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16. Segment Reporting
 9 Months Ended
Sep. 30, 2014
Segment Reporting [Abstract]  
Segment Reporting

Commencing with the reverse merger on April 2, 2014, the Company organized its business into four operating segments to align its organization based upon the Company’s management structure, products and services offered and funding requirements. The four operating segments that management defined were Hardware, Home Goods, eCommerce, and Corporate and Other. Below is a description of each operating segment.

 

Hardware

 

Building upon Infusion Brands’ success with the iconic DualSaw™ and DualTools™ brands, the Company had developed and marketed additional products including the patented RS1000 and RS1200 DualSaw Reciprocating Saws™, the OS2500 and OS3000 DualSaw Oscillating Saw™, and the PS7000 DualTools Polisher/Sander™,. Those products joined the DualSaw PrecisionCS3000™, DualSaw Everyday CS450™, and DualSaw Destroyer CS650™ in the consumer line, as well as the Professional Series DualSaw CS450s and CS650s. The Company also has additional new hardware, lawn and garden and lithium-ion power tools and hand tool products.

 

Home Goods

 

With the execution of the Participation Agreement and required consolidation of Ronco Holdings, Inc. in the first quarter of 2014, the Company entered the Home Goods space through a well known and respected brand in the direct response industry, Ronco®.

 

In addition to Ronco® in the home goods vertical market, the Company has also developed the DOC™ cleaning brand (Your Prescription for Clean™), as well as HomeHero™ (cleaning) and the Infusion Collection (cookware) brands. These brands exist primarily for live shopping distribution, where they have been and continue to be very successful, but also represent an opportunity for both direct response and retail distribution on a product-by-product basis. The Company plans to opportunistically develop or source multiple product offerings for these brands going forward.

 

eCommerce

 

eCommerce include the monetization of the Company’s eDiets.com and asseenontv.com URLs. Through its eDiets.com asset, management during this time period believed there would be existing and new cross-marketing and synergistic opportunities for development and distribution of health and wellness products, as well as subscription and transactional technology revenues, either alone or with strategic partners. During this time period and until October 28, 2014, the Company also owned the URL asseenontv.com, one of the leading marketplace for products sold in the As Seen On TV category.

 

Corporate and Other

 

The Corporate segment is responsible for corporate governance, compliance, strategic planning, and debt and equity capital transactions. The Corporate segment also provides funding to other operating segments when needed.

 

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on operating earnings of the respective business segments.

 

The consolidated condensed results of operations include the revenues and expenses of Ronco subsequent to March 6, 2014, the date Ronco became a VIE, and ASTV’s business subsequent to April 2, 2014, the closing date of the reverse acquisition.

 

Summarized financial information concerning the Company's reportable segments for the three months ended September 30, 2014 and 2013 are shown in the following tables.

 

  

  Three Months Ended September 30, 2014 
             Corporate     
               &    
  Hardware   Home Goods   eCommerce   Other   Total 
Total revenue  $1,115,815   $2,753,173   $155,366   $–   $4,024,354 
Net loss  $(3,273,373)  $(18,242,393)  $(6,640,857)  $(2,947,680)  $(31,104,303)
Depreciation and amortization  $17,529   $107,802   $162,522   $–   $287,853 
Interest expense  $–   $–   $–   $1,035,256   $(1,035,256)

 

 

  Three Months Ended September 30, 2013 
             Corporate     
               &    
  Hardware   Home Goods   eCommerce   Other   Total 
Total revenue  $765,690   $–   $–   $–   $765,690 
Net loss  $(1,032,650)  $–   $–   $(230,527)  $(1,263,177)
Depreciation and amortization  $8,689   $–   $–   $–   $8,689 
Interest expense  $–   $–   $–   $238,185   $238,185 

 

Summarized financial information concerning the Company's reportable segments for the nine months ended September 30, 2014 and 2013 are shown in the following tables, followed by a reconciliation of assets to consolidated assets is as follows:

 

 

  Nine Months Ended September 30, 2014 
             Corporate     
               &    
  Hardware   Home Goods   eCommerce   Other   Total 
Total revenue  $5,223,319   $5,038,462   $343,820   $–   $10,605,601 
Net loss  $(5,464,365)  $(20,420,109)  $(7,328,018)  $(2,399,256)  $(35,611,748)
Depreciation and amortization  $46,524   $230,532   $324,844   $–   $601,900 
Interest expense  $–   $(1,456,391)  $–   $2,491,647   $1,035,256 
Total assets held  $4,890,469   $8,960,441   $4,748,416   $44,738,534   $63,337,860 

 

 

  Nine Months Ended September 30, 2013 
             Corporate     
               &    
  Hardware   Home Goods   eCommerce   Other   Total 
Total revenue  $9,955,861   $–   $–   $–   $9,955,861 
Net loss  $(2,093,739)  $–   $–   $(231,956)  $(2,325,695)
Depreciation and amortization  $25,137   $–   $–   $–   $25,137 
Interest expense  $–   $–   $–   $238,185   $238,185 
Total assets held  $2,025,334   $–   $–   $–   $2,025,334 

 

 

   For the Nine Months Ended
September 30,		 
   2014   2013 
Assets          
Total assets for reportable segments  $63,337,860   $25,137 
Elimination of intersegment funding receivables   (46,654,020)   – 
Elimination of intersegment notes receivable   (851,237)   – 
Elimination of intersegment interest receivable   (34,828)   – 
Elimination of intersegment deferred financing fee   (16,250)   – 
Elimination of intersegment accrued fees   (40,062)    – 
Total consolidated assets  $15,741,463   $25,137 

 

Intersegment Transactions

 

As of September 30, 2014, the Corporate segment has provided funding to the Hardware, Home Goods, and eCommerce segments in the amounts of approximately $7,384,000, $882,000 and $61,000, respectively.

 

On April 11, 2014, the Home Goods segment and the Corporate segment entered into a Loan and Security Agreement ("Loan Agreement"). The Home Goods segment may borrow up to $3,000,000 for working capital subject to an Accounts Receivable and Inventory Borrowing Base calculation. Borrowings made are subject to an interest rate of Prime plus 4% (7.25% at September 30, 2014) per annum that shall accrue daily and be payable monthly. The Loan Agreement's maturity date is April 11, 2015. As part of the Agreement, the Home Goods segment has secured the payment of all borrowings by granting the Corporate segment a security interest in the assets of the Company. At September 30, 2014, the outstanding balance of the Loan Agreement was $651,237.

 

On May 5, 2014, the Home Goods segment issued a promissory note for $200,000 to the Corporate segment. The note requires monthly interest payments at an interest rate of 14% per annum. All outstanding principal and unpaid interest is due on December 31, 2014.