What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-08 · 102 added, 91 removed, 256 unchanged (43% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the three and six months ended March 31, 2025, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (the “2024 Form 10-K”).

For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the three and nine months ended June 30, 2025, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (the “2024 Form 10-K”).

Note about Forward-Looking Statements

This Quarterly Report on Form 10-Q includes statements that constitute “forward-looking statements.” These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “intends,” “plans,” “expects,” or “anticipates,” and do not reflect historical facts.

Specific forward-looking statements contained in this portion of the Annual Report include, but are not limited to:

Specific forward-looking statements contained in this portion of the Quarterly Report include, but are not limited to:

(i) statements that are based on current projections and expectations about the markets in which we operate, (ii) statements about current projections and expectations of general economic conditions, (iii) statements about specific industry projections and expectations of economic activity, (iv) statements relating to our future operations, prospects, results, and performance, (v) statements that the cash on hand and additional cash generated from operations together with potential sources of cash through issuance of debt or equity will provide the Company with sufficient liquidity for the next 12 months, and (vi) statements that the outcome of pending legal proceedings will not have a material adverse effect on business, financial position and results of operations, cash flow or liquidity.

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Our principal offices are located at 325 E.

Warm Springs Road, Suite 102, Las Vegas, Nevada 89119, our telephone number is (702) 939-0231, and our corporate website (which does not form part of this Quarterly Report Form 10-Q) is located at www.liveventures.com.

Warm Springs Road, Suite 102, Las Vegas, Nevada 89119, our telephone number is (702) 939-0231, and our corporate website (which does not form part of this Quarterly Report on Form 10-Q) is located at www.liveventures.com.

Our common stock trades on the Nasdaq Capital Market under the symbol “LIVE”.

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Adjusted EBITDA

We evaluate the performance of our operations based on financial measures such as “Adjusted EBITDA”, which is a non-GAAP financial measure.

We evaluate the performance of our operations based on financial measures such as “Adjusted EBITDA”, which is a non-U.S.

GAAP financial measure.

We define Adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization, stock-based compensation, and other non-cash or nonrecurring charges.

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Adjusted EBITDA is also a measure that is customarily used by financial analysts to evaluate a company's financial performance, subject to certain adjustments.

Adjusted EBITDA does not represent cash flows from operations, as defined by GAAP, and should not be construed as an alternative to net income or loss and is indicative neither of our results of operations, nor of cash flows available to fund all our cash needs.

Adjusted EBITDA does not represent cash flows from operations, as defined by U.S.

GAAP, and should not be construed as an alternative to net income or loss and is not indicative of our results of operations, or of cash flows available to fund all our cash needs.

It is, however, a measurement that the Company believes is useful to investors in analyzing its operating performance.

Accordingly, Adjusted EBITDA should be considered in addition to, but not as a substitute for, net income, cash flow provided by operating activities, and other measures of financial performance prepared in accordance with GAAP.

As companies often define non-GAAP financial measures differently, Adjusted EBITDA, as calculated by the Company, should not be compared to any similarly titled measures reported by other companies.

Results of Operations Three Months Ended March 31, 2025 and 2024

The following table sets forth certain statement of income items and as a percentage of revenue, for the three months ended March 31, 2025 and 2024 (in $000’s):

As companies often define non-U.S.

GAAP financial measures differently, Adjusted EBITDA, as calculated by the Company, should not be compared to any similarly titled measures reported by other companies.

Results of Operations Three Months Ended June 30, 2025 and 2024

The following table sets forth certain statement of income items and as a percentage of revenue, for the three months ended June 30, 2025 and 2024 (in $000’s):

Three Months Ended

March 31, 2025 Three Months Ended

March 31, 2024

June 30, 2025 Three Months Ended

June 30, 2024

Revenue % of Total

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The following table sets forth revenue by segment (in $000’s):

For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2025 For the Three Months Ended June 30, 2024

Retail-Entertainment $ 19,017 16.9 % $ 16,503 13.3 %

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The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):

For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2025 For the Three Months Ended June 30, 2024

Profit % of Total Revenue Gross

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Total Gross Profit $ 38,287 34.0 % $ 37,045 29.9 %

Revenue decreased approximately $11.6 million, or 9.8%, to approximately $107.0 million for the quarter ended March 31, 2025, compared to revenue of approximately $118.6 million in the prior year period.

The decrease is attributable to the Retail-Flooring, Flooring Manufacturing, and Steel Manufacturing segments, which decreased by approximately $13.2 million in the aggregate.

Gross profit was 32.8% for three months ended March 31, 2025 as compared to 29.9% for the three months ended March 31, 2024.

The increase was primarily attributable to increased margins in our Steel Manufacturing segment primarily due to improved efficiencies, as well as the acquisition of Central Steel during May 2024, which has historically generated higher margins.

Revenue decreased approximately $11.3 million, or 9.2%, to approximately $112.5 million for the quarter ended June 30, 2025, compared to approximately $123.9 million in the prior-year period.

The decrease is primarily attributable to the Retail-Flooring and Steel Manufacturing segments, which decreased by approximately $12.0 million.

Gross profit was 34.0% for the three months ended June 30, 2025 as compared to 29.9% for the three months ended June 30, 2024.

The increase was primarily driven by higher margins in our Steel Manufacturing segment, reflecting improved efficiencies and the May 2024 acquisition of Central Steel, which has historically generated stronger margins.

Additionally, our Flooring Manufacturing segment contributed to the increase through improved efficiencies and a more favorable product mix.

General and Administrative Expense

General and Administrative expenses decreased by 5% to approximately $28.3 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The decrease is primarily due to targeted cost reduction initiatives at Flooring Liquidators.

General and Administrative expenses decreased by 12.6% to approximately $26.3 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

The decrease is primarily due to targeted cost reduction initiatives in our Retail-Flooring segment.

Sales and Marketing Expense

Sales and marketing expense decreased by 27% to approximately $4.7 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to reduced sales and marketing activities at Flooring Liquidators.

Sales and marketing expense decreased by 31.5% to approximately $4.0 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to reduced sales and marketing activities in our Retail-Flooring and Flooring Manufacturing segments.

Interest Expense, net

Interest expense, net, decreased by approximately 5.6% to approximately $3.9 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 due to lower average debt balances.

Results of Operations Six Months Ended March 31, 2025 and 2024

The following table sets forth certain statement of income items and as a percentage of revenue, for the six months ended March 31, 2025 and 2024 (in $000’s):

For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024

Interest expense, net, decreased by approximately 9.0% to approximately $3.9 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024 due to lower average debt balances.

Results of Operations Nine Months Ended June 30, 2025 and 2024

The following table sets forth certain statement of income items and as a percentage of revenue, for the nine months ended June 30, 2025 and 2024 (in $000’s):

For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024

Revenue % of Total

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The following table sets forth revenue by segment (in $000’s):

For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024

For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024

Total Revenue Net

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The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):

For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024

For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024

Profit % of Total Revenue Gross

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Total Gross Profit $ 108,797 32.9 % 0.328641206339809 $ 108,839 30.2 %

Revenue decreased approximately $17.7 million, or 7.5%, to approximately $218.5 million for the six months ended March 31, 2025, compared to revenue of approximately $236.2 million in the prior year period.

The decrease is attributable to the Flooring Manufacturing, Retail-Flooring, and Steel Manufacturing segments, which decreased by approximately $20.0 million in the aggregate.

Gross profit was 32.3% for six months ended March 31, 2025 as compared to 30.4% for the six months ended March 31, 2024.

Revenue decreased approximately $29.0 million, or 8.1%, to approximately $331.1 million for the nine months ended June 30, 2025, compared to revenue of approximately $360.1 million in the prior-year period.

The decrease is attributable to the Flooring Manufacturing, Retail-Flooring, and Steel Manufacturing segments, which decreased by approximately $33.7 million in the aggregate, partially offset by an increase of approximately $4.8 million in the Retail-Entertainment segment.

Gross profit was 32.9% for nine months ended June 30, 2025 as compared to 30.2% for the nine months ended June 30, 2024.

General and Administrative Expense

General and administrative expense remained generally consistent at approximately $58.4 million and $57.5 million for the six months ended March 31, 2025 and 2024, respectively.

General and Administrative expenses decreased by 3.3% to approximately $84.7 million for the nine months ended June 30, 2025 and 2024, respectively.

The decrease is primarily due to targeted cost reduction initiatives in our Retail-Flooring segment.

Sales and Marketing Expense

Sales and marketing expense decreased by 20.1% to approximately $9.3 million for the six months ended March 31, 2025, as compared to the six months ended March 31, 2024, primarily due to reduced sales and marketing activities at Flooring Liquidators.

Sales and marketing expense decreased by 23.9% to approximately $13.3 million for the nine months ended June 30, 2025, as compared to the nine months ended June 30, 2024, primarily due to reduced sales and marketing activities in our Retail-Flooring and Flooring Manufacturing segments.

Interest Expense, net

Interest expense, net, remained generally consistent at approximately $8.1 million and $8.3 million for the six months ended March 31, 2025 and 2024, respectively.

Results of Operations by Segment for the Three Months Ended March 31, 2025 and 2024

For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024

Interest expense, net, decreased by approximately 4.9% to approximately $11.9 million for the nine months ended June 30, 2025 and 2024, respectively, due to lower average debt balances.

Results of Operations by Segment for the Three Months Ended June 30, 2025 and 2024

For the Three Months Ended June 30, 2025 For the Three Months Ended June 30, 2024

Retail-Entertainment Retail-Flooring Flooring

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Retail-Entertainment Segment

Retail-Entertainment segment revenue for the quarter ended March 31, 2025 was approximately $18.5 million, an increase of approximately $1.6 million, or 9.6%, compared to prior year period revenue of approximately $16.8 million.

Revenue increased primarily due to increased consumer demand for new products.

The increase in the sales of new products with higher margins contributed to the increase in gross margin to 59.1% for the quarter ended March 31, 2025, compared to 58.4% for the prior year period.

Operating income for the quarter ended March 31, 2025 was approximately $2.5 million, compared to operating income of approximately $1.8 million for the prior year period.

The Retail-Entertainment segment revenue for the quarter ended June 30, 2025, was approximately $19.0 million, an increase of approximately $2.5 million, or 15.2%, compared to approximately $16.5 million in the prior-year period.

Revenue increased primarily due to changes in product mix toward new products, which typically have higher selling prices.

The increase in the sales of new products with lower margins contributed to a slight decrease in gross margin to 57.5% for the quarter ended June 30, 2025, compared to 57.9% for the prior-year period.

Operating income for the quarter ended June 30, 2025, was approximately $2.3 million, compared to approximately $1.3 million in the prior-year period.

Retail-Flooring Segment

The Retail-Flooring segment revenue for the quarter ended March 31, 2025, was approximately $27.4 million, a decrease of approximately $4.6 million, or 14.5%, compared to the prior year period revenue of approximately $32.0 million.

The decrease in revenue was primarily attributable to the disposition of certain Johnson Floor & Home Carpet One stores in May 2024.

Gross margin for the quarter ended March 31, 2025 was 34.4%, compared to 36.5% for the prior year period.

The decrease in gross margin was primarily driven by a change in product mix.

Operating loss for the quarter ended March 31, 2025 was approximately $2.7 million, compared to an operating loss of approximately $3.0 million for the prior year period.

The Retail-Flooring segment revenue for the quarter ended June 30, 2025, was approximately $30.4 million, a decrease of approximately $6.6 million, or 17.9%, compared to approximately $37.0 million in the prior-year period.

The decrease in revenue was primarily attributable to the disposition of certain Johnson stores in May 2024, as well as decreased demand due to broader economic conditions.

Gross margin for the quarter ended June 30, 2025, was 35.5%, compared to 36.6% for the prior-year period.

The decrease in gross margin was primarily driven by a change in the product mix.

Operating loss for the quarter ended June 30, 2025, was approximately $0.7 million, compared to an operating loss of approximately $1.5 million in the prior-year period.

The decrease in operating loss is attributable to lower general and administrative expenses and sales and marketing expenses as a result of targeted cost reduction initiatives.

Flooring Manufacturing Segment

Revenue for the quarter ended March 31, 2025 was approximately $29.8 million, a decrease of approximately $4.4 million, or 12.8%, compared to prior year period revenue of approximately $34.2 million.

The Flooring Manufacturing segment revenue for the quarter ended June 30, 2025, was approximately $29.5 million, a decrease of approximately $1.8 million, or 5.7%, compared to approximately $31.3 million in the prior-year period.

The decrease in revenue was primarily due to reduced consumer demand, as a result of the ongoing weakness in the housing market and uncertainty about the current economic outlook.

Gross margin was 27.5% for the quarter ended March 31, 2025, compared to 25.6% for the prior year period.

Gross margin was 29.9% for the quarter ended June 30, 2025, compared to 24.7% for the prior-year period.

The increase in gross margin was primarily due to changes in product mix.

Operating income for the quarter ended March 31, 2025 was approximately $1.5 million, compared to approximately $2.0 million in the prior year period.

Operating income for the quarter ended June 30, 2025, was approximately $4.1 million, compared to approximately $1.9 million in the prior-year period.

The improvement in operating income is attributable to lower general and administrative expenses and sales and marketing expenses.

Steel Manufacturing Segment

Revenue for the quarter ended March 31, 2025 was approximately $31.3 million, a decrease of approximately $4.2 million, or 11.7%, compared to prior-year period revenue of approximately $35.5 million.

The Steel Manufacturing segment revenue for the quarter ended June 30, 2025, was approximately $33.6 million, a decrease of approximately $5.4 million, or 13.8%, compared to approximately $39.0 million in the prior-year period.

The decline was primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $5.0 million at Central Steel Fabricators, LLC (“Central Steel”), which was acquired in May 2024.

Gross margin was 21.2% for the quarter ended March 31, 2025, compared to 14.3% for the prior-year period.

The increase in gross margin was primarily due to strategic price increases as well as the acquisition of Central Steel.

Operating income for the quarter ended March 31, 2025 was approximately $2.2 million, compared to approximately $0.9 million in the prior-year period.

Gross margin was 23.1% for the quarter ended June 30, 2025, compared to 15.8% for the prior-year period.

The increase in gross margin was primarily due to strategic price increases as well as the acquisition of Central Steel, which has historically generated higher margins.

Operating income for the quarter ended June 30, 2025, was approximately $2.3 million, compared to approximately $1.4 million in the prior-year period.

Corporate and Other Segment

Revenue for the quarter ended March 31, 2025 was approximately $6,000, a decrease of approximately $78,000, or 92.9%, compared to prior year period revenue of approximately $84,000.

Operating loss was approximately $1.3 million and $2.4 million for the quarters ended March 31, 2025 and 2024, respectively.

Results of Operations by Segment for the Six Months Ended March 31, 2025 and 2024

For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024

The Corporate and Other segment operating income for the quarter ended June 30, 2025, was approximately $6,000 compared to an operating loss of $1.9 million in the prior-year period.

The change in operating income is due to the reallocation of certain costs from the Corporate holding company level to the segment level, along with a reduction in expenses as compared to the prior-year period.

Results of Operations by Segment for the Nine Months Ended June 30, 2025 and 2024

For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024

Retail-Entertainment Retail-Flooring Flooring

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Retail-Entertainment Segment

Retail-Entertainment segment revenue for the six months ended March 31, 2025 was approximately $39.7 million, an increase of approximately $2.3 million, or 6.2%, compared to prior year period revenue of approximately $37.4 million.

Revenue increased primarily due to increased consumer demand for new products.

The increase in the sales of new products with higher margins contributed to the increase in gross margin to 57.8% for the six months ended March 31, 2025, compared to 57.1% for the prior year period.

Operating income for the six months ended March 31, 2025 was approximately $5.9 million, compared to operating income of approximately $5.0 million for the prior year period.

The Retail-Entertainment segment revenue for the nine months ended June 30, 2025, was approximately $58.8 million, an increase of approximately $4.8 million, or 9.0%, compared to approximately $53.9 million in the prior-year period.

Revenue increased primarily due to changes in product mix toward new products, which typically have higher selling prices.

For the nine months ended June 30, 2025, there was a slight increase in gross margin to 57.7%, compared to 57.3% for the prior-year period.

Operating income for the nine months ended June 30, 2025, was approximately $8.2 million, compared to approximately $6.3 million in the prior-year period.

Retail-Flooring Segment

The Retail-Flooring segment revenue for the six months ended March 31, 2025 was approximately $59.1 million, a decrease of approximately $7.2 million, or 10.9%, compared to the prior year period revenue of approximately $66.4 million.

The decrease was primarily attributable to the disposition of certain Johnson Floor & Home Carpet One stores in May 2024.

Gross margin for the six months ended March 31, 2025 was 35.9%, compared to 37.3% for the prior year period.

The Retail-Flooring segment revenue for the nine months ended June 30, 2025, was approximately $89.5 million, a decrease of approximately $13.8 million, or 13.4%, compared to approximately $103.3 million in the prior-year period.

The decrease was primarily attributable to the disposition of certain Johnson stores in May 2024, as well as decreased demand due to broader economic conditions.

Gross margin for the nine months ended June 30, 2025, was 35.7%, compared to 37.0% for the prior-year period.

The decrease in gross margin was primarily driven by a change in product mix.

Operating loss for the six months ended March 31, 2025, was approximately $4.9 million, compared to an operating loss of approximately $2.9 million for the prior year period.

The increase in operating loss was primarily due to the decrease in revenues and gross margin, partially offset by targeted cost reduction initiatives implemented during the second quarter of fiscal 2025.

Operating loss for the nine months ended June 30, 2025, was approximately $5.6 million, compared to an operating loss of approximately $4.4 million for the prior-year period.

The increase in operating loss was primarily due to the decrease in revenues and gross margin, partially offset by cost reduction initiatives implemented during the second quarter of fiscal 2025.

Flooring Manufacturing Segment

Revenue for the Flooring Manufacturing segment for the six months ended March 31, 2025 was approximately $55.8 million, a decrease of approximately $7.6 million, or 12.0%, compared to prior year period revenue of approximately $63.4 million.

The Flooring Manufacturing segment revenue for the nine months ended June 30, 2025, was approximately $85.3 million, a decrease of approximately $9.4 million, or 9.9%, compared to approximately $94.7 million in the prior-year period.

The decrease in revenue was primarily due to reduced consumer demand as a result of the ongoing weakness in the housing market and uncertainty about the current economic outlook.

Gross margin was 24.6% for the six months ended March 31, 2025, compared to 23.9% for the prior year period.

Gross margin was 26.4% for the nine months ended June 30, 2025, compared to 24.2% for the prior-year period.

The increase in gross margin was primarily due to changes in product mix.

Operating income for the six months ended March 31, 2025 was approximately $1.4 million, compared to operating income of approximately $2.9 million for the prior year period.

Operating income for the nine months ended June 30, 2025, was approximately $5.5 million, compared to approximately $4.8 million for the prior-year period.

Steel Manufacturing Segment

Revenue for the six months ended March 31, 2025 was approximately $63.8 million, a decrease of approximately $5.0 million or 7.4%, compared to prior year period revenue of approximately $68.8 million.

The Steel Manufacturing segment revenue for the nine months ended June 30, 2025, was approximately $97.4 million, a decrease of approximately $10.5 million or 9.7%, compared to approximately $107.9 million in the prior-year period.

The decline was primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $11.9 million at Central Steel, which was acquired in May 2024.

Gross margin was 19.7% for the six months ended March 31, 2025, compared to 15.0% for the prior year period.

The increase in gross margin was primarily due to strategic price increases, as well as the acquisition of Central Steel.

Operating income for the six months ended March 31, 2025 was approximately $3.4 million, compared to operating income of approximately $1.9 million in the prior year period.

Gross margin was 20.9% for the nine months ended June 30, 2025, compared to 15.3% for the prior-year period.

The increase in gross margin was primarily due to strategic price

increases, as well as the acquisition of Central Steel.

Operating income for the nine months ended June 30, 2025, was approximately $5.6 million, compared to approximately $3.2 million in the prior-year period.

Corporate and Other Segment

Revenue for the six months ended March 31, 2025 was approximately $63,000, a decrease of approximately $111,000, or 63.8%, compared to prior year period revenue of approximately $174,000.

Operating loss was approximately $2.9 million and $4.1 million for the six months ended March 31, 2025 and 2024, respectively.

The Corporate and Other segment operating loss was approximately $2.9 million and $6.0 million for the nine months ended June 30, 2025, and 2024, respectively.

The change in operating loss is due to the reallocation of certain costs from the Corporate holding company level to the segment level in the fiscal third quarter of fiscal year 2025, as well as a reduction in expenses as compared to the prior-year period.

Adjusted EBITDA Reconciliation

The following table presents a reconciliation of net income to Adjusted EBITDA for the three and six months ended March 31, 2025 and 2024 (in 000's):

For the Three Months Ended For the Six Months Ended

March 31, 2025 March 31, 2024 March 31, 2025 March 31, 2024

The following table presents a reconciliation of net income to Adjusted EBITDA for the three and nine months ended June 30, 2025 and 2024 (in 000's):

For the Three Months Ended For the Nine Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Net income (loss) $ 5,388 $ (2,855) $ 21,746 $ (6,818)

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

Gain on settlement of holdback (1,282) — (1,186) —

Gain on receipt of ERC credits (1,469) — (1,824) —

Acquisition costs — 889 — 1,762

Debt acquisition costs — — — 183

Disposition of Johnson — 301 — 301

Other non-recurring charges 34 — 134 587

Adjusted EBITDA $ 13,188 $ 6,123 $ 25,379 $ 19,275

Adjusted EBITDA for the quarter ended March 31, 2025 was approximately $6.4 million, an increase of approximately $2.0 million, or 44.6%, compared to the prior year period.

The increase is primarily due to decreases in operating expenses targeted cost reduction initiatives.

Adjusted EBITDA for the six months ended March 31, 2025 was approximately $12.2 million, a decrease of approximately $1.0 million, or 7.3%, compared to the prior year period.

The decrease is primarily due to a decrease in gross profit.

Adjusted EBITDA for the quarter ended June 30, 2025 was approximately $13.2 million, an increase of approximately $7.1 million, or 115.4%, compared to the prior year period.

The increase is primarily due to decreases in operating expenses due to targeted cost reduction initiatives.

Adjusted EBITDA for the nine months ended June 30, 2025 was approximately $25.4 million, an increase of approximately $6.1 million, or 31.7%, compared to the prior year period.

The increase is primarily due to decreases in operating expenses due to targeted cost reduction initiatives.

Liquidity and Capital Resources

As of March 31, 2025, we had total cash on hand of approximately $6.9 million and approximately $19.7 million of available borrowing under our revolving credit facilities.

As of June 30, 2025, we had total cash on hand of approximately $7.6 million and approximately $29.5 million of available borrowing under our revolving credit facilities.

As we continue to pursue acquisitions and other strategic transactions to expand and grow our business, we regularly monitor capital market conditions and may raise additional funds through borrowings or public or private sales of debt or equity securities.

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Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities, and funds available under our asset-based revolver lines of credit will provide sufficient liquidity to do the following:

fund our operations;

our operations;

pay our scheduled loan payments;

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Working Capital

We had working capital of approximately $49.1 million as of March 31, 2025, as compared to working capital of approximately $52.3 million as of September 30, 2024;

a decrease of approximately $3.2 million.

The decrease is primarily due to increases in accrued liabilities, the current portion of long-term debt, and the current portion of operating lease obligations, and a decrease in income taxes receivable, partially offset by decreases in the current portion of notes payable to related parties and accounts payable, and an increase in accounts receivable.

We had working capital of approximately $66.6 million as of June 30, 2025, as compared to working capital of approximately $52.3 million as of September 30, 2024;

an increase of approximately $14.3 million.

The increase is primarily related to decreases in the current portion of long-term debt and accounts payable, partially offset by reduced trade accounts receivable due to decreased revenue, and a decrease in inventory purchases for the period.

Cash Flows from Operating Activities

The Company’s cash, as of March 31, 2025, was approximately $6.9 million compared to approximately $4.6 million as of September 30, 2024, an increase of approximately $2.3 million.

Net cash provided by operations was approximately $9.6 million and $2.1 million for the six months ended March 31, 2025 and 2024, respectively.

The increase was primarily due to collections of accounts receivable and reduction in inventory, partially offset by decreases in income taxes payable.

The Company’s cash, as of June 30, 2025, was approximately $7.6 million compared to approximately $4.6 million as of September 30, 2024, an increase of approximately $3.0 million.

Net cash provided by operations was approximately $21.9 million and $13.9 million for the nine months ended June 30, 2025 and 2024, respectively.

The increase was primarily driven by higher operating income, improved collections of accounts receivable, and a reduction in inventory, partially offset by payments of accounts payable and accrued liabilities.

Our primary sources of cash inflows are from customer receipts from sales on account, factored accounts receivable proceeds, receipts for securities sales commissions, and net remittances from directory services customers processed in the form of ACH billings.

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Cash Flows from Investing Activities

Our cash flows used in investing activities of approximately $4.3 million for the six months ended March 31, 2025 consisted of purchases of property and equipment.

Our cash flows used in investing activities of approximately $4.9 million for the six months ended March 31, 2024 consisted of the acquisitions of CRO by Flooring Liquidators, and Johnson by CRO, and purchases of property and equipment.

Our cash flows used in investing activities of approximately $5.8 million for the nine months ended June 30, 2025 consisted of purchases of property and equipment.

Our cash flows used in investing activities of approximately $18.0 million for the nine months ended June 30, 2024 consisted of the acquisitions of CRO by Flooring Liquidators, Johnson by CRO, Central Steel by Precision Marshall, Midwest Grinding by Kinetic, and purchases of property and equipment.

Cash Flows from Financing Activities

Our cash flows used in financing activities of approximately $3.0 million during the six months ended March 31, 2025 consisted of payments on notes payable of approximately $3.4, payments for finance leases of approximately $2.0 million, cash paid for the settlement of seller notes of approximately $1.9 million, net borrowings under revolver loans of approximately $1.3 million, payments of related party notes payable of $0.6 million, and purchases of treasury stock of approximately $0.4 million, partially offset by net borrowings under related party revolver loans of approximately $4.3 million, proceeds from the issuance related party notes payable of approximately $1.9 million, and proceeds from the issuance of notes payable of approximately $0.5 million.

Our cash flows used in financing activities of approximately $3.0 million during the six months ended March 31, 2024 consisted of net borrowings under revolver loans of approximately $7.7 million, payments on notes payable of approximately $3.4 million, proceeds from related parties of $1.0 million, purchases of treasury stock and payments for finance leases of approximately $0.4 million, and payments of related party notes payable of $0.6 million.

Our cash flows used in financing activities of approximately $13.1 million during the nine months ended June 30, 2025 consisted of net payments under revolver loans of approximately $9.3 million, payments on notes payable of approximately $5.2 million, payments of related party notes payable of $2.9 million, payments for finance leases of approximately $2.7 million, cash paid for the settlement of seller notes of approximately $1.9 million, and purchases of treasury stock of approximately $0.5 million, partially offset by net borrowings under related party revolver loans of approximately $7.1 million, proceeds from the issuance of related party notes payable of approximately $1.9 million, and proceeds from the issuance of notes payable of approximately $0.5 million.

Our cash flows provided by financing activities of approximately $4.5 million during the nine months ended June 30, 2024 consisted of proceeds from failed sales and leaseback transactions of approximately $7.9 million, proceeds from the issuance of notes payable of approximately $2.7 million, net borrowings under revolver loans of approximately $2.0 million, and net borrowings under related party revolver loans of approximately $1.3 million, partially offset by payments on notes payable of approximately $5.1 million, payments for finance leases of approximately $2.5 million, payments of related party notes payable of $0.9 million, and purchases of treasury stock of approximately $0.9 million.

Currently, we are not issuing common shares for liquidity purposes.

8 unchanged sentences

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What changed 10-Q

Item 2. Management’s Discussion and Analysis