LIVE VENTURES INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
10-Q
_________________________
(Mark One)
For the quarterly period ended
March 31, 2025
For the transition period from _____________ to _______________
Commission File Number
001-33937
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | ||||
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| (Address of principal executive offices) | (Zip Code) | ||||
(
702
)
997-5968
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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The
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
x
No
o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
x
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | Accelerated filer | o | ||||||||
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x | Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
x
The number of shares of the issuer’s common stock, par value $0.001 per share, outstanding as of May 3, 2025 was
3,076,802
.
INDEX TO FORM 10-Q FILING
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2025
TABLE OF CONTENTS
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2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LIVE VENTURES INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per-share amounts)
| March 31, 2025 | September 30, 2024 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Cash | $ |
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$ |
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Trade receivables, net of allowance for doubtful accounts of $
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| Inventories, net |
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| Prepaid expenses and other current assets |
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| Total current assets |
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| Property and equipment, net |
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| Right of use asset - operating leases |
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| Deposits and other assets |
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| Intangible assets, net |
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| Goodwill |
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| Total assets | $ |
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$ |
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| Liabilities and Stockholders' Equity | |||||||||||
| Liabilities: | |||||||||||
| Accounts payable | $ |
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$ |
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| Accrued liabilities |
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| Income taxes payable |
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| Current portion of lease obligations - operating leases |
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| Current portion of lease obligations - finance leases |
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| Current portion of long-term debt |
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| Current portion of notes payable related parties |
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| Current portion of seller notes - related parties |
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| Total current liabilities |
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| Long-term debt, net of current portion |
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| Lease obligation long term - operating leases |
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| Lease obligation long term - finance leases |
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| Notes payable related parties, net of current portion |
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| Seller notes - related parties |
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| Deferred tax liability |
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| Other non-current obligations |
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| Total liabilities |
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| Commitments and contingencies |
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| Stockholders' equity: | |||||||||||
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Series E convertible preferred stock, $
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Common stock, $
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| Paid in capital |
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Treasury stock common
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Treasury stock Series E preferred
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| Retained earnings |
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| Total stockholders' equity |
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| Total liabilities and stockholders' equity | $ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
LIVE VENTURES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(dollars in thousands, except per-share amounts)
| For the Three Months Ended March 31, | For the Six Months Ended March 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenue | $ |
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$ |
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$ |
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$ |
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| Cost of revenue |
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| Gross profit |
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| Operating expenses: | |||||||||||||||||||||||
| General and administrative expenses |
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| Sales and marketing expenses |
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| Total operating expenses |
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| Operating income (loss) |
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| Other expense: | |||||||||||||||||||||||
| Interest expense, net |
(
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(
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(
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| Gain on extinguishment of debt |
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| Gain on settlement of earnout liability |
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| Gain on modification of seller note |
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| Other income |
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| Total other income (expense), net |
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| Income (loss) before provision for income taxes |
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| Provision for (benefit from) income taxes |
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| Net income (loss) | $ |
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$ |
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$ |
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$ |
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| Income (loss) per share: | |||||||||||||||||||||||
| Basic | $ |
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$ |
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$ |
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$ |
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| Diluted | $ |
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$ |
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$ |
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$ |
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| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic |
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| Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
LIVE VENTURES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(dollars in thousands)
| For the Six Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating Activities: | |||||||||||
| Net income (loss) | $ |
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$ |
(
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| Adjustments to reconcile net income (loss) to net cash provided by operating activities, net of acquisition: | |||||||||||
| Depreciation and amortization |
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| Gain on extinguishment of debt |
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| Amortization of seller note discount |
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| Loss on disposal of fixed assets |
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| Gain on settlement of earnout liability |
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| Gain on modification of debt |
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| Amortization of debt issuance cost |
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| Stock based compensation expense |
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| Amortization of right-of-use assets |
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| Change in deferred income taxes |
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| Change in reserve for uncollectible accounts |
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| Change in reserve for obsolete inventory |
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| Changes in assets and liabilities, net of acquisitions: | |||||||||||
| Trade receivables |
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| Inventories |
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| Income taxes payable/receivable |
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| Prepaid expenses and other current assets |
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| Deposits and other assets |
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| Accounts payable |
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| Accrued liabilities |
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| Net cash provided by operating activities |
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| Investing Activities: | |||||||||||
| Acquisition of CRO |
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| Acquisition of Johnson |
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| Purchase of property and equipment |
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| Net cash used in investing activities |
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| Financing Activities: | |||||||||||
| Net (payments) borrowings under revolver loans |
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| Proceeds from issuance of notes payable |
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| Payments on notes payable |
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| Proceeds from issuance of related party notes payable |
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| Payments on related party notes payable |
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| Net borrowings under related party revolver loans |
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| Purchase of common treasury stock |
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| Payments on financing leases |
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| Cash paid for settlement of seller notes |
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| Net cash (used in) provided by financing activities |
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| Change in cash |
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| Cash, beginning of period |
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| Cash, end of period | $ |
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$ |
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| Supplemental cash flow disclosures: | |||||||||||
| Interest paid | $ |
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$ |
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| Income taxes received, net | $ |
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$ |
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| Income taxes paid, net | $ |
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$ |
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| Noncash financing and investing activities: | |||||||||||
| PMW goodwill adjustment | $ |
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$ |
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| Noncash items related to CRO acquisition | $ |
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$ |
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| Noncash items related to Johnson acquisition | $ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
LIVE VENTURES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(dollars in thousands)
|
Series E
Preferred Stock |
Common Stock |
Series E
Preferred Stock |
Common
Stock |
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| Shares | Amount | Shares | Amount |
Paid-In
Capital |
Treasury
Stock |
Treasury
Stock |
Retained
Earnings |
Total
Equity |
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| Balance, September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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| Stock based compensation | — | — | — | — |
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— | — | — |
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| Purchase of common treasury stock | — | — |
(
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— | — | — |
(
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— |
(
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| Net income | — | — | — | — | — | — | — |
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| Balance, December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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| Stock based compensation | — | — | — | — |
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— | — | — |
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| Purchase of common treasury stock | — | — |
(
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— | — | — |
(
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— |
(
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| Net income | — | — | — | — | — | — | — |
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| Balance, March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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Series E
Preferred Stock |
Common Stock |
Series E
Preferred Stock |
Common
Stock |
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| Shares | Amount | Shares | Amount |
Paid-In
Capital |
Treasury
Stock |
Treasury
Stock |
Retained
Earnings |
Total
Equity |
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| Balance, September 30, 2023 |
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$ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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| Stock based compensation | — | — | — | — |
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— | — | — |
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| Purchase of common treasury stock | — | — |
(
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— | — | — |
(
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— |
(
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| Net loss | — | — | — | — | — | — | — |
(
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(
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| Balance, December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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| Purchase of common treasury stock | — | — |
(
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— | — | — |
(
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— |
(
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| Stock based compensation | — | — | — | — |
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— | — | — |
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| Net loss | — | — | — | — | — | — | — |
(
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(
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| Balance, March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
LIVE VENTURES INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2025 AND 2024
(dollars in thousands, except per-share amounts)
Note 1:
Background and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Live Ventures Incorporated, a Nevada corporation, and its subsidiaries (collectively, “Live Ventures” or the “Company”). Live Ventures is a diversified holding company with a strategic focus on value-oriented acquisitions of domestic middle-market companies. The Company has
five
operating segments: Retail-Entertainment, Retail-Flooring, Flooring Manufacturing, Steel Manufacturing, and Corporate and Other. The Retail-Entertainment segment includes Vintage Stock, Inc. (“Vintage Stock”), which is engaged in the retail sale of new and used movies, music, collectibles, comics, books, games, game systems and components. The Retail-Flooring segment includes Flooring Liquidators, Inc. (“Flooring Liquidators”), which is engaged in the retail sale and installation of floors, carpets, and countertops. The Flooring Manufacturing segment includes Marquis Industries, Inc. (“Marquis”), which is engaged in the manufacture and sale of carpet and the sale of vinyl and wood floor coverings. The Steel Manufacturing Segment includes Precision Industries, Inc. (“Precision Marshall”), which is engaged in the manufacture and sale of alloy and steel plates, ground flat stock and drill rods, The Kinetic Co., Inc. (“Kinetic”), which is engaged in the production of industrial knives and hardened wear products for the tissue and metals industries, Precision Metal Works, Inc. (“PMW”), which is engaged in metal forming, assembly, and finishing solutions across diverse industries, including appliance, automotive, hardware, electrical, electronic, medical products, and devices, and Central Steel Fabricators, LLC ("Central Steel"), a Chicago-based manufacturer of specialized fabricated metal products primarily for data centers and the communications industry. PMW reports on a 13-week quarter, as opposed to the Company's calendar quarter reporting. However, the Company has determined that the difference in reporting periods has no material effect on its reported financial results.
The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for audited financial statements. In the opinion of the Company’s management, this interim information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and six months ended March 31, 2025 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2025. The financial information included in these statements should be read in conjunction with the condensed consolidated financial statements and related notes thereto as of September 30, 2024 and for the fiscal year then ended included in the Company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 19, 2024 (the “2024 Form 10-K”).
Note 2:
Summary of Significant Accounting Policies
Principles of Consolidation
The unaudited condensed financial statements include the accounts of the Company and its majority owned subsidiaries over which the Company exercises control. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Significant estimates made in connection with the accompanying consolidated financial statements include the estimated reserve for excess and obsolete inventory, fair values in connection with the analysis of goodwill, other intangibles and long-lived assets for impairment, valuation allowance against deferred tax assets, and estimated useful lives for intangible assets.
Revenue Recognition
General
7
The Company accounts for its sales revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”). Topic 606 provides a five-step revenue recognition model that is applied to the Company’s customer contracts. Under this model we (i) identify the contract with the customer, (ii) identify our performance obligations in the contract, (iii) determine the transaction price for the contract, (iv) allocate the transaction price to our performance obligations, and (v) recognize revenue when or as we satisfy our performance obligations.
Revenue is recognized upon transfer of control of the promised goods or the performance of the services to customers in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company enters into contracts that may include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations.
Retail - Entertainment Segment
The Retail-Entertainment Segment derives revenue primarily from direct sales of entertainment products. Sales are generally of a cash-and-carry nature and contain a single performance obligation. Consequently, revenue is recorded at the point in time in which the sale is made. Revenue is recorded net of sales taxes collected from customers. The Company recognizes the portion of the dollar value of prepaid stored-value products that ultimately is unredeemed (“breakage”) in accordance with ASC 606-10-32-11 through 32-13 Measurement-Constraining Estimates of Variable Consideration.
Retail - Flooring Segment
The Retail-Flooring Segment derives revenue primarily from the sale of flooring products and installation services, which are recognized at the point-of-sale and over time, respectively. Retail sales are generally of a cash-and-carry nature and contain a single performance obligation. Consequently, revenue is recorded at the point in time in which the sale is made. Installation services generally contain multiple performance obligations requiring revenue to be recognized over a period of time based on percentage of completion. For sales that include installation, revenue is recognized upon completion of the
installation of the material in accordance with the contract, as this method is the best depiction of when the transfer of goods or services takes place. All direct costs are either paid and or accrued for in the period in which the sale is recorded. Revenue is recorded net of sales taxes collected from customers.
Flooring and Steel Manufacturing Segments
The Flooring Manufacturing Segment derives revenue primarily from the sale of carpet and hard surface flooring products, including shipping and handling amounts. The Steel Manufacturing Segment derives revenue primarily from the sale of steel plates, ground flat stock and drill rods, fabricated products, and tooling, including shipping and handling amounts. Revenue for these segments generally contain a single performance obligation and is recognized at the point title passes to the customer. At the time revenue is recognized, the Company records a provision for the estimated amount of future returns based primarily on historical experience and any known trends or conditions that exist at the time revenue is recognized. Revenue is recorded net of taxes collected from customers. All direct costs are either paid and or accrued for in the period in which the sale is recorded.
Spare Parts
For spare parts sales, the Company transfers control and recognizes a sale when it ships the product to the customer or when the customer receives product based upon agreed shipping terms. Each unit sold is considered an independent, unbundled performance obligation. The Company has no additional performance obligations other than spare parts sales that are material in the context of the contract. The amount of consideration received and revenue recognized varies due to sales incentives and returns offered to customers. When customers retain the right to return eligible products, the Company reduces revenue for the estimate of the expected returns, which is primarily based on an analysis of historical experience.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the Chief Operating Decision Maker, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
8
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“ASU 2024-03”) which requires entities to (i) disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, (ii) include certain amounts that are already required to be disclosed under U.S. GAAP in the same disclosures as other disaggregation requirements, (iii) disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated quantitatively, and (iv) disclose the total amount of selling expenses, in annual reporting periods, an entity’s definition of selling expense. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating ASU 2024-03 to determine the impact it may have on its consolidated financial statements.
Note 3:
Acquisitions
Acquisition of Midwest Grinding
On June 10, 2024, pursuant to an asset purchase agreement, Kinetic acquired certain assets and assumed certain liabilities of Midwest Grinding Corp., a Milwaukee grinding house dedicated to precision Blanchard and specialty surface grinding of small to extra-large capacity. Total consideration for the acquisition was $
0.6
million. In connection with the acquisition, Kinetic also acquired the building being used in the business for $
0.4
million. Total consideration for both the business and building acquisition was $
1.0
million, paid in cash at close.
The fair value of the assets acquired and liabilities assumed are based on their estimates of fair value available as of June 10, 2024, as calculated by management.
The table below outlines the purchase price allocation of the purchase for Midwest Grinding to the acquired identifiable assets and liabilities assumed (in $000’s):
| Total purchase price | $ |
|
|||||||||
| Accounts payable |
|
||||||||||
| Total consideration |
|
||||||||||
| Accounts receivable |
|
||||||||||
| Other current assets |
|
||||||||||
| Property and equipment |
|
||||||||||
| Intangible Assets | |||||||||||
| Customer relationships | $ |
|
|||||||||
| Trade names |
|
||||||||||
| Non-compete agreement |
|
||||||||||
| Intangible assets |
|
||||||||||
| Total assets acquired |
|
||||||||||
| Total goodwill | $ |
|
|||||||||
Acquisition of Central Steel
On May 15, 2024, Precision Marshall acquired Central Steel. Total consideration for the acquisition was approximately $
13.9
million, comprised of $
10.7
million paid at closing, a seller note of $
1.1
million, a holdback, in the amount of $
0.3
million, and contingent consideration of $
2.0
million paid in the form of a
five-year
earn-out. The consideration paid at close was funded in part by borrowings under Precision Marshall's credit facility of approximately $
3.3
million, and
9
proceeds from a sale and leaseback transaction, discussed below. The acquisition involved
no
issuance of stock of the Company.
Simultaneous to the acquisition, the Company entered into a sale and leaseback transaction with Legacy West Partners, LLC, an unrelated party, for one of Central Steel's properties located in Broadview, Illinois. The sales price for the real property subject to the
sale
and leaseback transaction was approximately $
8.3
million, with total proceeds received by the Company of approximately $
7.9
million, net of approximately $
0.4
million in seller's fees.
The lease agreement includes a
20-year
lease term with
two
five-year
renewal options. The base rent under the lease agreement is $
58,795
per month for the first year of the term and a
2.0
% per annum escalator thereafter. The lease agreement is a “net lease,” such that Central Steel is also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the real property incurred by Central Steel. Due to the highly specialized nature of the leased property, the Company currently believes it is more likely than not that each of the
two
five-year
options will be exercised. Consequently, because the aggregate term of the lease at its conclusion will represent approximately 75% of the economic life of the building, the Company concluded that the lease is a financing transaction and a failed sale and leaseback transaction, as defined under ASC 842. The proceeds, net of closing fees, from the failed sale and leaseback transaction were used to assist in funding the acquisition of Central Steel.
No
gain was recognized as a result of the sale.
The fair value of the purchase price components was approximately $
13.9
million, as detailed below (in $000's):
| Purchase price | $ |
|
||||||
| Fair value of contingent consideration |
|
|||||||
| Holdback |
|
|||||||
| Net purchase price | $ |
|
||||||
Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $
2.9
million, which is calculated as the excess of both the consideration exchanged and liabilities assumed over the fair value of the identifiable assets acquired. The Company anticipates all of the goodwill arising from the acquisition to be fully deductible for tax purposes.
The table below outlines the purchase price allocation for the purchase of Central Steel to the acquired identifiable assets, liabilities assumed, and goodwill as of March 31, 2025 (in $000’s):
| Total purchase price | $ |
|
|||||||||
| Accounts payable |
|
||||||||||
| Accrued liabilities |
|
||||||||||
| Total liabilities assumed |
|
||||||||||
| Total purchase price plus liabilities assumed |
|
||||||||||
| Cash |
|
||||||||||
| Accounts receivable |
|
||||||||||
| Inventory |
|
||||||||||
| Property and equipment |
|
||||||||||
| Intangible assets | |||||||||||
| Trade names |
|
||||||||||
| Customer relationships |
|
||||||||||
| Non-compete |
|
||||||||||
| Subtotal intangible assets |
|
||||||||||
| Other assets |
|
||||||||||
| Total assets acquired |
|
||||||||||
| Total goodwill | $ |
|
|||||||||
10
Acquisition of Johnson
On November 30, 2023, CRO Affiliated, LLC ("CRO Affiliated"), a subsidiary of Live Ventures, acquired certain assets and assumed certain liabilities of Johnson Floor & Home Carpet One (“Johnson”), a floor covering retailer and installer serving residential and commercial customers through
four
locations in the Tulsa, Oklahoma area, and
one
in Joplin, Missouri. Total consideration for the acquisition was $
2.0
million, comprised of cash at close of $
0.5
million, deferred consideration in the form of a seller note of $
1.2
million, with additional consideration paid in the form of an earnout valued at approximately $
0.3
million. The deferred consideration is payable in
three
$
0.4
million installments due annually on the first three anniversary dates following the closing date. Each installment will accrue interest at
6.0
% per annum until paid.
The fair value of the purchase price components outlined above was approximately $
2.0
million, as detailed below (in $000's):
| Cash | $ |
|
||||||
| Deferred consideration |
|
|||||||
| Earnout |
|
|||||||
| Purchase price | $ |
|
||||||
The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of November 30, 2023, as calculated by management.
The table below outlines the purchase price allocation of the purchase for Johnson to the acquired identifiable assets and liabilities assumed:
| Total purchase price | $ |
|
|||||||||
| Accounts payable |
|
||||||||||
| Accrued liabilities |
|
||||||||||
| Total liabilities assumed |
|
||||||||||
| Total consideration |
|
||||||||||
| Accounts receivable |
|
||||||||||
| Inventory |
|
||||||||||
| Property, plant and equipment |
|
||||||||||
| Intangible assets | |||||||||||
| Customer relationships | $ |
|
|||||||||
| Non-compete agreement |
|
||||||||||
| Subtotal intangible assets |
|
||||||||||
| Other assets |
|
||||||||||
| Total assets acquired |
|
||||||||||
| Total goodwill | $ |
|
|||||||||
On May 24, 2024, CRO Affiliated entered into an asset purchase agreement with the original seller of Johnson under which the original seller agreed to purchase certain assets and assume certain obligations acquired by CRO Affiliated under the
11
original asset purchase agreement. Consequently, CRO Affiliated recorded a loss on disposition of Johnson’s assets and liabilities of approximately $
0.3
million, as detailed in the table below (in $000's):
| Accounts payable and accrued liabilities | $ |
|
|||||||||
| Earnout |
|
||||||||||
| Seller note |
|
||||||||||
| Lease liabilities |
|
||||||||||
| Total deconsolidation of liabilities |
|
||||||||||
| Inventory |
|
||||||||||
| Property and equipment |
|
||||||||||
| ROU assets |
|
||||||||||
| Intangible assets | |||||||||||
| Customer relationships |
|
||||||||||
| Non-compete agreement |
|
||||||||||
| Subtotal intangible assets |
|
||||||||||
| Total deconsolidation of assets |
|
||||||||||
| Total loss on disposition | $ |
(
|
|||||||||
Acquisition of CRO
On October 13, 2023, CRO Affiliated acquired certain assets and assumed certain liabilities of Carpet Remnant Outlet, Inc. (“CRO”), a floor covering retailer and installer serving residential and commercial customers throughout Northwest Arkansas. Total consideration for the acquisition was approximately $
1.4
million and was comprised of cash at close of approximately $
1.0
million, an indemnification holdback amount of $
0.3
million, and additional consideration valued at $
89,000
.
The fair value of the purchase price components was $
1.4
million, as detailed below (in $000's):
| Cash | $ |
|
||||||
| Additional consideration |
|
|||||||
| Holdback |
|
|||||||
| Purchase price | $ |
|
||||||
Under the preliminary purchase price allocation, the Company recognized goodwill of $
89,000
, which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of October 13, 2023, as calculated by an independent third-party firm. The value of the additional
12
consideration was calculated by management. The Company anticipates the $
89,000
of goodwill arising from the acquisition to be fully deductible for tax purposes.
The table below outlines the purchase price allocation of the purchase for CRO to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):
| Total purchase price | $ |
|
|||||||||
| Accounts payable |
|
||||||||||
| Accrued liabilities |
|
||||||||||
| Total liabilities assumed |
|
||||||||||
| Total consideration |
|
||||||||||
| Accounts receivable |
|
||||||||||
| Inventory |
|
||||||||||
| Property, plant and equipment |
|
||||||||||
| Intangible assets |
|
||||||||||
| Other assets |
|
||||||||||
| Total assets acquired |
|
||||||||||
| Total goodwill | $ |
|
|||||||||
Note 4:
Inventory
The following table details the Company's inventory as of March 31, 2025 and September 30, 2024 (in $000's):
| Inventory, net | March 31, 2025 | September 30, 2024 | |||||||||
| Raw materials | $ |
|
$ |
|
|||||||
| Work in progress |
|
|
|||||||||
| Finished goods |
|
|
|||||||||
| Merchandise |
|
|
|||||||||
|
|
|
||||||||||
| Less: Inventory reserves |
(
|
(
|
|||||||||
| Total inventory, net | $ |
|
$ |
|
|||||||
13
Note 5:
Property and Equipment
The following table details the Company's property and equipment as of March 31, 2025 and September 30, 2024 (in $000's):
| March 31, 2025 | September 30, 2024 | ||||||||||
| Property and equipment, net: | |||||||||||
| Land | $ |
|
$ |
|
|||||||
| Building and improvements |
|
|
|||||||||
| Transportation equipment |
|
|
|||||||||
| Machinery and equipment |
|
|
|||||||||
| Furnishings and fixtures |
|
|
|||||||||
| Office, computer equipment and other |
|
|
|||||||||
|
|
|
||||||||||
| Less: Accumulated depreciation |
(
|
(
|
|||||||||
| Total property and equipment, net | $ |
|
$ |
|
|||||||
Depreciation expense was $
3.1
million and $
3.0
million for the three months ended March 31, 2025 and 2024, respectively, and $
6.3
million and $
6.1
million for the six months ended March 31, 2025 and 2024, respectively.
Note 6:
Leases
The Company leases retail stores, warehouse facilities, and office space. These assets and properties are generally leased under noncancelable agreements that expire at various future dates with many agreements containing renewal options for additional periods. The agreements, which have been classified as either operating or finance leases, generally provide for minimum rent and, in some cases, percentage rent, and require the Company to pay all insurance, taxes, and other maintenance costs. As a result, the Company recognizes assets and liabilities for all leases with lease terms greater than 12 months. The amounts recognized reflect the present value of remaining lease payments for all leases. The discount rate used is an estimate of the Company’s blended incremental borrowing rate based on information available associated with each subsidiary’s debt outstanding at lease commencement. In considering the lease asset value, the Company considers fixed and variable payment terms, prepayments and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.
The following table details the Company's right of use assets and lease liabilities as of March 31, 2025 and September 30, 2024 (in $000's):
| March 31, 2025 | September 30, 2024 | ||||||||||
| Right of use asset - operating leases | $ |
|
$ |
|
|||||||
| Lease liabilities: | |||||||||||
| Current - operating |
|
|
|||||||||
| Current - finance |
|
|
|||||||||
| Long term - operating |
|
|
|||||||||
| Long term - finance |
|
|
|||||||||
As of March 31, 2025, the weighted average remaining lease term for operating leases is
9.8
years. The Company's weighted average discount rate for operating leases is
9.9
%. Total cash payments for operating leases for the six months ended March 31, 2025 and 2024 were approximately $
9.4
million and $
8.8
million, respectively. Additionally, the Company recognized approximately $
5.8
million in right of use assets and liabilities upon commencement of operating leases during the six months ended March 31, 2025.
14
Total present value of future lease payments of operating leases as of March 31, 2025 (in $000's):
| Twelve months ended March 31, | |||||
| 2026 | $ |
|
|||
| 2027 |
|
||||
| 2028 |
|
||||
| 2029 |
|
||||
| 2030 |
|
||||
| Thereafter |
|
||||
| Total |
|
||||
| Less implied interest |
(
|
||||
| Present value of payments | $ |
|
|||
As of March 31, 2025, the weighted average remaining lease term for finance leases is
26.6
years. The Company's weighted average discount rate for finance leases is
11.3
%. Total cash payments for finance leases for the six months ended March 31, 2025 and 2024 were approximately $
2.0
million and $
1.6
million, respectively. Additionally, the Company recognized approximately $
0.6
million in right of use assets and liabilities upon commencement of finance leases during the six months ended March 31, 2025.
The Company records finance lease right-of-use assets as property and equipment. The balance, as of March 31, 2025 and September 30, 2024 is as follows (in $000’s):
| March 31, 2025 | September 30, 2024 | ||||||||||
| Property and equipment, at cost | $ |
|
$ |
|
|||||||
| Accumulated depreciation | $ |
(
|
$ |
(
|
|||||||
| $ |
|
$ |
|
||||||||
Total present value of future lease payments of finance leases as of March 31, 2025 (in $000's):
| Twelve months ended March 31, | |||||
| 2026 | $ |
|
|||
| 2027 |
|
||||
| 2028 |
|
||||
| 2029 |
|
||||
| 2030 |
|
||||
| Thereafter |
|
||||
| Total |
|
||||
| Less implied interest |
(
|
||||
| Present value of payments | $ |
|
|||
15
Note 7:
Intangibles
The following table details the Company's intangibles as of March 31, 2025 and September 30, 2024 (in $000's):
| March 31, 2025 | September 30, 2024 | ||||||||||
| Intangible assets, net: | |||||||||||
| Intangible assets - Tradenames | $ |
|
$ |
|
|||||||
| Intangible assets - Customer relationships |
|
|
|||||||||
| Intangible assets - Other |
|
|
|||||||||
|
|
|
||||||||||
| Less: Accumulated amortization |
(
|
(
|
|||||||||
| Total intangibles, net | $ |
|
$ |
|
|||||||
Amortization expense was $
1.3
million and $
1.2
million for the three months ended March 31, 2025 and 2024, respectively, and $
2.5
million and $
2.4
million for the six months ended March 31, 2025 and 2024, respectively.
The following table summarizes estimated future amortization expense related to intangible assets that have net balances (in $000’s):
| Twelve months ending March 31, | |||||
| 2026 | $ |
|
|||
| 2027 |
|
||||
| 2028 |
|
||||
| 2029 |
|
||||
| 2030 |
|
||||
| Thereafter |
|
||||
| $ |
|
||||
Note 8:
Goodwill
The following table details the Company's goodwill as of September 30, 2024 and March 31, 2025 (in $000's):
| Retail - Entertainment | Retail - Flooring | Flooring Manufacturing | Steel Manufacturing | Total | |||||||||||||||||||||||||
| September 30, 2024 |
|
|
|
|
|
||||||||||||||||||||||||
| March 31, 2025 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
16
Note 9:
Accrued Liabilities
The following table details the Company's accrued liabilities as of March 31, 2025 and September 30, 2024 (in $000's):
| March 31, 2025 | September 30, 2024 | ||||||||||
| Accrued liabilities: | |||||||||||
| Accrued payroll and bonuses | $ |
|
$ |
|
|||||||
| Accrued sales and use taxes |
|
|
|||||||||
| Accrued customer deposits |
|
|
|||||||||
| Accrued gift card and escheatment liability |
|
|
|||||||||
| Accrued interest payable |
|
|
|||||||||
| Accrued inventory |
|
|
|||||||||
| Accrued professional fees |
|
|
|||||||||
| Accrued expenses - other |
|
|
|||||||||
| Total accrued liabilities | $ |
|
$ |
|
|||||||
Note 10:
Long-Term Debt
Long-term debt as of March 31, 2025 and September 30, 2024 consisted of the following (in $000's):
| March 31, 2025 | September 30, 2024 | ||||||||||
| Revolver loans | $ |
|
$ |
|
|||||||
| Equipment loans |
|
|
|||||||||
| Term loans |
|
|
|||||||||
| Other notes payable |
|
|
|||||||||
| Total notes payable |
|
|
|||||||||
| Less: unamortized debt issuance costs |
(
|
(
|
|||||||||
| Net amount |
|
|
|||||||||
| Less: current portion |
(
|
(
|
|||||||||
| Total long-term debt | $ |
|
$ |
|
|||||||
Future maturities of long-term debt at March 31, 2025, are as follows which does not include related party debt separately stated (in $000's):
| Twelve months ending March 31, | |||||
| 2026 | $ |
|
|||
| 2027 |
|
||||
| 2028 |
|
||||
| 2029 |
|
||||
| 2030 |
|
||||
| Thereafter |
|
||||
| Total future maturities of long-term debt | $ |
|
|||
Bank of America Revolver Loan
On January 31, 2020, as amended on September 4, 2024, Marquis entered into an amended $
25.0
million revolving credit agreement (“BofA Revolver”) with Bank of America Corporation (“BofA”). The BofA Revolver is an asset-based facility that is secured by substantially all of Marquis’ assets. Availability under the BofA Revolver is subject to a monthly borrowing base calculation. Marquis’ ability to borrow under the BofA Revolver is subject to the satisfaction of certain
17
conditions, including meeting all loan covenants under the credit agreement with BofA. The BofA Revolver has a variable interest rate and matures in July 2025. As of March 31, 2025, the Company concluded that Marquis was in default of its Fixed Cost Coverage Ratio (“FCCR”) covenant, as specified in the credit agreement governing the BofA Revolver, which provides the creditor rights to accelerate and make immediately due the borrowings under the BofA Revolver. Under the May 1, 2025 amendment to the BofA Revolver, Bank of America has issued a waiver with respect to Marquis’ default of its FCCR covenant. As of March 31, 2025 and September 30, 2024, the outstanding balance was approximately $
21.1
million and $
17.6
million, respectively.
Loan with Fifth Third Bank (Precision Marshall)
On January 20, 2022, Precision Marshall refinanced its Encina Business Credit loans with Fifth Third Bank, and the balance outstanding was repaid. The refinanced credit facility, totaling $
29.0
million, is comprised of $
23.0
million in revolving credit, $
3.5
million in M&E lending, and $
2.5
million for Capex lending. Advances under the new credit facility will bear interest at Prime Rate plus
0
basis points for lending under the revolving facility, and Prime Rate plus
25
basis points for M&E and Capex lending. The refinancing of the borrower’s existing credit facility reduces interest costs and improves the availability and liquidity of funds by approximately $
3.0
million at the close. The facility terminates on January 20, 2027, unless terminated earlier in accordance with its terms.
In connection with the acquisitions of Kinetic and Central Steel (see Note 3), the existing revolving facility was amended to add Kinetic and Central Steel as borrowers. In addition,
two
additional term loans were executed to fund the purchase of Kinetic. Approximately $
6.0
million was drawn from the revolving facility, and the
two
term loans were opened in the amounts of $
4.0
million and $
1.0
million, respectively. The $
4.0
million term loan (“Kinetic Term Loan #1”), which matures on January 20, 2027, bears interest on the same terms as for M&E term lending as stated above.
As of March 31, 2025 and September 30, 2024, the outstanding balance on the revolving loan was approximately $
21.7
million and $
21.3
million, respectively, and the outstanding balance on the original M&E lending, which is documented as a term note, was approximately $
1.6
million and $
1.8
million, respectively. The revolving loan has a variable interest rate and matures in January 2027. As of March 31, 2025 and September 30, 2024, the outstanding balance on Kinetic Term Loan #1 was approximately $
2.4
million and $
2.7
million, respectively.
On April 12, 2023, in connection with its existing credit facility with Fifth Third Bank, Precision Marshall took an advance against its Capex term lending in the amount of approximately $
1.4
million. Additionally, during June 2024, in connection with Kinetic's acquisition of Midwest Grinding (see Note 3), Precision Marshall took an additional advance against its Capex term lending in the amount of approximately $
0.4
million. The loan matures January 2027 and bears interest on the same terms as for Capex lending as stated above. As of March 31, 2025 and September 30, 2024, the outstanding balance on the Capex loan was $
1.9
million and $
1.6
million, respectively.
Eclipse Business Capital Loans
In connection with the acquisition of Flooring Liquidators, on January 18, 2023, Flooring Liquidators entered into a credit facility with Eclipse Business Capital, LLC (“Eclipse”). The facility consists of $
25.0
million in revolving credit (“Eclipse Revolver”) and $
3.5
million in M&E lending (“Eclipse M&E”). The Eclipse Revolver is a
three-year
, asset-based facility that is secured by substantially all of Flooring Liquidators’ assets. Availability under the Eclipse Revolver is subject to a monthly borrowing base calculation. Flooring Liquidators’ ability to borrow under the Eclipse Revolver is subject to the satisfaction of certain conditions, including meeting all loan covenants under the credit agreement with Eclipse. The Eclipse Revolver bears interest at
3.5
% per annum in excess of Adjusted Term SOFR. The Eclipse M&E loan bears interest at
6.0
% per annum in excess of Adjusted Term SOFR prior to April 1, 2023, and
5.0
% per annum in excess of Adjusted Term SOFR after April 1, 2023. The credit facility matures in January 2026. As of March 31, 2025 and September 30, 2024, the outstanding balance on the Eclipse Revolver was approximately $
8.5
million and $
9.3
million, respectively, and the outstanding balance on the Eclipse M&E loan was approximately $
1.4
million and $
1.8
million, respectively.
Loan with Fifth Third Bank (PMW)
In connection with the acquisition of PMW, on July 20, 2023, as amended on March 5, 2025, PMW entered into a revolving credit facility (the “Revolving Credit Facility”) with Fifth Third Bank. The facility consists of $
15.0
million in revolving credit (the “Fifth Third Revolver”) and approximately $
5.0
million in M&E lending (the “Fifth Third M&E Loan”). The Fifth Third Revolver is a
three-year
, asset-based facility that is secured by substantially all of PMW's assets. Availability under the Fifth Third Revolver is subject to a monthly borrowing base calculation. PMW's ability to borrow under the Fifth Third Revolver is subject to the satisfaction of certain conditions, including meeting all loan covenants under the credit agreement with Fifth Third. Loans made under the Revolving Credit Facility are considered Reference
18
Rate Loans, and bear interest at a rate equal to the sum of the Reference Rate plus the Applicable Margin. Reference Rate means the greater of (a)
3.0
% or (b) the Lender’s publicly announced prime rate (which is not intended to be Lender’s lowest or most favorable rate in effect at any time) in effect from time to time. The Applicable Margin for revolving loans is
zero
, while for the Fifth Third M&E Loan or any capital expenditure term loan, it is
50
basis points (
0.5
%). The credit facility matures in July 2026. As of December 31, 2024, the Company concluded that PMW was in default of its FCCR covenant, as specified in the credit agreement governing the Revolving Credit Facility. Under the March 5, 2025 amendment to the Revolving Credit Facility, Fifth Third Bank has issued a waiver with respect to PMW’s previous default of its FCCR covenant. As of March 31, 2025 and September 30, 2024, the outstanding balance on the Fifth Third Revolver was approximately $
7.5
million and $
10.1
million, respectively, and the balance on the Fifth Third M&E Loan was approximately $
3.7
million and $
4.1
million, respectively.
Bank Midwest Revolver Loan
On October 17, 2024, Vintage entered into an amended $
10.0
million credit agreement with Bank Midwest (“Bank Midwest Revolver”). The amended Bank Midwest Revolver accrues interest daily on the outstanding principal at a rate of the greater of (a) the one-month forward-looking term rate based on SOFR, plus
2.36
% per annum, or (b)
5.0
% per annum, and matures on October 17, 2025. As of March 31, 2025 and September 30, 2024, the outstanding balance on the Bank Midwest Revolver was approximately $
0
and $
1.9
million, respectively.
Note payable to JCM Holdings
During October 2020, Marquis purchased a manufacturing facility, which it had previously leased, for approximately $
2.5
million. Marquis entered into a $
2.0
million loan agreement, secured by the facility, with the seller of the facility, in order to complete the purchase of the facility. The loan bears interest at
6.0
%, due monthly, and matures January 2030. As of March 31, 2025 and September 30, 2024, the outstanding principal balance was approximately $
1.2
million and $
1.3
million, respectively.
Note Payable to Store Capital Acquisitions, LLC
On June 14, 2016, Marquis entered into a transaction with Store Capital Acquisitions, LLC. The transaction included a sale-leaseback of land owned by Marquis and a loan secured by the improvements on such land. The total aggregate proceeds received from the sale of the land and the loan was $
10.0
million, which consisted of approximately $
0.6
million from the sale of the land and a note payable of approximately $
9.4
million. In connection with the transaction, Marquis entered into a lease with a
15
-year term commencing on the closing of the transaction, which provides Marquis with an option to extend the lease upon the expiration of its term. The initial annual lease rate is $
60,000
. The proceeds from this transaction were used to pay down the BofA Revolver and Term loans, and related party loan, as well as to purchase a building from the previous owners of Marquis that was not purchased in the July 2015 transaction. The note payable bears interest at
9.3
% per annum, with principal and interest due monthly. The note payable matures June 13, 2056. For the first
five years
of the note payable, there is a pre-payment penalty of
5.0
%, which declines by
1.0
% for each year the loan remains unpaid for the next
five years
. At the end of
ten years
, there is no pre-payment penalty. In connection with the note payable, Marquis incurred approximately $
458,000
in transaction costs that are being recognized as a debt issuance cost and are being amortized and recorded as interest expense over the term of the note payable. The remaining principal balance was approximately $
9.1
million as of March 31, 2025 and September 30, 2024, respectively.
Equipment Loans
On June 20, 2016 and August 5, 2016, Marquis entered into a transaction that provided for a master agreement and separate loan schedules (the “Equipment Loans”) with Banc of America Leasing & Capital, LLC that provided for the following as of March 31, 2025:
Note #5 is for approximately $
4.0
million, secured by equipment. The Equipment Loan #5 was due December 2024, payable in
84
monthly payments of $
55,000
beginning January 2018, bearing interest at
4.7
% per annum. As of March 31, 2025 and September 30, 2024, the balance was approximately $
0
and $
164,000
, respectively.
Note #7 is for $
5.0
million, secured by equipment. The Equipment Loan #7 is due February 2027, payable in
84
monthly payments of $
59,000
beginning March 2020, with the final payment of $
809,000
, bearing interest at
3.2
% per annum. As of December 31, 2024 and September 30, 2024, the balance was approximately $
2.0
million and $
2.3
million, respectively.
19
Note #8 is for approximately $
3.4
million, secured by equipment. The Equipment Loan #8 is due September 2027, payable in
84
monthly payments of $
46,000
beginning October 2020, bearing interest at
4.0
%. As of December 31, 2024 and March 31, 2025, the balance was approximately $
1.3
million and $
1.6
million, respectively.
In December 2021, Marquis funded the acquisition of $
5.5
million of new equipment under Note #9 of its master agreement. The Equipment Loan #9, which is secured by the equipment, matures December 2026, and is payable in
60
monthly payments of $
92,000
beginning January 2022, with the final payment in the amount of approximately $
642,000
, bearing interest at
3.75
% per annum. As of March 31, 2025 and September 30, 2024, the balance was approximately $
2.4
million and $
2.9
million, respectively.
In December 2022, Marquis funded the acquisition of $
5.7
million of new equipment under Note #10 of its master agreement. The Equipment Loan #10, which is secured by the equipment, matures December 2029, and is payable in
84
monthly payments of $
79,000
, beginning January 2023, with the final payment in the amount of approximately $
650,000
, bearing interest at
6.5
%. As of March 31, 2025 and September 30, 2024, the balance was approximately $
4.3
million and $
4.6
million, respectively.
Loan Covenant Compliance
As of March 31, 2025, the Company was in compliance with all covenants under its existing revolving and other loan agreements.
Note 11:
Notes Payable-Related Parties
Long-term debt payable to related parties (see Note 16) as of March 31, 2025 and September 30, 2024 consisted of the following (in $000's):
| March 31, 2025 | September 30, 2024 | ||||||||||
|
Isaac Capital Group, LLC,
|
$ |
|
$ |
|
|||||||
|
Isaac Capital Group, LLC,
|
|
|
|||||||||
|
Spriggs Investments, LLC,
|
|
|
|||||||||
|
Spriggs Investments, LLC for Flooring Liquidators,
|
|
|
|||||||||
|
Isaac Capital Group, LLC revolver,
|
|
|
|||||||||
|
Isaac Capital Group, LLC for Flooring Liquidators,
|
|
|
|||||||||
| Total notes payable - related parties |
|
|
|||||||||
| Less: unamortized debt issuance costs |
(
|
(
|
|||||||||
| Net amount |
|
|
|||||||||
| Less: current portion |
(
|
(
|
|||||||||
| Total long-term portion, related parties | $ |
|
$ |
|
|||||||
Future maturities of related party notes at March 31, 2025 are as follows (in $000’s):
| Twelve months ending March 31, | |||||
| 2026 | $ |
|
|||
| 2028 |
|
||||
| 2030 |
|
||||
| Total future maturities of long-term debt, related parties | $ |
|
|||
20
Note 12:
Related Party Seller Notes
Seller notes as of March 31, 2025 and September 30, 2024 consisted of the following (in $000’s):
|
March 31,
2025 |
September 30,
2024 |
||||||||||
| Related Party Seller Notes | |||||||||||
|
Seller of PMW,
|
$ |
|
$ |
|
|||||||
|
Seller of Kinetic,
|
|
|
|||||||||
|
Seller of Central Steel,
|
|
|
|||||||||
|
Seller of Flooring Liquidators,
|
|
$ |
|
||||||||
|
Seller of Flooring Liquidators,
|
|
|
|||||||||
| Total Related Party Seller Notes |
|
|
|||||||||
| Unamortized debt premium (discount) |
(
|
|
|||||||||
| Net amount |
|
|
|||||||||
| Less current portion |
|
(
|
|||||||||
| Long-term portion of seller notes payable | $ |
|
$ |
|
|||||||
Future maturities of seller notes at March 31, 2025 are as follows (in $000’s):
| Twelve months ending March 31, | |||||
| 2027 | $ |
|
|||
| 2028 |
|
||||
| 2029 |
|
||||
| Total | $ |
|
|||
Note Payable to the Seller of PMW
In connection with the purchase of PMW, on July 20, 2023, the Company entered into a consulting agreement with the previous owner of PMW to serve as its part-time President and Chief Executive Officer. The consulting agreement shall terminate upon the later of (i) sellers’ receipt of earn-out payments in an aggregate amount equal to $
3.0
million and (ii) the full satisfaction and payment of all amounts due and to that are to become due under the seller note, unless earlier terminated in accordance with the terms set forth in the consulting agreement. Additionally, PMW entered into two seller financed loans, in the aggregate amount of $
2.5
million, which are fully guaranteed by the Company (the "Seller Financed Loans"). The Seller Financed Loans bear interest at
8.0
% per annum, with interest payable quarterly in arrears.
On December 24, 2024, the Company entered into a Settlement Agreement and Release (“Settlement Agreement”) to settle the Seller Financed Loans of $
2.5
million, plus accrued interest of approximately $
0.1
million, for approximately $
1.9
million with the previous owners of PMW. The funds to settle the loans were borrowed from Isaac Capital Group, LLC (“ICG”) (see Note 16). The Company evaluated this transaction under ASC 470-50 “Debt - Modification and Extinguishment”, and concluded that, because PMW was legally released as the primary obligor, and has no other debt with these lenders, this transaction should be accounted for as a debt extinguishment. As such, the Company recorded a gain on extinguishment of debt in the amount of approximately $
0.7
million. Additionally, under the Settlement Agreement, the Company was released of claims for earnout payments, as stipulated under the Stock Purchase Agreement. Consequently, the Company recorded a gain on settlement of the earnout liability in the amount of approximately $
2.8
million. As of March 31, 2025 and September 30, 2024, the carrying value of the seller financed loans was $
0
and $
2.5
million, respectively.
Note Payable to the Sellers of Kinetic
In connection with the purchase of Kinetic, on June 28, 2022, Kinetic entered into an employment agreement with the previous owner of Kinetic to serve as its Head of Equipment Operations. The employment agreement is for an initial term of
five years
and shall be automatically extended in
90
-day increments unless either party provides notice as required under the agreement. Additionally, Precision Marshall entered into a seller financed loan in the amount of $
3.0
million with the previous owner of Kinetic. The Sellers Subordinated Acquisition Note bears interest at
7.0
% per annum, with interest
21
payable quarterly in arrears. The Sellers Subordinated Acquisition Note has a maturity date of September 27, 2027. As of March 31, 2025 and September 30, 2024, the remaining principal balance was $
3.0
million.
Note Payable to the Seller of Central Steel
In connection with the purchase of Central Steel, on May 15, 2024 (see Note 3), Precision Marshall entered into an employment agreement with the previous owner of Central Steel to serve as its President. The employment agreement is for an initial term of
two years
and shall be deemed to be automatically extended, upon the same terms and conditions, for a period of
one year
, unless either party provides written notice of its or his intention not to extend the term at least
90
days prior to the end of the initial term. Additionally, Precision Marshall entered into a seller financed loan in the amount of $
1.1
million with the previous owner of Central Steel (the "Sellers Subordinated Promissory Note"). The Sellers Subordinated Promissory Note bears interest at
8.0
% per annum, with interest payable quarterly in arrears. The Sellers Subordinated Promissory Note has a maturity date of May 15, 2029. As of March 31, 2025 and September 30, 2024, the remaining principal balance was $
1.1
million.
Note Payable to the Seller of Flooring Liquidators
In connection with the purchase of Flooring Liquidators, on January 18, 2023, the Flooring Liquidators entered into an employment agreement with the previous owner of Flooring Liquidators to serve as its Chief Executive Officer. The employment agreement was for an initial term of
five years
and automatically extended in
90
-day increments unless either party provides notice as required under the agreement. Additionally, Flooring Affiliated Holdings, LLC, a Company subsidiary, entered into a seller financed mezzanine loan (the "Seller Note"), which was fully guaranteed by the Company, in the amount of $
34.0
million with the previous owners of Flooring Liquidators. The Seller Note bore interest at the contractual rate of
8.24
% per annum, with interest payable monthly in arrears beginning on January 18, 2024. The Seller Note had a maturity date of January 18, 2028. The fair value assigned to the Seller Note, as calculated by an independent third-party firm, was $
31.7
million, or a discount of $
2.3
million.
On February 25, 2025, Flooring Liquidators, Flooring Affiliated Holdings, and the Company entered into a binding Memorandum of Understanding (“MOU”) with the previous owner of Flooring Liquidators under which the principal amount of the Seller Note was reduced from $
34.0
million to $
15.0
million. The relevant portion of the MOU was later superseded by a Second Amendment to Secured Promissory Note (the “Second Seller Note Amendment”).The Seller Note bears interest at
8.24
% per annum effective January 1, 2025, and matures in February 2028, with interest payments due monthly beginning February 28, 2025. The Company determined that the fair value of the amended Seller Note was approximately $
14.0
million, or a discount of $
1.0
million. In an event of default under the Seller Note, or if the Company defaults in making any payment it is required to make pursuant to the Seller Note, the note holders may revoke the principal reduction, in which case the aggregate outstanding principal balance of the Seller Note will increase by $
19
million to $
34.0
million.
In addition to the reduction in the principal amount of the Seller Note, the MOU provides for the following:
•
An increase in the existing holdback principal amount of approximately $
0.5
million, to $
1.5
million, and that no further claims against the holdback shall be made or permitted. Under the MOU, the holdback bears interest at
8.24
% per annum effective January 1, 2025, with interest payments due monthly beginning February 28, 2025. Full payment of the holdback principal is due in August 2025.
•
The previous owner’s title was revised to be Founder and Vice President, his employment was made part-time, and he resigned from each other office and as director or manager of Flooring Liquidators and each of its related entities.
The Company evaluated this transaction under ASC 470-50 “Debt - Modification and Extinguishment”, and concluded that, because the change in present value of cash flows between the original and revised debt exceeds 10%, and the debt revision does not meet the accounting requirements for troubled debt restructuring, this transaction should be accounted for as a debt extinguishment. In connection with the debt extinguishment and the increase in the holdback principal amount, the Company recorded a gain of approximately $
22.8
million. As of March 31, 2025 and September 30, 2024, the carrying value of the Seller Note was approximately $
14.0
million and $
36.3
million, respectively
22
Note 13:
Stockholders’ Equity
Series E Convertible Preferred Stock
As of March 31, 2025 and September 30, 2024, there were
47,840
shares of Series E Convertible Preferred Stock issued and outstanding, respectively.
Treasury Stock
As of March 31, 2025 and September 30, 2024, the Company had
741,696
and
694,687
shares of Treasury Stock, respectively. During the six months ended March 31, 2025 and 2024, the Company repurchased
47,009
and
16,195
shares of its common stock for approximately $
416,315
and $
404,000
, respectively. During the six months ended March 31, 2025 and 2024, the average price paid per share was $
8.86
and $
24.99
, respectively.
Note 14:
Stock-Based Compensation
Our 2014 Omnibus Equity Incentive Plan (the “2014 Plan”) authorizes the issuance of distribution equivalent rights, incentive stock options, non-qualified stock options, performance stock, performance units, restricted ordinary shares, restricted stock units, stock appreciation rights, tandem stock appreciation rights and unrestricted ordinary shares to our directors, officer, employees, consultants, and advisors. The Company has reserved up to
300,000
shares of common stock for issuance under the 2014 Plan.
From time to time, the Company grants stock options to directors, officers, and employees. These awards are valued at the grant date by determining the fair value of the instruments. The value of each award is amortized on a straight-line basis over the requisite service period.
The following table summarizes stock option activity for the fiscal year ended September 30, 2024 and the six months ended March 31, 2025:
|
Number of
Shares |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contractual Life |
Intrinsic
Value |
||||||||||||||||||||
| Outstanding at September 30, 2023 |
|
$ |
|
|
$ |
|
|||||||||||||||||
| Outstanding at March 31, 2024 |
|
$ |
|
|
$ |
|
|||||||||||||||||
| Exercisable at March 31, 2024 |
|
$ |
|
|
$ |
|
|||||||||||||||||
| Outstanding at September 30, 2024 |
|
$ |
|
|
$ |
|
|||||||||||||||||
| Forfeited |
(
|
$ |
|
||||||||||||||||||||
| Outstanding at March 31, 2025 |
|
$ |
|
|
$ |
|
|||||||||||||||||
| Exercisable at March 31, 2025 |
|
$ |
|
|
$ |
|
|||||||||||||||||
The Company recognized compensation expense of approximately $
49,000
and $
50,000
during the three months ended March 31, 2025 and 2024, respectively, and approximately $
100,000
during the six months ended March 31, 2025 and 2024, related to stock option awards and restricted stock awards granted to certain employees and officers based on the grant date fair value of the awards, and the revaluation for existing options whereby the expiration date was extended.
As of March 31, 2025, the Company had approximately $
0.6
million of unrecognized compensation expense associated with restricted stock awards.
Note 15:
Earnings Per Share
Net income per share is calculated using the weighted average number of shares of common stock outstanding during the applicable period. Basic weighted average common shares outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s Condensed Consolidated Balance Sheet. Diluted net income per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential common shares consist of the additional
23
common shares issuable in respect of restricted share awards, stock options, and convertible preferred stock. Preferred stock dividends are subtracted from net earnings to determine the amount available to common stockholders.
The following table presents the computation of basic and diluted net earnings per share (in $000's):
| Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Net income (loss) | $ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||
| Weighted average common shares outstanding |
|
|
|
|
|||||||||||||||||||
| Basic earnings (loss) per share | $ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net income (loss) applicable to common stock | $ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||
| Weighted average common shares outstanding |
|
|
|
|
|||||||||||||||||||
| Add: Restricted Stock Units |
|
|
|
|
|||||||||||||||||||
| Add: Series E Preferred Stock |
|
|
|
|
|||||||||||||||||||
| Assumed weighted average common shares outstanding |
|
|
|
|
|||||||||||||||||||
| Diluted earnings (loss) per share | $ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||
Basic earnings per common share ("EPS") is computed by dividing net income by the weighted average number of shares of Common Stock outstanding for the period. Diluted EPS is computed by dividing net income by the sum of the weighted average number of shares of Common Stock outstanding and the effect of dilutive securities. No diluted EPS computation was made for the three and six months ended March 31, 2024, as the Company recorded a net loss. Had the Company calculated diluted EPS for the three and six months ended March 31, 2024, the total assumed weighted average common shares outstanding would have been
3,173,021
and
3,177,549
, respectively, and there would have been
22,500
options to purchase shares of common stock that were anti-dilutive.
Note 16:
Related Party Transactions
Transactions with Isaac Capital Group, LLC
As of March 31, 2025, ICG beneficially owns
50.5
% of the Company’s issued and outstanding capital stock. Jon Isaac, the Company's President and Chief Executive Officer, is the President and sole member of ICG, and, accordingly, has sole voting and dispositive power with respect to these shares. Mr. Isaac also personally owns
217,177
shares of common stock.
ICG Term Loan
During 2015, Marquis entered into a mezzanine loan in the amount of up to $
7.0
million (the “ICF Loan”) with Isaac Capital Fund I, LLC (“ICF”), a private lender whose managing member is Jon Isaac. On July 10, 2020, (i) ICF released and discharged Marquis from all obligations under the loan, (ii) ICF assigned all of its rights and obligations under the instruments, documents, and agreements with respect to the ICF Loan to ICG, of which Jon Isaac, the Company’s President and Chief Executive Officer, is the sole member, and (iii) Live Ventures borrowed $
2.0
million (the “ICG Loan”) from ICG. The ICG Loan bears interest at
12.5
% and matures in May 2025. As of March 31, 2025 and September 30, 2024, the outstanding balance on this note was $
2.0
million.
ICG Revolving Promissory Note
On April 9, 2020, the Company, as borrower, entered into an unsecured revolving line of credit promissory note whereby ICG agreed to provide the Company with a $
1.0
million revolving credit facility (the “ICG Revolver”). On June 23, 2022, the amount of available revolving credit under the facility was increased to $
6.0
million. No other terms of the Note were changed. On April 1, 2023, the Company entered into the Second Amendment of the ICG Revolver that extended the maturity date to April 8, 2024, increased the interest rate from
10
% to
12
% per annum, and decreased the amount of available revolving credit under the facility to $
1.0
million. On January 11, 2024, the Company entered into the Third Amendment of the ICG Revolver that extended the maturity date to
24
April 8, 2025 and increased the amount of available revolving credit under the facility to $
5.0
million. The ICG Revolver has been amended during the third quarter of 2025 to, among other items, increase the available revolving credit under the facility to $
12.0
million. As of March 31, 2025 and September 30, 2024, the outstanding balance on the ICG Revolver was $
6.9
million and
2.6
million, respectively.
ICG Flooring Liquidators Note
On January 18, 2023, in connection with the acquisition of Flooring Liquidators, Flooring Affiliated Holdings, LLC, a wholly-owned subsidiary of the Company, as borrower, entered into a promissory note for the benefit of ICG in the amount of $
5.0
million (“ICG Flooring Liquidators Loan”). The ICG Flooring Liquidators Loan matures on January 18, 2028, and bears interest at
12
%. Interest is payable in arrears on the last day of each calendar month. The note is fully guaranteed by the Company. As of March 31, 2025, the outstanding balance on this loan was $
5.0
million.
ICG PMW Note
On Dec 14, 2024, in connection with the Settlement Agreement of the PMW Seller Financed Loans (see Note 12), the Company, as borrower, entered into a promissory note for the benefit of ICG in the amount of approximately $
2.6
million (“ICG PMW Note”). The Company received proceeds of approximately $
1.9
million from ICG, which was used to settle the loans plus accrued interest. The $
0.7
million discount is being accreted to interest expense using the effective interest rate method, as required by U.S. GAAP, over the term of the note. The ICG PMW Note matures on Dec 17, 2029, and bears interest at the contractual rate of
12.0
% per annum. Interest is payable in arrears on the first business day of each month commencing on January 2, 2025. As of March 31, 2025, the balance on this loan was approximately $
2.6
million.
Transactions with Vintage Stock CEO
Rodney Spriggs, the President and Chief Executive Officer of Vintage Stock, a wholly owned subsidiary of the Company, is the sole member of Spriggs Investments, LLC (“Spriggs Investments”).
Spriggs Promissory Note I
On July 10, 2020, the Company executed a promissory note (the “Spriggs Promissory Note I”) in favor of Spriggs Investments that memorializes a loan by Spriggs Investments to the Company in the initial principal amount of $
2.0
million (the “Spriggs Loan I”). The Spriggs Loan I originally matured on July 10, 2022; however, the maturity date was extended to July 10, 2023. The Spriggs Promissory Note I bears simple interest at a rate of
10.0
% per annum. On January 19, 2023, the Company entered into a modification agreement of the Spriggs Loan I. Under the modification agreement, the Spriggs Promissory Note I will bear interest at a rate of
12.0
% per annum, and the maturity date was extended to July 31, 2024. On February 29, 2024, the Company entered into a loan modification agreement of the Spriggs Loan I. Under the loan modification agreement, the Company was required to make a principal payment of $
600,000
to Spriggs Investments within
five
business days following the effective date of the loan modification agreement, and make principal payments of not less than $
300,000
each
90
-day period thereafter, beginning on April 1, 2024, until the Spriggs Promissory Note I is fully repaid. Further, under the loan modification agreement, the maturity date of the Spriggs Promissory Note I was extended to July 31, 2025. All monthly payments under the original Spriggs Promissory Note I remain in effect through the maturity date as amended. As of March 31, 2025 and September 30, 2024, the principal amount owed was $
0.2
million and $
0.8
million, respectively.
Spriggs Promissory Note II
On January 19, 2023, in connection with the acquisition of Flooring Liquidators, the Company executed a promissory note in favor of Spriggs Investments in the initial principal amount of $
1.0
million (the “Spriggs Loan II”). The Spriggs Loan II matures on July 31, 2024, and bears interest at a rate of
12
% per annum. On February 29, 2024, the Company entered into a loan modification agreement of the Spriggs Loan II. Under the loan modification agreement, upon full principal repayment of the Spriggs Promissory Note I (see above), the Company will make principal payments of not less than $
300,000
, per each
90
-day period, until the Spriggs Loan II is fully repaid.
Further, under the loan modification agreement, the maturity date of the Spriggs Loan II was extended to July 31, 2025
.
All monthly payments under the original Spriggs Loan II remain in effect through the maturity date as amended. As of March 31, 2025 and September 30, 2024, the principal amount owed was $
1.0
million.
25
Transactions with ALT5 Sigma Corporation, formerly JanOne Inc.
Tony Isaac, a member of the Company's board of directors, and father of the Company's Chief Executive Officer, Jon Isaac, is the President and a director of ALT5 Sigma Corporation (“ALT5”), formerly JanOne Inc. Richard Butler, a member of the Company's board of directors, is a director of ALT5.
Lease Agreement
Customer Connexx LLC, formerly a subsidiary of ALT5, previously rented approximately
9,900
square feet of office space from the Company at its Las Vegas office, which totals
16,500
square feet. ALT5 paid the Company $
30,000
and $
39,000
in rent and other reimbursed expenses for three months ended March 31, 2025 and 2024, respectively, and $
58,000
and $
75,000
for the six months ended March 31, 2025 and 2024, respectively.
Transactions with Spyglass Estate Planning, LLC
Jon Isaac, the Company's President and Chief Executive Officer, is the sole member of Spyglass Estate Planning, LLC (“Spyglass”).
Building Leases
On July 1, 2022, in connection with its acquisition of certain assets and intellectual property of Better Backers, Inc., Marquis entered into
two
building leases with Spyglass. The building leases are for
20
years with
two
options to renew for an additional
five years
each. The provisions of the lease agreements include an initial
24
-month month-to-month rental period, during which the lessee may cancel with
90-day
notice, followed by a
20-year
lease term with
two
five-year
renewal options. The Company has evaluated each lease and determined the rental amounts to be at market rates.
Seller Notes
The Company routinely enters into seller notes in conjunction with its acquisitions. See Note 12 for the details related to existing seller notes.
Note 17:
Commitments and Contingencies
Litigation
SEC Investigation
On February 21, 2018, the Company received a subpoena from the SEC and a letter from the SEC stating that it was conducting an investigation. The subpoena requested documents and information concerning, among other things, the restatement of the Company’s financial statements for the quarterly periods ended December 31, 2016, March 31, 2017, and June 30, 2017, the acquisition of Marquis Industries, Inc., Vintage Stock, Inc., and ApplianceSmart, Inc., and the change in auditors. On August 12, 2020,
three
of the Company’s corporate executive officers (together, the “Executives”) each received a “Wells Notice” from the Staff of the SEC relating to the Company’s SEC investigation. On October 7, 2020, the Company received a “Wells Notice” from the Staff of the SEC relating to the SEC investigation. The Wells Notices related to, among other things, the Company’s reporting of its financial performance for its fiscal year ended September 30, 2016, certain disclosures related to executive compensation, and its previous acquisition of ApplianceSmart, Inc. A Wells Notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law. The Wells Notices informed the Company and the Executives that the SEC Staff had made a preliminary determination to recommend that the SEC file an enforcement action against the Company and each of the Executives to allege certain violations of the federal securities laws. On October 1, 2018, the Company received a letter from the SEC requesting information regarding a potential violation of Section 13(a) of the Securities Exchange Act of 1934, based upon the timing of the Company’s Form 8-K filed on February 14, 2018. The Company cooperated fully with the SEC inquiry and provided a response to the SEC on October 26, 2018.
On August 2, 2021, the SEC filed a civil Complaint in the United States District Court for the District of Nevada naming the Company and
two
of its executive officers
– Jon Isaac, the Company’s current President and Chief Executive Officer, and Virland Johnson, the Company’s former Chief Financial Officer, as defendants (collectively, the “Company Defendants”) as well as certain other related third parties (the “SEC Complaint”). The SEC Complaint alleges various financial, disclosure, and reporting violations related to income and earnings per share data, purported undisclosed stock promotion and trading, purported inaccurate disclosure regarding beneficial ownership of common stock, and undisclosed
26
executive compensation from 2016 through 2018. The violations are brought under Section 10(b) of the Exchange Act and Rule 10b-5; Sections 13(a), 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rules 12b-20, 13a-1, 13a-14, 13a-13, 13b2-1, 13b2-2; Section 14(a) of the Exchange Act and Rule 14a-3; and Section 17(a) of the Securities Act of 1933. The SEC seeks permanent injunctions against the Company Defendants, permanent officer-and-director bars, disgorgement of profits, and civil penalties. The foregoing is only a general summary of the SEC Complaint, which may be accessed on the SEC’s website at www.sec.gov/litigation/litreleases/2021/lr25155.htm.
On October 1, 2021, the Company Defendants and third-party defendants moved to dismiss the SEC complaint. On September 7, 2022, the court denied the Company Defendants’ Motion to Dismiss, but granted
one
of the third-party defendant’s Motions to Dismiss, granting the SEC leave to file an Amended Complaint. On September 21, 2022, the SEC filed an Amended Complaint to which the Company Defendants filed an Answer on October 11, 2022, denying liability. The court subsequently entered a discovery scheduling order and the parties exchanged initial disclosures. The parties participated in a mediation in June 2023. The mediation was not successful. Fact discovery was completed on May 20, 2024. The parties completed expert discovery in September 2024 and filed cross Motions for Summary Judgment in October 2024. We expect it will take a number of months for the court to rule on the motions, during which time much of the activity in the case will be on pause.
Sieggreen Class Action
On August 13, 2021, Daniel E. Sieggreen, individually and on behalf of all others similarly situated claimants (the "Plaintiff"), filed a class action Complaint for violation of federal securities laws in the United States District Court for the District of Nevada, naming the Company, Jon Isaac, the Company's current President and Chief Executive Officer, and Virland Johnson, the Company's former Chief Financial Officer, as defendants (collectively, the "Company Defendants"). The allegations asserted are similar to those in the SEC Complaint. Among other sought relief, the complaint seeks damages in connection with the purchases and sales of the Company’s securities between December 28, 2016 and August 3, 2021. As of December 17, 2021, the judge granted a stipulation to stay proceedings pending the resolutions of the Motions to Dismiss in the SEC Complaint. On February 1, 2023, the final Motion to Dismiss relating to the SEC Complaint was denied, which was subsequently noticed in the Sieggreen action on February 2, 2023. Plaintiff filed an Amended Complaint on March 6, 2023. On May 5, 2023, the Company Defendants filed a Motion to Dismiss the Amended Complaint. The Motion to Dismiss was heard and granted with Leave to Amend on September 30, 2024. The Second Amended Complaint was filed on October 31, 2024. We filed a Motion to Dismiss the Second Amended Complaint on December 16, 2024 and the briefing is complete. We do not know when the motion will be heard.
Holdback Matter
On October 10, 2022, a representative for the former shareholders of Precision Industries, Inc. filed a civil complaint in the Court of Chancery of the State of Delaware. The complaint alleged that the Company violated the terms of an agreement and plan of merger dated July 14, 2020, by failing to pay the shareholders a certain indemnity holdback of $
2,500,000
. The Chancery Court dismissed that action for lack of jurisdiction. On January 12, 2023, the representative re-filed the same action in the United States District Court for the Western District of Pennsylvania. On October 26, 2023, the Company counterclaimed against the representative and all represented shareholders for fraudulently misrepresenting the seller’s inventory and accounting methodology and asserting damages in excess of $
4,500,000
. On April 10, 2024, the District Court dismissed the individual shareholders, leaving intact the Company's misrepresentation claims against the shareholder representative. The Court recently denied the plaintiff's Motion for Leave to Amend to assert statute of limitations defenses. While discovery is ongoing, the Company is optimistic that a settlement will be reached.
Wage and Hour Matter
On July 27, 2022, Irma Sanchez, a former employee of Elite Builder Services, Inc. (“Elite Builders”), filed a class action Complaint against Elite Builders in the Superior Court of California, County of Alameda, which case was transferred to Stanislaus Count. The Complaint alleges that Elite Builders failed to pay all minimum and overtime wages, failed to provide lawful meal periods and rest breaks, failed to provide accurate itemized wage statements, and failed to pay all wages due upon separation as required by California law. The Complaint was later amended as a matter of right on October 4, 2022. Further, Ms. Sanchez has put the Labor & Workforce Development Agency on notice to exhaust administrative remedies and enable her to bring an additional claim under the California Labor Code Private Attorneys General Act, which permits an employee to assert a claim for violations of certain California Labor Code provisions on behalf of all aggrieved employees to recover statutory penalties. The parties agreed to mediation on October 30, 2024 in an effort to minimize litigation costs and seek an early reasonable resolution. However, the mediation was postponed and is now set for June 2025.
27
Generally
The Company is involved in various claims and lawsuits arising in the normal course of business. The ultimate results of claims and litigation cannot be predicted with certainty. The Company currently believes that the ultimate outcome of such lawsuits and proceedings will not, individually, or in the aggregate, have a material adverse effect on our condensed consolidated financial position, results of operations or cash flows. As applicable, liabilities pertaining to these matters, that are probable and estimable, have been accrued.
Note 18:
Segment Reporting
The Company operates in
five
operating segments which are characterized as: (1) Retail-Entertainment, (2) Retail-Flooring, (3) Flooring Manufacturing, (4) Steel Manufacturing, and (5) Corporate and Other. The Retail-Entertainment segment consists of Vintage Stock; the Retail-Flooring segment consists of Flooring Liquidators; the Flooring Manufacturing Segment consists of Marquis; and the Steel Manufacturing Segment consists of Precision Marshall and Kinetic.
The following tables summarize segment information (in $000's):
| For the Three Months Ended March 31, | For the Six Months Ended March 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Retail-Entertainment | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Retail-Flooring |
|
|
|
|
|||||||||||||||||||
| Flooring Manufacturing |
|
|
|
|
|||||||||||||||||||
| Steel Manufacturing |
|
|
|
|
|||||||||||||||||||
| Corporate & Other |
|
|
|
|
|||||||||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Retail-Entertainment | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Retail-Flooring |
|
|
|
|
|||||||||||||||||||
| Flooring Manufacturing |
|
|
|
|
|||||||||||||||||||
| Steel Manufacturing |
|
|
|
|
|||||||||||||||||||
| Corporate & Other |
|
|
|
|
|||||||||||||||||||
| Total gross profit | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Operating income (loss) | |||||||||||||||||||||||
| Retail-Entertainment | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Retail-Flooring |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Flooring Manufacturing |
|
|
|
|
|||||||||||||||||||
| Steel Manufacturing |
|
|
|
|
|||||||||||||||||||
| Corporate & Other |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Total operating income (loss) | $ |
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Retail-Entertainment | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Retail-Flooring |
|
|
|
|
|||||||||||||||||||
| Flooring Manufacturing |
|
|
|
|
|||||||||||||||||||
| Steel Manufacturing |
|
|
|
|
|||||||||||||||||||
| Corporate & Other |
|
|
|
|
|||||||||||||||||||
| Total depreciation and amortization | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
28
| Interest expense | |||||||||||||||||||||||
| Retail-Entertainment | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Retail-Flooring |
|
|
|
|
|||||||||||||||||||
| Flooring Manufacturing |
|
|
|
|
|||||||||||||||||||
| Steel Manufacturing |
|
|
|
|
|||||||||||||||||||
| Corporate & Other |
|
|
|
|
|||||||||||||||||||
| Total interest expense | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Net income (loss) before provision for income taxes | |||||||||||||||||||||||
| Retail-Entertainment | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Retail-Flooring |
|
(
|
|
(
|
|||||||||||||||||||
| Flooring Manufacturing |
|
|
(
|
|
|||||||||||||||||||
| Steel Manufacturing |
|
(
|
|
(
|
|||||||||||||||||||
| Corporate & Other |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Total net income (loss) before provision for income taxes | $ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||
Note 19:
Subsequent Events
The Company has evaluated subsequent events through the filing of this Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to disclosures in its condensed consolidated financial statements.
29
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the three and six months ended March 31, 2025, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (the “2024 Form 10-K”).
Note about Forward-Looking Statements
This Quarterly Report on Form 10-Q includes statements that constitute “forward-looking statements.” These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “intends,” “plans,” “expects,” or “anticipates,” and do not reflect historical facts.
Specific forward-looking statements contained in this portion of the Annual Report include, but are not limited to: (i) statements that are based on current projections and expectations about the markets in which we operate, (ii) statements about current projections and expectations of general economic conditions, (iii) statements about specific industry projections and expectations of economic activity, (iv) statements relating to our future operations, prospects, results, and performance, (v) statements that the cash on hand and additional cash generated from operations together with potential sources of cash through issuance of debt or equity will provide the Company with sufficient liquidity for the next 12 months, and (vi) statements that the outcome of pending legal proceedings will not have a material adverse effect on business, financial position and results of operations, cash flow or liquidity.
Forward-looking statements involve risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results, future performance and capital requirements and cause them to materially differ from those contained in the forward-looking statements include those identified in our 2024 Form 10-K under Item 1A “Risk Factors” and Part II, Item 1A. "Risk Factors" below, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.
In addition, the foregoing factors may generally affect our business, results of operations, and financial position. Forward-looking statements speak only as of the date the statements were made. We do not undertake and specifically decline any obligation to update any forward-looking statements except as required by federal securities laws. Any information contained on our website www.liveventures.com or any other websites referenced in this Quarterly Report are not incorporated into and should not be deemed a part of this Quarterly Report.
Our Company
Live Ventures Incorporated is a holding company of diversified businesses, which, together with our subsidiaries, we refer to as the “Company”, “Live Ventures”, “we”, “us” or “our”. We acquire and operate companies in various industries that have historically demonstrated a strong history of earnings power. We currently have five segments to our business: Retail-Entertainment, Retail-Flooring, Flooring Manufacturing, Steel Manufacturing, and Corporate and Other.
Under the Live Ventures brand, we seek opportunities to acquire profitable and well-managed companies. We work closely with consultants who help us identify target companies that fit within the criteria we have established for opportunities that will provide synergies with our businesses.
Our principal offices are located at 325 E. Warm Springs Road, Suite 102, Las Vegas, Nevada 89119, our telephone number is (702) 939-0231, and our corporate website (which does not form part of this Quarterly Report Form 10-Q) is located at www.liveventures.com. Our common stock trades on the Nasdaq Capital Market under the symbol “LIVE”.
Retail-Entertainment Segment
Our Retail-Entertainment Segment is composed of Vintage Stock, Inc., doing business as Vintage Stock, V-Stock, Movie Trading Company and EntertainMart (collectively, “Vintage Stock”).
30
Vintage Stock is an award-winning specialty entertainment retailer that offers a large selection of entertainment products, including new and pre-owned movies, video games and music products, as well as ancillary products, such as books, comics, toys and collectibles, in a single location. With its integrated buy-sell-trade business model, Vintage Stock buys, sells and trades new and pre-owned movies, music, video games, electronics and collectibles through 73 retail locations strategically positioned across Alabama, Arkansas, Colorado, Idaho, Illinois, Kansas, Missouri, Montana, Nebraska, New Mexico, Oklahoma, Tennessee, Texas, and Utah.
Retail-Flooring Segment
Our Retail-Flooring Segment is composed of Flooring Liquidators, Inc. (“Flooring Liquidators”).
Flooring Liquidators is a leading retailer and installer of flooring, carpeting, and countertops to consumers, builders, and contractors in California and Nevada, operating 27 warehouse-format stores and a design center. Over the years, the company has established a strong reputation for innovation, efficiency, and service in the home renovation and improvement market. Flooring Liquidators serves retail and builder customers through two businesses: retail customers through its Flooring Liquidators retail stores, and builder and contractor customers through Elite Builder Services, Inc.
Flooring Manufacturing Segment
Our Flooring Manufacturing segment is comprised of Marquis Industries, Inc. (“Marquis”).
Marquis is a leading carpet manufacturer and distributor of carpet and hard-surface flooring products. Over the last decade, Marquis has been an innovator and leader in the value-oriented polyester carpet sector, which is currently the market’s fastest-growing fiber category. Marquis focuses on the residential, niche commercial, and hospitality end-markets and serves thousands of customers.
Since commencing operations in 1995, Marquis has built a strong reputation for outstanding value, styling, and customer service. Its innovation has yielded products and technologies that differentiate its brands in the flooring marketplace. Marquis’s state-of-the-art operations enable high quality products, unique customization, and exceptionally short lead-times. Furthermore, the Company has recently invested in additional capacity to grow several attractive lines of business, including printed carpet and yarn extrusion.
Steel Manufacturing Segment
Our Steel Manufacturing segment is comprised of Precision Industries, Inc. (“Precision Marshall”), its wholly-owned subsidiary The Kinetic Co., Inc. (“Kinetic”), Precision Metal Works, Inc. (“PMW”), and Central Steel Fabricators, LLC. ("Central Steel")
.
Precision Marshall is the North American leader in providing and manufacturing, pre-finished de-carb free tool and die steel. For over 75 years, Precision Marshall has served steel distributors through quick and accurate service. Precision Marshall has led the industry with exemplary availability and value-added processing that saves distributors time and processing costs.
Founded in 1948, Precision Marshall “The Deluxe Company” has built a reputation of high integrity, speed of service and doing things the “Deluxe Way”. The term Deluxe refers to all aspects of the product and customer service to be head and shoulders above the rest. From order entry to packaging and delivery, Precision Marshall makes it easy to do business and backs all products and service with a guarantee.
Precision Marshall provides four key products to over 500 steel distributors in four product categories: Deluxe Alloy Plate, Deluxe Tool Steel Plate, Precision Ground Flat Stock, and Drill Rod. With over 5,000 distinct size grade combinations in stock every day, Precision Marshall arms tool steel distributors with deep inventory availability and same day shipment to their place of business or often ships direct to their customer saving time and handling.
On June 28, 2022, Precision Marshall acquired Kinetic. Kinetic is a highly recognizable and regarded brand name in the production of industrial knives and hardened wear products for the tissue, metals, and wood industries and is known as a one-stop shop for in-house grinding, machining, and heat-treating. Kinetic is headquartered in Greendale, Wisconsin. Kinetic manufactures more than 90 types of knives and numerous associated parts with modifications and customizations available to each. Kinetic employs approximately 100 non-union employees.
On July 20, 2023, we acquired PMW. Founded nearly 76 years ago in 1947 in Louisville, Kentucky, PMW manufactures and supplies highly engineered parts and components across 400,000 square feet of manufacturing space. PMW offers
31
world-class metal forming, assembly, and finishing solutions across diverse industries, including appliance, automotive, hardware, electrical, electronic, medical products, and devices.
On May 17, 2024, Precision Marshall acquired Central Steel. Founded in 1969 in Chicago, Illinois, Central Steel is a manufacturer of specialized fabricated metal products. Central Steel offers over 2,300 unique products to more than 500 customers. Its extensive product line, primarily for data centers, includes cable racks, auxiliary framing, hardware, insulation products, and network bays.
Corporate and Other Segment
Our Corporate and Other segment consists of certain corporate general and administrative costs, and operations of certain legacy products and service offerings for which we are no longer accepting new customers
.
Critical Accounting Policies
Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP"). Preparation of these statements requires us to make judgments and estimates. Some accounting policies have a significant and material impact on amounts reported in these financial statements. Estimates and assumptions are based on management's experience and other information available prior to the issuance of our financial statements. Our actual realized results may differ materially from management’s initial estimates as reported. Our critical and significant accounting policies include Trade and Other Receivables, Inventories, Goodwill, Revenue Recognition, Fair Value Measurements, Income Taxes. For a summary of our significant accounting policies and the means by which we develop estimates thereon, see Part II, Item 8 – Financial Statements - Notes to unaudited condensed consolidated financial statements Note 2 – summary of significant accounting policies in our 2024 Form 10-K.
Adjusted EBITDA
We evaluate the performance of our operations based on financial measures such as “Adjusted EBITDA”, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization, stock-based compensation, and other non-cash or nonrecurring charges. We believe that Adjusted EBITDA is an important indicator of the operational strength and performance of the business, including the business’ ability to fund acquisitions and other capital expenditures, and to service its debt. Additionally, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to improve performance. Adjusted EBITDA is also a measure that is customarily used by financial analysts to evaluate a company's financial performance, subject to certain adjustments. Adjusted EBITDA does not represent cash flows from operations, as defined by GAAP, and should not be construed as an alternative to net income or loss and is indicative neither of our results of operations, nor of cash flows available to fund all our cash needs. It is, however, a measurement that the Company believes is useful to investors in analyzing its operating performance. Accordingly, Adjusted EBITDA should be considered in addition to, but not as a substitute for, net income, cash flow provided by operating activities, and other measures of financial performance prepared in accordance with GAAP. As companies often define non-GAAP financial measures differently, Adjusted EBITDA, as calculated by the Company, should not be compared to any similarly titled measures reported by other companies.
32
Results of Operations Three Months Ended March 31, 2025 and 2024
The following table sets forth certain statement of income items and as a percentage of revenue, for the three months ended March 31, 2025 and 2024 (in $000’s):
|
Three Months Ended
March 31, 2025 |
Three Months Ended
March 31, 2024 |
||||||||||||||||||||||
|
% of Total
Revenue |
% of Total
Revenue |
||||||||||||||||||||||
| Selected Data | |||||||||||||||||||||||
| Revenue | $ | 107,013 | $ | 118,626 | |||||||||||||||||||
| Gross profit | 35,148 | 32.8 | % | 35,467 | 29.9 | % | |||||||||||||||||
| General and administrative expenses | 28,321 | 26.5 | % | 29,824 | 25.1 | % | |||||||||||||||||
| Sales and marketing expenses | 4,735 | 4.4 | % | 6,481 | 5.5 | % | |||||||||||||||||
| Interest expense, net | 3,933 | 3.7 | % | 4,167 | 3.5 | % | |||||||||||||||||
| Income (loss) before provision for income taxes | 21,103 | 19.7 | % | (4,498) | (3.8 | %) | |||||||||||||||||
| Provision for (benefit from) income taxes | 5,237 | 4.9 | % | (1,217) | (1.0 | %) | |||||||||||||||||
| Net income (loss) | $ | 15,866 | 14.8 | % | $ | (3,281) | (2.8 | %) | |||||||||||||||
| Adjusted EBITDA (a) | |||||||||||||||||||||||
| Retail-Entertainment | $ | 2,755 | $ | 2,153 | |||||||||||||||||||
| Retail-Flooring | (1,778) | (1,849) | |||||||||||||||||||||
| Flooring Manufacturing | 2,272 | 2,897 | |||||||||||||||||||||
| Steel Manufacturing | 3,742 | 2,331 | |||||||||||||||||||||
| Corporate & Other | (545) | (1,075) | |||||||||||||||||||||
| Total Adjusted EBITDA | $ | 6,446 | $ | 4,457 | |||||||||||||||||||
| Adjusted EBITDA as a percentage of revenue | |||||||||||||||||||||||
| Retail-Entertainment | 14.9 | % | 12.8 | % | |||||||||||||||||||
| Retail-Flooring | (6.5 | %) | (5.8 | %) | |||||||||||||||||||
| Flooring Manufacturing | 7.6 | % | 8.5 | % | |||||||||||||||||||
| Steel Manufacturing | 11.9 | % | 6.6 | % | |||||||||||||||||||
| Corporate & Other | N/A | N/A | |||||||||||||||||||||
| Consolidated adjusted EBITDA as a percentage of revenue | 6.0 | % | 3.8 | % | |||||||||||||||||||
(a)
See reconciliation of net income to Adjusted EBITDA below.
33
The following table sets forth revenue by segment (in $000’s):
| For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | ||||||||||||||||||||||
|
Net
Revenue |
% of
Total Revenue |
Net
Revenue |
% of
Total Revenue |
||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Retail-Entertainment | $ | 18,467 | 17.3 | % | $ | 16,842 | 14.2 | % | |||||||||||||||
| Retail-Flooring | 27,399 | 25.6 | % | 32,032 | 27.0 | % | |||||||||||||||||
| Flooring Manufacturing | 29,820 | 27.9 | % | 34,180 | 28.8 | % | |||||||||||||||||
| Steel Manufacturing | 31,321 | 29.3 | % | 35,488 | 29.9 | % | |||||||||||||||||
| Corporate & Other | 6 | — | % | 84 | 0.1 | % | |||||||||||||||||
| Total Revenue | $ | 107,013 | 100.0 | % | $ | 118,626 | 100.0 | % | |||||||||||||||
The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):
| For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | ||||||||||||||||||||||
|
Gross
Profit |
Gross
Profit % of Total Revenue |
Gross
Profit |
Gross
Profit % of Total Revenue |
||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| Retail-Entertainment | $ | 10,907 | 10.2 | % | $ | 9,836 | 8.3 | % | |||||||||||||||
| Retail-Flooring | 9,415 | 8.8 | % | 11,702 | 9.9 | % | |||||||||||||||||
| Flooring Manufacturing | 8,193 | 7.7 | % | 8,760 | 7.4 | % | |||||||||||||||||
| Steel Manufacturing | 6,629 | 6.2 | % | 5,090 | 4.3 | % | |||||||||||||||||
| Corporate & Other | 4 | — | % | 79 | 0.1 | % | |||||||||||||||||
| Total Gross Profit | $ | 35,148 | 32.8 | % | $ | 35,467 | 29.9 | % | |||||||||||||||
Revenue
Revenue decreased approximately $11.6 million, or 9.8%, to approximately $107.0 million for the quarter ended March 31, 2025, compared to revenue of approximately $118.6 million in the prior year period. The decrease is attributable to the Retail-Flooring, Flooring Manufacturing, and Steel Manufacturing segments, which decreased by approximately $13.2 million in the aggregate.
Gross Profit
Gross profit was 32.8% for three months ended March 31, 2025 as compared to 29.9% for the three months ended March 31, 2024. The increase was primarily attributable to increased margins in our Steel Manufacturing segment primarily due to improved efficiencies, as well as the acquisition of Central Steel during May 2024, which has historically generated higher margins.
General and Administrative Expense
General and Administrative expenses decreased by 5% to approximately $28.3 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease is primarily due to targeted cost reduction initiatives at Flooring Liquidators.
Sales and Marketing Expense
Sales and marketing expense decreased by 27% to approximately $4.7 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to reduced sales and marketing activities at Flooring Liquidators.
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Interest Expense, net
Interest expense, net, decreased by approximately 5.6% to approximately $3.9 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 due to lower average debt balances.
Results of Operations Six Months Ended March 31, 2025 and 2024
The following table sets forth certain statement of income items and as a percentage of revenue, for the six months ended March 31, 2025 and 2024 (in $000’s):
| For the Six Months Ended March 31, 2025 | For the Six Months Ended March 31, 2024 | ||||||||||||||||||||||
|
% of Total
Revenue |
% of Total
Revenue |
||||||||||||||||||||||
| Statement of Income Data: | |||||||||||||||||||||||
| Revenue | $ | 218,521 | $ | 236,219 | |||||||||||||||||||
| Gross profit | 70,510 | 32.3 | % | 71,794 | 30.4 | % | |||||||||||||||||
| General and administrative expenses | 58,392 | 26.7 | % | 57,503 | 24.3 | % | |||||||||||||||||
| Sales and marketing expenses | 9,264 | 4.2 | % | 11,588 | 4.9 | % | |||||||||||||||||
| Interest expense, net | 8,095 | 3.7 | % | 8,330 | 3.5 | % | |||||||||||||||||
| Income (loss) before provision for income taxes | 21,676 | 9.9 | % | (5,404) | (2.3 | %) | |||||||||||||||||
| Provision for (benefit from) income taxes | 5,318 | 2.4 | % | (1,441) | (0.6 | %) | |||||||||||||||||
| Net income (loss) | $ | 16,358 | 7.5 | % | $ | (3,963) | (1.7 | %) | |||||||||||||||
| Adjusted EBITDA (a) | |||||||||||||||||||||||
| Retail-Entertainment | $ | 6,565 | $ | 5,867 | |||||||||||||||||||
| Retail-Flooring | (2,749) | (546) | |||||||||||||||||||||
| Flooring Manufacturing | 3,023 | 4,774 | |||||||||||||||||||||
| Steel Manufacturing | 6,543 | 5,133 | |||||||||||||||||||||
| Corporate & Other | (1,191) | (2,075) | |||||||||||||||||||||
| Total Adjusted EBITDA | $ | 12,191 | $ | 13,153 | |||||||||||||||||||
| Adjusted EBITDA as a percentage of revenue | |||||||||||||||||||||||
| Retail-Entertainment | 16.5 | % | 15.7 | % | |||||||||||||||||||
| Retail-Flooring | (4.6 | %) | (0.8 | %) | |||||||||||||||||||
| Flooring Manufacturing | 5.4 | % | 7.5 | % | |||||||||||||||||||
| Steel Manufacturing | 10.3 | % | 7.5 | % | |||||||||||||||||||
| Corporate & Other | N/A | N/A | |||||||||||||||||||||
| Consolidated adjusted EBITDA as a percentage of revenue | 5.6 | % | 5.6 | % | |||||||||||||||||||
(a)
See reconciliation of net income to Adjusted EBITDA below.
The following table sets forth revenue by segment (in $000’s):
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| For the Six Months Ended March 31, 2025 | For the Six Months Ended March 31, 2024 | ||||||||||||||||||||||
|
Net
Revenue |
% of
Total Revenue |
Net
Revenue |
% of Total
Revenue |
||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Retail-Entertainment | $ | 39,740 | 18.2 | % | $ | 37,428 | 15.8 | % | |||||||||||||||
| Retail-Flooring | 59,146 | 27.1 | % | 66,351 | 28.1 | % | |||||||||||||||||
| Flooring Manufacturing | 55,815 | 25.5 | % | 63,425 | 26.9 | % | |||||||||||||||||
| Steel Manufacturing | 63,757 | 29.2 | % | 68,841 | 29.1 | % | |||||||||||||||||
| Corporate & other | 63 | — | % | 174 | 0.1 | % | |||||||||||||||||
| Total Revenue | $ | 218,521 | 100.0 | % | $ | 236,219 | 100.0 | % | |||||||||||||||
The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):
| For the Six Months Ended March 31, 2025 | For the Six Months Ended March 31, 2024 | ||||||||||||||||||||||
|
Gross
Profit |
Gross
Profit % of Total Revenue |
Gross
Profit |
Gross
Profit % of Total Revenue |
||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| Retail-Entertainment | $ | 22,951 | 10.5 | % | $ | 21,364 | 9.0 | % | |||||||||||||||
| Retail-Flooring | 21,218 | 9.7 | % | 24,734 | 10.5 | % | |||||||||||||||||
| Flooring Manufacturing | 13,716 | 6.3 | % | 15,182 | 6.4 | % | |||||||||||||||||
| Steel Manufacturing | 12,571 | 5.8 | % | 10,352 | 4.4 | % | |||||||||||||||||
| Corporate & other | 54 | — | % | 162 | 0.1 | % | |||||||||||||||||
| Total Gross Profit | $ | 70,510 | 32.3 | % | 0.322669217146178 | $ | 71,794 | 30.4 | % | ||||||||||||||
Revenue
Revenue decreased approximately $17.7 million, or 7.5%, to approximately $218.5 million for the six months ended March 31, 2025, compared to revenue of approximately $236.2 million in the prior year period. The decrease is attributable to the Flooring Manufacturing, Retail-Flooring, and Steel Manufacturing segments, which decreased by approximately $20.0 million in the aggregate.
Gross Profit
Gross profit was 32.3% for six months ended March 31, 2025 as compared to 30.4% for the six months ended March 31, 2024. The increase was primarily attributable to increased margins in our Steel Manufacturing segment primarily due to improved efficiencies, as well as the acquisition of Central Steel during May 2024, which has historically generated higher margins.
General and Administrative Expense
General and administrative expense remained generally consistent at approximately $58.4 million and $57.5 million for the six months ended March 31, 2025 and 2024, respectively.
Sales and Marketing Expense
Sales and marketing expense decreased by 20.1% to approximately $9.3 million for the six months ended March 31, 2025, as compared to the six months ended March 31, 2024, primarily due to reduced sales and marketing activities at Flooring Liquidators.
Interest Expense, net
Interest expense, net, remained generally consistent at approximately $8.1 million and $8.3 million for the six months ended March 31, 2025 and 2024, respectively.
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Results of Operations by Segment for the Three Months Ended March 31, 2025 and 2024
| For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail-Entertainment | Retail-Flooring |
Flooring
Manufacturing |
Steel
Manufacturing |
Corporate
& Other |
Total | Retail-Entertainment | Retail-Flooring |
Flooring
Manufacturing |
Steel
Manufacturing |
Corporate
& Other |
Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 18,467 | $ | 27,399 | $ | 29,820 | $ | 31,321 | $ | 6 | $ | 107,013 | $ | 16,842 | $ | 32,032 | $ | 34,180 | $ | 35,488 | $ | 84 | $ | 118,626 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of Revenue | 7,560 | 17,984 | 21,627 | 24,692 | 2 | 71,865 | 7,006 | 20,330 | 25,420 | 30,398 | 5 | 83,159 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | 10,907 | 9,415 | 8,193 | 6,629 | 4 | 35,148 | 9,836 | 11,702 | 8,760 | 5,090 | 79 | 35,467 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General and Administrative Expense | 8,254 | 12,083 | 2,329 | 4,312 | 1,343 | 28,321 | 7,919 | 13,469 | 1,866 | 4,048 | 2,522 | 29,824 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling and Marketing Expense | 155 | 73 | 4,381 | 121 | 5 | 4,735 | 133 | 1,256 | 4,916 | 170 | 6 | 6,481 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Income (Loss) | $ | 2,498 | $ | (2,741) | $ | 1,483 | $ | 2,196 | $ | (1,344) | $ | 2,092 | $ | 1,784 | $ | (3,023) | $ | 1,978 | $ | 872 | $ | (2,449) | $ | (838) | |||||||||||||||||||||||||||||||||||||||||||||||
Retail-Entertainment Segment
Retail-Entertainment segment revenue for the quarter ended March 31, 2025 was approximately $18.5 million, an increase of approximately $1.6 million, or 9.6%, compared to prior year period revenue of approximately $16.8 million. Revenue increased primarily due to increased consumer demand for new products. The increase in the sales of new products with higher margins contributed to the increase in gross margin to 59.1% for the quarter ended March 31, 2025, compared to 58.4% for the prior year period. Operating income for the quarter ended March 31, 2025 was approximately $2.5 million, compared to operating income of approximately $1.8 million for the prior year period.
Retail-Flooring Segment
The Retail-Flooring segment revenue for the quarter ended March 31, 2025, was approximately $27.4 million, a decrease of approximately $4.6 million, or 14.5%, compared to the prior year period revenue of approximately $32.0 million. The decrease in revenue was primarily attributable to the disposition of certain Johnson Floor & Home Carpet One stores in May 2024. Gross margin for the quarter ended March 31, 2025 was 34.4%, compared to 36.5% for the prior year period. The decrease in gross margin was primarily driven by a change in product mix. Operating loss for the quarter ended March 31, 2025 was approximately $2.7 million, compared to an operating loss of approximately $3.0 million for the prior year period.
Flooring Manufacturing Segment
Revenue for the quarter ended March 31, 2025 was approximately $29.8 million, a decrease of approximately $4.4 million, or 12.8%, compared to prior year period revenue of approximately $34.2 million. The decrease in revenue was primarily due to reduced consumer demand, as a result of the ongoing weakness in the housing market and uncertainty about the current economic outlook. Gross margin was 27.5% for the quarter ended March 31, 2025, compared to 25.6% for the prior year period. The increase in gross margin was primarily due to changes in product mix. Operating income for the quarter ended March 31, 2025 was approximately $1.5 million, compared to approximately $2.0 million in the prior year period.
Steel Manufacturing Segment
Revenue for the quarter ended March 31, 2025 was approximately $31.3 million, a decrease of approximately $4.2 million, or 11.7%, compared to prior-year period revenue of approximately $35.5 million. The decline was primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $3.8 million at Central Steel Fabricators, LLC (“Central Steel”), which was acquired in May 2024. Gross margin was 21.2% for the quarter ended March 31, 2025, compared to 14.3% for the prior-year period. The increase in gross margin was primarily due to strategic price increases as well as the acquisition of Central Steel. Operating income for the quarter ended March 31, 2025 was approximately $2.2 million, compared to approximately $0.9 million in the prior-year period.
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Corporate and Other Segment
Revenue for the quarter ended March 31, 2025 was approximately $6,000, a decrease of approximately $78,000, or 92.9%, compared to prior year period revenue of approximately $84,000. Operating loss was approximately $1.3 million and $2.4 million for the quarters ended March 31, 2025 and 2024, respectively.
Results of Operations by Segment for the Six Months Ended March 31, 2025 and 2024
| For the Six Months Ended March 31, 2025 | For the Six Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail-Entertainment | Retail-Flooring |
Flooring
Manufacturing |
Steel
Manufacturing |
Corporate
& Other |
Total | Retail-Entertainment | Retail-Flooring |
Flooring
Manufacturing |
Steel
Manufacturing |
Corporate
& Other |
Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 39,740 | $ | 59,146 | $ | 55,815 | $ | 63,757 | $ | 63 | $ | 218,521 | $ | 37,428 | $ | 66,351 | $ | 63,425 | $ | 68,841 | $ | 174 | $ | 236,219 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of Revenue | 16,789 | 37,928 | 42,099 | 51,186 | 9 | 148,011 | 16,064 | 41,617 | 48,243 | 58,489 | 12 | 164,425 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | 22,951 | 21,218 | 13,716 | 12,571 | 54 | 70,510 | 21,364 | 24,734 | 15,182 | 10,352 | 162 | 71,794 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General and Administrative Expense | 16,735 | 25,792 | 3,963 | 8,959 | 2,943 | 58,392 | 16,074 | 25,491 | 3,471 | 8,204 | 4,263 | 57,503 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling and Marketing Expense | 311 | 340 | 8,352 | 250 | 11 | 9,264 | 317 | 2,178 | 8,788 | 293 | 12 | 11,588 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Income (Loss) | $ | 5,905 | $ | (4,914) | $ | 1,401 | $ | 3,362 | $ | (2,900) | $ | 2,854 | $ | 4,973 | $ | (2,935) | $ | 2,923 | $ | 1,855 | $ | (4,113) | $ | 2,703 | |||||||||||||||||||||||||||||||||||||||||||||||
Retail-Entertainment Segment
Retail-Entertainment segment revenue for the six months ended March 31, 2025 was approximately $39.7 million, an increase of approximately $2.3 million, or 6.2%, compared to prior year period revenue of approximately $37.4 million. Revenue increased primarily due to increased consumer demand for new products. The increase in the sales of new products with higher margins contributed to the increase in gross margin to 57.8% for the six months ended March 31, 2025, compared to 57.1% for the prior year period. Operating income for the six months ended March 31, 2025 was approximately $5.9 million, compared to operating income of approximately $5.0 million for the prior year period.
Retail-Flooring Segment
The Retail-Flooring segment revenue for the six months ended March 31, 2025 was approximately $59.1 million, a decrease of approximately $7.2 million, or 10.9%, compared to the prior year period revenue of approximately $66.4 million. The decrease was primarily attributable to the disposition of certain Johnson Floor & Home Carpet One stores in May 2024. Gross margin for the six months ended March 31, 2025 was 35.9%, compared to 37.3% for the prior year period. The decrease in gross margin was primarily driven by a change in product mix. Operating loss for the six months ended March 31, 2025, was approximately $4.9 million, compared to an operating loss of approximately $2.9 million for the prior year period. The increase in operating loss was primarily due to the decrease in revenues and gross margin, partially offset by targeted cost reduction initiatives implemented during the second quarter of fiscal 2025.
Flooring Manufacturing Segment
Revenue for the Flooring Manufacturing segment for the six months ended March 31, 2025 was approximately $55.8 million, a decrease of approximately $7.6 million, or 12.0%, compared to prior year period revenue of approximately $63.4 million. The decrease in revenue was primarily due to reduced consumer demand as a result of the ongoing weakness in the housing market and uncertainty about the current economic outlook. Gross margin was 24.6% for the six months ended March 31, 2025, compared to 23.9% for the prior year period. The increase in gross margin was primarily due to changes in product mix. Operating income for the six months ended March 31, 2025 was approximately $1.4 million, compared to operating income of approximately $2.9 million for the prior year period.
Steel Manufacturing Segment
Revenue for the six months ended March 31, 2025 was approximately $63.8 million, a decrease of approximately $5.0 million or 7.4%, compared to prior year period revenue of approximately $68.8 million. The decline was primarily driven by lower sales volumes at certain business units partially offset by incremental revenue of $6.9 million at Central Steel, which was acquired in May 2024. Gross margin was 19.7% for the six months ended March 31, 2025, compared to 15.0% for the prior year period. The increase in gross margin was primarily due to strategic price increases, as well as the acquisition of Central Steel. Operating income for the six months ended March 31, 2025 was approximately $3.4 million, compared to operating income of approximately $1.9 million in the prior year period.
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Corporate and Other Segment
Revenue for the six months ended March 31, 2025 was approximately $63,000, a decrease of approximately $111,000, or 63.8%, compared to prior year period revenue of approximately $174,000. Operating loss was approximately $2.9 million and $4.1 million for the six months ended March 31, 2025 and 2024, respectively.
Adjusted EBITDA Reconciliation
The following table presents a reconciliation of net income to Adjusted EBITDA for the three and six months ended March 31, 2025 and 2024 (in 000's):
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||
| March 31, 2025 | March 31, 2024 | March 31, 2025 | March 31, 2024 | ||||||||||||||||||||
| Net income (loss) | $ | 15,866 | $ | (3,281) | $ | 16,358 | $ | (3,963) | |||||||||||||||
| Depreciation and amortization | 4,401 | 4,188 | 8,816 | 8,483 | |||||||||||||||||||
| Stock-based compensation | 49 | 50 | 100 | 100 | |||||||||||||||||||
| Interest expense, net | 3,933 | 4,167 | 8,095 | 8,330 | |||||||||||||||||||
| Income tax expense (benefit) | 5,237 | (1,217) | 5,318 | (1,441) | |||||||||||||||||||
| Gain on extinguishment of debt | — | — | (713) | — | |||||||||||||||||||
| Gain on modification of seller note | (22,784) | — | (22,784) | — | |||||||||||||||||||
| Gain on settlement of earnout liability | — | — | (2,840) | — | |||||||||||||||||||
| Acquisition costs | — | 468 | — | 874 | |||||||||||||||||||
| Debt acquisition costs | — | — | — | 183 | |||||||||||||||||||
| Other non-recurring charges | (256) | 82 | (159) | 587 | |||||||||||||||||||
| Adjusted EBITDA | $ | 6,446 | $ | 4,457 | $ | 12,191 | $ | 13,153 | |||||||||||||||
Adjusted EBITDA for the quarter ended March 31, 2025 was approximately $6.4 million, an increase of approximately $2.0 million, or 44.6%, compared to the prior year period. The increase is primarily due to decreases in operating expenses targeted cost reduction initiatives.
Adjusted EBITDA for the six months ended March 31, 2025 was approximately $12.2 million, a decrease of approximately $1.0 million, or 7.3%, compared to the prior year period. The decrease is primarily due to a decrease in gross profit.
Liquidity and Capital Resources
As of March 31, 2025, we had total cash on hand of approximately $6.9 million and approximately $19.7 million of available borrowing under our revolving credit facilities. As we continue to pursue acquisitions and other strategic transactions to expand and grow our business, we regularly monitor capital market conditions and may raise additional funds through borrowings or public or private sales of debt or equity securities. The amount, nature, and timing of any borrowings or sales of debt or equity securities will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.
Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities, and funds available under our asset-based revolver lines of credit will provide sufficient liquidity to do the following: fund our operations; pay our scheduled loan payments; ability to repurchase shares under our share buyback program; and, pay dividends on our shares of Series E Preferred Stock as declared by the Board of Directors, for at least the next 12 months.
Working Capital
We had working capital of approximately $49.1 million as of March 31, 2025, as compared to working capital of approximately $52.3 million as of September 30, 2024; a decrease of approximately $3.2 million. The decrease is primarily due to increases in accrued liabilities, the current portion of long-term debt, and the current portion of operating lease obligations, and a decrease in income taxes receivable, partially offset by decreases in the current portion of notes payable to related parties and accounts payable, and an increase in accounts receivable.
39
Cash Flows from Operating Activities
The Company’s cash, as of March 31, 2025, was approximately $6.9 million compared to approximately $4.6 million as of September 30, 2024, an increase of approximately $2.3 million. Net cash provided by operations was approximately $9.6 million and $2.1 million for the six months ended March 31, 2025 and 2024, respectively. The increase was primarily due to collections of accounts receivable and reduction in inventory, partially offset by decreases in income taxes payable.
Our primary sources of cash inflows are from customer receipts from sales on account, factored accounts receivable proceeds, receipts for securities sales commissions, and net remittances from directory services customers processed in the form of ACH billings. Our most significant cash outflows include payments for raw materials and general operating expenses, including payroll costs and general and administrative expenses that typically occur within close proximity of expense recognition.
Cash Flows from Investing Activities
Our cash flows used in investing activities of approximately $4.3 million for the six months ended March 31, 2025 consisted of purchases of property and equipment. Our cash flows used in investing activities of approximately $4.9 million for the six months ended March 31, 2024 consisted of the acquisitions of CRO by Flooring Liquidators, and Johnson by CRO, and purchases of property and equipment.
Cash Flows from Financing Activities
Our cash flows used in financing activities of approximately $3.0 million during the six months ended March 31, 2025 consisted of payments on notes payable of approximately $3.4, payments for finance leases of approximately $2.0 million, cash paid for the settlement of seller notes of approximately $1.9 million, net borrowings under revolver loans of approximately $1.3 million, payments of related party notes payable of $0.6 million, and purchases of treasury stock of approximately $0.4 million, partially offset by net borrowings under related party revolver loans of approximately $4.3 million, proceeds from the issuance related party notes payable of approximately $1.9 million, and proceeds from the issuance of notes payable of approximately $0.5 million.
Our cash flows used in financing activities of approximately $3.0 million during the six months ended March 31, 2024 consisted of net borrowings under revolver loans of approximately $7.7 million, payments on notes payable of approximately $3.4 million, proceeds from related parties of $1.0 million, purchases of treasury stock and payments for finance leases of approximately $0.4 million, and payments of related party notes payable of $0.6 million.
Currently, we are not issuing common shares for liquidity purposes. We prefer to use asset-based lending arrangements and mezzanine financing together with Company provided capital to finance acquisitions and have done so historically. Occasionally, as our Company history has demonstrated, we will issue stock and derivative instruments linked to stock for services or debt settlement.
Future Sources of Cash; New Products and Services
We may require additional debt financing or capital to finance new acquisitions, refinance existing indebtedness or other strategic investments in our business. Other sources of financing may include stock issuances and additional loans; or other forms of financing. Any financing obtained by us may further dilute or otherwise impair the ownership interest of our existing stockholders.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of March 31, 2025, we did not participate in any market risk-sensitive commodity instruments for which fair value disclosure would be required. We believe we are not subject in any material way to other forms of market risk, such as foreign currency exchange risk or foreign customer purchases or commodity price risk. We believe we are not subject in any material way to other forms of market risk, such as foreign currency exchange risk or foreign customer purchases or commodity price risk.
ITEM 4.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Control and Procedures
. We carried out an evaluation, under the supervision, and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based
40
upon that evaluation, we concluded that, as of March 31, 2025, the period covered in this report, our disclosure controls and procedures were not effective due to the material weakness in internal control over financial reporting further described below.
Despite the identified material weakness, management concluded that the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. generally accepted accounting principles.
Management’s Report on Internal Control Over Financial Reporting
. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent or detect all errors and all fraud. A control system, regardless of how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. These inherent limitations include the following: judgements in decision-making can be faulty, and control and process breakdowns can occur because of simple errors or mistakes, controls can be circumvented by individuals, acting alone or in collusion with each other, or by management override. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Our management assessed the design and effectiveness of our internal control over financial reporting as of March 31, 2025. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) of 2013 regarding Internal Control – Integrated Framework. Based on our assessment using those criteria, our management concluded that our internal controls over financial reporting were ineffective as of March 31, 2025. Management noted the following deficiency that management believes to be a material weakness:
•
Lack of sufficient controls around the financial reporting and consolidation process.
In response to the above identified weakness in our internal control over financial reporting, we plan to improve the control policies and procedures over financial reporting and consolidation processes. We expect to conclude these remediation initiatives during the fiscal year ended September 30, 2025. We continue to evaluate testing of our internal control policies and procedures, including assessing internal and external resources that may be available to complete these tasks, but do not know when these tasks will be completed.
A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting.
There were no changes in our internal control over financial reporting that occurred during the six months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1.
Legal Proceedings
The information in response to this item is included in Note 17, Commitments and Contingencies, to the Consolidated Financial Statements included in Part I, Item 1, of this Form 10-Q. Please also refer to “Item 3. Legal Proceedings” in our 2024 Form 10-K for information regarding material pending legal proceedings. Except as set forth herein and therein, there have been no new material legal proceedings and no material developments in the legal proceedings previously disclosed.
ITEM 1A.
Risk Factors
None.
ITEM 2.
Unregistered Sales of Equity Securities and Use of funds
On June 4, 2024, the Company announced a $10 million common stock repurchase program which will remain effective until May 31, 2025, unless extended, canceled , or modified by the Company's Board of Directors. During the three months ended March 31, 2025, the Company made the following repurchases:
| Month | Number of Shares Purchased | Average Purchase Price Paid | Number of Shares Purchased as Part of a Publicly Announced Plan or Program | Maximum Amount that May be Purchased Under the Announced Plan or Program | ||||||||||||||||||||||
| January 2025 | 9,243 | $ | 9.68 | 9,243 | $ | 9,749,315 | ||||||||||||||||||||
| February 2025 | 6,503 | $ | 8.61 | 6,503 | $ | 9,693,303 | ||||||||||||||||||||
| March 2025 | 15,577 | $ | 7.31 | 15,577 | $ | 9,579,497 | ||||||||||||||||||||
| Totals | 31,323 | $ | 8.28 | 31,323 | $ | 9,579,497 | ||||||||||||||||||||
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4.
Mine Safety Disclosures
None.
ITEM 5.
Other Information
42
ITEM 6.
Exhibits
The following exhibits are filed with or incorporated by reference into this Quarterly Report.
|
Exhibit Number
|
Exhibit Description
|
Form
|
File Number
|
Exhibit Number
|
Filing Date
|
|||||||||||||||||||||||||||
| 3.1 | 8-K | 001-33937 | 3.1 | 08/15/07 | ||||||||||||||||||||||||||||
| 3.2 |
8-K
|
001-33937 | 3.1 | 09/07/10 | ||||||||||||||||||||||||||||
| 3.3 |
8-K
|
001-33937 | 3.1 | 03/11/13 | ||||||||||||||||||||||||||||
| 3.4 |
10-Q
|
001-33937 | 3.1 | 02/14/14 | ||||||||||||||||||||||||||||
| 3.5 |
8-K
|
001-33937 |
3.1.4
|
10/08/15 | ||||||||||||||||||||||||||||
| 3.6 |
8-K
|
001-33937 |
3.1.5
|
11/25/16 | ||||||||||||||||||||||||||||
| 3.7 |
10-K
|
001-33937 |
3.1.6
|
12/29/16 | ||||||||||||||||||||||||||||
| 3.8 | 10-Q | 001-33937 | 3.8 | 08/14/18 | ||||||||||||||||||||||||||||
| 10.138 | * | |||||||||||||||||||||||||||||||
| 10.139 | * |
Second Amendment to the
Subordinated Promissory Note dated January 18, 2023 issued by Flooring Affiliated Holdings, LLC in favor of (i) the Stephen J. Kellogg Revocable Trust Dated April 17, 2015, (ii) the Kaitlyn Kellogg 2022 Irrevocable Trust, (iii) the Augustus Kellogg 2022 Irrevocable Trust, and (iv) the Kellogg 2022 Family Irrevocable Nevada Trust
, as amended
February 25, 2025
.
|
||||||||||||||||||||||||||||||
| 10.140 | * | |||||||||||||||||||||||||||||||
| 31.1 | * | |||||||||||||||||||||||||||||||
| 31.2 | * | |||||||||||||||||||||||||||||||
| 32.1 | * | |||||||||||||||||||||||||||||||
| 32.2 | * | |||||||||||||||||||||||||||||||
| 101.INS | * | Inline XBRL Instance Document | ||||||||||||||||||||||||||||||
| 101.SCH | * | Inline XBRL Taxonomy Extension Schema Document | ||||||||||||||||||||||||||||||
| 101.CAL | * | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||||||||||||||||||||||
| 101.DEF | * | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||||||||||||||||||||||
| 101.LAB | * | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||||||||||||||||||||||||||
43
| 101.PRE | * | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||
_________________________
*
Filed herewith
† Indicates a management contract or compensatory plan or arrangement.
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Live Ventures Incorporated | |||||
|
Dated: May 8, 2025
|
/s/ Jon Isaac | ||||
| President and Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
|
Dated: May 8, 2025
|
/s/ David Verret | ||||
| Chief Financial Officer | |||||
| (Principal Financial Officer) | |||||
45
TABLE OF CONTENTS
Part I - Financial InformationItem 1. Financial StatementsNote 1: Background and Basis Of PresentationNote 2: Summary Of Significant Accounting PoliciesNote 3: AcquisitionsNote 4: InventoryNote 5: Property and EquipmentNote 6: LeasesNote 7: IntangiblesNote 8: GoodwillNote 9: Accrued LiabilitiesNote 10: Long-term DebtNote 11: Notes Payable-related PartiesNote 12: Related Party Seller NotesNote 13: Stockholders EquityNote 14: Stock-based CompensationNote 15: Earnings Per ShareNote 16: Related Party TransactionsNote 17: Commitments and ContingenciesNote 18: Segment ReportingNote 19: Subsequent EventsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of FundsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits