Document and Entity Information
Document and Entity Information - Jul. 31, 2015 - shares | Total |
Document and Entity Information [Abstract] | |
Entity Registrant Name | CHAMPION INDUSTRIES INC |
Entity Central Index Key | 19,149 |
Current Fiscal Year End Date | --10-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 11,299,528 |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q3 |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Jul. 31, 2015 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Jul. 31, 2015 | Oct. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 72,543 | $ 818,438 |
Accounts receivable, net of allowance of $521,000 and $688,000 | 9,041,791 | 9,512,731 |
Inventories | 4,166,780 | 3,969,992 |
Other current assets | 809,026 | 226,307 |
Assets held for sale | 256,832 | 256,832 |
Total current assets | 14,346,972 | 14,784,300 |
Property and equipment, at cost: | ||
Land | 1,254,195 | 1,254,195 |
Buildings and improvements | 4,680,112 | 4,923,113 |
Machinery and equipment | 33,456,351 | 33,297,081 |
Equipment under capital lease | 72,528 | 72,528 |
Furniture and fixtures | 3,724,480 | 3,639,966 |
Vehicles | 2,615,971 | 2,488,981 |
Property and equipment, gross | 45,803,637 | 45,675,864 |
Less accumulated depreciation | (39,568,195) | (38,991,652) |
Property and equipment, net | 6,235,442 | 6,684,212 |
Goodwill | 1,230,485 | 1,230,485 |
Deferred financing costs | 4,655 | 69,644 |
Other intangibles, net of accumulated amortization | 1,088,369 | 1,179,943 |
Other assets | 0 | 59,809 |
Total noncurrent assets | 2,323,509 | 2,539,881 |
Total assets | 22,905,923 | 24,008,393 |
Current liabilities: | ||
Accounts payable | 5,139,734 | 4,518,634 |
Accrued payroll and commissions | 474,588 | 583,529 |
Taxes accrued and withheld | 716,711 | 666,166 |
Accrued expenses | 1,700,942 | 1,553,978 |
Debt discount (Note 5) | 0 | (138,520) |
Notes payable (Note 5) | 1,747,896 | 10,947,218 |
Notes payable - related party (Note 5) | 2,500,000 | 2,500,000 |
Capital lease obligations (Note 5) | 15,617 | 14,931 |
Total current liabilities | 12,295,488 | 20,645,936 |
Long-term debt, net of current portion: | ||
Notes payable (Note 5) | 8,460,788 | 128,690 |
Capital lease obligations (Note 5) | 16,580 | 28,381 |
Total liabilities | 20,772,856 | 20,803,007 |
Shareholders' equity: | ||
Additional paid-in capital | 24,279,179 | 24,279,179 |
Retained deficit | (33,445,640) | (32,373,321) |
Total shareholders' equity | 2,133,067 | 3,205,386 |
Total liabilities and shareholders' equity | 22,905,923 | 24,008,393 |
Class A Voting Shares [Member] | ||
Shareholders' equity: | ||
Common stock | $ 11,299,528 | $ 11,299,528 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Jul. 31, 2015 | Oct. 31, 2014 |
Current assets: | ||
Accounts receivable, allowance | $ 521,000 | $ 688,000 |
Shareholders' equity: | ||
Common stock, shares outstanding (in shares) | 11,299,528 | |
Class A voting shares [Member] | ||
Shareholders' equity: | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 11,299,528 | 11,299,528 |
Common stock, shares outstanding (in shares) | 11,299,528 | 11,299,528 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2015 | Jul. 31, 2014 | Jul. 31, 2015 | Jul. 31, 2014 | |
Revenues: | ||||
Printing | $ 8,567,378 | $ 8,649,088 | $ 27,074,972 | $ 27,675,260 |
Office products and office furniture | 5,826,751 | 6,675,445 | 18,408,524 | 18,104,252 |
Total revenues | 14,394,129 | 15,324,533 | 45,483,496 | 45,779,512 |
Cost of sales: | ||||
Printing | 6,619,027 | 6,541,617 | 20,426,090 | 20,919,347 |
Office products and office furniture | 4,322,724 | 5,044,082 | 13,678,412 | 13,453,853 |
Total cost of sales | 10,941,751 | 11,585,699 | 34,104,502 | 34,373,200 |
Gross profit | 3,452,378 | 3,738,834 | 11,378,994 | 11,406,312 |
Selling, general and administrative expenses | 3,840,912 | 4,047,856 | 11,633,071 | 12,253,934 |
Loss from operations | (388,534) | (309,022) | (254,077) | (847,622) |
Other income (expenses): | ||||
Interest expense - related party | (20,763) | (20,764) | (61,615) | (61,615) |
Interest expense | (159,329) | (262,076) | (629,381) | (782,441) |
Other | 7,927 | 4,400 | (35,547) | 225,538 |
Total other income (expenses) | (172,165) | (278,440) | (726,543) | (618,518) |
Loss before income taxes | (560,699) | (587,462) | (980,620) | (1,466,140) |
Income tax expense | (91,699) | 0 | (91,699) | 0 |
Net loss | $ (652,398) | $ (587,462) | $ (1,072,319) | $ (1,466,140) |
Loss per share: | ||||
Basic and diluted loss per common share (in dollars per share) | $ (0.06) | $ (0.05) | $ (0.09) | $ (0.13) |
Weighted average shares outstanding: | ||||
Basic and diluted (in shares) | 11,300,000 | 11,300,000 | 11,300,000 | 11,300,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Jul. 31, 2015 | Jul. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (1,072,319) | $ (1,466,140) |
Adjustments to reconcile net loss from continuing operations to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,221,586 | 1,501,495 |
Gain on sale of assets | 58,765 | (218,535) |
Allowance for doubtful accounts | (35,952) | (95,763) |
Deferred financing costs / debt discount | 182,478 | 384,885 |
Changes in assets and liabilities: | ||
Accounts receivable | 506,891 | 702,249 |
Inventories | (196,788) | 491,923 |
Other current assets | (582,719) | 22,473 |
Accounts payable | 621,101 | (2,531,099) |
Accrued payroll and commissions | (108,941) | (144,703) |
Taxes accrued and withheld | 50,545 | 63,851 |
Accrued expenses | 146,964 | (136,322) |
Accrued legal settlement | 0 | 120,000 |
Other liabilities | 0 | (150) |
Net cash provided by (used in) operating activities continuing operations | 791,611 | (1,305,836) |
Net cash provided by operating activities discontinued operations | 0 | 70,047 |
Net cash provided by operating activities | 791,611 | (1,235,789) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (810,165) | (420,859) |
Proceeds from sale of fixed assets | 70,158 | 464,229 |
Other assets | 80,840 | (15,040) |
Net cash (used in) provided by investing activities | (659,167) | 28,330 |
Cash flows from financing activities: | ||
Proceeds from term debt | 2,039,258 | 879,366 |
Principal payments on term debt | (2,917,597) | (771,970) |
Net cash (used in) provided by financing activities | (878,339) | 107,396 |
Net decrease in cash and cash equivalents | (745,895) | (1,100,063) |
Cash and cash equivalents at beginning of period | 818,438 | 1,428,542 |
Cash and cash equivalents at end of period | $ 72,543 | $ 328,479 |
Basis of Presentation, Business
Basis of Presentation, Business Operations and Recent Accounting Pronouncements | 9 Months Ended |
Jul. 31, 2015 | |
Basis of Presentation, Business Operations and Recent Accounting Pronouncements [Abstract] | |
Basis of Presentation, Business Operations and Recent Accounting Pronouncements | Note 1. Basis of Presentation, Business Operations and Recent Accounting Pronouncements The foregoing financial information has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the Securities and Exchange Commission for interim financial reporting. The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. In the opinion of management, the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended October 31, 2014, and related notes thereto contained in Champion Industries, Inc.’s Form 10-K filed January 29, 2015. The accompanying interim financial information is unaudited. The balance sheet information as of October 31, 2014 was derived from our audited financial statements. The results of operations for the period are not necessarily indicative of the results to be expected for the full year as o ur business is subject to seasonal fluctuations. Historically, the Company has experienced a greater portion of its profitability in the second and fourth quarters than in the first and third quarters. The second quarter generally reflects increased orders for printing of corporate annual reports and proxy statements. A post-Labor Day increase in demand for printing services and office products coincides with the Company’s fourth quarter. Reclassifications and Revisions: Newly Issued Accounting Standards Effective July 1, 2009, changes to the ASC are communicated through an ASU. As of July 31, 2015, the FASB has issued ASU’s 2009-01 through 2015-12. The Company reviewed each ASU and determined that they will not have a material impact on the Company’s financial position, results of operations or cash flows, other than related disclosures to the extent applicable. In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items. The Company will adopt ASU 2015-01 in December, 2015. This amendment will not have a material impact on the Company's financial position, results of operation, or cash flows, but will have an impact on related presentation and disclosure to the extent applicable. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 provides guidance on simplifying the measurement of inventory. The current standard is to measure inventory at lower of cost or market; where market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 updates this guidance to measure inventory at the lower of cost or net realizable value; where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation. The Company will adopt ASU 2015-11 in December, 2015. This amendment is not expected to have a material impact on the Company's financial position, results of operation, or cash flows. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Jul. 31, 2015 | |
Earnings per Share [Abstract] | |
Earnings per Share | Note 2. Earnings per Share Basic earnings per share is computed by dividing net income by the weighted average shares of common stock outstanding for the period and excludes any dilutive effects of stock options and warrants. Diluted earnings per share is computed by dividing net income by the weighted average shares of common stock outstanding for the period plus the shares that would be outstanding assuming the exercise of dilutive stock options and warrants using the treasury stock method. There was no dilutive effect for the three and nine months ended July 31, 2015 and 2014. |
Accounts Receivable, Allowance
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition | 9 Months Ended |
Jul. 31, 2015 | |
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition [Abstract] | |
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition | Note 3. Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition Accounts Receivable: Accounts receivable are stated at the amount billed to customers. Accounts receivable are ordinarily due 30 days from the invoice date. The Company encounters risks associated with sales and the collection of the associated accounts receivable. As such, the Company records a provision for accounts receivable that are considered to be uncollectible and performs a comprehensive assessment periodically utilizing a variety of historical information and specific account review. The allowance for doubtful accounts is assessed periodically based on events that may change the rate such as a significant increase or decrease in collection performance and timing of payments as well as the calculated total exposure in relation to the allowance. Periodically, the Company compares the identified credit risks with the allowance that has been established using historical experience and adjusts the allowance accordingly. Revenue Recognition: Revenues are recognized when products are shipped or ownership is transferred and when services are rendered to customers. The Company acts as a principal party in sales transactions, assumes title to products and assumes the risks and rewards of ownership including risk of loss for collection, delivery or returns. The Company typically recognizes revenue for the majority of its products upon shipment to the customer and transfer of title. Under agreements with certain customers, custom forms may be stored by the Company for future delivery. In these situations, the Company may receive a logistics and warehouse management fee for the services provided. In these cases, delivery and bill schedules are outlined with the customer and product revenue is recognized when manufacturing is complete and the product is received into the warehouse, title transfers to the customer, the order is invoiced and there is reasonable assurance of collectability. Since the majority of products are customized, product returns are not significant. Therefore, the Company records sales on a gross basis. Revenue generally is recognized net of any taxes collected from customers and subsequently remitted to government authorities. |
Inventories
Inventories | 9 Months Ended |
Jul. 31, 2015 | |
Inventories [Abstract] | |
Inventories | Note 4. Inventories Inventories are principally stated at the lower of first-in, first-out cost or market. Manufactured finished goods and work in process inventories include material, direct labor and overhead based on standard costs, which approximate actual costs. The Company utilizes an estimated gross profit method for determining cost of sales in interim periods at certain divisions. Inventories consisted of the following: July 31, 2015 October 31, 2014 Printing: Raw materials $ 1,240,711 $ 1,180,361 Work in process 555,925 539,023 Finished goods 1,011,225 1,131,430 Office products and office furniture 1,358,919 1,119,178 Total inventory $ 4,166,780 $ 3,969,992 |
Debt
Debt | 9 Months Ended |
Jul. 31, 2015 | |
Debt [Abstract] | |
Debt | Note 5. Debt At the dates indicated, debt consisted of the following: July 31, October 31, 2015 2014 Term Note A dated October 7, 2013, due in monthly installments of $50,000 plus interest payments equal to the prime rate of interest plus 2% maturing April 1, 2017, collateralized by substantially all of the assets of the Company. $ 8,900,000 $ 9,850,000 Installment notes payable to banks, due in monthly installments plus interest at rates approximating the bank’s prime rate or the prime rate subject to various floors maturing in various periods through July 2017, collateralized by equipment and vehicles. 558,684 475,908 Notes payable to shareholders. The shareholder note of $2.5 million plus all accrued interest was initially due in one balloon payment in September 2014; pursuant to Term Note A, the maturity was adjusted to April 2015. The interest is accrued on this note at a rate of 3.25%. See discussion below for more detail. 2,500,000 2,500,000 Notes payable to a bank, due August 2015, respectively including interest accrued at 5.00% collateralized by specific accounts receivable of the Company 750,000 750,000 C apital lease obligation for printing equipment at an imputed interest rate of 6.02% per annum 32,197 43,312 Unamortized debt discount - (138,520 ) 12,740,881 13,480,700 Less current portion long-term debt 997,896 12,697,218 Less current portion obligation under capital lease 15,617 14,931 Less short-term debt 750,000 750,000 Less notes payable - related party 2,500,000 Less debt discount - (138,520 ) Long-term debt, net of current portion and current capital lease obligation $ 8,477,368 $ 157,071 On June 15, 2015 the Company’s Board of Directors approved the conversion of the Company’s $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company’s income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%. This conversion will reduce the Company’s liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company’s annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company’s annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved. This conversion is pending a shareholder vote to amend the Company’s Articles of Incorporation to allow for the issuance of Preferred Stock. The Company will continue to accrue interest on the related party debt at an annual rate of 3.25% until such conversion has been consummated. |
Income taxes
Income taxes | 9 Months Ended |
Jul. 31, 2015 | |
Income taxes [Abstract] | |
Income taxes | Note 6. Income taxes The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers a multitude of factors in assessing the utilization of its deferred tax assets including the reversal of deferred tax liabilities, projected future taxable income and other assessments, which may have an impact on financial results. The Company excluded cancellation of debt income (“CODI”) from its income tax liability in 2013 in accordance with applicable Internal Revenue Service guidelines regarding insolvency where the amount of debt cancellation excluded from gross ordinary income is applied to attribute reductions. The insolvency calculation is based on IRS guidelines associated with liabilities in excess of the fair market value of assets immediately prior to the debt cancellation. The attribute reductions are ordered and reduce net operating losses, various credits, capital losses, and asset basis among other attribute reductions if applicable and necessary. As a result of the CODI exception provided in Internal Revenue Code Section 108, the Company reduced its net operating losses, applicable credits and asset basis in accordance with the applicable ordering rules. In 2014, as a result of the attribute reductions to exclude the Company’s CODI from taxable income in 2013, the Company incurred $6.4 million of attribute recapture income for tax purposes. As such, the Company used net operating loss carry forwards to offset this attribute recapture income. A decrease in the Company’s deferred tax asset valuation allowance in a like amount of the tax liability arising from the Company's taxable income was used to offset the income tax liability. During the third quarter of 2015, the Company finalized its position on its 2014 income tax liability after researching applicable Alternative Minimum Tax (“AMT”) rules and determined it owed $92,000 in federal income taxes. The $92,000 tax liability was paid in the third quarter of 2015. AMT taxes paid can be carried forward as a credit against future regular taxable income. The Company had determined that a full valuation allowance against deferred tax assets was warranted at October 31, 2014. The Company reassessed its previous determination regarding its valuation allowance and although the Company has had positive operating trends, it was determined that a full valuation allowance was still warranted at July 31, 2015. Given this, the Company increased its valuation allowance by $92,000 to neutralize the deferred tax asset associated with its AMT payment made during the third quarter. This increase in the valuation allowance was reflected on the income statement as an income tax expense for the third quarter and nine months ended July 31, 2015. The amount of deferred tax asset considered realizable could be adjusted in future periods and such adjustments may be material to the Consolidated Financial Statements. Due to the increase in the valuation allowance previously discussed, the Company’s effective tax rate for the three and nine months ended July 31, 2015 was (16.4)% and (9.4)%, respectively. This is compared to 0.0% for the three and nine months ended July 31, 2014. The effective income tax rate approximates the combined federal and state, net of federal benefit, statutory income tax rate and may be impacted by increases or decreases in the valuation allowance for deferred tax assets. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Jul. 31, 2015 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 7. Commitments and Contingencies The nature of the Company’s business results in a certain amount of claims, litigation, investigations, and other legal and administrative cases and proceedings, all of which are considered incidental to the normal conduct of business. When the Company determines it has meritorious defenses to the claims asserted, it vigorously defends itself. The Company will consider settlement of cases when, in Management’s judgment, it is in the best interests of both the Company and its shareholders to do so. The Company periodically assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. The Company would accrue a loss on legal contingencies in the event the loss is deemed probable and reasonably estimable. The accrual is adjusted as appropriate to reflect any relevant developments regarding the legal contingency. In the event of a legal contingency where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established. In certain cases, exposure to loss may exist in excess of the accrual to the extent such loss is reasonably possible, but not probable. Management believes an estimate of the aggregate of reasonably possible losses, in excess of amounts accrued, for current legal proceedings not covered by insurance is not greater than $0.4 million at July 31, 2015 and may be substantially lower than this amount. Any estimate involves significant judgment, given the varying stages of the proceedings (including cases in preliminary stages), as well as numerous unresolved issues that may impact the outcome of a proceeding. Accordingly, Management’s estimate will change from time-to-time, and actual losses may be more or less than the current estimate. The current loss estimate excludes legal and professional fees associated with defending such proceedings. These fees are expensed as incurred and may be material to the Company's Consolidated Financial Statements in a particular period. While the final outcome of legal proceedings is inherently uncertain, based on information currently available, advice of counsel, and available insurance coverage, Management believes that there is no accrual for legal contingencies required at this time. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these matters, if unfavorable, may be greater than the current range of estimates discussed above and may be material to the Company’s Consolidated Financial Statements in a particular period. On September 15, 2014 the Company settled a lawsuit for $0.1 million. The legal proceeding commenced prior to July 31, 2014. As such, the Company recorded this subsequent event in its financial statements at and for the period ended July 31, 2014. This settlement is recorded on the balance sheet under the caption “Accrued legal settlements” and the expense is recorded as part of “Selling, general and administrative” on the Company’s Income Statements for the three and nine months ended July 31, 2014. In accordance with the provisions of the Restated Credit Agreement, the Company issued $0.001 per share warrants issued for up to 30% (on a post-exercise basis) of the outstanding common stock of the Company in the form of non-voting Class B common stock and associated Investor Rights Agreement for the benefit of the Previous Secured Lenders under the Restated Credit Agreement. The warrants expire after October 19, 2017. The Warrants entitle the Holders thereof to purchase that number of shares of Company Class B Common Stock equal to thirty percent (30%) of the then issued and outstanding Common Stock of the Company, on a fully diluted, post-exercise basis. Based on the 11,299,528 shares of Company Common Stock currently issued and outstanding, exercise in full of the Warrants would result in the Company’s issuance of an additional 4,842,654 shares to the Warrant Holders. In the event a greater number of issued and outstanding common shares exist at the time of option exercise, a greater number of options of shares of Class B Common Stock would be issuable. The Previous Secured Lenders assigned the warrants to Marshall T. Reynolds in consideration for his personal guaranty and stock pledge and security agreement to assist in facilitating the consummation of the October 2013 Credit Agreement. The Previous Secured Lenders, as Warrant Holders, were subject to the ownership limitations of the Bank Holding Company Act of 1956, as amended and regulations promulgated thereunder (the "Bank Holding Company Act") which placed limitations on their ability to control other companies. The Previous Secured Lenders/Warrant Holders requested, and the Company agreed to create a non-voting class of Common Stock, to be designated as "Class B Common Stock". The Warrants constitute the right to purchase Class B Common Stock. The warrants are exercisable solely for shares of Class B Common Stock. However, because any Class B Common Stock issuable pursuant to the Warrants may be sold by the Warrant Holders to entities not subject to the Bank Holding Company Act, or because one or more Warrant Holders may be permitted to own a limited number of voting shares of Company Class A Common Stock, the articles of amendment provide that those shares of Class B Common Stock are convertible into shares of Class A Common Stock, and vice versa, without charge. Marshall T. Reynolds, as the current Warrant Holder is entitled to convert Class B Common Shares into shares of Class A Common Stock. As of July 31, 2015 the Company had contractual obligations in the form of leases and debt as follows: Payments Due by Fiscal Year Contractual Obligations : 2015 2016 2017 2018 2019 Residual Total Non-cancelable operating leases $ 177,994 $ 427,348 $ 367,939 $ 278,632 $ 174,088 $ 21,000 $ 1,447,001 Term debt 271,810 1,701,596 8,235,278 - - - 10,208,684 Obligations under capital lease 3,817 15,852 12,528 - - - 32,197 Debt discount - - - - - - - Notes payable - related party (1) 2,500,000 - - - - - 2,500,000 $ 2,953,621 $ 2,144,796 $ 8,615,745 $ 278,632 $ 174,088 $ 21,000 $ 14,187,882 (1) The Comapny intends, and the holder of this debt has consented, to convert this debt to preferred stock. See Note 5 to the Consolidated Financial Statements for more information on the Note Payable - Related Party. |
Industry Segment Information
Industry Segment Information | 9 Months Ended |
Jul. 31, 2015 | |
Industry Segment Information [Abstract] | |
Industry Segment Information | Note 8. Industry Segment Information The Company operates principally in two industry segments organized on the basis of product lines: the production, printing and sale, principally to commercial customers, of printed materials (including brochures, pamphlets, reports, tags, continuous and other forms) and the sale of office products and office furniture including interior design services. The Company reports segment information in a manner consistent with the way that our management, including our chief operating decision maker, the Company’s Chief Executive Officer, assesses performance and makes decisions regarding allocation of resources in accordance with the Segment Disclosures Topic of the ASC. Our Financial Reporting systems present various data, which is used to operate and measure our operating performance. Our chief operating decision maker utilizes various measures of a segment’s profit or loss including historical internal reporting measures and reporting measures based on product lines with operating income (loss) as the key profitability measure within the segment. Product line reporting is the basis for the organization of our segments and is the most consistent measure used by the chief operating decision maker and conforms with the use of segment operating income or (loss) that is the most consistent with those used in measuring like amounts in the Consolidated Financial Statements. The identifiable assets are reflective of non-GAAP assets reported on the Company's internal balance sheets. The assets are classified based on the primary functional segment category as reported on the internal balance sheets. Therefore the actual segment assets may not directly correspond with the segment operating (loss) income reported herein. The Company has certain assets classified as held for sale/discontinued operations representing $ 256,832 at July 31, 2015 and $ 311,275 at July 31, 2014. These assets were part of the printing and newspaper segments prior to the reclassification as assets held for sale/discontinued operations. The total assets reported on the Company's balance sheets as of July 31, 2015 and July 31, 2014 are $ 22,905,923 and $ 23,798,134. The identifiable assets reported below represent $ 22,649,091 and $ 23,486,859. The table below presents information about reported segments for the three and nine months ended July 31, 2015 and 2014: 2015 Quarter 3 Printing Office Products & Furniture Total Revenues $ 9,043,753 $ 6,433,197 $ 15,476,950 Elimination of intersegment revenue (476,375 ) (606,446 ) (1,082,821 ) Consolidated revenues $ 8,567,378 $ 5,826,751 $ 14,394,129 Operating loss (102,331 ) (286,203 ) (388,534 ) Depreciation & amortization 381,836 22,703 404,539 Capital expenditures 230,390 19,771 250,161 Identifiable assets 15,273,510 7,375,581 22, 649 Goodwill - 1,230,485 1, 230 2014 Quarter 3 Printing Office Products & Furniture Total Revenues $ 9,363,551 $ 7,483,730 $ 16,847,281 Elimination of intersegment revenue (714,463 ) (808,285 ) (1,522,748 ) Consolidated revenues $ 8,649,088 $ 6,675,445 $ 15,324,533 Operating loss (203,633 ) (105,389 ) (309,022 ) Depreciation & amortization 440,840 26,359 467,199 Capital expenditures 118,529 2,371 120 , Identifiable assets 16,040,091 7,446,768 23,486,859 Goodwill - 1,230,485 1,230,485 2015 Year to Date Printing Office Products & Furniture Total Revenues $ 28,634,690 $ 20,477,892 $ 49,112,582 Elimination of intersegment revenue (1,559,718 ) (2,069,368 ) (3,629,086 ) Consolidated revenues $ 27,074,972 $ 18,408,524 $ 45,483,496 Operating income (loss) 160,441 (414,518 ) (254,077 ) Depreciation & amortization 1,152,102 69,484 1,221,586 Capital expenditures 720,200 89,965 810,165 Identifiable assets 15,273,510 7,375,581 22, 649 Goodwill - 1,230,485 1,230,485 2014 Year to Date Printing Office Products & Furniture Total Revenues $ 29,377,286 $ 20,487,492 $ 49,864,778 Elimination of intersegment revenue (1,702,026 ) (2,383,240 ) (4,085,266 ) Consolidated revenues $ 27,675,260 $ 18,104,252 $ 45,779,512 Operating loss (429,058 ) (418,564 ) (847,622 ) Depreciation & amortization 1,422,415 79,080 1,501,495 Capital expenditures 400,748 20,111 420,859 Identifiable assets 16,040,091 7,446,768 23,486,859 Goodwill - 1,230,485 1,230,485 A reconciliation of total segment revenue, assets and operating (loss) to consolidated (loss) before income taxes, for the three and nine months ended July 31, 2015 and 2014 is as follows: Three months Nine months 2015 2014 2015 2014 Revenues: Total segment revenues $ 15,476,950 $ 16,847,281 $ 49,112,582 $ 49,864,778 Elimination of intersegment revenue (1,082,821 ) (1,522,748 ) (3,629,086 ) (4,085,266 ) Consolidated revenue $ 14,394,129 $ 15,324,533 $ 45,483,496 $ 45,779,512 Operating loss: Total segment operating loss $ (388,534 ) $ (309,022 ) $ (254,077 ) $ (847,622 ) Interest expense - related party (20,763 ) (20,764 ) (61,615 ) (61,615 ) Interest expense (159 , ) (262,076 ) (629,381 ) (782,441 ) Other income 7,927 4,400 (35,547 ) 225,538 Consolidated loss $ (560,699 ) $ (587,462 ) $ (980,620 ) $ (1,466,140 ) Identifiable assets: Total segment identifiable assets $ 22,649,091 $ 23,486,859 $ 22,649,091 $ 23,486,859 Assets not allocated to a segment 256,832 311,275 256,832 311,275 Total consolidated assets $ 22,905,923 $ 23,798,134 $ 22,905,923 $ 23,798,134 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Jul. 31, 2015 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 9. Fair Value Measurements There is a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 - Quoted market prices in active markets for identical assets or liabilities Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3 - Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use. The Company does not believe it is practicable to estimate the fair value of its variable interest-bearing debt with a private lender and its subordinated debt to a related party due primarily to the fact that an active market for the Company’s debt does not exist. The term debt not discussed herein had a carrying value of approximately $1.3 million and the Company believes carrying value approximates fair value for this debt based on recent market conditions, collateral support, recent borrowings and other factors. Cash consists principally of cash on deposit with banks. The Company's cash deposits in excess of federally insured amounts are primarily maintained at a large well-known financial institution. The carrying amounts of the Company's accounts receivable, accounts payable, accrued payrolls and commissions, taxes accrued and withheld and accrued expenses approximates fair value due to their short-term nature. Goodwill and other intangible assets are measured on a non-recurring basis using Level 3 inputs. Goodwill is also subject to an annual impairment test. (See Note 10) |
Acquired Intangible Assets and
Acquired Intangible Assets and Goodwill | 9 Months Ended |
Jul. 31, 2015 | |
Acquired Intangible Assets and Goodwill [Abstract] | |
Acquired Intangible Assets and Goodwill | Note 10. Acquired Intangible Assets and Goodwill July 31, 2015 October 31, 2014 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Amortizable intangible assets: Non-compete agreement $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Customer relationships 2,451,073 1,362,704 2,451,073 1,271,130 Other 564,946 564,946 564,946 564,946 4,016,019 2,927,650 4,016,019 2,836,076 Unamortizable Goodwill 1,737,763 507,278 1,737,763 507,278 1,737,763 507,278 1,737,763 507,278 Total goodwill and other intangibles $ 5,753,782 $ 3,434,928 $ 5,753,782 $ 3,343,354 Amortization expense for the three and nine months ended July 31, 2015 was $31,000 and $92,000, respectively, and for the three and nine months ended July 31, 2014 was $31,000 and $98,000, respectively. Customer relationships are being amortized over a period of 20 years, related to the acquisition of Syscan in 2004. The weighted average remaining life of the Company's amortizable intangible assets was approximately 5 years Estimated amortization expense for each of the following years is: 2015 $ 30,524 2016 122,098 2017 122,098 2018 122,098 2019 122,098 Thereafter 569,453 $ 1,088,369 The changes in the carrying amount of goodwill and other amortizing intangibles for the nine months ended July 31, 2014 were: Goodwill: Printing Office Products and Furniture Total Balance at October 31, 2014: Goodwill $ 2,226,837 $ 1,230,485 $ 3,457,322 Accumulated impairment losses (2,226,837 ) - (2,226,837 ) - 1,230,485 1,230,485 Goodwill acquired nine months ended July 31, 2015 - - - Impairment losses nine months ended July 31, 2015 - - - Balance at July 31, 2015: Goodwill 2,226,837 1,230,485 3,457,322 Accumulated impairment losses (2,226,837 ) - (2,226,837 ) $ - $ 1,230,485 $ 1,230,485 Amortizing Intangible Assets (net of amortization expense): Printing Office Products and Furniture Total Balance at October 31, 2014: Amortizing intangible assets $ 395,206 $ 784,737 $ 1,179,943 Accumulated impairment losses - - - 395,206 784,737 1,179,943 Amortizing intangible assets acquired nine months ended July 31, 2015 - - - Impairment losses nine months ended July 31, 2015 - - - Amortization expense 30,677 60,897 91,574 Balance at July 31, 2015: Amortizing intangible assets 364,529 723,840 1,088,369 Accumulated impairment losses - - - $ 364,529 $ 723,840 $ 1 , |
Basis of Presentation, Busine16
Basis of Presentation, Business Operations and Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Jul. 31, 2015 | |
Basis of Presentation, Business Operations and Recent Accounting Pronouncements [Abstract] | |
Basis of Presentation | The foregoing financial information has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the Securities and Exchange Commission for interim financial reporting. The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. In the opinion of management, the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended October 31, 2014, and related notes thereto contained in Champion Industries, Inc.’s Form 10-K filed January 29, 2015. The accompanying interim financial information is unaudited. The balance sheet information as of October 31, 2014 was derived from our audited financial statements. The results of operations for the period are not necessarily indicative of the results to be expected for the full year as o ur business is subject to seasonal fluctuations. Historically, the Company has experienced a greater portion of its profitability in the second and fourth quarters than in the first and third quarters. The second quarter generally reflects increased orders for printing of corporate annual reports and proxy statements. A post-Labor Day increase in demand for printing services and office products coincides with the Company’s fourth quarter. |
Reclassifications and Revisions | Reclassifications and Revisions: |
Newly Issued Accounting Standards | Newly Issued Accounting Standards Effective July 1, 2009, changes to the ASC are communicated through an ASU. As of July 31, 2015, the FASB has issued ASU’s 2009-01 through 2015-12. The Company reviewed each ASU and determined that they will not have a material impact on the Company’s financial position, results of operations or cash flows, other than related disclosures to the extent applicable. In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items. The Company will adopt ASU 2015-01 in December, 2015. This amendment will not have a material impact on the Company's financial position, results of operation, or cash flows, but will have an impact on related presentation and disclosure to the extent applicable. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 provides guidance on simplifying the measurement of inventory. The current standard is to measure inventory at lower of cost or market; where market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 updates this guidance to measure inventory at the lower of cost or net realizable value; where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation. The Company will adopt ASU 2015-11 in December, 2015. This amendment is not expected to have a material impact on the Company's financial position, results of operation, or cash flows. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Jul. 31, 2015 | |
Inventories [Abstract] | |
Schedule of inventories | Inventories consisted of the following: July 31, 2015 October 31, 2014 Printing: Raw materials $ 1,240,711 $ 1,180,361 Work in process 555,925 539,023 Finished goods 1,011,225 1,131,430 Office products and office furniture 1,358,919 1,119,178 Total inventory $ 4,166,780 $ 3,969,992 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Jul. 31, 2015 | |
Debt [Abstract] | |
Schedule of long-term debt | At the dates indicated, debt consisted of the following: July 31, October 31, 2015 2014 Term Note A dated October 7, 2013, due in monthly installments of $50,000 plus interest payments equal to the prime rate of interest plus 2% maturing April 1, 2017, collateralized by substantially all of the assets of the Company. $ 8,900,000 $ 9,850,000 Installment notes payable to banks, due in monthly installments plus interest at rates approximating the bank’s prime rate or the prime rate subject to various floors maturing in various periods through July 2017, collateralized by equipment and vehicles. 558,684 475,908 Notes payable to shareholders. The shareholder note of $2.5 million plus all accrued interest was initially due in one balloon payment in September 2014; pursuant to Term Note A, the maturity was adjusted to April 2015. The interest is accrued on this note at a rate of 3.25%. See discussion below for more detail. 2,500,000 2,500,000 Notes payable to a bank, due August 2015, respectively including interest accrued at 5.00% collateralized by specific accounts receivable of the Company 750,000 750,000 C apital lease obligation for printing equipment at an imputed interest rate of 6.02% per annum 32,197 43,312 Unamortized debt discount - (138,520 ) 12,740,881 13,480,700 Less current portion long-term debt 997,896 12,697,218 Less current portion obligation under capital lease 15,617 14,931 Less short-term debt 750,000 750,000 Less notes payable - related party 2,500,000 Less debt discount - (138,520 ) Long-term debt, net of current portion and current capital lease obligation $ 8,477,368 $ 157,071 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Jul. 31, 2015 | |
Commitments and Contingencies [Abstract] | |
Contractual obligations of leases and debt | As of July 31, 2015 the Company had contractual obligations in the form of leases and debt as follows: Payments Due by Fiscal Year Contractual Obligations : 2015 2016 2017 2018 2019 Residual Total Non-cancelable operating leases $ 177,994 $ 427,348 $ 367,939 $ 278,632 $ 174,088 $ 21,000 $ 1,447,001 Term debt 271,810 1,701,596 8,235,278 - - - 10,208,684 Obligations under capital lease 3,817 15,852 12,528 - - - 32,197 Debt discount - - - - - - - Notes payable - related party (1) 2,500,000 - - - - - 2,500,000 $ 2,953,621 $ 2,144,796 $ 8,615,745 $ 278,632 $ 174,088 $ 21,000 $ 14,187,882 |
Industry Segment Information (T
Industry Segment Information (Tables) | 9 Months Ended |
Jul. 31, 2015 | |
Industry Segment Information [Abstract] | |
Schedule of segment reporting information, by segment | The table below presents information about reported segments for the three and nine months ended July 31, 2015 and 2014: 2015 Quarter 3 Printing Office Products & Furniture Total Revenues $ 9,043,753 $ 6,433,197 $ 15,476,950 Elimination of intersegment revenue (476,375 ) (606,446 ) (1,082,821 ) Consolidated revenues $ 8,567,378 $ 5,826,751 $ 14,394,129 Operating loss (102,331 ) (286,203 ) (388,534 ) Depreciation & amortization 381,836 22,703 404,539 Capital expenditures 230,390 19,771 250,161 Identifiable assets 15,273,510 7,375,581 22, 649 Goodwill - 1,230,485 1, 230 2014 Quarter 3 Printing Office Products & Furniture Total Revenues $ 9,363,551 $ 7,483,730 $ 16,847,281 Elimination of intersegment revenue (714,463 ) (808,285 ) (1,522,748 ) Consolidated revenues $ 8,649,088 $ 6,675,445 $ 15,324,533 Operating loss (203,633 ) (105,389 ) (309,022 ) Depreciation & amortization 440,840 26,359 467,199 Capital expenditures 118,529 2,371 120 , Identifiable assets 16,040,091 7,446,768 23,486,859 Goodwill - 1,230,485 1,230,485 2015 Year to Date Printing Office Products & Furniture Total Revenues $ 28,634,690 $ 20,477,892 $ 49,112,582 Elimination of intersegment revenue (1,559,718 ) (2,069,368 ) (3,629,086 ) Consolidated revenues $ 27,074,972 $ 18,408,524 $ 45,483,496 Operating income (loss) 160,441 (414,518 ) (254,077 ) Depreciation & amortization 1,152,102 69,484 1,221,586 Capital expenditures 720,200 89,965 810,165 Identifiable assets 15,273,510 7,375,581 22, 649 Goodwill - 1,230,485 1,230,485 2014 Year to Date Printing Office Products & Furniture Total Revenues $ 29,377,286 $ 20,487,492 $ 49,864,778 Elimination of intersegment revenue (1,702,026 ) (2,383,240 ) (4,085,266 ) Consolidated revenues $ 27,675,260 $ 18,104,252 $ 45,779,512 Operating loss (429,058 ) (418,564 ) (847,622 ) Depreciation & amortization 1,422,415 79,080 1,501,495 Capital expenditures 400,748 20,111 420,859 Identifiable assets 16,040,091 7,446,768 23,486,859 Goodwill - 1,230,485 1,230,485 |
Reconciliation of total segment revenue, assets and operating (loss) | A reconciliation of total segment revenue, assets and operating (loss) to consolidated (loss) before income taxes, for the three and nine months ended July 31, 2015 and 2014 is as follows: Three months Nine months 2015 2014 2015 2014 Revenues: Total segment revenues $ 15,476,950 $ 16,847,281 $ 49,112,582 $ 49,864,778 Elimination of intersegment revenue (1,082,821 ) (1,522,748 ) (3,629,086 ) (4,085,266 ) Consolidated revenue $ 14,394,129 $ 15,324,533 $ 45,483,496 $ 45,779,512 Operating loss: Total segment operating loss $ (388,534 ) $ (309,022 ) $ (254,077 ) $ (847,622 ) Interest expense - related party (20,763 ) (20,764 ) (61,615 ) (61,615 ) Interest expense (159 , ) (262,076 ) (629,381 ) (782,441 ) Other income 7,927 4,400 (35,547 ) 225,538 Consolidated loss $ (560,699 ) $ (587,462 ) $ (980,620 ) $ (1,466,140 ) Identifiable assets: Total segment identifiable assets $ 22,649,091 $ 23,486,859 $ 22,649,091 $ 23,486,859 Assets not allocated to a segment 256,832 311,275 256,832 311,275 Total consolidated assets $ 22,905,923 $ 23,798,134 $ 22,905,923 $ 23,798,134 |
Acquired Intangible Assets an21
Acquired Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Jul. 31, 2015 | |
Acquired Intangible Assets and Goodwill [Abstract] | |
Acquired intangible assets and goodwill | July 31, 2015 October 31, 2014 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Amortizable intangible assets: Non-compete agreement $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Customer relationships 2,451,073 1,362,704 2,451,073 1,271,130 Other 564,946 564,946 564,946 564,946 4,016,019 2,927,650 4,016,019 2,836,076 Unamortizable Goodwill 1,737,763 507,278 1,737,763 507,278 1,737,763 507,278 1,737,763 507,278 Total goodwill and other intangibles $ 5,753,782 $ 3,434,928 $ 5,753,782 $ 3,343,354 |
Estimated amortization expense | Estimated amortization expense for each of the following years is: 2015 $ 30,524 2016 122,098 2017 122,098 2018 122,098 2019 122,098 Thereafter 569,453 $ 1,088,369 |
Changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill and other amortizing intangibles for the nine months ended July 31, 2014 were: Goodwill: Printing Office Products and Furniture Total Balance at October 31, 2014: Goodwill $ 2,226,837 $ 1,230,485 $ 3,457,322 Accumulated impairment losses (2,226,837 ) - (2,226,837 ) - 1,230,485 1,230,485 Goodwill acquired nine months ended July 31, 2015 - - - Impairment losses nine months ended July 31, 2015 - - - Balance at July 31, 2015: Goodwill 2,226,837 1,230,485 3,457,322 Accumulated impairment losses (2,226,837 ) - (2,226,837 ) $ - $ 1,230,485 $ 1,230,485 |
Amortizing intangible assets (net of amortization expense) | Amortizing Intangible Assets (net of amortization expense): Printing Office Products and Furniture Total Balance at October 31, 2014: Amortizing intangible assets $ 395,206 $ 784,737 $ 1,179,943 Accumulated impairment losses - - - 395,206 784,737 1,179,943 Amortizing intangible assets acquired nine months ended July 31, 2015 - - - Impairment losses nine months ended July 31, 2015 - - - Amortization expense 30,677 60,897 91,574 Balance at July 31, 2015: Amortizing intangible assets 364,529 723,840 1,088,369 Accumulated impairment losses - - - $ 364,529 $ 723,840 $ 1 , |
Accounts Receivable, Allowanc22
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition (Details) | 9 Months Ended |
Jul. 31, 2015 | |
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition [Abstract] | |
Accounts receivable, payment period from invoice date | 30 days |
Inventories (Details)
Inventories (Details) - USD ($) | Jul. 31, 2015 | Oct. 31, 2014 |
Printing [Abstract] | ||
Raw materials | $ 1,240,711 | $ 1,180,361 |
Work in process | 555,925 | 539,023 |
Finished goods | 1,011,225 | 1,131,430 |
Office products and office furniture | 1,358,919 | 1,119,178 |
Total inventory | $ 4,166,780 | $ 3,969,992 |
Debt (Details)
Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Jul. 31, 2015 | Jul. 31, 2015 | Oct. 31, 2014 | |
Debt Instrument [Line Items] | |||
Unamortized debt discount | $ 0 | $ 0 | $ (138,520) |
Total indebtedness | 12,740,881 | 12,740,881 | 13,480,700 |
Less current portion long-term debt | 997,896 | 997,896 | 12,697,218 |
Less current portion obligation under capital lease | 15,617 | 15,617 | 14,931 |
Less short-term debt | 750,000 | 750,000 | |
Less notes payable - related party | 2,500,000 | 2,500,000 | 0 |
Less debt discount | 0 | 0 | (138,520) |
Long-term debt, net of current portion and capital lease obligation | $ 8,477,368 | 8,477,368 | 157,071 |
Term Note A dated October 7, 2013 [Member] | |||
Debt Instrument [Line Items] | |||
Periodic installment payment | $ 50,000 | ||
Basis spread on variable rate | 2.00% | ||
Debt maturity date | Apr. 1, 2017 | ||
Notes Payable to Shareholders [Member] | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Apr. 30, 2015 | ||
Interest rate | 3.25% | 3.25% | |
Other Notes Payable [Member] | Term Note A dated October 7, 2013 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 8,900,000 | $ 8,900,000 | 9,850,000 |
Other Notes Payable [Member] | Notes Payable to Shareholders [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 2,500,000 | 2,500,000 | 2,500,000 |
Notes Payable to Banks [Member] | Note Payable to Bank due August 2015 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 750,000 | $ 750,000 | 750,000 |
Debt maturity date | Aug. 31, 2015 | ||
Interest rate | 5.00% | 5.00% | |
Notes Payable to Banks [Member] | Installment Notes Payable to Banks [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 558,684 | $ 558,684 | 475,908 |
Capital Lease Obligations [Member] | Capital Lease Obligation for Printing Equipment [Member] | |||
Debt Instrument [Line Items] | |||
Capital Lease Obligations | $ 32,197 | $ 32,197 | $ 43,312 |
Interest rate | 6.02% | 6.02% |
Debt, Conversion to Preferred S
Debt, Conversion to Preferred Stock Equity (Details) - USD ($) | Jun. 15, 2015 | Jul. 31, 2015 | Jul. 31, 2014 | Jul. 31, 2015 | Jul. 31, 2014 | Oct. 31, 2014 |
Debt Conversion [Line Items] | ||||||
Decrease in liabilities | $ 20,772,856 | $ 20,772,856 | $ 20,803,007 | |||
Increase in equity | 2,133,067 | 2,133,067 | $ 3,205,386 | |||
Reduction in annual interest expense | $ 159,329 | $ 262,076 | 629,381 | $ 782,441 | ||
Forecast [Member] | ||||||
Debt Conversion [Line Items] | ||||||
Decrease in liabilities | $ (2,500,000) | |||||
Increase in equity | 2,500,000 | |||||
Reduction in annual interest expense | $ (100,000) | |||||
Forecast [Member] | Minimum [Member] | ||||||
Debt Conversion [Line Items] | ||||||
Preferred Stock dividend | 0 | |||||
Increase or (decrease) of annual cash outflow | (100,000) | |||||
Forecast [Member] | Maximum [Member] | ||||||
Debt Conversion [Line Items] | ||||||
Preferred Stock dividend | 200,000 | |||||
Increase or (decrease) of annual cash outflow | 100,000 | |||||
Related Party Debt Conversion [Member] | ||||||
Debt Conversion [Line Items] | ||||||
Related party debt approved for conversion to Preferred Stock | 2,500,000 | |||||
Income after taxes threshold for dividend payment | $ 1,000,000 | |||||
Related Party Debt Conversion [Member] | Minimum [Member] | ||||||
Debt Conversion [Line Items] | ||||||
Dividend rate on Preferred Stock | 0.00% | |||||
Related Party Debt Conversion [Member] | Maximum [Member] | ||||||
Debt Conversion [Line Items] | ||||||
Dividend rate on Preferred Stock | 6.00% |
Income taxes (Details)
Income taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jul. 31, 2015 | Jul. 31, 2014 | Jul. 31, 2015 | Jul. 31, 2014 | Oct. 31, 2014 | |
Income taxes [Abstract] | |||||
Attribute recapture income | $ 6,400,000 | ||||
Income tax liability paid | $ 92,000 | ||||
Increase in valuation allowance | $ 92,000 | ||||
Effective tax rate | (16.40%) | 0.00% | (9.40%) | 0.00% |
Commitments and Contingencies27
Commitments and Contingencies (Details) | Sep. 15, 2014USD ($) | Jul. 31, 2015USD ($)Holder$ / sharesshares | |
Commitments and Contingencies [Abstract] | |||
Estimate of reasonably possible losses | $ 400,000 | ||
Lawsuit, amount of settlement | $ 100,000 | ||
Price of warrants issued (in dollars per share) | $ / shares | $ 0.001 | ||
Percentage of Common stock outstanding (in hundredths) | 30.00% | ||
Common stock, shares outstanding (in shares) | shares | 11,299,528 | ||
Potential shares issued from exercise of warrants (in shares) | shares | 4,842,654 | ||
Minimum number of warrant holders permitted to own a limited number of voting shares | Holder | 1 | ||
Contractual Obligations [Abstract] | |||
2,015 | $ 2,953,621 | ||
2,016 | 2,144,796 | ||
2,017 | 8,615,745 | ||
2,018 | 278,632 | ||
2,019 | 174,088 | ||
Residual | 21,000 | ||
Total | 14,187,882 | ||
Non-cancelable Operating Leases [Member] | |||
Contractual Obligations [Abstract] | |||
2,015 | 177,994 | ||
2,016 | 427,348 | ||
2,017 | 367,939 | ||
2,018 | 278,632 | ||
2,019 | 174,088 | ||
Residual | 21,000 | ||
Total | 1,447,001 | ||
Term Debt [Member] | |||
Contractual Obligations [Abstract] | |||
2,015 | 271,810 | ||
2,016 | 1,701,596 | ||
2,017 | 8,235,278 | ||
2,018 | 0 | ||
2,019 | 0 | ||
Residual | 0 | ||
Total | 10,208,684 | ||
Obligations under Capital Lease [Member] | |||
Contractual Obligations [Abstract] | |||
2,015 | 3,817 | ||
2,016 | 15,852 | ||
2,017 | 12,528 | ||
2,018 | 0 | ||
2,019 | 0 | ||
Residual | 0 | ||
Total | 32,197 | ||
Debt Discount [Member] | |||
Contractual Obligations [Abstract] | |||
2,015 | 0 | ||
2,016 | 0 | ||
2,017 | 0 | ||
2,018 | 0 | ||
2,019 | 0 | ||
Residual | 0 | ||
Total | 0 | ||
Notes Payable - Related Party [Member] | |||
Contractual Obligations [Abstract] | |||
2,015 | [1] | 2,500,000 | |
2,016 | [1] | 0 | |
2,017 | [1] | 0 | |
2,018 | [1] | 0 | |
2,019 | [1] | 0 | |
Residual | [1] | 0 | |
Total | [1] | $ 2,500,000 | |
[1] | The Comapny intends, and the holder of this debt has consented, to convert this debt to preferred stock. See Note 5 to the Consolidated Financial Statements for more information on the Note Payable - Related Party. |
Industry Segment Information (D
Industry Segment Information (Details) | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2015USD ($) | Jul. 31, 2014USD ($) | Jul. 31, 2015USD ($)Segment | Jul. 31, 2014USD ($) | Oct. 31, 2014USD ($) | |
Industry Segment Information [Abstract] | |||||
Number of operating segments | Segment | 2 | ||||
Total assets held for sale/discontinued operations | $ 256,832 | $ 311,275 | $ 256,832 | $ 311,275 | |
Segment reporting information, revenue for reportable segment [Abstract] | |||||
Revenues | 14,394,129 | 15,324,533 | 45,483,496 | 45,779,512 | |
Operating income (loss) | (388,534) | (309,022) | (254,077) | (847,622) | |
Depreciation & amortization | 404,539 | 467,199 | 1,221,586 | 1,501,495 | |
Capital expenditures | 250,161 | 120,900 | 810,165 | 420,859 | |
Identifiable assets | 22,649,091 | 23,486,859 | 22,649,091 | 23,486,859 | |
Goodwill | 1,230,485 | 1,230,485 | 1,230,485 | 1,230,485 | $ 1,230,485 |
Interest expense - related party | (20,763) | (20,764) | (61,615) | (61,615) | |
Interest expense | (159,329) | (262,076) | (629,381) | (782,441) | |
Other income | 7,927 | 4,400 | (35,547) | 225,538 | |
Loss before income taxes | (560,699) | (587,462) | (980,620) | (1,466,140) | |
Identifiable assets [Abstract] | |||||
Total segment identifiable assets | 22,649,091 | 23,486,859 | 22,649,091 | 23,486,859 | |
Assets not allocated to a segment | 256,832 | 311,275 | 256,832 | 311,275 | |
Total assets | 22,905,923 | 23,798,134 | 22,905,923 | 23,798,134 | 24,008,393 |
Printing [Member] | |||||
Segment reporting information, revenue for reportable segment [Abstract] | |||||
Revenues | 8,567,378 | 8,649,088 | 27,074,972 | 27,675,260 | |
Goodwill | 0 | 0 | 0 | ||
Office Products & Furniture [Member] | |||||
Segment reporting information, revenue for reportable segment [Abstract] | |||||
Revenues | 5,826,751 | 6,675,445 | 18,408,524 | 18,104,252 | |
Goodwill | 1,230,485 | 1,230,485 | $ 1,230,485 | ||
Operating Segments [Member] | |||||
Segment reporting information, revenue for reportable segment [Abstract] | |||||
Revenues | 15,476,950 | 16,847,281 | 49,112,582 | 49,864,778 | |
Operating Segments [Member] | Printing [Member] | |||||
Segment reporting information, revenue for reportable segment [Abstract] | |||||
Revenues | 9,043,753 | 9,363,551 | 28,634,690 | 29,377,286 | |
Operating income (loss) | (102,331) | (203,633) | 160,441 | (429,058) | |
Depreciation & amortization | 381,836 | 440,840 | 1,152,102 | 1,422,415 | |
Capital expenditures | 230,390 | 118,529 | 720,200 | 400,748 | |
Identifiable assets | 15,273,510 | 16,040,091 | 15,273,510 | 16,040,091 | |
Goodwill | 0 | 0 | 0 | 0 | |
Identifiable assets [Abstract] | |||||
Total segment identifiable assets | 15,273,510 | 16,040,091 | 15,273,510 | 16,040,091 | |
Operating Segments [Member] | Office Products & Furniture [Member] | |||||
Segment reporting information, revenue for reportable segment [Abstract] | |||||
Revenues | 6,433,197 | 7,483,730 | 20,477,892 | 20,487,492 | |
Operating income (loss) | (286,203) | (105,389) | (414,518) | (418,564) | |
Depreciation & amortization | 22,703 | 26,359 | 69,484 | 79,080 | |
Capital expenditures | 19,771 | 2,371 | 89,965 | 20,111 | |
Identifiable assets | 7,375,581 | 7,446,768 | 7,375,581 | 7,446,768 | |
Goodwill | 1,230,485 | 1,230,485 | 1,230,485 | 1,230,485 | |
Identifiable assets [Abstract] | |||||
Total segment identifiable assets | 7,375,581 | 7,446,768 | 7,375,581 | 7,446,768 | |
Elimination of Intersegment Revenue [Member] | |||||
Segment reporting information, revenue for reportable segment [Abstract] | |||||
Revenues | (1,082,821) | (1,522,748) | (3,629,086) | (4,085,266) | |
Elimination of Intersegment Revenue [Member] | Printing [Member] | |||||
Segment reporting information, revenue for reportable segment [Abstract] | |||||
Revenues | (476,375) | (714,463) | (1,559,718) | (1,702,026) | |
Elimination of Intersegment Revenue [Member] | Office Products & Furniture [Member] | |||||
Segment reporting information, revenue for reportable segment [Abstract] | |||||
Revenues | $ (606,446) | $ (808,285) | $ (2,069,368) | $ (2,383,240) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Millions | Jul. 31, 2015USD ($) |
Fair Value Measurements [Abstract] | |
Carrying value of term debt not related to credit agreement | $ 1.3 |
Acquired Intangible Assets an30
Acquired Intangible Assets and Goodwill (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2015 | Jul. 31, 2014 | Jul. 31, 2015 | Jul. 31, 2014 | Oct. 31, 2014 | |
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Amortizable intangible assets, gross carrying amount | $ 4,016,019 | $ 4,016,019 | $ 4,016,019 | ||
Amortizable intangible assets, accumulated amortization | 2,927,650 | 2,836,076 | |||
Unamortizable intangible assets [Abstract] | |||||
Goodwill | 1,737,763 | 1,737,763 | 1,737,763 | ||
Goodwill, accumulated amortization | 507,278 | $ 507,278 | 507,278 | ||
Total goodwill and other intangibles, gross carrying amount | 5,753,782 | 5,753,782 | |||
Total goodwill and other intangibles, accumulated amortization | 3,434,928 | 3,343,354 | |||
Amortization period | 5 years | ||||
Estimated amortization expense for future fiscal years [Abstract] | |||||
2,015 | 30,524 | ||||
2,016 | 122,098 | ||||
2,017 | 122,098 | ||||
2,018 | 122,098 | ||||
2,019 | 122,098 | ||||
Thereafter | 569,453 | ||||
Total | 1,088,369 | $ 1,179,943 | 1,179,943 | ||
Goodwill [Roll Forward] | |||||
Goodwill, gross, beginning of period | 1,737,763 | ||||
Accumulated impairment losses, beginning of period | (507,278) | ||||
Goodwill, beginning of period | 1,230,485 | ||||
Goodwill, gross, end of period | 1,737,763 | 1,737,763 | |||
Accumulated impairment losses, end of period | (507,278) | (507,278) | |||
Goodwill, ending balance | 1,230,485 | $ 1,230,485 | 1,230,485 | $ 1,230,485 | |
Amortizing Intangible Assets (net of amortization expense) [Roll Forward] | |||||
Amortizing intangible assets (net of amortization expense), beginning of period | 4,016,019 | ||||
Amortizing intangible assets (net of amortization expense and impairment losses), beginning of period | 1,179,943 | ||||
Amortization expense | 31,000 | $ 31,000 | 92,000 | $ 98,000 | |
Amortizing intangible assets (net of amortization expense), end of period | 4,016,019 | 4,016,019 | |||
Amortizing intangible assets (net of amortization expense and impairment losses), end of period | 1,088,369 | 1,088,369 | |||
Non-compete Agreements [Member] | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Amortizable intangible assets, gross carrying amount | 1,000,000 | 1,000,000 | 1,000,000 | ||
Amortizable intangible assets, accumulated amortization | 1,000,000 | 1,000,000 | |||
Amortizing Intangible Assets (net of amortization expense) [Roll Forward] | |||||
Amortizing intangible assets (net of amortization expense), beginning of period | 1,000,000 | ||||
Amortizing intangible assets (net of amortization expense), end of period | 1,000,000 | 1,000,000 | |||
Customer Relationships [Member] | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Amortizable intangible assets, gross carrying amount | 2,451,073 | 2,451,073 | 2,451,073 | ||
Amortizable intangible assets, accumulated amortization | 1,362,704 | 1,271,130 | |||
Amortizing Intangible Assets (net of amortization expense) [Roll Forward] | |||||
Amortizing intangible assets (net of amortization expense), beginning of period | 2,451,073 | ||||
Amortizing intangible assets (net of amortization expense), end of period | 2,451,073 | 2,451,073 | |||
Other [Member] | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Amortizable intangible assets, gross carrying amount | 564,946 | 564,946 | 564,946 | ||
Amortizable intangible assets, accumulated amortization | 564,946 | 564,946 | |||
Amortizing Intangible Assets (net of amortization expense) [Roll Forward] | |||||
Amortizing intangible assets (net of amortization expense), beginning of period | 564,946 | ||||
Amortizing intangible assets (net of amortization expense), end of period | 564,946 | 564,946 | |||
Printing [Member] | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Amortizable intangible assets, gross carrying amount | 364,529 | 395,206 | 395,206 | ||
Unamortizable intangible assets [Abstract] | |||||
Goodwill | 2,226,837 | 2,226,837 | 2,226,837 | ||
Goodwill, accumulated amortization | 2,226,837 | 2,226,837 | 2,226,837 | ||
Estimated amortization expense for future fiscal years [Abstract] | |||||
Total | 364,529 | 395,206 | 395,206 | ||
Goodwill [Roll Forward] | |||||
Goodwill, gross, beginning of period | 2,226,837 | ||||
Accumulated impairment losses, beginning of period | (2,226,837) | ||||
Goodwill, beginning of period | 0 | ||||
Goodwill acquired | 0 | ||||
Impairment losses | 0 | ||||
Goodwill, gross, end of period | 2,226,837 | 2,226,837 | |||
Accumulated impairment losses, end of period | (2,226,837) | (2,226,837) | |||
Goodwill, ending balance | 0 | 0 | |||
Amortizing Intangible Assets (net of amortization expense) [Roll Forward] | |||||
Amortizing intangible assets (net of amortization expense), beginning of period | 395,206 | ||||
Accumulated impairment losses, beginning of period | 0 | ||||
Amortizing intangible assets (net of amortization expense and impairment losses), beginning of period | 395,206 | ||||
Amortizing intangible assets acquired | 0 | ||||
Impairment losses | 0 | ||||
Amortization expense | 30,677 | ||||
Amortizing intangible assets (net of amortization expense), end of period | 364,529 | 364,529 | |||
Accumulated impairment losses, end of period | 0 | 0 | |||
Amortizing intangible assets (net of amortization expense and impairment losses), end of period | 364,529 | 364,529 | |||
Office Products and Furniture [Member] | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Amortizable intangible assets, gross carrying amount | 723,840 | 784,737 | 784,737 | ||
Unamortizable intangible assets [Abstract] | |||||
Goodwill | 1,230,485 | 1,230,485 | 1,230,485 | ||
Goodwill, accumulated amortization | 0 | 0 | 0 | ||
Estimated amortization expense for future fiscal years [Abstract] | |||||
Total | 723,840 | 784,737 | 784,737 | ||
Goodwill [Roll Forward] | |||||
Goodwill, gross, beginning of period | 1,230,485 | ||||
Accumulated impairment losses, beginning of period | 0 | ||||
Goodwill, beginning of period | 1,230,485 | ||||
Goodwill acquired | 0 | ||||
Impairment losses | 0 | ||||
Goodwill, gross, end of period | 1,230,485 | 1,230,485 | |||
Accumulated impairment losses, end of period | 0 | 0 | |||
Goodwill, ending balance | 1,230,485 | 1,230,485 | |||
Amortizing Intangible Assets (net of amortization expense) [Roll Forward] | |||||
Amortizing intangible assets (net of amortization expense), beginning of period | 784,737 | ||||
Accumulated impairment losses, beginning of period | 0 | ||||
Amortizing intangible assets (net of amortization expense and impairment losses), beginning of period | 784,737 | ||||
Amortizing intangible assets acquired | 0 | ||||
Impairment losses | 0 | ||||
Amortization expense | 60,897 | ||||
Amortizing intangible assets (net of amortization expense), end of period | 723,840 | 723,840 | |||
Accumulated impairment losses, end of period | 0 | 0 | |||
Amortizing intangible assets (net of amortization expense and impairment losses), end of period | 723,840 | 723,840 | |||
Printing and Office Products and Furniture [Member] | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Amortizable intangible assets, gross carrying amount | 1,088,369 | 1,179,943 | 1,179,943 | ||
Unamortizable intangible assets [Abstract] | |||||
Goodwill | 3,457,322 | 3,457,322 | 3,457,322 | ||
Goodwill, accumulated amortization | 2,226,837 | 2,226,837 | 2,226,837 | ||
Estimated amortization expense for future fiscal years [Abstract] | |||||
Total | 1,088,369 | 1,179,943 | $ 1,179,943 | ||
Goodwill [Roll Forward] | |||||
Goodwill, gross, beginning of period | 3,457,322 | ||||
Accumulated impairment losses, beginning of period | (2,226,837) | ||||
Goodwill, beginning of period | 1,230,485 | ||||
Goodwill acquired | 0 | ||||
Impairment losses | 0 | ||||
Goodwill, gross, end of period | 3,457,322 | 3,457,322 | |||
Accumulated impairment losses, end of period | (2,226,837) | (2,226,837) | |||
Goodwill, ending balance | 1,230,485 | 1,230,485 | |||
Amortizing Intangible Assets (net of amortization expense) [Roll Forward] | |||||
Amortizing intangible assets (net of amortization expense), beginning of period | 1,179,943 | ||||
Accumulated impairment losses, beginning of period | 0 | ||||
Amortizing intangible assets (net of amortization expense and impairment losses), beginning of period | 1,179,943 | ||||
Amortizing intangible assets acquired | 0 | ||||
Impairment losses | 0 | ||||
Amortization expense | 91,574 | ||||
Amortizing intangible assets (net of amortization expense), end of period | 1,088,369 | 1,088,369 | |||
Accumulated impairment losses, end of period | 0 | 0 | |||
Amortizing intangible assets (net of amortization expense and impairment losses), end of period | $ 1,088,369 | $ 1,088,369 | |||
Syscan [Member] | Customer Relationships [Member] | |||||
Unamortizable intangible assets [Abstract] | |||||
Amortization period | 20 years |