What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-14 · 328 added, 173 removed, 724 unchanged (41% of the section changed)

3 unchanged sentences

(dollars in thousands, except per-share amounts)

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Cash $ 4,711 $ 4,309

Trade receivables, net of allowance for doubtful accounts of $ 1.1 million at March 31, 2024 and $ 1.6 million at September 30, 2023

Trade receivables, net of allowance for doubtful accounts of $ 1.2 million at June 30, 2024 and $ 1.6 million at September 30, 2023

48,887 41,194

17 unchanged sentences

Current portion of notes payable related parties 5,400 4,000

Seller notes - related parties 2,500 —

Total current liabilities 130,031 97,821

9 unchanged sentences

Stockholders' equity:

Series E convertible preferred stock, $ 0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at March 31, 2024 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, 3,148,135 and 3,164,330 shares issued and outstanding at March 31, 2024 and September 30, 2023, respectively

Series E convertible preferred stock, $ 0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at June 30, 2024 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, 3,131,633 and 3,164,330 shares issued and outstanding at June 30, 2024 and September 30, 2023, respectively

Paid in capital 69,642 69,387

Treasury stock common 676,258 and 660,063 shares as of March 31, 2024 and September 30, 2023, respectively

Treasury stock common 694,414 and 660,063 shares as of June 30, 2024 and September 30, 2023, respectively

( 9,068 ) ( 8,206 )

Treasury stock Series E preferred 80,000 shares as of March 31, 2024 and September 30, 2023, respectively

Treasury stock Series E preferred 80,000 shares as of June 30, 2024 and September 30, 2023, respectively

Retained earnings 32,141 38,959

5 unchanged sentences

(dollars in thousands, except per-share amounts)

For the Three Months Ended March 31, For the Six Months Ended March 31,

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

2024 2023 2024 2023

6 unchanged sentences

Total operating expenses 35,914 26,608 105,005 70,641

Operating income (loss) ( 838 ) 4,952 2,703 9,519

Operating income 1,131 5,561 3,834 15,080

Other expense:

Interest expense, net ( 4,233 ) ( 3,485 ) ( 12,563 ) ( 8,767 )

Other Income 507 391 223 330

Salomon Whitney settlement — 1,000 — 2,000

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

Loss on disposition of Johnson ( 301 ) — ( 301 ) —

Other expense ( 420 ) ( 23 ) ( 197 ) ( 693 )

Total other expense, net ( 4,954 ) ( 4,204 ) ( 13,061 ) ( 9,156 )

12 unchanged sentences

(dollars in thousands)

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Operating Activities:

2 unchanged sentences

Depreciation and amortization 12,832 9,978

Gain on disposal of fixed assets — ( 7 )

Loss on disposal of fixed assets — 29

Amortization of seller note discount 2,048 —

2 unchanged sentences

Amortization of right-of-use assets 2,913 2,069

Change in reserve for uncollectible accounts ( 449 ) 350

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

Loss on disposition of Johnson 301 —

Change in allowance for doubtful accounts ( 396 ) 62

Change in reserve for obsolete inventory 2,065 1,030

13 unchanged sentences

Acquisition of Johnson ( 500 ) —

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

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

Acquisition of Midwest Grinding ( 1,000 ) —

Acquisition of Central Steel, net of cash acquired ( 10,474 ) —

Acquisition of Cal Coast Carpets — ( 1,300 )

Purchase of property and equipment ( 4,994 ) ( 3,499 )

2 unchanged sentences

Net borrowings under revolver loans 1,990 3,133

Net borrowings under related party revolver loans 1,300 —

Proceeds from issuance of notes payable 2,711 9,878

5 unchanged sentences

Payments on financing leases ( 2,497 ) ( 1,621 )

Cash paid for net settlement of stock option exercise ( 20 ) ( 29 )

Proceeds from failed sales and leaseback transaction 7,869 —

Payments on seller finance arrangements — ( 51 )

5 unchanged sentences

Interest paid $ 10,306 $ 7,443

Income taxes received, net $ 106 $ —

Income taxes paid, net $ — $ 102

1 unchanged sentence

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

Noncash stock options exercise $ 94 $ 327

PMW goodwill adjustment $ 233 $ —

Noncash items related to Central Steel acquisition $ 3,400 $ —

Noncash items related to CRO acquisition $ 725 $ —

2 unchanged sentences

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(dollars in thousands)

15 unchanged sentences

Balance, March 31, 2024 47,840 $ — 0 3,148,135 $ 2 $ 69,487 $ ( 7 ) $ ( 8,610 ) $ 34,996 $ — $ 95,868

Stock based compensation — — — — 175 — — — — 175

Stock options exercise — — 2 — — — — — — —

Taxes paid on net settlement of stock options exercised — — — — ( 20 ) — — — — ( 20 )

Purchase of common treasury stock — — ( 18 ) — — — ( 458 ) — — ( 458 )

Net loss — — — — — — — ( 2,855 ) — ( 2,855 )

Balance, June 30, 2024 47,840 $ — 3,131,633 $ 2 $ 69,642 $ ( 7 ) $ ( 9,068 ) $ 32,141 $ — $ 92,710

Preferred Stock Common Stock Series E

14 unchanged sentences

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 — — ( 13,606 ) — — — ( 350 ) — — ( 350 )

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

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

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

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

Balance, June 30, 2023 #REF!

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

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 SIX MONTHS ENDED MARCH 31, 2024 AND 2023

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 AND 2023

(dollars in thousands, except per-share amounts)

12 unchanged sentences

(“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.

(“Kinetic”), which is engaged in the production of industrial knives and hardened wear products for the tissue and metals industries, Precision Metal Works, Inc.

(“PMW”), which is engaged in metal forming, assembly, and finishing solutions across diverse industries, including appliance, automotive, hardware, electrical, electronic, medical products, and devices, and CSF Holdings, LLC (“Central Steel”), a Chicago-based manufacturer of specialized fabricated metal products primarily for data centers and the communications industry.

PMW reports on a 13-week quarter, as opposed to the Company's calendar quarter reporting.

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In the opinion of the Company’s management, this interim information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods.

The results of operations for the three and six months ended March 31, 2024 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.

The results of operations for the three and nine months ended June 30, 2024 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 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.

Securities and Exchange Commission (the “SEC”) on December 22, 2023 (the “2023 Form 10-K”).

3 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

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

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

3 unchanged sentences

Actual results could differ from those estimates.

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.

Significant estimates made in connection with the accompanying consolidated financial statements include the estimated reserve for doubtful current trade 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.

Revenue Recognition

The Company accounts for its sales revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”) .

Topic 606 provides a five-step revenue recognition model that is applied to the Company’s customer contracts.

Under this model we (i) identify the contract with the customer, (ii) identify our performance obligations in the contract, (iii) determine the transaction price for the contract, (iv) allocate the transaction price to our performance obligations and (v) recognize revenue when or as we satisfy our performance obligations.

Revenue is recognized upon transfer of control of the promised goods or the performance of the services to customers in an amount that reflects the consideration expected to be receive in exchange for those goods or services.

The Company enters into contracts that may include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations.

Retail - Entertainment Segment

The Retail-Entertainment Segment derives revenue primarily from direct sales of entertainment products.

Sales are generally of a cash-and-carry nature, and contain a single performance obligation.

Consequently, revenue is recorded at the point in time in which the sale is made.

Revenues are recorded net of sales taxes collected from customers.

Retail - Flooring Segment

The Retail-Flooring Segment derives revenue primarily from the sale of flooring products and installation services, which are recognized at the point-of-sale and over time, respectively.

Retail sales are generally of a cash-and-carry nature, and contain a single performance obligation.

Consequently, revenue is recorded at the point in time in which the sale is made.

Installation services generally contain multiple performance obligations requiring revenue to be recognized over a period of time based on percentage of completion.

All direct costs are either paid and or accrued for in the period in which the sale is recorded.

Revenues are recorded net of sales taxes collected from customers.

Flooring and Steel Manufacturing Segments

The Flooring Manufacturing Segment derives revenue primarily from the sale of carpet and hard surface flooring products, including shipping and handling amounts.

The Steel Manufacturing Segments derives revenue primarily from the sale of steel plates, ground flat stock and drill rods, fabricated products, and tooling, including shipping and handling amounts.

Revenue for these segments generally contain a single performance obligation and is recognized at the point title passes to the customer.

At the time revenue is recognized, the Company records a provision for the estimated amount of future returns based primarily on historical experience and any known trends or conditions that exist at the time revenue is recognized.

Revenues are recorded net of taxes collected from customers.

All direct costs are either paid and or accrued for in the period in which the sale is recorded.

For spare parts sales, the Company transfers control and recognizes a sale when it ships the product to the customer or when the customer receives product based upon agreed shipping terms.

Each unit sold is considered an independent, unbundled performance obligation.

The Company has no additional performance obligations other than spare parts sales that are material in the context of the contract.

The amount of consideration received and revenue recognized varies due to sales incentives and returns offered to customers.

When customers retain the right to return eligible products, the Company reduces revenue for the estimate of the expected returns, which is primarily based on an analysis of historical experience.

Recently Issued Accounting Pronouncements

1 unchanged sentence

Improvements to Reportable Segment Disclosures ("ASU 2023-07").

ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly

provided to the Chief Operating Decision Maker, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss.

ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the Chief Operating Decision Maker, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption.

7 unchanged sentences

The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

Acquisition of Midwest Grinding

On June 10, 2024, pursuant to an Asset Purchase Agreement, Kinetic acquired certain assets and assumed certain liabilities of Midwest Grinding, a Milwaukee grinding house dedicated to precision Blanchard and specialty surface grinding of small to extra-large capacity.

Total consideration for the acquisition was $ 600,000 .

In connection with the acquisition, Kinetic also acquired the building being used in the business for $ 400,000 .

Total consideration for both the business and building acquisition was $ 1.0 million, paid in cash at close.

The fair value of the assets acquired and liabilities assumed are based on their estimates of fair value available as of June 10, 2024, as calculated by management.

The table below outlines the purchase price allocation of the purchase for Midwest Grinding to the acquired identifiable assets and liabilities assumed as of June 30, 2024 (in $000’s):

Total purchase price $ 1,000

Accounts payable 1

Total consideration 1,001

Accounts receivable 152

Other current assets 71

Property and equipment 738

Intangible Assets

Customer relationships $ 16

Trade names 15

Non-compete agreement 9

Intangible assets 40

Total assets acquired 1,001

Total goodwill $ —

Acquisition of Central Steel

On May 15, 2024, Precision Marshall acquired Central Steel Fabricators (“Central Steel”), a Chicago-based manufacturer of specialized fabricated metal products primarily for data centers and the communications industry.

Total consideration for the acquisition was approximately $ 14.1 million, comprised of $ 10.7 million paid at closing, a seller note of $ 1.1 million, a holdback in the amount $ 300,000 , and contingent consideration of $ 2.0 million paid in the form of a five-year earn-out.

The consideration paid at close was funded in part by borrowings under Precision Marshall's credit facility of approximately $ 3.3 million, and proceeds from a sale and leaseback transaction, discussed below.

The acquisition involved no issuance of stock of the Company.

Simultaneous to the acquisition, the Company entered into a sales and leaseback transaction with Legacy West Partners, LLC, an unrelated party, for one of Central Steel's properties located in Broadview, Illinois.

The sales price for the real property subject to the sales and leaseback transaction was approximately $ 8.3 million, with total proceeds received by the Company of approximately $ 7.9 million, net of approximately $ 0.4 million in seller's fees.

The lease agreement includes a 20-year lease term with two five-year renewal options.

The base rent under the lease agreement is $ 58,795 per month for the first year of the term and a 2 % per annum escalator thereafter.

The lease agreement is a “net lease,” such that Central Steel is also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the real property incurred by Central Steel.

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

Consequently, because the aggregate term of the lease at its conclusion will represent approximately 75% of the

economic life of the building, the Company concluded that the lease is a financing transaction and a failed sale and leaseback transaction, as defined under ASC 842.

The proceeds, net of closing fees, from the sale and leaseback transaction were used to assist in funding the acquisition of Central Steel.

No gain was recognized as a result of the sale.

The fair value of the purchase price components was approximately $ 14.1 million, as detailed below (in $000's):

Purchase price $ 11,758

Fair value of contingent consideration 2,000

Net purchase price $ 14,058

Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $ 2.8 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed over the fair value of the identifiable assets acquired.

The Company anticipates all of the goodwill arising from the acquisition to be fully deductible for tax purposes.

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

Total purchase price $ 14,058

Accounts payable 464

Accrued liabilities 969

Total liabilities assumed 1,433

Total purchase price plus liabilities assumed 15,491

Accounts receivable 2,418

Inventory 2,425

Property and equipment 5,034

Intangible assets

Trade names 400

Customer relationships 900

Non-compete 825

Subtotal intangible assets 2,125

Other assets 476

Total assets acquired 12,662

Total goodwill $ 2,829

Acquisition of CRO

5 unchanged sentences

Purchase price $ 1,423

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.

Under the preliminary purchase price allocation, the Company recognized goodwill of $ 89,000 , which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets

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.

During the three months ended June 30, 2024, the Company recorded a noncash fair value adjustment related to the value of the additional consideration in the amount of approximately $ 336,000 .

The Company anticipates the $ 89,000 of goodwill arising from the acquisition to be fully deductible for tax purposes.

The table below outlines the purchase price allocation of the purchase for CRO to the acquired identifiable assets, liabilities assumed and goodwill as of March 31, 2024 (in $000’s):

The table below outlines the purchase price allocation of the purchase for CRO to the acquired identifiable assets, liabilities assumed and goodwill as of June 30, 2024 (in $000’s):

Total purchase price $ 1,423

5 unchanged sentences

Inventory 1,406

Property, plant and equipment 261

Property and equipment 261

Intangible assets 1,190

4 unchanged sentences

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 in the form of a seller note 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.

Total consideration for the acquisition was $ 2.0 million, comprised of cash at close of $ 500,000 , deferred consideration in the form of a seller note of $ 1.2 million, with additional consideration paid in the form of an earnout valued at approximately $ 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.

3 unchanged sentences

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 March 31, 2024 (in $000’s):

The table below outlines the purchase price allocation of the purchase for Johnson to the acquired identifiable assets and liabilities assumed as of June 30, 2024 (in $000’s):

Total purchase price $ 2,001

5 unchanged sentences

Inventory 1,127

Property, plant and equipment 157

Property and equipment 157

Intangible assets

5 unchanged sentences

Total goodwill $ —

On May 24, 2024, CRO entered into an asset purchase agreement with the original seller of Johnson under which the original seller agreed to purchase certain assets and assume certain obligations acquired by CRO under the original asset

purchase agreement.

Consequently, CRO recorded a loss on deconsolidation of Johnson’s assets and liabilities of approximately $ 301,000 , as detailed in the table below (in $000's):

Accounts payable and accrued liabilities $ 475

Seller note 1,230

Lease liabilities 2,703

Total deconsolidation of liabilities 4,715

Inventory 613

Property and equipment 206

ROU assets 2,692

Intangible assets

Customer relationships 1,224

Non-compete agreement 281

Subtotal intangible assets 1,505

Total deconsolidation of assets 5,016

Total loss on deconsolidation $ ( 301 )

Acquisition of Harris Flooring Group® Brands

36 unchanged sentences

Inventory 6,266

Property, plant and equipment 13,616

Property and equipment 13,616

Intangible assets 3,600

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

Property, plant and equipment $ 35

Property and equipment $ 35

Intangible assets

35 unchanged sentences

Inventory 19,402

Property, plant and equipment 4,643

Property and equipment 4,643

Intangible assets

6 unchanged sentences

Pro Forma Information

The table below presents selected proforma information for the Company for the three and six-month periods ended March 31, 2023, assuming that the acquisition had occurred on October 1, 2022 (the beginning of the Company’s 2023 fiscal year), pursuant to ASC 805-10-50 (in $000's).

The table below presents selected proforma information for the Company for the three and nine-month periods ended June 30, 2023, assuming that the acquisition had occurred on October 1, 2022 (the beginning of the Company’s 2023 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 March 31, 2023 Flooring Liquidators Unaudited Three Months Ended March 31, 2023 Adjustments (1)

Live for the Three Months Ended March 31, 2023

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

Live for the Three Months Ended June 30, 2023

Net revenue $ 91,516 $ 4,222 $ 95,738

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As Reported Adjustments Proforma

Live Unaudited Six Months Ended March 31, 2023 Flooring Liquidators Unaudited Six Months Ended March 31, 2023 Adjustments (1)

Live for the Six Months Ended March 31, 2023

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

Live for the Nine Months Ended June 30, 2023

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

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

The following table details the Company's inventory as of March 31, 2024 and September 30, 2023 (in $000's):

Inventory, net March 31, 2024 September 30, 2023

The following table details the Company's inventory as of June 30, 2024 and September 30, 2023 (in $000's):

Inventory, net June 30, 2024 September 30, 2023

Raw materials $ 29,451 $ 32,590

6 unchanged sentences

Property and Equipment

The following table details the Company's property and equipment as of March 31, 2024 and September 30, 2023 (in $000's):

March 31, 2024 September 30, 2023

The following table details the Company's property and equipment as of June 30, 2024 and September 30, 2023 (in $000's):

June 30, 2024 September 30, 2023

Property and equipment, net:

8 unchanged sentences

Total property and equipment, net $ 82,671 $ 80,703

Depreciation expense was $ 3.0 million and $ 2.7 million for the three months ended March 31, 2024 and 2023, respectively, and $ 6.1 million and $ 5.1 million for the six months ended March 31, 2024 and 2023, respectively.

Depreciation expense was $ 3.1 million and $ 2.7 million for the three months ended June 30, 2024 and 2023, respectively, and $ 9.2 million and $ 7.8 million for the nine months ended June 30, 2024 and 2023, respectively.

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

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The amounts recognized reflect the present value of remaining lease payments for all leases.

The discount rate

used is an estimate of the Company’s blended incremental borrowing rate based on information available associated with each subsidiary’s debt outstanding at lease commencement.

The discount rate used is an estimate of the Company’s blended incremental borrowing rate based on information available associated with

each subsidiary’s debt outstanding at lease commencement.

In considering the lease asset value, the Company considers fixed and variable payment terms, prepayments and options to extend, terminate or purchase.

Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.

The following table details the Company's right of use assets and lease liabilities as of March 31, 2024 and September 30, 2023 (in $000's):

March 31, 2024 September 30, 2023

The following table details the Company's right of use assets and lease liabilities as of June 30, 2024 and September 30, 2023 (in $000's):

June 30, 2024 September 30, 2023

Right of use asset - operating leases $ 59,687 $ 54,544

4 unchanged sentences

Long term - finance 40,950 32,942

As of March 31, 2024, the weighted average remaining lease term for operating leases is 10.0 years.

As of June 30, 2024, the weighted average remaining lease term for operating leases is 10.5 years.

The Company's weighted average discount rate for operating leases is 9.8 %.

Total cash payments for operating leases for the six months ended March 31, 2024 and 2023 were approximately $ 8.8 million and $ 3.9 million, respectively.

Additionally, the Company recognized approximately $ 17.4 million in right of use assets and liabilities upon commencement of operating leases during the six months ended March 31, 2024.

As of March 31, 2024, the weighted average remaining lease term for finance leases is 27.3 years.

Total cash payments for operating leases for the nine months ended June 30, 2024 and 2023 were approximately $ 13.8 million and $ 8.2 million, respectively.

Additionally, the Company recognized approximately $ 18.8 million in right of use assets and liabilities upon commencement of operating leases during the nine months ended June 30, 2024.

As of June 30, 2024, the weighted average remaining lease term for finance leases is 27.5 years.

The Company's weighted average discount rate for finance leases is 11.4 %.

Total cash payments for finance leases for the six months ended March 31, 2024 and 2023 were approximately $ 1.6 million and $ 1.1 million, respectively.

No finance right-of-use assets or liabilities were recognized during the six months ended March 31, 2024.

Total cash payments for finance leases for the nine months ended June 30, 2024 and 2023 were approximately $ 2.5 million and $ 1.6 million, respectively.

During the nine months ended June 30, 2024, the Company recognized finance right-of-use assets and liabilities of approximately $ 7.9 million.

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

The balance, as of March 31, 2024 and September 30, 2023 is as follows (in $000’s):

March 31, 2024 September 30, 2023

The balance, as of June 30, 2024 and September 30, 2023 is as follows (in $000’s):

June 30, 2024 September 30, 2023

Property and equipment, at cost $ 26,226 $ 22,526

1 unchanged sentence

Property and equipment, net $ 24,964 $ 21,824

Total present value of future lease payments of operating leases as of March 31, 2024 (in $000's):

Twelve months ended March 31,

Total present value of future lease payments of operating leases as of June 30, 2024 (in $000's):

Twelve months ended June 30,

2025 $ 18,189

2 unchanged sentences

Present value of payments $ 64,947

Total present value of future lease payments of finance leases as of March 31, 2024 (in $000's):

Twelve months ended March 31,

Total present value of future lease payments of finance leases as of June 30, 2024 (in $000's):

Twelve months ended June 30,

Thereafter 127,145

2 unchanged sentences

Present value of payments $ 41,297

During the six months ended March 31, 2024 and 2023, the Company recorded no impairment charges relating to any of its leases.

The following table details the Company's intangibles as of March 31, 2024 and September 30, 2023 (in $000's):

March 31, 2024 September 30, 2023

In connection with the disposition of certain of Johnson’s assets and liabilities (see Note 3), during the three months ended June 30, 2024, the Company derecognized right-of-use assets in the amount of approximately $ 2.7 million and lease liabilities in the amount of approximately $ 2.7 million.

During the nine months ended June 30, 2024 and 2023, the Company recorded no impairment charges relating to any of its leases.

The following table details the Company's intangibles as of June 30, 2024 and September 30, 2023 (in $000's):

June 30, 2024 September 30, 2023

Intangible assets, net:

5 unchanged sentences

Total intangibles, net $ 26,359 $ 26,568

Amortization expense was $ 1.2 million and $ 992,000 for the three months ended March 31, 2024 and 2023, respectively, and $ 2.4 million and $ 1.2 million for the six months ended March 31, 2024 and 2023, respectively.

Amortization expense was $ 1.2 million and approximately $ 1.0 million for the three months ended June 30, 2024 and 2023, respectively, and $ 3.7 million and $ 2.2 million for the nine months ended June 30, 2024 and 2023, respectively.

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

Twelve months ending March 31,

Twelve months ending June 30,

Thereafter 2,662

The following table details the Company's goodwill as of September 30, 2023 and March 31, 2024 (in $000's):

In connection with the disposition of Johnson’s assets and liabilities (see note 3), during the three months ended June 30, 2024, the Company derecognized customer relationships in the amount of approximately $ 1.2 million and other intangibles in the amount of approximately $ 0.3 million.

The following table details the Company's goodwill as of September 30, 2023 and June 30, 2024 (in $000's):

Retail - Entertainment Retail - Flooring Flooring Manufacturing Steel Manufacturing Total

1 unchanged sentence

CRO acquisition — 425 — — 425

Central Steel acquisition — — — 2,829 2,829

CRO adjustment — ( 336 ) — — ( 336 )

PMW adjustment — — — ( 652 ) ( 652 )

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

March 31, 2024 $ 36,947 $ 31,844 $ 807 $ 7,041 $ 76,639

During the six months ended March 31, 2024, the Company made fair value adjustments, in the amount of approximately ($ 652,000 ) related to the acquisition of PMW, $ 425,000 related to the CRO acquisition, and $ 1.0 million related to the acquisition of Flooring Liquidators (see Note 3).

As of March 31, 2024, the Company did not identify any triggering events that would require impairment testing.

June 30, 2024 $ 36,947 $ 31,508 $ 807 $ 9,870 $ 79,132

During the nine months ended June 30, 2024, the Company made fair value adjustments, in the amount of approximately $ 652,000 related to the acquisition of PMW, $ 336,000 related to the CRO acquisition, and $ 1.0 million related to the acquisition of Flooring Liquidators (see Note 3).

As of June 30, 2024, 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 March 31, 2024 and September 30, 2023 (in $000's):

March 31, 2024 September 30, 2023

The following table details the Company's accrued liabilities as of June 30, 2024 and September 30, 2023 (in $000's):

June 30, 2024 September 30, 2023

Accrued liabilities:

1 unchanged sentence

Accrued sales and use taxes 1,632 1,529

Accrued bank overdrafts 1,025 —

Accrued customer deposits 5,149 4,579

6 unchanged sentences

Long-Term Debt

Long-term debt as of March 31, 2024 and September 30, 2023 consisted of the following (in $000's):

March 31, 2024 September 30, 2023

Long-term debt as of June 30, 2024 and September 30, 2023 consisted of the following (in $000's):

June 30, 2024 September 30, 2023

Revolver loans $ 58,769 $ 56,779

7 unchanged sentences

Total long-term debt $ 59,887 $ 78,710

Future maturities of long-term debt at March 31, 2024, are as follows which does not include related party debt separately stated (in $000's):

Twelve months ending March 31,

Future maturities of long-term debt at June 30, 2024, are as follows which does not include related party debt separately stated (in $000's):

Twelve months ending June 30,

2025 $ 42,186

Thereafter 9,521

Total future maturities of long-term debt $ 102,073

5 unchanged sentences

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

As of March 31, 2024 and September 30, 2023, the outstanding balance was approximately $ 16.4 million and $ 6.1 million, respectively.

As of June 30, 2024 and September 30, 2023, the outstanding balance was approximately $ 13.7 million and $ 6.1 million, respectively.

Loan with Fifth Third Bank (Precision Marshall)

4 unchanged sentences

The facility terminates on January 20, 2027 , unless terminated earlier in accordance with its terms.

In connection with the acquisition of Kinetic, the existing revolving facility was amended to add Kinetic as a borrower.

In connection with the acquisitions of Kinetic and Central Steel, the existing revolving facility was amended to add Kinetic and Central Steel as borrowers.

In addition, two additional term loans were executed to fund the purchase of Kinetic.

2 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 March 31, 2024 and September 30, 2023, the outstanding balance on the revolving loan was approximately $ 25.0 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 $ 2.1 million and $ 2.3 million, respectively.

As of June 30, 2024 and September 30, 2023, the outstanding balance on the revolving loan was approximately $ 22.8 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 $ 2.0 million and $ 2.3 million, respectively.

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

As of March 31, 2024 and September 30, 2023, the outstanding balance on Kinetic Term Loan #1 was approximately $ 3.0 million and $ 3.3 million, respectively.

As of June 30, 2024 and September 30, 2023, the outstanding balance on Kinetic Term Loan #1 was approximately $ 2.9 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.

Additionally, during June 2024, in connection with Kinetic's acquisition of Midwest Grinding (see Note 3), Precision Marshall took an additional advance against its Capex term lending in the amount of approximately $ 403,000 .

The loan matures January 2027 and bears interest on the same terms as for Capex lending as stated above.

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

As of March 31, 2024 and September 30, 2023, the outstanding balance on the Capex loan was approximately $ 1.3 million and 1.4 million, respectively.

As of June 30, 2024 and September 30, 2023, the outstanding balance on the Capex loan was approximately $ 1.7 million and 1.4 million, respectively.

Eclipse Business Capital Loans

3 unchanged sentences

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.

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.

1 unchanged sentence

The credit facility matures in January 2026.

As of March 31, 2024 and September 30, 2023, the outstanding balance on the Eclipse Revolver was approximately $ 9.0 million and $ 8.2 million, respectively, and the outstanding balance on the Eclipse M&E loan was approximately $ 2.1 million and $ 2.4 million, respectively.

As of June 30, 2024 and September 30, 2023, the outstanding balance on the Eclipse Revolver was approximately $ 9.3 million and $ 8.2 million, respectively, and the outstanding balance on the Eclipse M&E loan was approximately $ 1.9 million and $ 2.4 million, respectively.

Loan with Fifth Third Bank (PMW)

8 unchanged sentences

The credit facility matures in July 2026.

As of March 31, 2024 and September 30, 2023, the outstanding balance on the Fifth-Third Revolver was approximately $ 10.8 million and $ 11.0 million, respectively, and the balance on the Fifth-Third M&E loan was approximately $ 4.4 million and $ 4.8 million, respectively.

As of June 30, 2024, the Company concluded that PMW was in default of its Fixed Cost Coverage Ratio (“FCCR”) covenant, as specified in the credit agreement governing the Revolving Credit Facility.

This default provides the creditor rights to accelerate and made immediately due the borrowings under the Revolving Credit Facility and Fifth Third M&E Loan.

As of the date of the filing of this 10-Q, Fifth Third Bank has not exercised these rights and management is actively working with Fifth Third Bank to resolve the default.

As such, as of June 30, 2024, PMW’s long-term debt balances, in the amount of approximately $ 15.1 million, have been reclassified to current liabilities.

As of June 30, 2024 and September 30, 2023, the outstanding balance on the Revolving Credit Facility was approximately $ 11.2 million and $ 11.0 million, respectively, and the balance on the Fifth Third M&E loan was approximately $ 4.3 million and $ 4.8 million, respectively.

Bank Midwest Revolver Loan

1 unchanged sentence

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 March 31, 2024, the outstanding balance on the Bank Midwest Revolver was approximately $ 3.4 million.

matures on October 17, 2024.

As of June 30, 2024, the outstanding balance on the Bank Midwest Revolver was approximately $ 1.7 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 March 31, 2024:

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

The Equipment Loan #3 matured in December 2023.

As of March 31, 2024 and September 30, 2023, the balance was $ 0 and $ 154,000 , respectively.

As of June 30, 2024 and September 30, 2023, the balance was $ 0 and $ 154,000 , respectively.

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

The Equipment Loan #4 matured in December 2023.

As of March 31, 2024 and September 30, 2023, the balance was $ 0 and $ 47,000 , respectively.

As of June 30, 2024 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 March 31, 2024 and September 30, 2023, the balance was approximately $ 485,000 and $ 799,000 , respectively.

As of June 30, 2024 and September 30, 2023, the balance was approximately $ 325,000 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 March 31, 2024 and September 30, 2023, the balance was approximately $ 237,000 and $ 317,000 , respectively.

As of June 30, 2024 and September 30, 2023, the balance was approximately $ 196,000 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 March 31, 2024 and September 30, 2023, the balance was approximately $ 2.6 million and $ 2.9 million, respectively.

As of June 30, 2024 and September 30, 2023, the balance was approximately $ 2.5 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 March 31, 2024 and September 30, 2023, the balance was approximately $ 1.8 million and $ 2.0 million, respectively.

As of June 30, 2024 and September 30, 2023, the balance was approximately $ 1.7 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 March 31, 2024 and September 30, 2023, the balance was approximately $ 3.4 million and $ 3.9 million, respectively.

As of June 30, 2024 and September 30, 2023, the balance was approximately $ 3.1 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 March 31, 2024 and September 30, 2023, the balance was approximately $ 5.0 million and $ 5.3 million.

As of June 30, 2024 and September 30, 2023, the balance was approximately $ 4.8 million and $ 5.3 million.

Loan Covenant Compliance

As of March 31, 2024, the Company was in compliance with all covenants under its existing revolving and other loan agreements.

As of June 30, 2024, the Company and its subsidiaries were in compliance with all covenants under their respective existing revolving and other loan agreements, with the exception of PMW which was in default under its Revolving Credit Facility and Fifth Third M&E Loan with Fifth Third Bank, as discussed above.

Notes Payable-Related Parties

Long-term debt payable to related parties (see Note 16) as of March 31, 2024 and September 30, 2023 consisted of the following (in $000's):

March 31, 2024 September 30, 2023

Long-term debt payable to related parties (see Note 16) as of June 30, 2024 and September 30, 2023 consisted of the following (in $000's):

June 30, 2024 September 30, 2023

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

9 unchanged sentences

Total long-term portion, related parties $ 5,929 $ 6,914

Twelve months ending March 31,

Twelve months ending June 30,

Total future maturities of long-term debt, related parties $ 11,329

Related Party Seller Notes

Seller notes as of March 31, 2024 and September 30, 2023 consisted of the following (in $000’s):

Seller notes as of June 30, 2024 and September 30, 2023 consisted of the following (in $000’s):

2024 September 30,

3 unchanged sentences

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

Seller of Central Steel, 8.0 % interest rate, matures May 2029

Total Related party seller notes payable 40,614 39,500

3 unchanged sentences

Long-term portion of Related party seller notes payable $ 39,661 $ 38,998

Future maturities of seller notes at March 31, 2024 are as follows (in $000’s):

Twelve months ending March 31,

Future maturities of seller notes at June 30, 2024 are as follows (in $000’s):

Twelve months ending June 30,

Total $ 42,161

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 Seller Subordinated Acquisition Note bears interest at 7.0 % per annum, with interest payable quarterly in arrears (the "Seller Subordinated Acquisition Note").

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

As of June 30, 2024 and September 30, 2023, the remaining principal balance was $ 3.0 million.

Flooring Liquidators

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 (the "Seller Note"), which is fully guaranteed by the Company, in the amount of $ 34.0 million with the previous owners of Flooring Liquidators.

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

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

The fair value assigned to the Selles 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 Seller Note.

As of June 30, 2024 and September 30, 2023, the carrying value of the Seller Note was approximately $ 35.4 million and $ 33.5 million, respectively.

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

The consulting agreement shall terminate upon the later of (i) Sellers’ receipt of earn-out payments in an aggregate amount equal to $ 3.0 million and (ii) the full satisfaction and payment of all amounts due and to that are to become due under the seller note, unless earlier terminated in accordance with the terms set forth in the consulting agreement .

Additionally, PMW entered into two seller financed loans, in the aggregate amount of $ 2.5 million, which are fully guaranteed by the Company (the "Seller Financed

The Seller Financed Loans bear interest at 8.0 % per annum, with interest payable quarterly in arrears.

The Seller Financed Loans stipulate that payment of the notes will be due and payable upon any event of default under the Revolving Credit Facility, and the Live Ventures Incorporated guarantee shall go into effect.

Consequently, as of June 30, 2024, the balances on the Seller Financed Loans, in the amount of $ 2.5 million in the aggregate, have been reclassified to current liabilities.

The Company is in the process of resolving the default with Fifth Third Bank.

The Seller Financed Loans have a maturity date of July 18, 2028.

As of June 30, 2024 and September 30, 2023, the carrying value of the seller financed loans was approximately $ 2.5 million.

Central Steel

In connection with the purchase of Central Steel, on May 15, 2024, Precision Marshall entered into an employment agreement with the previous owner of Central Steel to serve as its President.

The employment agreement is for an initial term of two years and shall be 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 $ 1.1 million with the previous owner of Central Steel (the "Sellers Subordinated Promissory Note").

The Sellers Subordinated Promissory Note bears interest at 8.0 % per annum, with interest payable quarterly in arrears.

The Sellers Subordinated Promissory Note has a maturity date of May 15, 2029.

As of June 30, 2024, the remaining principal balance was $ 1.1 million.

Stockholders’ Equity

Series E Convertible Preferred Stock

As of March 31, 2024 and September 30, 2023, there were 47,840 shares of Series E Convertible Preferred Stock issued and outstanding, respectively.

As of June 30, 2024 and September 30, 2023, there were 47,840 shares of Series E Convertible Preferred Stock issued and outstanding, respectively.

Treasury Stock

As of March 31, 2024 and September 30, 2023, the Company had 676,258 and 660,063 shares of Treasury Stock, respectively.

During the six months ended March 31, 2024 and 2023, the Company repurchased 16,195 and 25,384 shares of its common stock for approximately $ 404,000 and $ 639,000 , respectively.

During the six months ended March 31, 2024 and 2023, the average price paid per share was $ 24.99 and $ 25.16 , respectively.

As of June 30, 2024 and September 30, 2023, the Company had 694,414 and 660,063 shares of Treasury Stock, respectively.

During the nine months ended June 30, 2024 and 2023, the Company repurchased 34,351 and 38,990 shares of its common stock for approximately $ 862,000 and $ 988,000 , respectively.

During the nine months ended June 30, 2024 and 2023, the average price paid per share was $ 25.09 and $ 25.35 , respectively.

Stock-Based Compensation

4 unchanged sentences

The value of each award is amortized on a straight-line basis over the requisite service period.

The following table summarizes stock option activity for the fiscal year ended September 30, 2023 and the six months ended March 31, 2024:

The following table summarizes stock option activity for the fiscal year ended September 30, 2023 and the nine months ended June 30, 2024:

Shares Weighted

2 unchanged sentences

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

Outstanding at March 31, 2023 87,500 $ 18.81 0.85 $ 1,160

Exercisable at March 31, 2023 87,500 $ 18.81 0.85 $ 1,160

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

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

Outstanding at March 31, 2024 53,750 $ 21.51 1.04 $ 499

Exercisable at March 31, 2024 53,750 $ 21.51 1.04 $ 499

The Company recognized compensation expense of approximately $ 50,000 and $ 109,000 during the three months ended March 31, 2024 and 2023, respectively, and approximately $ 100,000 and $ 109,000 during the six months ended March 31, 2024 and 2023, 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 March 31, 2024, the Company had no unrecognized compensation expense associated with stock option awards.

Granted 17,500 $ 40.00

Exercised ( 6,250 ) $ 15.00

Forfeited ( 5,000 ) $ 40.00

Outstanding at June 30, 2024 60,000 $ 26.04 1.54 $ 317

Exercisable at June 30, 2024 60,000 $ 26.04 1.54 $ 317

The Company recognized compensation expense of approximately $ 175,000 and $ 287,000 during the three months ended June 30, 2024 and 2023, respectively, and approximately $ 275,000 and $ 396,000 during the nine months ended June 30, 2024 and 2023, 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, 2024, the Company had no unrecognized compensation expense associated with stock option awards.

Earnings Per Share

5 unchanged sentences

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

Three Months Ended March 31, Six Months Ended March 31,

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

2024 2023 2024 2023

14 unchanged sentences

Diluted EPS is computed by dividing net income by the sum of the weighted average number of shares of Common Stock outstanding and the effect of dilutive securities.

No diluted EPS computation was made for the three and six months ended March 31, 2024, as the Company recorded a net loss.

Had the Company calculated diluted EPS for the three and six months ended March 31, 2024, the total assumed weighted average common shares outstanding would have been 3,173,021 and 3,177,549 , respectively, and there would have been 22,500 options to purchase shares of common stock that were anti-dilutive.

For the three and six months ended March 31, 2023, there were 17,000 options to purchase shares of common stock that were anti-dilutive, and not included in the diluted EPS computation.

No diluted EPS computation was made for the three and nine months ended June 30, 2024, as the Company recorded a net loss.

Had the Company calculated diluted EPS for the three and nine months ended June 30, 2024, the total assumed weighted average common shares outstanding would have been 3,155,546 and 3,168,619 , respectively, and there would have been 35,000 options to purchase shares of common stock that were anti-dilutive.

For the three and nine months ended June 30, 2023, there were 38,500 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 March 31, 2024, Isaac Capital Group, LLC (“ICG”) beneficially owns 49.0 % of the Company’s issued and outstanding capital stock.

As of June 30, 2024, Isaac Capital Group, LLC (“ICG”) beneficially owns 49.3 % 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.

Isaac also personally owns 219,177 shares of common stock and holds options to purchase up to 25,000 shares of common stock at an exercise price of $ 10.00 per share, all of which are currently exercisable.

Isaac's options expire on January 15, 2025.

On January 13, 2023, the expiration date for Mr.

Isaac's options was extended from January 15, 2023 to January 15, 2025.

ICG Term Loan

During 2015, Marquis entered into a mezzanine loan in the amount of up to $ 7.0 million (the “ICF Loan”) with Isaac Capital Fund I, LLC (“ICF”), a private lender whose managing member is Jon Isaac.

On July 10, 2020, (i) ICF released and discharged Marquis from all obligations under the loan, (ii) ICF assigned all of its rights and obligations under the instruments, documents, and agreements with respect to the ICF Loan to ICG, of which Jon Isaac, the Company’s President and Chief Executive Officer, is the sole member, and (iii) Live Ventures borrowed $ 2.0 million (the “ICG Loan”) from ICG.

$ 2.0 million (the “ICG Loan”) from ICG.

The ICG Loan bears interest at 12.5 % and matures in May 2025.

As of March 31, 2024 and September 30, 2023, the outstanding balance on this note was $ 2.0 million.

As of June 30, 2024 and September 30, 2023, the outstanding balance on this note was $ 2.0 million.

ICG Revolving Promissory Note

4 unchanged sentences

On January 11, 2024, the Company entered into the Third Amendment of the ICG Revolver that extended the maturity date to April 8, 2025 and increased the amount of available revolving credit under the facility to $ 5.0 million.

As of March 31, 2024 and September 30, 2023, the outstanding balance on the ICG Revolver was $ 2.0 million and 1.0 million, respectively.

As of June 30, 2024 and September 30, 2023, the outstanding balance on the ICG Revolver was $ 2.3 million and 1.0 million, respectively.

ICG Flooring Liquidators Note

3 unchanged sentences

The note is fully guaranteed by the Company.

As of March 31, 2024, the outstanding balance on this loan was $ 5.0 million.

As of June 30, 2024 and September 30, 2023, the outstanding balance on this note was $ 5.0 million.

Transactions with JanOne Inc.

3 unchanged sentences

Customer Connexx LLC, formerly a subsidiary of JanOne, previously rented 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 $ 39,000 and $ 112,000 in rent and other reimbursed expenses for three months ended March 31, 2024 and 2023, respectively, and $ 75,000 and $ 256,000 for the six months ended March 31, 2024 and 2023, respectively.

JanOne paid the Company $ 35,000 and $ 55,000 in rent and other reimbursed expenses for three months ended June 30, 2024 and 2023, respectively, and $ 109,000 and $ 160,000 for the nine months ended June 30, 2024 and 2023, respectively.

Purchase Agreement with ARCA Recycling

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.

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

("ARCA"), which was a wholly owned subsidiary of JanOne 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.

1 unchanged sentence

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 March 31, 2024, the Company had a full allowance of approximately $ 690,000 recorded in the reserve for doubtful accounts for the amount due.

As of June 30, 2024, the Company had a full allowance of approximately $ 690,000 recorded in the reserve for doubtful accounts for the amount due.

On February 7, 2024, the Company converted outstanding receivables from JanOne and amounts due under the Purchase Agreement with ARCA Recycling into a promissory note with JanOne.

1 unchanged sentence

The NSA requires payment of 50 % of the amount due upon execution, and the balance due no later than three days following 60 days after the date of execution.

On March 11, 2024, the Company received payment of approximately $ 350,000 , which was recorded as other income, and recorded a receivable for the deferred payment, which was subsequently received.

On March 11, 2024, the Company received payment of approximately $ 350,000 , which was recorded as other income, and recorded a receivable for the deferred payment, which was subsequently received on April 29, 2024.

In connection with the execution of the NSA, the Company recognized a gain of approximately $ 0.6 million in the second quarter.

4 unchanged sentences

The Spriggs Loan I originally matured on July 10, 2022;

however, the maturity date was extended

to July 10, 2023, pursuant to unanimous written consent of the Board of Directors.

however, the maturity date was extended to July 10, 2023, pursuant to unanimous written consent of the Board of Directors.

The Spriggs Promissory Note I bears simple interest at a rate of 10.0 % per annum.

5 unchanged sentences

All monthly payments under the original Spriggs Promissory Note I remain in effect through the maturity date as amended.

As of March 31, 2024 and September 30, 2023, the principal amount owed was $ 1.4 million and $ 2.0 million, respectively.

As of June 30, 2024 and September 30, 2023, the principal amount owed was $ 1.1 million and $ 2.0 million, respectively.

Spriggs Promissory Note II

5 unchanged sentences

All monthly payments under the original Spriggs Loan II remain in effect through the maturity date as amended.

As of March 31, 2024 and September 30, 2023, the principal amount owed was $ 1.0 million.

As of June 30, 2024 and September 30, 2023, the principal amount owed was $ 1.0 million.

Transactions with Spyglass Estate Planning, LLC

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Stephen Kellogg is the Chief Executive Officer of Flooring Liquidators, 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.

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

Kellogg is a member.

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Kellogg's spouse.

Sellers Notes

Note Payable to the Sellers of Kinetic

In connection with the purchase of Kinetic, on June 28, 2022, Kinetic entered into an employment agreement with the previous owner of Kinetic to serve as its Head of Equipment Operations.

The employment agreement is for an initial term of five years and shall be automatically extended in 90-day increments unless either party provides notice as required under the agreement.

Additionally, Precision Marshall entered into a seller financed loan in the amount of $ 3.0 million with the previous owner of Kinetic.

The Sellers Subordinated Acquisition Note bears interest at 7.0 % per annum, with interest payable quarterly in arrears.

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

As of March 31, 2024 and September 30, 2023, the remaining principal balance was $ 3.0 million.

Note Payable to the Seller of Flooring Liquidators

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 March 31, 2024 and September 30, 2023, the carrying value of the Sellers Note was approximately $ 34.9 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 a 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 March 31, 2024 and September 30, 2023, the carrying value of the seller financed loans was approximately $ 2.5 million.

The Company routinely enters into related-party seller notes in conjunction with its acquisitions.

See Note 12 for the details related to existing seller notes.

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).

In accordance with its charter, the Audit Committee reviews and approves 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, approval, or ratification of the transactions described above.

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and Section 17(a) of the Securities Act of 1933.

SEC seeks permanent injunctions against the Company Defendants, permanent officer-and-director bars, disgorgement of profits, and civil penalties.

The SEC seeks permanent injunctions against the Company Defendants, permanent officer-and-director bars, disgorgement of profits, and civil penalties.

The foregoing is only a general summary of the SEC Complaint, which may be accessed on the SEC’s website at https://www.sec.gov/litigation/litreleases/2021/lr25155.htm.

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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.

In light of this, 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.

Fact discovery was completed on May 20, 2024.

The parties are currently engaged in expert discovery, which is set to conclude on August 26, 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.

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").

Sieggreen, individually and on behalf of all others similarly situated claimants (the "Plaintiff"), filed a class action complaint for violation of federal securities laws in the United States District Court for the District of Nevada, naming the Company, Jon Isaac, the Company's current President and Chief Executive Officer, and Virland Johnson, the Company's former Chief Financial Officer, as defendants (collectively, the "Company Defendants").

The allegations asserted are similar to those in the SEC Complaint.

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Discovery is automatically stayed in this case until after the disposition of the Motion to Dismiss.

The Motion to Dismiss is set for hearing on August 28, 2024.

If the Motion to Dismiss is not successful, the case will proceed to discovery.

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On April 10, 2024, the District Court dismissed the individual shareholders, leaving intact the company's misrepresentation claims against the shareholder representative.

The Court subsequently denied the shareholder representative's motion for leave to amend to assert statute of limitation defenses.

The Company expects discovery to last for approximately one year .

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On July 27, 2022, Irma Sanchez, a former employee of Elite Builder Services, Inc.

(“Elite Builders”), filed a class action complaint against Elite Builders in the Superior Court of California, County of Alameda.

(“Elite Builders”), filed a class action complaint against Elite Builders in the Superior Court of California, County of Alameda, which was transferred to Stanislaus County.

The complaint alleges that Elite Builders failed to pay all minimum and overtime wages, failed to provide lawful meal periods and rest breaks, failed to provide accurate itemized wage statements, and failed to pay all wages due upon separation as required by California law.

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Sanchez put the Labor & Workforce Development Agency on notice to exhaust administrative remedies and enable her to bring an additional claim under the California Labor Code Private Attorneys General Act, which permits an employee to assert a claim for violations of certain California Labor Code provisions on behalf of all aggrieved employees to recover statutory penalties.

The 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.

Elite Builders has received early round discovery from the plaintiff and plans to engage in further discovery to establish the extent, if any, of exposure.

The parties have also discussed attending mediation with the intent to minimize litigation costs.

The parties have agreed to participate in mediation on October 30, 2024, in an effort to minimize litigation costs and seek resolution.

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 March 31, For the Six Months Ended March 31,

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

2024 2023 2024 2023

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Corporate & Other 83 225 257 2,517

Total revenues $ 118,626 $ 91,122 $ 236,219 $ 160,108

Total revenue $ 123,878 $ 91,516 $ 360,097 $ 251,624

Retail-Entertainment $ 9,552 $ 9,845 $ 30,916 $ 32,606

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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