What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2025-02-07 · 214 added, 198 removed, 687 unchanged (37% of the section changed)

3 unchanged sentences

(dollars in thousands, except per-share amounts)

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Cash $ 6,931 $ 4,601

Trade receivables, net of allowance for doubtful accounts of $ 1.4 million at December 31, 2024 and $ 1.5 million at September 30, 2024

Trade receivables, net of allowance for doubtful accounts of $ 2.1 million at March 31, 2025 and $ 1.5 million at September 30, 2024

41,205 46,861

16 unchanged sentences

Current portion of notes payable related parties 10,070 6,400

Seller notes - related parties — 2,500

Current portion of seller notes - related parties — 2,500

Total current liabilities 124,992 129,659

4 unchanged sentences

Seller notes - related parties 18,143 40,361

Deferred tax liability, net 5,812 6,267

Deferred tax liability 10,607 6,267

Other non-current obligations 3,149 6,655

2 unchanged sentences

Stockholders' equity:

Series E convertible preferred stock, $ 0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at December 31, 2024 and September 30, 2024, with a liquidation preference of $ 0.30 per share outstanding

Common stock, $ 0.001 par value, 10,000,000 shares authorized, 3,115,674 and 3,131,360 shares issued and outstanding at December 31, 2024 and September 30, 2024, respectively

Series E convertible preferred stock, $ 0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at March 31, 2025 and September 30, 2024, with a liquidation preference of $ 0.30 per share outstanding

Common stock, $ 0.001 par value, 10,000,000 shares authorized, 3,084,351 and 3,131,360 shares issued and outstanding at March 31, 2025 and September 30, 2024, respectively

Paid in capital 69,792 69,692

Treasury stock common 710,373 and 694,687 shares as of December 31, 2024 and September 30, 2024, respectively

Treasury stock common 741,696 and 694,687 shares as of March 31, 2025 and September 30, 2024, respectively

( 9,488 ) ( 9,072 )

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

Treasury stock Series E preferred 80,000 shares as of March 31, 2025 and September 30, 2024

Retained earnings 28,632 12,274

5 unchanged sentences

(dollars in thousands, except per-share amounts)

For the Three Months Ended December 31,

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

2025 2024 2025 2024

Revenue $ 107,013 $ 118,626 $ 218,521 $ 236,219

5 unchanged sentences

Total operating expenses 33,056 36,305 67,656 69,091

Operating income 762 3,541

Operating income (loss) 2,092 ( 838 ) 2,854 2,703

Other expense:

2 unchanged sentences

Gain on settlement of earnout liability — — 2,840 —

Other income (expense) 420 ( 284 )

Total other expense, net ( 189 ) ( 4,447 )

Gain on modification of seller note 22,784 — 22,784 —

Other income 160 507 580 223

Total other income (expense), net 19,011 ( 3,660 ) 18,822 ( 8,107 )

Income (loss) before provision for income taxes 21,103 ( 4,498 ) 21,676 ( 5,404 )

Provision (benefit) for income taxes 81 ( 224 )

Provision for (benefit from) income taxes 5,237 ( 1,217 ) 5,318 ( 1,441 )

Net income (loss) $ 15,866 $ ( 3,281 ) $ 16,358 $ ( 3,963 )

Income (loss) per share:

Basic and diluted $ 0.16 $ ( 0.22 )

Basic $ 5.10 $ ( 1.04 ) $ 5.25 $ ( 1.25 )

Diluted $ 5.05 $ ( 1.04 ) $ 5.20 $ ( 1.25 )

Weighted average common shares outstanding:

5 unchanged sentences

(dollars in thousands)

For the Three Months Ended December 31,

For the Six Months Ended March 31,

Operating Activities:

2 unchanged sentences

Depreciation and amortization 8,816 8,483

Gain on extinguishment of debt ( 713 ) —

Amortization of seller note discount 1,048 1,355

Loss on disposal of fixed assets 339 —

Gain on settlement of earnout liability ( 2,840 ) —

Gain on modification of debt ( 22,784 ) —

Amortization of debt issuance cost 81 43

1 unchanged sentence

Amortization of right-of-use assets 2,087 2,008

Gain on extinguishment of debt ( 713 ) —

Gain on settlement of earnout liability ( 2,840 ) —

Change in deferred income taxes 4,340 ( 2,829 )

Change in allowance for doubtful accounts ( 110 ) ( 32 )

Change in reserve for uncollectible accounts 580 ( 449 )

Change in reserve for obsolete inventory ( 202 ) 1,557

2 unchanged sentences

Inventories 4,248 469

Income taxes payable/receivable ( 737 ) 1,438

Prepaid expenses and other current assets 371 791

2 unchanged sentences

Accrued liabilities ( 3,131 ) ( 1,709 )

Income taxes payable 535 1,547

Net cash provided by operating activities 9,631 2,131

5 unchanged sentences

Financing Activities:

Net payments under revolver loans ( 3,121 ) ( 756 )

Net borrowings under related party revolver loans 1,570 —

Payments on related party notes payable ( 300 ) —

Proceeds from the issuance of related party notes payable 1,932 —

Cash paid for settlement of seller notes ( 1,932 ) —

Net (payments) borrowings under revolver loans ( 1,348 ) 7,731

Proceeds from issuance of notes payable 496 227

Payments on notes payable ( 3,384 ) ( 3,359 )

Proceeds from issuance of related party notes payable 1,932 1,000

Payments on related party notes payable ( 600 ) ( 600 )

Net borrowings under related party revolver loans 4,270 —

Purchase of common treasury stock ( 416 ) ( 405 )

Payments on financing leases ( 2,005 ) ( 1,638 )

Net cash used in financing activities ( 4,777 ) ( 3,423 )

Increase in cash 2,806 1,260

Cash paid for settlement of seller notes ( 1,932 ) —

Net cash (used in) provided by financing activities ( 2,987 ) 2,956

Change in cash 2,330 180

Cash, beginning of period 4,601 4,309

2 unchanged sentences

Interest paid $ 6,903 $ 6,665

Income taxes received $ — $ 346

Income taxes received, net $ — $ 106

Income taxes paid, net $ 1,740 $ —

Noncash financing and investing activities:

2 unchanged sentences

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

Noncash debt discount on related party notes $ 713 $ —

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

11 unchanged sentences

Purchase of common treasury stock — — ( 15,686 ) — — — ( 157 ) — ( 157 )

Net loss — — — — — — — 492 492

Net income — — — — — — — 492 492

Balance, December 31, 2024 47,840 $ — 3,115,674 $ 2 $ 69,743 $ ( 7 ) $ ( 9,229 ) $ 12,766 $ 73,275

Stock based compensation — — — — 49 — — — 49

Purchase of common treasury stock — — ( 31,323 ) — — — ( 259 ) — ( 259 )

Net income — — — — — — — 15,866 15,866

Balance, March 31, 2025 47,840 $ — 3,084,351 $ 2 $ 69,792 $ ( 7 ) $ ( 9,488 ) $ 28,632 $ 88,931

Preferred Stock Common Stock Series E

9 unchanged sentences

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

Purchase of common treasury stock — — ( 11,849 ) — — — ( 298 ) — ( 298 )

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

Net loss — — — — — — — ( 3,281 ) ( 3,281 )

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

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2025 AND 2024

(dollars in thousands, except per-share amounts)

22 unchanged sentences

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

The results of operations for the three months ended December 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2025.

The results of operations for the three and six months ended March 31, 2025 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2025.

The financial information included in these statements should be read in conjunction with the condensed consolidated financial statements and related notes thereto as of September 30, 2024 and for the fiscal year then ended included in the Company’s Annual Report on Form 10-K, filed with the U.S.

32 unchanged sentences

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.

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

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

31 unchanged sentences

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 December 31, 2024 (in $000’s):

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

Total purchase price $ 1,000

32 unchanged sentences

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

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

The table below outlines the purchase price allocation for the purchase of Central Steel to the acquired identifiable assets, liabilities assumed, and goodwill as of March 31, 2025 (in $000’s):

Total purchase price $ 13,880

15 unchanged sentences

Acquisition of Johnson

On November 30, 2023, CRO Affiliated, LLC ("CRO Affiliated"), a subsidiary of Live Ventures, acquired certain assets and assumed certain liabilities of Johnson Floor & Home (“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.

On November 30, 2023, CRO Affiliated, LLC ("CRO Affiliated"), a subsidiary of Live Ventures, acquired certain assets and assumed certain liabilities of Johnson Floor & Home Carpet One (“Johnson”), a floor covering retailer and installer serving residential and commercial customers through four locations in the Tulsa, Oklahoma area, and one in Joplin, Missouri.

Total consideration for the acquisition was $ 2.0 million, comprised of cash at close of $ 0.5 million, deferred consideration in the form of a seller note of $ 1.2 million, with additional consideration paid in the form of an earnout valued at approximately $ 0.3 million.

5 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 and liabilities assumed as of December 31, 2024:

The table below outlines the purchase price allocation of the purchase for Johnson to the acquired identifiable assets and liabilities assumed:

Total purchase price $ 2,001

49 unchanged sentences

Inventory 1,406

Property and equipment 261

Property, plant and equipment 261

Intangible assets 1,190

Non-compete agreement 1,190

Subtotal intangible assets 1,190

Other assets 286

1 unchanged sentence

Total goodwill $ 89

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

Inventory, net December 31, 2024 September 30, 2024

The following table details the Company's inventory as of March 31, 2025 and September 30, 2024 (in $000's):

Inventory, net March 31, 2025 September 30, 2024

Raw materials $ 28,168 $ 31,994

6 unchanged sentences

Property and Equipment

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

December 31, 2024 September 30, 2024

The following table details the Company's property and equipment as of March 31, 2025 and September 30, 2024 (in $000's):

March 31, 2025 September 30, 2024

Property and equipment, net:

8 unchanged sentences

Total property and equipment, net $ 80,540 $ 82,869

Depreciation expense was $ 3.2 million and $ 3.1 million for the three months ended December 31, 2024 and 2023, respectively.

Depreciation expense was $ 3.1 million and $ 3.0 million for the three months ended March 31, 2025 and 2024, respectively, and $ 6.3 million and $ 6.1 million for the six months ended March 31, 2025 and 2024, respectively.

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.

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

December 31, 2024 September 30, 2024

The following table details the Company's right of use assets and lease liabilities as of March 31, 2025 and September 30, 2024 (in $000's):

March 31, 2025 September 30, 2024

Right of use asset - operating leases $ 53,547 $ 55,701

4 unchanged sentences

Long term - finance 42,236 41,677

As of December 31, 2024, the weighted average remaining lease term for operating leases is 9.8 years.

As of March 31, 2025, the weighted average remaining lease term for operating leases is 9.8 years.

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

Total cash payments for operating leases for the three months ended December 31, 2024 and 2023 were approximately $ 4.7 million and $ 4.3 million, respectively.

Additionally, the Company recognized approximately $ 3.2 million in right-of-use assets and liabilities upon commencement of operating leases during the three months ended December 31, 2024.

As of December 31, 2024, the weighted average remaining lease term for finance leases is 26.9 years.

The Company's weighted average discount rate for finance leases is 11.3 %.

Total cash payments for finance leases for the three months ended December 31, 2024 and 2023 were approximately $ 1.0 million and $ 0.8 million, respectively.

Additionally, the Company recognized approximately $ 0.6 million in right-of-use assets and liabilities upon commencement of operating leases during the three months ended December 31, 2024.

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

Twelve months ended December 31,

Total cash payments for operating leases for the six months ended March 31, 2025 and 2024 were approximately $ 9.4 million and $ 8.8 million, respectively.

Additionally, the Company recognized approximately $ 5.8 million in right of use assets and liabilities upon commencement of operating leases during the six months ended March 31, 2025.

Total present value of future lease payments of operating leases as of March 31, 2025 (in $000's):

Twelve months ended March 31,

2026 $ 17,885

2 unchanged sentences

Present value of payments $ 58,145

As of March 31, 2025, the weighted average remaining lease term for finance leases is 26.6 years.

The Company's weighted average discount rate for finance leases is 11.3 %.

Total cash payments for finance leases for the six months ended March 31, 2025 and 2024 were approximately $ 2.0 million and $ 1.6 million, respectively.

Additionally, the Company recognized approximately $ 0.6 million in right of use assets and liabilities upon commencement of finance leases during the six months ended March 31, 2025.

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

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

December 31, 2024 September 30, 2024

The balance, as of March 31, 2025 and September 30, 2024 is as follows (in $000’s):

March 31, 2025 September 30, 2024

Property and equipment, at cost $ 27,102 $ 26,495

1 unchanged sentence

Property and equipment, net $ 25,315 $ 24,833

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

Twelve months ended December 31,

Total present value of future lease payments of finance leases as of March 31, 2025 (in $000's):

Twelve months ended March 31,

Thereafter 123,956

2 unchanged sentences

Present value of payments $ 42,789

During the three months ended December 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 December 31, 2024 and September 30, 2024 (in $000's):

December 31, 2024 September 30, 2024

The following table details the Company's intangibles as of March 31, 2025 and September 30, 2024 (in $000's):

March 31, 2025 September 30, 2024

Intangible assets, net:

5 unchanged sentences

Total intangibles, net $ 22,591 $ 25,103

Amortization expense was $ 1.3 million and $ 1.2 million for the three months ended December 31, 2024 and 2023, respectively.

Amortization expense was $ 1.3 million and $ 1.2 million for the three months ended March 31, 2025 and 2024, respectively, and $ 2.5 million and $ 2.4 million for the six months ended March 31, 2025 and 2024, respectively.

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

Twelve months ending December 31,

Twelve months ending March 31,

Thereafter 284

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

The following table details the Company's goodwill as of September 30, 2024 and March 31, 2025 (in $000's):

Retail - Entertainment Retail - Flooring Flooring Manufacturing Steel Manufacturing Total

September 30, 2024 36,947 13,451 807 9,947 61,152

December 31, 2024 $ 36,947 $ 13,451 $ 807 $ 9,947 $ 61,152

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

March 31, 2025 $ 36,947 $ 13,451 $ 807 $ 9,947 $ 61,152

Accrued Liabilities

The following table details the Company's accrued liabilities as of December 31, 2024 and September 30, 2024, (in $000's):

December 31, 2024 September 30, 2024

The following table details the Company's accrued liabilities as of March 31, 2025 and September 30, 2024 (in $000's):

March 31, 2025 September 30, 2024

Accrued liabilities:

2 unchanged sentences

Accrued customer deposits 2,022 4,675

Accrued gift card liability 2,066 1,986

Accrued gift card and escheatment liability 464 1,986

Accrued interest payable 6,459 840

4 unchanged sentences

Long-Term Debt

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

December 31, 2024 September 30, 2024

Long-term debt as of March 31, 2025 and September 30, 2024 consisted of the following (in $000's):

March 31, 2025 September 30, 2024

Revolver loans $ 58,851 $ 60,199

7 unchanged sentences

Total long-term debt $ 53,687 $ 54,994

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

Twelve months ending December 31,

Future maturities of long-term debt at March 31, 2025, are as follows which does not include related party debt separately stated (in $000's):

Twelve months ending March 31,

2026 $ 41,423

4 unchanged sentences

The BofA Revolver is an asset-based facility that is secured by substantially all of Marquis’ assets.

Availability under the BofA Revolver is subject to a monthly

borrowing base calculation.

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

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

Marquis’ ability to borrow under the BofA Revolver is subject to the satisfaction of certain

conditions, including meeting all loan covenants under the credit agreement with BofA.

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

As of December 31, 2024 and September 30, 2024, the outstanding balance was approximately $ 16.0 million and $ 17.6 million, respectively.

As of March 31, 2025, the Company concluded that Marquis was in default of its Fixed Cost Coverage Ratio (“FCCR”) covenant, as specified in the credit agreement governing the BofA Revolver, which provides the creditor rights to accelerate and make immediately due the borrowings under the BofA Revolver.

Under the May 1, 2025 amendment to the BofA Revolver, Bank of America has issued a waiver with respect to Marquis’ default of its FCCR covenant.

As of March 31, 2025 and September 30, 2024, the outstanding balance was approximately $ 21.1 million and $ 17.6 million, respectively.

Loan with Fifth Third Bank (Precision Marshall)

4 unchanged sentences

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

In connection with the acquisitions of Kinetic and Central Steel (see Note 3), the existing revolving facility was amended to add Kinetic and Central Steel as a borrowers.

In connection with the acquisitions of Kinetic and Central Steel (see Note 3), the existing revolving facility was amended to add Kinetic and Central Steel as borrowers.

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

1 unchanged sentence

The $ 4.0 million term loan (“Kinetic Term Loan #1”), which matures on January 20, 2027, bears interest on the same terms as for M&E term lending as stated above.

As of December 31, 2024 and September 30, 2024, the outstanding balance on the revolving loan was approximately $ 22.3 million and $ 21.3 million, respectively, and the outstanding balance on the original M&E lending, which is documented as a term note, was approximately $ 1.7 million and $ 1.8 million, respectively.

As of March 31, 2025 and September 30, 2024, the outstanding balance on the revolving loan was approximately $ 21.7 million and $ 21.3 million, respectively, and the outstanding balance on the original M&E lending, which is documented as a term note, was approximately $ 1.6 million and $ 1.8 million, respectively.

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

As of December 31, 2024 and September 30, 2024, the outstanding balance on Kinetic Term Loan #1 was approximately $ 2.6 million and $ 2.7 million, respectively.

As of March 31, 2025 and September 30, 2024, the outstanding balance on Kinetic Term Loan #1 was approximately $ 2.4 million and $ 2.7 million, respectively.

On April 12, 2023, in connection with its existing credit facility with Fifth Third Bank, Precision Marshall took an advance against its Capex term lending in the amount of approximately $ 1.4 million.

Additionally, during June 2024, in connection with Kinetic's acquisition of Midwest Grinding (see Note 3), Precision Marshall took an additional advance against its Capex term lending in the amount of approximately $ 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 December 31, 2024 and September 30, 2024, the outstanding balance on the Capex loan was $ 1.5 million and $ 1.6 million, respectively.

As of March 31, 2025 and September 30, 2024, the outstanding balance on the Capex loan was $ 1.9 million and $ 1.6 million, respectively.

Eclipse Business Capital Loans

7 unchanged sentences

The credit facility matures in January 2026.

As of December 31, 2024 and September 30, 2024, the outstanding balance on the Eclipse Revolver was approximately $ 9.1 million and $ 9.3 million, respectively, and the outstanding balance on the Eclipse M&E loan was approximately $ 1.6 million and $ 1.8 million, respectively.

As of March 31, 2025 and September 30, 2024, the outstanding balance on the Eclipse Revolver was approximately $ 8.5 million and $ 9.3 million, respectively, and the outstanding balance on the Eclipse M&E loan was approximately $ 1.4 million and $ 1.8 million, respectively.

Loan with Fifth Third Bank (PMW)

In connection with the acquisition of PMW, on July 20, 2023, PMW entered into a revolving credit facility (the “Revolving Credit Facility”) with Fifth Third Bank.

In connection with the acquisition of PMW, on July 20, 2023, as amended on March 5, 2025, PMW entered into a revolving credit facility (the “Revolving Credit Facility”) with Fifth Third Bank.

The facility consists of $ 15.0 million in revolving credit (the “Fifth Third Revolver”) and approximately $ 5.0 million in M&E lending (the “Fifth Third M&E Loan”).

2 unchanged sentences

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.

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 Fifth Third M&E Loan or any capital expenditure term loan, it is 50 basis points ( 0.5 %).

The credit facility matures in July 2026.

As of December 31, 2024, the Company concluded that PMW was in default of its 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 December 31, 2024 and September 30, 2024, PMW’s long-term debt balances, in the amount of approximately $ 13.0 million and $ 14.4 million, respectively, have been reclassified to current liabilities.

As of December 31, 2024 and September 30, 2024, the outstanding balance on the Fifth Third Revolver was approximately $ 9.7 million and $ 10.1 million, respectively, and the balance on the Fifth Third M&E Loan was approximately $ 3.9 million and $ 4.1 million, respectively.

As of December 31, 2024, the Company concluded that PMW was in default of its FCCR covenant, as specified in the credit agreement governing the Revolving Credit Facility.

Under the March 5, 2025 amendment to the Revolving Credit Facility, Fifth Third Bank has issued a waiver with respect to PMW’s previous default of its FCCR covenant.

As of March 31, 2025 and September 30, 2024, the outstanding balance on the Fifth Third Revolver was approximately $ 7.5 million and $ 10.1 million, respectively, and the balance on the Fifth Third M&E Loan was approximately $ 3.7 million and $ 4.1 million, respectively.

Bank Midwest Revolver Loan

1 unchanged sentence

The amended Bank Midwest Revolver accrues interest daily on the outstanding principal at a rate of the greater of (a) the one-month forward-looking term rate based on SOFR, plus 2.36 % per annum, or (b) 5.0 % per annum, and matures on October 17, 2025.

As of December 31, 2024 and September 30, 2024 the outstanding on the Bank Midwest Revolver was approximately $ 0 and $ 1.9 million, respectively.

As of March 31, 2025 and September 30, 2024, the outstanding balance on the Bank Midwest Revolver was approximately $ 0 and $ 1.9 million, respectively.

Note payable to JCM Holdings

2 unchanged sentences

The loan bears interest at 6.0 %, due monthly, and matures January 2030.

As of December 31, 2024 and September 30, 2024, the outstanding principal balance was approximately $ 1.2 million and $ 1.3 million, respectively.

As of March 31, 2025 and September 30, 2024, the outstanding principal balance was approximately $ 1.2 million and $ 1.3 million, respectively.

Note Payable to Store Capital Acquisitions, LLC

1 unchanged sentence

The transaction included a sale-leaseback of land owned by Marquis and a loan secured by the improvements on such land.

The total aggregate proceeds received from the sale of the land and the loan was $ 10.0 million, which consisted of approximately $ 644,000 from the sale of the land and a note payable of approximately $ 9.4 million.

The total aggregate proceeds received from the sale of the land and the loan was $ 10.0 million, which consisted of approximately $ 0.6 million from the sale of the land and a note payable of approximately $ 9.4 million.

In connection with the transaction, Marquis entered into a lease with a 15 -year term commencing on the closing of the transaction, which provides Marquis with an option to extend the lease upon the expiration of its term.

6 unchanged sentences

In connection with the note payable, Marquis incurred approximately $ 458,000 in transaction costs that are being recognized as a debt issuance cost and are being amortized and recorded as interest expense over the term of the note payable.

The remaining principal balance was approximately $ 9.1 million as of December 31, 2024 and September 30, 2024, respectively.

The remaining principal balance was approximately $ 9.1 million as of March 31, 2025 and September 30, 2024, respectively.

Equipment Loans

On June 20, 2016 and August 5, 2016, Marquis entered into a transaction that provided for a master agreement and separate loan schedules (the “Equipment Loans”) with Banc of America Leasing & Capital, LLC that provided for the following as of December 31, 2024:

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 December 31, 2024 and September 30, 2024, the balance was approximately $ 0 and $ 164,000 , respectively.

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

As of March 31, 2025 and September 30, 2024, the balance was approximately $ 0 and $ 164,000 , respectively.

Note #7 is for $ 5.0 million, secured by equipment.

3 unchanged sentences

The Equipment Loan #8 is due September 2027, payable in 84 monthly payments of $ 46,000 beginning October 2020, bearing interest at 4.0 %.

As of December 31, 2024 and September 30, 2024, the balance was approximately $ 1.4 million and $ 1.6 million, respectively.

As of December 31, 2024 and March 31, 2025, the balance was approximately $ 1.3 million and $ 1.6 million, respectively.

In December 2021, Marquis funded the acquisition of $ 5.5 million of new equipment under Note #9 of its master agreement.

The Equipment Loan #9, which is secured by the equipment, matures December 2026, and is payable in 60 monthly payments of $ 92,000 beginning January 2022, with the final payment in the amount of approximately $ 642,000 , bearing interest at 3.75 % per annum.

As of December 31, 2024 and September 30, 2024, the balance was approximately $ 2.6 million and $ 2.9 million, respectively.

As of March 31, 2025 and September 30, 2024, the balance was approximately $ 2.4 million and $ 2.9 million, respectively.

In December 2022, Marquis funded the acquisition of $ 5.7 million of new equipment under Note #10 of its master agreement.

The Equipment Loan #10, which is secured by the equipment, matures December 2029, and is payable in 84 monthly payments of $ 79,000 , beginning January 2023, with the final payment in the amount of approximately $ 650,000 , bearing interest at 6.5 %.

As of December 31, 2024 and September 30, 2024, the balance was approximately $ 4.5 million and $ 4.6 million, respectively.

As of March 31, 2025 and September 30, 2024, the balance was approximately $ 4.3 million and $ 4.6 million, respectively.

Loan Covenant Compliance

As of December 31, 2024, the Company was in compliance with all covenants under its 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.

As of March 31, 2025, 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 December 31, 2024 and September 30, 2024 consisted of the following (in $000's):

December 31, 2024 September 30, 2024

Long-term debt payable to related parties (see Note 16) as of March 31, 2025 and September 30, 2024 consisted of the following (in $000's):

March 31, 2025 September 30, 2024

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

6 unchanged sentences

Total notes payable - related parties 17,715 11,400

unamortized debt discount ( 773 ) ( 66 )

unamortized debt issuance costs ( 751 ) ( 66 )

Net amount 16,964 11,334

1 unchanged sentence

Total long-term portion, related parties $ 6,894 $ 4,934

Future maturities of notes to related parties at December 31, 2024 are as follows (in $000’s):

Twelve months ending December 31,

Future maturities of related party notes at March 31, 2025 are as follows (in $000’s):

Twelve months ending March 31,

2026 $ 10,070

Total future maturities of long-term debt, related parties $ 16,964

Related Party Seller Notes

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

Seller notes as of March 31, 2025 and September 30, 2024 consisted of the following (in $000’s):

2025 September 30,

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

$ 34,000 $ 34,000

Related Party Seller Notes

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

1 unchanged sentence

Seller of Central Steel, 7.0 % interest rate, matures May 2029

Total Related party seller notes payable 38,100 40,600

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

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

Total Related Party Seller Notes 19,100 40,600

Unamortized debt premium (discount) ( 957 ) 2,261

1 unchanged sentence

Less current portion — ( 2,500 )

Long-term portion of Related party seller notes payable $ 41,119 $ 40,361

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

Twelve months ending December 31,

Long-term portion of seller notes payable $ 18,143 $ 40,361

Future maturities of seller notes at March 31, 2025 are as follows (in $000’s):

Twelve months ending March 31,

Total $ 18,143

Note Payable to the Seller 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 "Seller Subordinated Acquisition Note").

The Seller Subordinated Acquisition Note bears interest at 7.0 % per annum, with interest payable quarterly in arrears, and has a maturity date of September 27, 2027.

As of December 31, 2024 and September 30, 2024, 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, 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 the contractual rate of 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 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 U.S.

GAAP, over the term of the Seller Note.

As of December 31, 2024 and September 30, 2024, the carrying value of the Seller Note was approximately $ 37.0 million and $ 36.3 million, respectively.

Notes Payable to the Sellers of PMW

Note Payable to the Seller of PMW

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

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

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

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

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

As of September 30, 2024, the Company concluded that PMW was in default of its FCCR covenant, as specified in the credit agreement governing the Revolving Credit Facility, and the balances on the Seller Financed Loans, in the amount of $ 2.5 million in the aggregate, were classified as current liabilities (see Note 10).

On December 24, 2024, the Company entered into a Settlement Agreement and Release (“Settlement Agreement”) to settle the Seller Financed Loans of $ 2.5 million, plus accrued interest of approximately $ 0.1 million, for approximately $ 1.9 million with the previous owners of PMW.

4 unchanged sentences

Consequently, the Company recorded a gain on settlement of the earnout liability in the amount of approximately $ 2.8 million.

As of December 31, 2024 and September 30, 2024, the carrying value of the seller financed loans was approximately $ 0 million and $ 2.5 million, respectively.

As of March 31, 2025 and September 30, 2024, the carrying value of the seller financed loans was $ 0 and $ 2.5 million, respectively.

Note Payable to the Sellers of Kinetic

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

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

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

The Sellers Subordinated Acquisition Note bears interest at 7.0 % per annum, with interest

payable quarterly in arrears.

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

As of March 31, 2025 and September 30, 2024, the remaining principal balance was $ 3.0 million.

Note Payable to the Seller of Central Steel

4 unchanged sentences

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

As of December 31, 2024 and September 30, 2024, the remaining principal balance was $ 1.1 million.

As of March 31, 2025 and September 30, 2024, the remaining principal balance was $ 1.1 million.

Note Payable to the Seller of Flooring Liquidators

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

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

Additionally, Flooring Affiliated Holdings, LLC, a Company subsidiary, entered into a seller financed mezzanine loan (the "Seller Note"), which was fully guaranteed by the Company, in the amount of $ 34.0 million with the previous owners of Flooring Liquidators.

The Seller Note bore interest at the contractual rate of 8.24 % per annum, with interest payable monthly in arrears beginning on January 18, 2024.

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

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

On February 25, 2025, Flooring Liquidators, Flooring Affiliated Holdings, and the Company entered into a binding Memorandum of Understanding (“MOU”) with the previous owner of Flooring Liquidators under which the principal amount of the Seller Note was reduced from $ 34.0 million to $ 15.0 million.

The relevant portion of the MOU was later superseded by a Second Amendment to Secured Promissory Note (the “Second Seller Note Amendment”).The Seller Note bears interest at 8.24 % per annum effective January 1, 2025, and matures in February 2028, with interest payments due monthly beginning February 28, 2025.

The Company determined that the fair value of the amended Seller Note was approximately $ 14.0 million, or a discount of $ 1.0 million.

In an event of default under the Seller Note, or if the Company defaults in making any payment it is required to make pursuant to the Seller Note, the note holders may revoke the principal reduction, in which case the aggregate outstanding principal balance of the Seller Note will increase by $ 19 million to $ 34.0 million.

In addition to the reduction in the principal amount of the Seller Note, the MOU provides for the following:

• An increase in the existing holdback principal amount of approximately $ 0.5 million, to $ 1.5 million, and that no further claims against the holdback shall be made or permitted.

Under the MOU, the holdback bears interest at 8.24 % per annum effective January 1, 2025, with interest payments due monthly beginning February 28, 2025.

Full payment of the holdback principal is due in August 2025.

• The previous owner’s title was revised to be Founder and Vice President, his employment was made part-time, and he resigned from each other office and as director or manager of Flooring Liquidators and each of its related entities.

The Company evaluated this transaction under ASC 470-50 “Debt - Modification and Extinguishment”, and concluded that, because the change in present value of cash flows between the original and revised debt exceeds 10%, and the debt revision does not meet the accounting requirements for troubled debt restructuring, this transaction should be accounted for as a debt extinguishment.

In connection with the debt extinguishment and the increase in the holdback principal amount, the Company recorded a gain of approximately $ 22.8 million.

As of March 31, 2025 and September 30, 2024, the carrying value of the Seller Note was approximately $ 14.0 million and $ 36.3 million, respectively

Stockholders’ Equity

Series E Convertible Preferred Stock

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

As of March 31, 2025 and September 30, 2024, there were 47,840 shares of Series E Convertible Preferred Stock issued and outstanding, respectively.

Treasury Stock

As of December 31, 2024 and September 30, 2024, the Company had 710,373 and 694,687 shares of Treasury Stock, respectively.

During the three months ended December 31, 2024 and 2023, the Company repurchased 15,686 and 4,346 shares of its common stock for approximately $ 157,000 and $ 107,000 , respectively.

During the three months ended December 31, 2024 and 2023, the average price paid per share was $ 10.01 and $ 24.51 , respectively.

As of March 31, 2025 and September 30, 2024, the Company had 741,696 and 694,687 shares of Treasury Stock, respectively.

During the six months ended March 31, 2025 and 2024, the Company repurchased 47,009 and 16,195 shares of its common stock for approximately $ 416,315 and $ 404,000 , respectively.

During the six months ended March 31, 2025 and 2024, the average price paid per share was $ 8.86 and $ 24.99 , respectively.

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, 2024 and the three months ended December 31, 2024:

The following table summarizes stock option activity for the fiscal year ended September 30, 2024 and the six months ended March 31, 2025:

Shares Weighted

2 unchanged sentences

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

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

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

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

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

Outstanding at September 30, 2024 60,000 $ 26.04 1.29 $ 130

Forfeited ( 60,000 ) $ 26.04

Outstanding at December 31, 2024 25,000 $ 10.00 0.04 $ —

Exercisable at December 31, 2024 25,000 $ 10.00 0.04 $ —

The Company recognized compensation expense of approximately $ 51,000 and $ 50,000 during the three months ended December 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 December 31, 2024, the Company had no unrecognized compensation expense associated with stock option awards.

Outstanding at March 31, 2025 0 $ — 0.00 $ —

Exercisable at March 31, 2025 0 $ — 0.00 $ —

The Company recognized compensation expense of approximately $ 49,000 and $ 50,000 during the three months ended March 31, 2025 and 2024, respectively, and approximately $ 100,000 during the six months ended March 31, 2025 and 2024, related to stock option awards and restricted stock awards granted to certain employees and officers based on the grant date fair value of the awards, and the revaluation for existing options whereby the expiration date was extended.

As of March 31, 2025, the Company had approximately $ 0.6 million of unrecognized compensation expense associated with restricted stock awards.

Earnings Per Share

2 unchanged sentences

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

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

Potential common shares consist of the additional

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

Preferred stock dividends are subtracted from net earnings to determine the amount available to common stockholders.

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

Three Months Ended December 31,

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

2025 2024 2025 2024

Net income (loss) $ 15,866 $ ( 3,281 ) $ 16,358 $ ( 3,963 )

3 unchanged sentences

Weighted average common shares outstanding 3,109,362 3,154,771 3,113,864 3,159,180

Restricted Stock Units 29,110 — 29,110 —

Series E Preferred Stock 239 — 239 —

3 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 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 , and there would have been 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 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.

Related Party Transactions

Transactions with Isaac Capital Group, LLC

As of December 31, 2024, ICG beneficially owns 49.5 % of the Company’s issued and outstanding capital stock.

As of March 31, 2025, ICG beneficially owns 50.5 % of the Company’s issued and outstanding capital stock.

Jon Isaac, the Company's President and Chief Executive Officer, is the President and sole member of ICG, and, accordingly, has sole voting and dispositive power with respect to these shares.

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.

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

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

Isaac also personally owns 217,177 shares of common stock.

ICG Term Loan

2 unchanged sentences

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

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

As of March 31, 2025 and September 30, 2024, the outstanding balance on this note was $ 2.0 million.

ICG Revolving Promissory Note

On April 9, 2020, the Company, as borrower, entered into an unsecured revolving line of credit promissory note whereby ICG agreed to provide the Company with a $ 1.0 million revolving credit facility (the “ICG Revolver”).

On June 23, 2022, 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.

On June 23, 2022, the amount of available revolving credit under the facility was increased to $ 6.0 million.

No other terms of the Note were changed.

On April 1, 2023, the Company entered into the 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, and decreased the amount of available revolving credit under the facility to $ 1.0 million.

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

As of December 31, 2024 and September 30, 2024, the outstanding balance on the ICG Revolver was $ 4.2 million and $ 2.6 million, respectively.

On April 1, 2023, the Company entered into the Second Amendment of the ICG Revolver that extended the maturity date to April 8, 2024, increased the interest rate from 10 % to 12 % per annum, and decreased the amount of available revolving credit under the facility to $ 1.0 million.

On January 11, 2024, the Company entered into the Third Amendment of the ICG Revolver that extended the maturity date to

April 8, 2025 and increased the amount of available revolving credit under the facility to $ 5.0 million.

The ICG Revolver has been amended during the third quarter of 2025 to, among other items, increase the available revolving credit under the facility to $ 12.0 million.

As of March 31, 2025 and September 30, 2024, the outstanding balance on the ICG Revolver was $ 6.9 million and 2.6 million, respectively.

ICG Flooring Liquidators Note

On January 18, 2023, in connection with the acquisition of Flooring Liquidators, Flooring Affiliated Holdings, LLC, a wholly-owned subsidiary of the Company, as borrower, entered into a promissory note for the benefit of ICG in the amount of $ 5.0 million (“ICG Flooring Liquidators Loan”).

The ICG Flooring Liquidators Loan matures on January 18, 2028, and bears interest at 12 % per annum.

The ICG Flooring Liquidators Loan matures on January 18, 2028, and bears interest at 12 %.

Interest is payable in arrears on the last day of each calendar month.

The note is fully guaranteed by the Company.

As of December 31, 2024, the outstanding balance on this note was $ 5.0 million.

On December 14, 2024, in connection with the Settlement Agreement of the PMW Seller Financed Loans (see Note 12), the Company, as borrower, entered into a promissory note for the benefit of ICG in the amount of approximately $ 2.6 million (“ICG PMW Note”).

As of March 31, 2025, the outstanding balance on this loan was $ 5.0 million.

On Dec 14, 2024, in connection with the Settlement Agreement of the PMW Seller Financed Loans (see Note 12), the Company, as borrower, entered into a promissory note for the benefit of ICG in the amount of approximately $ 2.6 million (“ICG PMW Note”).

The Company received proceeds of approximately $ 1.9 million from ICG, which was used to settle the loans plus accrued interest.

The $ 700,000 discount is being accreted to interest expense using the effective interest rate method, as required by U.S.

The $ 0.7 million discount is being accreted to interest expense using the effective interest rate method, as required by U.S.

GAAP, over the term of the note.

The ICG PMW Note matures on December 17, 2029, and bears interest at the contractual rate of 12 % per annum.

The ICG PMW Note matures on Dec 17, 2029, and bears interest at the contractual rate of 12.0 % per annum.

Interest is payable in arrears on the first business day of each month commencing on January 2, 2025.

As of December 31, 2024, the balance on this loan was approximately $ 2.6 million.

As of March 31, 2025, the balance on this loan was approximately $ 2.6 million.

Transactions with Vintage Stock CEO

3 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.

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 December 31, 2024 and September 30, 2024, the principal amount owed was $ 0.5 million and $ 0.8 million, respectively.

As of March 31, 2025 and September 30, 2024, the principal amount owed was $ 0.2 million and $ 0.8 million, respectively.

Spriggs Promissory Note II

5 unchanged sentences

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

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

As of March 31, 2025 and September 30, 2024, the principal amount owed was $ 1.0 million.

Transactions with ALT5 Sigma Corporation, formerly JanOne Inc.

Tony Isaac, a member of the Company's board of directors, and father of the Company's CEO, Jon Isaac, is the President and a director of ALT5 Sigma Corporation (“ALT5”), formerly JanOne Inc.

Tony Isaac, a member of the Company's board of directors, and father of the Company's Chief Executive Officer, Jon Isaac, is the President and a director of ALT5 Sigma Corporation (“ALT5”), formerly JanOne Inc.

Richard Butler, a member of the Company's board of directors, is a director of ALT5.

1 unchanged sentence

Customer Connexx LLC, formerly a subsidiary of ALT5, previously rented approximately 9,900 square feet of office space from the Company at its Las Vegas office, which totals 16,500 square feet.

ALT5 paid the Company $ 27,000 and $ 36,000 in rent and other reimbursed expenses for three months ended December 31, 2024 and 2023, respectively.

ALT5 paid the Company $ 30,000 and $ 39,000 in rent and other reimbursed expenses for three months ended March 31, 2025 and 2024, respectively, and $ 58,000 and $ 75,000 for the six months ended March 31, 2025 and 2024, respectively.

Transactions with Spyglass Estate Planning, LLC

5 unchanged sentences

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, a wholly owned subsidiary of the Company.

Flooring Liquidators and Elite Builder Services, Inc., collectively, lease four properties from K2L Property Management, LLC, and two from Railroad Investments, LLC, each of which Mr.

Kellogg is a member.

Additionally, Flooring Liquidators leases two properties from Stephen Kellogg and Kimberly Hendrick as a couple, one property from The Stephen J.

Kellogg Revocable Trust and Kimberly M Kellogg Revocable Trust, collectively, and one property from The Stephen J.

Kellogg Revocable Trust.

Hendrick is Mr.

Kellogg's former spouse.

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

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

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

11 unchanged sentences

On August 2, 2021, the SEC filed a civil Complaint in the United States District Court for the District of Nevada naming the Company and two of its executive officers – Jon Isaac, the Company’s current President and Chief Executive Officer, and Virland Johnson, the Company’s former Chief Financial Officer, as defendants (collectively, the “Company Defendants”) as well as certain other related third parties (the “SEC Complaint”).

The SEC Complaint alleges various financial, disclosure, and reporting violations related to income and earnings per share data, purported undisclosed stock promotion and trading, purported inaccurate disclosure regarding beneficial ownership of common stock, and undisclosed executive compensation from 2016 through 2018.

executive compensation from 2016 through 2018.

The violations are brought under Section 10(b) of the Exchange Act and Rule 10b-5;

12 unchanged sentences

The parties completed expert discovery in September 2024 and filed cross Motions for Summary Judgment in October 2024.

The parties are currently preparing oppositions to the respective motions.

We expect it will take a number of months for the court to rule on the motions, during which time much of the activity in the case will be on pause.

8 unchanged sentences

On May 5, 2023, the Company Defendants filed a Motion to Dismiss the Amended Complaint.

The Motion to Dismiss was heard on September 30, 2024.

The Court granted the Motion with Leave to Amend.

The Second Amended Complaint was recently filed.

We are currently evaluating our response thereto which may result in another Motion to Dismiss being filed.

The Motion to Dismiss was heard and granted with Leave to Amend on September 30, 2024.

The Second Amended Complaint was filed on October 31, 2024.

We filed a Motion to Dismiss the Second Amended Complaint on December 16, 2024 and the briefing is complete.

We do not know when the motion will be heard.

Holdback Matter

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

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 .

3 unchanged sentences

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

The Court recently denied plaintiff’s Motion for Leave to Amend to assert statute of limitations defenses.

Discovery is ongoing and is expected to last six months .

The Court recently denied the plaintiff's Motion for Leave to Amend to assert statute of limitations defenses.

While discovery is ongoing, the Company is optimistic that a settlement will be reached.

Wage and Hour Matter

5 unchanged sentences

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

However, the mediation was postponed and the parties a working on setting a new mediation date and anticipate it will occur in April 2025.

However, the mediation was postponed and is now set for June 2025.

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

10 unchanged sentences

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

For the Three Months Ended December 31,

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

2025 2024 2025 2024

Retail-Entertainment $ 18,467 $ 16,842 $ 39,740 $ 37,428

3 unchanged sentences

Corporate & Other 6 84 63 174

Total revenue $ 111,508 $ 117,593

Total revenues $ 107,013 $ 118,626 $ 218,521 $ 236,219

Retail-Entertainment $ 10,907 $ 9,836 $ 22,951 $ 21,364

10 unchanged sentences

Corporate & Other ( 1,344 ) ( 2,449 ) ( 2,899 ) ( 4,113 )

Total operating income $ 762 $ 3,541

Total operating income (loss) $ 2,092 $ ( 838 ) $ 2,854 $ 2,703

Depreciation and amortization

12 unchanged sentences

Total interest expense $ 3,933 $ 4,167 $ 8,095 $ 8,330

Net (loss) income before provision for income taxes

Net income (loss) before provision for income taxes

Retail-Entertainment $ 2,859 $ 1,845 $ 6,377 $ 4,954

7 unchanged sentences

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