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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

(Mark One)

 

QUARTERLY Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2022

 

TRANSITION Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from _____________ to _______________

 

Commission File Number 001-33937

 

Live Ventures Incorporated

(Exact name of registrant as specified in its charter)

 

Nevada

85-0206668

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

 

 

325 E. Warm Springs Road, Suite 102

Las Vegas, Nevada

89119

(Address of principal executive offices)

(Zip Code)

 

(702) 997-5968

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value per share

 

LIVE

 

The Nasdaq Stock Market LLC (The Nasdaq Capital Market)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 ☐

Accelerated filer

 ☐

Non-accelerated filer

 ☒

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

The number of shares of the issuer’s common stock, par value $0.001 per share, outstanding as of May 6, 2022 was 3,095,616.

 


 

INDEX TO FORM 10-Q FILING

FOR THE SIX MONTHS ENDED MARCH 31, 2022

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

PART I

 

 

 

 

 

 

 

 

 

FINANCIAL INFORMATION

 

3

 

 

 

 

 

Item 1.

 

Financial Statements

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and September 30, 2021

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended March 31, 2022 and 2021

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended March 31, 2022 and 2021

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Six Months Ended March 31, 2022 and 2021

 

6

 

 

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

 

7

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

30

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

30

 

 

 

 

 

 

 

PART II

 

 

 

 

 

 

 

 

 

OTHER INFORMATION

 

32

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

32

 

 

 

 

 

Item 1A.

 

Risk Factors

 

32

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

32

 

 

 

 

 

Item 3.

 

Defaults upon Senior Securities

 

32

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

33

 

 

 

 

 

Item 5.

 

Other Information

 

33

 

 

 

 

 

Item 6.

 

Exhibits

 

34

 

 

 

 

 

SIGNATURES

 

35

 

2


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts)

 

 

 

March 31, 2022

 

 

September 30, 2021

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Cash

 

$

6,190

 

 

$

4,664

 

Trade receivables, net of allowance for doubtful accounts of approximately $34,000 at March 31, 2022 and $61,000 at September 30, 2021

 

 

22,204

 

 

 

21,559

 

Inventories, net of reserves of approximately $1.7 million at March 31, 2022, and approximately $1.8 million at September 30, 2021

 

 

79,364

 

 

 

70,747

 

Prepaid expenses and other current assets

 

 

2,064

 

 

 

1,640

 

Debtor in possession assets

 

 

 

 

 

180

 

Total current assets

 

 

109,822

 

 

 

98,790

 

Property and equipment, net of accumulated depreciation of approximately $23.1 million at March 31, 2022, and approximately $20.6 million at September 30, 2021

 

 

40,585

 

 

 

35,632

 

Right of use asset - operating leases

 

 

28,415

 

 

 

30,466

 

Deposits and other assets

 

 

798

 

 

 

682

 

Intangible assets, net of accumulated amortization of approximately $2.7 million at March 31, 2022, and approximately $2.2 million at September 30, 2021

 

 

4,201

 

 

 

4,697

 

Goodwill

 

 

41,471

 

 

 

41,471

 

Total assets

 

$

225,292

 

 

$

211,738

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

14,597

 

 

$

10,644

 

Accrued liabilities

 

 

12,117

 

 

 

17,048

 

Income taxes payable

 

 

728

 

 

 

876

 

Current portion of lease obligations - operating leases

 

 

7,311

 

 

 

7,202

 

Current portion of long-term debt

 

 

20,032

 

 

 

16,055

 

Current portion of notes payable related parties

 

 

2,000

 

 

 

2,000

 

Debtor-in-possession liabilities

 

 

 

 

 

11,135

 

Total current liabilities

 

 

56,785

 

 

 

64,960

 

Long-term debt, net of current portion

 

 

39,359

 

 

 

37,559

 

Lease obligation long term - operating leases

 

 

27,158

 

 

 

29,343

 

Notes payable related parties, net of current portion

 

 

2,000

 

 

 

2,000

 

Deferred taxes

 

 

5,053

 

 

 

2,796

 

Total liabilities

 

 

130,355

 

 

 

136,658

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Series B convertible preferred stock, $0.001 par value, 1,000,000 shares authorized,
   
0 and 315,790 shares issued and outstanding at March 31, 2022 and September 30, 2021, respectively

 

 

 

 

 

 

Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840
  shares issued and outstanding at March 31, 2022 and September 30, 2021, respectively, with a
  liquidation preference of $
0.30 per share outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 10,000,000 shares authorized, 3,095,616 and 1,582,334 shares issued
   and outstanding at March 31, 2022 and September 30, 2021, respectively

 

 

2

 

 

 

2

 

Paid in capital

 

 

65,321

 

 

 

65,284

 

Treasury stock common 600,188 shares as of March 31, 2022 and 534,520 shares as of September 30, 2021, respectively

 

 

(6,603

)

 

 

(4,519

)

Treasury stock Series E preferred 50,000 shares as of March 31, 2022 and
   of September 30, 2021, respectively

 

 

(7

)

 

 

(7

)

Retained earnings

 

 

36,672

 

 

 

14,768

 

Equity attributable to Live stockholders

 

 

95,385

 

 

 

75,528

 

Non-controlling interest

 

 

(448

)

 

 

(448

)

Total stockholders' equity

 

 

94,937

 

 

 

75,080

 

Total liabilities and stockholders' equity

 

$

225,292

 

 

$

211,738

 

 

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

3


 

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(dollars in thousands, except per share)

 

 

 

For the Three Months Ended March 31,

 

 

For the Six Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

69,706

 

 

$

70,890

 

 

$

144,864

 

 

$

133,344

 

Cost of revenue

 

 

44,753

 

 

 

44,400

 

 

 

92,295

 

 

 

84,585

 

Gross profit

 

 

24,953

 

 

 

26,490

 

 

 

52,569

 

 

 

48,759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

13,154

 

 

 

12,565

 

 

 

27,311

 

 

 

24,844

 

Sales and marketing expenses

 

 

3,350

 

 

 

2,800

 

 

 

6,402

 

 

 

5,499

 

Total operating expenses

 

 

16,504

 

 

 

15,365

 

 

 

33,713

 

 

 

30,343

 

Operating income

 

 

8,449

 

 

 

11,125

 

 

 

18,856

 

 

 

18,416

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(858

)

 

 

(1,649

)

 

 

(1,875

)

 

 

(3,119

)

Gain on Payroll Protection Program loan forgiveness

 

 

 

 

 

1,382

 

 

 

 

 

 

1,382

 

Loss on debt extinguishment

 

 

(363

)

 

 

 

 

 

(363

)

 

 

 

Loss on disposal of fixed assets

 

 

(1

)

 

 

 

 

 

(1

)

 

 

 

Gain on bankruptcy settlement

 

 

11,362

 

 

 

1,115

 

 

 

11,352

 

 

 

1,115

 

Other income (expense)

 

 

292

 

 

 

(50

)

 

 

418

 

 

 

858

 

Total other income, net

 

 

10,432

 

 

 

798

 

 

 

9,531

 

 

 

236

 

Income before provision for income taxes

 

 

18,881

 

 

 

11,923

 

 

 

28,387

 

 

 

18,652

 

Provision for income taxes

 

 

3,523

 

 

 

3,228

 

 

 

6,483

 

 

 

4,678

 

Net income

 

 

15,358

 

 

 

8,695

 

 

 

21,904

 

 

 

13,974

 

Net income attributable to non-controlling interest

 

 

 

 

 

39

 

 

 

 

 

 

173

 

Net income attributable to Live stockholders

 

$

15,358

 

 

$

8,734

 

 

$

21,904

 

 

$

14,147

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

4.90

 

 

$

5.62

 

 

$

6.96

 

 

$

9.22

 

Diluted

 

$

4.84

 

 

$

2.66

 

 

$

6.87

 

 

$

4.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

3,134,540

 

 

 

1,555,175

 

 

 

3,148,059

 

 

 

1,534,287

 

Diluted

 

 

3,172,881

 

 

 

3,284,133

 

 

 

3,187,124

 

 

 

3,263,245

 

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

4


 

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(dollars in thousands)

 

 

 

 

For the Six Months Ended March 31,

 

 

 

2022

 

 

2021

 

Operating Activities:

 

 

 

 

 

 

Net income

 

$

21,904

 

 

$

13,974

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

3,045

 

 

 

3,420

 

Gain or loss on disposal of property and equipment

 

 

1

 

 

 

(23

)

Gain on Payroll Protection Program loan forgiveness

 

 

 

 

 

(1,382

)

Gain on bankruptcy settlement

 

 

(11,501

)

 

 

(1,115

)

Amortization of debt issuance cost

 

 

(112

)

 

 

612

 

Stock based compensation expense

 

 

37

 

 

 

287

 

Amortization of right-of-use assets

 

 

55

 

 

 

125

 

Change in reserve for uncollectible accounts

 

 

27

 

 

 

658

 

Change in reserve for obsolete inventory

 

 

146

 

 

 

964

 

Changes in assets and liabilities:

 

 

 

 

 

 

Trade receivables

 

 

(698

)

 

 

(2,499

)

Inventories

 

 

(8,658

)

 

 

1,935

 

Income taxes payable/receivable

 

 

(148

)

 

 

2,763

 

Prepaid expenses and other current assets

 

 

(422

)

 

 

529

 

Change in deferred income taxes

 

 

2,257

 

 

 

1,334

 

Deposits and other assets

 

 

(116

)

 

 

(235

)

Accounts payable

 

 

3,911

 

 

 

2,594

 

Accrued liabilities

 

 

(4,500

)

 

 

(2,882

)

Change in other

 

 

23

 

 

 

(148

)

Net cash provided by operating activities

 

 

5,251

 

 

 

20,911

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(7,503

)

 

 

(5,469

)

Net cash used in investing activities

 

 

(7,503

)

 

 

(5,469

)

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

Net borrowings (payments) under revolver loans

 

 

4,887

 

 

 

(4,554

)

Proceeds from issuance of notes payable

 

 

9,000

 

 

 

2,258

 

Purchase of common treasury stock

 

 

(2,084

)

 

 

(383

)

Payments on related party notes payable

 

 

 

 

 

(2,000

)

Debtor-in-possession cash

 

 

75

 

 

 

112

 

Payments on financing leases

 

 

(80

)

 

 

 

Payments on notes payable

 

 

(8,020

)

 

 

(7,931

)

Net cash provided by (used in) financing activities

 

 

3,778

 

 

 

(12,498

)

 

 

 

 

 

 

 

Increase in cash

 

 

1,526

 

 

 

2,944

 

Cash, beginning of period

 

 

4,664

 

 

 

8,984

 

Cash, end of period

 

$

6,190

 

 

$

11,928

 

 

 

 

 

 

 

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

Interest paid

 

$

1,823

 

 

$

2,516

 

Income taxes paid

 

$

4,458

 

 

$

369

 

 

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

5


 

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(dollars in thousands)

 

 

 

 

Series B
Preferred Stock

 

 

Series E
Preferred Stock

 

 

Common Stock

 

 

 

 

 

Series E
Preferred
Stock

 

 

Common
Stock

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-In
Capital

 

 

Treasury
Stock

 

 

Treasury
Stock

 

 

Retained Earnings

 

 

Non-controlling Interest

 

 

Total
Equity

 

Balance, September 30, 2021

 

 

315,790

 

 

$

 

 

 

47,840

 

 

$

 

 

 

1,582,334

 

 

$

2

 

 

$

65,284

 

 

$

(7

)

 

$

(4,519

)

 

$

14,768

 

 

$

(448

)

 

$

75,080

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,546

 

 

 

 

 

 

6,546

 

Balance, December 31, 2021

 

 

315,790

 

 

 

 

 

 

47,840

 

 

 

 

 

 

1,582,334

 

 

 

2

 

 

 

65,302

 

 

 

(7

)

 

 

(4,519

)

 

 

21,314

 

 

 

(448

)

 

 

81,644

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

Purchase of common treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(65,668

)

 

 

 

 

 

 

 

 

 

 

 

(2,084

)

 

 

 

 

 

 

 

 

(2,084

)

Conversion of Series B preferred stock

 

 

(315,790

)

 

 

 

 

 

 

 

 

 

 

 

1,578,950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income