What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-08-14 compared with 2020-05-15 · 100 added, 100 removed, 247 unchanged (45% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AN D 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, 2020, 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, 2019 (the “2019 Form 10-K”).

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 nine months ended June 30, 2020, 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, 2019 (the “2019 Form 10-K”).

Note about Forward-Looking Statements

22 unchanged sentences

We focus on the residential, niche commercial, and hospitality end-markets and serve over 2,000 customers.

Since commencing operations in 1995, Marquis has built a s trong reputation for outstanding value, styling, and customer service.

Since commencing operations in 1995, Marquis has built a st rong 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, uniqu e customization, and exceptionally short lead-times.

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.

3 unchanged sentences

Vintage Stock Holdings LLC, Vintage Stock, V-Stock, Movie Trading Company and EntertainMart (collectively “Vintage Stock”) is an award-winning specialty entertainment retailer offering 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 all available 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 62 retail locations strategically positioned across Arkansas, Colorado, Idaho, Illinois, Kansas, Missouri, New M exico, Oklahoma Texas and Utah.

As of March 31, 2020, Vintage Stock has closed all of its retail locations in response to the crisis.

Vintage expects to reopen its retail locations as soon as possible while maintaining compliance with government mandates.

Due to the COIVD-19 pandemic As of March 31, 2020, Vintage Stock had closed all of its retail locations in response to the crisis.

Beginning May 1, 2020, Vintage began to reopen certain locations in compliance with government regulations.

Additionally, as of June 30, 2020, all Vintage retail locations were reopened while maintaining compliance with government mandates.

We are unable to predict if additional periods of store closures will be needed or mandated.

ApplianceSmart

5 unchanged sentences

one consisting of typical and commonly available, innovative appliances, and the other consisting of affordable value-priced, niche offerings such as close-outs, factory overruns, discontinued models, and special-buy appliances, including open box merchandise and others.

In addition to retailing household appliances, ApplianceSmart through ApplianceSmart Contracting Inc.

provides household appliances to builders and developers in the Minnesota and Ohio markets.

On April 22, 2020, the Company sold ApplianceSmart Contracting Inc.

to a related party for $60 (see Note 13 to the consolidated financial statements for a complete discussion).

On December 9, 2019, ApplianceSmart filed a voluntary petition (the “Chapter 11 Case”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”).

17 unchanged sentences

For a summary of significant accounting policies and the means by which we develop estimates thereon, see (“Part 1, Item 1 of this 10-Q report – Financial Statements - Notes to unaudited condensed consolidated financial statements Note 2 – summary of significant accounting policies), which are an integral component of this filing.

Results of Operations Three Months Ended March 31, 2020 and 2019

Results of Operations Three Months Ended June 30 , 2020 and 2019

The following table sets forth certain statement of income items and as a percentage of revenue, for the periods indicated:

For the Three Months Ended March 31, 2020

For the Three Months Ended March 31, 2019

For the Three Months Ended June 30, 2020

For the Three Months Ended June 30, 2019

Statement of Income Data:

9 unchanged sentences

The following table sets forth revenues for key product categories revenue and percentages of total revenue for each key product category indicated:

For the Three Months Ended March 31, 2020

For the Three Months Ended March 31, 2019

For the Three Months Ended June 30, 2020

For the Three Months Ended June 30, 2019

Used Movies, Music, Games and Other

7 unchanged sentences

The following table sets forth gross profit earned by key product categories and gross profit as a percentage of revenue for each key product category indicated:

For the Three Months Ended March 31, 2020

For the Three Months Ended March 31, 2019

For the Three Months Ended June 30, 2020

For the Three Months Ended June 30, 2019

Used Movies, Music, Games and Other

6 unchanged sentences

Total Gross Profit

Revenue remained consistent a $46,431 for the three months ended March 31, 2020 as compared to $46,973 for the three months ended March 31, 2019.

Revenue decreased $4,571 or 10% to $42,472 for the three months ended June 30, 2020 as compared to $47,043 for the three months ended June 30, 2019.

Revenue from retail appliances decreased significantly due to ApplianceSmart declining sales and the closure of certain retail locations.

The decrease in retail appliance revenue was offset by an increase in carpet and hard surface products as a result of the Lonesome Oak acquisition (see Note 4 to the condensed consolidated financial statements).

Revenue from new and used movies, music, games and other decreased primarily due to retail location closures impacted by COVID-19.

The decrease in retail revenue was offset by an increase in carpet and hard surface products as a result of the Lonesome Oak acquisition (see Note 4 to the condensed consolidated financial statements).

Cost of Revenue

Cost of revenue remained consistent at $28,655 for the three months ended March 31, 2020 as compared $28,322 for the three months ended March 31, 2019.

Cost of revenue remained consistent at $25,759 for the three months ended June 30, 2020 as compared $27,797 for the three months ended June 30, 2019.

Costs of revenue varied proportionately with the variance in revenue.

Gross profit remained consistent at $17,776 for the three months ended March 31, 2020 as compared to $18,651 the three months ended March 31, 2019.

Gross profit decreased $2,533 or 13% to $16,713 for the three months ended June 30, 2020 as compared to $19,246 for the three months ended June 30, 2019, primarily due to the decrease in revenue as discussed above.

General and Administrative Expense

General and Administrative expense decreased $1,093 or 9%, for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019 primarily due to lower costs resulting from the decrease rent expense and employee costs associated with closure of the ApplianceSmart retail locations.

General and Administrative expense decreased $3,970 or 33%, to $8,221 for the three months ended June 30, 2020 as compared to $12,191 for the three months ended June 30, 2019 primarily due to lower costs resulting from the decrease rent expense and employee costs associated with permanent closure of the ApplianceSmart retail locations and the temporary closure of Vintage retail locations due to COVID-19.

Selling and Marketing Expense

Selling and marketing expense decreased $804 or 21%, for the three months March 31, 2020 as compared to the three months ended March 31, 2019 primarily due to reduced marketing efforts related to the ApplianceSmart retail location closures.

Selling and marketing expense decreased $744 or 23%, for the three months June 30, 2020 as compared to the three months ended June 30, 2019 primarily due to reduced marketing efforts related to the permanent ApplianceSmart retail location closures and reduced activities due to COVID-19.

Operating Income

Because of the factors described above, operating income of $3,068 for the three months ended March 31, 2020 represented an increase of $1,022 or 50% over the comparable prior year period of $2,046.

Because of the factors described above, operating income of $5,990 for the three months ended June 30, 2020 represented an increase of $2,181 or 57% over the comparable prior year period of $3,809.

Interest Expense, net

Interest expense, net decreased $266 or 17%, for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019 due to a decrease in certain interest rates and the continued efforts to repay debt obligations.

Gain on lease settlement, net

During the three months ended March 31, 2020, the Company recorded a net gain on lease settlement $1,448 resulting from the extinguishment of the lease liability associated with the closed ApplianceSmart retail locations.

There were no similar gains during the three months ended March 31, 2019.

Other expense of $125 for the three months ended March 31, 2020 was primarily related to the warrant extension fair value adjustment.

Other income of $165 for the three months ended March 31, 2019 was driven by breakage income related to gift cards which are no longer reportable under state escheatment laws.

Interest expense, net decreased $450 or 28% for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 due to a decrease in certain interest rates and the continued efforts to repay debt obligations.

Other income of $173 for the three months ended June 30, 2020 was primarily related to the settlement of certain ApplianceSmart liabilities under bankruptcy.

Other expense of $162 for the three months ended June 30, 2019 was driven by the disposal of certain assets .

Provision for Income Taxes

Provision for income taxes was $836, for the three months ended March 31, 2020 as compared to $202 for the three months ended March 31, 2019 primarily due to the variance in net income.

The factors described above led to net income of $2,285 for the three months ended March 31, 2020, which was an increase of $1,812 compared to net income of $473 for the three months ended March 31, 2019.

Results of Operations Six Months Ended March 31, 2020 and 2019

Provision for income taxes was $1,423, for the three months ended June 30, 2020 as compared to $562 for the three months ended June 30, 2019 primarily due to the variance in pre-tax net income.

The factors described above led to net income of $3,585 for the three months ended June 30, 2020, which was an increase of $2,105 compared to net income of $1,480 for the three months ended June 30, 2019.

Results of Operations Nine Months Ended June 30 , 2020 and 2019

The following table sets forth certain statement of income items and as a percentage of revenue, for the periods indicated:

For the Six Months Ended March 31, 2020

For the Six Months Ended March 31, 2019

For the Nine Months Ended June 30,2020

For the Nine Months Ended June 30,2019

Statement of Income Data:

9 unchanged sentences

The following table sets forth revenues for key product categories revenue and percentages of total revenue for each key product category indicated:

For the Six Months Ended March 31, 2020

For the Six Months Ended March 31, 2019

For the Nine Months Ended June 30,2020

For the Nine Months Ended June 30,2019

Total Revenue

9 unchanged sentences

The following table sets forth gross profit earned by key product categories and gross profit as a percentage of revenue for each key product category indicated:

For the Six Months Ended March 31, 2020

For the Six Months Ended March 31, 2019

For the Nine Months Ended June 30,2020

For the Nine Months Ended June 30,2019

Used Movies, Music, Games and Other

6 unchanged sentences

Total Gross Profit

Revenue decreased $11,737 or 12% for the six months ended March 31, 2020 as compared to the six months ended March 31, 2019.

Revenue decreased $16,308 or 11% to $130,904 for the nine months ended June 30, 2020 as compared to $147,212 for the nine months ended June 30, 2019.

Revenue from retail appliances decreased significantly due to ApplianceSmart declining sales and the closure of certain retail locations.

New and used movies, music, games and other revenue slightly decreased due to retail location temporary closures as a result of COVID-19.

Synthetic turf revenue decreased due to the sale of the equipment as the Company exits this division.

1 unchanged sentence

Cost of Revenue

Cost of revenue decreased $8,151 or 13% for the six months ended March 31, 2020 as compared the six months ended March 31, 2019.

Cost of revenue decreased $10,189 or 11% to $79,789 for the nine months ended June 30, 2020 as compared to $89,978 for the nine months ended June 30, 2019.

Costs of revenue varied proportionately with the variance in revenue.

The decrease in revenue and costs of revenues discussed above resulted in a decrease in gross profit of $3,586 or 9% for the six months ended March 31, 2020 as compared to the six months ended March 31, 2019.

The decrease in revenue and costs of revenues discussed above resulted in a decrease in gross profit of $6,119 or 11% for the nine months ended June 30, 2020 as compared to the nine months ended June 30, 2019.

General and Administrative Expense

General and Administrative expense decreased $3,184 or 12%, for the six months ended March 31, 2020 as compared to the six months ended March 31, 2019 primarily due to lower costs resulting from the decrease rent expense and employee costs associated with closure of the ApplianceSmart retail locations.

Selling and Marketing Expense

Selling and marketing expense decreased $2,820 or 35%, for the six months March 31, 2020 as compared to the six months ended March 31, 2019 primarily due to reduced marketing efforts related to the ApplianceSmart retail location closures.

General and Administrative expense decreased $7,155 or 19% to $30,731 for the nine months ended June 30, 2020 as compared to $37,886 for the nine months ended June 30, 2019 primarily due to lower costs resulting from the decrease rent expense and employee costs associated with permanent closure of the ApplianceSmart retail locations and the temporary closure of Vintage retail locations due to COVID-19.

Sales and Marketing Expense

Sales and marketing expense decreased $3,564 or 31% to $7,839 for the nine months June 30, 2020 as compared to $11,403 for the nine months ended June 30, 2019 primarily due to reduced marketing efforts related to the permanent ApplianceSmart retail location closures and reduced activities due to COVID-19.

Operating Income

Because of the factors described above, operating income of $6,555 for the six months ended March 31, 2020 represented an increase of $2,418 or 58% over the comparable prior year period of $4,137.

Because of the factors described above, operating income of $12,545 for the nine months ended June 30, 2020 represented an increase of $4,600 or 58% over the comparable prior year period of $7,945.

Interest Expense, net

Interest expense net decreased $562 or 18%, for the six months ended March 31, 2020 as compared to the six months ended March 31, 2019 due to a decrease in certain interest rates and the continued efforts to repay debt obligations.

Interest expense net decreased $1,011 or 21%, for the nine months ended June 30, 2020 as compared to the nine months ended June 30, 2019 due to a decrease in certain interest rates and the continued efforts to repay debt obligations.

Gain on lease settlement, net

During the six months ended March 31, 2020, the Company recorded a net gain on lease settlement of $241 which consisted of impairment charges of $1,207 related to the decision to close additional ApplianceSmart retail locations resulting in a decrease to the associated right of use asset related to these leases, offset by a gain on lease settlement of $1,448 resulting from the extinguishment of the lease liability associated with the closed retail locations.

There were no such transactions during the six months ended March 31, 2019.

Other expense of $306 for the six months ended March 31, 2020 was primarily related to the warrant extension fair value adjustment.

Other income of $1,825 for the six months ended March 31, 2019 was driven by $1,518 of gain on sale of the Marquis Synthetic Turf Products business during December 2018.

During the nine months ended June 30, 2020, the Company recorded a net gain on lease settlement of $223 which consisted of impairment charges of $614 related to the decision to close additional ApplianceSmart retail locations resulting in a decrease to the associated right of use asset related to these leases, offset by a gain on lease settlement of $837 resulting from the extinguishment of the lease liability associated with the closed retail locations.

There were no such transactions during the nine months ended June 30, 2019.

Other expense of $133 for the nine months ended June 30, 2020 was primarily related to the warrant extension fair value adjustment, offset by the settlement of certain ApplianceSmart liabilities under bankruptcy.

Other income of $1,663 for the nine months ended June 30, 2019 was driven by $1,518 of gain on sale of the Marquis Synthetic Turf Products business during December 2018.

Provision for Income Taxes

Provision for income taxes was $1,031, for the six months ended March 31, 2020 as compared to $769 for the six months ended March 31, 2019 primarily due to the variance in net income.

The factors described above led to net income of $2,832 for the six months ended March 31, 2020, which was a $828 or 41% increase to net income of $2,004 for the three months ended March 31, 2019

Provision for income taxes was $2,402, for the nine months ended June 30, 2020 as compared to $1,331 for the nine months ended June 30, 2019 primarily due to the variance in pre-tax net income.

The factors described above led to net income of $6,451 for the nine months ended June 30, 2020, which was a $2,967 or 85% increase to net income of $3,484 for the nine months ended June 30, 2019

Segment Performance

4 unchanged sentences

Operating income by operating segment, is defined as income before net interest expense, other income and expense, provision for income taxes and income attributable to non-controlling interest.

For the Three Months Ended March 31, 2020

For the Three Months Ended March 31, 2019

For the Three Months Ended June 30, 2020

For the Three Months Ended June 30, 2019

Manufacturing

3 unchanged sentences

Selling and Marketing

Operating Income (Loss)

Three Months Ended March 31, 2020

Operating Income

Three Months Ended June 30, 2020

Segments in % of Revenue

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019

Segments in % of Revenue

4 unchanged sentences

Selling and Marketing

Operating Income (Loss)

Operating Income

Retail and Online Segment

Segment results for Retail and Online include Vintage Stock and ApplianceSmart.

Revenue for the three months ended March 31, 2020 decreased $6,761, or 26%, as compared to the prior year, primarily due to the ApplianceSmart retail location closures during fiscal 2019.

Cost of revenue for the three months ended March 31, 2020 decreased $4,353 or 33%, as compared to the prior year period, primarily due to the decrease in revenue.

Operating income for the three months ended March 31, 2020 was $237, as compared to operating loss of $129 the prior year period, primarily due to the decrease in gross profit, general and administrative costs and selling and marketing expenses due to ApplianceSmart retail location closures.

Revenue for the three months ended June 30, 2020 decreased $9,714, or 41%, as compared to the prior year, primarily due to the ApplianceSmart retail location closures during fiscal 2019 and the temporary closure of Vintage retail locations due to COVID-19.

Cost of revenue for the three months ended June 30, 2020 decreased $5,268 or 46%, as compared to the prior year period, primarily due to the decrease in revenue.

Operating income for the three months ended June 30, 2020 was $1,586, as compared to operating income of $551 the prior year period, primarily due to the decrease in gross profit, general and administrative costs and selling and marketing expenses due to ApplianceSmart retail location closures and COVID-19.

Manufacturing Segment

Segment results for Manufacturing include Marquis, which is our carpet, hard surface and synthetic turf products business.

Revenue for the three months ended March 31, 2020 increased $6,238 or 30%, as compared to the prior year period, due to Lonesome Oak acquisition (see Note 4 to the condensed consolidated financial statements).

Cost of revenue for the three months ended March 31, 2020 increased proportionately with revenue, as compared to the prior year period.

Operating income for the three months ended March 31, 2020 of $2,698 remained constant compared to the prior year period of $2,021.

Revenue for the three months ended June 30, 2020 increased $5,166 or 23%, as compared to the prior year period, due to Lonesome Oak acquisition (see Note 4 to the condensed consolidated financial statements).

Cost of revenue for the three months ended June 30, 2020 increased proportionately with revenue, as compared to the prior year period.

Operating income for the three months ended June 30, 2020 of $4,280 increased $1,169 compared to the prior year period of $3,111.

Services Segment

3 unchanged sentences

We are no longer accepting new customers in our directory services business .

For the Six Months Ended March 31, 2020

For the Six Months Ended March 31, 2019

For the Nine Months Ended June 30,2020

For the Nine Months Ended June 30,2019

Manufacturing

3 unchanged sentences

Selling and Marketing

Operating Income (Loss)

Six Months Ended March 31, 2020

Operating Income

Nine Months Ended June 30, 2020

Segments in % of Revenue

Six Months Ended March 31, 2019

Nine Months Ended June 30, 2019

Segments in % of Revenue

4 unchanged sentences

Selling and Marketing

Operating Income (Loss)

Operating Income

Retail and Online Segment

Segment results for Retail and Online include Vintage Stock and ApplianceSmart.

Revenue for the six months ended March 31, 2020 decreased $15,918, or 28%, as compared to the prior year, primarily due to the ApplianceSmart retail location closures during fiscal 2019.

Cost of revenue for the six months ended March 31, 2020 decreased $11,054 or 37%, as compared to the prior year period, primarily due to the decrease in revenue.

Operating income for the six months ended March 31, 2020 was $1,183, as compared to operating loss of $368 the prior year period, primarily due to the decrease in gross profit, general and administrative costs and selling and marketing expenses due to ApplianceSmart retail location closures.

Revenue for the nine months ended June 30, 2020 decreased $25,633, or 32%, as compared to the prior year, primarily due to the ApplianceSmart retail location closures during fiscal 2019 and the temporary closure of Vintage retail locations due to COVID-19.

Cost of revenue for the nine months ended June 30, 2020 decreased $16,324 or 39%, as compared to the prior year period, primarily due to the decrease in revenue.

Operating income for the nine months ended June 30, 2020 was $2.770, as compared to operating loss of $184 the prior year period, primarily due to the decrease in gross profit, general and administrative costs and selling and marketing expenses due to ApplianceSmart retail location closures and COIVD-19.

Manufacturing Segment

Segment results for Manufacturing include Marquis, which is our carpet, hard surface and synthetic turf products business.

Revenue for the six months ended March 31, 2020 increased $4,223, or 10%, as compared to the prior year period, due to Lonesome Oak acquisition (see Note 4 to the condensed consolidated financial statements), partially offset by a decrease in synthetic turf products due to the sale of equipment for this division during December 2018.

Cost of revenue for the six months ended March 31, 2020 decreased proportionately with revenue, as compared to the prior year period.

Operating income for the six months ended March 31, 2020 increased $908 to $5,101 from $4,193 for the six months ended March 31, 2019.

Revenue for the nine months ended June 30, 2020 increased $9,389, or 14%, as compared to the prior year period, due to the Lonesome Oak acquisition (see Note 4 to the condensed consolidated financial statements), partially offset by a decrease in synthetic turf products due to the sale of equipment for this division during December 2018.

Cost of revenue for the nine months ended June 30, 2020 decreased proportionately with revenue, as compared to the prior year period.

Operating income for the nine months ended June 30, 2020 increased $2,077 to $9,381 from $7,304 for the nine months ended June 30, 2019.

Services Segment

4 unchanged sentences

Liquidity and Capital Resources

Based on our operating plans as of March 31, 2020, 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 fund our operations, pay our scheduled loan payments, fund our continued investments in store openings and remodelling activities, continue to repurchase shares, 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 .

We have two asset-based revolver lines of credit (i) Bank of America Revolver Loan (“BofA Revolver”) used by Marquis and (ii) Texas Capital Bank Revolver Loan (“TCB Revolver”) used by Vintage Stock.

As of March 31, 2020, we had total cash on hand of $1,496, an additional $17,725 of available borrowing under the BofA Revolver, and an additional $3,433 of available borrowing under the TCB Revolver.

Based on our operating plans as of June 30 , 2020, 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 fund our operations, pay our scheduled loan payments, fund our continued investments in store openings and remodelling activities, continue to repurchase shares, 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 .

As of June 30 , 2020, we had total cash on hand of $5,689, an additional $22,455 of available borrowing under the BofA Revolver, an additional $5,681 of available borrowing under the TCB Revolver and an additional $1,000 under the ICG Revolver (as defined below).

On May 4, 2020, Marquis entered into a promissory note (the “Promissory Note”) with Bank of America, N.A.

7 unchanged sentences

On May 5, 2020, Marquis received the funds from the PPP Loan.

Additionally, on April 9, 2020, the Company entered into an unsecured revolving line of credit promissory note whereby the Isaac Capital Group, LLC (“ICG”) agreed to provide the Company with a $1,000 revolving credit facility (the “Unsecured Revolving Credit Facility”) .

The Unsecured Revolving Credit Facility bears interest at 10.0% per annum and provides for the payment of interest monthly in arrears and matures April 2023.

The ICG Revolver bears interest at 10.0% per annum and provides for the payment of interest monthly in arrears and matures April 2023.

The foregoing transaction did not include the issuance of any shares of the Company’s common stock, warrants, or other derivative securities.

As of January 29, 2020, ICG is a record and beneficial owner of approximately 38.4% of the outstanding capital stock of the Company, and Jon Isaac, the Company’s President and Chief Executive Officer, and manager and sole member of ICG, is a record and beneficial owner of approximately 45.9% of the outstanding capital stock of the Company

As of June 17, 2020, ICG is a record and beneficial owner of approximately 45.4% of the outstanding capital stock of the Company, and Jon Isaac, the Company’s President and Chief Executive Officer, and manager and sole member of ICG, is a record and beneficial owner of approximately 52.9% of the outstanding capital stock of the Company.

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 (including convertible debt) or equity securities.

9 unchanged sentences

As the pandemic continues to grow, consumer fear about becoming ill with the virus and recommendations and/or mandates from federal, state, and local authorities to avoid large gatherings of people or self-quarantine are continuing to increase, which has already affected, and may continue to affect, traffic to our stores.

As of March 31, 2020, Vintage Stock has closed all of its retail locations in response to the crisis.

As of May 14, 2020, Vintage reopen all but four of its 62 retail locations and expects to reopen its remaining retail locations as soon as possible while maintaining compliance with government mandates.

We are unable to predict when all stores will reopen or if additional periods of store closures will be needed or mandated.

As of March 31, 2020, Vintage Stock had closed all of its retail locations in response to the crisis.

Beginning May 1, 2020, Vintage began to reopen certain locations in compliance with government regulations.

Additionally, as of June 30, 2020, all Vintage retail locations were reopened while maintaining compliance with government mandates.

We are unable to predict if additional periods of store closures will be needed or mandated.

During March and April 2020, Marquis conducted rolling layoffs for certain employees, however, during May 2020, all employees have returned to their respective locations.

3 unchanged sentences

Working Capital

We had working capital of $8,584 as of March 31, 2020 as compared to working capital of $20,727 as of September 30, 2019 with current assets increasing by $11,725 and current liabilities increasing by $23,868.

We had working capital of $11,601 as of June 30, 2020 as compared to working capital of $20,727 as of September 30, 2019 with current assets increasing by $9,411 and current liabilities increasing by $18,537.

Such changes in working capital were primarily attributable to the Lonesome Oak acquisition, increase in short term lease obligations due to the adoption of the new lease accounting standard, an increase in the current portion of debt, a decrease in trade receivables and net debtor-in-possession liabilities.

Cash Flows from Operating Activities

The Company’s cash and cash equivalents at March 31, 2020 was $1,496 compared to $2,681 at September 30, 2019, a decrease of $1,185.

Net cash provided by operations was $6,571 for the six months ended March 31, 2020 as compared to net cash provided by operations of $6,986 for the same period in 2019 primarily due to the Result of operations discussed above.

The Company’s cash and cash equivalents at June 30, 2020 was $5,689 compared to $2,681 at September 30, 2019, an increase of $3,088.

Net cash provided by operations was $18,075 for the nine months ended June 30, 2020 as compared to net cash provided by operations of $14,786 for the same period in 2019 primarily due to the Result of operations discussed above.

Our primary source of cash inflows is from customer receipts from sales on account, factor accounts receivable proceeds and net remittances from directory services customers processed in the form of ACH billings.

1 unchanged sentence

Cash Flows from Investing Activities

Our cash flows used in investing activities of $2,412 for the six months ended March 31, 2020 consisted primarily of purchases of property and equipment of $1,858 and a $550 payment associated with the Lonesome Oak acquisition (see Note 4 to the condensed consolidated financial statements).

Our cash flows provided by investing activities of $3,347 for the six months ended March 31, 2019 consisted primarily of proceeds from the sale of property and equipment.

Our cash flows used in investing activities of $2,992 for the nine months ended June 30, 2020 consisted primarily of purchases of property and equipment of $2,357 and a $550 payment associated with the Lonesome Oak acquisition (see Note 4 to the condensed consolidated financial statements).

Our cash flows provided by investing activities of $2,251 for the nine months ended June 30, 2019 consisted primarily of $4,382 proceeds from the sale of property and equipment, partially offset by purchases of property and equipment of $2,019.

Cash Flows from Financing Activities

Our cash flows used in financing activities during the six months ended March 31, 2020 consisted of $2,640 net borrowings under revolver loans, purchase of treasury stock $759, payment on notes payable $12,035, proceeds on notes payable of $5,000 and cash classified as debtor-in-possession of $187.

Our cash flows used in financing activities during the six months ended March 31, 2019 consisted of $2,516 in net payments under revolver loans, $118 in payments of debt issuance costs, purchase of treasury stock of $321, $100 payment on related party notes payable and payment on notes payable of $6,728.

Our cash flows used in financing activities during the nine months ended June 30, 2020 consisted of $5,169 net payments under revolver loans, purchase of treasury stock $1,433, payment on notes payable $15,152, proceeds on notes payable of $9,768 and cash classified as debtor-in-possession of $86.

Our cash flows used in financing activities during the nine months ended June 30, 2019 consisted of $5,446 in net payments under revolver loans, $168 in payments of debt issuance costs, purchase of treasury stock of $631, $1,069 payment on related party notes payable and payment on notes payable of $10,048.

Currently, the Company does not intend to issue shares of common stock for liquidity purposes.

8 unchanged sentences

The following tables summarize the BofA Revolver for the period:

During the six months ended March 31,

During the nine months ended June 30,

Cumulative borrowing during the period

2 unchanged sentences

Weighted average interest for the period

March 31, 2020

June 30, 2020

September 30, 2019

3 unchanged sentences

The following tables summarize the TCB Revolver for the period:

During the six months ended March 31,

During the nine months ended June 30,

Cumulative borrowing during the period

2 unchanged sentences

Weighted average interest for the period

March 31, 2020

June 30, 2020

September 30, 2019

1 unchanged sentence

Total outstanding

The Company may borrow funds for operations under the ICG Revolver subject to availability as described in Note 7 to the consolidated financial statements.

As of June 30, 2020, the Company had not borrowed any funds and the full amount of $1,000 was available .

Future Sources of Cash;

4 unchanged sentences

Off-Balance Sheet Arrangements

At March 31, 2020, we had no off-balance sheet arrangements, commitments, or guarantees that require additional disclosure or measurement.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of March 31, 2020, 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.

At June 30, 2020, we had no off-balance sheet arrangements, commitments, or guarantees that require additional disclosure or measurement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis