What changed in this filing

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Item 1. Financial Statements

2024-02-08 compared with 2023-08-10 · 399 added, 447 removed, 449 unchanged (65% of the section changed)

3 unchanged sentences

(dollars in thousands, except per-share amounts)

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Cash $ 5,569 $ 4,309

Trade receivables, net of allowance for doubtful accounts of $ 194,000 at June 30, 2023 and $ 132,000 at September 30, 2022

27,358 25,665

Inventories, net of reserves of $ 3.5 million at June 30, 2023 and $ 2.4 million at September 30, 2022

Trade receivables, net of allowance for doubtful accounts of $ 1.5 million at December 31, 2023 and $ 1.6 million at September 30, 2023

42,350 41,194

Inventories, net 132,455 131,314

Income taxes receivable — 1,116

1 unchanged sentence

Total current assets 185,125 182,852

Property and equipment, net of accumulated depreciation of $ 34.3 million at June 30, 2023, and $ 26.7 million at September 30, 2022

65,431 64,590

Property and equipment, net 79,683 80,703

Right of use asset - operating leases 65,799 54,544

Deposits and other assets 1,240 1,282

Intangible assets, net of accumulated amortization of $ 3.4 million at June 30, 2023 and $ 2.1 million at September 30, 2022

Intangible assets, net 28,163 26,568

Goodwill 76,639 75,866

3 unchanged sentences

Accrued liabilities 39,123 31,826

Income taxes payable 431 —

Current portion of lease obligations - operating leases 12,799 11,369

7 unchanged sentences

Notes payable related parties, net of current portion 6,919 6,914

Seller notes - related parties 39,672 38,998

Deferred taxes 11,714 14,035

3 unchanged sentences

Stockholders' equity:

Series E convertible preferred stock, $ 0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at June 30, 2023 and September 30, 2022, respectively, with a liquidation preference of $ 0.30 per share outstanding

Common stock, $ 0.001 par value, 10,000,000 shares authorized, 3,164,432 and 3,074,833 shares issued and outstanding at June 30, 2023 and September 30, 2022, respectively

Series E convertible preferred stock, $ 0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at December 31, 2023 and September 30, 2023, respectively, with a liquidation preference of $ 0.30 per share outstanding

Common stock, $ 0.001 par value, 10,000,000 shares authorized, 3,159,984 and 3,164,330 shares issued and outstanding at December 31, 2023 and September 30, 2023, respectively

Paid in capital 69,437 69,387

Treasury stock common 659,961 and 620,971 shares as of June 30, 2023 and September 30, 2022, respectively

Treasury stock common 664,409 and 660,063 shares as of December 31, 2023 and September 30, 2023, respectively

( 8,312 ) ( 8,206 )

Treasury stock Series E preferred 80,000 shares as of June 30, 2023 and September 30, 2022, respectively

Treasury stock Series E preferred 80,000 shares as of December 31, 2023 and September 30, 2023, respectively

Retained earnings 38,277 38,959

Equity attributable to Live stockholders 104,651 97,610

Non-controlling interest ( 448 ) ( 448 )

Total stockholders' equity 99,397 100,135

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LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(dollars in thousands, except per-share amounts)

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2023 2022 2023 2022

For the Three Months Ended December 31,

Revenues $ 117,593 $ 68,986

6 unchanged sentences

Operating income 3,541 4,567

Other (expense) income:

Other expense:

Interest expense, net ( 4,163 ) ( 2,047 )

Gain (loss) on debt extinguishment — 279 — ( 84 )

Gain on disposal of fixed assets ( 29 ) ( 443 ) ( 22 ) ( 444 )

Loss on write-off of ROU asset — ( 522 ) — ( 522 )

Salomon Whitney settlement 1,000 — 2,000 —

Loss on disposition of Salomon Whitney ( 1,696 ) — ( 1,696 ) —

Gain on bankruptcy settlement — — — 11,352

Other income (expense) 6 333 ( 671 ) 751

Total other income (expense), net ( 4,204 ) ( 1,027 ) ( 9,156 ) 8,504

Income before provision for income taxes 1,357 4,837 5,924 33,224

Provision for income taxes 297 1,365 1,462 7,848

Net income 1,060 3,472 4,462 25,376

Net income attributable to Live stockholders $ 1,060 $ 3,472 $ 4,462 $ 25,376

Income per share:

Other expense ( 284 ) ( 61 )

Total other expense, net ( 4,447 ) ( 2,108 )

(Loss) income before provision for income taxes ( 906 ) 2,459

(Benefit) provision for income taxes ( 224 ) 615

Net (loss) income $ ( 682 ) $ 1,844

(Loss) income per share:

Basic $ ( 0.22 ) $ 0.60

7 unchanged sentences

(dollars in thousands)

For the Nine Months Ended June 30,

For the Three Months Ended December 31,

Operating Activities:

Net income $ 4,462 $ 25,376

Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition:

Net (loss) income $ ( 682 ) $ 1,844

Adjustments to reconcile net (loss) income to net cash provided by operating activities, net of acquisition:

Depreciation and amortization 4,295 2,651

(Gain)/loss on disposal of property and equipment 29 443

Gain on bankruptcy settlement — ( 11,501 )

Amortization of seller note discount 673 —

Amortization of debt issuance cost 21 16

1 unchanged sentence

Amortization of right-of-use assets 1,143 540

Write-off of ROU asset — 522

Change in reserve for uncollectible accounts ( 32 ) 20

Change in reserve for obsolete inventory 1,001 ( 48 )

Change in deferred income taxes 4,227 2,529

Disposition of SW Financial, net of cash retained 1,509 —

Changes in assets and liabilities, net of acquisitions:

6 unchanged sentences

Accrued liabilities 3,700 ( 1,050 )

Change in deferred income taxes ( 1,435 ) 56

Other Liabilities — ( 133 )

1 unchanged sentence

Investing Activities:

Acquisition of Flooring Liquidators, net of cash acquired ( 33,929 ) —

Acquisition of Kinetic — ( 24,355 )

Acquisition of Cal Coast Carpets ( 1,300 ) —

Acquisition of CRO ( 1,034 ) —

Acquisition of Johnson ( 500 ) —

Purchase of property and equipment ( 1,655 ) ( 1,282 )

1 unchanged sentence

Financing Activities:

Net borrowings under revolver loans 3,133 18,179

Net payments under revolver loans ( 756 ) ( 51 )

Proceeds from issuance of notes payable — 5,709

Payments on notes payable ( 1,767 ) ( 1,362 )

Proceeds from issuing related party notes payable 7,000 —

Payments for debt acquisition costs ( 98 ) —

Purchase of common treasury stock ( 107 ) ( 622 )

Payments on financing leases ( 793 ) ( 481 )

Payments on seller financing arrangements ( 51 ) —

Cash paid for taxes on net settlement of stock option exercise ( 29 ) —

Debtor-in-possession cash — 75

Net cash provided by financing activities 11,669 20,776

Decrease in cash ( 1,053 ) ( 1,039 )

Net cash (used in) provided by financing activities ( 3,423 ) 3,193

Increase in cash 1,260 8,165

Cash, beginning of period 4,309 4,600

2 unchanged sentences

Interest paid $ 3,271 $ 1,927

Income taxes paid $ 102 $ 5,795

Income taxes received $ 346 $ —

Noncash financing and investing activities:

Noncash items related to Flooring Liquidators acquisition $ 36,900 $ —

Noncash stock options exercise $ 327 $ —

Kinetic goodwill adjustment $ — $ 312

PMW goodwill adjustment $ 233 $ —

Noncash items related to CRO acquisition $ 725 $ —

Noncash items related to Johnson acquisition $ 1,501 $ —

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

2 unchanged sentences

(dollars in thousands)

Preferred Stock Series E

Preferred Stock Common Stock Series E

Shares Amount Shares Amount Shares Amount Paid-In

Shares Amount Shares Amount Paid-In

Capital Treasury

4 unchanged sentences

Balance, September 30, 2023 47,840 $ — 3,164,330 $ 2 $ 69,387 $ ( 7 ) $ ( 8,206 ) $ 38,959 $ — $ 100,135

Purchase of common treasury stock — — — — ( 24,710 ) — — — ( 621 ) — — ( 621 )

Net income — — — — — — — — — 1,844 — 1,844

Balance, December 31, 2022 — $ — 47,840 $ — 3,050,123 $ 2 $ 65,321 $ ( 7 ) $ ( 7,836 ) $ 41,353 $ ( 448 ) $ 98,385

Purchase of common treasury stock — — — — ( 674 ) — — — ( 17 ) — — ( 17 )

Stock based compensation — — — — 50 — — — — 50

Issuance of common stock — — — — 116,441 — 3,200 — — — 3,200

Net income — — — — — — — — — 1,558 — 1,558

Balance, March 31, 2023 — $ — 47,840 $ — 3,165,890 $ 2 $ 68,630 $ ( 7 ) $ ( 7,853 ) $ 42,911 $ ( 448 ) $ 103,235

Purchase of common treasury stock — — ( 4,346 ) — — — ( 106 ) — — ( 106 )

Stock based compensation — — — — — — 287 — — — — 287

Stock options exercised — — — — 12,148 — — — — — — —

Taxes paid on net settlement of stock options exercised — — — — — — ( 29 ) — — — — ( 29 )

Issuance of common stock — — — — — — — — — — —

Net income — — — — — — — — — 1,060 — 1,060

Balance, June 30, 2023 — $ — 47,840 $ — 3,164,432 $ 2 $ 68,888 $ ( 7 ) $ ( 8,203 ) $ 43,971 $ ( 448 ) $ 104,203

Preferred Stock Series E

Net loss — — — — — — — ( 682 ) — ( 682 )

Balance, December 31, 2023 47,840 $ — 3,159,984 $ 2 $ 69,437 $ ( 7 ) $ ( 8,312 ) $ 38,277 $ — $ 99,397

Preferred Stock Common Stock Series E

Shares Amount Shares Amount Shares Amount Paid-In

Shares Amount Shares Amount Paid-In

Capital Treasury

4 unchanged sentences

Balance, September 30, 2022 47,840 $ — 3,074,833 $ 2 $ 65,321 $ ( 7 ) $ ( 7,215 ) $ 39,509 $ ( 448 ) $ 97,162

Stock based compensation — — — — — — 18 — — — 18

Net income — — — — — — — — — 6,546 — 6,546

Balance, December 31, 2021 315,790 $ — 47,840 $ — 1,582,334 $ 2 $ 65,302 $ ( 7 ) $ ( 4,519 ) $ 21,314 $ ( 448 ) $ 81,644

Stock based compensation — — — — — — 19 — — — — 19

Purchase of common treasury stock — — ( 24,710 ) — — — ( 621 ) — ( 621 )

Conversion of Series B preferred stock ( 315,790 ) — — — 1,578,950 — — — — — — —

Net income — — — — — — — 1,844 — 1,844

Balance, March 31, 2022 — $ — 47,840 $ — 3,095,616 $ 2 $ 65,321 $ 65,321 $ ( 7 ) $ ( 6,603 ) $ 36,672 $ ( 448 ) $ 94,937

Purchase of common treasury stock — — — — ( 14,160 ) — — — ( 444 ) — — ( 444 )

Net income — — — — — — — 3,472 — 3,472

Balance, June 30, 2022 — 0 $ — 47,840 $ — 3,081,456 $ 2 $ 65,321 $ ( 7 ) $ ( 7,047 ) $ 40,144 $ ( 448 ) $ 97,965

Balance, December 31, 2022 47,840 $ — 3,050,123 $ 2 $ 65,321 $ ( 7 ) $ ( 7,836 ) $ 41,353 $ ( 448 ) $ 98,385

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 AND NINE MONTHS ENDED JUNE 30, 2023 AND 2022

FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022

(dollars in thousands, except per-share amounts)

11 unchanged sentences

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, and 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 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, and 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.

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 (“GAAP”) for interim financial information.

Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements.

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 nine months ended June 30, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2023.

The results of operations for the three months ended December 31, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2024.

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, 2023 and for the fiscal year then ended included in the Company’s Annual Report on Form 10-K, filed with the U.S.

3 unchanged sentences

The unaudited condensed financial statements include the accounts of the Company and its majority owned subsidiaries over which the Company exercises control.

The Company records a non-controlling interest within stockholders’ equity for the portion of the entity’s equity attributed to the consolidated entities that are not wholly owned.

All intercompany accounts and transactions have been eliminated in consolidation.

These reclassifications have no material effect on the reported financial results.

Reclassifications

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

Use of Estimates

2 unchanged sentences

Actual results could differ from those estimates.

Significant estimates made in connection with the accompanying condensed consolidated financial statements include the estimated reserve for doubtful accounts, the estimated reserve for excess and obsolete inventory, fair values of goodwill, other intangibles and long-lived assets in connection with an acquisition, 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 and property and equipment.

Significant estimates made in connection with the accompanying consolidated financial statements include the estimated reserve for doubtful current and long-term trade and other receivables, 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, lease terminations, and estimated useful lives for intangible assets and property and equipment.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU No.

2020-04 - Reference Rate Reform (Topic 848), codified as ASC 848 (“ASC 848”).

The purpose of ASC 848 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates to alternative reference rates.

ASC 848 applies only to contracts, hedging relationships, and other transactions that reference a reference rate expected to be discontinued because of reference rate reform.

Effective December 31, 2021, the Secured Overnight Financing Rate (“SOFR”) replaced the USD London Interbank-Offered Rate (“LIBOR”) for most financial benchmarking.

The guidance may be applied upon issuance of ASC 848 through December 31, 2022.

The Company has adopted this new accounting standard on its condensed consolidated financial statements and related disclosures;

however, adoption of this ASU had no material impact on the Company's financial statements.

Acquisition of Flooring Liquidators

On January 18, 2023, Live Ventures acquired 100 % of the issued and outstanding equity interests (the “Equity Interests”) of Flooring Liquidators, Inc., Elite Builder Services, Inc., 7 Day Stone, Inc., Floorable, LLC, K2L Leasing, LLC, and SJ & K Equipment, Inc.

(collectively, the “Acquired Companies”).

The Acquired Companies are leading retailers and installers of floors, carpets, and countertops to consumers, builders and contractors in California and Nevada (see Note 11).

The acquisition was effected pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) with an effective date of January 18, 2023 by and among the Company, and Stephen J.

Kellogg, as the seller representative of the equity holders of the Acquired Companies and individually in his capacity as an equity holder of the Acquired Companies, and the other equity holders of the Acquired Companies (collectively, the “Seller”).

The purchase price for the Equity Interests was $ 83.8 million before any fair value considerations, and is comprised of the following:

• $ 41.8 million in cash to the Seller;

• $ 34.0 million (the “Note Amount”) to certain trusts for the benefit of Kellogg and members of his family (the “Kellogg Trusts”) pursuant to the issuance by the Company of a subordinated promissory note (the “Note”) in favor of the Kellogg Trusts;

• $ 4.0 million to the Kellogg 2022 Family Irrevocable Nevada Trust by issuance of 116,441 shares of Company Common Stock (as defined in the Purchase Agreement) (the “Share Amount”), calculated in the manner described in the Purchase Agreement;

• $ 2.0 million holdback;

• $ 2.0 million of contingent consideration, comprised of $ 1.0 million in cash and $ 1.0 million in restricted stock units.

The fair value the purchase price components outlined above was $ 78.7 million due to fair value adjustments for the Note, restricted stock, and contingent consideration.

Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $ 30.6 million, 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 January 18, 2023, as calculated by an independent third-party firm.

The Company anticipates approximately $ 13.4 million of the goodwill arising from the acquisition to be fully deductible for tax purposes.

below outlines the purchase price allocation of the purchase for Flooring Liquidators to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):

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 CODM, 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.

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.

Acquisition of CRO

On October 13, 2023, Flooring Liquidators 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 $ 1.8 million and was comprised of cash at close of approximately $ 1.0 million, an indemnification holdback amount of $ 300,000 , and additional consideration valued at $ 425,000 .

The fair value of the purchase price components was $ 1.8 million, as detailed below (in $000's):

Additional consideration 425

Purchase price $ 1,759

Under the preliminary purchase price allocation, the Company recognized goodwill of $ 425,000 , 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 consideration was calculated by management.

The Company anticipates the $ 425,000 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 as of December 31, 2023 (in $000’s):

Total purchase price $ 1,759

Accounts payable 770

6 unchanged sentences

Intangible assets

Trade names $ 13,275

Non-compete agreement 1,190

Subtotal intangible assets 1,190

Other assets 286

Total assets acquired 3,402

Total goodwill $ 425

Acquisition of Johnson

On November 30, 2023, CRO acquired certain assets and assumed certain liabilities of Johnson Floor & Home (“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 $ 500,000 , deferred consideration of $ 1.2 million, with additional consideration paid in the form of an earnout valued at approximately $ 300,000 .

The deferred consideration is payable in three $ 400,000 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):

Deferred consideration 1,200

Purchase price $ 2,001

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, liabilities assumed and goodwill as of December 31, 2023 (in $000’s):

Total purchase price $ 2,001

Accounts payable 1,017

Accrued liabilities 1,141

Total liabilities assumed 2,158

Total consideration 4,159

Accounts receivable 1,252

Inventory 1,127

Property, plant and equipment 157

Intangible assets

Customer relationships $ 1,301

Non-compete agreements 1,625

Non-compete agreement 306

Subtotal intangible assets 1,607

Other assets 16

Total assets acquired 4,159

Total goodwill $ —

During the three months ended June 30, 2023, the Company recorded a fair value adjustment to increase goodwill by $ 1.9 million.

The increase relates to an increase in the value of other assets acquired of $ 1.3 million, as well as an increase in the value of accrued liabilities assumed of $ 2.3 million, partially offset by a reduction in inventory acquired of $ 842,000 .

Pro Forma Information

The table below presents selected proforma information for the Company for the nine-month period ended June 30, 2023, and the three and nine month period ended June 30, 2022 assuming that the acquisition had occurred on October 1, 2021 (the beginning of the Company’s 2022 fiscal year), pursuant to ASC 805-10-50 (in $000’s).

This proforma information

does not purport to represent what the actual results of operations of the Company would have been had the acquisition occurred on that date, nor does it purport to predict the results of operations for future periods.

As Reported Adjustments Proforma

Live Unaudited Three Months Ended June 30, 2022 Flooring Liquidators Unaudited Three Months Ended June 30, 2022 Adjustments (1)

Live for the Three Months Ended June 30, 2022

Net revenue $ 68,269 $ 32,525 $ 100,794

Net income $ 3,472 $ 2,562 $ ( 2,008 ) $ 4,026

Earnings per basic common share $ 1.12 $ 1.30

Earnings per basic diluted share $ 1.11 $ 1.29

As Reported Adjustments Proforma

Live Unaudited Nine Months Ended June 30, 2023 Flooring Liquidators Unaudited Nine Months Ended June 30, 2023 (2) Adjustments (1)

Live for the Nine Months Ended June 30, 2023

Net revenue $ 251,624 $ 37,702 $ 289,326

Net income 4,462 $ ( 1,033 ) $ ( 2,226 ) $ 1,203

Earnings per basic common share $ 1.43 $ 0.39

Earnings per basic diluted share $ 1.42 $ 0.38

As Reported Adjustments Proforma

Live Unaudited Nine Months Ended June 30, 2022 Flooring Liquidators Unaudited Nine Months Ended June 30, 2022 Adjustments (1)

Live for the Nine Months Ended June 30, 2022

Net revenue $ 213,133 $ 92,375 $ 305,508

Net income $ 25,376 $ 7,783 $ ( 5,826 ) $ 27,333

Earnings per basic common share $ 8.11 $ 8.74

Earnings per basic diluted share $ 8.01 $ 8.62

(1) Adjustments are related to adjustments made for the following:

• Amortization expense of definite-lived intangible assets has been adjusted based on the preliminary fair value at the acquisition date.

• Interest expense has been adjusted to include proforma interest expense that would have been incurred as a result of the acquisition financing obtained by the Company.

• Elimination of revenues and costs of revenues associated with sales between Flooring Liquidators and the Company prior to acquisition.

(2) Amounts presented are for predecessor period.

Acquisition of Harris Flooring Group® Brands

On September 20, 2023, Marquis acquired the Harris Flooring Group® brands from Q.E.P., a designer, manufacturer, and distributor of a broad range of best-in-class flooring and installation solutions for commercial and home improvement projects.

Specifically, Marquis acquired the Harris Flooring Group brands, inventory, and book of business and intends to retain all sales representatives.

The purchase price was $ 10.1 million, consisting of $ 3.0 million in cash at close, and the recording of a deferred payment of $ 5.1 million and holdback of $ 2.0 million.

The acquisition was determined to be an asset acquisition for accounting purposes.

The entirety of the purchase was allocated to inventory.

Acquisition of PMW

On July 20, 2023 (“Effective Date”), the Company acquired PMW, a Kentucky-based metal stamping and value-added manufacturing company.

PMW was acquired for total consideration of approximately $ 28 million, comprised of a $ 25 million purchase price, plus closing cash, and subject to working capital adjustments, with additional consideration of up to $ 3 million paid in the form of an earn-out.

The purchase price was funded in part by a $ 2.5 million seller note, borrowings under a credit facility of $ 14.4 million, and proceeds under a sale and leaseback transaction of approximately $ 8.6 million.

The acquisition involved no issuance of stock of the Company.

As of the Effective Date, the Company entered into a sales and leaseback transaction for two properties acquired, one located in Frankfort, Kentucky, and the other located in Louisville, Kentucky, with Legacy West Kentucky Portfolio, LLC (“Lessor”).

The aggregate sales price of the real estate was approximately $ 14.5 million.

The Louisville, Kentucky

property was acquired on the Effective Date for $ 5.1 million in connection with an option of PMW to purchase that property.

The provisions of each of the two lease agreements include a 20-year lease term with two five-year renewal options.

The base rent under the Frankfort lease agreement is $ 34,977 per month for the first year of the term and a 2 % per annum escalator thereafter.

The base rent under the Louisville lease agreement is $ 63,493 per month for the first year of the term and a 2 % per annum escalator thereafter.

Both lease agreements are “net leases,” such that the lessees are also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the real property incurred by the lessor.

Due to the highly specialized nature of the leased assets, the Company currently believes it is more likely than not that each of the two five-year options will be exercised.

The proceeds of $ 14.5 million, net of closing fees, from the sale-leaseback were used to assist in funding the acquisition of PMW.

The fair value of the purchase price components outlined above was $ 26.8 million due to fair value adjustments for the contingent consideration, cash acquired, and working capital adjustments, as detailed below (in $000's):

Purchase price $ 25,000

Fair value of earnout 2,675

Cash from balance sheet 1,602

Working capital adjustment ( 2,500 )

Net purchase price $ 26,777

Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $ 4.0 million, 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 July 20, 2023, as calculated by an independent third-party firm.

Because the transaction was considered a stock purchase for tax purposes, none of the goodwill arising from the acquisition will be deductible for tax purposes.

During the three months ended December 31, 2023, the Company recorded noncash fair value adjustments related to inventory and other liabilities assumed, as well as an adjustment to deferred tax liabilities in the aggregate amount of $ 652,000 .

The table below outlines the purchase price allocation of the purchase for PMW to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):

Net purchase price $ 26,777

Accounts payable 10,788

Accrued liabilities 4,995

Total liabilities assumed 15,783

Total consideration 42,560

Accounts receivable 12,613

Inventory 6,266

Property, plant and equipment 13,616

Intangible assets 3,600

Other assets 849

Total assets acquired 38,546

Total goodwill $ 4,014

Acquisition of Cal Coast Carpets

On June 2, 2023, Flooring Liquidators acquired certain fixed assets and other intangible assets of Cal Coast Carpets, Inc.

(“Cal Coast”), and its Shareholders, which was effected through two Asset Purchase Agreements (“Agreement”, or collectively, “Agreements”).

(“Cal Coast”), and its shareholders.

No liabilities were assumed as part of either transaction.

11 unchanged sentences

Total assets acquired $ 1,300

Acquisition of Kinetic

On June 28, 2022, Precision Marshall (“Precision”) acquired 100 % of the issued and outstanding shares of common stock of The Kinetic Co., Inc.

(“Kinetic”), a Wisconsin corporation, which was effected through a Purchase Agreement (the “Purchase Agreement”).

In connection with the Purchase Agreement, Precision also entered into a Real Estate Purchase Agreement with Plant B-6, LLC, an affiliate of Kinetic, pursuant to which Precision received all of Kinetic's right, title, and interest in and to the land and improvements (collectively, the “Real Estate”) that Kinetic uses in its operations.

The combined purchase price for the Kinetic shares and Real Estate was approximately $ 24.7 million, which was funded with approximately $ 11.0 million in borrowings under the company’s credit facility, approximately $ 8.3 million in proceeds from the sale and leaseback of the Real Estate, a subordinated promissory note in the principal amount of $ 3.0 million for the benefit of the Seller of Kinetic, $ 1.7 million of cash on-hand, a contingent earn-out liability valued at $ 997,000 , a working capital adjustment of approximately $ 400,000 , which was paid in cash, and a final fair value adjustment of approximately $ 312,000 , which was noncash.

As of the date of acquisition, Precision entered into a sale and leaseback agreement with a third-party, independent of the Kinetic sellers, for the Real Estate.

The sale price of the Real Estate was approximately $ 8.9 million, subject to closing fees of approximately $ 547,000 .

The provisions of the lease agreement include a 20 -year lease term with two five-year renewal options.

The base rent under the lease agreement is $ 600,000 for the first year of the term and a 2 % per annum escalator.

The Lease Agreement is a “net lease,” such that the lessees are also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the Real Property incurred by the lessor.

Due to the highly specialized nature of the leased assets, the Company currently believes that it is more likely than not that each of the two five-year options will be exercised.

The proceeds, net of closing fees, from the sale-leaseback were used to assist in funding the acquisition of Kinetic.

Under the purchase price allocation, the Company recognized goodwill of approximately $ 3.0 million, 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 June 28, 2022, as calculated by an independent third-party firm.

Goodwill arising from the acquisition is

expected to be fully deductible for tax purposes.

The table below outlines the purchase price allocation of the purchase for Kinetic to the acquired identifiable assets, liabilities assumed and goodwill as of June 30, 2023 (in $000’s):

Total purchase price $ 24,732

Acquisition of Flooring Liquidators

On January 18, 2023, Live Ventures acquired 100 % of the issued and outstanding equity interests (the “Equity Interests”) of Flooring Liquidators, Inc., Elite Builder Services, Inc.

(“EBS”), 7 Day Stone, Inc., Floorable, LLC, K2L Leasing, LLC, and SJ & K Equipment, Inc.

(collectively, the “Acquired Companies”).

The Acquired Companies are leading retailers and installers of floors, carpets, and countertops to consumers, builders and contractors in California and Nevada.

The acquisition was effected pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) with an effective date of January 18, 2023 by and among the Company, and Stephen J.

The purchase price for the Equity Interests was $ 83.8 million before any fair value considerations, and is comprised of the following:

• $ 41.8 million in cash to the Seller;

• $ 2.0 million holdback;

• $ 2.0 million of contingent consideration, comprised of $ 1.0 million in cash and $ 1.0 million in restricted stock units.

The fair value of the purchase price components outlined above was $ 78.7 million due to fair value adjustments for the Note, and restricted stock, as detailed below (in $000's).

Purchase price $ 83,800

Fair value adjustment, sellers note ( 3,300 )

Fair value adjustment, restricted stock ( 1,800 )

Net purchase price $ 78,700

Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $ 31.4 million, 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 January 18, 2023, as calculated by an independent third-party firm.

The Company anticipates approximately $ 13.4 million of the goodwill arising from the acquisition to be fully deductible for tax purposes.

During the three months ended December 31, 2023, the Company recorded a fair value adjustment related to its contingent

consideration of $ 1 million.

The table below outlines the purchase price allocation, as revised, of the purchase for Flooring Liquidators to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):

Purchase price $ 78,700

Accounts payable 5,189

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Intangible assets

Other assets 480

Total assets acquired 24,124

Total goodwill $ 3,027

Pro Forma Information

The table below presents selected proforma information for the Company for the three and nine-month periods ended June 30, 2022, assuming that the acquisition had occurred on October 1, 2021 (the beginning of the Company’s 2022 fiscal year), pursuant to ASC 805-10-50 (in $000's).

This proforma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition occurred on that date, nor does it purport to predict the results of operations for future periods.

As Reported Adjustments Proforma

Live Unaudited Three Months Ended June 30, 2022 Kinetic Unaudited Three Months Ended June 30, 2022 Adjustments (1)

Live for the Three Months Ended June 30, 2022

Net revenue $ 68,269 $ 5,696 $ 73,965

Net income $ 3,472 $ 712 $ ( 69 ) $ 4,115

Earnings per basic common share $ 1.12 $ 1.33

Earnings per basic diluted share $ 1.11 $ 1.31

As Reported Adjustments Proforma

Live Unaudited Nine Months Ended June 30, 2022 Kinetic Unaudited Nine Months Ended June 30, 2022 Adjustments (1)

Live for the Nine Months Ended June 30, 2022

Net revenue $ 213,133 $ 15,418 $ 228,551

Net income $ 25,376 $ 1,286 $ ( 207 ) $ 26,455

Earnings per basic common share $ 8.11 $ 8.46

Earnings per basic diluted share $ 8.01 $ 8.35

(1) Adjustments are related to adjustments made for the following:

• Amortization expense of definite-lived intangible assets has been adjusted based on the preliminary fair value at the acquisition date.

• Interest expense has been adjusted to include proforma interest expense that would have been incurred as a result of the acquisition financing obtained by the Company.

• Certain other expenses have been adjusted to reflect the post-acquisition operating environment.

Acquisition of Better Backers

On July 1, 2022, Live acquired certain assets and intellectual property of Better Backers, a Georgia corporation, which was effected through an Asset Purchase Agreement (the “Asset Purchase Agreement”).

No liabilities were assumed as part of the acquisition.

The purchase price, which is subject to certain post-closing adjustments, was approximately $ 3.2 million, which is comprised of $ 1.8 million that was paid upon closing, and the $ 1.4 million present value of $ 1.5 million of non-compete payments to be made over a 24 -month period.

In order to expedite the transaction, the acquisition was originally made by Live, and the $ 1.8 million paid upon closing was funded with borrowings under Live’s credit line with Isaac Capital Group (“ICG”).

On August 18, 2022, Marquis repaid the $ 1.8 million to ICG and assumed ownership of Better Backers.

In connection with the acquisition, Marquis entered into two 20-year building leases with Spyglass Estate Planning, LLC, a related party (see Note 16), with two options to renew for an additional five years each.

The fair value of the buildings and improvement is approximately $ 9.3 million.

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.

Due to the highly specialized nature of the leased assets, the Company currently believes that it is more likely than not that it will not cancel during the initial 24 -month term, and that each of the two five-year options will be exercised.

The base rent under the lease agreements is approximately $ 73,000 and $ 32,000 per month, respectively, for the first year of the term, and each lease agreement has a 2.5 % per annum escalator.

The lease agreements are each “net leases”, such that the lessee is also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the property.

The Company has evaluated each lease and determined the rent amounts to be at market rates.

These leases are being treated as finance leases for accounting purposes, as described in ASC 842 “ Leases”.

Under the purchase price allocation, no goodwill was recognized.

The values assigned to the assets acquired are based on their estimates of fair value available as of July 1, 2022, as calculated by management.

The table below outlines the purchase price allocation of the purchase for Better Backers to the acquired identifiable assets (in $000’s):

Total purchase price $ 3,166

Inventory 748

Property, plant and equipment 2,118

Intangible assets 300

Total assets acquired 3,166

Variable Interest Entity

On March 31, 2023, the Company entered into a Settlement Agreement and Mutual Release (“Agreement”) with Angia Holdings, LLC and Thomas Diamante and Lawrence Zelin (“Principals”).

The Agreement stipulated that the Principals would pay the Company $ 1,000,000 within 10 days of the effective date of the Agreement, and an additional $ 1,000,000 within 45 days of the effective date of the Agreement if a joint venture, with terms acceptable to the Company, was not formed.

The Principals made the initial $ 1,000,000 payment in April 2023, and, having failed to form a joint venture, as described above, made the second $ 1,000,000 payment in May 2023.

Consequently, employment of the Principals was terminated, and operations of SW Financial were shut down.

The Company recorded a gain on receipt of the settlement amounts of $ 2,000,000 and a loss on deconsolidation of SW Financial's assets and liabilities of approximately $ 1.7 million, as detailed in the table below (in $000’s):

Accounts payable $ 242

Lease liabilities 728

Total deconsolidation of liabilities 970

Accounts receivable 130

Other current assets 187

Intangible assets

Trade names $ 13,275

Customer relationships 7,700

Tradenames 72

Non-compete agreements 1,625

Subtotal intangible assets 22,649

Right-of-use assets 687

Other assets 55

Total deconsolidation of assets 2,666

Total loss on deconsolidation $ ( 1,696 )

Total assets acquired 63,230

Total goodwill $ 31,419

The following table details the Company's inventory as of December 31, 2023 and September 30, 2023 (in $000's):

Inventory, net December 31, 2023 September 30, 2023

Raw materials $ 29,690 $ 32,590

Work in progress 9,682 9,028

Finished goods 51,806 50,082

Merchandise 46,098 43,438

137,276 135,138

Inventory reserves ( 4,821 ) ( 3,824 )

Total inventory, net $ 132,455 $ 131,314

Property and Equipment

The following table details the Company's property and equipment as of December 31, 2023 and September 30, 2023 (in $000's):

December 31, 2023 September 30, 2023

Property and equipment, net:

Land $ 2,029 $ 2,029

Building and improvements 36,417 35,684

Transportation equipment 2,088 2,062

Machinery and equipment 68,202 67,575

Furnishings and fixtures 6,287 6,028

Office, computer equipment and other 4,941 4,569

119,964 117,947

Accumulated depreciation ( 40,281 ) ( 37,244 )

Total property and equipment, net $ 79,683 $ 80,703

Depreciation expense was $ 3.1 million and $ 2.4 million for the three months ended December 31, 2023 and 2022, respectively.

The Company leases retail stores, warehouse facilities, and office space.

6 unchanged sentences

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.

As of June 30, 2023, the weighted average remaining lease term for operating leases is 7.2 years.

The Company's weighted average discount rate for operating leases is 8.4 %.

Total cash payments for operating leases for the nine months ended June 30, 2023 and 2022 were approximately $ 8.2 million and $ 7.2 million, respectively.

Additionally, we obtained right-of-use assets in exchange for operating lease liabilities of approximately $ 19.9 million upon commencement of operating leases during the nine months ended June 30, 2023.

As of June 30, 2023, the weighted average remaining lease term for finance leases is 26.9 years.

The Company's weighted average discount rate for finance leases is 13.2 %.

Total cash payments for finance leases for the nine months ended June 30, 2023 and 2022 were approximately $ 1.6 million and $ 0 , respectively.

Additionally, we obtained right-of-use assets in exchange for finance lease liabilities of approximately $ 443,000 upon commencement of operating leases during the nine months ended June 30, 2023.

The following table details our right of use assets and lease liabilities as of June 30, 2023 and September 30, 2022 (in $000's):

June 30, 2023 September 30, 2022

The following table details the Company's right of use assets and lease liabilities as of December 31, 2023 and September 30, 2023 (in $000's):

December 31, 2023 September 30, 2023

Right of use asset - operating leases $ 65,799 $ 54,544

4 unchanged sentences

Long term - finance 32,981 32,942

As of December 31, 2023, the weighted average remaining lease term for operating leases is 10.3 years.

The Company's weighted average discount rate for operating leases is 9.9 %.

Total cash payments for operating leases for the three months ended December 31, 2023 and 2022 were approximately $ 4.3 million and $ 2.4 million, respectively.

Additionally, the Company recognized approximately $ 14.9 million in right of use assets and liabilities upon commencement of operating leases during the three months ended December 31, 2023.

As of December 31, 2023, the weighted average remaining lease term for finance leases is 27.4 years.

The Company's weighted average discount rate for finance leases is 11.7 %.

Total cash payments for finance leases for the three months

ended December 31, 2023 and 2022 were approximately $ 793,000 and $ 481,000 , respectively.

No finance right-of-use assets or liabilities were recognized during the three months ended December 31, 2023.

The Company records finance lease right of use assets as property and equipment.

The balance, as of June 30, 2023 and September 30, 2022 is as follows (in $000’s):

The balance, as of December 31, 2023 and September 30, 2023 is as follows (in $000’s):

December 31, 2023 September 30, 2023

Property and equipment, at cost $ 22,526 $ 22,526

1 unchanged sentence

Property and equipment, net $ 21,665 $ 21,824

Total present value of future lease payments of operating leases as of June 30, 2023 (in $000's):

Twelve months ended June 30,

Total present value of future lease payments of operating leases as of December 31, 2023 (in $000's):

Twelve months ended December 31,

2024 $ 18,564

Thereafter 36,737

Total 106,599

Less implied interest ( 35,509 )

Present value of payments $ 71,090

Total present value of future lease payments of finance leases as of June 30, 2023 (in $000's):

Twelve months ended June 30,

Total present value of future lease payments of finance leases as of December 31, 2023 (in $000's):

Twelve months ended December 31,

Thereafter 104,066

Total 120,416

Less implied interest ( 87,074 )

Present value of payments $ 33,342

In connection with the acquisition of Flooring Liquidators (see Note 3), as of June 30, 2023, the Company obtained right-of-use assets in exchange for operating lease liabilities of $ 16.8 million, and right-of-use assets in exchange for finance lease liabilities of $ 443,000 .

In connection with the disposition of SW Financial (see Note 4), the Company deconsolidated approximately $ 687,000 of right-of-use assets and $ 728,000 of operating lease liabilities, which were included in the calculation of the loss on disposition.

During the nine months ended June 30, 2023 and 2022, the Company recorded no impairment charges relating to any of its leases.

The following table details the Company's inventory as of June 30, 2023 and September 30, 2022 (in $000's):

Inventory, net June 30, 2023 September 30, 2022

Raw materials $ 32,810 $ 35,829

Work in progress 7,623 7,539

Finished goods 34,327 32,814

Merchandise 42,916 23,900

117,676 100,082

Inventory reserves ( 3,601 ) ( 2,423 )

Total inventory, net $ 114,075 $ 97,659

Property and Equipment

The following table details the Company's property and equipment as of June 30, 2023 and September 30, 2022 (in $000's):

June 30, 2023 September 30, 2022

Property and equipment, net:

Land $ 2,029 $ 2,029

Building and improvements 28,073 26,761

Transportation equipment 3,384 622

Machinery and equipment 55,923 53,739

Furnishings and fixtures 6,019 4,407

Office, computer equipment and other 4,281 3,699

99,709 91,257

Accumulated depreciation ( 34,278 ) ( 26,667 )

$ 65,431 $ 64,590

Depreciation expense was $ 2.7 million and $ 1.4 million, respectively, for the three months ended June 30, 2023 and 2022, and $ 7.8 million and $ 3.9 million for the nine months ended June 30, 2023 and 2022.

The following table details the Company's intangibles as of June 30, 2023 and September 30, 2022 (in $000's):

June 30, 2023 September 30, 2022

During the three months ended December 31, 2023 and 2022, the Company recorded no impairment charges relating to any of its leases.

The following table details the Company's intangibles as of December 31, 2023 and September 30, 2023 (in $000's):

December 31, 2023 September 30, 2023

Intangible assets, net:

2 unchanged sentences

Intangible assets - Other 3,811 2,316

33,926 31,130

Accumulated amortization ( 5,763 ) ( 4,562 )

Total intangibles, net $ 28,163 $ 26,568

In connection with the disposition of SW Financial (see Note 4), the Company deconsolidated approximately $ 1.3 million of customer relationships, net, and $ 72,000 of domain names, net, which were included in the calculation of the loss on disposition.

Amortization expense was $ 978,000 and $ 210,000 , respectively, for the three months ended June 30, 2023 and 2022, and $ 2.2 million and $ 706,000 for the nine months ended June 30, 2023 and 2022.

Amortization expense was $ 1.2 million and $ 253,000 for the three months ended December 31, 2023 and 2022, respectively.

The following table summarizes estimated future amortization expense related to intangible assets that have net balances (in $000’s):

Twelve months ending June 30,

Twelve months ending December 31,

Thereafter 4,049

The following table details the Company's goodwill as of June 30, 2023 (in $000's):

The following table details the Company's goodwill as of September 30, 2023 and December 31, 2023 (in $000's):

Retail - Entertainment Retail - Flooring Flooring Manufacturing Steel Manufacturing Total

September 30, 2023 36,947 30,419 807 7,693 75,866

Kinetic fair value adjustment — — — ( 312 ) ( 312 )

Flooring Liquidators acquisition — 27,277 — — 27,277

Flooring Liquidators tax adjustment — 3,331 — — 3,331

Impairment — — — — —

June 30, 2023 $ 36,947 $ 30,608 $ 807 $ 3,027 $ 71,389

As of June 30, 2023, the Company did not identify any triggering events that would require impairment testing.

CRO acquisition — 425 — — 425

PMW adjustment — — — ( 652 ) ( 652 )

Flooring Liquidators adjustment — 1,000 — — 1,000

December 31, 2023 $ 36,947 $ 31,844 $ 807 $ 7,041 $ 76,639

During the three months ended December 31, 2023, the Company made fair value adjustments, in the amount of approximately $ 652,000 , related to the acquisition of PMW, and $ 1.0 million related to the acquisition of Flooring Liquidators (see Note 3).

As of December 31, 2023, the Company did not identify any triggering events that would require impairment testing.

Accrued Liabilities

The following table details the Company's accrued liabilities as of June 30, 2023 and September 30, 2022, respectively (in $000's):

June 30, 2023 September 30, 2022

The following table details the Company's accrued liabilities as of December 31, 2023 and September 30, 2023, respectively (in $000's):

December 31, 2023 September 30, 2023

Accrued liabilities:

4 unchanged sentences

Accrued interest payable 697 669

Accrued accounts payable and bank overdrafts 1,085 1,731

Accrued inventory 7,262 5,700

Accrued professional fees 5,454 3,146

2 unchanged sentences

Long-Term Debt

Long-term debt as of June 30, 2023 and September 30, 2022 consisted of the following (in $000's):

June 30, 2023 September 30, 2022

Long-term debt as of December 31, 2023 and September 30, 2023 consisted of the following (in $000's):

December 31, 2023 September 30, 2023

Revolver loans $ 56,022 $ 56,779

7 unchanged sentences

Total long-term debt $ 78,357 $ 78,710

Future maturities of long-term debt at June 30, 2023, are as follows which does not include related party debt separately stated (in $000's):

Twelve months ending June 30,

Future maturities of long-term debt at December 31, 2023, are as follows which does not include related party debt separately stated (in $000's):

Twelve months ending December 31,

2024 $ 21,223

1 unchanged sentence

Total future maturities of long-term debt $ 99,580

Eclipse Business Capital Loans

In connection with the acquisition of Flooring Liquidators (see Note 3), 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 4.5 % per annum in excess of Adjusted Term SOFR prior to April 1, 2023, and 3.5 % per annum in excess of Adjusted Term SOFR after April 1, 2023.

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 June 30, 2023, the outstanding balance on the Eclipse Revolver was approximately $ 7.8 million, and the outstanding balance on the Eclipse M&E loan was approximately $ 2.6 million.

Bank of America Revolver Loan

1 unchanged sentence

The BofA Revolver is a five-year , 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.

Availability under the BofA Revolver is subject to a monthly borrowing base

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 BofA Revolver has a variable interest rate and matures in January 2025.

As of June 30, 2023 and September 30, 2022, the outstanding balance was approximately $ 5.8 million and $ 10.1 million, respectively.

Loan with Fifth Third Bank

As of December 31, 2023 and September 30, 2023, the outstanding balance was approximately $ 6.5 million and $ 6.1 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.

8 unchanged sentences

The $ 1.0 million term loan (“Kinetic Term Loan #2”), which matures on June 28, 2025 , is a “Special Advance Term Loan”, and bears interest at SOFR plus 375 basis points.

As of June 30, 2023 and September 30, 2022, the outstanding balance on the revolving loan was approximately $ 26.0 million and $ 23.6 million, respectively, and the outstanding balance on the original M&E lending, which is documented as a term note, was approximately $ 2.5 million and $ 3.2 million, respectively.

As of December 31, 2023 and September 30, 2023, the outstanding balance on the revolving loan was approximately $ 26.0 million and $ 23.0 million, respectively, and the outstanding balance on the original M&E lending, which is documented as a term note, was approximately $ 2.2 million and $ 2.3 million, respectively.

The revolving loan has a variable interest rate and matures in January 2027.

As of June 30, 2023 and September 30, 2022, the outstanding balance on Kinetic Term Loan #1 was approximately $ 3.4 million and $ 3.9 million, respectively.

As of June 30, 2023 and September 30, 2022, the outstanding balance on Kinetic Term Loan #2 was $ 0 and $ 917,000 , respectively.

As of December 31, 2023 and September 30, 2023, the outstanding balance on Kinetic Term Loan #1 was approximately $ 3.1 million and $ 3.3 million, respectively.

As of September 30, 2023, the Kinetic Term Loan #2 was fully repaid.

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.

1 unchanged sentence

The first payment under this loan is due in February 2024.

As of June 30, 2023, the outstanding balance on this Capex loan was $ 1.4 million.

Texas Capital Bank Revolver Loan

On November 3, 2016, Vintage Stock entered into an amended $ 12.0 million credit agreement with Texas Capital Bank (“TCB Revolver”).

The TCB Revolver is a five-year , asset-based facility that is secured by substantially all of Vintage Stock’s assets.

Availability under the TCB Revolver is subject to a monthly borrowing base calculation.

The TCB Revolver has a variable interest rate and matures in November 2023.

The effective rate, as of June 30, 2023, was 7.23 %.

As of June 30, 2023 and September 30, 2022, the balance outstanding was approximately $ 6.7 million and $ 9.4 million, respectively.

The outstanding balance on the Capex loan was $ 1.4 million as of each of December 31, 2023 and September 30, 2023.

Eclipse Business Capital Loans

In connection with the acquisition of Flooring Liquidators (see Note 3), 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.

The Eclipse Revolver bears interest at 4.5 % per annum in excess of Adjusted Term SOFR prior to April 1, 2023, and 3.5 % per annum in excess of Adjusted Term SOFR after April 1, 2023.

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 December 31, 2023 and September 30, 2023, the outstanding balance on the Eclipse Revolver was approximately $ 8.8 million and $ 8.2 million, respectively, and the outstanding balance on the Eclipse M&E loan was approximately $ 2.3 million and $ 2.4 million, respectively.

Loan with Fifth Third Bank (PMW)

In connection with the acquisition of PMW (see Note 3), on July 20, 2023, PMW entered into a revolving credit facility with Fifth Third Bank.

The facility consists of $ 15.0 million in revolving credit and approximately $ 5.0 million in M&E lending.

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 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 M&E Term 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, 2023 and September 30, 2023, the outstanding balance on the Fifth-Third Revolver was approximately $ 10.2 million and $ 11.0 million, respectively, and the balance on the Fifth-Third M&E loan was approximately $ 4.7 million and $ 4.8 million, respectively.

Bank Midwest Revolver Loan

On October 17, 2023, Vintage entered into a $ 15.0 million credit agreement with Bank Midwest (“Bank Midwest Revolver”), replacing a revolving credit facility between Vintage and Texas Capital Bank (“TCB Revolver”), which was entered into in November 2016 and set to mature in November 2023.

In connection with the entry into the Credit Agreement, the revolving credit facility between Vintage Stock and Texas Capital Bank was terminated and the balance outstanding was repaid.

The Bank Midwest Revolver interest accrues 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) 6.5 % per annum, and matures on October 17, 2024.

As of December 31, 2023, the outstanding balance on the Bank Midwest Revolver was approximately $ 4.5 million.

As of September 30, 2023, the outstanding balance on the TCB Revolver was approximately $ 5.3 million.

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 June 30, 2023:

Note #3 is for approximately $ 3.7 million, secured by equipment.

The Equipment Loan #3 is due December 2023, payable in 84 monthly payments of $ 52,000 beginning January 2017, bearing interest rate at 4.8 % per annum.

As of June 30, 2023 and September 30, 2022, the balance was approximately $ 306,000 and $ 751,000 , respectively.

The Equipment Loan #3 matured in December 2023, payable in 84 monthly payments of $ 52,000 beginning January 2017, bearing interest rate at 4.8 % per annum.

As of December 31, 2023 and September 30, 2023, the balance was $ 0 and $ 154,000 , respectively.

Note #4 is for approximately $ 1.1 million, secured by equipment.

The Equipment Loan #4 is due December 2023, payable in 81 monthly payments of $ 16,000 beginning April 2017, bearing interest at 4.9 % per annum.

As of June 30, 2023 and September 30, 2022, the balance was approximately $ 94,000 and $ 231,000 , respectively.

The Equipment Loan #4 matured in December 2023, payable in 81 monthly payments of $ 16,000 beginning April 2017, bearing interest at 4.9 % per annum.

As of December 31, 2023 and September 30, 2023, the balance was $ 0 and $ 47,000 , respectively.

Note #5 is for approximately $ 4.0 million, secured by equipment.

The Equipment Loan #5 is due December 2024, payable in 84 monthly payments of $ 55,000 beginning January 2018, bearing interest at 4.7 % per annum.

As of June 30, 2023 and September 30, 2022, the balance was approximately $ 953,000 and $ 1.4 million, respectively.

As of December 31, 2023 and September 30, 2023, the balance was approximately $ 643,000 and $ 799,000 , respectively.

Note #6 is for $ 913,000 , secured by equipment.

The Equipment Loan #6 is due July 2024, payable in 60 monthly payments of $ 14,000 beginning August 2019, with a final payment of $ 197,000 , bearing interest at 4.7 % per annum.

As of June 30, 2023 and September 30, 2022, the balance was approximately $ 356,000 and $ 471,000 , respectively.

As of December 31, 2023 and September 30, 2023, the balance was approximately $ 277,000 and $ 317,000 , 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 June 30, 2023 and September 30, 2022, the balance was approximately $ 3.1 million and $ 3.5 million, respectively.

As of December 31, 2023 and September 30, 2023, the balance was approximately $ 2.8 million and $ 2.9 million, respectively.

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 June 30, 2023 and September 30, 2022, the balance was approximately $ 2.2 million and $ 2.5 million, respectively.

As of December 31, 2023 and September 30, 2023, the balance was approximately $ 1.9 million and $ 2.0 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 June 30, 2023 and September 30, 2022, the balance was approximately $ 4.1 million and $ 4.8 million, respectively.

As of December 31, 2023 and September 30, 2023, the balance was approximately $ 3.6 million and $ 3.9 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 6.50 %.

As of June 30, 2023, the balance was approximately $ 5.4 million.

As of December 31, 2023 and September 30, 2023, the balance was approximately $ 5.1 million and $ 5.3 million.

Loan Covenant Compliance

As of June 30, 2023, the Company was in compliance with all covenants under its existing revolving and other loan agreements.

As of December 31, 2023, the Company was in compliance with all covenants under its existing revolving and other loan agreements.

Notes Payable-Related Parties

Long-term debt payable to related parties (see Note 16) as of June 30, 2023 and September 30, 2022 consisted of the following (in $000's):

June 30, 2023 September 30, 2022

Long-term debt payable to related parties (see Note 16) as of December 31, 2023 and September 30, 2023 consisted of the following (in $000's):

December 31, 2023 September 30, 2023

Isaac Capital Group, LLC, 12.5 % interest rate, matures May 2025

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Isaac Capital Group, LLC for Flooring Liquidators, 12 % interest rate, matures January 2028

Seller of Flooring Liquidators, 8.24 % interest rate, matures January 2028

Seller of Kinetic, 7 .% interest rate, matures September 2027

Total notes payable - related parties 11,000 11,000

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Total long-term portion, related parties $ 6,919 $ 6,914

Twelve months ending June 30,

Thereafter 42,000

Twelve months ending December 31,

Total future maturities of long-term debt, related parties $ 11,000

Related Party Seller Notes

Seller notes as of December 31, 2023 and September 30, 2023 consisted of the following (in $000’s):

2023 September 30,

Seller of Flooring Liquidators, 8.24 % interest rate, matures January 2028

$ 34,000 $ 34,000

Seller of PMW, 8.0 % interest rate, matures July 2028

Seller of Kinetic, 7.0 % interest rate, matures September 2027

Total Related party seller notes payable 39,500 39,500

Unamortized debt premium (discount) 172 ( 502 )

Net amount 39,672 38,998

Less current portion — —

Long-term portion of Related party seller notes payable $ 39,672 $ 38,998

Future maturities of seller notes at December 31, 2023 are as follows (in $000’s):

Twelve months ending December 31,

Total $ 39,672

Stockholders’ Equity

Series E Convertible Preferred Stock

As of June 30, 2023 and September 30, 2022, there were 47,840 shares of Series E Convertible Preferred Stock issued and outstanding, respectively.

As of December 31, 2023 and September 30, 2023, there were 47,840 shares of Series E Convertible Preferred Stock issued and outstanding, respectively.

Treasury Stock

As of June 30, 2023 and September 30, 2022, the Company had 659,961 and 620,971 shares of Treasury Stock, respectively.

During the nine months ended June 30, 2023 and 2022, respectively, the Company repurchased 38,990 and 79,828 shares of its common stock for approximately $ 988,000 and $ 2.5 million, respectively.

On June 13, 2023, Tony Isaac, a member of the Company's board of directors, and father of the Company's CEO, Jon Isaac, exercised stock options for which he received 9,904 shares of the Company's common stock.

On June 30, 2023, the Company repurchased Mr.

Isaac's 9,904 shares of the Company's common stock for $ 25.85 per share, the closing market price on June 28, 2023, or approximately $ 256,000 (see Note 16).

As of December 31, 2023 and September 30, 2023, the Company had 664,409 and 660,063 shares of Treasury Stock, respectively.

During the three months ended December 31, 2023 and 2022, the Company repurchased 4,346 and 24,710 shares of its common stock for approximately $ 106,532 and $ 622,000 , respectively.

During the three months ended December 31, 2023 and 2022, the average price paid per share was $ 24.51 and $ 25.16 , respectively.

Stock-Based Compensation

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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, 2022 and the nine months ended June 30, 2023:

The following table summarizes stock option activity for the fiscal year ended September 30, 2023 and the three months ended December 31, 2023:

Shares Weighted

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Outstanding at September 30, 2022 87,500 $ 18.81 0.78 $ 771

Exercisable at September 30, 2022 87,500 $ 18.81 0.78 $ 771

Outstanding at September 30, 2022 87,500 $ 18.81 0.78 $ 771

Granted 17,500 $ 35.00

Exercised ( 31,250 ) $ 14.64

Outstanding at June 30, 2023 73,750 $ 24.42 1.38 $ 762

Exercisable at June 30, 2023 73,750 $ 24.42 1.38 $ 762

The following table presents the number and weighted average fair value ("WAFV") of unvested restricted stock awards:

Series A Restricted Stock Awards WAFV

Outstanding at December 31, 2022 87,500 $ 18.81 0.52 $ 1,201

Exercisable at December 31, 2022 87,500 $ 18.81 0.52 $ 1,201

Outstanding at September 30, 2023 53,750 $ 21.51 1.54 $ 540

Granted 27,307 $ 36.62

Canceled — $ —

Non-vested at June 30, 2023 27,307 $ 36.62

The Company recognized compensation expense of approximately $ 287,000 and $ 0 during the three months ended June 30, 2023 and 2022, respectively, and approximately $ 396,000 and $ 37,000 during the nine months ended June 30, 2023 and 2022, respectively, 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 June 30, 2023, the Company had approximately $ 911,000 of unrecognized compensation expense associated with stock option awards and Restricted Stock Units outstanding.

Outstanding at December 31, 2023 53,750 $ 21.51 1.29 $ 450

Exercisable at December 31, 2023 53,750 $ 21.51 1.29 $ 450

The Company recognized compensation expense of approximately $ 50,000 and $ 0 during the three months ended December 31, 2023 and 2022, respectively, 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 December 31, 2023, the Company had no unrecognized compensation expense associated with stock option awards.

Earnings Per Share

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The following table presents the computation of basic and diluted net earnings per share (in $000's):

Three Months Ended June 30, Nine Months Ended June 30,

2023 2022 2023 2022

Net income $ 1,060 $ 3,472 $ 4,462 $ 25,376

Three Months Ended December 31,

Net (loss) income $ ( 682 ) $ 1,844

preferred stock dividends — —

Net income applicable to common stock $ 1,060 $ 3,472 $ 4,462 $ 25,376

Net (loss) income applicable to common stock $ ( 682 ) $ 1,844

Weighted average common shares outstanding 3,163,541 3,059,035

Basic earnings per share $ 0.33 $ 1.12 $ 1.43 $ 8.11

Net income applicable to common stock $ 1,060 $ 3,472 $ 4,462 $ 25,376

Basic (loss) earnings per share $ ( 0.22 ) $ 0.60

Net (loss) income applicable to common stock $ ( 682 ) $ 1,844

preferred stock dividends — —

Net income applicable for diluted earnings per share $ 1,060 $ 3,472 $ 4,462 $ 25,376

Net (loss) income applicable for diluted earnings per share $ ( 682 ) $ 1,844

Weighted average common shares outstanding 3,163,541 3,059,035

Options — 30,467

Series B Preferred Stock — — — —

Series B Preferred Stock Warrants — — — —

Series E Preferred Stock — 239

Assumed weighted average common shares outstanding 3,163,541 3,089,741

Diluted earnings per share $ 0.33 $ 1.11 $ 1.42 $ 8.01

There are 38,500 and 21,000 options to purchase shares of common stock that are anti-dilutive, and are not included in the three and nine months ended June 30, 2023 and 2022 diluted earnings per share computations, respectively.

Diluted (loss) earnings per share $ ( 0.22 ) $ 0.60

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 months ended December 31, 2023, as the Company recorded a net loss.

Had the Company calculated diluted EPS for the three months ended December 31, 2023, the total assumed weighted average common shares outstanding would have been 3,182,083 .

For the three months ended December 31, 2022, there were 17,000 options to purchase shares of common stock that were anti-dilutive, and not included in the diluted EPS computation.

Related Party Transactions

Transactions with Isaac Capital Group, LLC

As of June 30, 2023, Isaac Capital Group, LLC (“ICG”) beneficially owns 48.8 % of the Company’s issued and outstanding capital stock.

As of December 31, 2023, Isaac Capital Group, LLC (“ICG”) beneficially owns 48.9 % 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.

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ICG Term Loan

As of June 30, 2023, the Company was a party to a term loan with ICG in the amount of $ 2.0 million (the “ICG 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.

As of June 30, 2023 and September 30, 2022, the outstanding balance on this loan was $ 2.0 million.

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 December 31, 2023 and September 30, 2023, 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”).

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

On April 1, 2023, the Company entered into the First Amendment of the ICG Revolver that extended the maturity to April 8, 2024 and increased the interest rate to 12 % per annum.

As of June 30, 2023 and September 30, 2022, the outstanding balance on this note was $ 1.0 million and $ 0 , respectively.

On June 23, 2022, as approved by unanimous consent of the Board of Directors of the Company, 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 First Amendment of the ICG Revolver that extended the maturity date to April 8, 2024 and increased the interest rate from 10 % to 12 % per annum.

As of each of December 31, 2023 and September 30, 2023, the the ICG Revolver was $ 1.0 million.

ICG Flooring Liquidators Note

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The note is fully guaranteed by the Company.

As of June 30, 2023, the outstanding balance on this loan was $ 5.0 million.

Transaction with Tony Isaac

On June 30, 2023, the Company repurchased Mr.

Isaac's 9,904 shares of the Company's common stock for $ 25.85 per share, the closing market price on June 28, 2023, for approximately $ 256,000 (see Note 13).

As of December 31, 2023, the outstanding balance on this loan was $ 5.0 million.

Transactions with JanOne Inc.

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Customer Connexx LLC, formerly a subsidiary of 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 $ 55,000 and $ 52,000 in rent and other reimbursed expenses for three months ended June 30, 2023 and 2022 and $ 160,000 and $ 163,000 in rent and other reimbursed expenses for the nine months ended June 30, 2023 and 2022, respectively.

JanOne paid the Company $ 36,000 and $ 52,000 in rent and other reimbursed expenses for three months ended December 31, 2023 and 2022, respectively.

Purchase Agreement with ARCA Recycling

On April 5, 2022, the Company entered into a Purchasing Agreement with ARCA Recycling, Inc.

(“ARCA”), then a wholly-owned subsidiary of JanOne.

On April 5, 2022, the Company entered into a Purchasing Agreement with ARCA Recycling ("ARCA"), which was a wholly owned subsidiary of JanOne, Inc.

until March 2023.

Pursuant to the agreement, the Company agreed to purchase inventory from time to time for ARCA as set forth in submitted purchase orders.

The inventory is owned by the Company until ARCA installs it in customer's homes, and payment by ARCA to the Company is due upon ARCA's receipt of payment from the customer.

All purchases made by the Company must be paid back by ARCA in full, plus an additional five percent surcharge or broker-

The initial term of the Agreement was for one year , and automatically renews for successive one-year terms if not terminated by either party.

Due to significant doubt that the full balance due from ARCA will be paid, on May 24, 2023 the parties entered into a Promissory Note in the aggregate principal amount of $ 583,894 , which represented the principal balance due as of that date, payable by ARCA for the benefit of the Company, to repay the outstanding receivables balance (“ARCA Note”).

The ARCA Note bears interest at a rate of 10 % per annum with payments of $ 75,000 due each month beginning on June 1, 2023, until the promissory note is repaid in full, and accrues late fees if payments are delinquent.

The Company also recorded an allowance of approximately $ 300,000 against the amount due.

As of June 30, 2023, the amount due from ARCA was approximately $ 300,000 , net of the allowance recorded.

All purchases made by the Company shall be paid back by ARCA in full plus an additional five percent surcharge or broker-type fee.

As of December 31, 2023, the Company has a full allowance of approximately $ 690,000 recorded in the reserve for doubtful accounts for the amount due.

Transactions with Vintage Stock CEO

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Consequently, the Spriggs Promissory Note I will bear interest at a rate of 12 % per annum, and the maturity date was extended to July 31, 2024.

As of June 30, 2023 and September 30, 2022, the amount owed was $ 2.0 million.

As of December 31, 2023 and September 30, 2023, the amount owed was $ 2.0 million.

Spriggs Promissory Note II

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The Spriggs Loan II matures on July 31, 2024, and bears interest at a rate of 12 % per annum.

As of June 30, 2023, the amount owed was $ 1.0 million.

As of December 31, 2023 and September 30, 2023, the amount owed was $ 1.0 million.

Transactions with Spyglass Estate Planning, LLC

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The Company has evaluated each lease and determined the rental amounts to be at market rates.

Transactions with Flooring Liquidators CEO

Stephen Kellogg is the Chief Executive Officer of Flooring Liquidators, Inc., a wholly owned subsidiary of the Company.

Flooring Liquidators leases five properties from K2L Property Management, and one from Railroad Investments, each of which Mr.

Kellogg is a member.

Additionally, Flooring Liquidators leases two properties from Stephen Kellogg and Kimberly Hendrick as a couple, and properties from each of The Stephen Kellogg and Kimberly Hendrick Trust, The Stephen Kellogg Trust, and Mr.

Kellogg personally.

Hendrick is Mr.

Kellogg's spouse.

Sellers Notes

Note Payable to the Sellers of Kinetic

In connection with the purchase of Kinetic (see Note 3), on June 28, 2022, Precision Marshall entered into a seller financed loan in the amount of $ 3.0 million with the previous owners 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 payable quarterly in arrears.

The Sellers Subordinated Acquisition Note has a maturity date of September 27, 2027.

As of June 30, 2023, the remaining principal balance was $ 3.0 million.

As of December 31, 2023 and September 30, 2023, the remaining principal balance was $ 3.0 million.

Note Payable to the Seller of Flooring Liquidators

In connection with the purchase of Flooring Liquidators, on January 18, 2023, Flooring Affiliated Holdings, LLC (“Buyer”) entered into a seller financed mezzanine loan, which is fully guaranteed by the Company, in the amount of $ 34.0 million with the previous owners of Flooring Liquidators.

The Seller Subordinated Acquisition Note (“Sellers Note”) bears interest at 8.24 % per annum, with interest payable monthly in arrears beginning on January 18, 2024.

In connection with the purchase of Flooring Liquidators (see Note 3), on January 18, 2023, the Company entered into an employment agreement with the previous owner of Flooring Liquidators to serve as its Chief Executive Officer.

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, the Company entered into a seller financed mezzanine loan, which is fully guaranteed by the Company, in the amount of $ 34.0 million with the previous owners of Flooring Liquidators.

The Seller Subordinated Acquisition Note bears interest at 8.24 % per annum, with interest payable monthly in arrears beginning on January 18, 2024.

The Sellers Note has a maturity date of January 18, 2028.

The fair value assigned to the Sellers Note, as calculated by an independent third-party firm, was $ 31.7 million, or a discount of $ 2.3 million.

The $ 2.3 million discount is being accreted to interest expense, using

the effective interest rate method, as required by GAAP, over the term of the Sellers Note.

As of June 30, 2023, the carrying value of the Sellers Note was approximately $ 31.9 million.

The $ 2.3 million discount is being accreted to interest expense, using the effective interest rate method, as required by GAAP, over the term of the Sellers Note.

As of December 31, 2023 and September 30, 2023, the carrying value of the Sellers Note was approximately $ 34.2 million and $ 33.5 million, respectively.

Note Payable to the Seller of PMW

In connection with the purchase of PMW (see Note 3), on July 20, 2023, the Company entered into an consulting agreement with the previous owner of PMW to serve as part-time President and Chief Executive Officer .

The consulting agreement commenced on the Effective Date and 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 bear interest at 8.0 % per annum, with interest payable quarterly in arrears.

The seller financed loans have a maturity date of July 18, 2028.

As of December 31, 2023 and September 30, 2023, the carrying value of the seller financed loans was approximately $ 2.5 million.

Procedures for Approval of Related Party Transactions

In accordance with its charter, the Audit Committee reviews and determines whether to approve all related party transactions (as such term is defined for purposes of Item 404 of Regulation S-K).

The Audit Committee participated in the review and approval of the transactions described above.

The Audit Committee participated in the review, approval, or ratification of the transactions described above.

Commitments and Contingencies

SEC Investigation

On February 21, 2018, the Company received a subpoena from the Securities and Exchange Commission (“SEC”) and a letter from the SEC stating that it is conducting an investigation.

On February 21, 2018, the Company received a subpoena from the Securities and Exchange Commission (“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 Company’s previously-disclosed 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 has 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.

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.

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The parties participated in a mediation in June 2023.

The mediation was not successful and the case will now proceed through discovery.

The mediation was not successful and the case is currently in the midst of discovery.

Discovery deadlines have been extended because counsel for JanOne Inc.

and Virland Johnson moved to withdraw on August 18, 2023, which motion the court granted on October 2, 2023.

Since that time, JanOne Inc.

and Virland Johnson have obtained new counsel who have appeared in the case.

In light of the new counsel in this case, the Court approved a stipulated order to extend the discovery period approximately 45 days.

Fact discovery is now set to be completed by May 20, 2024.

The Company Defendants strongly dispute and deny the allegations and intend to continue to defend themselves vigorously against the claims.

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On August 13, 2021, Daniel E.

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").

Sieggreen, individually and on behalf of all others similarly situated claimants ("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.

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.

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Holdback Matter

On October 10, 2022, a representative for the former shareholders of Precision Marshall filed a civil complaint in the Court of Chancery of the State of Delaware.

The complaint alleges that the Company violated the terms of the Agreement and Plan of Merger dated July 14, 2020, by failing to pay the shareholders a certain indemnity holdback of $ 2,500,000 .

Plaintiff alleged that he effectuated service of the complaint on the Company, but the Company did not receive notification of the action until it received an Application for Default Judgment filed with the court on December 26, 2022.

On December 28, 2022, the Court issued a letter order questioning its jurisdiction over the matter and directed plaintiff’s counsel to submit briefing as to why it believes jurisdiction is proper.

Plaintiff filed its brief on January 13, 2023.

On April 13, 2023, the Court dismissed the action in its entirety for lack of jurisdiction, rendering the Application for Default Judgment moot.

On January 12, 2023, and after jurisdiction over the case was questioned by the Court of Chancery, State of Delaware, plaintiff filed a substantially identical complaint in the Western District of Pennsylvania.

After the Delaware action was dismissed, plaintiff requested that counsel waive service of the Pennsylvania complaint.

On April 19, 2023, the Company agreed to waive service.

The Company’s response to the Complaint was filed on August 7, 2023.

The Company intends to defend itself vigorously against these claims.

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 .

Several of the individual shareholders have moved to dismiss the counterclaim.

The Company expects discovery to last for approximately one year .

Wage and Hour Matter

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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.

A Motion for Change of Venue to Stanislaus County was filed by Elite Builders on December 7, 2022.

The hearing on the motion was heard on February 8, 2023 and the motion was granted.

The Company believes that Ms.

The Court has set this for a Case Management Conference on September 30, 2024 after the parties have had a chance to exchange discovery regarding the claims.

Elite Builders maintains that Ms.

Sanchez’s claims lack merit and intends to defend this action vigorously.

The Company is currently unable to estimate the range of possible losses associated with this proceeding since no discovery has commenced and the scope of class is not yet known.

Consumer Protection Act

On December 4, 2022, Sheila Thompson and Dennis Thompson filed a Complaint in the 21st Judicial Circuit Court of St.

Louis County, Missouri asserting putative class claims arising under the Telephone Consumer Protection Act, 47 U.S.C.

227, and related Missouri state law claims pertaining to purportedly unsolicited text message advertisements.

Vintage Stock, Inc.

(“Vintage”) was served on December 13, 2022.

On January 11, 2023, Vintage timely removed the case from the state court into federal court.

On February 8, 2023, Vintage filed a Motion to Dismiss and Motion to Strike Class Allegations.

On March 1, 2023, plaintiffs filed their First Amended Complaint that mooted the pending motion.

On March 15, 2023, Vintage moved to dismiss and/or strike the First Amended Complaint.

The motion is fully briefed and stands submitted to the Court for decision.

Vintage disputes the allegations and intends to defend itself vigorously against the claims in the First Amended Complaint.

As the case is still in the pleading stage, it is premature to estimate potential liability.

Salomon Whitney Settlement

Effective March 31, 2023, the Company entered into a settlement agreement in which the principals of Salomon Whitney, LLC agreed to pay the Company $ 1.0 million within 10 days of the effective date, and agreed to pay an additional $ 1.0 million within 45 days of the effective date if certain conditions of the settlement agreement were not met.

The Company recorded a receivable for the initial payment of $ 1.0 million on March 31, 2023, which it has recorded as other income in its condensed consolidated statements of income, and payment was received on April 17, 2023.

The Company received and recorded payment for the additional $ 1.0 million on May 16, 2023.

The Company is currently unable to estimate the range of possible losses associated with this proceeding as we are in the early stages of discovery and the scope of class is not yet known.

The Company is involved in various claims and lawsuits arising in the normal course of business.

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The following tables summarize segment information (in $000's):

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2023 2022 2023 2022

For the Three Months Ended December 31,

Retail-Entertainment $ 20,586 $ 23,273

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Corporate & Other 193 119

Total interest expenses $ 3,485 $ 674 $ 8,767 $ 2,549

Net income before provision for income taxes

Total interest expense $ 4,163 $ 2,047

Net (loss) income before provision for income taxes

Retail-Entertainment $ 3,055 $ 3,538

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Corporate & Other ( 1,152 ) ( 1,034 )

Total net income before provision for income taxes $ 1,357 $ 4,837 $ 5,924 $ 33,224

Total (loss) net income before provision for income taxes $ ( 906 ) $ 2,459

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 other than as discussed below:

Acquisition of Precision Metal Works

On July 20, 2023, the Company acquired Precision Metal Works, Inc.

(“PMW”), a Kentucky-based Metal Stamping and Value-Added Manufacturing Company.

PMW was acquired for total consideration of approximately $ 28 million, comprised of a $ 25 million purchase price, with additional consideration of up to $ 3 million paid in the form of an earn-out.

The purchase price was funded in part by a $ 2.5 million seller note, borrowings under a credit facility of $ 14.4 million, and proceeds under a sale-lease back transaction.

The acquisition involved no issuance of stock of the Company.

Management will assess the fair value of total consideration in accordance with Accounting Standards Codification 805, Business Combinations, in connection with the application of purchase accounting .

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