Exhibit 99.2

Unaudited Pro Forma Condensed Combined Financial Statement of Live Ventures Incorporated as of December 31, 2022, for the year ended September 30, 2022, and for the three months ended December 31, 2022

 

Introduction

Flooring Liquidators Acquisition

On January 18, 2023, Live Ventures acquired 100% of the issued and outstanding equity interests of Flooring Liquidators, Inc., Elite Builder Services, Inc., 7 Day Stone, Inc., Floorable, LLC, K2L Leasing, LLC, and SJ & K Equipment, Inc. (collectively, the “Acquired Companies”). The Acquired Companies are leading retailers and installers of floors, carpets, and countertops to consumers, builders and contractors in California and Nevada.

The acquisition was pursuant to a Securities Purchase Agreement with an effective date of January 18, 2023 by and among the Company, Buyer, Stephen J. Kellogg, as the seller representative of the equity holders of the Acquired Companies and individually in his capacity as an equity holder of the Acquired Companies, and the other equity holders of the Acquired Companies. The purchase price for the Equity Interests was $85.0 million less Estimated Indebtedness (other than Repaid Indebtedness), Estimated Selling Expenses (inclusive of $1.2 million of transaction bonuses which are deemed to be assumed liabilities for accounting purposes, such that the net purchase price for accounting purposes is $83.8 million), the RSU Value and the Retention Bonus (each as defined in the Purchase Agreement). On the Effective Date, the Purchase Price was paid as follows:

•
$41.4 million in cash to the Seller Representative (on behalf of and for further distribution to the Sellers), calculated as follows: (A) the Purchase Price minus (B) the Holdback Amount of $2.0 million (defined in the Purchase Agreement), minus (C) the Note Amount (defined below) minus (D) the Share Amount (defined below), minus (E) Estimated Selling Expenses of $1.6 million (inclusive of $1.2 million of transaction bonuses), and minus (F) $2.0 million of additional consideration (described below) and was funded in part through cash in the Acquired Companies’ bank accounts on the Effective Date;
•
$34.0 million (the “Note Amount”) to certain trusts for the benefit of Kellogg and members of his family (the “Kellogg Trusts”) pursuant to the issuance by Buyer of a subordinated promissory note (the “Note”) in favor of the Kellogg Trusts;
•
$4.0 million to the Kellogg 2022 Family Irrevocable Nevada Trust by issuance of 116,441 shares of Parent Common Stock (as defined in the Purchase Agreement) (the “Share Amount”), calculated in the manner described in the Purchase Agreement; and
•
$2.0 million of additional consideration, comprised of $1.0 million in cash and $1.0 million in restricted stock units

Proforma information

The accompanying unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of SEC Regulation S-X. The historical consolidated financial information in the unaudited pro forma condensed combined financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the acquisition, (2) factually supportable and (3) expected to have a continuing impact on the combined results of the Company.

The unaudited pro forma condensed combined financial information does not give effect to any operating or revenue synergies that may result from the merger or the costs to achieve any synergies.

The unaudited pro forma condensed combined financial information has been presented for informational purposes only and is not necessarily indicative of what the combined Company's financial position or results of operations would have been had the transactions been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined Company.

The unaudited pro forma condensed combined financial information contains estimated adjustments, based upon available information and certain assumptions that we believe are reasonable under the circumstances. The assumptions underlying the pro forma adjustments are described in greater detail in the accompanying notes to the unaudited pro forma combined financial information. In many cases, these assumptions were based on preliminary information and estimates.

As of December 31, 2022, proforma total assets, liabilities, and total shareholders’ equity would have been approximately $364.7 million, $263.1 million, and $101.6 million, respectively. If the transaction had occurred on October 1, 2021, the pro forma statement of operations for the year ended September 30, 2022 would have reflected net income of approximately $25.0 million. Pro forma basic and diluted income per share would have decreased by $0.21 and $0.20 per common share to $7.73 and $7.64, respectively. Additionally, the pro forma statement of operations for the three months ended December 31, 2022 would have reflected a net loss of approximately $859,000. Pro forma basic and diluted income per share would have decreased by $0.87 per common share to a loss of $0.27 and $0.27, respectively.

 

LIVE VENTURES INCORPORATED

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS

DECEMBER 31, 2022

(dollars in thousands)

 

 

Live Historical

 

 

Flooring Liquidators Historical

 

 

Pro Forma Adjustments

 

 

Notes

 

Pro Forma Combined

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

12,765

 

 

$

12,428

 

 

$

(24,421

)

 

a

 

$

772

 

Trade receivables, net

 

 

20,579

 

 

 

4,815

 

 

 

—

 

 

 

 

 

25,394

 

Inventories, net

 

 

97,484

 

 

 

20,457

 

 

 

—

 

 

 

 

 

117,941

 

Notes receivable

 

 

3,845

 

 

 

9,830

 

 

 

(9,821

)

 

b

 

 

3,854

 

Prepaid expenses and other current assets

 

 

2,377

 

 

 

4,476

 

 

 

—

 

 

 

 

 

6,853

 

Total current assets

 

 

137,050

 

 

 

52,006

 

 

 

(34,242

)

 

 

 

 

154,814

 

Property and equipment, net

 

 

63,474

 

 

 

4,678

 

 

 

—

 

 

 

 

 

68,152

 

Right of use asset - operating leases

 

 

33,388

 

 

 

—

 

 

 

14,712

 

 

c

 

 

48,100

 

Right of use asset - finance leases

 

 

—

 

 

 

—

 

 

 

387

 

 

c

 

 

387

 

Deposits and other assets

 

 

820

 

 

 

670

 

 

 

—

 

 

 

 

 

1,490

 

Intangible assets, net

 

 

3,591

 

 

 

—

 

 

 

24,124

 

 

d

 

 

27,715

 

Goodwill

 

 

40,781

 

 

 

—

 

 

 

23,270

 

 

e

 

 

64,051

 

Total assets

 

$

279,104

 

 

$

57,354

 

 

$

28,251

 

 

 

 

$

364,709

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,483

 

 

$

5,189

 

 

$

—

 

 

 

 

$

12,672

 

Accrued liabilities

 

 

15,124

 

 

 

2,652

 

 

 

—

 

 

 

 

 

17,776

 

Customer deposits

 

 

—

 

 

 

3,396

 

 

 

—

 

 

 

 

 

3,396

 

Income taxes payable

 

 

—

 

 

 

433

 

 

 

—

 

 

 

 

 

433

 

Current portion of long-term debt

 

 

26,064

 

 

 

4,575

 

 

 

(4,278

)

 

f

 

 

26,361

 

Lease obligation short term - operating leases

 

 

8,071

 

 

 

—

 

 

 

2,668

 

 

c

 

 

10,739

 

Lease obligation short term - finance leases

 

 

214

 

 

 

—

 

 

 

129

 

 

c

 

 

343

 

Current portion of notes payable related parties

 

 

2,000

 

 

 

—

 

 

 

—

 

 

 

 

 

2,000

 

Total current liabilities

 

 

58,956

 

 

 

16,245

 

 

 

(1,481

)

 

 

 

 

73,720

 

Long-term debt, net of current portion

 

 

59,889

 

 

 

45

 

 

 

48,294

 

 

f

 

 

108,228

 

Lease obligation long term - operating leases

 

 

29,890

 

 

 

—

 

 

 

12,044

 

 

c

 

 

41,934

 

Lease obligation long term - finance leases

 

 

19,631

 

 

 

—

 

 

 

258

 

 

c

 

 

19,889

 

Notes payable related parties, net of current portion

 

 

2,000

 

 

 

—

 

 

 

5,000

 

 

f

 

 

7,000

 

Deferred taxes

 

 

8,874

 

 

 

—

 

 

 

—

 

 

 

 

 

8,874

 

Other non-current obligations

 

 

1,479

 

 

 

—

 

 

 

2,000

 

 

f

 

 

3,479

 

Total liabilities

 

 

180,719

 

 

 

16,290

 

 

 

66,115

 

 

 

 

 

263,124

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

2

 

 

 

1,439

 

 

 

(1,439

)

 

g

 

 

2

 

Paid-in capital

 

 

65,321

 

 

 

—

 

 

 

3,200

 

 

g

 

 

68,521

 

Treasury stock common

 

 

(7,836

)

 

 

—

 

 

 

—

 

 

 

 

 

(7,836

)

Treasury stock Series E preferred

 

 

(7

)

 

 

—

 

 

 

—

 

 

 

 

 

(7

)

Retained earnings

 

 

41,353

 

 

 

39,625

 

 

 

(39,625

)

 

g

 

 

41,353

 

Equity attributable to Live stockholders

 

 

98,833

 

 

 

41,064

 

 

 

(37,864

)

 

 

 

 

102,033

 

Non-controlling interest

 

 

(448

)

 

 

—

 

 

 

—

 

 

 

 

 

(448

)

Total stockholders' equity

 

$

98,385

 

 

$

41,064

 

 

$

(37,864

)

 

 

 

$

101,585

 

Total liabilities and stockholders' equity

 

$

279,104

 

 

$

57,354

 

 

$

28,251

 

 

 

 

$

364,709

 

 

LIVE VENTURES INCORPORATED

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

YEAR ENDED SEPTEMBER 30, 2022

(dollars in thousands, except per share amounts)

 

 

Live Historical

 

 

Flooring Liquidators Historical

 

 

Pro Forma Adjustments

 

 

Notes

 

Pro Forma Combined

 

Revenues

 

$

286,913

 

 

$

127,645

 

 

$

(5,039

)

 

a

 

$

409,519

 

Cost of revenues

 

 

189,086

 

 

 

78,466

 

 

 

(3,005

)

 

a

 

 

264,547

 

Gross profit

 

 

97,827

 

 

 

49,179

 

 

 

(2,034

)

 

 

 

 

144,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales, general and administrative expenses

 

 

66,990

 

 

 

35,112

 

 

 

3,539

 

 

b

 

 

105,641

 

Impairment expense

 

 

4,910

 

 

 

—

 

 

 

—

 

 

 

 

 

4,910

 

Total operating expenses

 

 

71,900

 

 

 

35,112

 

 

 

3,539

 

 

 

 

 

110,551

 

Operating income

 

 

25,927

 

 

 

14,067

 

 

 

(5,573

)

 

 

 

 

34,421

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(4,209

)

 

 

(247

)

 

 

(5,064

)

 

c

 

 

(9,520

)

Gain on bankruptcy settlement

 

 

11,352

 

 

 

—

 

 

 

—

 

 

 

 

 

11,352

 

Loss on debt extinguishment

 

 

(84

)

 

 

—

 

 

 

—

 

 

 

 

 

(84

)

Other (expense) income

 

 

(1,370

)

 

 

1,413

 

 

 

—

 

 

 

 

 

43

 

Total other income, net

 

 

5,689

 

 

 

1,166

 

 

 

(5,064

)

 

 

 

 

1,791

 

Income before provision for income taxes

 

 

31,616

 

 

 

15,233

 

 

 

(10,637

)

 

 

 

 

36,212

 

Provision for income taxes

 

 

6,875

 

 

 

4,343

 

 

 

—

 

 

 

 

 

11,218

 

Net income (loss)

 

 

24,741

 

 

 

10,890

 

 

 

(10,637

)

 

 

 

 

24,994

 

Net income attributable to non-controlling interest

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Net income attributable to Live stockholders

 

$

24,741

 

 

$

10,890

 

 

$

(10,637

)

 

 

 

$

24,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

7.94

 

 

 

 

 

 

 

 

 

 

$

7.73

 

Diluted

 

$

7.84

 

 

 

 

 

 

 

 

 

 

$

7.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

3,116,214

 

 

 

 

 

 

 

 

d

 

 

3,232,655

 

Diluted

 

 

3,155,535

 

 

 

 

 

 

 

 

d

 

 

3,271,976

 

 

LIVE VENTURES INCORPORATED

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2022

(dollars in thousands, except per share amounts)

 

 

Live Historical

 

 

Flooring Liquidators Historical

 

 

Pro Forma Adjustments

 

 

Notes

 

Pro Forma Combined

 

Revenues

 

$

68,986

 

 

$

33,280

 

 

$

(1,399

)

 

a

 

$

100,867

 

Cost of revenues

 

 

47,042

 

 

 

19,711

 

 

 

(866

)

 

a

 

 

65,887

 

Gross profit

 

 

21,944

 

 

 

13,569

 

 

 

(533

)

 

 

 

 

34,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales, general and administrative expenses

 

 

17,377

 

 

 

12,714

 

 

 

885

 

 

b

 

 

30,976

 

Total operating expenses

 

 

17,377

 

 

 

12,714

 

 

 

885

 

 

 

 

 

30,976

 

Operating income (loss)

 

 

4,567

 

 

 

855

 

 

 

(1,418

)

 

 

 

 

4,004

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(2,047

)

 

 

(119

)

 

 

(1,266

)

 

c

 

 

(3,432

)

Other income (expense)

 

 

(61

)

 

 

9

 

 

 

—

 

 

 

 

 

(52

)

Total other (expense) income, net

 

 

(2,108

)

 

 

(110

)

 

 

(1,266

)

 

 

 

 

(3,484

)

Income (loss) before provision for income taxes

 

 

2,459

 

 

 

745

 

 

 

(2,684

)

 

 

 

 

520

 

Provision for income taxes

 

 

615

 

 

 

764

 

 

 

—

 

 

 

 

 

1,379

 

Net income (loss)

 

 

1,844

 

 

 

(19

)

 

 

(2,684

)

 

 

 

 

(859

)

Net income attributable to non-controlling interest

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Net income (loss)

 

$

1,844

 

 

$

(19

)

 

$

(2,684

)

 

 

 

$

(859

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.60

 

 

 

 

 

 

 

 

 

 

$

(0.27

)

Diluted

 

$

0.60

 

 

 

 

 

 

 

 

 

 

$

(0.27

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

3,059,035

 

 

 

 

 

 

 

 

d

 

 

3,175,476

 

Diluted

 

 

3,089,741

 

 

 

 

 

 

 

 

d

 

 

3,144,770

 

 

 

LIVE VENTURES INCORPORATED

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

Note 1. Basis of presentation

The unaudited pro forma condensed combined financial statements are based on Live’s and Flooring Liquidators historical financial statements as adjusted to give effect to the acquisition of Flooring Liquidators.

The unaudited pro forma combined statements of operations for the year ended September 30, 2022 gives effect to the Flooring Liquidators acquisition as if it had occurred on October 1, 2021. Live’s fiscal year was October 1, 2021 to September 30, 2022, and the combined proforma statement of operations represents this period.

The unaudited pro forma combined statements of operations for the three months ended December 31, 2022 gives effect to the Flooring Liquidators acquisition as if it had occurred on October 1, 2022. The statement of operations for “Live Historical” includes proforma financial results for the period of October 1, 2022 to December 31, 2022. The statement of operations for “Flooring Liquidators Historical” includes the actual results for Flooring Liquidators for the period of October 1, 2022 to December 31, 2022.

The unaudited pro forma combined balance sheets as of December 31, 2022 give effect to the Flooring Liquidators acquisition as if it had occurred on December 31, 2022.

Note 2. Preliminary purchase price allocation

The following table shows the preliminary allocation of the purchase price for Flooring Liquidators to the acquired identifiable assets, liabilities assumed and pro forma goodwill (dollars in thousands):

Accounts payable

 

 

5,189

 

Accrued liabilities

 

 

6,481

 

Debt

 

 

4,557

 

   Total liabilities assumed

 

 

16,227

 

Total consideration

 

 

94,927

 

Cash

 

 

12,428

 

Accounts receivable

 

 

4,823

 

Inventory

 

 

20,457

 

Property, plant and equipment

 

 

4,678

 

Intangible assets

 

 

24,124

 

Other assets

 

 

5,147

 

   Total assets acquired

 

 

71,657

 

    Total goodwill

 

$

23,270

 

Note 3. Pro forma adjustments

The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:

Adjustments to the pro forma condensed combined balance sheet

(a)
Reflects cash paid to seller, net of debt proceeds.
(b)
Reflects the reversal of affiliate note under terms of the acquisition agreement.
(c)
Reflects the fair value of operating and finance Right-of-Use assets acquired and lease liabilities assumed, and the adoption of ASC 842 (“Leases”).
(d)
Reflect the fair value of intangible assets acquired based on independent third-party appraisal.
(e)
Reflects the preliminary estimate of goodwill, which represents the excess of the purchase price over the fair value of Flooring Liquidator’s identifiable assets acquired and liabilities assumed as presented in Note 2.
(f)
Reflects Flooring Liquidator’s current and long-term debt and the seller’s note to finance the acquisition.
(g)
Reflects the elimination of Flooring Liquidator’s shareholders’ equity, and additional paid in capital related to Live stock issued.

Adjustments to the pro forma condensed combined statement of operations

(a)
Reflects the elimination of revenues and costs of revenues associated with sales between Flooring Liquidators and the Company prior to the acquisition.
(b)
Reflects amortization expense of intangible assets based on the preliminary fair value at acquisition date.
(c)
Reflects interest expense that would have been incurred as a result of the acquisition financing obtained by the Company.
(d)
Reflects the revised basic and diluted shares outstanding when including the 116,441 Live shares of its common stock issued by the Company as part of the purchase consideration.