receive compensation subsequent to her leaving employment with the Company. Not included above are expense reimbursements for Mrs. Pappas for the twelve months ended September 30, 2016 and 2015 of approximately $-0- and $3,000, respectively. Also see note receivable from related party. | ||
[2] | MC Logic, LLC ("MC Logic") is 100% owned by Michelle Cote, who is the Company's President and Secretary and a former director and founder of the Company. Not included above are travel and expense reimbursements paid of approximately $-0- and $-0-, respectively for the twelve month periods ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 and 2015 respectively. During the quarter ended December 31, 2013, the Company made a non-interest bearing loan in the amount of $125,000 to MC Logic. Later in that same quarter, management determined that the loan could be deemed a violation of Section 13(k) of the Exchange Act and Section 402 of the Sarbanes-Oxley Act and immediately sought repayment in full of the loan. MC Logic promptly repaid the entire amount of the loan before the end of the fiscal quarter ended December 31, 2013. Subsequent to the end of fiscal year 2015, the Company has recorded a related party receivable of $7,500 which resulted from activities that occurred in 2016. The receivable is a net amount due resulting from pre-approved activities at an MC Logic Sew Fun Franchise location, which involved using the space for initial evaluation of a potential new franchise concept and for the Company's use of the location to consider taking the Sew Fun franchise as a company store. During this time, MC Logic had been reimbursed for expended funds and had tendered to the Company certain revenues. The Company later changed strategy, resulting in the reversal of reimbursements to MC Logic and the return of revenues to MC Logic. The net result was $10,217.73 due from MC Logic. MC Logic paid the balance in June of 2016. In addition, the Company has entered into an arrangement with MC Logic under which MC Logic has agreed to pay the standard Sew Fun Studios monthly royalty fee due for this territory effective June 1, 2016, and MC Logic is current on those payments as of September 30, 2016. | ||
[3] | Leap Ahead Learning Company is 100% owned by Dan O'Donnell, who was a director and the Chief Operating Officer of the Company until his resignation on April 6 2016. Until April 15, 2015, the Company had paid Leap Ahead Learning $5,000 per month for consulting services provided through Mr. O'Donnell. Not included above are travel and expense reimbursements paid of approximately $4,000 and $79,000, respectively for the twelve month periods ended September 30, 2016 and 2015. The related party payable was approximately $2,275 and $-0-, respectively at September 30, 2016 and 2015. | ||
[4] | Bottom Line Group is owned by Jeff Pappas, a brother to Brian Pappas. The Business Consulting and Development Agreement between Bottom Line Group and the Company was terminated on September 25, 2015. Bottom Line Group served as one of the Company's brokers in the sale of franchises. Payments to Bottom Line Group include commissions and consulting fees reflected in the table above. Not included above are travel and expense reimbursements paid of approximately $-0- and $23,000, respectively for the twelve months ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 and 2015 respectively. Not included in the related party schedule above are payments made to Michael Pappas (son to Jeff Pappas). The Business Consulting and Development Agreement between Michael Pappas and the Company has been terminated effective September 26, 2015. Payments made to Michael Pappas in the twelve months ended September 30, 2016 and 2014 were approximately $-0- and $15,700, respectively. | ||
[5] | J. Ball Group LLC is owned by Jeffery Ball, a son-in-law to Brian Pappas. The Independent Contractor Agreement between Jeffrey Ball and J Ball Group, LLC and the Company was terminated on September 30, 2015. The J Ball Group LLC served as one of the Company's brokers in the sale of franchises. Payments reflected in the table above include commissions and consulting fees. Not included above are travel and expense reimbursements paid of approximately $-0- and $12,700, respectively for the twelve months ended September 30, 2016 and 2015. There was no related party payable at September 30, 2016 or 2015. In January 2015, Jeffery Ball formed J. Ball Group LLC, which in these financial statements and disclosures have been presented as one business activity with amounts paid to either entity combined. | ||
[6] | Jacqueline Pappas-Ball, is a daughter to Brian Pappas. The consulting relationship between Jacqueline Pappas-Ball and the Company was ended on September 30, 2015. Ms. Pappas-Ball provided social media marketing and development. She also provided support in the development of photo and video presentation for the social media environment. Payments reflected in the table above include consulting fees. Not included above are expense reimbursements paid of approximately $-0- and $500 for the twelve months ended September 30, 2016 and 2015 respectively. |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | ||
Property, Plant and Equipment [Line Items] | |||
Total Depreciable Fixed Assets | $ 487,238 | $ 387,268 | |
Accumulated Depreciation | (187,918) | (134,207) | |
Total Net Depreciable Fixed Assets | 299,320 | 253,061 | |
Work In Progress | [1] | 30,894 | |
Property and equipment, net of accumulated depreciation | 299,320 | 283,955 | |
Depreciation expense | 53,711 | 41,301 | |
Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total Depreciable Fixed Assets | 71,889 | 50,330 | |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total Depreciable Fixed Assets | 83,427 | 81,510 | |
Property Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total Depreciable Fixed Assets | 233,615 | 233,615 | |
Software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total Depreciable Fixed Assets | $ 98,307 | $ 21,813 | |
[1] | This is website development and was completed in 2016. |
Notes and Other Receivables (De
Notes and Other Receivables (Details) - USD ($) | 1 Months Ended | |||
Aug. 31, 2015 | Jul. 31, 2013 | Sep. 30, 2016 | Sep. 30, 2015 | |
Other receivables | $ 102,000 | $ 210,000 | ||
Brian Pappas [Member] | ||||
Principal and accrued interest | $ 70,000 | |||
Note receivable, interest rate | 6.00% | |||
Price per share notes receivable can be converted into unrestricted shares | $ 0.35 | |||
Proceeds from collection of notes receivable principal | $ 70,000 | |||
Proceeds from collection of interest owed on notes receivable | $ 8,400 |
Notes and Other Receivables (Sc
Notes and Other Receivables (Schedule of Future Payments for Notes Receivables) (Details) | Sep. 30, 2016USD ($) |
Receivables [Abstract] | |
Due 2,017 | $ 42,176 |
Due 2,018 | 20,000 |
Due 2,019 | 12,950 |
Due 2,020 | 12,950 |
Due 2,021 | 12,950 |
Thereafter | 1,300 |
Total | $ 102,326 |
Accrued Marketing Fund (Details
Accrued Marketing Fund (Details) - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Accrued marketing fund | $ 147,227 | $ 248,777 |
Percentage of gross revenues collected for marketing fund | 2.00% | 2.00% |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Payables and Accruals [Abstract] | ||
Accrued Audit Fees | $ 13,753 | $ 8,581 |
Accrued Legal Fees | 131,504 | 213,130 |
Accrued Legal Settlements | 17,000 | 101,897 |
Accrued State Regulatory Settlement | 149,366 | 104,450 |
Accrued Other | 35,000 | |
Accrued liabilities | $ 346,623 | $ 428,058 |
Common Stock Issuances (Details
Common Stock Issuances (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2015 | May 31, 2015 | Mar. 31, 2015 | Feb. 28, 2015 | Nov. 30, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Jan. 26, 2015 | |
Stock issued for services, fair value | $ 6,300 | |||||||
Treasury stock, shares | 65,100 | 15,100 | ||||||
Value of stock repurchased during period | $ 16,500 | $ 18,126 | ||||||
Common Stock [Member] | ||||||||
Stock issued for purchase of assets, shares | 25,000 | |||||||
Stock issued for purchase of assets, fair value | $ 45,000 | |||||||
Stock issued for services, shares | 10,000 | 8,000 | 4,000 | |||||
Stock issued for services, fair value | $ 6,300 | $ 10,080 | $ 5,040 | |||||
Stock issued as part of mediated settlement agreement, shares | 85,000 | 85,000 | ||||||
Equity issuance, price per share | $ 1.26 | $ 1.26 | ||||||
Number of common shares authorized to be repurchased | 100,000 | |||||||
Treasury stock, shares | 15,100 | |||||||
Value of stock repurchased during period | $ 18,000 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details) - shares | Dec. 01, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Options remain outstanding | 10,000 | 120,000 | 120,000 | 50,000 |
Stock Options and Warrants (Sum
Stock Options and Warrants (Summary of Stock Options Activity) (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Number of Shares | |||
Options outstanding at beginning of period | 120,000 | 120,000 | 50,000 |
Granted | 70,000 | ||
Forfeited shares | (100,000) | ||
Options outstanding at end of period | 120,000 | 120,000 | |
Options vested and exercisable at end of period | 20,000 | ||
Vested and exercisable weighted average remaining life | 2 months | ||
Weighted Average Exercise Price | |||
Options outstanding at beginning of period | $ 1.15 | $ 1.15 | $ 0.60 |
Options granted | 1.55 | ||
Forfeited shares | 1.55 | ||
Options outstanding at end of period | $ 1.15 | $ 1.15 | |
Vested and Exercisable at September 30, 2016 | $ 1.55 | ||
Aggregate Intrinsic Value | |||
Vested and Exercisable at September 30, 2016 |
Commitments and Contingencies50
Commitments and Contingencies (Lease Commitments) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating Leased Assets [Line Items] | ||
Rent expense | $ 26,000 | $ 26,000 |
2,017 | 17,100 | |
2,018 | 17,100 | |
2,019 | 12,113 | |
Total | 46,313 | |
Commercial Lease Suite 114 [Member] | ||
Operating Leased Assets [Line Items] | ||
2,017 | 17,100 | |
2,018 | 17,100 | |
2,019 | 12,113 | |
Total | 46,313 | |
Commercial Lease Suite 103B [Member] | ||
Operating Leased Assets [Line Items] | ||
2,017 | ||
2,018 | ||
2,019 | ||
Total |
Commitments and Contingencies51
Commitments and Contingencies (Litigation) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jun. 23, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Loss Contingencies [Line Items] | |||
Bed debt | $ 87,837 | $ 306,118 | |
Brian Pappas [Member] | |||
Loss Contingencies [Line Items] | |||
Damages sought by plantiff | $ 1,000,000 | ||
Commissions | 560,000 | ||
Bed debt | 40,000 | ||
Retainer and commission payments to Jeff Pappas and his companies | 89,000 | ||
Loyalty fees to pappas and his wife | $ 95,000 | ||
Settled Litigation [Member] | Sew Fun, LLC [Member] | |||
Loss Contingencies [Line Items] | |||
Accrued legal settlement | 85,000 | ||
Settled Litigation [Member] | Common Stock [Member] | Sew Fun, LLC [Member] | |||
Loss Contingencies [Line Items] | |||
Stock issued as part of settlement agreement, fair value | 106,000 | ||
Pending Litigation [Member] | Sew Fun, LLC [Member] | |||
Loss Contingencies [Line Items] | |||
Damages sought by plantiff | $ 42,000 |
Income Taxes (Schedule of Compo
Income Taxes (Schedule of Components of Deferred Taxes) (Details) - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Deferred tax assets: | ||
Depreciation timing difference | $ 2,595 | |
Allowance for bad debt | 87,542 | 68,870 |
Charitable contributions | 180 | 180 |
Impairment of assets held for sale | 9,938 | |
Benefit from net operating loss carryover | 525,283 | |
Total gross deferred tax asset | 613,004 | 81,583 |
Less: Valuation allowances | (262,642) | |
Total deferred tax asset | 350,362 | 81,583 |
Deferred tax liabilities: | ||
Depreciation timing difference | (6,919) | |
Total deferred liability | (6,919) | |
Net deferred tax asset | $ 343,444 | $ 81,583 |
Income Taxes (Schedule of Com53
Income Taxes (Schedule of Components of Income Tax Provision) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Current Federal: | ||
Continuing operations | $ (176,492) | $ (31,082) |
Discontinued operations | (2,287) | (75,937) |
Total | (178,779) | (107,019) |
Current State: | ||
Continuing operations | (121,988) | (20,599) |
Discontinued operations | (615) | (14,263) |
Total | (122,603) | (34,862) |
Total current provision continuing operations | (298,480) | (51,681) |
Total current discontinued operations | (2,902) | (90,200) |
Total Current Tax | (301,382) | (141,881) |
Deferred: | ||
Additional deferred tax related to book tax differences | (524,516) | (77,636) |
Valuation allowance on net operating loss carryover | 262,642 | |
Total Tax Provision | $ (563,256) | $ (219,517) |
Income Taxes (Schedule of Recon
Income Taxes (Schedule of Reconciliation of Income Tax Provision) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Provision Reconciliation (Amount): | ||
Provision at statutory rates | $ (789,534) | $ (230,008) |
State income tax, net of federal benefit | (84,294) | (24,557) |
Non-Deductible items | ||
Penalties | 48,165 | 24,624 |
Meals & Entertainment | 1,440 | 8,073 |
Other permanent items | (1,674) | 2,351 |
Valuation allowance on net operating loss carryover | 262,641 | |
Total Tax Provision | $ (563,256) | $ (219,517) |
Income Tax Provision Reconciliation (%): | ||
Provision at statutory rates | 34.00% | 34.00% |
State income tax, net of federal benefit | 3.63% | 3.63% |
Non-Deductible items | ||
Penalties | (2.07%) | (3.64%) |
Meals & Entertainment | (0.06%) | (1.19%) |
Other permanent items | 0.07% | (0.35%) |
Valuation allowance on net operating loss carryover | (11.31%) | 0.00% |
Total income tax provision | 24.26% | 32.45% |
Assets Held For Sale (Details)
Assets Held For Sale (Details) - USD ($) | Dec. 09, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Liabilities of discontinued operations | |||
Total Liabilities of discontinued operations | $ 9,016 | ||
Operating Loss on discontinued operations | |||
Operating Loss on discontinued operations | $ (12,087) | (207,556) | |
CI Franchise Company LLC [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of shares of stock issued for assets purchased | 50,000 | ||
Number of shares previously accrued for | 25,000 | ||
Assets of discontinued operations | |||
Cash | 24,032 | ||
Accounts receivable | 16,667 | ||
Notes receivable | 16,500 | ||
Total Assets of discontinued operations | 57,199 | ||
Liabilities of discontinued operations | |||
Accounts payable | 9,016 | ||
Total Liabilities of discontinued operations | 9,016 | ||
Operating Loss on discontinued operations | |||
Revenue | 10,785 | 355,843 | |
Advertising and promotion | (7,635) | (128,561) | |
Bad debt | (73,118) | ||
Commissions and consulting | (240,201) | ||
Franchisee expense | (67,409) | ||
General and administrative expenses | (15,237) | (54,110) | |
Operating Loss on discontinued operations | $ (12,087) | $ (207,556) |
Earnings Per Share (Schedule of
Earnings Per Share (Schedule of Computation of Basic and Diluted Net Income Per Share) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Net loss attributed to common stockholders | ||
Net loss from continuing operations | $ (1,808,849) | $ (311,978) |
Net loss from discontinued operations | (9,228) | (144,962) |
Net loss | $ (1,818,077) | $ (456,940) |
Net loss per share | ||
Continuing operations | $ (0.15) | $ (0.03) |
Discontinued operations | 0 | (0.01) |
Total | $ (0.15) | $ (0.04) |
Basic weighted average number of common shares outstanding | 12,001,409 | 11,952,252 |