Quarterly report pursuant to Section 13 or 15(d)

15. Business Combination

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15. Business Combination
 9 Months Ended
Jun. 30, 2014
Business Combinations [Abstract]  
Business Combination

On March 7, 2014, the Company incorporated Live Goods, LLC (“Live Goods”), a California limited liability company, which became a wholly-owned subsidiary of the Company. Also, on March 7, 2014, the Company signed an agreement for the acquisition of substantially all of the assets of DA Stores, LLC, through its 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 DA Stores 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 the operations of the purchased assets of DA Stores, LLC, achieve $15,000,000 in revenue during such 12-month period with 5% profitability margin;

 

ii.   $250,000 if the operations of the purchased assets of DA Stores, LLC, achieve $12,000,000 in revenue during such 12-month period, with 5% profitability margin; or

 

iii.   $200,000 if the operations of the purchased assets of DA Stores, LLC, achieve $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.

 

Share Purchase Agreement for Acquisition of DealTicker, Inc.

 

On May 6, 2014, the Company, through Live Goods, acquired all of the issued and outstanding shares in the capital of DealTicker Inc., a Canadian corporation (“DealTicker”), from Julian Gleizer and Daniel Abramov, the shareholders of DealTicker (collectively the “Sellers”). Upon the closing of the transaction, the Sellers sold all of the shares of DealTicker to Live Goods for a purchase price in the aggregate amount of CAN$246,000 (US$228,000). Pursuant to the terms of the Agreement, Live Goods may, in its absolute discretion, increase the purchase price taking into account the financial performance and operation of the DealTicker business during the one-year period following the closing compared to historical performance.

 

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

 

A summary of the purchase price allocations is below:

 

   

DA Stores

     DealTicker     Total  
Cash   $ –     $ 103,884     $ 103,884  
Accounts receivable     –       27,193       27,193  
Inventory     110,375       55,691       166,066  
Property and equipment     48,500       12,855       61,355  
Other assets     11,125       10,285       21,410  
Intangible assets     30,000       245,662       275,662  
Accounts payable     –       (28,106 )     (28,106 )
Other liabilities     –       (199,464 )     (199,464 )
Purchase price   $ 200,000     $ 228,000     $ 428,000  

 

Both acquisitions are not considered significant; therefore, pro forma information is not presented.