What changed in this filing

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Item 1. Financial Statements

2021-05-17 compared with 2021-02-16 · 174 added, 169 removed, 482 unchanged (42% of the section changed)

1 unchanged sentence

LIVE VENTURES INCORPORATED

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

December 31, 2020

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts)

March 31, 2021

September 30, 2020

13 unchanged sentences

Income taxes payable

Lease obligation short term - operating leases

Current portion of lease obligations - operating leases

Current portion of long-term debt

Current portion of long-term debt related parties

Current portion of notes payable related parties

Debtor-in-possession liabilities

2 unchanged sentences

Lease obligation long term - operating leases

Long-term debt related parties, net of current portion

Deferred tax liability

Notes payable related parties, net of current portion

Deferred taxes

Other non-current obligations

3 unchanged sentences

Series B convertible preferred stock, $0.001 par value, 1,000,000 shares authorized,

214,244 shares issued and outstanding at December 31, 2020 and September 30, 2020

Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at December 31, 2020 and September 30, 2020, with a liquidation preference of $0.30 per share outstanding

Common stock, $0.001 par value, 10,000,000 shares authorized, 1,555,175 and 1,589,101 shares issued and outstanding at December 31, 2020 and September 30, 2020, respectively

315,790 and 214,244 shares issued and outstanding at March 31, 2021 and September 30, 2020, respectively

Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840

shares issued and outstanding at March 31, 2021 and September 30, 2020, respectively, with a

liquidation preference of $0.30 per share outstanding

Common stock, $0.001 par value, 200,000,000 shares authorized, 1,555,175 and 1,589,101 shares issued

and outstanding at March 31, 2021 and September 30, 2020, respectively

Paid in capital

Treasury stock common 533,011 shares as of December 31, 2020 and 499,085 shares as of September 30, 2020

Treasury stock Series E preferred 50,000 shares as of December 31, 2020 and September 30, 2020

Treasury stock common 533,011 shares as of March 31, 2021 and 499,805 shares as of

September 30, 2020

Treasury stock Series E preferred 50,000 shares as of March 31, 2021 and

of September 30, 2020

Accumulated deficit

Equity attributable to Live stockholders

Noncontrolling interest

Non-controlling interest

Total stockholders' equity

2 unchanged sentences

LIVE VENTURES, INCORPORATED

CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share)

Three Months Ended December 31,

For the Three Months Ended March 31,

For the Six Months Ended March 31,

Cost of revenues

6 unchanged sentences

Interest expense, net

Impairment charges

Gain on lease settlement, net

Gain on Payroll Protection Program loan forgiveness

Gain on disposal of fixed assets

Gain on bankruptcy settlement

Other income (expense)

8 unchanged sentences

Dividends declared - series E convertible preferred stock

Dividends declared - common stock

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIVE VENTURES INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

Three Months Ended December 31,

For the Six Months Ended March 31,

OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Impairment charges

Gain on disposal of property and equipment

Gain on lease settlement, net

Gain or loss on disposal of property and equipment

Gain on Payroll Protection Program loan forgiveness

Gain on bankruptcy settlement

Amortization of debt issuance cost

1 unchanged sentence

Warrant extension fair value adjustment

Change in deferred rent

Amortization of right-to-use assets

Change in reserve for uncollectible accounts

4 unchanged sentences

Trade receivables

Income taxes receivable

Prepaid expenses and other current assets

Deposits and other assets

Right-of-use assets

Accounts payable

Accrued liabilities

Lease liabilities

Net cash provided by operating activities

1 unchanged sentence

Purchase of intangible assets

Lonesome Oak acquisition

Purchase of property and equipment

2 unchanged sentences

Net borrowings (payments) under revolver loans

Purchase of series E preferred treasury stock

Proceeds from issuance of notes payable

Purchase of common treasury stock

Payments on related party notes payable

Debtor-in-possession cash

Payments on long-term debt

Payments on notes payable

Net cash used in financing activities

5 unchanged sentences

Income taxes paid

Noncash financing and investing activities:

Settlement of debt in exchange for property and equipment

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIVE VENTURES INCORPORATED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(dollars in thousands)

2 unchanged sentences

Non-controlling Interest

Balance, December 31, 2020

Stock based compensation

Warrant exercise

Balance, March 31, 2021

Preferred Stock

Balance, December 31, 2019

Stock based compensation

Warrant extension fair value adjustment

Purchase of common treasury stock

Balance, March 31, 2020

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(dollars in thousands)

Preferred Stock

Non-controlling Interest

Balance, September 30, 2020

Stock based compensation

Warrant exercise

Purchase of common treasury stock

Net income (loss)

Balance, December 31, 2020

Balance, March 31, 2021

Preferred Stock

5 unchanged sentences

Purchase of Series E preferred stock

Balance, December 31, 2019

Balance, March 31, 2020

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2021 AND 2020

(dollars in thousands, except per share)

7 unchanged sentences

(i) Vintage Stock, Inc.

(“Vintage Stock”), the Company is engaged in the retail sale of new and used movies, music, collectibles, comics, books, games, game systems and components and (ii) ApplianceSmart, Inc.

(“ApplianceSmart”), the Company is engaged in the sale of new major appliances through a retail store.

(“Vintage Stock”), through which the Company is engaged in the retail sale of new and used movies, music, collectibles, comics, books, games, game systems and components and (ii) ApplianceSmart, Inc.

(“ApplianceSmart”), through which the Company is engaged in the sale of new major appliances through a retail store.

Included in the Flooring Manufacturing segment is Marquis Industries, Inc.

6 unchanged sentences

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 three months ended December 31, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2021.

The results of operations for three and six months ended March 31, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2021.

This financial information should be read in conjunction with the consolidated financial statements and related notes thereto as of September 30, 2020 and for the fiscal year then ended included in the Company’s Annual Report on Form 10-K, filed with the U.S.

18 unchanged sentences

The accompanying consolidated financial statements represent the consolidated financial position, results of operations and cash flows for Live Ventures and its wholly-owned subsidiaries.

Additionally, the Company records noncontrolling interest for entities

which the Company has determined itself to be the primarily beneficiary of the variable interest entity but does not have 100% ownership.

All intercompany transactions and balances have been eliminated in consolidation .

Additionally, the Company records noncontrolling interest for entities which the Company has determined itself to be the primarily beneficiary of the variable interest entity but does not have 100% ownership.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S.

generally accepted accounting principles requires 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of the consolidated financial statements in conformity with GAAP requires 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

1 unchanged sentence

Reclassifications

Certain amounts in the prior year have been reclassifies to confirm to the current year presentation.

Certain amounts in the prior period have been reclassified to conform to the current period presentation.

Recently Issued Accounting Pronouncements

21 unchanged sentences

The agreements, which have been classified as operating leases, generally provide for minimum and, in some cases percentage rent, and require us to pay all insurance, taxes, and other maintenance costs.

As a result, they recognize assets and liabilities for all leases with lease terms greater than 12 months.

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.

4 unchanged sentences

Our weighted average discount rate is 8.9%.

Total cash payments for the three months ended December 31, 2020 was $ 2,178 .

We did not enter into any new leases during the three months ended December 31, 2020 .

The following table details our right of use assets and lease liabilities as of December 31, 2020 and September 30, 2020:

December 31, 2020

September 30, 2020

Total cash payments for the six months ended March 31, 2021 and 2020 were $1,705 and $3,872, respectively Additionally, we obtained right-of-use assets in exchange for lease liabilities of approximately $7,600 upon commencement of operating leases during the the six months ended March 31, 2021 .

The following table details our right of use assets and lease liabilities as of March 31, 2021:

March 31, 2021

Right of use asset - operating leases

Operating lease liabilities:

Total present value of future lease payments as of December 31, 2020:

Twelve months ended December 31,

Total present value of future lease payments as of March 31, 2021:

Twelve months ended March 31,

Less implied interest

Present value of payments

During the three months ended December 31, 2019, the Company incurred $1,207 of impairment charges 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.

These locations physically closed during the three months ended March 31, 2020.

There were no similar charges for the three months ended December 31, 2020.

During the six months ended March 31, 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 similar charges for the six months ended March 31, 2021.

Balance Sheet Detail Information

December 31, 2020

March 31, 2021

September 30, 2020

17 unchanged sentences

Machinery and equipment

Furnishings, fixtures, office equipment and other

Furnishings and fixtures

Office, computer equipment and other

Accumulated depreciation

5 unchanged sentences

Accrued liabilities:

Accrued payroll

Compensation and benefits

Accrued sales and use taxes

Accrued property and other tax

Accrued property taxes

Accrued gift card and escheatment liability

Accrued interest payable

Accrued bank fees and overdrafts

Accrued accounts payable and bank overdrafts

Accrued professional fees

2 unchanged sentences

Long Term Debt

Long-term debt as of December 31, 2020 and September 30, 2020 consisted of the following:

December 31, 2020

Long-term debt as of March 31, 2021 and September 30, 2020 consisted of the following:

March 31, 2021

September 30, 2020

18 unchanged sentences

Payroll Protection Program

Isaac Capital Fund

Isaac Capital Group

Spriggs Investments, LLC

Seller of Lonesome Oak

Note payable to individual, interest at 10-11% per annum, payable on a 90 day written notice,

Sellers of Lonesome Oak

Note payable to individuals, interest at 10-11% per annum, payable on a 90 day written notice,

Note payable to individuals, interest at 7% per annum, unsecured

Note payable to individual, noninterest bearing, monthly payments of $19 through March 2023, unsecured

Note payable to individual, noninterest bearing, monthly payments of $19 through March 2023

Total notes payable

Less unamortized debt issuance costs

1 unchanged sentence

Long-term portion

Future maturities of long-term debt at December 31, 2020, are as follows which does not include related party debt separately stated:

Twelve months ending December 31,

Future maturities of long-term debt at March 31, 2021, are as follows which does not include related party debt separately stated:

Twelve months ending March 31,

Bank of America Revolver Loan

On July 6, 2015 (amended most recently January 31, 2020, July 6, 2020 and September 28, 2020), Marquis entered into a $25,000 revolving credit agreement (“BofA Revolver”) with Bank of America Corporation (“BofA”).

The BofA Revolver is a five-year, asset-based facility that is secured by substantially all of Marquis’ assets.

On July 6, 2015 (as amended), Marquis entered into a $25,000 revolving credit agreement (“BofA Revolver”) with Bank of America Corporation (“BofA”).

The BofA Revolver is an asset-based facility that matures on January 31, 2025 and 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 conditions, including meeting all loan covenants under the credit agreement with BofA.

The following tables summarize the BofA Revolver for the three months ended December 31, 2020 and 2019 and as of December 31, 2020 and September 30, 2020:

During the three months ended December 31,

Marquis’ ability to borrow under the BofA Revolver is subject to the satisfaction of certain conditions, including satisfying all loan covenants under the credit agreement with BofA.

The following tables summarize the BofA Revolver for the six months ended March 31, 2021 and 2020 and as of March 31, 2021 and September 30, 2020 :

During the six months ended March 31,

Cumulative borrowing during the period

2 unchanged sentences

Weighted average interest for the period

December 31, 2020

March 31, 2021

September 30, 2020

4 unchanged sentences

The Loan Agreement provides for secured revolving loans (the “Encina Revolver Loans”) in a principal amount not to exceed the lesser of (i) $23,500 and (ii) a borrowing base equal to the sum of Precision’s (a) 85% of eligible accounts receivable, plus (b) 85% of eligible inventory, subject to an eligible inventory sublimit that begins at $14,000 and declines to $12,000 during the term of the Loan Agreement, minus (c) customary reserves.

The following tables summarize the Encina Revolver Loans for the for the three months ended December 31, 2020 and 2019 and as of December 31, 2020 and September 30, 2020:

During the three months ended December 31,

The following tables summarize the Encina Revolver Loans for the for the six months ended March 31, 2021 and 2020 and as of March 31, 2021 and September 30, 2020:

During the six months ended March 31,

Cumulative borrowing during the period

2 unchanged sentences

Weighted average interest for the period

December 31, 2020

March 31, 2021

September 30, 2020

6 unchanged sentences

The TCB Revolver matures November 3, 2023.

The following tables summarize the TCB Revolver for the three months ended December 31, 2020 and 2019 and as of December 31, 2020 and September 30, 2020:

During the three months ended December 31,

The following tables summarize the TCB Revolver for the six months ended March 31, 2021 and 2020 and as of March 31, 2021 and September 30, 2020:

During the six months ended March 31,

Cumulative borrowing during the period

2 unchanged sentences

Weighted average interest for the period

December 31, 2020

March 31, 2021

September 30, 2020

5 unchanged sentences

The borrowing base for the ABL Facility at any time equals the lower of (i) up to 75% of inventory cost or (ii) up to 85% of net orderly liquidation value, in each case as further described in the Loan Agreement.

The Crossroads Revolver matures on March 15, 2021.

On March 3, 2020, the Company executed a guaranty agreement to Crossroads to induce Crossroads to continue to extend financial accommodations and consent to use of cash collateral to ApplianceSmart.

10 unchanged sentences

The loan bears interest at 6% due monthly and matures January 2030.

During January 2021, the Company paid the Comvest loan in full and, as a result, the loan agreement and the related instruments, documents, and agreements, were terminated.

Precision PPP Loan

During February 2021, Precision received notice that its $1,382 payroll protection program loan has been forgiven and no amounts are owed.

Loan Covenant Compliance

We were in compliance as of December 31, 2020 with all covenants under our existing revolving and other loan agreements, with the exception of covenants related to the Crossroads Revolver.

We were in compliance as of March 31, 2021 with all covenants under our existing revolving and other loan agreements, with the exception of covenants related to the Crossroads Revolver .

Stockholders’ Equity

Series E Convertible Preferred Stock

As of December 31, 2020, and September 30, 2020, there were 47,840 and 47,840 shares outstanding of Series a Preferred Stock, respectively.

During the three months ended December 31, 2019, the Company repurchased 30,000 shares of Series E Convertible Preferred Stock for an aggregate purchase price of $3.

As of March 31, 2021, and September 30, 2020, there were 47,840 and 47,840 shares outstanding of Series a Preferred Stock, respectively.

During the six months ended March 31, 2020, the Company repurchased 30,000 shares of Series E Convertible Preferred Stock for an aggregate purchase price of $3.

Treasury Stock

For the three months ended December 31, 2020 and 2019, the Company purchased 33,926 and 41,699 shares, respectively, of its common stock on the open market for $383 and $343, respectively.

The warrants listed below expire at various timeframes over the next two years.

However, Company and ICG entered into an agreement whereby if the warrants are not exercised on or before the applicable expiration date, the applicable expiration date is deemed automatically extended for successive two year periods, immediately prior to such expiration.

During the three months ended December 31, 2019, the Company recorded a fair value adjustment of $266 related to the extension of warrants that expired during this period.

There was no such adjustment during the three months ended December 31, 2020.

The following table summarizes information about the Company’s warrants at December 31, 2020 and September 30, 2020, respectively:

Number of units -

Series B Convertible

preferred warrants

Weighted Average

Exercise Price

Weighted Average

Remaining Contractual

Term (in years)

Intrinsic Value

Outstanding and Exercisable at September 30, 2020

Outstanding and Exercisable at December 31, 2020

The warrants may be exchanged for shares of common stock at a ratio of one share of Series B Preferred Stock into five common shares.

The following table provides information assuming the warrants are exercised and exchanged for common shares:

Number of units -

Series B Convertible

preferred warrants

Weighted Average

Exercise Price

Weighted Average

Remaining Contractual

Term (in years)

Intrinsic Value

Outstanding and Exercisable at September 30, 2020

Outstanding and Exercisable at December 31, 2020

The exercise price for the Series B Convertible Preferred Stock warrants outstanding and exercisable at December 31, 2020 and September 30, 2020, are as follows:

Series B Convertible Preferred

Outstanding and Exercisable

Number of Warrants

Exercise Price

All of the warrants were exercised for shares of Series B Convertible Preferred Stock using a cashless exercise method during January 2021.

For the six months ended March 31, 2021 and 2020, the Company purchased 33,926 and 106,567 shares of its common stock on the open market for $383 and $759, respectively.

As of September 30, 2020 the Company had 118,029 warrants to purchase shares of Series B Convertible Preferred Stock outstanding with a weighted average exercise price of $20.80 expiring at various timeframes over the next two years.

The Company and ICG have entered into agreements whereby if the warrants are not exercised on or before the applicable expiration date, the applicable expiration date is deemed automatically extended for successive two-year periods, immediately prior to such expiration.

During the three and six months ended March 31, 2020, the Company recorded a fair value adjustment of $102 and $368, respectively, related to the extension of warrants that expired during this period.

There was no such adjustment during the three and six months ended March 31, 2021.

In January 2021, all of the warrants were exercised (via cashless exercise) for shares of Series B Convertible Preferred Stock.

Stock-Based Compensation

4 unchanged sentences

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 twelve months ended September 30, 2020 and the three months ended December 31, 2020:

The following table summarizes stock option activity for the twelve months ended September 30, 2020 and the six months ended March 31, 2021:

Contractual Life

2 unchanged sentences

Exercisable at September 30, 2020

Outstanding at December 31, 2020

Exercisable at December 31, 2020

The Company recognized compensation expense of $17 and $29 during the three months ended December 31, 2020 and 2019, respectively, related to stock option awards granted to certain employees and officers based on the grant date fair value of the awards, net of estimated forfeitures.

At December 31, 2020, the Company has $43 of unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the company expects to recognize as compensation expense through October of 2022.

The exercise price for stock options outstanding and exercisable outstanding at December 31, 2020 is as follows:

Outstanding at September 30, 2020

Outstanding at March 31, 2021

Exercisable at March 31, 2021

The Company recognized compensation expense of $270 and $19 during the three months ended March 31, 2021 and 2020, respectively, and $287 and $48 during the six months ended March 31, 2021 and 2020, respectively, related to stock option awards granted to certain employees and officers based on the grant date fair value of the awards, net of estimated forfeitures and the revaluation for existing options whereby the expiration date was extended.

At March 31, 2021, the Company had $55 of unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the Company expects to recognize as compensation expense through December 2021.

The exercise price for stock options outstanding and exercisable outstanding at March 31, 2021 is as follows:

Number of Options

2 unchanged sentences

Exercise Price ($)

The following table summarizes information about the Company’s non-vested shares outstanding as of December 31, 2020 and September 30, 2020:

The following table summarizes information about the Company’s non-vested shares outstanding as of March 31, 2021:

Non-vested Shares

Non-vested at September 30, 2020

Non-vested at December 31, 2020

Non-vested at March 31, 2021

The following table depicts the Black-Scholes model valuation assumptions for the stock options granted during the six months ended March 31, 2021.

There were no stock option grants during the six months ended March 31, 2020.

Risk-free interest rate

Expected life of the options

Expected volatility

Expected dividend yield

Earnings Per Share

Net earnings per share is calculated using the weighted average number of shares of common stock outstanding during the applicable period.

Diluted net earnings per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period.

Diluted net earnings per share is computed using the weighted average number of shares of common stock outstanding and if dilutive, potential shares of common stock outstanding during the period.

Potential shares of common stock consist of the additional shares of common stock issuable in respect of restricted share awards, stock options and convertible preferred stock.

1 unchanged sentence

The following table presents the computation of basic and diluted net earnings per share:

Three Months Ended December 31,

Three Months Ended March 31,

Six Months Ended March 31,

preferred stock dividends

Net income applicable to common stock

Weighted average common shares outstanding

Basic income per share

Basic earnings per share

Net income applicable to common stock

6 unchanged sentences

Assumed weighted average common shares outstanding

Diluted income per share

There are 77,500 and 175,418 common stock options that are anti-dilutive that are not included in the three months ended December 31, 2020 and 2019, diluted earnings per share computations, respectively.

Diluted earnings per share

There are 33,250 and 200,418 options to purchase shares of common stock that are anti-dilutive that are not included in the three and six months ended March 31, 2021, diluted earnings per share computations, respectively.

Related Party Transactions

Isaac Capital Fund and Capital Group LLC

As of December 31, 2020, Isaac Capital Group, LLC (“ICG”) is a record and beneficial owner of approximately 46.2% 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 54.0% of the outstanding capital stock of the Company.

Transactions with Isaac Capital Fund and Capital Group LLC

As of March 31, 2021, Isaac Capital Group LLC (“ICG”) owned 259,902 shares of Series B Preferred Stock that are convertible into 1,299,510 shares of common stock.

Jon Isaac is the President and sole member of ICG and accordingly has sole voting and dispositive power with respect to such shares.

ICG beneficially owns 45.5% of the Company’s outstanding capital stock.

The holders of shares of the Series B Stock have agreed not to sell transfer, assign, hypothecate, pledge, margin, hedge, trade, or otherwise obtain or attempt to obtain any economic value from any of such shares or any shares into which they may be converted (e.g., common stock) or for which they may be exchanged.

This “lockup” agreement expires on December 31, 2021.

Jon Isaac , the Company’s President and Chief Executive Officer, and manager and sole member of ICG, 193,677 shares of common stock and holds options to purchase up to 25,000 shares of common stock at an exercise price of $10.00 per share, all of which are currently exercisable .

ICG Term Loan

During 2015, Marquis entered into a mezzanine loan in the amount of up to $7,000 (the “ICF Loan”) with Isaac Capital Fund I, LLC (“ICF”), a private lender whose managing member is Jon Isaac, our President and Chief Executive Officer.

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 ICG Loan to Isaac Capital Group, LLC, of which Jon Isaac, our President and Chief Executive Officer, is the sole member, and (iii) Live Ventures borrowed $2.0 million (the “ICG Loan”) from ICG using substantially the documentation from the ICF Loan.

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 ICG Loan to ICG, of which Jon Isaac, our President and Chief Executive Officer, is the sole member, and (iii) Live Ventures borrowed $2.0 million (the “ICG Loan”) from ICG using substantially the documentation from the ICF Loan.

The ICG Loan matures on May 1, 2025 and bears interest at a rate of 12.5% Interest is payable in arrears on the last day of each month, commencing July 31, 2020.

As of December 31, 2020, and September 30, 2020, there was $2,000 outstanding on this loan.

As of March 31, 2021, and September 30, 2020, there was $2,000 outstanding on this loan.

ICG Revolving Promissory Note

1 unchanged sentence

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

As of December 31, 2020, the Company has not drawn on the revolving promissory note.

Series B Preferred Warrants

The warrants, discussed in Note 7, expire at various timeframes over the next two years.

However, Company and ICG entered into an agreement whereby if the warrants are not exercised on or before the applicable expiration date, the applicable expiration date is deemed automatically extended for successive two-year periods immediately prior to such expiration.

As of March 31, 2021, the Company has not drawn on the revolving promissory note.

Series B Preferred Stock Warrants

As discussed in Note 7, the warrants were set to expire at various times over the next two years, subject to the automatic extension discussed in Note 7.

All of these warrants were exercised by cashless exercise during January 2021.

Transactions with JanOne Inc.

Lease agreement

1 unchanged sentence

(“JanOne”), rents approximately 9,900 square feet of office space from the Company at its Las Vegas office which totals 16,500 square feet.

JanOne paid the Company $35 and $45 in rent and other reimbursed expenses for the three months ended December 31, 2020 and 2019, respectively.

Tony Isaac and Virland Johnson are Chief Executive Officer and Board of Directors member and the Chief Financial Officer of JanOne, respectively.

JanOne paid the Company $50 and $89 in rent and other reimbursed expenses for the three months ended March 31, 2021 and 2020, respectively.

JanOne paid the Company $88 and $181 in rent and other reimbursed expenses for the six months ended March 31, 2021 and 2020, respectively.

Tony Isaac and Virland Johnson are President and Chief Executive Officer and Board of Directors member, and the Chief Financial Officer of JanOne, respectively.

On December 30, 2017, ApplianceSmart Holdings Inc.

10 unchanged sentences

ApplianceSmart has agreed to guaranty repayment of the ApplianceSmart Note .

The remaining $2,581 of the Purchase Price was paid in cash by ASH to the Seller.

The remaining $2,581 of the Purchase Price was

paid in cash by ASH to the Seller.

ASH may reborrow funds, and pay interest on such re-borrowings, from the Seller up to the Original Principal Amount.

As of December 31, 2020, and September 30, 2020, there was $2,826 principal outstanding on the ApplianceSmart Note.

As of March 31, 2021 , and September 30, 2020, there was $ 2,826 principal outstanding on the ApplianceSmart Note.

On December 26, 2018, ASH and the Seller amended and restated the ApplianceSmart Note to, among other things, grant the Seller a security interest in the assets of ASH and ApplianceSmart in accordance with the terms of separate security agreements entered into between ASH and ApplianceSmart, respectively, and the Seller.

1 unchanged sentence

See Note 11 for a complete discussion.

Transactions with Vintage Stock CEO

Note Payable to the Sellers of Vintage Stock

In connection with the purchase of Vintage Stock, on November 3, 2016, Vintage Stock entered into a seller financed mezzanine loan in the amount of $10,000 with the previous owners of Vintage Stock.

In connection with the purchase of Vintage Stock, on November 3, 2016, Vintage Stock entered into a seller financed mezzanine loan in the amount of $10,000 (as amended, the “Sellers Subordinated Acquisition Note”) with the previous owners of Vintage Stock, one of whom was Rodney Spriggs, the President and Chief Executive Officer of Vintage Stock, Inc., a wholly-owned subsidiary of the Company.

The Sellers Subordinated Acquisition Note bears interest at 8% per annum, with interest payable monthly in arrears.

The Sellers Subordinated Acquisition Note, as amended, has a maturity date of September 23, 2023.

Rodney Spriggs, President of Vintage Stock, holds a 41% interest in the $10,000 Seller Subordinated Acquisition Note payable by Vintage Stock.

The Sellers Subordinated Acquisition Note, has a maturity date of September 23, 2023.

Spriggs holds a 41% interest in the Sellers Subordinated Acquisition Note.

As of March 31, 2021, the amount owed was $8,000.

Spriggs Promissory Note

On July 10, 2020, the Company executed a promissory note (the “Spriggs Promissory Note”) in favor of Spriggs Investments LLC (“Spriggs Investments”), a limited liability company whose sole member is Rodney Spriggs, the President and Chief Executive Officer of Vintage Stock, Inc., a wholly-owned subsidiary of the Company, that memorializes a loan by Spriggs Investments to the Company in the initial principal amount of $2,000 (the “Spriggs Loan”).

The Spriggs Promissory Note memorializes a loan by Spriggs Investments to the Company in the initial principal amount of $2,000 (the “Spriggs Loan”).

The Spriggs Loan matures on July 10, 2022 and bears simple interest at a rate of 10.0% per annum.

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the Company may prepay the Spriggs Loan in whole or in part at any time or from time to time without penalty or premium by paying the principal amount to be prepaid, together with accrued interest thereon to the date of prepayment.

provided, however, that, if the Company prepays the Spriggs Loan in whole or in part on or prior to December 10, 2020, then the Company would also be obligated to pay a prepayment penalty to Spriggs Investments in an amount equal to $100, less the amount of any interest paid or to be paid by the Company up to the date of prepayment.

the Company used the proceeds from the Spriggs Loan to finance the acquisition of Precision.

The Company used the proceeds from the Spriggs Loan to finance, in part, the acquisition of Precision Marshall.

The Spriggs Promissory Note contains events of default and other provisions customary for a loan of this type.

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The Company is cooperating with the SEC in its inquiry .

ApplianceSmart Bankruptcy and Other ApplianceSmart Litigation Matters

ApplianceSmart Bankruptcy and Other ApplianceSmart Related Litigation Matters

On August 4, 2020, Valassis Communications, Inc.

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Court filings and other information related to the Chapter 11 Case are available at the PACER Case Locator website for those registered to do so or at the Courthouse located at One Bowling Green, Manhattan, New York 10004.

ApplianceSmart’s balance sheet as of December 31, 2020 is below.

ApplianceSmart’s balance sheet as of March 31, 2021 is below.

The debtor in possession assets and liabilities are primarily related to assets and liabilities incurred pre-petition and are subject to compromise.

December 31, 2020

March 31, 2021

Inventories, net

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Taxes payable

Other non-current obligations

Total liabilities

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Total liabilities and stockholders' equity

ApplianceSmart’s statement of operations for the period of October 1, 2020 through December 31, 2020 is below:

Three Months Ended December 31, 2020

ApplianceSmart’s statement of operations for the period of October 1, 2020 through March 31, 2021 is below:

Six months ended March 31, 2021

Cost of revenues

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This matter has been stayed as a result of the Chapter 11 Case.

On November 1, 2019, OIRE Minnesota, L.L.C.

filed suit against ApplianceSmart in the Hennepin Court alleging, among other things, breach of contract and seeking damages in excess of $60.

This matter was subsequently settled for an aggregate of $20 on February 18, 2020 in exchange for full mutual releases.

On October 16, 2019, VanMile, LLC filed a lawsuit against ApplianceSmart in the Magistrate Court of Gwinnett County, State of Georgia alleging unpaid invoices and seeking damages therefor.

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This matter has been stayed as a result of the Chapter 11 Case.

On August 15, 2019, 280 Business Center, LLC filed suit against ApplianceSmart in the District Court for the State of Minnesota, County of Ramsey for eviction from the premises.

This matter was settled in September 2019 for $130.

On June 19, 2019, Graceland Retail 2017 LLC filed suit against ApplianceSmart in the Court of Common Pleas in Franklin County, Ohio, alleging, among other things, breach of contract and failure to pay rent under the terms of a lease agreement.

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During fiscal 2019, as a result of our decision to close certain ApplianceSmart retail locations, we recorded a liability for the estimated remaining lease payments and early termination charges, as applicable, of $724.

As of December 31,2020, this amount has been reduced to $405.

As of March 31, 2021, this amount has been reduced to $405.

During 2019, the Company became the principal for certain extended warranties, as a result, warranty reserves are included in accrued liabilities in our consolidated balance sheet.

The following table summarizes the warranty reserve activity for the three months ended December 31, 2020:

The following table summarizes the warranty reserve activity for the six months ended March 31, 2021:

Beginning balance, September 30, 2020

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Warranty settlements

Ending balance, December 31, 2020

During 2020, Marquis entered into a $1,100 agreement to install heating, ventilation and air conditioning in one of its manufacturing facilities.

Ending balance, March 31, 2021

Segment Reporting

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The Retail segment consists of Vintage Stock and ApplianceSmart, the Flooring Manufacturing Segment consists of Marquis, and the Steel Manufacturing Segment consists of Precision Marshall.

The following tables summarize segment information for the three months ended December 31, 2020 and 2019:

Three Months Ended December 31,

The following tables summarize segment information for the three and six months ended March 31, 2021 and 2020 :

For the Three Months Ended March 31,

For the Six Months Ended March 31,

Flooring Manufacturing

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Subsequent Events

The Company evaluated subsequent events through the date of this Quarterly Report noting only the following:

During January 2021, the Company paid the Comvest loan in full and terminated the loan agreement.

Precision PPP Loan

During February 2021, Precision received notice that its $1,382 payroll protection program loan has been forgiven and no amounts are owed.

Series Be Preferred Warrants

All of the Series B Preferred Warrants were exercised by cashless exercise during January 2021.

The Company evaluated subsequent events through the date of this Quarterly Report noting no reportable events.

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 1. Financial Statements