Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jul. 31, 2017 | Sep. 18, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Probility Media Corporation | |
Entity Central Index Key | 1,530,981 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 51,890,323 | |
Document Fiscal Year Focus | 2,017 | |
Document fiscal period focus | Q3 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
Current Assets | ||
Cash | $ 240,528 | $ 68,369 |
Accounts receivable, net | 1,063,329 | 54,279 |
Inventory | 690,502 | 514,795 |
Other current assets | 16,460 | 0 |
Total current assets | 2,010,819 | 637,443 |
Property, plant, and equipment, net | 172,324 | 98,510 |
Intangible assets, net | 1,770,395 | 238,608 |
Security deposit | 8,701 | 7,500 |
Investment in equity interest, at cost | 0 | 45,967 |
Total Assets | 3,962,239 | 1,028,028 |
Current Liabilities | ||
Current portion of acquisition notes payable | 137,974 | 26,311 |
Current portion - lease payable | 12,654 | 0 |
Accounts payable and accrued expenses | 1,404,361 | 310,459 |
Accounts payable - related parties | 0 | 20,112 |
Accrued expenses - related parties | 365,801 | 271,704 |
Stock payable | 0 | 33,668 |
Stock payable - related parties | 0 | 84,562 |
Current portion of convertible note payable, net | 525,778 | 352,000 |
Notes payable, net | 950,115 | 500,848 |
Derivative liabilities | 0 | 218,943 |
Total current liabilities | 3,396,683 | 1,818,607 |
Long-term liabilities: | ||
Security deposit | 7,000 | 7,000 |
Shareholder advance | 93,000 | 88,000 |
Lease payable | 58,924 | 0 |
Contingent liability | 362,000 | 0 |
Convertible notes payable, net | 45,000 | 0 |
Acquisition notes payable | 387,702 | 343,745 |
Total long-term liabilities | 953,626 | 438,745 |
Total liabilities | 4,350,309 | 2,257,352 |
Commitments and contingencies | ||
Stockholders' Deficit | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 500,000,000 shares authorized, 51,683,173 and 39,784,717 issued and outstanding as of July 31, 2017 and October 31, 2016, respectively | 51,684 | 39,785 |
Additional paid-in capital | 4,566,542 | (498,623) |
Accumulated deficit | (5,006,296) | (770,486) |
Total stockholders' deficit | (388,070) | (1,229,324) |
Total Liabilities and Stockholders' Deficit | $ 3,962,239 | $ 1,028,028 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jul. 31, 2017 | Oct. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (In dollars per share) | $ 0.001 | $ .001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (In dollars per share) | $ 0.001 | $ .001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 51,683,173 | 39,784,717 |
Common stock, shares outstanding | 51,683,173 | 39,784,717 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Income Statement [Abstract] | ||||
Revenue | $ 3,043,449 | $ 627,700 | $ 5,972,276 | $ 2,232,990 |
Cost of sales | 2,007,006 | 469,156 | 4,019,633 | 1,638,398 |
Gross profit | 1,036,443 | 158,544 | 1,952,643 | 594,592 |
Operating expenses: | ||||
General and administrative expenses | 1,214,150 | 192,470 | 2,447,046 | 545,723 |
Stock compensation | 1,353,334 | 0 | 2,382,834 | 0 |
Professional fees | 127,873 | 32,653 | 478,903 | 140,729 |
Impairment expense | 276,335 | 0 | 387,696 | 0 |
Depreciation and amortization expense | 102,416 | 8,646 | 193,785 | 9,331 |
Total operating expenses | 3,074,108 | 233,769 | 5,890,264 | 695,783 |
Operating loss | (2,037,665) | (75,225) | (3,937,621) | (101,191) |
Other income (expense): | ||||
Discount amortization | (276,336) | 0 | (301,601) | 0 |
Interest expense | (102,260) | (95,092) | (215,531) | (140,717) |
Gain on debt extinguishment | 0 | 0 | 82,240 | 0 |
Change in derivative liability | 250,556 | 0 | 136,703 | 0 |
Total other income (expenses) | (128,040) | (95,092) | (298,189) | (140,717) |
Loss before income taxes | (2,165,705) | (170,317) | (4,235,810) | (241,908) |
Net loss attributable to non-controlling interests | 0 | 110,389 | 0 | 108,995 |
Net loss attributable to ProBility | $ (2,165,705) | $ (59,928) | $ (4,235,810) | $ (132,913) |
Net loss per common share, basic and diluted | $ (.04) | $ (.01) | $ (.09) | $ (.01) |
Weighted average number of common shares outstanding, basic and diluted | 49,127,229 | 23,582,766 | 45,504,292 | 23,582,766 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (4,235,810) | $ (241,908) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Depreciation and amortization | 193,785 | 9,331 |
Bad debt expense | 31,305 | 10,407 |
Share-based compensation | 2,382,834 | 0 |
Amortization of debt discount | 301,601 | 62,162 |
Impairment expense | 387,696 | 0 |
Change in derivative liability | (136,703) | 0 |
Gain on debt extinguishment | (82,240) | 0 |
Changes in operating assets and liabilities: | ||
Accounts Receivable | (675,013) | 2,461 |
Inventory | 205,649 | 30,656 |
Other assets | (17,661) | 0 |
Accounts payable and accrued expenses | 689,258 | (144,979) |
Accrued expenses - related parties | 73,985 | 85,282 |
Net cash used in operating activities | (881,314) | (186,588) |
Cash Flows from Investing Activities: | ||
Acquisitions of Premier Purchasing and Marketing Alliance, LLC, One Exam Prep, LLC, W Marketing, Inc. and Cranbury Associates, LLC. | (9,425) | 0 |
Advances to cost method investee - related party | (123,672) | (43,466) |
PP&E purchases | (19,019) | 0 |
Net cash used in investing activities | (152,116) | (43,466) |
Cash Flows from Financing Activities: | ||
Payments on convertible notes payable | (60,000) | 0 |
Proceeds from convertible note payable | 606,000 | 0 |
Payments on lease payable | (4,832) | 0 |
Proceeds from sale of common stock | 441,500 | 0 |
Payments on acquisition notes payable | (19,380) | 0 |
Proceeds from notes payable | 2,192,138 | 1,245,707 |
Payments on notes payable | (1,949,837) | (1,049,904) |
Net cash provided by financing activities | 1,205,589 | 195,803 |
Net change in cash | 172,159 | (34,251) |
Cash at beginning of period | 68,369 | 74,001 |
Cash at end of period | 240,528 | 39,750 |
Supplemental Cash Flow Disclosure: | ||
Interest paid | 181,243 | 53,017 |
Taxes paid | 0 | 0 |
Common stock issued for stock payable | 60,287 | 0 |
Common stock issued upon conversion of convertible note payable | 168,626 | 0 |
Discount on convertible notes from beneficial conversion features | $ 745,000 | $ 0 |
1. Organization and Description
1. Organization and Description of Business | 9 Months Ended |
Jul. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Business Activity ProBility Media Corporation (formerly Panther Biotechnology, Inc.) (the “Company”) was incorporated in the State of Nevada on July 11, 2011. The Company was originally incorporated as New Era Filing Services Inc., changed its name to NEF Enterprises, Inc. on October 4, 2011, changed its name to Panther Biotechnology, Inc. on October 29, 2014 and changed its name to ProBility Media Corporation on February 1, 2017. The Company incorporated a wholly-owned subsidiary, PubCo Reporting Services, Inc., formerly known as New Era Filing Services, Inc., in Florida on November 20, 2012. Effective June 1, 2015, the Company sold PubCo Reporting Services, Inc. to its then management. On October 31, 2016 (the “Closing Date”), we consummated the transactions contemplated by a Share Exchange Agreement (the “Exchange Agreement” or the “Business Combination”), by and between the Company and Brown Technical Media Corporation (“Brown”). In connection with the closing of the Exchange Agreement, we issued 32,000,000 restricted shares of our common stock, to the shareholders of Brown, which included Evan M. Levine, our Chief Executive Officer and director (6,600,000 shares of common stock beneficially owned by Mr. Levine, when including minor children and affiliates, who received shares in the exchange), Noah I. Davis, our President and Chief Operating Officer (7,175,522 shares of common stock beneficially owned by Mr. Davis), and Steven M. Plumb, our Chief Financial Officer (11,469,785 shares of common stock beneficially owned by Mr. Plumb, when including shares held by his minor children and affiliates, who received shares in the exchange) in consideration for 100% of the outstanding capital stock of Brown, and Brown became our wholly-owned subsidiary. This transaction has been accounted for as a reverse merger with Brown as the surviving entity. The assets of the Company that existed prior to the transaction have been recorded at their historical value as of the closing of the transaction and has been added to the historical cost basis of the assets of Brown. Brown was incorporated on January 21, 2014 and is a provider of codes, standards, training materials and related materials in print and electronically to small, medium and large businesses, government, and non-profit organizations in the United States. Brown acquired a 51% interest on January 31, 2014 in Brown Book Shop, Inc., (“Brown Books”) a Texas corporation that was formed as Brown Book Shop, a sole-proprietorship, in 1946, and on June 8, 1976 was incorporated in Texas as Brown Book Shop, Inc. The Company operates a number of e-commerce websites, including www.browntechnical.org, www.1examprep.com, www.CranburyInternational.com, www.New-Providers.com, and www.WMarketingOnline.com. On October 31, 2016, Brown acquired the remaining 49% of Brown Books. On August 6, 2014, Brown formed Pink Professionals, LLC (“Pink”) to develop and market social networking software aimed at female managers and professionals in certain targeted professions, such as Oil and Gas, Finance and Information Technology. At the time of formation, Brown owned 75% of the membership units of Pink. On October 31, 2014, Brown sold the rights to the use of the software in the Oil and Gas industry to the 25% owner of Pink in exchange for cash consideration and the cancelation of such 25% owner’s membership units. Accordingly, Brown now owns 100% of the equity in Pink. On January 19, 2017, the Company acquired 100% of the membership units of Premier Purchasing and Marketing Alliance LLC, a New York limited liability company, also known as National Electrical Wholesale Providers (“NEWP”). The acquisition of NEWP was effective January 1, 2017. On January 26, 2017, the Company acquired 100% of the membership units of One Exam Prep, LLC, (“One Exam”) a Florida limited liability company. The acquisition of One Exam was effective January 1, 2017. On June 22, 2017, the Company acquired 100% of the outstanding shares of W Marketing Inc. (“W Marketing”) a New York corporation. The acquisition of W Marketing was effective May 1, 2017. On July 31, 2017, the Company acquired 100% of the outstanding shares of Cranbury Associates, LLC (“Cranbury”) a Vermont limited liability company. The acquisition of Cranbury was effective May 1, 2017. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 9 Months Ended |
Jul. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Basis of Presentation The Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its majority owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation. Use of Estimates The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Business Combinations The Company accounts for all business combinations using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company may utilize third-party valuation specialists to assist the Company in the allocation. Initial purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition. Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred. Cash Cash and cash equivalents include short-term investments with original maturities of 90 days or less. The recorded value of our cash and cash equivalents approximates their fair value. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and typically do not bear interest. The Company provides allowances for doubtful accounts related to accounts receivable for estimated losses resulting from the inability of its customers to make required payments. The Company takes into consideration the overall quality of the receivable portfolio along with specifically-identified customer risks. The Company has an allowance for doubtful accounts of $27,901 and $19,635 as of July 31, 2017 and October 31, 2016, respectively. Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the average cost method. Price protection is recorded when earned as a reduction to the cost of inventory. The Company decreases the value of inventory for estimated obsolescence equal to the difference between the cost of inventory and a realizable selling price less normal costs of disposal, based upon an aging analysis of the inventory on hand, specifically known inventory-related risks, and assumptions about future demand and market conditions. The Company has no allowance as of July 31, 2017 and October 31, 2016. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. The Company calculates depreciation expense using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their useful lives or the initial lease term. Expenditures for major renewals and improvements that extend the useful life of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. The estimated useful lives of property and equipment are as follows: Classification Estimated Useful Lives Equipment 5 to 7 years Leasehold improvements 4 to 5 years Furniture and fixtures 4 to 7 years Websites 3 years Fair Value Measurements Fair value is defined under GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 – observable inputs such as quoted prices for identical instruments traded in active markets. Level 2 – inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. Revenue Recognition The Company records revenue from sales transactions when title and risk of loss are passed to the customer, there is persuasive evidence of an arrangement for sale, shipment has occurred and/or services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. The Company’s shipping terms typically specify F.O.B. origination, at which time title and risk of loss have passed to the customer. The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouses, thereby increasing efficiency and reducing costs. The Company recognizes revenue for drop-shipment arrangements upon shipment to the customer with contract terms that typically specify F.O.B. shipping point. The Company records freight billed to its customers as revenue and the related freight costs as a cost of sales. Sales Taxes The State of Texas imposes a sales tax on the Company’s sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the State. The Company’s accounting policy is to exclude the tax collected and remitted to the State from revenue and cost of sales. Leases All leases are reviewed for capital or operating classification at their inception under the guidance of Accounting Standards Codification Topic 840, “Leases” (“ASC 840”). We conduct operations primarily under operating leases. For leases that contain rent escalations, we record the total rent payable during the lease term, as defined above, on a straight-line basis over the term of the lease and record the difference between the rents paid and the straight-line rent as a deferred rent liability. Advertising Costs We expense advertising costs as incurred and recorded $661,033 and $142,194 during the nine months ended July 31, 2017 and 2016, respectively. Income Taxes Deferred income taxes are provided to reflect the differences between the tax bases of assets and liabilities and their reported amounts in the Financial Statements using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company performs an evaluation of the realizability of deferred tax assets on a quarterly basis. This evaluation requires management to make use of estimates and assumptions and considers all positive and negative evidence and factors, such as the scheduled reversal of temporary differences, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies. The Company accounts for unrecognized tax benefits based upon its assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company reports a liability for unrecognized tax benefits resulting from unrecognized tax benefits taken or expected to be taken in a tax return and recognizes interest and penalties, if any, related to its unrecognized tax benefits in income tax expense. Intangible Assets Intangible assets are amortized using the straight-line method over their estimated period of benefit. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization. The Company recognized impairment expense of $218,058 related to the Faulk patents during the nine months ended July 31, 2017. Impairment of Long-Lived Assets The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset should no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the future net undiscounted cash flows expected to result from the asset, including eventual disposition. If the future net undiscounted cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and estimated fair value. Investments in Equity Interest The Company reviews its investments for other-than-temporary impairment whenever events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. Investments identified as having an indication of impairment are subject to further analysis to determine if the impairment is other-than-temporary and this analysis requires estimating the fair value of the investment. The determination of fair value of the investment involves considering factors such as current economic and market conditions, the operating performance of the companies including current earnings trends and forecasted cash flows, and other company and industry specific information. Share-based Expenses ASC 718 “ Compensation – Stock Compensation” The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “ Equity – Based Payments to Non-Employees” Fair Value of Financial Instruments The Company believes that the fair value of its financial instruments comprising cash, accounts receivable, cost investments, accounts payable, and convertible notes approximate their carrying amounts. As of July 31, 2017 and October 31, 2016, the Company had no Level 1 or Level 2 financial assets or liabilities, and Level 3 financial liabilities consisted of the Company’s derivative liability. There are no level 3 fair value measurements as of July 31, 2017 since the convertible note was modified and no derivative liability exists as of July 31, 2017: Carrying Level 1 Level 2 Level 3 Derivative liability $ – $ – $ – $ – The following table presents the fair value measurement information for the Company as of October 31, 2016: Carrying Amount Level 1 Level 2 Level 3 Derivative liability $ 218,943 $ – $ – $ 218,943 Loss per Share Basic loss per common share equals net loss divided by weighted average common shares outstanding during the period. Diluted loss per share includes the impact on dilution from all contingently issuable shares, including options, warrants and convertible securities. The common stock equivalents from contingent shares are determined by the treasury stock method. The Company incurred net losses for the three and nine months ended July 31, 2017, and therefore, basic and diluted loss per share for those periods are the same as all potential common equivalent shares would be antidilutive. For the nine months ended July 31, 2017, the Company had 33,000 common stock warrants outstanding, at an exercise price of $6.00 per share, expiring on August 31, 2020, that were excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive. Recent Accounting Pronouncements Balance Sheet Classification of Deferred Taxes In November 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, simplifying the balance sheet classification of deferred taxes by requiring all deferred taxes, along with any related valuation allowance, to be presented as noncurrent. This ASU is effective for the Company beginning in the first quarter of 2017, allows for early adoption and may be applied either prospectively or retrospectively. This ASU is not expected to have a material impact on the Company’s Financial Statements. Simplifying the Measurement of Inventory In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, amending the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value instead of the lower of cost or market value. This ASU is effective for the Company beginning in the first quarter of 2017, allows for early adoption and must be applied prospectively after the date of adoption. The Company has adopted ASU 2015-11 and the implementation had no material impact on the Company’s Financial Statements. Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), replacing most existing revenue recognition guidance under GAAP and eliminating industry specific guidance. The core principal of the new guidance is that an entity should recognize revenue for the transfer of goods and services equal to an amount it expects to be entitled to receive for those goods and services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date by one year. This ASU will be effective for the Company beginning in the first quarter of 2018, allows for early adoption in the first quarter of 2017 and may be applied using either a full retrospective approach or a modified retrospective approach. The Company is currently analyzing the impacts of the guidance including the increased footnote disclosures. Reclassifications Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. |
3. Going Concern and Liquity Co
3. Going Concern and Liquity Considerations | 9 Months Ended |
Jul. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern and Liquity Considerations | The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a cumulative net loss since inception of $5,006,296, negative working capital of $1,385,864 and has required additional capital raises and credit card advances to support its operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving capital from shareholders and other related parties and obtain financing from third parties. No assurance can be given that the Company will be successful in these efforts. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
4. Property and Equipment
4. Property and Equipment | 9 Months Ended |
Jul. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consists of the following: July 31, 2017 October 31, 2016 Equipment $ 68,182 $ 68,182 Web sites 44,600 32,956 Leasehold improvements 19,002 19,002 Office equipment 89,318 5,533 Property and equipment 221,102 125,673 Less: accumulated depreciation (48,778 ) (27,163 ) Property and equipment, net $ 172,324 $ 98,510 Depreciation expense for the nine months ended July 31, 2017 and 2016, is $21,615 and $1,659, respectively. |
5. Intangible Assets
5. Intangible Assets | 9 Months Ended |
Jul. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible assets consisted of the following as of July 31, 2017 and October 31, 2016: Useful life July 31, 2017 October 31, 2016 Faulk Patents 10 $ – $ 274,000 Customer Lists 3 671,327 – Copyrights 5 1,250,688 – Accumulated amortization and impairment (151,620 ) (35,392 ) Intangible assets, net $ 1,770,395 $ 238,608 Amortization expense for the nine months ended July 31, 2017 and 2016 is $172,169 and $0, respectively. The amortization included amortization of $20,550 on the Faulk Patents and the Company recognized impairment of $218,058 related to the Faulk assets during the quarter ending July 31, 2017. |
6. Related Party Transactions
6. Related Party Transactions | 9 Months Ended |
Jul. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | On November 7, 2016, the Company agreed to issue 500,000 shares of its restricted common stock to the Vice Chairman of the Board, Richard Corbin. The fair market value of the common stock was $395,000 on the date of issuance. On December 23, 2016, the Company sold 333,334 shares of restricted common stock to the Vice Chairman of the Board of Directors, Richard Corbin, for gross proceeds of $50,000. On January 30, 2017, the Company borrowed $70,000 from Richard Corbin, the Vice Chairman of the Board. The loan was originally due on February 10, 2017, at which time the Company was to repay the loan and $1,000 of interest. The loan has been amended and the maturity date was extended to June 2020. As of July 31, 2017, the outstanding balance was $45,000. As of July 31, 2017 and October 31, 2016, total advances from certain officers, directors and shareholders of the Company were $88,000, which were used for payment of general operating expenses. The related parties advances have no conversion provisions into equity, have no paperwork associated with them and do not incur interest. The Company uses credit cards of related parties to pay for certain operational expenses. The Company has agreed to pay the credit card balances, including related interest. As of July 31, 2017 and October 31, 2016, the Company has outstanding balances on these credit cards of $365,801 and $271,704, respectively. During the nine months ended July 31, 2017, the Company advanced $123,672 to an urgent care center that is managed by the President and CFO of the Company, who collectively own 6% of the equity of the urgent care center. The Company owns 5% of the equity in the urgent care center. On July 31, 2017, the Company recognized an impairment charge of $169,639 related to the investment. Officer Compensation In November 2015, the board of directors authorized compensation for Mr. Levine, the Chief Executive Officer of the Company, as follows: · A $25,000 lump sum payment; · 2016 salary established at $15,000 per month commencing January 15, 2016; · Healthcare reimbursement of $1,000 per month; and · 2016 bonus, if warranted, will be determined at the discretion of the compensation committee of the Board of Directors and paid in a lump sum in November or December 2016. The bonus was not paid. In April 2016, the Company retained Steven M. Plumb, CPA as Chief Financial Officer, through a contract with his consulting firm, Clear Financial Solutions, Inc. (“Clear Financial”). Clear Financial is paid $6,000 per month for Mr. Plumb’s services. In February 2014, Brown entered into consulting agreements with Mr. Davis and Mr. Plumb. The agreements were modified on May 1, 2016 such that Mr. Davis, the President and Chief Operating Officer is paid $11,000 per month by Brown and Mr. Plumb, the Chief Financial Officer, is paid $4,500 per month by Brown. The contracts expire on December 19, 2017. During the nine months ended July 31, 2017, Mr. Levine, Mr. Davis, and Mr. Plumb were paid $105,000, $93,500 and $126,000, respectively, which is current period compensation and liquidation of amounts owed from prior periods. |
7. Notes Payable
7. Notes Payable | 9 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes payable consists of the following: As of, July 31, 2017 October 31, 2016 Note payable dated September 9, 2016, bearing interest at 14.9% per annum, due November 2017 $ 52,000 $ 49,799 Note payable dated May 14, 2015, bearing interest at 18% per annum, due September 2018, guaranteed by the officers of the Company. 100,983 100,496 Note payable dated May 19, 2015, bearing interest at 33% per annum, due September 14, 2017, and guaranteed by the officers of the Company. The effective interest rate is 35.6% per annum. This note was paid in full at maturity. 86,269 241,770 Note payable dated October 23, 2014, bearing interest at 10% per annum and due in August 2017. This note was renewed at maturity and the due date was extended to February 2018 78,614 131,960 Note payable dated March 16, 2015 bearing interest at 9%, due June 30, 2017. The Company is currently in default on this note. 51,000 51,000 Note payable dated January 1, 2017, bearing interest at 8%, due September 30, 2017. The note is secured by the membership interest of Premier Purchasing and Marketing Alliance, LLC held by the Company 50,000 – Non-interest bearing note payable dated January 1, 2017, due on March 1, 2017. The Company is currently in default on this note. The note is secured by the membership interest of Premier Purchasing and Marketing Alliance, LLC held by the Company. 36,830 – Note payable dated January 17, 2017, bearing interest at 7%, due on January 17, 2018, and guaranteed by the officers of the Company. 158,466 – Note payable dated March 14, 2017 bearing interest at 9%, due March 14, 2018 66,318 – Note payable dated July 26, 2017 bearing interest at 16.216%, due on July 26, 2018 229,908 – Line of credit with a maximum value of $125,000 dated January 4, 2008 bearing interest at the prime rate plus 2%. 52,081 – Total notes payable 962,469 575,025 Less original issue discount (156,240 ) (156,240 ) Amortization of discount 143,886 82,063 Notes payable, net of discount 950,115 500,848 Less, current portion (950,115 ) – Long term portion of notes payable $ – $ – Notes payable related to certain acquisitions consists of the following: As of, July 31, 2017 October 31, 2016 Notes payable dated June, 22, 2017, bearing interest at 8% per annum, due August 22, 2018 with monthly principal and interest payments totaling $3,306 beginning August 22, 2017. The notes are to the former owners of W Marketing. $ 75,000 $ – Note payable dated July, 31, 2017, bearing interest at 6% per annum, due November 30, 2019 with monthly principal and interest payments totaling $4,153 beginning November 1, 2017. The notes are to the former owner of Cranbury. 100,000 – Notes payable dated January 31, 2014 bearing interest at 8%, due February 1, 2019 with monthly principal and interest payments totaling $4,629. The notes are due to the former owners of Brown Book Store. 350,676 370,056 Total notes payable 525,676 370,056 Less, current portion (137,974 ) (26,311 ) Long term portion of notes payable $ 387,702 $ 343,745 Years ending July 31, Future 2018 $ 137,974 2019 387,702 2020 – 2021 – 2022 – Thereafter – $ 525,676 The fair values approximate the related carrying values of the Company’s long-term debt, including current maturities. |
8. Stock Payable
8. Stock Payable | 9 Months Ended |
Jul. 31, 2017 | |
Notes to Financial Statements | |
Stock Payable | As of October 31, 2016, the Company has 324,000 shares of its restricted common stock that were fully vested and have not been issued. The shares have a fair market value of $118,230 as of October 31, 2016, of which 300,000 shares valued at $84,562 is owed to related parties. The 324,000 common shares were issued during the nine months ended July 31, 2017 and the stock payable balance was $0 on July 31, 2017. |
9. Convertible Notes Payable
9. Convertible Notes Payable | 9 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | July 31, October 31, Description 2017 2016 On August 20, 2015, the Company executed a convertible note payable to Typenex Co-Investment, L.LC. in the original principal amount of $247,000 for net proceeds of $220,000, payable on March 31, 2018 bearing interest at 10% per annum. This note is convertible into the Company’s common stock at $7.50 per share unless the market capitalization of the Company falls below $15,000,000, at which point the conversion price will equal the market price of the Company’s common stock on the date of conversion. On October 29, 2015, the market capitalization of the Company fell below $15,000,000 and the variable conversion feature became permanent. The note is unsecured. On May 12, 2017 the note holder sold this note to an unrelated third party. See additional information below. $ 125,000 $ 265,000 During the year ended October 31, 2016, the Company sold convertible promissory notes in aggregate amount of $87,000 to three investors. During the six months ending April 30, 2017, the Company sold an additional note with a face value of $50,000. The notes bear interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a capital raise of $500,000 by December 31, 2016 (a “Qualified Raise”). The notes may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. On December 31, 2016, notes with a principal and accrued interest balance of $88,626 were converted into 709,008 shares of the Company’s common stock. The remaining note is due on December 31, 2017. 50,000 87,000 On January 20, 2017, the Company executed a non-interest bearing convertible note in the original principal amount of $300,000, payable on January 20, 2018. The note is convertible into the Company’s common stock at $0.50 per share, no earlier than one year from the date of the note. The note is secured by the membership units of One Exam Prep, LLC held by the Company. 300,000 – In June 2017, the Company sold convertible notes payable of $356,000 to 8 investors. The notes bear interest at 15%, are due in one year and are convertible at $0.15 per share. In connection with the issuance, the company recorded a discount of $356,000 from the beneficial conversion feature that will be amortized over the life of the note. 356,000 – In June 2017, the Company sold a convertible note payable of $200,000 to an investor. The note bears interest at 12% and is due in June 2020 and is convertible at $0.25 per share. The Company is obligated to make monthly principal and interest payments of $2,000 per month to the note holder. In connection with the issuance, the company recorded a discount of $184,000 from the beneficial conversion feature that will be amortized over the life of the note. 200,000 On June 18, 2017, the Vice Chairman of the Board, who holds a $45,000 note dated January 30, 2017, with the Company agreed to convert the principal balance on his note into a convertible note that bears interest at 12% and is due in June 2020 and is convertible at $0.25 per share. The Company is obligated to make monthly principal and interest payments of $500 per month to the note holder. 45,000 – Total convertible notes payable, net $ 1,076,000 $ 352,000 Less: net discount on convertible notes payable (505,222 ) – Less, current portion (525,778 ) (352,000 ) Long term portion of convertible notes payable 45,000 – On October 11, 2016, the Company entered into a Settlement Agreement with Typenex Co-Investment, LLC (“Typenex”), whereby the Company and Typenex agreed to modify the terms of the Secured Convertible Promissory Note dated August 20, 2015 (the “Note”) between the Company and Typenex. Under the terms of the Settlement Agreement, the parties agreed that the Company will repay $265,000 plus accrued interest (the “Settlement Amount”) in fourteen payments. The first thirteen payments will be in the amount of $20,000 and the fourteenth payment will be in the amount of the unpaid balance of the Settlement Amount. The first payment was due and paid on October 21, 2016. Subsequent payments are due on the fifth day of each month thereafter. The Company will make the first thirteen payments as follows: (i) $10,000 in cash, and (ii) if elected by Typenex in its sole discretion, up to $10,000 in shares of Company’s common stock. The conversion price of the portion of the payment to be made in the Company’s common stock will be based upon the market price which shall mean 60% multiplied by the average of the three (3) lowest Closing Bid Prices in the ten (10) Trading Days immediately preceding the applicable payment date. On May 12, 2017, Typenex sold the Note to an unrelated third party. In connection with the sale of the Note, the Company and the purchaser agreed to modify the terms of the Note so as to change the conversion price from a variable conversion rate to a fixed conversion price of $0.04 per share. In connection with the change to fixed conversion terms the Company no longer has a derivative liability and recorded a beneficial conversion feature of $205,000 which is included with interest expense. On June 21, 2017, the debt holder converted $80,000 in accordance with the conversion terms for 2,000,000 shares of common stock. |
10. Capitalized Leases
10. Capitalized Leases | 9 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Capitalized Leases | The Company has an obligation under a capitalized lease for certain equipment with a lease term of five years, expiring through May 2021. The capital lease obligation totaled $71,578 at July 31, 2017, and require monthly payments of $2,044. Interest is imputed at an average rate of approximately 18.00%. At July 31, 2017, the cost of rental equipment under capital leases amounted to $76,410 and related accumulated depreciation amounted to $9,905. The rental equipment may be repurchased at favorable prices by the Company upon expiration of the lease term (generally at the fair market value of the equipment at the expiration of the lease). The liability under each lease is secured by the underlying equipment on the lease. At July 31, 2017, future minimum lease payments by year and the present value of future minimum capital lease payments are as follows: Years ending July 31, Amount 2018 $ 24,528 2019 24,528 2020 24,528 2021 24,528 2022 4,171 Total minimum payments $ 102,283 Less amount representing interest (30,705 ) Present value of minimum lease payments 71,578 Less: current portion (12,654 ) Total long-term portion $ 58,924 |
11. Derivative Liabilities
11. Derivative Liabilities | 9 Months Ended |
Jul. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | On August 20, 2015, the Company issued a convertible note agreement with a variable conversion feature that gave rise to an embedded derivative instrument. The derivative feature has been valued using a binomial lattice-based option valuation model using holding period assumptions developed from the Company’s business plan and management assumptions, and expected volatility from comparable companies including OTC Pink® and small-cap companies. Increases or decreases in the Company’s share price, the volatility of the share price, changes in interest rates in general, and the passage of time will all impact the value of the derivative instrument. The Company re-values the derivative instrument at the end of each reporting period and any changes are reflected as changes in derivative liabilities in the consolidated statements of operations. Beginning in May 2017 the Company no longer had any derivative liabilities due to a modification in the convertible feature of certain notes. See note 9 for a discussion of the convertible note. The assumptions used are as follows: July 31, 2017 October 31, 2016 Market value of common stock on measurement date (1) $ n/a $ 0.56 Adjusted conversion price (2) $ n/a $ 0.2304 Risk free interest rate (3) n/a 0.68% Life of the note in years n/a 1.726 years Expected volatility (4) n/a 360.57% Expected dividend yield (5) – – (1) The market value of common stock is based on closing market price as of initial valuation date. (2) The adjusted conversion price is calculated based on conversion terms described in the note agreement. (3) The risk-free interest rate was determined by management using the 2 year Treasury Bill as of the respective offering or measurement date. (4) The volatility factor was estimated by management using the historical volatilities of the Company’s stock. (5) Management determined the dividend yield to be 0% based upon its expectation that it will not pay dividends for the foreseeable future. There was no derivative liability as of July 31, 2017. The valuation of the derivative liability was $218,943 on October 31, 2016. During the nine months ended July 31, 2017, the Company recognized derivative expense of $136,703 related to the change in fair value and gain on debt extinguishment of $82,240 as a result of principal payments totaling $60,000. |
12. Stockholders' Equity
12. Stockholders' Equity | 9 Months Ended |
Jul. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | On November 7, 2016, the Company agreed to issue 500,000 shares of its restricted common stock to the Vice Chairman of the Board, Richard Corbin. The fair market value of the common stock was $395,000 on the date of issuance. On November 7, 2016, the Company agreed to issue 75,000 shares of restricted common stock to James Sapirstein, a former director of the Company, for his service as a director. The fair market value of the common stock was $59,250 on the date of issuance. On November 7, 2016, the Company formed a Scientific Advisory Board (“SAB”) comprised of David Barshis, John Norton, and Heinz-Josef Lenz. The Company agreed to issue 150,000 shares of its restricted common stock to each member of the SAB or a total of 450,000 shares of common stock as compensation for their service on the SAB. The fair market value of the common stock was $355,500 on the date of issuance. On November 8, 2016, the Company issued 23,187 shares of restricted common stock to the former Chairman of the Board for the settlement of stock payable. The fair market value of the common stock was $60,287 on the date of issuance. On November 8, 2016, the Company issued 25,317 shares of restricted common stock to a consultant as compensation. The fair market value of the common stock was $20,000 on the date of issuance. On November 8, 2016, the Company issued 180,000 shares of restricted common stock to Steven Plumb, the Company’s Chief Financial Officer, as compensation. These shares had been authorized by the board of directors in March 2016 and were vesting on a monthly basis. In November 2016, the board of directors agreed to accelerate the vesting of the shares and issue all of the shares originally granted. The fair market value of the common stock was $150,505 on the date of grant. On November 22, 2016, the Company sold 566,666 shares of restricted common stock for gross proceeds of $85,000. On December 23, 2016, the Company sold 333,334 shares of restricted common stock to the Vice Chairman of the Board of Directors, Richard Corbin, for gross proceeds of $50,000. On December 31, 2016, investors holding convertible notes with a face value of $87,000 converted their notes into 709,008 shares of restricted common stock according to the terms of the agreement. In December 2016 and January 2017, the Company sold an aggregate of 1,256,667 shares of restricted common stock for gross proceeds of $188,500. On January 19, 2017, the Company issued 25,253 shares of restricted common stock to a consultant for services rendered. The fair market value of the shares on the date of issuance was $25,000. On January 19, 2017, the Company issued 645,000 shares of restricted common stock under the terms of an Exchange Agreement with the owners of Premier Purchasing and Marketing Alliance, LLC. The fair market value of the shares on the date of issuance was $370,875. On January 30, 2017, the Company sold 53,333 shares of restricted common stock for gross proceeds of $8,000. On February 6, 2017, the Company issued 12,500 shares of restricted common stock to a consultant for services rendered pursuant to a consulting agreement entered on February 15, 2017. The fair market value of the common stock was $7,188 on the date of issuance. On February 10, 2017, the Company sold 166,667 shares of restricted common stock for gross proceeds of $25,000. On March 1, 2017, the Company sold 500,000 shares of restricted common stock to two investors for gross proceeds of $75,000. On March 7, 2017, the Company issued 27,778 shares of restricted common stock to a consultant for services rendered pursuant to a consulting agreement entered on January 18, 2017. The fair market value of the common stock $25,000 on the date of issuance. On March 20, 2017, the Company issued 48,077 shares of restricted common stock to a consultant for services rendered pursuant to a consulting agreement entered on January 18, 2017. The fair market value of the common stock $25,000 on the date of issuance. On April 20, 2017, the Company issued 47,170 shares of restricted common stock to a consultant for services rendered pursuant to a consulting agreement entered on January 18, 2017. The fair market value of the common stock $25,000 on the date of issuance. On April 14, 2017, the Company sold 66,667 shares of restricted common stock to an investor for gross proceeds of $10,000. On May 1, 2017, the Company authorized the issuance of 670,000 shares of common stock to Evan Levine, CEO of the Company, and has agreed to issue 670,000 shares of common stock to both Noah Davis, COO and Steven Plumb, CFO, and 223,000 shares of common stock to Rich Corbin, Jr., Chairman of the Board of Directors, as compensation. The fair market value of the grants to Levine, Davis, and Plumb on the date of grant was $368,500, for a total of $1,105,500. The fair market value of the grant to Corbin was $122,833 on the date of grant. On May 1, 2017, the Company issued 40,744 shares to two consultants for services. The fair market value of the common stock was $24,949 on the date of issuance. On May 18, 2017 and June 18, 2017, the Company issued 58,548 and 53,442 shares of restricted common stock to a consultant for services rendered pursuant to a consulting agreement entered on January 18, 2017. The fair market value of each issuance of the common stock was $25,000 on the date of issuance. On June 1, 2017, the Company issued 62,552 shares to two consultants for services. The fair market value of the common stock was $24,937 on the date of issuance. On June 21, 2017, a debt holder of the Company converted $80,000 of debt in accordance with the conversion terms for 2,000,000 shares of common stock at $0.04 per share. On June 22, 2017 the Company issued 900,000 shares of common stock related to the acquisition of W Marketing. On July 1, 2017, the Company issued 53,900 shares to two consultants for services. The fair market value of the common stock was $24,946 on the date of issuance. On July 31, 2017, the Company issued 784,313 shares of common stock related to the acquisition of Cranbury. |
13. Acquisitions
13. Acquisitions | 9 Months Ended |
Jul. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | Premier Acquisition On January 19, 2017, the Company executed a Share Exchange Agreement (the “Premier Exchange Agreement”), by and between the Company, Premier Purchasing and Marketing Alliance LLC (“Premier”), and the sole member of Premier, Scott Schwartz. In connection with the closing of the transactions contemplated by the Premier Exchange Agreement (the “Premier Exchange”), we acquired 100% of the outstanding membership interests of Premier from Mr. Schwartz in consideration for $557,705 in consideration as follows: · $50,000 cash; · $136,830 in notes payable; · $370,875 of common stock - 645,000 shares of restricted common stock (the “Premier Shares”). The amounts owed under the First Note, Second Note and Hill Note are secured by a Security Agreement, providing Mr. Schwartz a first priority security interest in all of the membership interests of Premier. The Premier Exchange has an effective date of January 1, 2017. The Premier Share Exchange included standard and customary representations, warranties and indemnification rights. Premier, also known as National Electrical Wholesale Providers (NEWP), is in the business of servicing electrical wholesalers throughout the United States with electrician related study material including the National Electrical Code. Premier provides a complete line of printed reference materials in addition to eBooks, downloadable digital formatting, and mobile applications to all distributors. Premier has significant corporate accounts with electrical wholesale conglomerates making them one of the largest wholesalers of National Electrical Codes in the United States. Premier also covers HVAC, Plumbing, Industrial and Residential trade reference materials with online training for product education, certification and current code practices. Premier services several multibillion dollar companies such as Consolidated Electrical Distributors and Home Depot reaching thousands of accounts in locations throughout the United States. The following preliminary information summarizes the allocation of the fair values assigned to the assets at the purchase date: Amount Cash and cash equivalents $ – Inventory 58,524 Customer list 55,702 Copyrights 443,479 Total identifiable assets 557,705 Less: liabilities assumed – Total purchase price $ 557,705 The following table summarizes the costs of amortizable intangible assets related to the Premier acquisition: Estimated Cost Useful life Customer list $ 55,702 3 Copyrights 443,479 5 Total $ 499,181 One Exam Prep Acquisition On January 26, 2017, the Company executed a Share Exchange Agreement (the “One Exam Exchange Agreement”), by and between the Company, One Exam Prep LLC (“One Exam”), and the sole member of One Exam, Rob Estell. In connection with the closing of the transactions contemplated by the One Exam Exchange Agreement (the “One Exam Exchange”), we acquired 100% of the outstanding membership interests of One Exam from Mr. Estell in consideration for the Non-Recourse Secured Convertible Promissory Note (the “Secured Note”). The amount owed under the Secured Note is secured by a Security and Pledge Agreement, providing Mr. Estell a first priority security interest in all of the membership interests of One Exam, and allowing him to take over control and ownership of One Exam if we default in our obligations under the Secured Note. The One Exam Exchange has an effective date of January 1, 2017. The One Exam Share Exchange included standard and customary representations, warranties and indemnification rights. As additional consideration for agreeing to the terms of the transaction, we agreed to issue Mr. Estell up to 1,000,000 shares of restricted common stock of the Company, as an earn-out, with shares being issued in fiscal 2017 and/or fiscal 2018 (up to a maximum of 1,000,000 in aggregate for both years (the “Earn-Out Shares”)), based on the following calculation: (a) total annual revenue of One Exam (for the years ended December 31, 2017 and 2018, as applicable) minus $1,000,000, divided by three, (b) plus total net profit of One Exam minus $100,000, multiplied by three, multiplied by (c) 0.30. For example: Annual revenue of One Exam $ 4,000,000 Less: $1,000,000 (1,000,000 ) Sub-total 3,000,000 Divided by 3 Divided by 3 Sub-total 1,000,000 Net profit of One Exam 200,000 Less: $100,000 (100,000 ) Sub-total $ 1,100,000 Times .30 Times 0.30 Common shares up to 1,000,000 330,000 One Exam is in the business of exam preparation with a focus on construction training and certification. One Exam offers eLearning courses and weekly training classes and certification in a wide variety of topics for contractors with continuing education in 22 states with a goal of servicing all 50 states. One Exam owns over 70 domains pertaining to contractor licensing and continuing education throughout the United States. One Exam has written dozens of courses which are offered both in an online e-learning setting or in a classroom. The Non-Recourse Secured Convertible Promissory Note (the “Secured Note”) provided to Mr. Estell at closing evidences the principal amount of $300,000 owed to Mr. Estell, which does not accrue interest. Beginning on the first business day which falls thirty days after the earlier of (a) January 20, 2018; and (b) the date we determine in our sole discretion, and continuing month to month thereafter, a portion of the principal amount of the Secured Note equal to the lesser of (A) ten percent (10%) of the total trading volume of our common stock for the thirty (30) days prior to such applicable date; and (B) such number of shares of common stock as equals 4.99% of our then outstanding shares of common stock, multiplied by $0.50 per share, automatically converts into common stock. Additionally, on the first business day following January 20, 2019, the remaining balance of the Secured Note converts into common stock at a conversion price of $0.50 per share. If we fail to comply with any of the provisions of the Secured Note, Mr. Estell’s sole remedy is to take back ownership of the membership interests representing 100% of the ownership of One Exam. The Secured Note contains standard and customary events of default and may be prepaid at any time without penalty. Mr. Estell also entered into a Lock-Up Agreement with us in connection with the closing. As part of the One Exam Exchange, we entered into a Consulting Agreement with Mr. Estell. The Consulting Agreement continues until December 31, 2020, terminable by either party with 90 days prior notice at any time, or 10 days’ notice by us upon the material breach of any term of the Consulting Agreement by Mr. Estell. We agreed to pay Mr. Estell compensation of $1,500 per week during the first year of the term; $1,575 per week during the second year of the term; and $1,654 per week during the third year of the term and Mr. Estell agreed to customary confidentiality and work made for hire terms in the agreement. We also agreed that Mr. Estell would be paid a $60,000 signing bonus, payable in four installments of $15,000 each on April 30, 2017, May 30, 2017, June 30, 2017 and July 30, 2017, and that Mr. Estell could earn a bonus on June 30th and December 31st, of each year during the term of the agreement, beginning with periods after January 1, 2017 equal to (a) total revenue generated by One Exam and other related companies and assets we may acquire in the future, less (i) $500,000, less (ii) 50% of the total revenue for the prior annual period of any related companies and assets we may acquire in the future, (b) divided by 100 (rounded down to the nearest $250,000 increment); plus (x) total gross profit generated by One Exam and other related companies and assets we may acquire in the future, less (i) $37,500, less (ii) 50% of the total gross profit for the prior annual period of any related companies and assets we may acquire in the future; (y) divided by 100 (rounded down to the nearest $25,000 increment) (the “Bonus”). We are required to calculate the Bonus as soon as practicable after each June 30th and December 31st, and pay the Bonus due promptly after such calculation is made. In the event that the revenue or gross profit calculation above is negative, we shall decrease the applicable Bonus, provided that the Bonus may not be less than $0, provided further that any negative Bonus calculation for any period ending June 30th, carries over and adjusts downward any positive Bonus for any period ending December 31st. The following preliminary information summarizes the allocation of the fair values assigned to the assets at the purchase date: Amount Cash and cash equivalents $ 14,232 Inventory 159,961 Property and equipment 76,410 Copyrights 443,091 Total identifiable assets 693,694 Less: liabilities assumed (121,694 ) Less: contingent consideration and bonus consideration (272,000 ) Total purchase price (less contingent and bonus consideration) $ 300,000 The following table summarizes the costs of amortizable intangible assets related to the One Exam acquisition: Estimated Cost Useful life (years) Copyrights $ 443,091 5 Total $ 443,091 W Marketing Acquisition On June 22, 2017, we consummated the transactions contemplated by a Share Exchange Agreement (the “ W Marketing Exchange Agreement W Marketing W Marketing Shareholders W Marketing Exchange W Marketing Shares As additional consideration for agreeing to the terms of the transaction, we agreed to issue the W Marketing Shareholders an additional $50,000 of shares of restricted common stock (based on the closing sales price of the Company’s common stock on July 31, 2018), in the event the revenue generated by W Marketing exceeds $1.5 million during the 12 calendar months ended July 31, 2018 (the “ W Marketing Earn-Out W Marketing Earn-Out Shares W Marketing, located in Hauppauge, New York, provides the latest National Electrical Code (NEC) through its nationwide network of electrical distributors, which includes bookstores, trade/vocational schools, universities, retail chains, specialty retailers, and independent hardware stores. The NEC is a regionally adoptable standard for the safe installation of electrical wiring and equipment in the United States. It is part of the National Fire Codes series published by the National Fire Protection (NFPA), a private association. First published in 1897, the NEC is updated and published every three years. W Marketing’s library of published products includes courses and exam preparation materials. We provided Promissory Notes (the “ W Marketing Notes As part of the W Marketing Exchange, on June 22, 2017, and effective June 23, 2017, we entered into an employment agreement with Jeffrey S. Spellman, one of the employees of W Marketing (“ Employment Agreement Employment Agreement Shares In the event that Mr. Spellman’s employment with the Company is terminated by Mr. Spellman, terminated by the Company for cause, or terminated due to Mr. Spellman’s death or disability (a “ Triggering Termination The shares issued pursuant to the W Marketing Exchange Agreement are subject to a lock-up agreement (the “ Lock-Up Agreement The following preliminary information summarizes the allocation of the fair values assigned to the assets at the purchase date: Amount Cash and cash equivalents $ 26,343 Accounts receivable 46,245 Inventory 162,871 Copyrights 462,847 Total identifiable assets 698,306 Less: liabilities assumed (123,306 ) Less: contingent consideration and bonus consideration (50,000 ) Total purchase price (less contingent and bonus consideration) $ 525,000 The following table summarizes the costs of amortizable intangible assets related to the One Exam acquisition: Estimated Cost Useful life (years) Copyrights $ 462,847 5 Total $ 412,847 Cranbury Acquisition On July 31, 2017, we consummated the transactions contemplated by a Share Exchange Agreement (the “ Cranbury Exchange Agreement Cranbury Cranbury Member Cranbury Exchange Cranbury Shares As additional consideration for agreeing to the terms of the transaction, we agreed to issue the Cranbury Member an additional $100,000 of shares of restricted common stock (based on the closing sales price of the Company’s common stock on July 31, 2018), in the event the revenue generated by Cranbury exceeds $2.0 million during the 12 calendar months ended July 31, 2018 (the “ Cranbury Earn-Out Cranbury Earn-Out Shares Cranbury, established in 2010, sells training and educational materials to governmental institutions and private sector markets in Brazil, Mexico, Columbia, Trinidad, and other international regions. The Company markets and represents approximately 40 major publishers in international markets. We provided a Promissory Note (the “ Cranbury Note As part of the Cranbury Exchange, on and effective July 31, 2017, we entered into a Consulting Agreement with Ethan Atkin, the Cranbury Member (the “ Consulting Agreement The Cranbury Shares issued pursuant to the Cranbury Exchange Agreement are subject to a lock-up agreement (the “ Lock-Up Agreement The following preliminary information summarizes the allocation of the fair values assigned to the assets at the purchase date: Amount Cash and cash equivalents $ – Accounts receivable 319,097 Property and equipment – Customer list 516,896 Total identifiable assets 835,993 Less: liabilities assumed (235,993 ) Less: contingent consideration and bonus consideration (100,000 ) Total purchase price (less contingent and bonus consideration) $ 500,000 The following table summarizes the costs of amortizable intangible assets related to the One Exam acquisition: Estimated Cost Useful life (years) Customer list $ 516,896 5 Total $ 516,896 Combined Proforma The results of One Exam and Premier are included in the consolidated financial statements effective January 1, 2017. The results of W Marketing and Cranbury are included in the consolidated financial statements effective May 1, 2017. The following schedule contains pro-forma consolidated results of operations for the nine months ended July 31, 2017 and 2016 as if the acquisitions occurred on November 1, 2015. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisition had taken place on November 1, 2015, or of results that may occur in the future. Nine months ended July 31, 2017 2016 As Reported Pro Forma As Reported Pro Forma Revenue $ 5,972,276 $ 7,986,698 $ 2,232,990 $ 4,362,853 Income (loss) from operations (3,937,621 ) (3,809,111 ) (101,191 ) (188,204 ) Net income (loss) $ (4,235,810 ) $ (4,115,689 ) $ (241,908 ) $ (341,611 ) Earnings (loss) per common share-Basic $ (0.10 ) $ (0.10 ) $ (0.01 ) $ (0.01 ) Earnings (loss) per common share-Diluted $ (0.10 ) $ (0.10 ) $ (0.01 ) $ (0.01 ) |
14. Subsequent Events
14. Subsequent Events | 9 Months Ended |
Jul. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | In September 2017, the Company issued 207,150 shares of stock to consultants for professional services. The fair market value of the common stock on the date of issuance was $113,375. |
2. Summary of Significant Acc20
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Jul. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and its majority owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. |
Business Combinations | Business Combinations The Company accounts for all business combinations using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company may utilize third-party valuation specialists to assist the Company in the allocation. Initial purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition. Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred. |
Cash | Cash Cash and cash equivalents include short-term investments with original maturities of 90 days or less. The recorded value of our cash and cash equivalents approximates their fair value. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and typically do not bear interest. The Company provides allowances for doubtful accounts related to accounts receivable for estimated losses resulting from the inability of its customers to make required payments. The Company takes into consideration the overall quality of the receivable portfolio along with specifically-identified customer risks. The Company has an allowance for doubtful accounts of $27,901 and $19,635 as of July 31, 2017 and October 31, 2016, respectively. |
Inventory | Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the average cost method. Price protection is recorded when earned as a reduction to the cost of inventory. The Company decreases the value of inventory for estimated obsolescence equal to the difference between the cost of inventory and a realizable selling price less normal costs of disposal, based upon an aging analysis of the inventory on hand, specifically known inventory-related risks, and assumptions about future demand and market conditions. The Company has no allowance as of July 31, 2017 and October 31, 2016. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. The Company calculates depreciation expense using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their useful lives or the initial lease term. Expenditures for major renewals and improvements that extend the useful life of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. The estimated useful lives of property and equipment are as follows: Classification Estimated Useful Lives Equipment 5 to 7 years Leasehold improvements 4 to 5 years Furniture and fixtures 4 to 7 years Websites 3 years |
Fair Value Measurements | Fair Value Measurements Fair value is defined under GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 – observable inputs such as quoted prices for identical instruments traded in active markets. Level 2 – inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. |
Revenue Recognition | Revenue Recognition The Company records revenue from sales transactions when title and risk of loss are passed to the customer, there is persuasive evidence of an arrangement for sale, shipment has occurred and/or services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. The Company’s shipping terms typically specify F.O.B. origination, at which time title and risk of loss have passed to the customer. The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouses, thereby increasing efficiency and reducing costs. The Company recognizes revenue for drop-shipment arrangements upon shipment to the customer with contract terms that typically specify F.O.B. shipping point. The Company records freight billed to its customers as revenue and the related freight costs as a cost of sales. |
Sales Taxes | Sales Taxes The State of Texas imposes a sales tax on the Company’s sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the State. The Company’s accounting policy is to exclude the tax collected and remitted to the State from revenue and cost of sales. |
Leases | Leases All leases are reviewed for capital or operating classification at their inception under the guidance of Accounting Standards Codification Topic 840, “Leases” (“ASC 840”). We conduct operations primarily under operating leases. For leases that contain rent escalations, we record the total rent payable during the lease term, as defined above, on a straight-line basis over the term of the lease and record the difference between the rents paid and the straight-line rent as a deferred rent liability. |
Advertising Costs | Advertising Costs We expense advertising costs as incurred and recorded $661,033 and $142,194 during the nine months ended July 31, 2017 and 2016, respectively. |
Income Taxes | Income Taxes Deferred income taxes are provided to reflect the differences between the tax bases of assets and liabilities and their reported amounts in the Financial Statements using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company performs an evaluation of the realizability of deferred tax assets on a quarterly basis. This evaluation requires management to make use of estimates and assumptions and considers all positive and negative evidence and factors, such as the scheduled reversal of temporary differences, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies. The Company accounts for unrecognized tax benefits based upon its assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company reports a liability for unrecognized tax benefits resulting from unrecognized tax benefits taken or expected to be taken in a tax return and recognizes interest and penalties, if any, related to its unrecognized tax benefits in income tax expense. |
Intangible Assets | Intangible Assets Intangible assets are amortized using the straight-line method over their estimated period of benefit. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization. The Company recognized impairment expense of $218,058 related to the Faulk patents during the nine months ended July 31, 2017. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset should no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the future net undiscounted cash flows expected to result from the asset, including eventual disposition. If the future net undiscounted cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and estimated fair value. |
Investments in Equity Interest | Investments in Equity Interest The Company reviews its investments for other-than-temporary impairment whenever events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. Investments identified as having an indication of impairment are subject to further analysis to determine if the impairment is other-than-temporary and this analysis requires estimating the fair value of the investment. The determination of fair value of the investment involves considering factors such as current economic and market conditions, the operating performance of the companies including current earnings trends and forecasted cash flows, and other company and industry specific information. |
Share-based Expenses | Share-based Expenses ASC 718 “ Compensation – Stock Compensation” The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “ Equity – Based Payments to Non-Employees” |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company believes that the fair value of its financial instruments comprising cash, accounts receivable, cost investments, accounts payable, and convertible notes approximate their carrying amounts. As of July 31, 2017 and October 31, 2016, the Company had no Level 1 or Level 2 financial assets or liabilities, and Level 3 financial liabilities consisted of the Company’s derivative liability. There are no level 3 fair value measurements as of July 31, 2017 since the convertible note was modified and no derivative liability exists as of July 31, 2017: Carrying Level 1 Level 2 Level 3 Derivative liability $ – $ – $ – $ – The following table presents the fair value measurement information for the Company as of October 31, 2016: Carrying Amount Level 1 Level 2 Level 3 Derivative liability $ 218,943 $ – $ – $ 218,943 |
Loss per Share | Loss per Share Basic loss per common share equals net loss divided by weighted average common shares outstanding during the period. Diluted loss per share includes the impact on dilution from all contingently issuable shares, including options, warrants and convertible securities. The common stock equivalents from contingent shares are determined by the treasury stock method. The Company incurred net losses for the three and nine months ended July 31, 2017, and therefore, basic and diluted loss per share for those periods are the same as all potential common equivalent shares would be antidilutive. For the nine months ended July 31, 2017, the Company had 33,000 common stock warrants outstanding, at an exercise price of $6.00 per share, expiring on August 31, 2020, that were excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Balance Sheet Classification of Deferred Taxes In November 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, simplifying the balance sheet classification of deferred taxes by requiring all deferred taxes, along with any related valuation allowance, to be presented as noncurrent. This ASU is effective for the Company beginning in the first quarter of 2017, allows for early adoption and may be applied either prospectively or retrospectively. This ASU is not expected to have a material impact on the Company’s Financial Statements. Simplifying the Measurement of Inventory In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, amending the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value instead of the lower of cost or market value. This ASU is effective for the Company beginning in the first quarter of 2017, allows for early adoption and must be applied prospectively after the date of adoption. The Company has adopted ASU 2015-11 and the implementation had no material impact on the Company’s Financial Statements. Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), replacing most existing revenue recognition guidance under GAAP and eliminating industry specific guidance. The core principal of the new guidance is that an entity should recognize revenue for the transfer of goods and services equal to an amount it expects to be entitled to receive for those goods and services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date by one year. This ASU will be effective for the Company beginning in the first quarter of 2018, allows for early adoption in the first quarter of 2017 and may be applied using either a full retrospective approach or a modified retrospective approach. The Company is currently analyzing the impacts of the guidance including the increased footnote disclosures. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. |
2. Summary of Significant Acc21
2. Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of estimated useful lives of property | Classification Estimated Useful Lives Equipment 5 to 7 years Leasehold improvements 4 to 5 years Furniture and fixtures 4 to 7 years Websites 3 years |
Schedule of derivative liabilities | There are no level 3 fair value measurements as of July 31, 2017 since the convertible note was modified and no derivative liability exists as of July 31, 2017: Carrying Level 1 Level 2 Level 3 Derivative liability $ – $ – $ – $ – The following table presents the fair value measurement information for the Company as of October 31, 2016: Carrying Amount Level 1 Level 2 Level 3 Derivative liability $ 218,943 $ – $ – $ 218,943 |
4. Property and Equipment (Tabl
4. Property and Equipment (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | July 31, 2017 October 31, 2016 Equipment $ 68,182 $ 68,182 Web sites 44,600 32,956 Leasehold improvements 19,002 19,002 Office equipment 89,318 5,533 Property and equipment 221,102 125,673 Less: accumulated depreciation (48,778 ) (27,163 ) Property and equipment, net $ 172,324 $ 98,510 |
5. Intangible Assets (Tables)
5. Intangible Assets (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Useful life July 31, 2017 October 31, 2016 Faulk Patents 10 $ – $ 274,000 Customer Lists 3 671,327 – Copyrights 5 1,250,688 – Accumulated amortization and impairment (151,620 ) (35,392 ) Intangible assets, net $ 1,770,395 $ 238,608 |
7. Notes Payable (Tables)
7. Notes Payable (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of debt | As of, July 31, 2017 October 31, 2016 Note payable dated September 9, 2016, bearing interest at 14.9% per annum, due November 2017 $ 52,000 $ 49,799 Note payable dated May 14, 2015, bearing interest at 18% per annum, due September 2018, guaranteed by the officers of the Company. 100,983 100,496 Note payable dated May 19, 2015, bearing interest at 33% per annum, due September 14, 2017, and guaranteed by the officers of the Company. The effective interest rate is 35.6% per annum. This note was paid in full at maturity. 86,269 241,770 Note payable dated October 23, 2014, bearing interest at 10% per annum and due in August 2017. This note was renewed at maturity and the due date was extended to February 2018 78,614 131,960 Note payable dated March 16, 2015 bearing interest at 9%, due June 30, 2017. The Company is currently in default on this note. 51,000 51,000 Note payable dated January 1, 2017, bearing interest at 8%, due September 30, 2017. The note is secured by the membership interest of Premier Purchasing and Marketing Alliance, LLC held by the Company 50,000 – Non-interest bearing note payable dated January 1, 2017, due on March 1, 2017. The Company is currently in default on this note. The note is secured by the membership interest of Premier Purchasing and Marketing Alliance, LLC held by the Company. 36,830 – Note payable dated January 17, 2017, bearing interest at 7%, due on January 17, 2018, and guaranteed by the officers of the Company. 158,466 – Note payable dated March 14, 2017 bearing interest at 9%, due March 14, 2018 66,318 – Note payable dated July 26, 2017 bearing interest at 16.216%, due on July 26, 2018 229,908 – Line of credit with a maximum value of $125,000 dated January 4, 2008 bearing interest at the prime rate plus 2%. 52,081 – Total notes payable 962,469 575,025 Less original issue discount (156,240 ) (156,240 ) Amortization of discount 143,886 82,063 Notes payable, net of discount 950,115 500,848 Less, current portion (950,115 ) – Long term portion of notes payable $ – $ – |
Notes payable related to certain acquisitions | As of, July 31, 2017 October 31, 2016 Notes payable dated June, 22, 2017, bearing interest at 8% per annum, due August 22, 2018 with monthly principal and interest payments totaling $3,306 beginning August 22, 2017. The notes are to the former owners of W Marketing. $ 75,000 $ – Note payable dated July, 31, 2017, bearing interest at 6% per annum, due November 30, 2019 with monthly principal and interest payments totaling $4,153 beginning November 1, 2017. The notes are to the former owner of Cranbury. 100,000 – Notes payable dated January 31, 2014 bearing interest at 8%, due February 1, 2019 with monthly principal and interest payments totaling $4,629. The notes are due to the former owners of Brown Book Store. 350,676 370,056 Total notes payable 525,676 370,056 Less, current portion (137,974 ) (26,311 ) Long term portion of notes payable $ 387,702 $ 343,745 |
Schedule of debt maturities | Years ending July 31, Future 2018 $ 137,974 2019 387,702 2020 – 2021 – 2022 – Thereafter – $ 525,676 |
9. Convertible Notes Payable (T
9. Convertible Notes Payable (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of convertible notes payable | July 31, October 31, Description 2017 2016 On August 20, 2015, the Company executed a convertible note payable to Typenex Co-Investment, L.LC. in the original principal amount of $247,000 for net proceeds of $220,000, payable on March 31, 2018 bearing interest at 10% per annum. This note is convertible into the Company’s common stock at $7.50 per share unless the market capitalization of the Company falls below $15,000,000, at which point the conversion price will equal the market price of the Company’s common stock on the date of conversion. On October 29, 2015, the market capitalization of the Company fell below $15,000,000 and the variable conversion feature became permanent. The note is unsecured. On May 12, 2017 the note holder sold this note to an unrelated third party. See additional information below. $ 125,000 $ 265,000 During the year ended October 31, 2016, the Company sold convertible promissory notes in aggregate amount of $87,000 to three investors. During the six months ending April 30, 2017, the Company sold an additional note with a face value of $50,000. The notes bear interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a capital raise of $500,000 by December 31, 2016 (a “Qualified Raise”). The notes may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. On December 31, 2016, notes with a principal and accrued interest balance of $88,626 were converted into 709,008 shares of the Company’s common stock. The remaining note is due on December 31, 2017. 50,000 87,000 On January 20, 2017, the Company executed a non-interest bearing convertible note in the original principal amount of $300,000, payable on January 20, 2018. The note is convertible into the Company’s common stock at $0.50 per share, no earlier than one year from the date of the note. The note is secured by the membership units of One Exam Prep, LLC held by the Company. 300,000 – In June 2017, the Company sold convertible notes payable of $356,000 to 8 investors. The notes bear interest at 15%, are due in one year and are convertible at $0.15 per share. In connection with the issuance, the company recorded a discount of $356,000 from the beneficial conversion feature that will be amortized over the life of the note. 356,000 – In June 2017, the Company sold a convertible note payable of $200,000 to an investor. The note bears interest at 12% and is due in June 2020 and is convertible at $0.25 per share. The Company is obligated to make monthly principal and interest payments of $2,000 per month to the note holder. In connection with the issuance, the company recorded a discount of $184,000 from the beneficial conversion feature that will be amortized over the life of the note. 200,000 On June 18, 2017, the Vice Chairman of the Board, who holds a $45,000 note dated January 30, 2017, with the Company agreed to convert the principal balance on his note into a convertible note that bears interest at 12% and is due in June 2020 and is convertible at $0.25 per share. The Company is obligated to make monthly principal and interest payments of $500 per month to the note holder. 45,000 – Total convertible notes payable, net $ 1,076,000 $ 352,000 Less: net discount on convertible notes payable (505,222 ) – Less, current portion (525,778 ) (352,000 ) Long term portion of convertible notes payable 45,000 – |
10. Capitalized Leases (Tables)
10. Capitalized Leases (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Future maturities of capital lease obligation | Years ending July 31, Amount 2018 $ 24,528 2019 24,528 2020 24,528 2021 24,528 2022 4,171 Total minimum payments $ 102,283 Less amount representing interest (30,705 ) Present value of minimum lease payments 71,578 Less: current portion (12,654 ) Total long-term portion $ 58,924 |
11. Derivative Liabilities (Tab
11. Derivative Liabilities (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Assumptions used | July 31, 2017 October 31, 2016 Market value of common stock on measurement date (1) $ n/a $ 0.56 Adjusted conversion price (2) $ n/a $ 0.2304 Risk free interest rate (3) n/a 0.68% Life of the note in years n/a 1.726 years Expected volatility (4) n/a 360.57% Expected dividend yield (5) – – |
13. Acquisitions (Tables)
13. Acquisitions (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Pro forma information | Nine months ended July 31, 2017 2016 As Reported Pro Forma As Reported Pro Forma Revenue $ 5,972,276 $ 7,986,698 $ 2,232,990 $ 4,362,853 Income (loss) from operations (3,937,621 ) (3,809,111 ) (101,191 ) (188,204 ) Net income (loss) $ (4,235,810 ) $ (4,115,689 ) $ (241,908 ) $ (341,611 ) Earnings (loss) per common share-Basic $ (0.10 ) $ (0.10 ) $ (0.01 ) $ (0.01 ) Earnings (loss) per common share-Diluted $ (0.10 ) $ (0.10 ) $ (0.01 ) $ (0.01 ) |
Premier [Member] | |
Allocation of purchase price | Amount Cash and cash equivalents $ – Inventory 58,524 Customer list 55,702 Copyrights 443,479 Total identifiable assets 557,705 Less: liabilities assumed – Total purchase price $ 557,705 |
Intangible assets acquired | Estimated Cost Useful life Customer list $ 55,702 3 Copyrights 443,479 5 Total $ 499,181 |
One Exam Prep, LLC [Member] | |
Allocation of purchase price | Amount Cash and cash equivalents $ 14,232 Inventory 159,961 Property and equipment 76,410 Copyrights 443,091 Total identifiable assets 693,694 Less: liabilities assumed (121,694 ) Less: contingent consideration and bonus consideration (272,000 ) Total purchase price (less contingent and bonus consideration) $ 300,000 |
Intangible assets acquired | Estimated Cost Useful life (years) Copyrights $ 443,091 5 Total $ 443,091 |
W Marketing [Member] | |
Allocation of purchase price | Amount Cash and cash equivalents $ 26,343 Accounts receivable 46,245 Inventory 162,871 Copyrights 462,847 Total identifiable assets 698,306 Less: liabilities assumed (123,306 ) Less: contingent consideration and bonus consideration (50,000 ) Total purchase price (less contingent and bonus consideration) $ 525,000 |
Intangible assets acquired | Estimated Cost Useful life (years) Copyrights $ 462,847 5 Total $ 412,847 |
Cranbury Associates [Member] | |
Allocation of purchase price | Amount Cash and cash equivalents $ – Accounts receivable 319,097 Property and equipment – Customer list 516,896 Total identifiable assets 835,993 Less: liabilities assumed (235,993 ) Less: contingent consideration and bonus consideration (100,000 ) Total purchase price (less contingent and bonus consideration) $ 500,000 |
Intangible assets acquired | Estimated Cost Useful life (years) Customer list $ 516,896 5 Total $ 516,896 |
1. Organization and Descripti29
1. Organization and Description of Business (Details Narrative) | Jul. 31, 2017 | Jun. 22, 2017 | Jan. 26, 2017 | Jan. 19, 2017 | Oct. 31, 2016 |
Pink [Member] | |||||
Equity ownership percentage | 100.00% | ||||
National Electrical Wholesale Providers [Member] | |||||
Equity ownership percentage | 100.00% | ||||
One Exam Prep, LLC [Member] | |||||
Equity ownership percentage | 100.00% | ||||
W Marketing [Member] | |||||
Equity ownership percentage | 100.00% | ||||
Cranbury Associates [Member] | |||||
Equity ownership percentage | 100.00% |
2. Summary of Significant Acc30
2. Summary of Significant Accounting Policies (Details-Estimated useful lives) | 9 Months Ended |
Jul. 31, 2017 | |
Equipment [Member] | |
Estimated useful lives of property and equipment | 5 to 7 years |
Leasehold Improvements [Member] | |
Estimated useful lives of property and equipment | 4 to 5 years |
Furniture and Fixtures [Member] | |
Estimated useful lives of property and equipment | 4 to 7 years |
Websites [Member] | |
Estimated useful lives of property and equipment | 3 years |
2. Summary of Significant Acc31
2. Summary of Significant Accounting Policies (Details - Derivative liabilities) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
Derivative liabilities | $ 0 | $ 218,943 |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative liabilities | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Derivative liabilities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Derivative liabilities | $ 0 | $ 218,943 |
2. Summary of Significant Acc32
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | |
Accounting Policies [Abstract] | |||
Allowance for doubtful accounts | $ 27,901 | $ 19,635 | |
Inventory allowance | 0 | $ 0 | |
Advertising expense | 661,033 | $ 142,194 | |
Impairment of intangible assets | $ 218,058 | $ 0 | |
Antidilutive securities excluded from EPS | 33,000 |
3. Going Concern and Liquity 33
3. Going Concern and Liquity Considerations (Details Narrative) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cumulative net loss since inception | $ (5,006,296) | $ (770,486) |
Working capital | $ (1,385,864) |
4. Property and Equipment (Deta
4. Property and Equipment (Details) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
Property and equipment, gross | $ 221,102 | $ 125,673 |
Less: accumulated depreciation | (48,778) | (27,163) |
Property and equipment, net | 172,324 | 98,510 |
Equipment [Member] | ||
Property and equipment, gross | 68,182 | 68,182 |
Websites [Member] | ||
Property and equipment, gross | 44,600 | 32,956 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 19,002 | 19,002 |
Office Equipment [Member] | ||
Property and equipment, gross | $ 89,318 | $ 5,533 |
4. Property and Equipment (De35
4. Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 21,615 | $ 1,659 |
5. Intangible Assets (Details)
5. Intangible Assets (Details) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
Accumulated amortization and impairment | $ (151,620) | $ (35,392) |
Intangible assets, net | 1,770,395 | 238,608 |
Patents [Member] | ||
Intangible assets, gross | 0 | 274,000 |
Customer Lists [Member] | ||
Intangible assets, gross | 671,327 | 0 |
Copyrights [Member] | ||
Intangible assets, gross | $ 1,250,688 | $ 0 |
5. Intangible Assets (Details N
5. Intangible Assets (Details Narrative) - USD ($) | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Amortization expense | $ 172,169 | $ 0 |
Impairment of intangible asset | 218,058 | $ 0 |
Faulk Patents [Member] | ||
Amortization expense | 20,550 | |
Impairment of intangible asset | $ 218,058 |
6. Related Party Transactions (
6. Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Nov. 22, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | |
Shareholder advances | $ 93,000 | $ 93,000 | $ 88,000 | |||
Accrued expenses - related parties | 365,801 | 365,801 | $ 271,704 | |||
Impairment charge | 276,335 | $ 0 | 387,696 | $ 0 | ||
Restricted Stock [Member] | ||||||
Stock issued new, shares | 566,666 | |||||
Proceeds from sale of restricted stock | $ 85,000 | |||||
Richard Corbin [Member] | ||||||
Proceeds from related party loan | $ 70,000 | |||||
Debt maturity date | Feb. 10, 2017 | |||||
Accrued interest | 1,000 | $ 1,000 | ||||
Due to related party | $ 45,000 | $ 45,000 | ||||
Richard Corbin [Member] | Restricted Stock [Member] | ||||||
Stock issued new, shares | 500,000 | |||||
Stock issued new, value | $ 395,000 | |||||
Richard Corbin [Member] | Restricted Stock [Member] | November 7, 2016 [Member] | ||||||
Stock issued new, shares | 500,000 | |||||
Stock issued new, value | $ 395,000 | |||||
Richard Corbin [Member] | Restricted Stock [Member] | December 23, 2016 [Member] | ||||||
Stock issued new, shares | 333,334 | |||||
Proceeds from sale of restricted stock | $ 50,000 | |||||
Urgent Care Center [Member] | ||||||
Advances to related parties | 123,672 | |||||
Impairment charge | 169,639 | |||||
Mr. Levine [Member] | ||||||
Salaries and wages | 105,000 | |||||
Mr. Davis [Member] | ||||||
Salaries and wages | 93,500 | |||||
Mr. Plumb [Member] | ||||||
Salaries and wages | $ 126,000 |
7. Notes Payable (Details - Not
7. Notes Payable (Details - Notes payable) - USD ($) | 9 Months Ended | |
Jul. 31, 2017 | Oct. 31, 2016 | |
Notes payable | $ 962,469 | $ 575,025 |
Less original issue discount | (156,240) | (156,240) |
Amortization of discount | 143,886 | 82,063 |
Notes payable, net | 950,115 | 500,848 |
Note Payable 4 [Member] | ||
Notes payable | $ 78,614 | 131,960 |
Debt issuance date | Oct. 23, 2014 | |
Debt stated interest rate | 10.00% | |
Date maturity date | Feb. 28, 2018 | |
Note Payable 5 [Member] | ||
Notes payable | $ 51,000 | 51,000 |
Debt issuance date | Mar. 16, 2015 | |
Debt stated interest rate | 9.00% | |
Date maturity date | Jun. 30, 2017 | |
Note Payable 11 [Member] | ||
Notes payable | $ 52,081 | 0 |
Debt issuance date | Jan. 4, 2008 | |
Debt stated interest rate | 2.00% | |
Note Payable 1 [Member] | ||
Notes payable | $ 52,000 | 49,799 |
Debt issuance date | Sep. 6, 2016 | |
Debt stated interest rate | 14.90% | |
Date maturity date | Nov. 30, 2017 | |
Note Payable 2 [Member] | ||
Notes payable | $ 100,983 | 100,496 |
Debt issuance date | May 14, 2015 | |
Debt stated interest rate | 18.00% | |
Date maturity date | Sep. 30, 2018 | |
Note Payable 3 [Member] | ||
Notes payable | $ 86,269 | 241,770 |
Debt issuance date | May 19, 2015 | |
Debt stated interest rate | 35.60% | |
Date maturity date | Sep. 14, 2017 | |
Note Payable 6 [Member] | ||
Notes payable | $ 50,000 | 0 |
Debt issuance date | Jan. 1, 2017 | |
Debt stated interest rate | 8.00% | |
Date maturity date | Sep. 30, 2017 | |
Note Payable 7 [Member] | ||
Notes payable | $ 36,830 | 0 |
Debt issuance date | Jan. 1, 2017 | |
Date maturity date | Mar. 1, 2017 | |
Note Payable 8 [Member] | ||
Notes payable | $ 158,466 | 0 |
Debt issuance date | Jan. 17, 2017 | |
Debt stated interest rate | 7.00% | |
Date maturity date | Jan. 17, 2018 | |
Note Payable 9 [Member] | ||
Notes payable | $ 66,318 | 0 |
Debt issuance date | Mar. 14, 2017 | |
Debt stated interest rate | 9.00% | |
Date maturity date | Mar. 14, 2018 | |
Note Payable 10 [Member] | ||
Notes payable | $ 229,908 | $ 0 |
Debt issuance date | Jul. 26, 2017 | |
Debt stated interest rate | 16.216% | |
Date maturity date | Jul. 26, 2018 |
7. Notes Payable (Details - Acq
7. Notes Payable (Details - Acquisition notes) - USD ($) | 9 Months Ended | |
Jul. 31, 2017 | Oct. 31, 2016 | |
Acquisition notes payable | $ 525,676 | $ 370,056 |
Acquisition notes payable, current | 137,974 | 26,311 |
Acquisition notes payable, noncurrent | 387,702 | 343,745 |
Acquisition Note 1 [Member] | ||
Acquisition notes payable | $ 75,000 | 0 |
Debt issuance date | Jun. 22, 2017 | |
Debt stated interest rate | 8.00% | |
Date maturity date | Aug. 22, 2018 | |
Acquisition Note 2 [Member] | ||
Acquisition notes payable | $ 100,000 | 0 |
Debt issuance date | Jul. 31, 2017 | |
Debt stated interest rate | 6.00% | |
Date maturity date | Nov. 30, 2019 | |
Acquisition Note 3 [Member] | ||
Acquisition notes payable | $ 350,676 | $ 370,056 |
Debt issuance date | Jan. 31, 2014 | |
Debt stated interest rate | 8.00% | |
Date maturity date | Feb. 1, 2019 |
7. Notes Payable (Details - Deb
7. Notes Payable (Details - Debt maturities) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
Debt Disclosure [Abstract] | ||
Debt maturing 2018 | $ 137,974 | |
Debt maturing 2019 | 387,702 | |
Debt maturing 2020 | 0 | |
Debt maturing 2021 | 0 | |
Debt maturing 2022 | 0 | |
Debt maturing thereafter | 0 | |
Total long term debt | $ 525,676 | $ 370,056 |
8. Stock Payable (Details Narra
8. Stock Payable (Details Narrative) - USD ($) | 1 Months Ended | ||
Nov. 22, 2016 | Jul. 31, 2017 | Oct. 31, 2016 | |
Stock payable | $ 0 | $ 33,668 | |
Stock payable - related parties | 0 | $ 84,562 | |
Restricted Stock [Member] | |||
Stock to be issued, shares | 324,000 | ||
Restricted stock issued, shares | 566,666 | ||
Restricted stock, value | $ 118,230 | ||
Stock payable | $ 0 | ||
Restricted Stock [Member] | Owed to Related Parties [Member] | |||
Stock to be issued, shares | 0 | 300,000 | |
Restricted stock, value | $ 84,562 | ||
Stock payable - related parties | $ 0 |
9. Convertible Notes Payable (D
9. Convertible Notes Payable (Details) - USD ($) | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | |
Convertible notes payable | $ 1,076,000 | $ 352,000 | |
Discount on convertible notes | (505,222) | 0 | |
Convertible notes payable, current | (525,778) | (352,000) | |
Convertible notes payable, noncurrent | 45,000 | 0 | |
Proceeds from convertible note | 606,000 | $ 0 | |
Convertible Notes Payable [Member] | |||
Convertible notes payable | 125,000 | 265,000 | |
Debt face amount | $ 247,000 | ||
Debt maturity date | Mar. 31, 2018 | ||
Debt stated interest | 10.00% | ||
Convertible Notes Payable 2 [Member] | |||
Convertible notes payable | $ 50,000 | 87,000 | |
Debt face amount | 137,000 | ||
Proceeds from convertible note | $ 50,000 | ||
Debt maturity date | Dec. 31, 2017 | ||
Debt stated interest | 10.00% | ||
Debt converted, amount converted | $ 88,626 | ||
Debt converted, shares issued | 709,008 | ||
Convertible Notes Payable 3 [Member] | |||
Convertible notes payable | $ 300,000 | 0 | |
Debt issuance date | Jan. 29, 2017 | ||
Debt face amount | $ 300,000 | ||
Debt maturity date | Jan. 20, 2018 | ||
Convertible Notes Payable 4 [Member] | |||
Convertible notes payable | $ 356,000 | 0 | |
Debt issuance date | Jun. 1, 2017 | ||
Debt face amount | $ 356,000 | ||
Debt maturity date | Jun. 1, 2018 | ||
Debt stated interest | 15.00% | ||
Beneficial conversion feature | $ 356,000 | ||
Convertible Notes Payable 5 [Member] | |||
Convertible notes payable | $ 200,000 | 0 | |
Debt issuance date | Jun. 1, 2017 | ||
Debt maturity date | Jun. 30, 2020 | ||
Debt stated interest | 12.00% | ||
Beneficial conversion feature | $ 184,000 | ||
Convertible Notes Payable 6 [Member] | |||
Convertible notes payable | $ 45,000 | $ 0 | |
Debt issuance date | Jan. 30, 2017 | ||
Debt stated interest | 12.00% |
9. Convertible Notes Payable 44
9. Convertible Notes Payable (Details Narrative) - Typenex Note [Member] | 9 Months Ended |
Jul. 31, 2017USD ($)shares | |
Beneficial conversion charged as interest expense | $ 205,000 |
Debt converted, amount converted | $ 80,000 |
Debt converted, shares issued | shares | 2,000,000 |
10. Capitalized Leases (Details
10. Capitalized Leases (Details) - USD ($) | Jul. 31, 2017 | Oct. 31, 2016 |
Debt Disclosure [Abstract] | ||
Future maturity of capital lease, 2018 | $ 24,528 | |
Future maturity of capital lease, 2019 | 24,528 | |
Future maturity of capital lease, 2020 | 24,528 | |
Future maturity of capital lease, 2021 | 24,528 | |
Future maturity of capital lease, 2022 | 4,171 | |
Total minimum payments | 102,283 | |
Less amount representing interest | (30,705) | |
Present value of minimum lease payments | 71,578 | |
Less: current portion | (12,654) | $ 0 |
Total long-term portion | $ 58,924 | $ 0 |
10. Capitalized Leases (Detai46
10. Capitalized Leases (Details Narrative) | 9 Months Ended |
Jul. 31, 2017USD ($) | |
Debt Disclosure [Abstract] | |
Cost of equipment under capital leases | $ 76,410 |
Accumulated depreciation of capital leased assets | $ 9,905 |
Capital lease expiration date | expires May 2021 |
11. Derivative Liabilities (Det
11. Derivative Liabilities (Details - Assumptions) | 12 Months Ended |
Oct. 31, 2016$ / shares | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Market value of common stock on measurement date (1) | $ 0.56 |
Adjusted conversion price (2) | $ 0.2304 |
Risk free interest rate (3) | 0.68% |
Life of the note in years | 1 year 8 months 22 days |
Expected volatility (4) | 360.57% |
Expected dividend yield (5) |
11. Derivative Liabilities (D48
11. Derivative Liabilities (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||
Derivative liability | $ 0 | $ 0 | $ 218,943 | ||
Derivative expense | 136,703 | ||||
Gain on extinguishment of debt | $ 0 | $ 0 | 82,240 | $ 0 | |
Repayments of capital lease | $ 60,000 |
12. Stockholders' Equity (Detai
12. Stockholders' Equity (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended |
Nov. 22, 2016 | Jul. 31, 2017 | |
W Marketing [Member] | ||
Shares issued for acquisition | 900,000 | |
Cranbury Associates [Member] | ||
Shares issued for acquisition | 784,313 | |
Convertible Notes Payable 2 [Member] | ||
Debt converted, amount converted | $ 88,626 | |
Debt converted, shares issued | 709,008 | |
Debt Holder [Member] | ||
Debt converted, amount converted | $ 80,000 | |
Debt converted, shares issued | 2,000,000 | |
Restricted Stock [Member] | ||
Restricted stock, shares issued | 566,666 | |
Proceeds from issuance of stock | $ 85,000 | |
Restricted Stock [Member] | Exchange Agreement [Member] | ||
Restricted stock, shares issued | 645,000 | |
Restricted stock, value | $ 370,875 | |
Restricted Stock [Member] | December 2016 and January 2017 [Member] | ||
Restricted stock, shares issued | 1,256,667 | |
Proceeds from issuance of stock | $ 188,500 | |
Restricted Stock [Member] | January 30, 2017 [Member] | ||
Restricted stock, shares issued | 53,333 | |
Proceeds from issuance of stock | $ 8,000 | |
Restricted Stock [Member] | February 10, 2017 [Member] | ||
Restricted stock, shares issued | 166,667 | |
Proceeds from issuance of stock | $ 25,000 | |
Restricted Stock [Member] | March 1, 2017 [Member] | ||
Restricted stock, shares issued | 500,000 | |
Proceeds from issuance of stock | $ 75,000 | |
Restricted Stock [Member] | April 14, 2017 [Member] | ||
Restricted stock, shares issued | 66,667 | |
Proceeds from issuance of stock | $ 10,000 | |
Restricted Stock [Member] | James Sapirstein [Member] | ||
Stock issued for compensation, shares | 75,000 | |
Stock issued for compensation, value | $ 59,250 | |
Restricted Stock [Member] | Barshis [Member] | ||
Stock issued for compensation, shares | 150,000 | |
Restricted Stock [Member] | Norton [Member] | ||
Stock issued for compensation, shares | 150,000 | |
Restricted Stock [Member] | Lenz [Member] | ||
Stock issued for compensation, shares | 150,000 | |
Restricted Stock [Member] | Scientific Advisory Board [Member] | ||
Stock issued for compensation, value | $ 355,500 | |
Restricted Stock [Member] | Consultant [Member] | ||
Stock issued for compensation, shares | 23,187 | |
Stock issued for compensation, value | $ 60,287 | |
Restricted Stock [Member] | Consultant [Member] | February 6, 2017 [Member] | ||
Stock issued for services, shares | 12,500 | |
Stock issued for services, value | $ 7,188 | |
Restricted Stock [Member] | Consultant [Member] | March 7, 2017 [Member] | ||
Stock issued for services, shares | 27,778 | |
Stock issued for services, value | $ 25,000 | |
Restricted Stock [Member] | Consultant [Member] | March 20, 2017 [Member] | ||
Stock issued for services, shares | 48,077 | |
Stock issued for services, value | $ 25,000 | |
Restricted Stock [Member] | Consultant [Member] | April 20, 2017 [Member] | ||
Stock issued for services, shares | 47,170 | |
Stock issued for services, value | $ 25,000 | |
Restricted Stock [Member] | Consultant [Member] | May 18, 2017 [Member] | ||
Stock issued for services, shares | 58,548 | |
Stock issued for services, value | $ 25,000 | |
Restricted Stock [Member] | Consultant [Member] | June 18, 2017 [Member] | ||
Stock issued for services, shares | 53,442 | |
Stock issued for services, value | $ 25,000 | |
Restricted Stock [Member] | Consultant 2 [Member] | ||
Stock issued for compensation, shares | 25,317 | |
Stock issued for compensation, value | $ 20,000 | |
Restricted Stock [Member] | Mr. Plumb [Member] | ||
Stock issued for compensation, shares | 180,000 | |
Stock issued for compensation, value | $ 150,505 | |
Restricted Stock [Member] | Consultant 3 [Member] | ||
Stock issued for compensation, shares | 25,253 | |
Stock issued for compensation, value | $ 25,000 | |
Common Stock [Member] | Two Consultants [Member] | May 1, 2017 [Member] | ||
Stock issued for services, shares | 40,744 | |
Stock issued for services, value | $ 24,949 | |
Common Stock [Member] | Two Consultants [Member] | June 1, 2017 [Member] | ||
Stock issued for services, shares | 62,552 | |
Stock issued for services, value | $ 24,937 | |
Common Stock [Member] | Two Consultants [Member] | July 1, 2017 [Member] | ||
Stock issued for services, shares | 53,900 | |
Stock issued for services, value | $ 24,946 | |
Richard Corbin [Member] | Restricted Stock [Member] | ||
Restricted stock, shares issued | 500,000 | |
Restricted stock, value | $ 395,000 | |
Richard Corbin [Member] | Restricted Stock [Member] | December 23, 2016 [Member] | ||
Restricted stock, shares issued | 333,334 | |
Proceeds from issuance of stock | $ 50,000 | |
Richard Corbin [Member] | Common Stock [Member] | May 1, 2017 [Member] | ||
Stock issued for compensation, shares | 223,000 | |
Stock issued for compensation, value | $ 122,833 | |
Levine, Davis and Plumb [Member] | Common Stock [Member] | May 1, 2017 [Member] | ||
Stock issued for compensation, shares | 2,010,000 | |
Stock issued for compensation, value | $ 1,105,500 |
13. Acquisitions (Details - Acq
13. Acquisitions (Details - Acquisition allocation) - USD ($) | Jul. 31, 2017 | Jun. 22, 2017 | Jan. 26, 2017 | Jan. 19, 2017 | Oct. 31, 2016 |
Less: contingent consideration | $ (362,000) | $ 0 | |||
Premier [Member] | |||||
Cash and cash equivalents | $ 0 | ||||
Inventory | 58,524 | ||||
Customer list | 55,702 | ||||
Copyrights | 443,479 | ||||
Total identifiable net assets | 557,705 | ||||
Less liabilities assumed | 0 | ||||
Total purchase price | $ 557,705 | ||||
One Exam Prep, LLC [Member] | |||||
Cash and cash equivalents | $ 14,232 | ||||
Inventory | 159,961 | ||||
Property and equipment | 76,410 | ||||
Copyrights | 443,091 | ||||
Total identifiable net assets | 693,694 | ||||
Less liabilities assumed | (121,694) | ||||
Less: contingent consideration | (272,000) | ||||
Total purchase price | $ 300,000 | ||||
W Marketing [Member] | |||||
Cash and cash equivalents | $ 26,343 | ||||
Accounts receivable | 46,245 | ||||
Inventory | 162,871 | ||||
Copyrights | 462,847 | ||||
Total identifiable net assets | 698,306 | ||||
Less liabilities assumed | (123,306) | ||||
Less: contingent consideration | (50,000) | ||||
Total purchase price | 525,000 | ||||
Cranbury Associates [Member] | |||||
Cash and cash equivalents | 0 | ||||
Accounts receivable | 319,097 | ||||
Customer list | 516,896 | ||||
Total identifiable net assets | 835,993 | ||||
Less liabilities assumed | (235,993) | ||||
Less: contingent consideration | (100,000) | ||||
Total purchase price | $ 500,000 |
13. Acquisitions (Details - A51
13. Acquisitions (Details - Acquired intangibles) - USD ($) | 9 Months Ended | |||
Jul. 31, 2017 | Jun. 22, 2017 | Jan. 26, 2017 | Jan. 19, 2017 | |
Premier [Member] | ||||
Intangible asset, cost | $ 499,181 | |||
Premier [Member] | Customer Lists [Member] | ||||
Intangible asset, cost | 55,702 | |||
Estimated useful life | 3 years | |||
Premier [Member] | Copyrights [Member] | ||||
Intangible asset, cost | $ 443,479 | |||
Estimated useful life | 5 years | |||
One Exam Prep, LLC [Member] | ||||
Intangible asset, cost | $ 443,091 | |||
One Exam Prep, LLC [Member] | Copyrights [Member] | ||||
Intangible asset, cost | $ 443,091 | |||
Estimated useful life | 5 years | |||
W Marketing [Member] | ||||
Intangible asset, cost | $ 462,847 | |||
W Marketing [Member] | Copyrights [Member] | ||||
Intangible asset, cost | $ 462,847 | |||
Estimated useful life | 5 years | |||
Cranbury Associates [Member] | ||||
Intangible asset, cost | $ 516,896 | |||
Cranbury Associates [Member] | Customer Lists [Member] | ||||
Intangible asset, cost | $ 516,896 | |||
Estimated useful life | 5 years |
13. Acquisitions (Details - Pro
13. Acquisitions (Details - Pro forma) - USD ($) | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
As Reported [Member] | ||
Revenue | $ 5,972,276 | $ 2,232,990 |
Income (loss) from operations | (3,937,621) | (101,191) |
Net income (loss) | $ (4,235,810) | $ (241,908) |
Earnings (loss) per common share - Basic | $ (.10) | $ (.01) |
Earnings (loss) per common share - Diluted | $ (.10) | $ (.01) |
Pro Forma [Member] | ||
Revenue | $ 7,986,698 | $ 4,362,853 |
Income (loss) from operations | (3,809,111) | (188,204) |
Net income (loss) | $ (4,115,689) | $ (341,611) |
Earnings (loss) per common share - Basic | $ (.10) | $ (.01) |
Earnings (loss) per common share - Diluted | $ (.10) | $ (.01) |
13. Acquisitions (Details Narra
13. Acquisitions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jan. 26, 2017 | Jan. 19, 2017 | Jul. 31, 2017 | Jul. 31, 2016 | Jun. 22, 2017 | |
Cash transferred | $ 9,425 | $ 0 | |||
Premier [Member] | |||||
Total consideration | $ 557,705 | ||||
Cash transferred | 50,000 | ||||
Notes payable incurred | 136,830 | ||||
Equity transferred | $ 370,875 | ||||
Stock acquired, shares | 645,000 | ||||
Equity ownership percentage | 100.00% | ||||
One Exam Prep, LLC [Member] | |||||
Stock issued for acquisition, shares | 1,000,000 | ||||
W Marketing [Member] | |||||
Stock acquired, shares | 900,000 | ||||
Stock issued for acquisition, shares | 900,000 | ||||
Cranbury Associates [Member] | |||||
Stock acquired, shares | 784,313 | ||||
Stock issued for acquisition, shares | 784,313 |