Quarterly report pursuant to sections 13 or 15(d)

15. Business Combination

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15. Business Combination
 6 Months Ended
Mar. 31, 2014
Business Combinations [Abstract]  
15. Business Combination

On March 7, 2014, the Company signed an agreement for the acquisition of substantially all of the assets of DA Stores, LLC, through its wholly-owned subsidiary, Live Goods, LLC (“Live Goods”). The acquisition of the assets is intended to assist in the implementation of the Company’s new business line. Under the terms of the acquisition, the Company acquired DA Stores, LLC’s retail store inventory and equipment, furniture, software, hardware, and domain names in exchange for $200,000 cash. The purchase price for the assets of Live Goods was determined to be the fair market value thereof. On May 16, 2014, DA Stores, LLC, executed the Deed of Transfer in respect of all the assets.

 

In connection with the transaction, the Company paid to the benefit of each of Akmal Hodjaev and David Rashidov the sum of $150,000 as retention compensation. The Company, through Live Goods LLC, also agreed to employ each of such individuals for a three-year term, commencing as of the date of the transaction. However, in the event that either or both of such individuals voluntarily terminates their respective employment prior to the expiration of such three-year term, such terminating individual has agreed to return such $150,000 sum.

 

Further, and in connection with such individual’s employment but subject to the achievement of certain performance metrics at the one-year anniversary of the acquisition of such assets, the Company will pay an aggregate, additional amount to Messrs. Hodjaev and Rashidov, in cash or stock options (based on the price of the Company’s common stock on March 7, 2014), as follows:

 

i. $300,000 if Live Goods, LLC, achieves $15,000,000 in revenue during such 12-month period with 5% profitability margin;

 

ii. $250,000 if Live Goods, LLC, achieves $12,000,000 in revenue during such 12-month period, with 5% profitability margin; or

 

iii. $200,000 if Live Goods, LLC, achieves $10,000,000 in revenue during such 12-month period with 5% profitability margin.

 

The Company will recognize this additional, conditional payment to such individuals, if, when, and any such performance metric has been achieved.