live-20230630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

_________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

o 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 x No o

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 x No o

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	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
Emerging growth company	o

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. o

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

The number of shares of the issuer’s common stock, par value $0.001 per share, outstanding as of August 7, 2023 was 3,164,330.

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INDEX TO FORM 10-Q FILING

FOR THE NINE MONTHS ENDED June 30, 2023

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		Page
	PART I

	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of June 30 , 2023 (Unaudited) and September 30, 2022	3

	Condensed Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended June 30 , 2023 and 2022	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended June 30 , 2023 and 2022	5

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Nine Months Ended June 30 , 2023 and 2022	6

	Notes to the Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40

Item 4.	Controls and Procedures	40

	PART II

	OTHER INFORMATION	42

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.	Defaults upon Senior Securities	44

Item 4.	Mine Safety Disclosures	44

Item 5.	Other Information	44

Item 6.	Exhibits	45

SIGNATURES		46

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per-share amounts)


	June 30, 2023		September 30, 2022
	(Unaudited)
Assets
Cash	$	3,547	$	4,600
Trade receivables, net of allowance for doubtful accounts of $194,000 at June 30, 2023 and $132,000 at September 30, 2022	27,358		25,665
Inventories, net of reserves of $3.5 million at June 30, 2023 and $2.4 million at September 30, 2022	114,075		97,659
Income taxes receivable	4,087		4,403
Prepaid expenses and other current assets	3,249		2,477
Total current assets	152,316		134,804
Property and equipment, net of accumulated depreciation of $34.3 million at June 30, 2023, and $26.7 million at September 30, 2022	65,431		64,590
Right of use asset - operating leases	45,321		33,659

Deposits and other assets	1,593		647

Intangible assets, net of accumulated amortization of $3.4 million at June 30, 2023 and $2.1 million at September 30, 2022	24,117		3,844
Goodwill	71,389		41,093
Total assets	$	360,167	$	278,637
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable	$	14,808	$	10,899
Accrued liabilities	22,748		16,486

Current portion of lease obligations - operating leases	10,582		7,851
Current portion of lease obligations - finance leases	355		217
Current portion of long-term debt	23,689		18,935
Current portion of notes payable related parties	1,000		2,000
Total current liabilities	73,182		56,388
Long-term debt, net of current portion	64,519		59,704
Lease obligation long term - operating leases	39,588		30,382
Lease obligation long term - finance leases	20,004		19,568
Notes payable related parties, net of current portion	44,773		5,000
Deferred taxes	13,046		8,818
Other non-current obligations	852		1,615
Total liabilities	255,964		181,475
Commitments and contingencies
Stockholders' equity:
Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at June 30, 2023 and September 30, 2022, respectively, with a liquidation preference of $0.30 per share outstanding	—		—
Common stock, $0.001 par value, 10,000,000 shares authorized, 3,164,432 and 3,074,833 shares issued and outstanding at June 30, 2023 and September 30, 2022, respectively	2		2
Paid in capital	68,888		65,321
Treasury stock common 659,961 and 620,971 shares as of June 30, 2023 and September 30, 2022, respectively	(8,203)		(7,215)
Treasury stock Series E preferred 80,000 shares as of June 30, 2023 and September 30, 2022, respectively	(7)		(7)
Retained earnings	43,971		39,509
Equity attributable to Live stockholders	104,651		97,610
Non-controlling interest	(448)		(448)
Total stockholders' equity	104,203		97,162
Total liabilities and stockholders' equity	$	360,167	$	278,637

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

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LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(dollars in thousands, except per-share amounts)


	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	91,516	$	68,269	$	251,624	$	213,133
Cost of revenues	59,347		45,920		165,903		138,215
Gross profit	32,169		22,349		85,721		74,918

Operating expenses:
General and administrative expenses	23,226		13,407		60,443		40,718
Sales and marketing expenses	3,382		3,078		10,198		9,480
Total operating expenses	26,608		16,485		70,641		50,198
Operating income	5,561		5,864		15,080		24,720
Other (expense) income:
Interest expense, net	(3,485)		(674)		(8,767)		(2,549)
Gain (loss) on debt extinguishment	—		279		—		(84)
Gain on disposal of fixed assets	(29)		(443)		(22)		(444)
Loss on write-off of ROU asset	—		(522)		—		(522)
Salomon Whitney settlement	1,000		—		2,000		—
Loss on disposition of Salomon Whitney	(1,696)		—		(1,696)		—
Gain on bankruptcy settlement	—		—		—		11,352
Other income (expense)	6		333		(671)		751
Total other income (expense), net	(4,204)		(1,027)		(9,156)		8,504
Income before provision for income taxes	1,357		4,837		5,924		33,224
Provision for income taxes	297		1,365		1,462		7,848
Net income	1,060		3,472		4,462		25,376
Net income attributable to Live stockholders	$	1,060	$	3,472	$	4,462	$	25,376

Income per share:
Basic	$	0.33	$	1.12	$	1.43	$	8.11
Diluted	$	0.33	$	1.11	$	1.42	$	8.01

Weighted average common shares outstanding:
Basic	3,166,842		3,090,321		3,123,177		3,128,813
Diluted	3,186,904		3,130,925		3,143,634		3,169,258

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

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LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(dollars in thousands)


	For the Nine Months Ended June 30,
	2023		2022
Operating Activities:
Net income	$	4,462	$	25,376
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition:
Depreciation and amortization	9,978		4,616
(Gain)/loss on disposal of property and equipment	29		443
Gain on bankruptcy settlement	—		(11,501)
Amortization of debt issuance cost	223		(95)
Stock based compensation expense	396		37
Amortization of right-of-use assets	2,069		8,517
Write-off of ROU asset	—		522
Change in reserve for uncollectible accounts	62		(6)
Change in reserve for obsolete inventory	1,030		431
Change in deferred income taxes	4,227		2,529
Disposition of SW Financial, net of cash retained	1,509		—
Changes in assets and liabilities, net of acquisitions:
Trade receivables	2,940		(362)
Inventories	2,917		(18,582)
Income taxes payable/receivable	316		(481)
Prepaid expenses and other current assets	3,482		(450)
Deposits and other assets	(1,002)		(362)
Accounts payable	(1,039)		3,741
Accrued liabilities	(5,656)		(3,553)
Other Liabilities	63		24
Net cash provided by operating activities	26,006		10,844

Investing Activities:
Acquisition of Flooring Liquidators, net of cash acquired	(33,929)		—
Acquisition of Kinetic	—		(24,355)
Acquisition of Cal Coast Carpets	(1,300)		—
Purchase of property and equipment	(3,499)		(8,304)
Net cash used in investing activities	(38,728)		(32,659)

Financing Activities:
Net borrowings under revolver loans	3,133		18,179
Proceeds from issuance of notes payable	9,878		20,292
Payments on notes payable	(5,555)		(15,122)
Proceeds from issuing related party notes payable	7,000		—
Payments for debt acquisition costs	(98)		—
Purchase of common treasury stock	(988)		(2,528)
Payments on financing leases	(1,621)		(120)
Payments on seller financing arrangements	(51)		—
Cash paid for taxes on net settlement of stock option exercise	(29)		—
Debtor-in-possession cash	—		75
Net cash provided by financing activities	11,669		20,776

Decrease in cash	(1,053)		(1,039)
Cash, beginning of period	4,600		4,664
Cash, end of period	$	3,547	$	3,625

Supplemental cash flow disclosures:
Interest paid	$	7,443	$	2,496
Income taxes paid	$	102	$	5,795
Noncash financing and investing activities:
Noncash items related to Flooring Liquidators acquisition	$	36,900	$	—
Noncash stock options exercise	$	327	$	—

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

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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, 2022	—	$	—	47,840	$	—	3,074,833	$	2	$	65,321	$	(7)	$	(7,215)	$	39,509	$	(448)	$	97,162
Purchase of common treasury stock	—	—		—	—		(24,710)	—		—		—		(621)		—		—		(621)
Net income	—	—		—	—		—	—		—		—		—		1,844		—		1,844
Balance, December 31, 2022	—	$	—	47,840	$	—	3,050,123	$	2	$	65,321	$	(7)	$	(7,836)	$	41,353	$	(448)	$	98,385
Purchase of common treasury stock	—	—		—	—		(674)	—		—		—		(17)		—		—		(17)
Stock based compensation	—	—		—	—		—	—		109										109
Issuance of common stock	—	—		—	—		116,441	—		3,200		—		—		—				3,200
Net income	—	—		—	—		—	—		—		—		—		1,558		—		1,558
Balance, March 31, 2023	—	$	—	47,840	$	—	3,165,890	$	2	$	68,630	$	(7)	$	(7,853)	$	42,911	$	(448)	$	103,235
Purchase of common treasury stock	—	—		—	—		(13,606)	—		—		—		(350)		—		—		(350)
Stock based compensation	—	—		—	—		—	—		287		—		—		—		—		287
Stock options exercised	—	—		—	—		12,148	—		—		—		—		—		—		—
Taxes paid on net settlement of stock options exercised	—	—		—	—		—	—		(29)		—		—		—		—		(29)
Issuance of common stock	—	—		—	—		—	—		—		—		—		—				—
Net income	—	—		—	—		—	—		—		—		—		1,060		—		1,060
Balance, June 30, 2023	—	$	—	47,840	$	—	3,164,432	$	2	$	68,888	$	(7)	$	(8,203)	$	43,971	$	(448)	$	104,203

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	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	—		—		—	—		—	—		—				—		—		15,358		—		15,358
Balance, March 31, 2022	—		$	—	47,840	$	—	3,095,616	$	2	$	65,321	$	65,321	$	(7)	$	(6,603)	$	36,672	$	(448)	$	94,937
Purchase of common treasury stock	—		—		—	—		(14,160)	—		—				—		(444)		—		—		(444)
Net income	—		—		—	—			—		—				—				3,472		—		3,472
Balance, June 30, 2022	—	0	$	—	47,840	$	—	3,081,456	$	2	$	65,321			$	(7)	$	(7,047)	$	40,144	$	(448)	$	97,965

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

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LIVE VENTURES INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2023 AND 2022

(dollars in thousands, except per-share amounts)

Note 1: Background and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Live Ventures Incorporated, a Nevada corporation, and its subsidiaries (collectively, “Live Ventures” or the “Company”). Live Ventures is a diversified holding company with a strategic focus on value-oriented acquisitions of domestic middle-market companies. The Company has five operating segments: Retail-Entertainment, Retail-Flooring, Flooring Manufacturing, Steel Manufacturing, and Corporate and Other. The Retail-Entertainment segment includes Vintage Stock, Inc. (“Vintage Stock”), which is engaged in the retail sale of new and used movies, music, collectibles, comics, books, games, game systems and components. The Retail-Flooring segment includes Flooring Liquidators, Inc. (“Flooring Liquidators”), which is engaged in the retail sale and installation of floors, carpets, and countertops. The Flooring Manufacturing segment includes Marquis Industries, Inc. (“Marquis”), which is engaged in the manufacture and sale of carpet and the sale of vinyl and wood floor coverings. The Steel Manufacturing Segment includes Precision Industries, Inc. (“Precision Marshall”), which is engaged in the manufacture and sale of alloy and steel plates, ground flat stock and drill rods, and The Kinetic Co., Inc. (“Kinetic”), which is engaged in the production of industrial knives and hardened wear products for the tissue and metals industries.

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 the three and nine months ended June 30, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2023. The financial information included in these statements should be read in conjunction with the condensed consolidated financial statements and related notes thereto as of September 30, 2022 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 December 16, 2022 (the “2022 Form 10-K”).

Note 2: Summary of Significant Accounting Policies

Principles of Consolidation

The unaudited condensed financial statements include the accounts of the Company and its majority owned subsidiaries over which the Company exercises control. The Company records a non-controlling interest within stockholders’ equity for the portion of the entity’s equity attributed to the consolidated entities that are not wholly owned. All intercompany accounts and transactions have been eliminated in consolidation. These reclassifications have no material effect on the reported financial results.

Reclassifications

Certain amounts in the prior period have been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s 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 condensed consolidated financial statements, as well as 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 condensed consolidated financial statements include the estimated reserve for doubtful accounts, the estimated reserve for excess and obsolete inventory, fair values of goodwill, other intangibles and long-lived assets in connection with an acquisition, fair values in connection with the analysis of goodwill, other intangibles and long-lived assets for impairment, valuation allowance against deferred tax assets, and estimated useful lives for intangible assets and property and equipment.

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Recently Issued Accounting Pronouncements

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. Effective December 31, 2021, the Secured Overnight Financing Rate (“SOFR”) replaced the USD London Interbank-Offered Rate (“LIBOR”) for most financial benchmarking. The guidance may be applied upon issuance of ASC 848 through December 31, 2022. The Company has adopted this new accounting standard on its condensed consolidated financial statements and related disclosures; however, adoption of this ASU had no material impact on the Company's financial statements.

Note 3: Acquisitions

Acquisition of Flooring Liquidators

On January 18, 2023, Live Ventures acquired 100% of the issued and outstanding equity interests (the “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 (see Note 11).

The acquisition was effected pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) with an effective date of January 18, 2023 by and among the Company, and 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 (collectively, the “Seller”). The purchase price for the Equity Interests was $83.8 million before any fair value considerations, and is comprised of the following:

•$41.8 million in cash to the Seller;

•$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 the Company 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 Company Common Stock (as defined in the Purchase Agreement) (the “Share Amount”), calculated in the manner described in the Purchase Agreement;

•$2.0 million holdback; and

•$2.0 million of contingent consideration, comprised of $1.0 million in cash and $1.0 million in restricted stock units.

The fair value the purchase price components outlined above was $78.7 million due to fair value adjustments for the Note, restricted stock, and contingent consideration.

Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $30.6 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of January 18, 2023, as calculated by an independent third-party firm. The Company anticipates approximately $13.4 million of the goodwill arising from the acquisition to be fully deductible for tax purposes. The table

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below outlines the purchase price allocation of the purchase for Flooring Liquidators to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):


Purchase price			$	78,700


Accounts payable			5,189
Accrued liabilities			11,484
Debt			60
Total liabilities assumed			16,733
Total consideration			95,433
Cash			7,871
Accounts receivable			4,824
Inventory			19,102
Property, plant and equipment			4,678
Intangible assets
Trade names	$	13,275
Customer relationships	7,700
Non-compete agreements	1,625
Other	49
Subtotal intangible assets			22,649
Other			5,701
Total assets acquired			64,825
Total goodwill			$	30,608

During the three months ended June 30, 2023, the Company recorded a fair value adjustment to increase goodwill by $1.9 million. The increase relates to an increase in the value of other assets acquired of $1.3 million, as well as an increase in the value of accrued liabilities assumed of $2.3 million, partially offset by a reduction in inventory acquired of $842,000.

Pro Forma Information

The table below presents selected proforma information for the Company for the nine-month period ended June 30, 2023, and the three and nine month period ended June 30, 2022 assuming that the acquisition had occurred on October 1, 2021 (the beginning of the Company’s 2022 fiscal year), pursuant to ASC 805-10-50 (in $000’s). This proforma information

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does not purport to represent what the actual results of operations of the Company would have been had the acquisition occurred on that date, nor does it purport to predict the results of operations for future periods.









	As Reported				Adjustments		Proforma
	Live Unaudited Three Months Ended June 30, 2022		Flooring Liquidators Unaudited Three Months Ended June 30, 2022		Adjustments(1)		Live for the Three Months Ended June 30, 2022
Net revenue	$	68,269	$	32,525			$	100,794
Net income	$	3,472	$	2,562	$	(2,008)	$	4,026
Earnings per basic common share	$	1.12					$	1.30
Earnings per basic diluted share	$	1.11					$	1.29

	As Reported				Adjustments		Proforma
	Live Unaudited Nine Months Ended June 30, 2023		Flooring Liquidators Unaudited Nine Months Ended June 30, 2023 (2)		Adjustments(1)		Live for the Nine Months Ended June 30, 2023
Net revenue	$	251,624	$	37,702			$	289,326
Net income	4,462		$	(1,033)	$	(2,226)	$	1,203
Earnings per basic common share	$	1.43					$	0.39
Earnings per basic diluted share	$	1.42					$	0.38

	As Reported				Adjustments		Proforma
	Live Unaudited Nine Months Ended June 30, 2022		Flooring Liquidators Unaudited Nine Months Ended June 30, 2022		Adjustments(1)		Live for the Nine Months Ended June 30, 2022
Net revenue	$	213,133	$	92,375			$	305,508
Net income	$	25,376	$	7,783	$	(5,826)	$	27,333
Earnings per basic common share	$	8.11					$	8.74
Earnings per basic diluted share	$	8.01					$	8.62

(1)Adjustments are related to adjustments made for the following:

•Amortization expense of definite-lived intangible assets has been adjusted based on the preliminary fair value at the acquisition date.

•Interest expense has been adjusted to include proforma interest expense that would have been incurred as a result of the acquisition financing obtained by the Company.

•Elimination of revenues and costs of revenues associated with sales between Flooring Liquidators and the Company prior to acquisition.

(2) Amounts presented are for predecessor period.

Acquisition of Cal Coast Carpets

On June 2, 2023, Flooring Liquidators acquired certain fixed assets and other intangible assets of Cal Coast Carpets, Inc. (“Cal Coast”), and its Shareholders, which was effected through two Asset Purchase Agreements (“Agreement”, or collectively, “Agreements”). No liabilities were assumed as part of either transaction. The purchase price for the fixed assets acquired from Cal Coast was $35,000, and the intangible assets acquired from the Shareholders was approximately $1.265 million, for a total combined purchase price of $1.3 million. The intangible assets acquired were comprised of customer relationships, trade name, and non-compete agreements. The acquisition was determined to be an asset acquisition for accounting purposes and, as such, no goodwill was recorded as part of the transaction. The values assigned to the assets acquired are based on their estimates of fair value available as of June 2, 2023, as calculated by management.

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The table below outlines the purchase price allocation of the purchase for Cal Coast to the acquired identifiable assets (in $000’s):


Property, plant and equipment	$	35
Intangible assets
Customer relationships	785
Trade name	425
Non-compete agreement	55
Total intangible assets	1,265
Total assets acquired	$	1,300

Acquisition of Kinetic

On June 28, 2022, Precision Marshall (“Precision”) acquired 100% of the issued and outstanding shares of common stock of The Kinetic Co., Inc. (“Kinetic”), a Wisconsin corporation, which was effected through a Purchase Agreement (the “Purchase Agreement”). In connection with the Purchase Agreement, Precision also entered into a Real Estate Purchase Agreement with Plant B-6, LLC, an affiliate of Kinetic, pursuant to which Precision received all of Kinetic's right, title, and interest in and to the land and improvements (collectively, the “Real Estate”) that Kinetic uses in its operations. The combined purchase price for the Kinetic shares and Real Estate was approximately $24.7 million, which was funded with approximately $11.0 million in borrowings under the company’s credit facility, approximately $8.3 million in proceeds from the sale and leaseback of the Real Estate, a subordinated promissory note in the principal amount of $3.0 million for the benefit of the Seller of Kinetic, $1.7 million of cash on-hand, a contingent earn-out liability valued at $997,000, a working capital adjustment of approximately $400,000, which was paid in cash, and a final fair value adjustment of approximately $312,000, which was noncash.

As of the date of acquisition, Precision entered into a sale and leaseback agreement with a third-party, independent of the Kinetic sellers, for the Real Estate. The sale price of the Real Estate was approximately $8.9 million, subject to closing fees of approximately $547,000.

The provisions of the lease agreement include a 20-year lease term with two five-year renewal options. The base rent under the lease agreement is $600,000 for the first year of the term and a 2% per annum escalator. The Lease Agreement is a “net lease,” such that the lessees are also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the Real Property incurred by the lessor. Due to the highly specialized nature of the leased assets, the Company currently believes that it is more likely than not that each of the two five-year options will be exercised. The proceeds, net of closing fees, from the sale-leaseback were used to assist in funding the acquisition of Kinetic.

Under the purchase price allocation, the Company recognized goodwill of approximately $3.0 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of June 28, 2022, as calculated by an independent third-party firm. Goodwill arising from the acquisition is

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expected to be fully deductible for tax purposes. The table below outlines the purchase price allocation of the purchase for Kinetic to the acquired identifiable assets, liabilities assumed and goodwill as of June 30, 2023 (in $000’s):


Total purchase price	$	24,732
Accounts payable	571
Accrued liabilities	1,848
Total liabilities assumed	2,419
Total consideration	27,151
Cash	287
Accounts receivable	3,073
Inventory	6,429
Property, plant and equipment	12,855
Intangible assets	1,000
Other assets	480
Total assets acquired	24,124
Total goodwill	$	3,027

Pro Forma Information

The table below presents selected proforma information for the Company for the three and nine-month periods ended June 30, 2022, assuming that the acquisition had occurred on October 1, 2021 (the beginning of the Company’s 2022 fiscal year), pursuant to ASC 805-10-50 (in $000's). This proforma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition occurred on that date, nor does it purport to predict the results of operations for future periods.


	As Reported				Adjustments		Proforma
	Live Unaudited Three Months Ended June 30, 2022		Kinetic Unaudited Three Months Ended June 30, 2022		Adjustments(1)		Live for the Three Months Ended June 30, 2022
Net revenue	$	68,269	$	5,696			$	73,965
Net income	$	3,472	$	712	$	(69)	$	4,115
Earnings per basic common share	$	1.12					$	1.33
Earnings per basic diluted share	$	1.11					$	1.31

	As Reported				Adjustments		Proforma
	Live Unaudited Nine Months Ended June 30, 2022		Kinetic Unaudited Nine Months Ended June 30, 2022		Adjustments(1)		Live for the Nine Months Ended June 30, 2022
Net revenue	$	213,133	$	15,418			$	228,551
Net income	$	25,376	$	1,286	$	(207)	$	26,455
Earnings per basic common share	$	8.11					$	8.46
Earnings per basic diluted share	$	8.01					$	8.35

(1) Adjustments are related to adjustments made for the following:

• Amortization expense of definite-lived intangible assets has been adjusted based on the preliminary fair value at the acquisition date.

• Interest expense has been adjusted to include proforma interest expense that would have been incurred as a result of the acquisition financing obtained by the Company.

• Certain other expenses have been adjusted to reflect the post-acquisition operating environment.

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Acquisition of Better Backers

On July 1, 2022, Live acquired certain assets and intellectual property of Better Backers, a Georgia corporation, which was effected through an Asset Purchase Agreement (the “Asset Purchase Agreement”). No liabilities were assumed as part of the acquisition. The purchase price, which is subject to certain post-closing adjustments, was approximately $3.2 million, which is comprised of $1.8 million that was paid upon closing, and the $1.4 million present value of $1.5 million of non-compete payments to be made over a 24-month period. In order to expedite the transaction, the acquisition was originally made by Live, and the $1.8 million paid upon closing was funded with borrowings under Live’s credit line with Isaac Capital Group (“ICG”). On August 18, 2022, Marquis repaid the $1.8 million to ICG and assumed ownership of Better Backers.

In connection with the acquisition, Marquis entered into two 20-year building leases with Spyglass Estate Planning, LLC, a related party (see Note 16), with two options to renew for an additional five years each. The fair value of the buildings and improvement is approximately $9.3 million. The provisions of the lease agreements include an initial 24-month month-to-month rental period, during which the lessee may cancel with 90-day notice, followed by a 20-year lease term with two five-year renewal options. Due to the highly specialized nature of the leased assets, the Company currently believes that it is more likely than not that it will not cancel during the initial 24-month term, and that each of the two five-year options will be exercised. The base rent under the lease agreements is approximately $73,000 and $32,000 per month, respectively, for the first year of the term, and each lease agreement has a 2.5% per annum escalator. The lease agreements are each “net leases”, such that the lessee is also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the property. The Company has evaluated each lease and determined the rent amounts to be at market rates. These leases are being treated as finance leases for accounting purposes, as described in ASC 842 “Leases”.

Under the purchase price allocation, no goodwill was recognized. The values assigned to the assets acquired are based on their estimates of fair value available as of July 1, 2022, as calculated by management. The table below outlines the purchase price allocation of the purchase for Better Backers to the acquired identifiable assets (in $000’s):


Total purchase price	$	3,166
Inventory	748
Property, plant and equipment	2,118
Intangible assets	300
Total assets acquired	3,166

Note 4: Variable Interest Entity

On March 31, 2023, the Company entered into a Settlement Agreement and Mutual Release (“Agreement”) with Angia Holdings, LLC and Thomas Diamante and Lawrence Zelin (“Principals”). The Agreement stipulated that the Principals would pay the Company $1,000,000 within 10 days of the effective date of the Agreement, and an additional $1,000,000 within 45 days of the effective date of the Agreement if a joint venture, with terms acceptable to the Company, was not formed.

The Principals made the initial $1,000,000 payment in April 2023, and, having failed to form a joint venture, as described above, made the second $1,000,000 payment in May 2023. Consequently, employment of the Principals was terminated, and operations of SW Financial were shut down. The Company recorded a gain on receipt of the settlement amounts of $2,000,000 and a loss on deconsolidation of SW Financial's assets and liabilities of approximately $1.7 million, as detailed in the table below (in $000’s):

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Accounts payable	$	242
Lease liabilities	728
Total deconsolidation of liabilities	970
Cash	187
Accounts receivable	130
Other current assets	187
Intangible assets
Customer Relationships	1,348
Tradenames	72
Subtotal Intangible Assets	1,420
Right-of-use assets	687
Other assets	55
Total deconsolidation of assets	2,666
Total loss on deconsolidation	$	(1,696)

Note 5: Leases

The Company leases retail stores, warehouse facilities, and office space. These assets and properties are generally leased under noncancelable agreements that expire at various future dates with many agreements containing renewal options for additional periods. The agreements, which have been classified as either operating or finance leases, generally provide for minimum and, in some cases, percentage rent, and require the Company to pay all insurance, taxes, and other maintenance costs. As a result, the Company recognizes 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.

As of June 30, 2023, the weighted average remaining lease term for operating leases is 7.2 years. The Company's weighted average discount rate for operating leases is 8.4%. Total cash payments for operating leases for the nine months ended June 30, 2023 and 2022 were approximately $8.2 million and $7.2 million, respectively. Additionally, we obtained right-of-use assets in exchange for operating lease liabilities of approximately $19.9 million upon commencement of operating leases during the nine months ended June 30, 2023.

As of June 30, 2023, the weighted average remaining lease term for finance leases is 26.9 years. The Company's weighted average discount rate for finance leases is 13.2%. Total cash payments for finance leases for the nine months ended June 30, 2023 and 2022 were approximately $1.6 million and $0, respectively. Additionally, we obtained right-of-use assets in exchange for finance lease liabilities of approximately $443,000 upon commencement of operating leases during the nine months ended June 30, 2023.

The following table details our right of use assets and lease liabilities as of June 30, 2023 and September 30, 2022 (in $000's):


	June 30, 2023		September 30, 2022
Right of use asset - operating leases	$	45,321	$	33,659

Lease liabilities:
Current - operating	10,582		7,851
Current - finance	355		217
Long term - operating	39,588		30,382
Long term - finance	20,004		19,568

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The Company records finance lease right of use assets as property and equipment. The balance, as of June 30, 2023 and September 30, 2022 is as follows (in $000’s):


Property and equipment, at cost	$	16,471	$	16,029
Accumulated depreciation	$	(514)	$	(130)
Property and equipment, net	$	15,957	$	15,899

Total present value of future lease payments of operating leases as of June 30, 2023 (in $000's):


Twelve months ended June 30,
2023	$	13,855
2024	11,515
2025	9,655
2026	7,525
2027	4,987
Thereafter	15,462
Total	62,999
Less implied interest	(12,829)
Present value of payments	$	50,170

Total present value of future lease payments of finance leases as of June 30, 2023 (in $000's):


Twelve months ended June 30,
2023	$	2,175
2024	2,222
2025	2,223
2026	2,268
2027	2,345
Thereafter	72,260
Total	83,493
Less implied interest	(63,134)
Present value of payments	$	20,359

In connection with the acquisition of Flooring Liquidators (see Note 3), as of June 30, 2023, the Company obtained right-of-use assets in exchange for operating lease liabilities of $16.8 million, and right-of-use assets in exchange for finance lease liabilities of $443,000.

In connection with the disposition of SW Financial (see Note 4), the Company deconsolidated approximately $687,000 of right-of-use assets and $728,000 of operating lease liabilities, which were included in the calculation of the loss on disposition.

During the nine months ended June 30, 2023 and 2022, the Company recorded no impairment charges relating to any of its leases.

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Note 6: Inventory

The following table details the Company's inventory as of June 30, 2023 and September 30, 2022 (in $000's):


Inventory, net	June 30, 2023		September 30, 2022
Raw materials	$	32,810	$	35,829
Work in progress	7,623		7,539
Finished goods	34,327		32,814
Merchandise	42,916		23,900
	117,676		100,082
Less: Inventory reserves	(3,601)		(2,423)
Total inventory, net	$	114,075	$	97,659

Note 7: Property and Equipment

The following table details the Company's property and equipment as of June 30, 2023 and September 30, 2022 (in $000's):


	June 30, 2023		September 30, 2022
Property and equipment, net:
Land	$	2,029	$	2,029
Building and improvements	28,073		26,761
Transportation equipment	3,384		622
Machinery and equipment	55,923		53,739
Furnishings and fixtures	6,019		4,407
Office, computer equipment and other	4,281		3,699
	99,709		91,257
Less: Accumulated depreciation	(34,278)		(26,667)
	$	65,431	$	64,590

Depreciation expense was $2.7 million and $1.4 million, respectively, for the three months ended June 30, 2023 and 2022, and $7.8 million and $3.9 million for the nine months ended June 30, 2023 and 2022.

Note 8: Intangibles

The following table details the Company's intangibles as of June 30, 2023 and September 30, 2022 (in $000's):


	June 30, 2023		September 30, 2022
Intangible assets, net:
Intangible assets - Tradenames	$	14,390	$	808
Intangible assets - Customer relationships	10,824		4,598
Intangible assets - Other	2,316		587
	27,530		5,993
Less: Accumulated amortization	(3,413)		(2,149)
Total intangibles, net	$	24,117	$	3,844

In connection with the disposition of SW Financial (see Note 4), the Company deconsolidated approximately $1.3 million of customer relationships, net, and $72,000 of domain names, net, which were included in the calculation of the loss on disposition.

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Amortization expense was $978,000 and $210,000, respectively, for the three months ended June 30, 2023 and 2022, and $2.2 million and $706,000 for the nine months ended June 30, 2023 and 2022.

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


Twelve months ending June 30,
2024	$	3,968
2025	3,910
2026	3,910
2027	3,812
2028	3,668
Thereafter	4,849
	$	24,117

Note 9: Goodwill

The following table details the Company's goodwill as of June 30, 2023 (in $000's):


	Retail - Entertainment		Retail - Flooring		Flooring Manufacturing		Steel Manufacturing		Total
September 30, 2022	36,947		—		807		3,339		41,093

Kinetic fair value adjustment	—		—		—		(312)		(312)
Flooring Liquidators acquisition	—		27,277		—		—		27,277
Flooring Liquidators tax adjustment	—		3,331		—		—		3,331
Impairment	—		—		—		—		—
June 30, 2023	$	36,947	$	30,608	$	807	$	3,027	$	71,389

As of June 30, 2023, the Company did not identify any triggering events that would require impairment testing.

Note 10: Accrued Liabilities

The following table details the Company's accrued liabilities as of June 30, 2023 and September 30, 2022, respectively (in $000's):


	June 30, 2023		September 30, 2022
Accrued liabilities:
Accrued payroll and bonuses	$	4,446	$	4,838
Accrued sales and use taxes	2,219		1,905
Accrued customer deposits	3,579		—
Accrued gift card and escheatment liability	1,792		1,696
Accrued interest payable	1,503		390
Accrued accounts payable and bank overdrafts	1,085		1,731
Accrued professional fees	3,042		1,924
Accrued expenses - other	5,082		4,002
Total accrued liabilities	$	22,748	$	16,486

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Note 11: Long-Term Debt

Long-term debt as of June 30, 2023 and September 30, 2022 consisted of the following (in $000's):


	June 30, 2023		September 30, 2022
Revolver loans	$	46,240	$	43,107
Equipment loans	16,486		13,716
Term loans	9,901		7,941
Other notes payable	16,155		14,501
Total notes payable	88,782		79,265
Less: unamortized debt issuance costs	(574)		(626)
Net amount	88,208		78,639
Less: current portion	(23,689)		(18,935)
Total long-term debt	$	64,519	$	59,704

Future maturities of long-term debt at June 30, 2023, are as follows which does not include related party debt separately stated (in $000's):


Twelve months ending June 30,
2024	$	23,689
2025	5,654
2026	13,557
2027	33,188
2028	1,406
Thereafter	10,714
Total future maturities of long-term debt	$	88,208

Eclipse Business Capital Loans

In connection with the acquisition of Flooring Liquidators (see Note 3), on January 18, 2023, Flooring Liquidators entered into a credit facility with Eclipse Business Capital, LLC (“Eclipse”). The facility consists of $25.0 million in revolving credit (“Eclipse Revolver”) and $3.5 million in M&E lending (“Eclipse M&E”). The Eclipse Revolver is a three-year, asset-based facility that is secured by substantially all of Flooring Liquidators’ assets. Availability under the Eclipse Revolver is subject to a monthly borrowing base calculation. Flooring Liquidators’ ability to borrow under the Eclipse Revolver is subject to the satisfaction of certain conditions, including meeting all loan covenants under the credit agreement with Eclipse. The Eclipse Revolver bears interest at 4.5% per annum in excess of Adjusted Term SOFR prior to April 1, 2023, and 3.5% per annum in excess of Adjusted Term SOFR after April 1, 2023. The Eclipse M&E loan bears interest at 6.0% per annum in excess of Adjusted Term SOFR prior to April 1, 2023, and 5.0% per annum in excess of Adjusted Term SOFR after April 1, 2023. The credit facility matures in January 2026. As of June 30, 2023, the outstanding balance on the Eclipse Revolver was approximately $7.8 million, and the outstanding balance on the Eclipse M&E loan was approximately $2.6 million.

Bank of America Revolver Loan

On January 31, 2020, Marquis entered into an amended $25.0 million revolving credit agreement (“BofA Revolver”) with Bank of America Corporation (“BofA”). The BofA Revolver is a five-year, asset-based facility that is secured by substantially all of Marquis’ assets. Availability under the BofA Revolver is subject to a monthly borrowing base calculation. Marquis’ ability to borrow under the BofA Revolver is subject to the satisfaction of certain conditions, including meeting all loan covenants under the credit agreement with BofA. The BofA Revolver has a variable interest rate and matures in January 2025. As of June 30, 2023 and September 30, 2022, the outstanding balance was approximately $5.8 million and $10.1 million, respectively.

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Loan with Fifth Third Bank

On January 20, 2022, Precision Marshall refinanced its Encina Business Credit loans with Fifth Third Bank, and the balance outstanding was repaid. The refinanced credit facility, totaling $29 million, is comprised of $23.0 million in revolving credit, $3.5 million in M&E lending, and $2.5 million for Capex lending. Advances under the new credit facility will bear interest at the 30-day SOFR plus 200 basis points for lending under the revolving facility, and 30-day SOFR plus 225 basis points for M&E and Capex lending. The refinancing of the Borrower’s existing credit facility reduces interest costs and improves the availability and liquidity of funds by approximately $3.0 million at the close. The facility terminates on January 20, 2027, unless terminated earlier in accordance with its terms.

In connection with the acquisition of Kinetic, the existing revolving facility was amended to add Kinetic as a borrower. In addition, two additional term loans were executed to fund the purchase of Kinetic. Approximately $6.0 million was drawn from the revolving facility, and the two term loans were opened in the amounts of $4.0 million and $1.0 million, respectively. The $4.0 million term loan (“Kinetic Term Loan #1”), which matures on January 20, 2027, bears interest on the same terms as for M&E term lending as stated above. The $1.0 million term loan (“Kinetic Term Loan #2”), which matures on June 28, 2025, is a “Special Advance Term Loan”, and bears interest at SOFR plus 375 basis points.

As of June 30, 2023 and September 30, 2022, the outstanding balance on the revolving loan was approximately $26.0 million and $23.6 million, respectively, and the outstanding balance on the original M&E lending, which is documented as a term note, was approximately $2.5 million and $3.2 million, respectively. The revolving loan has a variable interest rate and matures in January 2027. As of June 30, 2023 and September 30, 2022, the outstanding balance on Kinetic Term Loan #1 was approximately $3.4 million and $3.9 million, respectively. As of June 30, 2023 and September 30, 2022, the outstanding balance on Kinetic Term Loan #2 was $0 and $917,000, respectively.

On April 12, 2023, in connection with its existing credit facility with Fifth Third Bank, Precision Marshall took an advance against its Capex term lending in the amount of approximately $1.4 million. The loan matures January 2027 and bears interest on the same terms as for Capex lending as stated above. The first payment under this loan is due in February 2024. As of June 30, 2023, the outstanding balance on this Capex loan was $1.4 million.

Texas Capital Bank Revolver Loan

On November 3, 2016, Vintage Stock entered into an amended $12.0 million credit agreement with Texas Capital Bank (“TCB Revolver”). The TCB Revolver is a five-year, asset-based facility that is secured by substantially all of Vintage Stock’s assets. Availability under the TCB Revolver is subject to a monthly borrowing base calculation. The TCB Revolver has a variable interest rate and matures in November 2023. The effective rate, as of June 30, 2023, was 7.23%. As of June 30, 2023 and September 30, 2022, the balance outstanding was approximately $6.7 million and $9.4 million, respectively.

Equipment Loans

On June 20, 2016 and August 5, 2016, Marquis entered into a transaction that provided for a master agreement and separate loan schedules (the “Equipment Loans”) with Banc of America Leasing & Capital, LLC that provided for the following as of June 30, 2023:

Note #3 is for approximately $3.7 million, secured by equipment. The Equipment Loan #3 is due December 2023, payable in 84 monthly payments of $52,000 beginning January 2017, bearing interest rate at 4.8% per annum. As of June 30, 2023 and September 30, 2022, the balance was approximately $306,000 and $751,000, respectively.

Note #4 is for approximately $1.1 million, secured by equipment. The Equipment Loan #4 is due December 2023, payable in 81 monthly payments of $16,000 beginning April 2017, bearing interest at 4.9% per annum. As of June 30, 2023 and September 30, 2022, the balance was approximately $94,000 and $231,000, respectively.

Note #5 is for approximately $4.0 million, secured by equipment. The Equipment Loan #5 is due December 2024, payable in 84 monthly payments of $55,000 beginning January 2018, bearing interest at 4.7% per annum. As of June 30, 2023 and September 30, 2022, the balance was approximately $953,000 and $1.4 million, respectively.

Note #6 is for $913,000, secured by equipment. The Equipment Loan #6 is due July 2024, payable in 60 monthly payments of $14,000 beginning August 2019, with a final payment of $197,000, bearing interest at 4.7% per annum. As of June 30, 2023 and September 30, 2022, the balance was approximately $356,000 and $471,000, respectively.

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Note #7 is for $5.0 million, secured by equipment. The Equipment Loan #7 is due February 2027, payable in 84 monthly payments of $59,000 beginning March 2020, with the final payment of $809,000, bearing interest at 3.2% per annum. As of June 30, 2023 and September 30, 2022, the balance was approximately $3.1 million and $3.5 million, respectively.

Note #8 is for approximately $3.4 million, secured by equipment. The Equipment Loan #8 is due September 2027, payable in 84 monthly payments of $46,000 beginning October 2020, bearing interest at 4.0%. As of June 30, 2023 and September 30, 2022, the balance was approximately $2.2 million and $2.5 million, respectively.

In December 2021, Marquis funded the acquisition of $5.5 million of new equipment under Note #9 of its master agreement. The Equipment Loan #9, which is secured by the equipment, matures December 2026, and is payable in 60 monthly payments of $92,000 beginning January 2022, with the final payment in the amount of approximately $642,000, bearing interest at 3.75% per annum. As of June 30, 2023 and September 30, 2022, the balance was approximately $4.1 million and $4.8 million, respectively.

In December 2022, Marquis funded the acquisition of $5.7 million of new equipment under Note #10 of its master agreement. The Equipment Loan #10, which is secured by the equipment, matures December 2029, and is payable in 84 monthly payments of $79,000, beginning January 2023, with the final payment in the amount of approximately $650,000, bearing interest at 6.50%. As of June 30, 2023, the balance was approximately $5.4 million.

Loan Covenant Compliance

As of June 30, 2023, the Company was in compliance with all covenants under its existing revolving and other loan agreements.

Note 12: Notes Payable-Related Parties

Long-term debt payable to related parties (see Note 16) as of June 30, 2023 and September 30, 2022 consisted of the following (in $000's):


	June 30, 2023		September 30, 2022
Isaac Capital Group, LLC, 12.5% interest rate, matures May 2025	$	2,000	$	2,000
Spriggs Investments, LLC, 10% interest rate, matures July 2024	2,000		2,000
Spriggs Investments, LLC for Flooring Liquidators, 12% interest rate, matures July 2024	1,000		—
Isaac Capital Group, LLC revolver, 12% interest rate, matures April 2024	1,000		—
Isaac Capital Group, LLC for Flooring Liquidators, 12% interest rate, matures January 2028	5,000		—
Seller of Flooring Liquidators, 8.24% interest rate, matures January 2028	34,000		—
Seller of Kinetic, 7.% interest rate, matures September 2027	3,000		3,000
Total notes payable - related parties	48,000		7,000
Less: unamortized debt issuance costs	(2,227)		—
Net amount	45,773		7,000
Less: current portion	(1,000)		(2,000)
Total long-term portion, related parties	$	44,773	$	5,000


Twelve months ending June 30,
2024			$