live-10q_20201231.htm

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.

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 February 8, 2021 was 1,555,175.

	December 31, 2020			September 30, 2020
	(Unaudited)
Assets
Cash	$	7,232		$	8,984
Trade receivables, net		17,564			20,121
Inventories, net		64,739			64,525
Prepaid expenses and other current assets		1,305			1,778
Debtor in possession assets		326			520
Total current assets		91,166			95,928
Property and equipment, net		31,127			30,376
Right of use asset - operating leases		28,971			30,894
Deposits and other assets		590			223
Deferred taxes		—			1,021
Intangible assets, net		956			1,063
Goodwill		37,754			37,754
Total assets	$	190,564		$	197,259
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable	$	8,227		$	9,117
Accrued liabilities		12,896			14,822
Income taxes payable		806			736
Lease obligation short term - operating leases		6,958			7,176
Current portion of long-term debt		12,066			11,986
Current portion of long-term debt related parties		—			1,297
Debtor in possession liabilities		11,889			12,228
Total current liabilities		52,842			57,362
Long-term debt, net of current portion		57,961			63,390
Lease obligation long term - operating leases		26,503			28,101
Long-term debt related parties, net of current portion		4,000			4,000
Deferred tax liability		269			—
Other non-current obligations		404			734
Total liabilities		141,979			153,587
Commitments and contingencies
Stockholders' equity:
Series B convertible preferred stock, $0.001 par value, 1,000,000 shares authorized, 214,244 shares issued and outstanding at December 31, 2020 and September 30, 2020		—			—
Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at December 31, 2020 and September 30, 2020, with a liquidation preference of $0.30 per share outstanding		—			—
Common stock, $0.001 par value, 10,000,000 shares authorized, 1,555,175 and 1,589,101 shares issued and outstanding at December 31, 2020 and September 30, 2020, respectively		2			2
Paid in capital		64,489			64,472
Treasury stock common 533,011 shares as of December 31, 2020 and 499,085 shares as of September 30, 2020		(4,481	)		(4,098	)
Treasury stock Series E preferred 50,000 shares as of December 31, 2020 and September 30, 2020		(7	)		(7	)
Accumulated deficit		(11,016	)		(16,429	)
Equity attributable to Live stockholders		48,987			43,940
Noncontrolling interest		(402	)		(268	)
Total stockholders' equity		48,585			43,672
Total liabilities and stockholders' equity	$	190,564		$	197,259

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

	Three Months Ended December 31,
	2020			2019
Revenues	$	62,454		$	42,001
Cost of revenues		40,185			25,375
Gross profit		22,269			16,626

Operating expenses:
General and administrative expenses		12,279			10,809
Sales and marketing expenses		2,699			2,330
Total operating expenses		14,978			13,139
Operating income		7,291			3,487
Other (expense) income:
Interest expense, net		(1,470	)		(1,357	)
Impairment charges		—			(1,207	)
Gain on disposal of fixed assets		129			—
Other income (expense)		779			(181	)
Total other (expense) income, net		(562	)		(2,745	)
Income before provision for income taxes		6,729			742
Provision for income taxes		1,450			195
Net income		5,279			547
Net loss attributable to non-controlling interest		134			—
Net income attributable to Live stockholders	$	5,413		$	547
Income per share:
Basic	$	3.45		$	0.30
Diluted	$	1.63		$	0.15
Weighted average common shares outstanding:
Basic		1,568,213			1,806,746
Diluted		3,318,728			3,540,953
Dividends declared - series B convertible preferred stock	$	—		$	—
Dividends declared - series E convertible preferred stock	$	—		$	—

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

	Three Months Ended December 31,
	2020			2019
OPERATING ACTIVITIES:
Net income	$	5,279		$	547
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition:
Depreciation and amortization		1,714			1,085
Impairment charges		—			1,207
Gain on disposal of property and equipment		(129	)		47
Amortization of debt issuance cost		266			108
Stock based compensation expense		17			29
Warrant extension fair value adjustment		—			266
Change in deferred rent		—			370
Change in reserve for uncollectible accounts		658			415
Change in reserve for obsolete inventory		590			(170	)
Change in deferred income taxes		1,290			126
Change in other		(344	)		103
Changes in assets and liabilities:
Trade receivables		1,909			1,929
Inventories		(716	)		439
Income taxes receivable		70			74
Prepaid expenses and other current assets		478			290
Deposits and other assets		(366	)		9
Right-of-use assets		1,923			1,628
Accounts payable		(898	)		(2,182	)
Accrued liabilities		(2,256	)		(2,020	)
Lease liabilities		(1,817	)		(1,301	)
Net cash provided by operating activities		7,668			2,999

INVESTING ACTIVITIES:
Purchase of intangible assets		—			(4	)
Purchase of property and equipment		(3,258	)		(641	)
Net cash provided by (used in) investing activities		(3,258	)		(645	)

FINANCING ACTIVITIES:
Net borrowings (payments) under revolver loans		(3,289	)		(972	)
Proceeds from issuance of notes payable		2,130			—
Purchase of common treasury stock		(383	)		(343	)
Debtor in possession - cash		92			(173	)
Payments on long-term debt		(4,712	)		(2,042	)
Net cash used in financing activities		(6,162	)		(3,533	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(1,752	)		(1,179	)
CASH AND CASH EQUIVALENTS, beginning of period		8,984			2,681
CASH AND CASH EQUIVALENTS, end of period	$	7,232		$	1,502

Supplemental cash flow disclosures:
Interest paid	$	1,223		$	1,187
Income taxes paid	$	—		$	—
Noncash financing and investing activities:
Settlement of debt in exchange for property and equipment	$	1,000		$	—

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

	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			Accumulated Deficit			Non-controlling interest			Total Equity
Balance, September 30, 2020		214,244	$	—		47,480	$	—		1,589,101		$	2	$	64,472	$	(7	)	$	(4,098	)	$	(16,429	)	$	(268	)	$	43,672
Stock based compensation		—		—		—		—		—			—		17		—			—			—			—			17
Purchase of common treasury stock		—		—		—		—		(33,926	)		—		—		—			(383	)		—			—			(383	)
Net income (loss)		—		—		—		—		—			—		—		—			—			5,413			(134	)		5,279
Balance, December 31, 2020		214,244	$	—		47,480	$	—		1,555,175		$	2	$	64,489	$	(7	)	$	(4,481	)	$	(11,016	)	$	(402	)	$	48,585

	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			Accumulated Deficit			Total Equity
Balance, September 30, 2019		214,244	$	—		77,840		$	—		1,826,009		$	2	$	63,924	$	(4	)	$	(2,438	)	$	(27,355	)	$	34,129
Stock based compensation		—		—		—			—		—			—		29		—			—			—			29
Warrant extension fair value adjustment		—		—		—			—		—			—		266		—			—			—			266
Purchase of common treasury stock		—		—		—			—		(41,699	)		—		—		—			(343	)		—			(343	)
Purchase of Series E preferred stock		—		—		(30,000	)		—		—			—		—		(3	)								(3	)
Net income		—		—		—			—		—			—		—		—			—			547			547
Balance, December 31, 2019		214,244	$	—		47,840		$	—		1,784,310		$	2	$	64,219	$	(7	)	$	(2,781	)	$	(26,808	)	$	34,625

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

The accompanying unaudited condensed consolidated financial statements include the accounts of Live Ventures Incorporated, a Nevada corporation, and its subsidiaries (collectively, the “Company”). Commencing in fiscal year 2015, the Company began a strategic shift in its business plan away from providing online marketing solutions for small and medium sized business to acquiring profitable companies in various industries that have demonstrated a strong history of earnings power. The Company continues to actively develop, revise and evaluate its products, services and its marketing strategies in its businesses. The Company has three operating segments: Retail, Flooring Manufacturing and Steel Manufacturing. Included in the Retail segment: (i) Vintage Stock, Inc. (“Vintage Stock”), the Company is engaged in the retail sale of new and used movies, music, collectibles, comics, books, games, game systems and components and (ii) ApplianceSmart, Inc. (“ApplianceSmart”), the Company is engaged in the sale of new major appliances through a retail store. Included in the Flooring Manufacturing segment is Marquis Industries, Inc. (“Marquis”), which is engaged in the manufacture and sale of carpet and the sale of vinyl and wood floorcoverings. Included in the Steel Manufacturing Segment is Precision Industries, Inc. (“Precision Marshall”), which is engaged in the manufacture and sale of alloy and steel plates, ground flat stock and drill rods.

The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. 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 three months ended December 31, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2021. This financial information should be read in conjunction with the consolidated financial statements and related notes thereto as of September 30, 2020 and for the fiscal year then ended included in the Company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on January 13, 2021 (the “2020 10-K”).

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 fund our operations, pay our scheduled loan payments, continue to repurchase shares, and pay dividends on our shares of Series E Preferred Stock as declared by the Board of Directors, for at least the next 12 months.

In March 2020, there was a global outbreak of COVID-19 (Coronavirus) which continues to create challenges and unprecedented conditions. Although there are effective vaccines for COVID-19 that have been approved for use, distribution of the vaccines did not begin until late 2020, and a majority of the public will likely not have access to a vaccination until sometime in 2021. Accordingly, there remains significant uncertainty about the duration and the extent of the impact of the COVID-19 pandemic. These uncertainties include, but are not limited to, the potential adverse effect of the pandemic on the Company’s supply chain partners, its employees and customers, customer sentiment in general, and traffic within shopping centers, and, where applicable, malls, containing its stores. Recommendations and/or mandates from federal, state, and local authorities to avoid large gatherings of people or self-quarantine have previously affected, and may continue to affect, traffic to the stores. As of March 31, 2020, Vintage Stock had closed all of its retail locations in response to the crisis. Beginning May 1, 2020, Vintage Stock began to reopen certain locations in compliance with government regulations and, at June 30, 2020, all Vintage Stock retail locations were reopened while maintaining compliance with government mandates. The Company is unable to predict if additional periods of store closures will be needed or mandated. During March and April 2020, Marquis conducted rolling layoffs for certain employees, however, during May 2020, most employees have returned to their respective locations. Continued impacts of the pandemic could materially adversely affect the near-term and long-term revenues, earnings, liquidity, and cash flows, and may require significant actions in response, including but not limited to, employee furloughs, reduced store hours, store closings, expense reductions or discounting of pricing of products, all in an effort to mitigate such impacts. The extent of the impact of the pandemic on the business and financial results will depend largely on future developments, including the duration of the spread of the outbreak within the U.S. and the effect of the vaccines, the impact on capital and financial markets and the related impact on consumer confidence and spending, all of which are highly uncertain and cannot be predicted. This situation is changing rapidly, and additional impacts may arise that the Company is not aware of currently.

The accompanying consolidated financial statements represent the consolidated financial position, results of operations and cash flows for Live Ventures and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Additionally, the Company records noncontrolling interest for entities which the Company has determined itself to be the primarily beneficiary of the variable interest entity but does not have 100% ownership.

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates made in connection with the accompanying consolidated financial statements include the estimate of dilution and fees associated with billings, the estimated reserve for doubtful current and long-term trade and other receivables, the estimated reserve for excess and obsolete inventory, estimated warranty reserve, estimated fair value and forfeiture rates for stock-based compensation, fair values in connection with the analysis of goodwill, other intangibles and long-lived assets for impairment, current portion of notes payable, valuation allowance against deferred tax assets, lease terminations, and estimated useful lives for intangible assets and property and equipment.

Certain amounts in the prior year have been reclassifies to confirm to the current year presentation.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which introduces a new approach to estimate credit losses on certain types of financial instruments based on expected losses instead of incurred losses. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU No. 2016-13 is effective for smaller reporting companies for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of adopting this new accounting standard on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU No. 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 is part of the FASB’s overall simplification initiative and seeks to simplify the accounting for income taxes by updating certain guidance and removing certain exceptions. The updated guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of adopting this new accounting standard on its consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU No. 2020-04 - Reference Rate Reform (Topic 848), codified as ASC 848 (“ASC 848”). The purpose of ASC 848 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates to alternative reference rates. ASC 848 applies only to contracts, hedging relationships, and other transactions that reference a reference rate expected to be discontinued because of reference rate reform. The guidance may be applied upon issuance of ASC 848 through December 31, 2022. The Company is currently assessing the impact of adopting this new accounting standard on its consolidated financial statements and related disclosures.

The Company leases retail stores, warehouse facilities and office space. These assets and properties are generally leased under noncancelable agreements that expire at various dates through 2040 with various renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for minimum and, in some cases percentage rent and require us to pay all insurance, taxes and other maintenance costs. As a result, they recognize assets and liabilities for all leases with lease terms greater than 12 months. The amounts recognized reflect the present value of remaining lease payments for all leases. The discount rate used is an estimate of the Company’s blended incremental borrowing rate based on information available associated with each subsidiary’s debt outstanding at lease commencement. In considering the lease asset value, the Company considers fixed and variable payment terms, prepayments and options to extend, terminate or purchase. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.

The weighted average remaining lease term is 9.2 years. Our weighted average discount rate is 6.9%. Total cash payments for the three months ended December 31, 2020 was $2,178. We did not enter into any new leases during the three months ended December 31, 2020.

The following table details our right of use assets and lease liabilities as of December 31, 2020 and September 30, 2020:

During the three months ended December 31, 2019, the Company incurred $1,207 of impairment charges related to the decision to close additional ApplianceSmart retail locations resulting in a decrease to the associated right of use asset related to these leases. These locations physically closed during the three months ended March 31, 2020. There were no similar charges for the three months ended December 31, 2020.

	December 31, 2020			September 30, 2020
Trade receivables, current, net:
Accounts receivable, current	$	17,626		$	20,197
Less: Reserve for doubtful accounts		(62	)		(76	)
	$	17,564		$	20,121
Trade receivables , long term, net:
Accounts receivable, long term	$	—		$	196
Less: Reserve for doubtful accounts		—			(196	)
	$	—		$	—
Total trade receivables, net:
Gross trade receivables	$	17,626		$	20,393
Less: Reserve for doubtful accounts		(62	)		(272	)
	$	17,564		$	20,121
Inventory, net
Raw materials	$	12,930		$	13,175
Work in progress		11,031			11,747
Finished goods		26,474			25,009
Merchandise		16,891			17,729
		67,326			67,660
Less: Inventory reserves		(2,587	)		(3,135	)
	$	64,739		$	64,525
Property and equipment, net:
Building and improvements	$	11,405		$	9,908
Transportation equipment		122			480
Machinery and equipment		29,719			27,217
Furnishings, fixtures, office equipment and other		6,749			6,353
		47,994			43,958
Less: Accumulated depreciation		(16,868	)		(13,582	)
	$	31,127		$	30,376
Intangible assets, net:
Domain name and marketing related intangibles	$	90		$	90
Customer relationship intangibles		2,689			2,689
Purchased software		121			121
		2,900			2,900
Less: Accumulated amortization		(1,944	)		(1,837	)
	$	956		$	1,063
Accrued liabilities:
Accrued payroll	$	2,691		$	4,178
Accrued sales and use taxes		1,574			1,251
Accrued property and other tax		208			270
Accrued gift card and escheatment liability		1,683			1,534
Accrued interest payable		393			280
Accrued bank fees and overdrafts		514			2,631
Accrued professional fees		5,102			3,378
Customer deposits		35			169
Accrued expenses - other		695			1,131
	$	12,896		$	14,822

Long-term debt as of December 31, 2020 and September 30, 2020 consisted of the following:

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)

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)

		Page
	PART I

	FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of December 31, 2020 (Unaudited) and September 30, 2020	3

	Condensed Consolidated Statements of Income (Unaudited) for the Three Months December 31, 2020 and 2019	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended December 31, 2020 and 2019	5

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three Months Ended December 31, 2020 and 2019	6

	Notes to the Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30

Item 4.	Controls and Procedures	30

	PART II

	OTHER INFORMATION	31

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

SIGNATURES		34

Twelve months ended December 31,
2021	$	8,731
2022		6,871
2023		4,879
2024		3,953
2025		2,946
Thereafter		13,660
Total		41,040
Less implied interest		(7,579	)
Present value of payments	$	33,461

	December 31, 2020		September 30, 2020
Bank of America Revolver Loan	$	—	$	—
Encina Business Credit Revolver Loan		13,233		14,886
Texas Capital Bank Revolver Loan

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐