Nevada
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85-0206668
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(State or Other Jurisdiction of Incorporation or Organization)
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(IRS Employer Identification No.)
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2490 East Sunset Road, Suite 100
Las Vegas, Nevada
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89120
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
x
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Page
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Part I
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Item 1.
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4
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Item 1A.
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11
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Item 1B.
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19
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Item 2.
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19
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Item 3.
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20
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Item 4.
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20
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Part II
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Item 5.
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20
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Item 6.
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23
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Item 7.
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23
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Item 7A.
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31
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Item 8.
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32
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33
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34
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35
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36
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37
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38
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Item 9.
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54
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Item 9A.
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54
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Item 9B.
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54
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Part III
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Item 10.
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56
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Item 11.
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56
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Item 12.
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56
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Item 13.
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56
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Item 14.
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56
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Part IV
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Item 15.
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56
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61
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§
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Website URL acquisition services whereby we obtain website address names on behalf of our small business clients.
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§
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Website development and deployment services where we create, house and manage websites on behalf of our small business clients.
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Website traffic and audience development services which provides sophisticated search engine marketing techniques, access to our own websites, partnerships with other websites and other techniques to generate traffic to our customers websites, whether created and housed by us or not.
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§
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Website analytics and performance reports that generate information for our customers about activities on their websites and lead activities for their businesses based on Internet activities.
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Directory services: We provide both basic and enhanced directory listings for our customers on our own directory and on partner directories.
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Classified services which provide classified and bulk inventory commerce capabilities for our small business customers through our classified marketplace.
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·
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Larger font.
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·
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Bolded business name.
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A tagline whereby the advertiser can differentiate itself from its competitors.
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An audio advertisement.
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Map directions.
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A Click2Call feature, whereby a user of our website can place a telephone call to one of our advertising customers by clicking the icon that is displayed on the Mini-WebPage.
This initiates
a telephone call by the advertiser to the user, in a conference call type format. Once both are connected, it functions as a regular telephone call.
Because we cover all charges for this telephone call, it is free of charge to both the user and the IAP advertiser.
We
have an agreement with WebDialogs, Inc. to provide this service.
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·
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A link to the advertisers own webpage and email address.
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·
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Additional distribution network for preferred listings. This feature gives additional exposure to our IAP advertisers by placing their preferred listing on several online directory systems.
There
currently is no charge to the IAP advertiser for these additional channels of distribution.
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§
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Website acquisition whereby we obtain website address names on behalf of our small business clients.
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§
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Website development and deployment services where we create, house and manage websites on behalf of our small business clients.
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§
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Website traffic and audience development whereby we provide sophisticated search engine marketing techniques, access to our own websites, partnerships with other websites and other techniques to generate traffic to our customers websites, whether created and housed by us or not.
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§
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Website analytics and performance reports which generate information for our customers about activities on their websites and lead activities for their businesses based on Internet activities.
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§
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Directory services that provide both basic and enhanced directory listings for our customers on our own directory and on partner directories.
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§
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Classified services through which we provide classified and bulk inventory commerce capabilities for our small business customers through our classified marketplace.
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·
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More current and extensive listing information.
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·
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Immediate access to business listings across the nation from any location.
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·
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Broad accessibility via computers and hand-held devices, such as mobile phones and personal digital assistants.
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·
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Features such as mapping, direct calling to the advertiser, and e-mail at the click of a button also may be available.
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§
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Visitors to local media sites are more likely than visitors to other sites to take action after seeing local ads: from making purchases to visiting sites and stores,
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Local media sites attract valuable audiences who spend more money online than visitors to other local sites,
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§
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Local sites lead all others in advertising trust, and;
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§
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Local content sites attract a high number of influencers –the first person others come to for local recommendations.
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·
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Linear scaling architecture using low cost commodity hardware:
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·
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An architecture based on redundancy for scalable quick user responses:
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Proven search technology which scales for large volumes:
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Enhanced security using HTTPS, Encryption, and data obfuscation: and
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Internationalized Architecture for quick localization.
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We have cross-marketing arrangements with reciprocal linking of websites without any compensation to either party. These arrangements increase the page views for our advertisers listings by being listed on the linked websites. These co-promotional arrangements typically are terminable with one months notice.
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We have an agreement with Google, Inc. designating us as Certified Reseller of the Google AdWords advertising system. This is the highest possible AdWords designation, and provides us with access to Google training and services that we can then utilize on behalf of our small business clients.
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·
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We have an agreement with Yahoo! Search Services to provide visibility to our website so that we can provide traffic to our advertisers. In exchange for monthly fees, Yahoo! Search Services assists in helping us to be one of the highest placed sites when Yellow Pages searches are done on major search engines, such as MSN and Yahoo!.
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·
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We utilize WebDialogs in a co-promotional effort to provide automatic dialing services to our website users. These services allow these users to place a call to one of our IAP advertisers by simply clicking a button. This function powers our Click2Call feature.
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We will begin featuring Yelps 1.8 million customer reviews on our online classifieds and Yellow Pages platforms, giving LiveDeal users an enormous wealth of user-generated content about local area businesses.
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some competitors have longer operating histories and greater financial and other resources than we have and are in better financial condition than we are;
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some competitors have better name recognition, as well as larger, more established, and more extensive marketing, customer service, and customer support capabilities than we have;
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some competitors may supply a broader range of services, enabling them to serve more or all of their customers needs. This could limit our sales and strengthen our competitors existing relationships with their customers, including our current and potential IAP advertisers;
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some competitors may be able to better adapt to changing market conditions and customer demand; and
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·
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barriers to entry are not significant.
As a result, other companies that are not currently involved in the Internet-based Yellow Pages advertising business may enter the market or develop technology
that reduces the need for our services.
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·
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fluctuating demand for our services, which may depend on a number of factors including
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o
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changes in economic conditions and our IAP advertisers profitability,
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varying IAP advertiser response rates to our direct marketing efforts,
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o
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our ability to complete direct mailing solicitations on a timely basis each month,
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o
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changes in our direct marketing efforts,
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o
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IAP advertiser refunds or cancellations, and
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o
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our ability to continue to bill through LEC billing, ACH billing or credit card channels rather than through direct invoicing;
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·
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market acceptance of new or enhanced versions of our services or products;
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price competition or pricing changes by us or our competitors;
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new product offerings or other actions by our competitors;
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the ability of our check processing service providers to continue to process and provide billing information regarding our solicitation checks;
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the amount and timing of expenditures for expansion of our operations, including the hiring of new employees, capital expenditures, and related costs;
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technical difficulties or failures affecting our systems or the Internet in general;
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a decline in Internet traffic at our website;
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the cost of acquiring, and the availability of, information for our database of potential advertisers; and
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the fixed nature of a significant amount of our operating expenses.
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the pace of expansion of our operations;
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our need to respond to competitive pressures; and
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future acquisitions of complementary products, technologies or businesses.
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cease selling or using any of our products that incorporate the challenged intellectual property, which would adversely affect our revenue;
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obtain a license from the holder of the intellectual property right alleged to have been infringed, which license may not be available on reasonable terms, if at all; and
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redesign or, in the case of trademark claims, rename our products or services to avoid infringing the intellectual property rights of third parties, which may not be possible and in any event could be costly and time-consuming.
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changes that might result from regulatory requirements, exchange rates, tariffs and/or other economic barriers;
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difficulties in staffing and managing the operations of our Philippine subsidiary;
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differing technology and systems standards;
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conflicting laws and/or political conditions; and
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risks relating to accounting practices and/or tax laws enforced in foreign jurisdictions.
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rapid technological change;
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changes in advertiser and user requirements and preferences;
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frequent new product and service introductions embodying new technologies; and
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the emergence of new industry standards and practices that could render our existing service offerings, technology, and hardware and software infrastructure obsolete.
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enhance our existing services and develop new services and technology that address the increasingly sophisticated and varied needs of our prospective or current IAP advertisers;
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license, develop or acquire technologies useful in our business on a timely basis; and
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respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis.
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decreased demand in the Internet services sector;
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variations in our operating results;
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announcements of technological innovations or new services by us or our competitors;
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changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;
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our failure to meet analysts expectations;
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changes in operating and stock price performance of other technology companies similar to us;
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conditions or trends in the technology industry;
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additions or departures of key personnel; and
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future sales of our common stock.
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the authority of our board to issue up to 5,000,000
shares of serial preferred stock and to determine the price, rights, preferences, and privileges of these shares, without stockholder approval;
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all stockholder actions must be effected at a duly called meeting of stockholders and not by written consent unless such action or proposal is first approved by our board of directors;
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special meetings of the stockholders may be called only by the Chairman of the Board, the Chief Executive Officer, or the President of our company; and
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cumulative voting is not allowed in the election of our directors.
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Fiscal Year
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Quarter Ended
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High
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Low
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2007
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December 31, 2006
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$ | 10.70 | $ | 7.20 | |||||
March 31, 2007
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$ | 12.10 | $ | 7.60 | ||||||
June 30, 2007
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$ | 8.70 | $ | 6.60 | ||||||
September 30, 2007
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$ | 8.00 | $ | 6.00 | ||||||
2008
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December 31, 2007
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$ | 7.00 | $ | 3.30 | |||||
March 31, 2008
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$ | 5.70 | $ | 3.18 | ||||||
June 30, 2008
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$ | 3.94 | $ | 2.35 | ||||||
September 30, 2008
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$ | 2.59 | $ | 1.40 |
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·
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Rajesh Navar resigned as President, but remained a member of our Board of Directors;
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·
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John Raven assumed the role of President;
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Dan Coury was terminated as our Chief Executive Officer and, in connection with this termination, he resigned as a member of our Board of Directors;
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·
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Benjamin Milk resigned as a member of our Board of Directors;
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·
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Michael Edelhart was appointed as Chief Executive Officer and to serve as a director of the Company;
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Rajesh Navar replaced Joe Cunningham as the Chairman of our Board of Directors with Mr. Cunningham remaining as a director of the Company;
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Greg LeClaire was appointed to serve as a director of the Company and as Chairman of our Audit Committee;
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Richard Sommer was appointed to serve as a director of the Company and as Chairman of our Compensation Committee; and
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·
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Sheryle Bolton was appointed to serve as a director of the Company and as a member of the Audit Committee.
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Q4 2008
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Q3 2008
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Q2 2008 | Q1 2008 | Q4 2007 | Q3 2007 | Q2 2007 | Q1 2007 | |||||||||||||||||||||||||
Net revenues
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$ | 5,764,347 | $ | 5,812,141 | $ | 6,637,785 | $ | 7,068,888 | $ | 7,120,697 | $ | 5,989,437 | $ | 6,106,544 | $ | 7,123,683 | ||||||||||||||||
Gross margin
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$ | 4,604,243 | $ | 4,682,770 | $ | 5,532,096 | $ | 6,063,339 | $ | 5,860,893 | $ | 5,113,544 | $ | 5,148,835 | $ | 6,012,813 | ||||||||||||||||
Operating expenses
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$ | 5,103,994 | $ | 6,533,673 | $ | 5,518,529 | $ | 5,580,857 | $ | 4,956,357 | $ | 4,537,182 | $ | 4,043,109 | $ | 5,272,758 | ||||||||||||||||
Operating income (loss)
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$ | (499,751 | ) | $ | (1,850,903 | ) | $ | 13,567 | $ | 482,482 | $ | 904,536 | $ | 576,362 | $ | 1,105,726 | $ | 740,055 | ||||||||||||||
Net income (loss)
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$ | (277,505 | ) | $ | (1,580,697 | ) | $ | 3,338 | $ | 326,092 | $ | 376,053 | $ | 266,405 | $ | 626,262 | $ | 485,198 |
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§
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Third quarter of fiscal 2008 – includes $496,000 of severance costs associated with the termination of our former Chief Executive Officer, and $439,000 of increased stock based compensation expense associated with the accelerated vesting of stock awards to the former Chief Executive Officer; partially offset by $281,000 of decreased stock based compensation expense resulting from an increase in the estimated
forfeiture rate on awards based on historical forfeiture experience which is considered to be a reasonable approximation of expected future forfeitures.
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§
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Second quarter of fiscal 2008 – includes a bonus of $150,000 to our former CEO as stipulated in his employment contract for our listing on the NASDAQ Capital Market, a national exchange.
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§
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Fourth quarter of fiscal 2007 –
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o
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Includes an increased bad debt reserve of approximately $377,000 resulting from the Chapter 11 Bankruptcy filing of one of our LEC aggregators, representing our entire pre-petition outstanding receivable balance. The aggregator continues to operate as debtor-in-possession. We have since transitioned this portion of our business to another aggregator.
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o
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Includes the reversal of approximately $431,000 of accrued bonuses which were not paid as pre-determined financial goals were not met in fiscal 2007
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§
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Second quarter of fiscal 2007 – includes the reversal of approximately $200,000 of accrued expenses related to the Attorneys General settlement.
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§
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First quarter of fiscal 2007 – includes approximately $1,000,000 of direct response advertising costs incurred in October 2006 for which we derived no benefit based on the Attorneys General settlement that was agreed to in December 2006.
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·
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Customer refunds
.
We have a customer refund policy that allows the customer to request a refund if they are not satisfied
with the service within the first 120 days of the subscription.
We accrue for refunds based on historical experience of refunds as a percentage of new billings in that 120-day period.
Customer
refunds are reserved and charged against gross revenue.
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Non-paying customers
.
There are customers who may not pay the fee for our services even though we believe they are
valid subscribers.
Included in cost of services is an accrual for estimated non-paying customers that are recorded at the time of billing.
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·
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Unbilled accounts
.
We recognize revenue during the month for which the service is provided based on net billings accepted
by the billing aggregators.
We recognize revenue only for accepted records.
However, subsequent to this acceptance, there are instances in the LEC billing process where
a customer cannot be billed due to changes in telephone numbers, telephone carriers, data synchronization issues, etc.
These amounts that ultimately cannot be billed, as well as certain minor billing adjustments by the LECs are commonly referred to as unbilled accounts.
Unbilled
accounts are estimated at the time of billing and charged to cost of services.
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·
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Fees
.
Both the aggregator and the LEC charge processing fees.
Additionally,
the LEC charges fees for responding to billing inquiries by its customers, processing refunds, and other customer-related services.
Such fees are estimated at the time of billing and charged to cost of services.
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Year Ended September 30,
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Net
Revenues
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Change from Prior Year
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Percent Change from Prior Year
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|||||||||
2008
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$ | 25,283,161 | $ | (1,057,200 | ) | (4.0 | )% | |||||
2007
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$ | 26,340,361 |
Year Ended September 30,
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Cost of Services
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Change from Prior Year
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Percent Change from Prior Year
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|||||||||
2008
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$ | 4,400,713 | $ | 196,437 | 4.7 | % | ||||||
2007
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$ | 4,204,276 |
2008
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2007
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|||||||
LEC billing
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65 | % | 63 | % | ||||
ACH billing
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20 | % | 30 | % | ||||
Direct billing, credit card & other
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15 | % | 7 | % |
Year Ended September 30,
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Gross Profit
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Change from Prior Year
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Percent Change from Prior Year
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|||||||||
2008
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$ | 20,882,448 | $ | (1,253,637 | ) | (5.7 | )% | |||||
2007
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$ | 22,136,085 |
Year Ended September 30,
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General & Administrative Expenses
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Change from Prior Year
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Percent Change from Prior Year
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|||||||||
2008
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$ | 15,610,521 | $ | 3,091,901 | 24.7 | % | ||||||
2007
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$ | 12,518,620 |
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·
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An increase in depreciation and amortization expense of approximately $500,000 stemming primarily from the effects of the LiveDeal acquisition, which added $2,200,000 of depreciable and amortizable long-lived and intangible assets, and additional capitalized costs for enhancements to our websites and on-line customer service applications;
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·
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An increase in compensation expense of approximately $2,270,000 due to:
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o
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Salaries and other compensation expense of $761,000 associated with the LiveDeal acquisition that took place in June 2007, as 2007 only included LiveDeal expenses beginning with June 6, 2007, the date of acquisition;
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o
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$496,000 of severance costs associated with the termination of our former Chief Executive Officer;
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o
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$439,000 of increased stock based compensation expense associated with the accelerated vesting of stock awards to the former Chief Executive Officer;
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o
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$1,189,000 of increased compensation costs associated with the development of certain call center functions in our Las Vegas headquarters; partially offset by,
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o
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$281,000 of decreased stock based compensation expense resulting from an increase in the estimated forfeiture rate on awards based on historical forfeiture experiencewhich is considered to be a reasonable approximation of expected future forfeitures; and
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o
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$334,000 of other compensation cost decreases primarily due to reductions in staffing and bonus expense.
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·
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An increase in other general and administrative expenses of approximately $376,000 primarily due to increased facility, office and other corporate expenses associated with the LiveDeal acquisition, as 2007 only included LiveDeal expenses beginning with June 6, 2007, the date of acquisition; and
|
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·
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Other general and administrative cost increases of $168,000; partially offset by,
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·
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A decrease in professional and consulting fees of approximately $223,000 as we incurred significant expenses in fiscal 2007 to develop our strategic direction following the effects of the Attorneys General settlement, partially offset by increased legal fees in fiscal 2008 associated with executive turnover and other events.
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Q4 2008
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Q3 2008
|
Q2 2008
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Q1 2008
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Q4 2007
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Q3 2007
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Q2 2007
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Q1 2007
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|||||||||||||||||||||||||
Compensation for employees, leased employees, officers and directors
|
$ | 1,810,383 | $ | 3,181,375 | $ | 2,377,412 | $ | 1,928,272 | $ | 1,535,115 | $ | 1,760,439 | $ | 1,877,103 | $ | 1,873,582 | ||||||||||||||||
Professional fees
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456,180 | 275,638 | 191,330 | 281,418 | 184,507 | 529,139 | 319,948 | 394,028 | ||||||||||||||||||||||||
Reconfirmation, mailing, billing and other customer-related costs
|
48,529 | 18,185 | 27,735 | 17,601 | 33,662 | 24,269 | 34,042 | 23,715 | ||||||||||||||||||||||||
Depreciation and amortization
|
588,718 | 505,095 | 487,085 | 478,433 | 460,554 | 396,759 | 364,724 | 336,887 | ||||||||||||||||||||||||
Other general and administrative costs
|
643,785 | 842,571 | 761,583 | 689,247 | 757,136 | 522,583 | 531,915 | 558,513 |
Year Ended September 30,
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Sales & Marketing Expenses
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Change from Prior Year
|
Percent Change from Prior Year
|
|||||||||
2008
|
$ | 7,126,532 | $ | 635,028 | 9.8 | % | ||||||
2007
|
$ | 6,491,504 |
Year Ended September 30,
|
Litigation and Related Expenses
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Change from Prior Year
|
Percent Change from Prior Year
|
|||||||||
2008
|
$ | - | $ | 200,718 | (100.0 | )% | ||||||
2007
|
$ | (200,718 | ) |
Year Ended September 30,
|
Operating Income (Loss)
|
Change from Prior Year
|
Percent Change from Prior Year
|
|||||||||
2008
|
$ | (1,854,605 | ) | $ | (5,181,284 | ) | (155.7 | )% | ||||
2007
|
$ | 3,326,679 |
Year Ended September 30,
|
Total Other Income (Expense)
|
Change from Prior Year
|
Percent Change from Prior Year
|
|||||||||
2008
|
$ | 137,742 | $ | (145,172 | ) | (51.3 | )% | |||||
2007
|
$ | 282,914 |
Year Ended
September 30,
|
Income Tax
Provision (Benefit)
|
Change from
Prior Year
|
Percent Change
from Prior Year
|
|||||||||
2008
|
$ | (188,091 | ) | $ | (2,043,766 | ) | (110.1 | )% | ||||
2007
|
$ | 1,855,675 |
Year Ended September 30,
|
Net Income (Loss)
|
Change from Prior Year
|
Percent Change from Prior Year
|
|||||||||
2008
|
$ | (1,528,772 | ) | $ | (3,282,690 | ) | (187.2 | )% | ||||
2007
|
$ | 1,753,918 |
Page
|
|
Report of Independent Registered Public Accounting Firm
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33
|
Consolidated Financial Statements:
|
|
Consolidated Balance Sheets at September 30, 2008 and 2007
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34
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Consolidated Statements of Operations for the years ended September 30, 2008 and 2007
|
35
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Consolidated Statements of Stockholders Equity for the years ended September 30, 2008 and 2007
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36
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Consolidated Statements of Cash Flows for the years ended September 30, 2008 and 2007
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37
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Notes to Consolidated Financial Statements
|
38
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September 30,
|
||||||||
Assets
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2008
|
2007
|
||||||
Cash and equivalents
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$ | 4,639,787 | $ | 5,674,533 | ||||
Accounts receivable, net
|
6,880,492 | 6,919,180 | ||||||
Prepaid expenses and other current assets
|
792,309 | 510,609 | ||||||
Customer acquisition costs, net
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642,220 | - | ||||||
Income taxes receivable
|
487,532 | 316,429 | ||||||
Deferred tax asset
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949,121 | 546,145 | ||||||
Total current assets
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14,391,461 | 13,966,896 | ||||||
Accounts receivable, long term portion, net
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2,011,143 | 1,941,996 | ||||||
Property and equipment, net
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959,854 | 423,563 | ||||||
Deposits and other assets
|
83,547 | 103,057 | ||||||
Intangible assets, net
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6,736,078 | 7,372,147 | ||||||
Goodwill
|
11,706,406 | 11,683,163 | ||||||
Deferred tax asset, long term
|
3,863,502 | 4,551,644 | ||||||
Total assets
|
$ | 39,751,991 | $ | 40,042,466 | ||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities:
|
||||||||
Accounts payable
|
$ | 1,078,712 | $ | 1,138,265 | ||||
Accrued liabilities
|
1,991,369 | 1,196,330 | ||||||
Current portion of capital lease obligation
|
61,149 | - | ||||||
Total current liabilities
|
3,131,230 | 2,334,595 | ||||||
Capital lease obligation, net of current portion
|
170,838 | - | ||||||
Total liabilities
|
3,302,068 | 2,334,595 | ||||||
Commitments and contingencies
|
||||||||
Stockholders' Equity:
|
||||||||
Series E convertible preferred stock, $.001 par value, 200,000 shares authorized, 127,840 issued and outstanding, liquidation preference $38,202
|
10,866 | 10,866 | ||||||
Common stock, $.001 par value, 100,000,000 shares authorized,6,513,686 and 7,022,242 issued and 6,513,686 and 6,693,676 outstanding in 2008 and 2007
|
6,514 | 6,694 | ||||||
Treasury stock (0 and 328,566 shares carried at cost)
|
- | (2,714,698 | ) | |||||
Paid in capital
|
20,884,112 | 23,325,888 | ||||||
Retained earnings
|
15,548,431 | 17,079,121 | ||||||
Total stockholders' equity
|
36,449,923 | 37,707,871 | ||||||
Total liabilities and stockholders' equity
|
$ | 39,751,991 | $ | 40,042,466 |
Year ended September 30,
|
||||||||
2008
|
2007
|
|||||||
Net revenues
|
$ | 25,283,161 | $ | 26,340,361 | ||||
Cost of services
|
4,400,713 | 4,204,276 | ||||||
Gross profit
|
20,882,448 | 22,136,085 | ||||||
Operating expenses:
|
||||||||
General and administrative expenses
|
15,610,521 | 12,518,620 | ||||||
Sales and marketing expenses
|
7,126,532 | 6,491,504 | ||||||
Litigation and related expenses
|
- | (200,718 | ) | |||||
Total operating expenses
|
22,737,053 | 18,809,406 | ||||||
Operating income (loss)
|
(1,854,605 | ) | 3,326,679 | |||||
Other income (expense):
|
||||||||
Interest expense
|
(3,586 | ) | - | |||||
Interest income
|
138,280 | 271,969 | ||||||
Other income (expense)
|
3,048 | 10,945 | ||||||
Total other income (expense)
|
137,742 | 282,914 | ||||||
Income (loss) before income taxes
|
(1,716,863 | ) | 3,609,593 | |||||
Income tax provision (benefit)
|
(188,091 | ) | 1,855,675 | |||||
Net income (loss)
|
$ | (1,528,772 | ) | $ | 1,753,918 | |||
Net income (loss) per common share:
|
||||||||
Basic
|
$ | (0.25 | ) | $ | 0.34 | |||
Diluted
|
$ | (0.25 | ) | $ | 0.33 | |||
Weighted average common shares outstanding:
|
||||||||
Basic
|
6,231,610 | 5,108,551 | ||||||
Diluted
|
6,231,610 | 5,336,439 |
Common Stock
|
Preferred Stock
|
Treasury
|
Paid-In
|
Deferred
|
Retained
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Stock
|
Capital
|
Compensation
|
Earnings
|
Total
|
||||||||||||||||||||||||||||
Balance, September 30, 2006
|
5,002,159 | $ | 5,002 | 127,840 | $ | 10,866 | $ | (2,407,158 | ) | $ | 12,294,186 | $ | (2,854,122 | ) | $ | 15,327,599 | $ | 22,376,373 | ||||||||||||||||||
Reclass of deferred compensation
|
- | - | - | - | - | (2,854,122 | ) | 2,854,122 | - | - | ||||||||||||||||||||||||||
Series E preferred stock dividends
|
- | - | - | - | - | - | - | (2,396 | ) | (2,396 | ) | |||||||||||||||||||||||||
Common stock issued in restricted stock plan
|
78,500 | 79 | - | - | - | (79 | ) | - | - | |||||||||||||||||||||||||||
Common stock issued in acquisition
|
1,675,016 | 1,675 | - | - | - | 12,326,370 | - | - | 12,328,045 | |||||||||||||||||||||||||||
Shares acquired from LiveDeal shareholders
|
(44,224 | ) | (44 | ) | (307,540 | ) | 44 | (307,540 | ) | |||||||||||||||||||||||||||
Issuance of restricted stock in exchange for services
|
10,800 | 11 | - | - | - | 78,828 | - | - | 78,839 | |||||||||||||||||||||||||||
Restricted stock cancellations
|
(28,575 | ) | (29 | ) | - | - | - | 29 | - | - | - | |||||||||||||||||||||||||
Amortization of deferred stock compensation
|
- | - | - | - | - | 1,480,632 | - | - | 1,480,632 | |||||||||||||||||||||||||||
Net income
|
- | - | - | - | - | - | - | 1,753,918 | 1,753,918 | |||||||||||||||||||||||||||
Balance, September 30, 2007
|
6,693,676 | 6,694 | 127,840 | 10,866 | (2,714,698 | ) | 23,325,888 | - | 17,079,121 | 37,707,871 | ||||||||||||||||||||||||||
Series E preferred stock dividends
|
- | - | - | - | - | - | - | (1,918 | ) | (1,918 | ) | |||||||||||||||||||||||||
Common stock issued in restricted stock plan
|
53,000 | 53 | - | - | - | (53 | ) | - | - | - | ||||||||||||||||||||||||||
Stock option grant
|
- | - | - | - | - | 10,155 | - | - | 10,155 | |||||||||||||||||||||||||||
Restricted stock cancellations
|
(84,169 | ) | (84 | ) | - | - | - | 84 | - | - | - | |||||||||||||||||||||||||
Amortization of deferred stock compensation
|
- | - | - | - | - | 788,431 | - | - | 788,431 | |||||||||||||||||||||||||||
Treasury stock purchases
|
(148,820 | ) | (149 | ) | - | - | (525,844 | ) | 149 | - | - | (525,844 | ) | |||||||||||||||||||||||
Treasury stock retired
|
- | - | - | - | 3,240,542 | (3,240,542 | ) | - | - | - | ||||||||||||||||||||||||||
Net income (loss)
|
- | - | - | - | - | - | - | (1,528,772 | ) | (1,528,772 | ) | |||||||||||||||||||||||||
Balance, September 30, 2008
|
6,513,687 | $ | 6,514 | 127,840 | $ | 10,866 | $ | - | $ | 20,884,112 | $ | - | $ | 15,548,431 | $ | 36,449,923 |
Year ended September 30,
|
||||||||
2008
|
2007
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$ | (1,528,772 | ) | $ | 1,753,918 | |||
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
|
||||||||
Depreciation and amortization
|
3,191,237 | 1,575,488 | ||||||
Amortization of stock-based compensation
|
788,431 | 1,480,632 | ||||||
Issuance of common stock as compensation for services
|
- | 78,839 | ||||||
Non-cash stock compensation expense
|
10,155 | - | ||||||
Non-cash compensation expense to Chief Executive Officer
|
- | 88,680 | ||||||
Deferred income taxes
|
285,166 | 1,564,352 | ||||||
(Gain) loss on disposal of equipment
|
15,352 | 4,128 | ||||||
Provision for uncollectible accounts
|
505,812 | 660,963 | ||||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
(536,271 | ) | (237,771 | ) | ||||
Customer acquisition costs
|
(1,700,000 | ) | - | |||||
Prepaid and other current assets
|
(281,700 | ) | (252,182 | ) | ||||
Deposits and other assets
|
19,510 | (851 | ) | |||||
Accounts payable
|
(59,553 | ) | (718,151 | ) | ||||
Accrued liabilities
|
795,039 | (3,654,358 | ) | |||||
Income taxes receivable
|
(171,103 | ) | (578,191 | ) | ||||
Net cash provided by operating activities
|
1,333,303 | 1,765,496 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Acquisition of businesses, net of cash acquired
|
- | (4,114,139 | ) | |||||
Expenditures for intangible assets
|
(1,227,334 | ) | (939,102 | ) | ||||
Net purchases/redemptions of certificates of
|
||||||||
deposits and other investments
|
- | 3,082,053 | ||||||
Purchases of equipment
|
(589,338 | ) | (204,614 | ) | ||||
Net cash used in investing activities
|
(1,816,672 | ) | (2,175,802 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Series E preferred stock dividends
|
(1,918 | ) | (2,396 | ) | ||||
Principal repayments on capital lease obligations
|
(23,615 | ) | - | |||||
Purchase of treasury stock
|
(525,844 | ) | (307,540 | ) | ||||
Net cash used in financing activities
|
(551,377 | ) | (309,936 | ) | ||||
DECREASE IN CASH AND CASH EQUIVALENTS
|
(1,034,746 | ) | (720,242 | ) | ||||
CASH AND CASH EQUIVALENTS, beginning of year
|
5,674,533 | 6,394,775 | ||||||
CASH AND CASH EQUIVALENTS, end of year
|
$ | 4,639,787 | $ | 5,674,533 | ||||
Supplemental cash flow disclosures:
|
||||||||
Cash paid for interest
|
$ | 3,586 | $ | - | ||||
Cash paid for income taxes
|
$ | 1,860 | $ | 870,000 | ||||
Noncash financing and investing activities - acquisition of equipment under capital leases
|
$ | 255,602 | $ | - |
1.
|
ORGANIZATION
AND BASIS OF PRESENTATION
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
·
|
direct ACH withdrawals; and
|
|
·
|
inclusion on the customers local telephone bill provided by their Local Exchange Carriers, or LECs.
|
3.
|
ACQUISITIONS
|
Current assets
|
$
|
962,877
|
||
Property, plant and equipment
|
70,000
|
|||
Goodwill
|
7,349,366
|
|||
Intangible assets
|
2,130,000
|
|||
Deferred tax assets
|
3,545,618
|
|||
Other non-current assets
|
10,846
|
|||
Total assets acquired
|
14,068,707
|
|||
Current liabilities
|
1,368,012
|
|||
Total liabilities assumed
|
1,368,012
|
|||
Net assets acquired
|
$
|
12,700,695
|
Estimated
Fair Value
|
Average
Remaining
Useful Life
|
||||
Asset class:
|
|||||
Marketing-based intangible assets
|
$
|
1,500,000
|
20 years
|
||
Technology-based intangible assets
|
630,000
|
5 years
|
|||
$
|
2,130,000
|
Year ended September 30,
|
||||
2007
|
||||
(unaudited)
|
||||
Net revenues
|
$ | 28,057,074 | ||
Net loss
|
$ | (1,834,830 | ) | |
Diluted net loss per share
|
$ | (0.28 | ) |
4.
|
BALANCE SHEET INFORMATION
|
September 30,
|
||||||||
2008
|
2007
|
|||||||
Receivables, current, net
|
||||||||
Accounts receivable, current
|
8,923,315 | $ | 9,221,903 | |||||
Less: Allowance for doubtful accounts
|
(2,042,823 | ) | (2,302,723 | ) | ||||
6,880,492 | $ | 6,919,180 | ||||||
Receivables, long term, net
|
||||||||
Accounts receivable, long term
|
2,171,865 | $ | 2,101,071 | |||||
Less: Allowance for doubtful accounts
|
(160,722 | ) | (159,075 | ) | ||||
2,011,143 | $ | 1,941,996 | ||||||
Total receivables, net
|
||||||||
Gross receivables
|
11,095,180 | $ | 11,322,974 | |||||
Gross allowance for doubtful accounts
|
(2,203,545 | ) | (2,461,798 | ) | ||||
8,891,635 | $ | 8,861,176 | ||||||
Components of allowance for doubtful accounts are as follows:
|
||||||||
Allowance for dilution and fees on amounts due from billing aggregators
|
1,775,276 | $ | 1,888,730 | |||||
Allowance for customer refunds
|
428,269 | 573,068 | ||||||
2,203,545 | $ | 2,461,798 | ||||||
Property and equipment, net
|
||||||||
Leasehold improvements
|
233,970 | $ | 455,286 | |||||
Furnishings and fixtures
|
311,319 | 310,499 | ||||||
Office, computer equipment and other
|
961,931 | 1,423,989 | ||||||
1,507,220 | 2,189,774 | |||||||
Less: Accumulated depreciation
|
(547,366 | ) | (1,766,211 | ) | ||||
959,854 | $ | 423,563 | ||||||
Intangible assets, net
|
||||||||
Domain name and marketing related intangibles
|
7,208,600 | $ | 7,208,600 | |||||
Non-compete agreement
|
3,465,000 | 3,465,000 | ||||||
Website and technology related intangibles
|
4,147,459 | 3,006,093 | ||||||
14,821,059 | 13,679,693 | |||||||
Less: Accumulated amortization of intangible
|
(8,084,981 | ) | (6,307,546 | ) | ||||
6,736,078 | $ | 7,372,147 | ||||||
Accrued liabilities
|
||||||||
Litigation accrual
|
- | $ | - | |||||
Deferred revenue
|
917,068 | 323,596 | ||||||
Accrued payroll and bonuses
|
306,984 | 339,305 | ||||||
Accrued expenses - other
|
767,317 | 533,428 | ||||||
1,991,369 | $ | 1,196,330 |
5.
|
ACCOUNTS RECEIVABLE
|
6.
|
INTANGIBLE ASSETS
|
7.
|
CAPITAL LEASES
|
|
The Company has entered into two capital leases for communications equipment during the year ended September 30, 2008, with a cost basis of $255,603 with terms ranging from 45 to 48 months and imputed interest rates ranging from 3.6 to 13.2 percent. All capital leases are secured by the underlying equipment. Equipment acquired under these capital leases is being depreciated over their estimated
lives of four years.
|
|
Future minimum lease payments due under the capital lease agreements are as follows for the years ended September 30:
|
2009
|
$ | 69,838 | ||
2010
|
69,838 | |||
2011
|
69,838 | |||
2012
|
41,213 | |||
2013
|
- | |||
Thereafter
|
- | |||
Total minimum lease payments
|
250,728 | |||
Less imputed interest
|
(18,741 | ) | ||
Present value of minimum lease payments
|
231,987 | |||
Less: current maturities of capital lease obligations
|
61,149 | |||
Noncurrent maturities of capital lease obligations
|
$ | 170,838 |
8.
|
STOCKHOLDERS EQUITY
|
9.
|
NET (LOSS)/INCOME PER SHARE
|
Year Ended September 30, 2008
|
Year Ended September 30, 2007
|
|||||||
Income (loss)
|
$ | (1,528,772 | ) | $ | 1,753,918 | |||
Less: preferred stock dividends
|
(1,918 | ) | (2,396 | ) | ||||
Net income (loss) applicable to common stock
|
$ | (1,530,690 | ) | $ | 1,751,522 | |||
Basic weighted average common shares outstanding:
|
6,231,610 | 5,108,551 | ||||||
Add incremental shares for:
|
||||||||
Unvested restricted stock
|
- | 222,359 | ||||||
Series E convertible preferred stock
|
- | 5,529 | ||||||
Outstanding warrants
|
- | - | ||||||
Diluted weighted average common shares outstanding:
|
6,231,610 | 5,336,439 | ||||||
Net income (loss) per share:
|
||||||||
Basic
|
$ | (0.25 | ) | $ | 0.34 | |||
Diluted
|
$ | (0.25 | ) | $ | 0.33 |
September 30,
|
|||||||
2008
|
2007
|
||||||
Warrants to purchase shares of common stock
|
- | - | |||||
Series E convertible preferred stock
|
243 | - | |||||
Shares of non-vested restricted stock
|
112,811 | 63,406 | |||||
113,054 | 63,406 |
10.
|
COMMITMENTS AND CONTINGENCIES
|
2009
|
$ | 801,181 | ||
2010
|
510,465 | |||
2011
|
408,065 | |||
2012
|
315,331 | |||
2013
|
78,720 | |||
Thereafter
|
- | |||
$ | 2,113,763 |
11.
|
PROVISION FOR INCOME TAXES
|
2008
|
2007
|
|||||||
Current provision (benefit)
|
$ | (470,728 | ) | $ | 291,273 | |||
Deferred (benefit) provision
|
282,637 | 1,564,402 | ||||||
Net income tax (benefit) provision
|
$ | (188,091 | ) | $ | 1,855,675 |
2008
|
2007
|
|||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||
Federal statutory rates
|
$ | (583,733 | ) | 34 | % | $ | 1,227,262 | 34 | % | |||||||
State income taxes
|
(57,707 | ) | 3 | % | 121,282 | 3 | % | |||||||||
Write off of deferred tax asset related to vested restricted stock
|
517,547 | (30 | )% | 499,885 | 14 | % | ||||||||||
Other
|
(64,198 | ) | 4 | % | 7,246 | 0 | % | |||||||||
Effective rate
|
$ | (188,091 | ) | 11 | % | $ | 1,855,675 | 51 | % |
2008
|
2007
|
|||||||
Deferred income tax asset, current:
|
||||||||
Book to tax differences in accounts receivable
|
$ | 884,368 | $ | 546,145 | ||||
Book to tax differences in accrued expenses
|
64,754 | - | ||||||
Total deferred income tax asset, current
|
949,121 | 546,145 | ||||||
Deferred incom tax asset, long-term:
|
||||||||
Net operating loss carryforwards
|
3,481,786 | 3,545,618 | ||||||
Book to tax differences for stock based compensation
|
204,805 | 951,246 | ||||||
Book to tax differences in intangible assets
|
1,342,998 | 121,613 | ||||||
Book to tax differences in depreciation
|
(1,166,088 | ) | (66,833 | ) | ||||
Total deferred income tax asset, long-term
|
3,863,502 | 4,551,644 | ||||||
Total deferred income tax asset
|
$ | 4,812,623 | $ | 5,097,789 |
12.
|
CONCENTRATION OF CREDIT RISK
|
13.
|
STOCK-BASED COMPENSATION
|
Outstanding (unvested) at September 30, 2006
|
535,607 | |||
Granted
|
78,500 | |||
Forfeited
|
(28,575 | ) | ||
Vested
|
(143,625 | ) | ||
Outstanding (unvested) at September 30, 2007
|
441,907 | |||
Granted
|
53,000 | |||
Forfeited
|
(84,169 | ) | ||
Vested
|
(183,313 | ) | ||
Outstanding (unvested) at September 30, 2008
|
227,425 |
Volatility
|
95.9 | % | ||
Risk-free interest rate
|
2.2 | % | ||
Expected term
|
5.0 years
|
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||
Average
|
Average
|
Average
|
Aggregate
|
|||||||||||||||||
Number of
|
Exercise
|
Fair
|
Remaining
|
Intrinsic
|
||||||||||||||||
Shares
|
Price
|
Value
|
Contractual Life
|
Value
|
||||||||||||||||
Outstanding at September 30, 2007
|
- | |||||||||||||||||||
Granted at market price
|
5,000 | $ | 2.78 | $ | 2.03 | |||||||||||||||
Exercised
|
- | $ | - | |||||||||||||||||
Cancelled
|
- | $ | - | |||||||||||||||||
Outstanding at September 30, 2008
|
5,000 | 9.8 | $ | - | ||||||||||||||||
Exercisable
|
5,000 | $ | 2.78 | 9.8 | $ | - |
14.
|
EMPLOYEE BENEFIT PLAN
|
15.
|
OTHER INCOME (EXPENSE)
|
16.
|
SEGMENT REPORTING
|
17.
|
SUBSEQUENT EVENTS
|
|
·
|
Fulfillment and Marketing Agreement dated October 10, 2007, by and between the Company and Sharednet.
|
|
·
|
Fulfillment and Marketing Agreement dated October 16, 2007, by and between the Company and OneSource Web Hosting.
|
|
·
|
Fulfillment and Marketing Agreement dated October 10,2007, by and between the Company and Blabb1e Networks.
|
18.
|
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
|
Quarter Ended
|
||||||||||||||||
December 31,
|
March 31,
|
June 30,
|
September 30,
|
|||||||||||||
2007
|
2008
|
2008
|
2008
|
|||||||||||||
Net revenues
|
$ | 7,068,888 | $ | 6,637,785 | $ | 5,812,141 | $ | 5,764,347 | ||||||||
Gross profit
|
6,063,339 | 5,532,096 | 4,682,770 | 4,604,243 | ||||||||||||
Net income (loss)
|
326,092 | 3,338 | (1,580,697 | ) | (277,505 | ) | ||||||||||
Earnings per share information:
|
||||||||||||||||
Basic income per share
|
$ | 0.05 | $ | - | $ | (0.25 | ) | $ | (0.04 | ) | ||||||
Diluted income per share
|
$ | 0.05 | $ | - | $ | (0.25 | ) | $ | (0.04 | ) |
Quarter Ended
|
||||||||||||||||
December 31,
|
March 31,
|
June 30,
|
September 30,
|
|||||||||||||
2006
|
2007
|
2007
|
2007
|
|||||||||||||
(as restated)
|
(as restated)
|
(as restated)
|
||||||||||||||
Net revenues
|
$ | 7,123,683 | $ | 6,106,544 | $ | 5,989,437 | $ | 7,120,697 | ||||||||
Gross profit
|
6,012,813 | 5,148,835 | 5,113,544 | 5,860,893 | ||||||||||||
Net income
|
485,198 | 626,262 | 266,405 | 376,053 | ||||||||||||
Earnings per share information:
|
||||||||||||||||
Basic income per share
|
$ | 0.11 | $ | 0.14 | $ | 0.05 | $ | 0.06 | ||||||||
Diluted income per share
|
$ | 0.11 | $ | 0.13 | $ | 0.05 | $ | 0.06 |
|
·
|
Fulfillment and Marketing Agreement dated October 10, 2007, by and between the Company and Sharednet.
|
|
·
|
Fulfillment and Marketing Agreement dated October 16, 2007, by and between the Company and OneSource Web Hosting.
|
|
·
|
Fulfillment and Marketing Agreement dated October 10,2007, by and between the Company and Blabb1e Networks.
|
ITEM
10.
|
Directors, Executive Officers and Corporate Governance
|
ITEM
11.
|
Executive Compensation
|
ITEM
12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
ITEM
13.
|
Certain Relationships and Related Transactions, and Director
Independence
|
ITEM
14.
|
Principal Accountant Fees and Services
|
ITEM
15.
|
Exhibits and Financial Statement Schedule
|
(1)
|
Financial Statements are listed on the Index to Consolidated Financial Statements on page 40 of this Annual
Report.
|
(2)
|
The following represents financial statement schedules required to be filed with this Annual Report:
|
(3)
|
The following exhibits are filed with or incorporated by reference into this Annual Report.
|
Exhibit Number
|
Description
|
Previously Filed as Exhibit
|
File Number
|
Date Previously Filed
|
||||
3.1
|
Amended and Restated Articles of Incorporation
|
Exhibit 3.1 to the Registrants Current Report on Form 8-K filed on August 15, 2007
|
000-24217
|
8/15/07
|
||||
3.2
|
Amended and Restated Bylaws
|
Exhibit 3.2 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2007
|
00-24217
|
12/20/07
|
||||
10.1
|
LiveDeal, Inc. Amended and Restated 2003 Stock Plan*
|
Exhibit 10.1 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2007
|
00-24217
|
12/20/07
|
||||
10.2
|
Form of 2003 Stock Plan Restricted Stock Agreement*
|
Exhibit 10 to the Registrants Quarterly Report on Form 10-QSB for the fiscal quarter ending March 31, 2005
|
000-24217
|
5/16/05
|
||||
10.3 | Form of 2003 Stock Plan Stock Option Agreement* | Attached hereto | - | - | ||||
10.4
|
Standard Industrial/Commercial Multi-Tenant Lease for Mesa facility, dated June 1, 1998, between the Registrant and Art Grandlich, d/b/a McKellips Corporate Square
|
Exhibit 10.5 to the Registrants Annual Report on Form 10-KSB for the fiscal year ended September 30, 1999
|
000-24217
|
9/19/00
|
||||
10.4.1
|
Amendment No. 1 to Standard Industrial/Commercial Multi-Tenant Lease for Mesa facility, dated August 17, 1998, between the Registrant and Arthur Grandlich, d/b/a McKellips Corporate Square
|
Exhibit 10.4 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2006
|
000-24217
|
12/29/06
|
||||
10.4.2
|
Amendment No. 2 to Standard Industrial/Commercial Multi-Tenant Lease for Mesa facility, dated January 7, 2003, between the Registrant and Arthur Grandlich, d/b/a McKellips Corporate Square
|
Exhibit 10.14 to Amendment No. 2 to the Registrants Annual Report on Form 10-KSB/A for the fiscal year ended September 30, 2002
|
000-24217
|
7/8/03
|
||||
10.4.3
|
Amendment No. 3 to Standard Industrial/Commercial Multi-Tenant Lease for Mesa facility, dated March 23, 2006, between the Registrant and J3 Harmon, LLC, successor in interest to The Estate of Arthur Grandlich
|
Exhibit 10.4.2 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2006
|
000-24217
|
12/29/06
|
||||
10.4.4
|
Amendment No. 4 to Standard Industrial/Commercial Multi-Tenant Lease for Mesa facility, dated April 12, 2006, between the Registrant and J3 Harmon, LLC, successor in interest to The Estate of Arthur Grandlich
|
Exhibit 10.4.3 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2006
|
000-24217
|
12/29/06
|
10.5
|
Standard Industrial Lease for Nevada facility, dated September 3, 2003, between the Registrant and Tomorrow 33 Convention, LP
|
Exhibit 10.4 to the Registrants Annual Report on Form 10-KSB for the fiscal year ended September 30, 2003
|
000-24217
|
12/31/03
|
||||
10.6
|
Amendment No. 1 to Standard Industrial Lease for Nevada facility, dated October 4, 2006, between the Registrant and Tomorrow 33 Convention, LP
|
Exhibit 10.6 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2006
|
000-24217
|
12/29/06
|
||||
10.7
|
Employment Agreement, dated September 19, 2006, between the Registrant and Gary L. Perschbacher*
|
Exhibit 10.10 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2006
|
000-24217
|
12/29/06
|
||||
10.8
|
Employment Agreement, dated February 6, 2006, between the Registrant and John Raven*
|
Exhibit 10.1 to the Registrants Current Report on Form 8-K
|
000-24217
|
2/21/06
|
||||
10.8.1
|
First Amendment to Employment Agreement, dated September 19, 2006, between the Registrant and John Raven*
|
Exhibit 10.13.1 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2006
|
000-24217
|
12/29/06
|
10.9
|
Master Services Agreement, dated August 1, 2002, between the Registrant and eBillit, Inc.
|
Exhibit 10.24 to Amendment No. 1 to the Registrants Quarterly Report on Form 10-QSB/A for the fiscal quarter ended March 31, 2003
|
000-24217
|
7/8/03
|
||||
10.10
|
Billings and Related Services Agreement, dated September 1, 2001, between the Registrant and ACI Communications, Inc.
|
Exhibit 10.33 to Amendment No. 2 to the Registrants Annual Report on Form 10-KSB/A for the fiscal year ended September 30, 2002
|
000-24217
|
7/8/03
|
||||
10.11
|
Asset Purchase Agreement dated as of July 10, 2007, relating to the Registrants acquisition of the assets of Oncall Subscriber Management Inc.
|
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on July 16, 2007
|
000-24217
|
7/16/07
|
||||
10.12
|
Escrow Agreement dated as of July 10, 2007, relating to the Registrants acquisition of the assets of Oncall Subscriber Management Inc.
|
Exhibit 10.2 to the Registrants Current Report on Form 8-K filed on July 16, 2007
|
000-24217
|
7/16/07
|
||||
Amended and Restated Employment Agreement, dated October 1, 2008, between the Registrant and Michael Edelhart*
|
Attached hereto
|
|||||||
10.14 | Non-Qualified Stock Option Agreement, dated November 10, 2008, between the Registrant and Michael Edelhart |
Attached hereto
|
- | - | ||||
14
|
Code of Business Conduct and Ethics, Adopted December 31, 2003
|
Exhibit 14 to the Registrants Quarterly Report on Form 10-QSB for the period ended March 31, 2004
|
000-24217
|
5/13/04
|
||||
Company Subsidiaries
|
Attached hereto
|
|||||||
Consent of Mayer Hoffman McCann P.C.
|
Attached hereto
|
|||||||
Certifications pursuant to SEC Release No. 33-8238, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Attached hereto
|
|||||||
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Attached hereto
|
Dated: December 29, 2008
|
/s/Michael Edelhart
|
Michael Edelhart
|
|
Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/ Michael Edelhart
|
Chief Executive Officer
(Principal Executive Officer)
|
December 29, 2008
|
||
Michael Edelhart
|
||||
/s/ Gary L. Perschbacher
|
Chief Financial Officer
(Principal Financial Officer and
|
December 29, 2008
|
||
Gary L. Perschbacher
|
Principal Accounting Officer)
|
|||
/s/ Richard D. Butler.
|
Director
|
December 29, 2008
|
||
Richard D. Butler
|
||||
/s/ Sheryle Bolton
|
Director
|
December 29, 2008
|
||
Sheryle Bolton
|
||||
/s/ Thomas Clarke, Jr.
|
Director
|
December 29, 2008
|
||
Thomas Clark, Jr
|
||||
Director | [Date Blank] | |||
Joseph Cunningham | ||||
/s/ John Evans.
|
Director
|
December 29, 2008
|
||
John Evans
|
||||
/s/ Greg LeClaire
|
Director
|
December 29, 2008
|
||
Greg LeClaire
|
||||
/s/ Rajesh Navar
|
Chairman of the Board
|
December 29, 2008
|
||
Rajesh Navar
|
||||
/s/ Richard Sommer
|
Director
|
December 29, 2008
|
||
Richard Sommer
|
Optionees Name and Address:
|
||
DATE
|
PERCENTAGE OF OPTION
THAT IS EXERCISABLE
|
LIVEDEAL, INC.
|
||
By: Michael Edelhart
|
||
Its: CEO
|
Dated:
|
Signed:
|
||||
Optionee
|
LIVEDEAL, INC.
|
||
By: Michael Edelhart
|
||
Its: Chief Executive Officer
|
||
ACCEPTED AND AGREED TO:
|
||
Optionee
|
1.
|
Effective as of today, ______________, ___ the undersigned (the Optionee) hereby elects to exercise the Optionees option to purchase ___________ shares of the Common Stock (the Shares) of LiveDeal, Inc. (the Company) under and pursuant to the Companys Amended and Restated 2003 Stock Plan (the Plan) and the [ ] Incentive [ ] Non-Qualified
Stock Option Award Agreement (the Option Agreement) and Notice of Stock Option Award (the Notice) dated ______________, ________.
|
2.
|
Representations of the Optionee
. The Optionee acknowledges that the Optionee has received, read and understood the Notice, the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.
|
3.
|
Rights as Stockholder
. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in of the Plan.
|
4.
|
Delivery of Payment
. The Optionee herewith delivers to the Company the full Exercise Price for the Shares in the form(s) provided for in the Option Agreement.
|
5.
|
Tax Consultation
. The Optionee understands that the Optionee may suffer adverse tax consequences as a result of the Optionees purchase or disposition of the Shares. The Optionee represents that the Optionee has consulted with any tax consultants the Optionee deems advisable in connection with the purchase or disposition of
the Shares and that the Optionee is not relying on the Company for any tax advice.
|
6.
|
Taxes
. The Optionee agrees to satisfy all applicable foreign, federal, state and local income and employment tax withholding obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the Company to satisfy such obligations. In the case of an Incentive Stock Option,
the Optionee also agrees, as partial consideration for the designation of the Option as an Incentive Stock Option, to notify the Company in writing within thirty (30) days of any disposition of any shares acquired by exercise of the Option if such disposition occurs within two (2) years from the Award Date or within one (1) year from the date the Shares were transferred to the Optionee. If the Company is required to satisfy any foreign, federal, state or local income or employment tax withholding obligations
as a result of such an early disposition, the Optionee agrees to satisfy the amount of such withholding in a manner that the Administrator prescribes.
|
7.
|
Restrictive Legends
. The Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:
|
8.
|
Successors and Assigns
. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon the Optionee
and his or her heirs, executors, administrators, successors and assigns.
|
9.
|
Headings
. The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of this agreement for construction or interpretation.
|
10.
|
Interpretation
. Any dispute regarding the interpretation of this Exercise Notice shall be submitted by the Optionee or by the Company forthwith to the Committee, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Committee shall be final and binding on all persons.
|
11.
|
Governing Law; Severability
. This Exercise Notice is to be construed in accordance with and governed by the internal laws of the State of Arizona without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Arizona to the rights and duties of
the parties. Should any provision of this Exercise Notice be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.
|
12.
|
Notices
. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as
such party may designate in writing from time to time to the other party.
|
13.
|
Further Instruments
. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this agreement.
|
14.
|
Entire Agreement
. The Notice, the Plan and the Option Agreement are incorporated herein by reference and together with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Optionee with respect
to the subject matter hereof, and may not be modified adversely to the Optionees interest except by means of a writing signed by the Company and the Optionee.
|
Submitted by:
|
Accepted by:
|
||||
OPTIONEE:
|
LIVEDEAL, INC.
|
||||
By:
|
|||||
Title:
|
|||||
(Signature)
|
|||||
Address
:
|
Address
:
|
||||
LiveDeal, Inc.
|
|||||
OPTIONEE:
|
||
COMPANY:
|
LIVEDEAL, INC.
|
|
SECURITY:
|
COMMON STOCK
|
|
AMOUNT:
|
||
DATE:
|
Optionee:
|
|||
Date:
|
LIVEDEAL,
INC., a Nevada corporation
|
EXECUTIVE
|
|||
/s/ Rajesh Navar
|
/s/ Mike Edelhart
|
|||
By:
Rajesh Navar
|
Mike
Edelhart
|
|||
Its:
Chairman of the Board
|
LIVEDEAL, INC.
|
||
/s/ Rajesh Navar
|
||
Rajesh Navar
|
||
Chairman of the Board
|
||
ACCEPTED AND AGREED TO:
|
||
/s/ Michael Edelhart
|
||
Michael Edelhart
|
Submitted by:
|
Accepted by:
|
||||
OPTIONEE:
|
LIVEDEAL, INC.
|
||||
By:
|
|||||
Title:
|
|||||
(Signature)
|
|||||
Address
:
|
Address
:
|
||||
LiveDeal, Inc.
|
|||||
OPTIONEE:
|
||
COMPANY:
|
LIVEDEAL, INC.
|
|
SECURITY:
|
COMMON STOCK
|
|
AMOUNT:
|
||
DATE:
|
Optionee:
|
|||
Date:
|
Date: December 29, 2008
|
/s/ Michael Edelhart
|
Michael Edelhart
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date: December 29, 2008
|
/s/ Gary L. Perschbacher
|
Gary L. Perschbacher
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
Date: December 29, 2008
|
/s/ Michael Edelhart
|
Michael Edelhart
|
|
Chief Executive Officer
|
Date: December 29, 2008
|
/s/ Gary L. Perschbacher
|
Gary L. Perschbacher
|
|
Chief Financial Officer
|