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Table of Contents
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 March 31, 2024
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)
Nevada85-0206668
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareLIVE
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 oAccelerated filer o
Non-accelerated filer xSmaller 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 May 10, 2024 was 3,144,028.


Table of Contents
INDEX TO FORM 10-Q FILING
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024
TABLE OF CONTENTS
Page
2

Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LIVE VENTURES INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per-share amounts)
March 31, 2024September 30, 2023
(Unaudited)
Assets
Cash$4,489 $4,309 
Trade receivables, net of allowance for doubtful accounts of $1.1 million at March 31, 2024 and $1.6 million at September 30, 2023
45,510 41,194 
Inventories, net130,980 131,314 
Income taxes receivable 1,116 
Prepaid expenses and other current assets4,430 4,919 
Total current assets185,409 182,852 
Property and equipment, net78,432 80,703 
Right of use asset - operating leases64,867 54,544 
Deposits and other assets1,579 1,282 
Intangible assets, net26,942 26,568 
Goodwill76,639 75,866 
Total assets$433,868 $421,815 
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable$26,466 $27,190 
Accrued liabilities33,180 31,826 
Income taxes payable322  
Current portion of lease obligations - operating leases13,459 11,369 
Current portion of lease obligations - finance leases361 359 
Current portion of long-term debt31,396 23,077 
Current portion of notes payable related parties1,200 4,000 
Total current liabilities106,384 97,821 
Long-term debt, net of current portion75,322 78,710 
Lease obligation long term - operating leases56,678 48,156 
Lease obligation long term - finance leases33,023 32,942 
Notes payable related parties, net of current portion10,124 6,914 
Seller notes - related parties40,354 38,998 
Deferred taxes10,320 14,035 
Other non-current obligations5,795 4,104 
Total liabilities338,000 321,680 
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 March 31, 2024 and September 30, 2023, respectively, with a liquidation preference of $0.30 per share outstanding
  
Common stock, $0.001 par value, 10,000,000 shares authorized, 3,148,135 and 3,164,330 shares issued and outstanding at March 31, 2024 and September 30, 2023, respectively
2 2 
Paid in capital69,487 69,387 
Treasury stock common 676,258 and 660,063 shares as of March 31, 2024 and September 30, 2023, respectively
(8,610)(8,206)
Treasury stock Series E preferred 80,000 shares as of March 31, 2024 and September 30, 2023, respectively
(7)(7)
Retained earnings34,996 38,959 
Total stockholders' equity95,868 100,135 
Total liabilities and stockholders' equity$433,868 $421,815 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIVE VENTURES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(UNAUDITED)
(dollars in thousands, except per-share amounts)
For the Three Months Ended March 31,For the Six Months Ended March 31,
2024202320242023
Revenue$118,626 $91,122 $236,219 $160,108 
Cost of revenue83,159 59,514 164,425 106,556 
Gross profit35,467 31,608 71,794 53,552 
Operating expenses:
General and administrative expenses29,824 22,617 57,503 37,217 
Sales and marketing expenses6,481 4,039 11,588 6,816 
Total operating expenses36,305 26,656 69,091 44,033 
Operating income (loss)(838)4,952 2,703 9,519 
Other expense:
Interest expense, net(4,167)(3,235)(8,330)(5,282)
Other Income507 391 223 330 
Total other expense, net(3,660)(2,844)(8,107)(4,952)
(Loss) income before provision for income taxes(4,498)2,108 (5,404)4,567 
(Benefit) provision for income taxes(1,217)550 (1,441)1,165 
Net (loss) income$(3,281)$1,558 $(3,963)$3,402 
(Loss) income per share:
Basic$(1.04)$0.50 $(1.25)$1.10 
Diluted$(1.04)$0.49 $(1.25)$1.08 
Weighted average common shares outstanding:
Basic3,154,7713,143,9113,159,1803,101,007
Diluted3,154,7713,184,9823,159,1803,137,625
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIVE VENTURES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(dollars in thousands)
For the Six Months Ended March 31,
20242023
Operating Activities:
Net (loss) income$(3,963)$3,402 
Adjustments to reconcile net (loss) income to net cash provided by operating activities, net of acquisition:
Depreciation and amortization8,483 6,297 
Gain on disposal of fixed assets (7)
Amortization of seller note discount1,355  
Amortization of debt issuance cost43 105 
Stock based compensation expense100 109 
Amortization of right-of-use assets2,008 1,397 
Change in reserve for uncollectible accounts(449)350 
Change in reserve for obsolete inventory1,557 169 
Changes in assets and liabilities, net of acquisitions:
Trade receivables(2,357)436 
Inventories469 2,384 
Income taxes payable/receivable1,438 166 
Prepaid expenses and other current assets791 3,453 
Deposits and other assets(295)(1,095)
Accounts payable(2,511)(3,668)
Accrued liabilities(1,709)(3,547)
Change in deferred income taxes(2,829)4,168 
Other Liabilities 59 
Net cash provided by operating activities2,131 14,178 
Investing Activities:
Acquisition of CRO(1,034) 
Acquisition of Johnson(500) 
Acquisition of Flooring Liquidators, net of cash received (33,929)
Purchase of property and equipment(3,373)(2,900)
Net cash used in investing activities(4,907)(36,829)
Financing Activities:
Net borrowings under revolver loans7,731 12,312 
Proceeds from issuance of notes payable227 8,449 
Payments on notes payable(3,359)(3,679)
Proceeds from issuance of related party notes payable1,000 7,000 
Payments on related party notes payable(600) 
Payments for debt acquisition costs (96)
Purchase of common treasury stock(405)(639)
Payments on financing leases(1,638)(1,077)
Payments on seller finance arrangements (51)
Net cash provided by financing activities2,956 22,219 
Change in cash180 (432)
Cash, beginning of period4,309 4,600 
Cash, end of period$4,489 $4,168 

Supplemental cash flow disclosures:
Interest paid$6,665 $4,602 
Income taxes received, net$106 $— 
Income taxes paid, net$— $43 
Noncash financing and investing activities:
Noncash items related to Flooring Liquidators acquisition$ $36,900 
PMW goodwill adjustment$233 $ 
Noncash items related to CRO acquisition$725 $ 
Noncash items related to Johnson acquisition$1,501 $ 
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 E
Preferred Stock
Common StockSeries E
Preferred
Stock
Common
Stock
SharesAmountShares AmountPaid-In
Capital
Treasury
Stock
Treasury
Stock
Retained
 Earnings
Non-controlling
Interest
Total
Equity
Balance, September 30, 202347,840$ 3,164,330$2 $69,387 $(7)$(8,206)$38,959 $ $100,135 
Stock based compensation— — — — 50 — — — — 50 
Purchase of common treasury stock— — (4,346)— — — (106)— — (106)
Net loss— — — — — — (682)— (682)
Balance, December 31, 202347,840$ 3,159,984$2 $69,437 $(7)$(8,312)$38,277 $ $99,397 
Stock based compensation— — — 50 — — — — 50 
Purchase of common treasury stock— — (11,849)— — — (298)— — (298)
Net loss— — — — — — (3,281)— (3,281)
Balance, March 31, 202447,840$ 3,148,135$2 $69,487 $(7)$(8,610)$34,996 $ $95,868 
Series E
Preferred Stock
Common StockSeries E
Preferred
Stock
Common
Stock
SharesAmountShares AmountPaid-In
Capital
Treasury
Stock
Treasury
Stock
Retained
 Earnings
Non-controlling
Interest
Total
Equity
Balance, September 30, 202247,840$ 3,074,833$2 $65,321 $(7)$(7,215)$39,509 $(448)$97,162 
Purchase of common treasury stock— (24,710)— — — (621)— (621)
Net income— — — — — 1,844 — 1,844 
Balance, December 31, 202247,840$ 3,050,123$2 $65,321 $(7)$(7,836)$41,353 $(448)$98,385 
Purchase of common treasury stock(674)— (17)— — (17)
Stock based compensation109 — — — 109 
Issuance of common stock116,4413,200 — — — 3,200 
Net income— — 1,558 — 1,558 
Balance, March 31, 202347,840$ 3,165,890$2 $68,630 $(7)$(7,853)$42,911 $(448)$103,235 
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 SIX MONTHS ENDED MARCH 31, 2024 AND 2023
(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, The Kinetic Co., Inc. (“Kinetic”), which is engaged in the production of industrial knives and hardened wear products for the tissue and metals industries, and Precision Metal Works, Inc. (“PMW”), which is engaged in metal forming, assembly, and finishing solutions across diverse industries, including appliance, automotive, hardware, electrical, electronic, medical products, and devices. PMW reports on a 13-week quarter, as opposed to the Company's calendar quarter reporting. However, the Company has determined that the difference in reporting periods has no material effect on its reported financial results.
The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. 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 six months ended March 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 2024. 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, 2023 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 22, 2023 (the “2023 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. All intercompany accounts and transactions have been eliminated in consolidation. These reclassifications have no material effect on the reported financial results.
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 revenue 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 estimated reserve for doubtful current and long-term trade and other receivables, the estimated reserve for excess and obsolete inventory, fair values in connection with the analysis of goodwill, other intangibles and long-lived assets for impairment, valuation allowance against deferred tax assets, lease terminations, and estimated useful lives for intangible assets and property and equipment.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly
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provided to the Chief Operating Decision Maker, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
Note 3:    Acquisitions
Acquisition of CRO
On October 13, 2023, Flooring Liquidators acquired certain assets and assumed certain liabilities of Carpet Remnant Outlet, Inc. (“CRO”), a floor covering retailer and installer serving residential and commercial customers throughout Northwest Arkansas. Total consideration for the acquisition was approximately $1.8 million and was comprised of cash at close of approximately $1.0 million, an indemnification holdback amount of $300,000, and additional consideration valued at $425,000.
The fair value of the purchase price components was $1.8 million, as detailed below (in $000's):
Cash$1,034 
Additional consideration425 
Holdback300 
Purchase price$1,759 
Under the preliminary purchase price allocation, the Company recognized goodwill of $425,000, 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 October 13, 2023, as calculated by an independent third-party firm. The value of the additional consideration was calculated by management. The Company anticipates the $425,000 of goodwill arising from the acquisition to be fully deductible for tax purposes. The table below outlines the purchase price allocation of the purchase for CRO to the acquired identifiable assets, liabilities assumed and goodwill as of March 31, 2024 (in $000’s):
Total purchase price$1,759 
Accounts payable770 
Accrued liabilities1,298 
Total liabilities assumed2,068 
Total consideration3,827 
Accounts receivable259 
Inventory1,406 
Property, plant and equipment261 
Intangible assets1,190 
Other assets286 
Total assets acquired3,402 
Total goodwill$425 
Acquisition of Johnson
On November 30, 2023, CRO acquired certain assets and assumed certain liabilities of Johnson Floor & Home (“Johnson”), a floor covering retailer and installer serving residential and commercial customers through four locations in the Tulsa, Oklahoma area, and one in Joplin, Missouri. Total consideration for the acquisition was $2.0 million, comprised of cash at close of $500,000, deferred consideration in the form of a seller note of $1.2 million, with additional
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consideration paid in the form of an earnout valued at approximately $300,000. The deferred consideration is payable in three $400,000 installments due annually on the first three anniversary dates following the closing date. Each installment will accrue interest at 6.0% per annum until paid.
The fair value of the purchase price components outlined above was approximately $2.0 million, as detailed below (in $000's):
Cash$500 
Deferred consideration1,200 
Earnout301 
Purchase price$2,001 
The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of November 30, 2023, as calculated by management. The table below outlines the purchase price allocation of the purchase for Johnson to the acquired identifiable assets, liabilities assumed and goodwill as of March 31, 2024 (in $000’s):
Total purchase price$2,001 
Accounts payable1,017 
Accrued liabilities1,141 
Total liabilities assumed2,158 
Total consideration4,159 
Accounts receivable1,252 
Inventory1,127 
Property, plant and equipment157 
Intangible assets
Customer relationships$1,301 
Non-compete agreement306 
Subtotal intangible assets1,607 
Other assets16 
Total assets acquired4,159 
Total goodwill$ 
Acquisition of Harris Flooring Group® Brands
On September 20, 2023, Marquis acquired the Harris Flooring Group® brands from Q.E.P., a designer, manufacturer, and distributor of a broad range of best-in-class flooring and installation solutions for commercial and home improvement projects. Specifically, Marquis acquired the Harris Flooring Group brands, inventory, and book of business and intends to retain all sales representatives. The purchase price was $10.1 million, consisting of $3.0 million in cash at close, and the recording of a deferred payment of $5.1 million and holdback of $2.0 million. The acquisition was determined to be an asset acquisition for accounting purposes. The entirety of the purchase price was allocated to inventory.
Acquisition of PMW
On July 20, 2023 (“Effective Date”), the Company acquired PMW, a Kentucky-based metal stamping and value-added manufacturing company. PMW was acquired for total consideration of approximately $28 million, comprised of a $25 million purchase price, plus closing cash, and subject to working capital adjustments, with additional consideration of up to $3 million paid in the form of an earn-out. The purchase price was funded in part by a $2.5 million seller note, borrowings under a credit facility of $14.4 million, and proceeds under a sale and leaseback transaction of approximately $8.6 million. The acquisition involved no issuance of stock of the Company.
As of the Effective Date, the Company entered into a sales and leaseback transaction for two properties acquired, one located in Frankfort, Kentucky, and the other located in Louisville, Kentucky, with Legacy West Kentucky Portfolio, LLC (“Lessor”). The aggregate sales price of the real estate was approximately $14.5 million. The Louisville, Kentucky property was acquired on the Effective Date for $5.1 million in connection with an option of PMW to purchase that property.
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The provisions of each of the two lease agreements include a 20-year lease term with two five-year renewal options. The base rent under the Frankfort lease agreement is $34,977 per month for the first year of the term and a 2% per annum escalator thereafter. The base rent under the Louisville lease agreement is $63,493 per month for the first year of the term and a 2% per annum escalator thereafter. Both lease agreements are “net leases,” 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 it is more likely than not that each of the two five-year options will be exercised. The proceeds of $14.5 million, net of closing fees, from the sale-leaseback were used to assist in funding the acquisition of PMW.
The fair value of the purchase price components outlined above was $26.8 million due to fair value adjustments for the contingent consideration, cash acquired, and working capital adjustments, as detailed below (in $000’s):
Purchase price$25,000 
Fair value of earnout2,675 
Cash from balance sheet1,602 
Working capital adjustment(2,500)
Net purchase price$26,777 
Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $4.0 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 July 20, 2023, as calculated by an independent third-party firm. Because the transaction was considered a stock purchase for tax purposes, none of the goodwill arising from the acquisition will be deductible for tax purposes. During the three months ended December 31, 2023, the Company recorded noncash fair value adjustments related to inventory and other liabilities assumed, as well as an adjustment to deferred tax liabilities in the aggregate amount of $652,000. The table below outlines the purchase price allocation of the purchase for PMW to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):
Net purchase price$26,777 
Accounts payable10,788 
Accrued liabilities4,995 
Total liabilities assumed15,783 
Total consideration42,560 
Cash1,602 
Accounts receivable12,613 
Inventory6,266 
Property, plant and equipment13,616 
Intangible assets3,600 
Other assets849 
Total assets acquired38,546 
Total goodwill$4,014 
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. 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 relationships785 
Trade name425 
Non-compete agreement55 
Total intangible assets1,265 
Total assets acquired$1,300 
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. (“EBS”), 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 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 of the purchase price components outlined above was $78.7 million due to fair value adjustments for the Note, and restricted stock, as detailed below (in $000's).
Purchase price$83,800 
Fair value adjustment, sellers note(3,300)
Fair value adjustment, restricted stock(1,800)
Net purchase price$78,700 

Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $31.4 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. During the three months ended December 31, 2023, the Company recorded a fair value adjustment related to its contingent
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consideration of $1 million. The table below outlines the purchase price allocation, as revised, of the purchase for Flooring Liquidators to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):
Purchase price$78,700 
Accounts payable5,189 
Accrued liabilities10,700 
Debt60 
Total liabilities assumed15,949 
Total consideration94,649 
Cash9,131 
Accounts receivable4,824 
Inventory19,402 
Property, plant and equipment4,643 
Intangible assets
Trade names$13,275 
Customer relationships7,700 
Non-compete agreements1,625 
Other49 
Subtotal intangible assets22,649 
Other2,581 
Total assets acquired63,230 
Total goodwill$31,419 
Pro Forma Information
The table below presents selected proforma information for the Company for the three and six-month periods ended March 31, 2023, assuming that the acquisition had occurred on October 1, 2022 (the beginning of the Company’s 2023 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 ReportedAdjustmentsProforma
Live Unaudited Three Months Ended March 31, 2023Flooring Liquidators Unaudited Three Months Ended March 31, 2023
Adjustments(1)
Live for the Three Months Ended March 31, 2023
Net revenue$91,122 $4,222 $95,344 
Net income$1,558 $(2,188)$(300)$(930)
Earnings per basic common share$0.50 $(0.30)
Earnings per basic diluted share$0.49 $(0.29)
As ReportedAdjustmentsProforma
Live Unaudited Six Months Ended March 31, 2023Flooring Liquidators Unaudited Six Months Ended March 31, 2023
Adjustments(1)
Live for the Six Months Ended March 31, 2023
Net revenue$160,108 $37,702 $197,810 
Net income$3,402 $(1,033)$(2,226)$143 
Earnings per basic common share$1.10 $0.05 
Earnings per basic diluted share$1.08 $0.05 
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(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 revenue and costs of revenue associated with sales between Flooring Liquidators and the Company prior to acquisition.

Note 4:    Inventory
The following table details the Company's inventory as of March 31, 2024 and September 30, 2023 (in $000's):
Inventory, netMarch 31, 2024September 30, 2023
Raw materials$28,695 $32,590 
Work in progress9,320 9,028 
Finished goods52,674 50,082 
Merchandise46,388 43,438 
137,077 135,138 
Less: Inventory reserves(6,097)(3,824)
Total inventory, net$130,980 $131,314 
Note 5:    Property and Equipment
The following table details the Company's property and equipment as of March 31, 2024 and September 30, 2023 (in $000's):
March 31, 2024September 30, 2023
Property and equipment, net:
Land$2,029 $2,029 
Building and improvements36,955 35,684 
Transportation equipment2,086 2,062 
Machinery and equipment69,322 67,575 
Furnishings and fixtures6,285 6,028 
Office, computer equipment and other5,003 4,569 
121,680 117,947 
Less: Accumulated depreciation(43,248)(37,244)
Total property and equipment, net$78,432 $80,703 
Depreciation expense was $3.0 million and $2.7 million for the three months ended March 31, 2024 and 2023, respectively, and $6.1 million and $5.1 million for the six months ended March 31, 2024 and 2023, respectively.
Note 6:    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 rent 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
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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 following table details the Company's right of use assets and lease liabilities as of March 31, 2024 and September 30, 2023 (in $000's):
March 31, 2024September 30, 2023
Right of use asset - operating leases$64,867 $54,544 
Lease liabilities:
Current - operating13,459 11,369 
Current - finance361 359 
Long term - operating56,678 48,156 
Long term - finance33,023 32,942 
As of March 31, 2024, the weighted average remaining lease term for operating leases is 10.0 years. The Company's weighted average discount rate for operating leases is 9.8%. Total cash payments for operating leases for the six months ended March 31, 2024 and 2023 were approximately $8.8 million and $3.9 million, respectively. Additionally, the Company recognized approximately $17.4 million in right of use assets and liabilities upon commencement of operating leases during the six months ended March 31, 2024.
As of March 31, 2024, the weighted average remaining lease term for finance leases is 27.3 years. The Company's weighted average discount rate for finance leases is 11.7%. Total cash payments for finance leases for the six months ended March 31, 2024 and 2023 were approximately $1.6 million and $1.1 million, respectively. No finance right-of-use assets or liabilities were recognized during the six months ended March 31, 2024.
The Company records finance lease right-of-use assets as property and equipment. The balance, as of March 31, 2024 and September 30, 2023 is as follows (in $000’s):
March 31, 2024September 30, 2023
Property and equipment, at cost$22,526 $22,526 
Accumulated depreciation$(1,048)$(702)
Property and equipment, net$21,478 $21,824 
Total present value of future lease payments of operating leases as of March 31, 2024 (in $000's):
Twelve months ended March 31,
2025$18,466 
202616,286 
202713,774 
202811,132 
20297,049 
Thereafter31,421 
Total98,128 
Less implied interest(27,991)
Present value of payments$70,137 
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Total present value of future lease payments of finance leases as of March 31, 2024 (in $000's):
Twelve months ended March 31,
2025$3,185 
20263,197 
20273,257 
20283,348 
20293,453 
Thereafter103,196 
Total119,636 
Less implied interest(86,252)
Present value of payments$33,384 
During the six months ended March 31, 2024 and 2023, the Company recorded no impairment charges relating to any of its leases.
Note 7:    Intangibles
The following table details the Company's intangibles as of March 31, 2024 and September 30, 2023 (in $000's):
March 31, 2024September 30, 2023
Intangible assets, net:
Intangible assets - Tradenames$14,940 $14,940 
Intangible assets - Customer relationships15,139 13,874 
Intangible assets - Other3,810 2,316 
33,889 31,130 
Less: Accumulated amortization(6,947)(4,562)
Total intangibles, net$26,942 $26,568 
Amortization expense was $1.2 million and $992,000 for the three months ended March 31, 2024 and 2023, respectively, and $2.4 million and $1.2 million for the six months ended March 31, 2024 and 2023, respectively.
The following table summarizes estimated future amortization expense related to intangible assets that have net balances (in $000’s):
Twelve months ending March 31,
2025$4,984 
20264,984 
20274,915 
20284,799 
20294,141 
Thereafter3,119 
$26,942 
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Note 8:    Goodwill
The following table details the Company's goodwill as of September 30, 2023 and March 31, 2024 (in $000's):
Retail - EntertainmentRetail - FlooringFlooring ManufacturingSteel Manufacturing Total
September 30, 202336,947 30,419 807 7,693 75,866 
CRO acquisition 425   425 
PMW adjustment   (652)(652)
Flooring Liquidators adjustment 1,000   1,000 
March 31, 2024$36,947 $31,844 $807 $7,041 $76,639 
During the six months ended March 31, 2024, the Company made fair value adjustments, in the amount of approximately ($652,000) related to the acquisition of PMW, $425,000 related to the CRO acquisition, and $1.0 million related to the acquisition of Flooring Liquidators (see Note 3).
As of March 31, 2024, the Company did not identify any triggering events that would require impairment testing.
Note 9:     Accrued Liabilities
The following table details the Company's accrued liabilities as of March 31, 2024 and September 30, 2023 (in $000's):
March 31, 2024September 30, 2023
Accrued liabilities:
Accrued payroll and bonuses$6,524 $5,802 
Accrued sales and use taxes1,884 1,529 
Accrued customer deposits6,548 4,579 
Accrued gift card and escheatment liability1,825 1,819 
Accrued interest payable846 669 
Accrued inventory2,230 5,700 
Accrued professional fees2,476 3,146 
Accrued expenses - other10,847 8,582 
Total accrued liabilities$33,180 $31,826 
Note 10:     Long-Term Debt
Long-term debt as of March 31, 2024 and September 30, 2023 consisted of the following (in $000's):
March 31, 2024September 30, 2023
Revolver loans$64,510 $56,779 
Equipment loans13,543 15,486 
Term loans13,192 14,290 
Other notes payable15,997 15,789 
Total notes payable107,242 102,344 
Less: unamortized debt issuance costs(524)(557)
Net amount106,718 101,787 
Less: current portion(31,396)(23,077)
Total long-term debt$75,322 $78,710 
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Future maturities of long-term debt at March 31, 2024, are as follows which does not include related party debt separately stated (in $000's):
Twelve months ending March 31,
2024$31,396 
20255,992 
202653,669 
20274,441 
202811,220 
Total future maturities of long-term debt$106,718 
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 March 31, 2024 and September 30, 2023, the outstanding balance was approximately $16.4 million and $6.1 million, respectively.
Loan with Fifth Third Bank (Precision Marshall)
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 March 31, 2024 and September 30, 2023, the outstanding balance on the revolving loan was approximately $25.0 million and $23.0 million, respectively, and the outstanding balance on the original M&E lending, which is documented as a term note, was approximately $2.1 million and $2.3 million, respectively. The revolving loan has a variable interest rate and matures in January 2027. As of March 31, 2024 and September 30, 2023, the outstanding balance on Kinetic Term Loan #1 was approximately $3.0 million and $3.3 million, respectively. As of September 30, 2023, the Kinetic Term Loan #2 was fully repaid.
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 March 31, 2024 and September 30, 2023, the outstanding balance on the Capex loan was approximately $1.3 million and 1.4 million, respectively.
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
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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 March 31, 2024 and September 30, 2023, the outstanding balance on the Eclipse Revolver was approximately $9.0 million and $8.2 million, respectively, and the outstanding balance on the Eclipse M&E loan was approximately $2.1 million and $2.4 million, respectively.
Loan with Fifth Third Bank (PMW)
In connection with the acquisition of PMW (see Note 3), on July 20, 2023, PMW entered into a revolving credit facility with Fifth Third Bank (the "Revolving Credit Facility"). The facility consists of $15.0 million in revolving credit ("Fifth-Third Revolver") and approximately $5.0 million in M&E lending (the "Fifth-Third M&E Loan"). The Fifth-Third Revolver is a three-year, asset-based facility that is secured by substantially all of PMW's assets. Availability under the Fifth-Third Revolver is subject to a monthly borrowing base calculation. PMW's ability to borrow under the Fifth-Third Revolver is subject to the satisfaction of certain conditions, including meeting all loan covenants under the credit agreement with Fifth-Third. Loans made under the Revolving Credit Facility are considered Reference Rate Loans, and bear interest at a rate equal to the sum of the Reference Rate plus the Applicable Margin. Reference Rate means the greater of (a) 3.0% or (b) the Lender’s publicly announced prime rate (which is not intended to be Lender’s lowest or most favorable rate in effect at any time) in effect from time to time. The Applicable Margin for revolving loans is zero, while for the M&E Term Loan or any Capital Expenditure Term Loan, it is 50 basis points (0.5%). The credit facility matures in July 2026. As of March 31, 2024 and September 30, 2023, the outstanding balance on the Fifth-Third Revolver was approximately $10.8 million and $11.0 million, respectively, and the balance on the Fifth-Third M&E loan was approximately $4.4 million and $4.8 million, respectively.
Bank Midwest Revolver Loan
On October 17, 2023, Vintage entered into a $15.0 million credit agreement with Bank Midwest (“Bank Midwest Revolver”), replacing a revolving credit facility between Vintage and Texas Capital Bank (“TCB Revolver”), which was entered into in November 2016 and set to mature in November 2023. In connection with the entry into the Credit Agreement, the revolving credit facility between Vintage Stock and Texas Capital Bank was terminated and the balance outstanding was repaid. The Bank Midwest Revolver interest accrues daily on the outstanding principal at a rate of the greater of (a) the one-month forward-looking term rate based on SOFR, plus 2.36% per annum, or (b) 6.5% per annum, and matures on October 17, 2024. As of March 31, 2024, the outstanding balance on the Bank Midwest Revolver was approximately $3.4 million. As of September 30, 2023, the outstanding balance on the TCB Revolver was approximately $5.3 million.
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 March 31, 2024:
Note #3 was for approximately $3.7 million, secured by equipment. The Equipment Loan #3 matured in December 2023. As of March 31, 2024 and September 30, 2023, the balance was $0 and $154,000, respectively.
Note #4 was for approximately $1.1 million, secured by equipment. The Equipment Loan #4 matured in December 2023. As of March 31, 2024 and September 30, 2023, the balance was $0 and $47,000, 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 March 31, 2024 and September 30, 2023, the balance was approximately $485,000 and $799,000, 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 March 31, 2024 and September 30, 2023, the balance was approximately $237,000 and $317,000, respectively.
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 March 31, 2024 and September 30, 2023, the balance was approximately $2.6 million and $2.9 million, respectively.
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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 March 31, 2024 and September 30, 2023, the balance was approximately $1.8 million and $2.0 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 March 31, 2024 and September 30, 2023, the balance was approximately $3.4 million and $3.9 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 March 31, 2024 and September 30, 2023, the balance was approximately $5.0 million and $5.3 million.
Loan Covenant Compliance
As of March 31, 2024, the Company was in compliance with all covenants under its existing revolving and other loan agreements.
Note 11:     Notes Payable-Related Parties
Long-term debt payable to related parties (see Note 16) as of March 31, 2024 and September 30, 2023 consisted of the following (in $000's):
March 31, 2024September 30, 2023
Isaac Capital Group, LLC, 12.5% interest rate, matures May 2025
$2,000 $2,000 
Spriggs Investments, LLC, 10% interest rate, matures July 2025
1,400 2,000 
Spriggs Investments, LLC for Flooring Liquidators, 12% interest rate, matures July 2025
1,000 1,000 
Isaac Capital Group, LLC revolver, 12% interest rate, matures April 2025
2,000 1,000 
Isaac Capital Group, LLC for Flooring Liquidators, 12% interest rate, matures January 2028
5,000 5,000 
Total notes payable - related parties11,400 11,000 
Less: unamortized debt issuance costs(76)(86)
Net amount11,324 10,914 
Less: current portion(1,200)(4,000)
Total long-term portion, related parties$10,124 $6,914 
Twelve months ending March 31,
2025$1,200 
20265,200 
20294,924 
Total future maturities of long-term debt, related parties$11,324 
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Note 12: Related Party Seller Notes
Seller notes as of March 31, 2024 and September 30, 2023 consisted of the following (in $000’s):
March 31,
2024
September 30,
2023
Seller of Flooring Liquidators, 8.24% interest rate, matures January 2028
$34,000 $34,000 
Seller of PMW, 8.0% interest rate, matures July 2028
2,500 2,500 
Seller of Kinetic, 7.0% interest rate, matures September 2027
3,000 3,000 
Total Related party seller notes payable39,500 39,500 
Unamortized debt premium (discount)854 (502)
Net amount40,354 38,998 
Less current portion  
Long-term portion of Related party seller notes payable$40,354 $38,998 
Future maturities of seller notes at March 31, 2024 are as follows (in $000’s):
Twelve months ending March 31,
2026500 
20273,500 
202836,354 
Total$40,354 
Note 13:     Stockholders’ Equity
Series E Convertible Preferred Stock
As of March 31, 2024 and September 30, 2023, there were 47,840 shares of Series E Convertible Preferred Stock issued and outstanding, respectively.
Treasury Stock
As of March 31, 2024 and September 30, 2023, the Company had 676,258 and 660,063 shares of Treasury Stock, respectively. During the six months ended March 31, 2024 and 2023, the Company repurchased 16,195 and 25,384 shares of its common stock for approximately $404,000 and $639,000, respectively. During the six months ended March 31, 2024 and 2023, the average price paid per share was $24.99 and $25.16, respectively.
Note 14:     Stock-Based Compensation
Our 2014 Omnibus Equity Incentive Plan (the “2014 Plan”) authorizes the issuance of distribution equivalent rights, incentive stock options, non-qualified stock options, performance stock, performance units, restricted ordinary shares, restricted stock units, stock appreciation rights, tandem stock appreciation rights and unrestricted ordinary shares to our directors, officer, employees, consultants and advisors. The Company has reserved up to 300,000 shares of common stock for issuance under the 2014 Plan.
From time to time, the Company grants stock options to directors, officers, and employees. These awards are valued at the grant date by determining the fair value of the instruments. The value of each award is amortized on a straight-line basis over the requisite service period.
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The following table summarizes stock option activity for the fiscal year ended September 30, 2023 and the six months ended March 31, 2024:
Number of
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual Life
Intrinsic
Value
Outstanding at September 30, 202287,500$18.81 0.78$771 
Outstanding at March 31, 202387,500$18.81 0.85$1,160 
Exercisable at March 31, 202387,500$18.81 0.85$1,160 
Outstanding at September 30, 202353,750$21.51 1.54$540 
Outstanding at March 31, 202453,750$21.51 1.04$499 
Exercisable at March 31, 202453,750$21.51 1.04$499 
The Company recognized compensation expense of approximately $50,000 and $109,000 during the three months ended March 31, 2024 and 2023, respectively, and approximately $100,000 and $109,000 during the six months ended March 31, 2024 and 2023, respectively, related to stock option awards and restricted stock awards granted to certain employees and officers based on the grant date fair value of the awards, and the revaluation for existing options whereby the expiration date was extended.
As of March 31, 2024, the Company had no unrecognized compensation expense associated with stock option awards.
Note 15: Earnings Per Share
Net income per share is calculated using the weighted average number of shares of common stock outstanding during the applicable period. Basic weighted average common shares outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s Condensed Consolidated Balance Sheet. Diluted net income per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential common shares consist of the additional common shares issuable in respect of restricted share awards, stock options and convertible preferred stock. Preferred stock dividends are subtracted from net earnings to determine the amount available to common stockholders.
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The following table presents the computation of basic and diluted net earnings per share (in $000's):
Three Months Ended March 31,Six Months Ended March 31,
2024202320242023
Basic
Net (loss) income$(3,281)$1,558 $(3,963)$3,402 
Less: preferred stock dividends    
Net (loss) income applicable to common stock$(3,281)$1,558 $(3,963)$3,402 
Weighted average common shares outstanding3,154,7713,143,9113,159,1803,101,007
Basic (loss) earnings per share$(1.04)$0.50 $(1.25)$1.10 
Diluted
Net (loss) income applicable to common stock$(3,281)$1,558 $(3,963)$3,402 
Add: preferred stock dividends    
Net (loss) income applicable to diluted earnings per share$(3,281)$1,558 $(3,963)$3,402 
Weighted average common shares outstanding3,154,7713,143,9113,159,1803,101,007
Add: Options40,83236,379
Add: Series E Preferred Stock239239
Assumed weighted average common shares outstanding3,154,7713,184,9823,159,1803,137,625
Diluted (loss) earnings per share$(1.04)$0.49 $(1.25)$1.08 
Basic earnings per common share ("EPS") is computed by dividing net income by the weighted average number of shares of Common Stock outstanding for the period. Diluted EPS is computed by dividing net income by the sum of the weighted average number of shares of Common Stock outstanding and the effect of dilutive securities. No diluted EPS computation was made for the three and six months ended March 31, 2024, as the Company recorded a net loss. Had the Company calculated diluted EPS for the three and six months ended March 31, 2024, the total assumed weighted average common shares outstanding would have been 3,173,021 and 3,177,549, respectively, and there would have been 22,500 options to purchase shares of common stock that were anti-dilutive. For the three and six months ended March 31, 2023, there were 17,000 options to purchase shares of common stock that were anti-dilutive, and not included in the diluted EPS computation.
Note 16: Related Party Transactions
Transactions with Isaac Capital Group, LLC
As of March 31, 2024, Isaac Capital Group, LLC (“ICG”) beneficially owns 49.0% of the Company’s issued and outstanding capital stock. Jon Isaac, the Company's President and Chief Executive Officer, is the President and sole member of ICG, and, accordingly, has sole voting and dispositive power with respect to these shares. Mr. Isaac also personally owns 219,177 shares of common stock and holds options to purchase up to 25,000 shares of common stock at an exercise price of $10.00 per share, all of which are currently exercisable. Mr. Isaac's options expire on January 15, 2025.
ICG Term Loan
During 2015, Marquis entered into a mezzanine loan in the amount of up to $7.0 million (the “ICF Loan”) with Isaac Capital Fund I, LLC (“ICF”), a private lender whose managing member is Jon Isaac. On July 10, 2020, (i) ICF released and discharged Marquis from all obligations under the loan, (ii) ICF assigned all of its rights and obligations under the instruments, documents, and agreements with respect to the ICF Loan to ICG, of which Jon Isaac, the Company’s President and Chief Executive Officer, is the sole member, and (iii) Live Ventures borrowed $2.0 million (the “ICG Loan”) from ICG. The ICG Loan bears interest at 12.5% and matures in May 2025. As of March 31, 2024 and September 30, 2023, the outstanding balance on this note was $2.0 million.
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ICG Revolving Promissory Note
On April 9, 2020, the Company, as borrower, entered into an unsecured revolving line of credit promissory note whereby ICG agreed to provide the Company with a $1.0 million revolving credit facility (the “ICG Revolver”). On June 23, 2022, as approved by unanimous consent of the Board of Directors of the Company, the amount of available revolving credit under the facility was increased to $6.0 million. No other terms of the Note were changed. On April 1, 2023, the Company entered into the Second Amendment of the ICG Revolver that extended the maturity date to April 8, 2024, increased the interest rate from 10% to 12% per annum, and decreased the amount of available revolving credit under the facility to $1.0 million. On January 11, 2024, the Company entered into the Third Amendment of the ICG Revolver that extended the maturity date to April 8, 2025 and increased the amount of available revolving credit under the facility to $5.0 million. As of March 31, 2024 and September 30, 2023, the outstanding balance on the ICG Revolver was $2.0 million and 1.0 million, respectively.
ICG Flooring Liquidators Note
On January 18, 2023, in connection with the acquisition of Flooring Liquidators, Flooring Affiliated Holdings, LLC, a wholly-owned subsidiary of the Company, as borrower, entered into a promissory note for the benefit of ICG in the amount of $5.0 million (“ICG Flooring Liquidators Loan”). The ICG Flooring Liquidators Loan matures on January 18, 2028, and bears interest at 12%. Interest is payable in arrears on the last day of each calendar month. The note is fully guaranteed by the Company. As of March 31, 2024, the outstanding balance on this loan was $5.0 million.
Transactions with JanOne Inc.
Tony Isaac, a member of the Company's board of directors, and father of the Company's Chief Executive Officer, Jon Isaac, is the Chief Executive Officer and a director of JanOne Inc. (“JanOne”). Richard Butler, a member of the Company's board of directors, is a director of JanOne.
Lease Agreement
Customer Connexx LLC, formerly a subsidiary of JanOne, previously rented approximately 9,900 square feet of office space from the Company at its Las Vegas office, which totals 16,500 square feet. JanOne paid the Company $39,000 and $112,000 in rent and other reimbursed expenses for three months ended March 31, 2024 and 2023, respectively, and $75,000 and $256,000 for the six months ended March 31, 2024 and 2023, respectively.
Purchase Agreement with ARCA Recycling
On April 5, 2022, the Company entered into a Purchasing Agreement with ARCA Recycling ("ARCA"), which was a wholly owned subsidiary of JanOne, Inc. until March 2023. Pursuant to the agreement, the Company agreed to purchase inventory from time to time for ARCA as set forth in submitted purchase orders. The inventory is owned by the Company until ARCA installs it in customer's homes, and payment by ARCA to the Company is due upon ARCA's receipt of payment from the customer. All purchases made by the Company shall be paid back by ARCA in full plus an additional five percent surcharge or broker-type fee. As of March 31, 2024, the Company had a full allowance of approximately $690,000 recorded in the reserve for doubtful accounts for the amount due.
On February 7, 2024, the Company converted outstanding receivables from JanOne and amounts due under the Purchase Agreement with ARCA Recycling into a promissory note with JanOne. On March 6, 2024, the Company entered into a Note Sale Agreement (“NSA”) with an unaffiliated third party under which the third party acquired the promissory note for approximately $700,000. The NSA requires payment of 50% of the amount due upon execution, and the balance due no later than three days following 60 days after the date of execution. On March 11, 2024, the Company received payment of approximately $350,000, which was recorded as other income, and recorded a receivable for the deferred payment, which was subsequently received. In connection with the execution of the NSA, the Company recognized a gain of approximately $0.6 million in the second quarter.
Transactions with Vintage Stock CEO
Rodney Spriggs, the President and Chief Executive Officer of Vintage Stock, Inc., a wholly owned subsidiary of the Company, is the sole member of Spriggs Investments, LLC (“Spriggs Investments”).
Spriggs Promissory Note I
On July 10, 2020, the Company executed a promissory note (the “Spriggs Promissory Note I”) in favor of Spriggs Investments that memorializes a loan by Spriggs Investments to the Company in the initial principal amount of $2.0 million (the “Spriggs Loan I”). The Spriggs Loan I originally matured on July 10, 2022; however, the maturity date was extended
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to July 10, 2023, pursuant to unanimous written consent of the Board of Directors. The Spriggs Promissory Note I bears simple interest at a rate of 10.0% per annum. On January 19, 2023, the Company entered into a modification agreement of the Spriggs Loan I. Under the modification agreement, the Spriggs Promissory Note I will bear interest at a rate of 12% per annum, and the maturity date was extended to July 31, 2024. On February 29, 2024, the Company entered into a loan modification agreement of the Spriggs Loan I. Under the loan modification agreement, the Company was required to make a principal payment of $600,000 to Spriggs Investments within five business days following the effective date of the loan modification agreement, and make principal payments of not less than $300,000 each 90-day period thereafter, beginning on April 1, 2024, until the Spriggs Promissory Note I is fully repaid. Further, under the loan modification agreement, the maturity date of the Spriggs Promissory Note I was extended to July 31, 2025. All monthly payments under the original Spriggs Promissory Note I remain in effect through the maturity date as amended. As of March 31, 2024 and September 30, 2023, the principal amount owed was $1.4 million and $2.0 million, respectively.
Spriggs Promissory Note II
On January 19, 2023, in connection with the acquisition of Flooring Liquidators, the Company executed a promissory note in favor of Spriggs Investments in the initial principal amount of $1.0 million (the “Spriggs Loan II”). The Spriggs Loan II matures on July 31, 2024, and bears interest at a rate of 12% per annum. On February 29, 2024, the Company entered into a loan modification agreement of the Spriggs Loan II. Under the loan modification agreement, upon full principal repayment of the Spriggs Promissory Note I (see above), the Company will make principal payments of not less than $300,000, per each 90-day period, until the Spriggs Loan II is fully repaid. Further, under the loan modification agreement, the maturity date of the Spriggs Loan II was extended to July 31, 2025. All monthly payments under the original Spriggs Loan II remain in effect through the maturity date as amended. As of March 31, 2024 and September 30, 2023, the principal amount owed was $1.0 million.
Transactions with Spyglass Estate Planning, LLC
Jon Isaac, the Company's President and Chief Executive Officer, is the sole member of Spyglass Estate Planning, LLC (“Spyglass”).
Building Leases
On July 1, 2022, in connection with its acquisition of certain assets and intellectual property of Better Backers, Inc., Marquis entered into two building leases with Spyglass. The building leases are for 20 years with two options to renew for an additional five years each. 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. The Company has evaluated each lease and determined the rental amounts to be at market rates.
Transactions with Flooring Liquidators CEO
Stephen Kellogg is the Chief Executive Officer of Flooring Liquidators, a wholly owned subsidiary of the Company.
Flooring Liquidators leases five properties from K2L Property Management, and one from Railroad Investments, each of which Mr. Kellogg is a member. Additionally, Flooring Liquidators leases two properties from Stephen Kellogg and Kimberly Hendrick as a couple, and properties from each of The Stephen Kellogg and Kimberly Hendrick Trust, The Stephen Kellogg Trust, and Mr. Kellogg personally. Ms. Hendrick is Mr. Kellogg's spouse.
Sellers Notes
Note Payable to the Sellers of Kinetic
In connection with the purchase of Kinetic, on June 28, 2022, Kinetic entered into an employment agreement with the previous owner of Kinetic to serve as its Head of Equipment Operations. The employment agreement is for an initial term of five years and shall be automatically extended in 90-day increments unless either party provides notice as required under the agreement. Additionally, Precision Marshall entered into a seller financed loan in the amount of $3.0 million with the previous owner of Kinetic. The Sellers Subordinated Acquisition Note bears interest at 7.0% per annum, with interest payable quarterly in arrears. The Sellers Subordinated Acquisition Note has a maturity date of September 27, 2027. As of March 31, 2024 and September 30, 2023, the remaining principal balance was $3.0 million.
Note Payable to the Seller of Flooring Liquidators
In connection with the purchase of Flooring Liquidators (see Note 3), on January 18, 2023, the Company entered into an employment agreement with the previous owner of Flooring Liquidators to serve as its Chief Executive Officer. The
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employment agreement is for an initial term of five years and shall be automatically extended in 90-day increments unless either party provides notice as required under the agreement. Additionally, the Company entered into a seller financed mezzanine loan, which is fully guaranteed by the Company, in the amount of $34.0 million with the previous owners of Flooring Liquidators. The Seller Subordinated Acquisition Note bears interest at 8.24% per annum, with interest payable monthly in arrears beginning on January 18, 2024. The Sellers Note has a maturity date of January 18, 2028. The fair value assigned to the Sellers Note, as calculated by an independent third-party firm, was $31.7 million, or a discount of $2.3 million. The $2.3 million discount is being accreted to interest expense, using the effective interest rate method, as required by GAAP, over the term of the Sellers Note. As of March 31, 2024 and September 30, 2023, the carrying value of the Sellers Note was approximately $34.9 million and $33.5 million, respectively.
Note Payable to the Seller of PMW
In connection with the purchase of PMW (see Note 3), on July 20, 2023, the Company entered into a consulting agreement with the previous owner of PMW to serve as part-time President and Chief Executive Officer. The consulting agreement commenced on the Effective Date and shall terminate upon the later of (i) Sellers’ receipt of earn-out payments in an aggregate amount equal to $3.0 million and (ii) the full satisfaction and payment of all amounts due and to that are to become due under the seller note, unless earlier terminated in accordance with the terms set forth in the consulting agreement. Additionally, PMW entered into two seller financed loans, in the aggregate amount of $2.5 million, which are fully guaranteed by the Company. The seller financed loans bear interest at 8.0% per annum, with interest payable quarterly in arrears. The seller financed loans have a maturity date of July 18, 2028. As of March 31, 2024 and September 30, 2023, the carrying value of the seller financed loans was approximately $2.5 million.
Procedures for Approval of Related Party Transactions
In accordance with its charter, the Audit Committee reviews and determines whether to approve all related party transactions (as such term is defined for purposes of Item 404 of Regulation S-K). The Audit Committee participated in the review, approval, or ratification of the transactions described above.

Note 17:    Commitments and Contingencies
Litigation
SEC Investigation
On February 21, 2018, the Company received a subpoena from the Securities and Exchange Commission (“SEC”) and a letter from the SEC stating that it was conducting an investigation. The subpoena requested documents and information concerning, among other things, the restatement of the Company’s financial statements for the quarterly periods ended December 31, 2016, March 31, 2017, and June 30, 2017, the acquisition of Marquis Industries, Inc., Vintage Stock, Inc., and ApplianceSmart, Inc., and the change in auditors. On August 12, 2020, three of the Company’s corporate executive officers (together, the “Executives”) each received a “Wells Notice” from the Staff of the SEC relating to the Company’s SEC investigation. On October 7, 2020, the Company received a “Wells Notice” from the Staff of the SEC relating to the SEC investigation. The Wells Notices related to, among other things, the Company’s reporting of its financial performance for its fiscal year ended September 30, 2016, certain disclosures related to executive compensation, and its previous acquisition of ApplianceSmart, Inc. A Wells Notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law. The Wells Notices informed the Company and the Executives that the SEC Staff had made a preliminary determination to recommend that the SEC file an enforcement action against the Company and each of the Executives to allege certain violations of the federal securities laws. On October 1, 2018, the Company received a letter from the SEC requesting information regarding a potential violation of Section 13(a) of the Securities Exchange Act of 1934, based upon the timing of the Company’s Form 8-K filed on February 14, 2018. The Company cooperated fully with the SEC inquiry and provided a response to the SEC on October 26, 2018.
On August 2, 2021, the SEC filed a civil complaint in the United States District Court for the District of Nevada naming the Company and two of its executive officers - Jon Isaac, the Company’s current President and Chief Executive Officer, and Virland Johnson, the Company’s former Chief Financial Officer, as defendants (collectively, the “Company Defendants”) as well as certain other related third parties (the “SEC Complaint”). The SEC Complaint alleges various financial, disclosure, and reporting violations related to income and earnings per share data, purported undisclosed stock promotion and trading, purported inaccurate disclosure regarding beneficial ownership of common stock, and undisclosed executive compensation from 2016 through 2018. The violations are brought under Section 10(b) of the Exchange Act and Rule 10b-5; Sections 13(a), 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rules 12b-20, 13a-1, 13a-14, 13a-13, 13b2-1, 13b2-2; Section 14(a) of the Exchange Act and Rule 14a-3; and Section 17(a) of the Securities Act of 1933. The
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SEC seeks permanent injunctions against the Company Defendants, permanent officer-and-director bars, disgorgement of profits, and civil penalties. The foregoing is only a general summary of the SEC Complaint, which may be accessed on the SEC’s website at https://www.sec.gov/litigation/litreleases/2021/lr25155.htm.
On October 1, 2021, the Company Defendants and third-party defendants moved to dismiss the SEC complaint. On September 7, 2022, the court denied the Company Defendants’ motion to dismiss, but granted one of the third-party defendant’s motions to dismiss, granting the SEC leave to file an amended complaint. On September 21, 2022, the SEC filed an amended complaint to which the Company Defendants filed an answer on October 11, 2022, denying liability. The court subsequently entered a discovery scheduling order and the parties exchanged initial disclosures. The parties participated in a mediation in June 2023. The mediation was not successful and the case is currently in the midst of discovery. Discovery deadlines have been extended because counsel for JanOne Inc. and Virland Johnson moved to withdraw on August 18, 2023, which motion the court granted on October 2, 2023. In light of this, the Court approved a stipulated order to extend the discovery period approximately 45 days. Fact discovery is now set to be completed by May 20, 2024. The Company Defendants strongly dispute and deny the allegations and intend to continue to defend themselves vigorously against the claims.
Sieggreen Class Action
On August 13, 2021, Daniel E. Sieggreen, individually and on behalf of all others similarly situated claimants ("Plaintiff"), filed a class action complaint for violation of federal securities laws in the United States District Court for the District of Nevada, naming the Company, Jon Isaac, the Company's current President and Chief Executive Officer, and Virland Johnson, the Company's former Chief Financial Officer, as defendants (collectively, the "Company Defendants"). The allegations asserted are similar to those in the SEC Complaint. Among other sought relief, the complaint seeks damages in connection with the purchases and sales of the Company’s securities between December 28, 2016 and August 3, 2021. As of December 17, 2021, the judge granted a stipulation to stay proceedings pending the resolutions of the motions to dismiss in the SEC Complaint. On February 1, 2023, the final motion to dismiss relating to the SEC Complaint was denied, which was subsequently noticed in the Sieggreen action on February 2, 2023. Plaintiff filed an Amended Complaint on March 6, 2023. On May 5, 2023, the Company Defendants filed a Motion to Dismiss the Amended Complaint, and the briefing on that motion is now complete. Discovery is automatically stayed in this case until after the disposition of the Motion to Dismiss. If the Motion to Dismiss is not successful, the case will proceed to discovery. The Company Defendants strongly dispute and deny the allegations at issue in this case and intend to continue to defend themselves vigorously against these claims.
Holdback Matter
On October 10, 2022, a representative for the former shareholders of Precision Industries, Inc. filed a civil complaint in the Court of Chancery of the State of Delaware. The complaint alleged that the Company violated the terms of an agreement and plan of merger dated July 14, 2020, by failing to pay the shareholders a certain indemnity holdback of $2,500,000. The Chancery Court dismissed that action for lack of jurisdiction. On January 12, 2023, the representative re-filed the same action in the United States District Court for the Western District of Pennsylvania. On October 26, 2023, the Company counterclaimed against the representative and all represented shareholders for fraudulently misrepresenting the seller’s inventory and accounting methodology and asserting damages in excess of $4,500,000. On April 10, 2024, the District Court dismissed the individual shareholders, leaving intact the company's misrepresentation claims against the shareholder representative. The Company expects discovery to last for approximately one year.
Wage and Hour Matter
On July 27, 2022, Irma Sanchez, a former employee of Elite Builder Services, Inc. (“Elite Builders”), filed a class action complaint against Elite Builders in the Superior Court of California, County of Alameda. The complaint alleges that Elite Builders failed to pay all minimum and overtime wages, failed to provide lawful meal periods and rest breaks, failed to provide accurate itemized wage statements, and failed to pay all wages due upon separation as required by California law. The complaint was later amended as a matter of right on October 4, 2022. Further, Ms. Sanchez put the Labor & Workforce Development Agency on notice to exhaust administrative remedies and enable her to bring an additional claim under the California Labor Code Private Attorneys General Act, which permits an employee to assert a claim for violations of certain California Labor Code provisions on behalf of all aggrieved employees to recover statutory penalties. The Court has set this for a Case Management Conference on September 30, 2024, after the parties have had a chance to exchange discovery regarding the claims. Elite Builders maintains that Ms. Sanchez’s claims lack merit. Elite Builders has received early round discovery from the plaintiff and plans to engage in further discovery to establish the extent, if any, of exposure. The parties have also discussed attending mediation with the intent to minimize litigation costs.

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Generally
The Company is involved in various claims and lawsuits arising in the normal course of business. The ultimate results of claims and litigation cannot be predicted with certainty. The Company currently believes that the ultimate outcome of such lawsuits and proceedings will not, individually, or in the aggregate, have a material adverse effect on our condensed consolidated financial position, results of operations or cash flows. As applicable, liabilities pertaining to these matters, that are probable and estimable, have been accrued.
Note 18:     Segment Reporting
The Company operates in five operating segments which are characterized as: (1) Retail-Entertainment, (2) Retail-Flooring, (3) Flooring Manufacturing, (4) Steel Manufacturing, and (5) Corporate and Other. The Retail-Entertainment segment consists of Vintage Stock; the Retail-Flooring segment consists of Flooring Liquidators; the Flooring Manufacturing Segment consists of Marquis; and the Steel Manufacturing Segment consists of Precision Marshall and Kinetic.
The following tables summarize segment information (in $000's):
For the Three Months Ended March 31,For the Six Months Ended March 31,
2024202320242023
Revenues
Retail-Entertainment$16,842 $19,188 $37,428 $42,461 
Retail-Flooring32,032 20,769 66,351 20,769 
Flooring Manufacturing34,180 30,340 63,425 56,772 
Steel Manufacturing35,488 19,916 68,841 37,897 
Corporate & Other84 909 174 2,209 
Total revenues$118,626 $91,122 $236,219 $160,108 
Gross profit
Retail-Entertainment$9,836 $10,654 $21,364 $22,864 
Retail-Flooring11,702 7,742 24,734 7,742 
Flooring Manufacturing8,760 7,328 15,182 11,989 
Steel Manufacturing5,090 5,647 10,352 10,040 
Corporate & Other79 237 162 917 
Total gross profit$35,467 $31,608 $71,794 $53,552 
Operating income (loss)
Retail-Entertainment$1,784 $2,327 $4,973 $5,991 
Retail-Flooring(3,023)(216)(2,935)(216)
Flooring Manufacturing1,978 2,406 2,923 3,158 
Steel Manufacturing872 2,814 1,855 4,270 
Corporate & Other(2,449)(2,379)(4,113)(3,684)
Total operating income$(838)$4,952 $2,703 $9,519 
 
Depreciation and amortization
Retail-Entertainment$226 $321 $492 $633 
Retail-Flooring1,275 995 2,627 995 
Flooring Manufacturing1,055 1,082 2,112 2,193 
Steel Manufacturing1,627 1,114 3,244 2,207 
Corporate & Other5 135 8 269 
Total depreciation and amortization$4,188 $3,647 $8,483 $6,297 
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Interest expense
Retail-Entertainment$82 $152 $237 $306 
Retail-Flooring1,275 1,021 2,474 1,021 
Flooring Manufacturing1,016 1,067 2,000 2,054 
Steel Manufacturing1,557 841 3,180 1,628 
Corporate & Other237 154 439 273 
Total interest expense$4,167 $3,235 $8,330 $5,282 
Net (loss) income before provision for income taxes
Retail-Entertainment$1,845 $2,178 $4,954 $5,716 
Retail-Flooring(4,485)(1,390)(6,115)(1,390)
Flooring Manufacturing826 1,214 662 901 
Steel Manufacturing(1,056)1,715 (2,074)1,983 
Corporate & Other(1,628)(1,609)(2,831)(2,643)
Total (loss) net income before provision for income taxes$(4,498)$2,108 $(5,404)$4,567 
Note 19:     Subsequent Events
The Company has evaluated subsequent events through the filing of this Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to disclosures in its condensed consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the three and six months ended March 31, 2024, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the “2023 Form 10-K”).
Note about Forward-Looking Statements
This Quarterly Report on Form 10-Q includes statements that constitute “forward-looking statements.” These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “intends,” “plans,” “expects,” or “anticipates,” and do not reflect historical facts.
Specific forward-looking statements contained in this portion of the Annual Report include, but are not limited to: (i) statements that are based on current projections and expectations about the markets in which we operate, (ii) statements about current projections and expectations of general economic conditions, (iii) statements about specific industry projections and expectations of economic activity, (iv) statements relating to our future operations, prospects, results, and performance, (v) statements that the cash on hand and additional cash generated from operations together with potential sources of cash through issuance of debt or equity will provide the Company with sufficient liquidity for the next 12 months, and (vi) statements that the outcome of pending legal proceedings will not have a material adverse effect on business, financial position and results of operations, cash flow or liquidity.
Forward-looking statements involve risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results, future performance and capital requirements and cause them to materially differ from those contained in the forward-looking statements include those identified in our 2023 Form 10-K under Item 1A “Risk Factors” and Part II, Item 1A. "Risk Factors" below, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.
In addition, the foregoing factors may generally affect our business, results of operations and financial position. Forward-looking statements speak only as of the date the statements were made. We do not undertake and specifically decline any obligation to update any forward-looking statements except as required by federal securities laws. Any information contained on our website www.liveventures.com or any other websites referenced in this Quarterly Report are not incorporated into and should not be deemed a part of this Quarterly Report.
Our Company
Live Ventures Incorporated is a holding company of diversified businesses, which, together with our subsidiaries, we refer to as the “Company”, “Live Ventures”, “we”, “us” or “our”. We acquire and operate companies in various industries that have historically demonstrated a strong history of earnings power. We currently have five segments to our business: Retail-Entertainment, Retail-Flooring, Flooring Manufacturing, Steel Manufacturing, and Corporate and Other.
Under the Live Ventures brand, we seek opportunities to acquire profitable and well-managed companies. We work closely with consultants who help us identify target companies that fit within the criteria we have established for opportunities that will provide synergies with our businesses.
Our principal offices are located at 325 E. Warm Springs Road, Suite 102, Las Vegas, Nevada 89119, our telephone number is (702) 939-0231, and our corporate website (which does not form part of this Quarterly Report Form 10-Q) is located at www.liveventures.com. Our common stock trades on the Nasdaq Capital Market under the symbol “LIVE”.
Retail-Entertainment Segment
Our Retail-Entertainment Segment is composed of Vintage Stock, Inc., doing business as Vintage Stock, V-Stock, Movie Trading Company and EntertainMart (collectively, “Vintage Stock”).
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Vintage Stock is an award-winning specialty entertainment retailer that offers a large selection of entertainment products, including new and pre-owned movies, video games and music products, as well as ancillary products, such as books, comics, toys and collectibles, in a single location. With its integrated buy-sell-trade business model, Vintage Stock buys, sells and trades new and pre-owned movies, music, video games, electronics and collectibles through 70 retail locations strategically positioned across Arkansas, Colorado, Idaho, Illinois, Kansas, Missouri, Nebraska, New Mexico, Oklahoma, Texas, and Utah.
Retail-Flooring Segment
Our Retail-Flooring Segment is composed of Flooring Liquidators, Inc. (“Flooring Liquidators”).
Flooring Liquidators is a leading retailer and installer of flooring, carpeting, and countertops to consumers, builders, and contractors in California and Nevada, operating 20 warehouse-format stores and a design center. Over the years, the company has established a strong reputation for innovation, efficiency and service in the home renovation and improvement market. Flooring Liquidators serves retail and builder customers through two businesses: retail customers through its Flooring Liquidators retail stores, and builder and contractor customers through Elite Builder Services, Inc.
On October 13, 2023, Flooring Liquidators acquired certain assets and assumed certain liabilities of Carpet Remnant Outlet, Inc. ("CRO"), a floor covering retailer and installer serving residential and commercial customers throughout Northwest Arkansas.
On November 30, 2023, CRO acquired certain assets and assumed certain liabilities of Johnson Floor & Home ("Johnson"), a floor covering retailer and installer serving residential and commercial customers through locations in Tulsa, Oklahoma and Joplin, Missouri.
Flooring Manufacturing Segment
Our Flooring Manufacturing segment is comprised of Marquis Industries, Inc. (“Marquis”).
Marquis is a leading carpet manufacturer and distributor of carpet and hard-surface flooring products. Over the last decade, Marquis has been an innovator and leader in the value-oriented polyester carpet sector, which is currently the market’s fastest-growing fiber category. Marquis focuses on the residential, niche commercial, and hospitality end-markets and serves thousands of customers.
Since commencing operations in 1995, Marquis has built a strong reputation for outstanding value, styling, and customer service. Its innovation has yielded products and technologies that differentiate its brands in the flooring marketplace. Marquis’s state-of-the-art operations enable high quality products, unique customization, and exceptionally short lead-times. Furthermore, the Company has recently invested in additional capacity to grow several attractive lines of business, including printed carpet and yarn extrusion.
On July 1, 2022, Live acquired certain assets and intellectual property of Better Backers, Inc., a Georgia corporation, which was accomplished through an Asset Purchase Agreement.
Steel Manufacturing Segment
Our Steel Manufacturing segment is comprised of Precision Industries, Inc. (“Precision Marshall”), its wholly-owned subsidiary The Kinetic Co., Inc. (“Kinetic”), and Precision Metal Works, Inc. (“PMW”).
Precision Marshall is the North American leader in providing and manufacturing, pre-finished de-carb free tool and die steel. For over 75 years, Precision Marshall has served steel distributors through quick and accurate service. Precision Marshall has led the industry with exemplary availability and value-added processing that saves distributors time and processing costs.
Founded in 1948, Precision Marshall “The Deluxe Company” has built a reputation of high integrity, speed of service and doing things the “Deluxe Way”. The term Deluxe refers to all aspects of the product and customer service to be head and shoulders above the rest. From order entry to packaging and delivery, Precision Marshall makes it easy to do business and backs all products and service with a guarantee.
Precision Marshall provides four key products to over 500 steel distributors in four product categories: Deluxe Alloy Plate, Deluxe Tool Steel Plate, Precision Ground Flat Stock, and Drill Rod. With over 5,000 distinct size grade combinations in
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stock every day, Precision Marshall arms tool steel distributors with deep inventory availability and same day shipment to their place of business or often ships direct to their customer saving time and handling.
On June 28, 2022, Precision Marshall acquired Kinetic. Kinetic is a highly recognizable and regarded brand name in the production of industrial knives and hardened wear products for the tissue, metals, and wood industries and is known as a one-stop shop for in-house grinding, machining, and heat-treating. Kinetic is headquartered in Greendale, Wisconsin. Kinetic manufactures more than 90 types of knives and numerous associated parts with modifications and customizations available to each. Kinetic employs approximately 100 non-union employees.
On July 20, 2023, we acquired PMW. Founded nearly 76 years ago in 1947 in Louisville, Kentucky, PMW manufactures and supplies highly engineered parts and components across 400,000 square feet of manufacturing space. PMW offers world-class metal forming, assembly, and finishing solutions across diverse industries, including appliance, automotive, hardware, electrical, electronic, medical products, and devices.
Corporate and Other Segment
Our Corporate and Other segment consists of certain corporate general and administrative costs, Salomon Whitney LLC, which was shut down during the three months ended June 30, 2023, and operations of certain legacy products and service offerings for which we are no longer accepting new customers.
Critical Accounting Policies
Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Preparation of these statements requires us to make judgments and estimates. Some accounting policies have a significant and material impact on amounts reported in these financial statements. Estimates and assumptions are based on management's experience and other information available prior to the issuance of our financial statements. Our actual realized results may differ materially from management’s initial estimates as reported. Our critical and significant accounting policies include Trade and Other Receivables, Inventories, Goodwill, Revenue Recognition, Fair Value Measurements, Income Taxes, Segment Reporting and Concentrations of Credit Risk. For a summary of our significant accounting policies and the means by which we develop estimates thereon, see Part II, Item 8 – Financial Statements - Notes to unaudited condensed consolidated financial statements Note 2 – summary of significant accounting policies in our 2023 Form 10-K.
Adjusted EBITDA
We evaluate the performance of our operations based on financial measures such as “Adjusted EBITDA”, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization, stock-based compensation, and other non-cash or nonrecurring charges. We believe that Adjusted EBITDA is an important indicator of the operational strength and performance of the business, including the business’ ability to fund acquisitions and other capital expenditures, and to service its debt. Additionally, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to improve performance. Adjusted EBITDA is also a measure that is customarily used by financial analysts to evaluate a company's financial performance, subject to certain adjustments. Adjusted EBITDA does not represent cash flows from operations, as defined by GAAP, and should not be construed as an alternative to net income or loss and is indicative neither of our results of operations, nor of cash flows available to fund all our cash needs. It is, however, a measurement that the Company believes is useful to investors in analyzing its operating performance. Accordingly, Adjusted EBITDA should be considered in addition to, but not as a substitute for, net income, cash flow provided by operating activities, and other measures of financial performance prepared in accordance with GAAP. As companies often define non-GAAP financial measures differently, Adjusted EBITDA, as calculated by the Company, should not be compared to any similarly titled measures reported by other companies.
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Results of Operations Three Months Ended March 31, 2024 and 2023
The following table sets forth certain statement of income items and as a percentage of revenue, for the three months ended March 31, 2024 and 2023 (in $000’s):
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2023
% of Total
Revenue
% of Total
Revenue
Selected Data
Revenues$118,626 $91,122 
Cost of revenues83,159 70.1 %59,514 65.3 %
General and administrative expenses29,824 25.1 %22,617 24.8 %
Sales and marketing expenses6,481 5.5 %4,039 4.4 %
Interest expense, net4,167 3.5 %3,235 3.6 %
(Loss) income before provision for income taxes(4,498)(3.8 %)2,108 2.3 %
(Benefit) provision for income taxes(1,217)(1.0 %)550 0.6 %
Net (loss) income$(3,281)(2.8 %)$1,558 1.7 %
Adjusted EBITDA (a)
Retail-Entertainment$2,153 $2,652 
Retail-Flooring(1,849)1,111 
Flooring Manufacturing2,897 3,363 
Steel Manufacturing2,331 3,670 
Corporate & Other(1,075)(1,609)
Total Adjusted EBITDA$4,457 $9,187 
Adjusted EBITDA as a percentage of revenue
Retail-Entertainment12.8 %13.8 %
Retail-Flooring(5.8 %)5.3 %
Flooring Manufacturing8.5 %11.1 %
Steel Manufacturing6.6 %18.4 %
Corporate & OtherN/AN/A
Consolidated adjusted EBITDA as a percentage of revenue3.8 %10.1 %
(a)See reconciliation of net income to Adjusted EBITDA below.
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The following table sets forth revenue by segment (in $000’s):
For the Three Months Ended March 31, 2024For the Three Months Ended March 31, 2023
Net
Revenue
% of
Total
Revenue
Net
Revenue
% of
Total
Revenue
Revenue
Retail-Entertainment$16,842 14.2 %$19,188 21.1 %
Retail-Flooring32,032 27.0 %20,769 22.8 %
Flooring Manufacturing34,180 28.8 %30,340 33.3 %
Steel Manufacturing35,488 29.9 %19,916 21.9 %
Corporate & Other84 0.1 %909 1.0 %
Total Revenue$118,626 100.0 %$91,122 100.0 %
The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):
For the Three Months Ended March 31, 2024For the Three Months Ended March 31, 2023
Gross
Profit
Gross
Profit % of Total Revenue
Gross
Profit
Gross
Profit % of Total Revenue
Gross Profit
Retail-Entertainment$9,836 8.3 %$10,654 11.7 %
Retail-Flooring11,702 9.9 %7,742 8.5 %
Flooring Manufacturing8,760 7.4 %7,328 8.0 %
Steel Manufacturing5,090 4.3 %5,647 6.2 %
Corporate & Other79 0.1 %237 0.3 %
Total Gross Profit$35,467 29.9 %$31,608 34.7 %
Revenue
Revenue increased approximately $27.5 million, or 30.2%, to approximately $118.6 million for the quarter ended March 31, 2024, compared to revenue of approximately $91.1 million in the prior year period. The increase is primarily attributable to the acquisitions of PMW, which was acquired during the fourth quarter of fiscal year 2023, and Flooring Liquidators, which was acquired during the second quarter of fiscal year 2023 which collectively added approximately $29.6 million, as well as an increase of approximately $3.8 million in revenue in the Flooring Manufacturing segment. The increase was partially offset by decreased revenue of approximately $5.9 million in the Company’s other business segments due to general economic conditions.
Cost of Revenue
Cost of revenue as a percentage of revenue was 70.1% for three months ended March 31, 2024 as compared to 65.3% for the three months ended March 31, 2023. The increase was primarily attributable to the acquisition of PMW, which historically has generated lower margins, as well as a decrease in margins in our Steel Manufacturing segment as a whole due to decreased production due to a slow down in sales, partially offset by an increase in margins in our Flooring Manufacturing segment due to increased sales of Harris Flooring Group® brands, which generates higher margins.
General and Administrative Expense
General and Administrative expenses increased by 31.9% to approximately $29.8 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase is primarily due to the acquisitions of Flooring Liquidators and PMW during fiscal 2023.
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Sales and Marketing Expense
Sales and marketing expense increased by 60.5% to approximately $6.5 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to expanding the sales force in connection with the acquisition of the Harris Flooring Group® brands from Q.E.P, increased convention and trade show activity in our Flooring Manufacturing segment, as well as the acquisition of Flooring Liquidators.
Interest Expense, net
Interest expense, net, increased by approximately $925,000 for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to increased debt balances related to the acquisitions of Flooring Liquidators and PMW, and to fund operations, and increased interest rates during the period.
Results of Operations Six Months Ended March 31, 2024 and 2023
The following table sets forth certain statement of income items and as a percentage of revenue, for the six months ended March 31, 2024 and 2023 (in $000’s):
For the Six Months Ended March 31, 2024For the Six Months Ended March 31, 2023
% of Total
Revenue
% of Total
Revenue
Statement of Income Data:
Revenues$236,219 $160,108 
Cost of revenues164,425 69.6 %106,556 66.6 %
General and administrative expenses57,503 24.3 %37,217 23.2 %
Sales and marketing expenses11,588 4.9 %6,816 4.3 %
Interest expense, net8,330 3.5 %5,282 3.3 %
Income before provision for income taxes(5,404)(2.3 %)4,567 2.9 %
Provision for income taxes(1,441)(0.6 %)1,165 0.7 %
Net income$(3,963)(1.7 %)$3,402 2.1 %
Adjusted EBITDA (a)
Retail-Entertainment$5,867 $6,656 
Retail-Flooring(546)1,111 
Flooring Manufacturing4,774 5,147 
Steel Manufacturing5,133 6,195 
Corporate & Other(2,075)(2,382)
Total Adjusted EBITDA$13,153 $16,727 
Adjusted EBITDA as a percentage of revenue
Retail-Entertainment15.7 %15.7 %
Retail-Flooring(0.8 %)5.4 %
Flooring Manufacturing7.5 %9.1 %
Steel Manufacturing7.5 %16.3 %
Corporate & OtherN/AN/A
Consolidated adjusted EBITDA as a percentage of revenue5.6 %10.4 %
(a)See reconciliation of net income to Adjusted EBITDA below.
The following table sets forth revenue by segment (in $000’s):
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For the Six Months Ended March 31, 2024For the Six Months Ended March 31, 2023
Net
Revenue
% of
Total Revenue
Net
Revenue
% of Total
Revenue
Revenue
Retail-Entertainment$37,428 15.8 %$42,461 26.5 %
Retail-Flooring66,351 28.1 %20,769 13.0 %
Flooring Manufacturing63,425 26.9 %56,772 35.5 %
Steel Manufacturing68,841 29.1 %37,897 23.7 %
Corporate & other174 0.1 %2,209 1.4 %
Total Revenue$236,219 100.0 %$160,108 100.0 %
The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):
For the Six Months Ended March 31, 2024For the Six Months Ended March 31, 2023
Gross
Profit
Gross
Profit % of Total Revenue
Gross
Profit
Gross
Profit % of Total Revenue
Gross Profit
Retail-Entertainment$21,364 9.0 %$22,864 14.3 %
Retail-Flooring24,734 10.5 %7,742 4.8 %
Flooring Manufacturing15,182 6.4 %11,989 7.5 %
Steel Manufacturing10,352 4.4 %10,040 6.3 %
Corporate & other162 0.1 %917 0.6 %
Total Gross Profit$71,794 30.4 %0.30392982782926$53,552 33.4 %
Revenue
Revenue increased approximately $76.1 million, or 47.5%, to $236.2 million for the six months ended March 31, 2024, as compared to the prior year period revenue of $160.1 million. The increase is primarily attributable to the acquisitions of PMW and Flooring Liquidators, which collectively added $81.4 million, as well as an increase of approximately $6.7 million in revenue in the Flooring Manufacturing segment. The increase was partially offset by decreased revenue of approximately $11.9 million in the Company’s other business segments due to general economic conditions.
Cost of Revenue
Cost of revenue as a percentage of revenue was 69.6% for six months ended March 31, 2024 as compared to 66.6% for the six months ended March 31, 2023. The increase was primarily attributable to the acquisition of PMW, which historically has generated lower margins, as well as a decrease in margins in our Steel Manufacturing segment as a whole due to decreased production due to a slow down in sales, partially offset by an increase in margins in our Flooring Manufacturing segment due to increased sales of Harris Flooring Group® brands, which generates higher margins.
General and Administrative Expense
General and Administrative expenses increased by 54.5% to approximately $57.5 million for the six months ended March 31, 2024, as compared to the six months ended March 31, 2023. The increase is primarily due to the acquisitions of Flooring Liquidators and PMW during fiscal 2023.
Sales and Marketing Expense
Sales and marketing expense increased by 70.0% to approximately $11.6 million for the six months ended March 31, 2024, as compared to the six months ended March 31, 2023, primarily due to expanding the sales force in connection with the
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acquisition of the Harris Flooring Group® brands from Q.E.P, increased convention and trade show activity in our Flooring Manufacturing segment, as well as the acquisition of Flooring Liquidators.
Interest Expense, net
Interest expense, net, increased by approximately $3.0 million for the six months ended March 31, 2024, as compared to the six months ended March 31, 2023, primarily due to increased debt balances related to the acquisitions of Flooring Liquidators and PMW, and to fund operations, and increased interest rates during the period.
Results of Operations by Segment for the Three Months Ended March 31, 2024 and 2023
For the Three Months Ended March 31, 2024For the Three Months Ended March 31, 2023
Retail-EntertainmentRetail-FlooringFlooring
Manufacturing
Steel
Manufacturing
Corporate
& Other
TotalRetail-EntertainmentRetail-FlooringFlooring
Manufacturing
Steel
Manufacturing
Corporate
& Other
Total
Revenue$16,842 $32,032 $34,180 $35,488 $84 $118,626 $19,188 $20,769 $30,340 $19,916 $909 $91,122 
Cost of Revenue7,006 — 20,330 — 25,420 — 30,398 — 83,159 8,534 13,027 — 23,012 — 14,269 — 672 59,514 
Gross Profit9,836 11,702 8,760 5,090 79 35,467 10,654 7,742 7,328 5,647 237 31,608 
General and Administrative Expense7,919 13,469 1,866 4,048 2,524 29,826 8,164 7,873 1,438 2,676 2,466 22,617 
Selling and Marketing Expense133 1,256 4,916 170 6,479 163 85 3,484 157 150 4,039 
Operating Income (Loss)$1,784 $(3,023)$1,978 $872 $(2,449)$(838)$2,327 $(216)$2,406 $2,814 $(2,379)$4,952 
Retail-Entertainment Segment
Retail-Entertainment segment revenue for the quarter ended March 31, 2024 was approximately $16.8 million, a decrease of approximately $2.3 million, or 12.2%, compared to prior year period revenue of approximately $19.2 million. Revenue decreased primarily due to reduced consumer demand and a shift in sales mix toward used products, which generally have lower ticket sales with higher margins. The shift in sales mix also contributed to the increase in gross margin to 58.4% for the quarter ended March 31, 2024, compared to 55.5% for the prior year period. Operating income for the quarter ended March 31, 2024 was approximately $1.8 million, compared to operating income of approximately $2.3 million for the prior year period.
Retail-Flooring Segment
The Retail-Flooring segment consists of Flooring Liquidators, which was acquired in January 2023. Revenue for the quarter ended March 31, 2024, was approximately $32.0 million, an increase of approximately $11.3 million, or 54.2%, compared to prior year period revenue of approximately $20.8 million. The increase is due to the acquisition of Flooring Liquidators in the second quarter of fiscal year 2023 and the acquisitions of CRO and Johnson by Flooring Liquidators during the first quarter of fiscal year 2024. The gross margin for the quarter ended March 31, 2024 was 36.5%, compared to 37.3% for the prior year period. Operating loss for the quarter ended March 31, 2024 was approximately $3.0 million, compared to an operating loss of approximately $0.2 million for the prior year period. The increase in operating loss was primarily due to temporary inefficiencies associated with the acquisitions of CRO and Johnson in the current period.
Flooring Manufacturing Segment
Revenue for the quarter ended March 31, 2024 was approximately $34.2 million, an increase of approximately $3.8 million, or 12.7%, compared to prior year period revenue of approximately $30.3 million. The gross margin was 25.6% for the quarter ended March 31, 2024, compared to 24.2% for the prior year period. The revenue and gross margin increases are primarily due to increased sales associated with the acquisition of the Harris Flooring Group® brands in the fourth quarter of fiscal year 2023. Operating income for the quarter ended March 31, 2024 was approximately $2.0 million, compared to operating income of approximately $2.4 million for the prior year.
Steel Manufacturing Segment
Revenue for the quarter ended March 31, 2024 was approximately $35.5 million, an increase of approximately $15.6 million or 78.2%, compared to the prior year period revenue of approximately $19.9 million. The increase is primarily due to increased revenue of approximately $18.3 million at PMW, partially offset by a $2.9 million decrease in the Company’s other Steel Manufacturing businesses. The gross margin was 14.3% for the quarter ended March 31, 2024, compared to 28.4% for the prior year period. The increase is primarily due to increased revenue of approximately $18.3 million at
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PMW, partially offset by a $2.9 million decrease in the Company’s other Steel Manufacturing business. The gross margin was 14.3% for the quarter ended March 31, 2024, compared to 28.4% for the prior year period. The decrease in gross margin is primarily due to the acquisition of PMW, which has historically generated lower margins, as well as an overall decrease in margins in the Steel Manufacturing segment due to reduced production efficiencies as a result of lower demand. Operating income for the quarter ended March 31, 2024 was approximately $0.9 million, compared to operating income of approximately $2.8 million in the prior year period.
Corporate and Other Segment
Revenue for the quarter ended March 31, 2024 was approximately $0.1 million, a decrease of approximately $0.8 million, or 90.8%, compared to the prior year period revenue of approximately $0.9 million. The decrease was primarily due to the due to the closure of SW Financial in May 2023. Operating loss for both quarters ended March 31, 2024 and March 31, 2023 was approximately $2.4 million.
Results of Operations by Segment for the Six Months Ended March 31, 2024 and 2023
For the Six Months Ended March 31, 2024For the Six Months Ended March 31, 2023
Retail-EntertainmentRetail-FlooringFlooring
Manufacturing
Steel
Manufacturing
Corporate
& Other
TotalRetail-EntertainmentRetail-FlooringFlooring
Manufacturing
Steel
Manufacturing
Corporate
& Other
Total
Revenue$37,428 $66,351 $63,425 $68,841 $174 $236,219 $42,461 $20,769 $56,772 $37,897 $2,209 $160,108 
Cost of Revenue16,064 41,617 48,243 58,489 12 164,425 19,597 13,027 44,783 27,857 1,292 106,556 
Gross Profit21,364 24,734 15,182 10,352 162 71,794 22,864 7,742 11,989 10,040 917 53,552 
General and Administrative Expense16,074 25,491 3,471 8,204 4,263 57,503 16,549 7,873 2,928 5,468 4,399 37,217 
Selling and Marketing Expense317 2,178 8,788 293 12 11,588 324 85 5,903 302 202 6,816 
Operating Income (Loss)$4,973 $(2,935)$2,923 $1,855 $(4,113)$2,703 $5,991 $(216)$3,158 $4,270 $(3,684)$9,519 
Retail-Entertainment Segment
Retail-Entertainment segment revenue for the six months ended March 31, 2024 was approximately $37.4 million, a decrease of approximately $5.0 million, or 11.9%, compared to the prior year period revenue of approximately $42.5 million. The decrease in revenue is primarily due to reduced consumer demand and a shift in sales mix toward used products, which generally have lower ticket sales with higher margins. The shift in sales mix also contributed to the increase in gross margin to 57.1% for the six months ended March 31, 2024, compared to 53.8% for the prior year period. Operating income for the six months ended March 31, 2024 was approximately $5.0 million, compared to operating income of approximately $6.0 million for the prior year period.
Retail-Flooring Segment
The Retail-Flooring segment consists of Flooring Liquidators, which was acquired in January 2023. Revenue for the six months ended March 31, 2024 was approximately $66.4 million, an increase of approximately $45.6 million, or 219.5%, compared to the prior year period revenue of $20.8 million. The increase is due to the acquisition of Flooring Liquidators in the second quarter of fiscal year 2023 and the acquisitions of CRO and Johnson by Flooring Liquidators during the first quarter of fiscal year 2024. The gross margin for both of the six months ended March 31, 2024 and March 31, 2023 was 37.3%. Operating loss for the six months ended March 31, 2024 was approximately $2.9 million, compared to an operating loss of approximately $0.2 million for the prior year period. The increase in operating loss was primarily due to temporary inefficiencies associated with the acquisitions of CRO and Johnson in the current period.
Flooring Manufacturing Segment
Revenue for the six months ended March 31, 2024 was approximately $63.4 million, an increase of approximately $6.7 million, or 11.7%, compared to the prior year period revenue of approximately $56.8 million. The gross margin was 23.9% for the six months ended March 31, 2024, compared to 21.1% for the prior year period. The increase in revenue and gross margin are primarily due to increased sales associated with the acquisition of the Harris Flooring Group® brands in the fourth quarter of fiscal year 2023. Operating income for the six months ended March 31, 2024 was approximately $2.9 million, compared to operating income of approximately $3.2 million for the prior year period.
Steel Manufacturing Segment
Revenue for the six months ended March 31, 2024 increased approximately $31.0 million or 81.7% to approximately $68.8 million, as compared to the prior year period revenue of $35.8 million. The increase is primarily due to increased revenue
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of approximately $35.8 million at PMW, partially offset by a $4.8 million decrease in the Company’s other Steel Manufacturing businesses. The gross margin was 15.0% for the six months ended March 31, 2024, compared to 26.5% for the prior year period. The decrease in gross margin is primarily due to the acquisition of PMW, which has historically generated lower margins, as well as overall decreased margins in the Steel Manufacturing segment due to reduced production. Operating income for the six months ended March 31, 2024 was approximately $1.9 million, compared to operating income of approximately $4.3 in the prior year period.
Corporate and Other Segment
Revenue for the six months ended March 31, 2024 decreased by approximately $2.0 million. The decrease was primarily due to the closure of SW Financial in May 2023. Operating loss for the six months ended March 31, 2024 was approximately $4.1 million, compared to a loss of approximately $3.7 million in the prior year period.
Adjusted EBITDA Reconciliation
The following table presents a reconciliation of net income to Adjusted EBITDA for the three and six months ended March 31, 2024 and 2023 (in 000's):
For the Three Months Ended For the Six Months Ended
March 31, 2024March 31, 2023March 31, 2024March 31, 2023
Net (loss) income$(3,281)$1,558 $(3,963)$3,402 
Depreciation and amortization4,188 3,647 8,483 6,297 
Stock-based compensation50 109 100 109 
Interest expense, net4,167 3,235 8,330 5,282 
Income tax (benefit) expense(1,217)550 (1,441)1,165 
SW Financial settlement gain— (1,000)— (1,000)
Acquisition costs468 1,088 874 1,472 
Debt acquisition costs— — 183 — 
Other non-recurring charges82 — 587 — 
Adjusted EBITDA$4,457 $9,187 $13,153 $16,727 
Adjusted EBITDA¹ for the quarter ended March 31, 2024 was approximately $4.5 million, a decrease of approximately $4.7 million, or 51.5%, compared to the prior year period. The decrease is primarily due to decreases in gross profit and operating income.
Adjusted EBITDA for the six months ended March 31, 2024 was $13.2 million, a decrease of approximately $3.6 million, or 21.4%, compared to the prior year period. The decrease is primarily due to decreases in gross profit and operating income.
Liquidity and Capital Resources
As of March 31, 2024, we had total cash on hand of approximately $4.5 million and approximately $31.5 million of available borrowing under our revolving credit facilities. As we continue to pursue acquisitions and other strategic transactions to expand and grow our business, we regularly monitor capital market conditions and may raise additional funds through borrowings or public or private sales of debt or equity securities. The amount, nature, and timing of any borrowings or sales of debt or equity securities will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.
Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities and funds available under our asset-based revolver lines of credit will provide sufficient liquidity to do the following: fund our operations; pay our scheduled loan payments; ability to repurchase shares under our share buyback program; 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.
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Working Capital
We had working capital of approximately $79.0 million as of March 31, 2024, as compared to working capital of approximately $85.0 million as of September 30, 2023; a decrease of approximately $6.0 million. The decrease is primarily due to increases in accrued liabilities, the current portion of long-term debt, and the current portion of operating lease obligations, and a decrease in income taxes receivable, partially offset by decreases in the current portion of notes payable to related parties and accounts payable, and an increase in accounts receivable.
Cash Flows from Operating Activities
The Company’s cash, as of March 31, 2024, was approximately $4.5 million compared to approximately $4.3 million as of September 30, 2023, an increase of approximately $0.2 million. Net cash provided by operations was approximately $2.1 million and $14.2 million for the six months ended March 31, 2024 and 2023, respectively. The decrease was primarily due to decreases in net income and deferred income tax liabilities, and an increase in accounts receivable, partially offset by increases in depreciation and amortization expense, reserve for inventory obsolescence and income taxes payable.
Our primary sources of cash inflows are from customer receipts from sales on account, factored accounts receivable proceeds, receipts for securities sales commissions, and net remittances from directory services customers processed in the form of ACH billings. Our most significant cash outflows include payments for raw materials and general operating expenses, including payroll costs and general and administrative expenses that typically occur within close proximity of expense recognition.
Cash Flows from Investing Activities
Our cash flows used in investing activities of approximately $4.9 million for the six months ended March 31, 2024 consisted of the acquisitions of CRO by Flooring Liquidators, and Johnson by CRO, and purchases of property and equipment. Our cash flows used in investing activities of approximately $36.8 million for the six months ended March 31, 2023 consisted of purchases of property and equipment.
Cash Flows from Financing Activities
Our cash flows used in financing activities of approximately $3.0 million during the six months ended March 31, 2024 consisted of net borrowings under revolver loans of approximately $7.7 million, payments on notes payable of approximately $3.4 million, proceeds from related parties of $1.0 million, purchases of treasury stock and payments for finance leases of approximately $0.4 million, and payments of related party notes payable of $0.6 million.
Our cash flows provided by financing activities of approximately $22.2 million during the six months ended March 31, 2023 consisted of proceeds from notes payable of approximately $5.7 million, partially offset by payments of notes payable and financing leases of approximately $1.8 million, and purchases of treasury stock and net borrowings under revolver loans of approximately $670,000.
Currently, we are not issuing common shares for liquidity purposes. We prefer to use asset-based lending arrangements and mezzanine financing together with Company provided capital to finance acquisitions and have done so historically. Occasionally, as our Company history has demonstrated, we will issue stock and derivative instruments linked to stock for services or debt settlement.
Future Sources of Cash; New Products and Services
We may require additional debt financing or capital to finance new acquisitions, refinance existing indebtedness or other strategic investments in our business. Other sources of financing may include stock issuances and additional loans; or other forms of financing. Any financing obtained by us may further dilute or otherwise impair the ownership interest of our existing stockholders.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of March 31, 2024, we did not participate in any market risk-sensitive commodity instruments for which fair value disclosure would be required. We believe we are not subject in any material way to other forms of market risk, such as foreign currency exchange risk or foreign customer purchases or commodity price risk. We believe we are not subject in any material way to other forms of market risk, such as foreign currency exchange risk or foreign customer purchases or commodity price risk.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Control and Procedures. We carried out an evaluation, under the supervision, and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, as of March 31, 2024, we concluded that the Company's disclosure, controls, and procedures were effective.
Management’s Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent or detect all errors and all fraud. A control system, regardless of how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. These inherent limitations include the following: judgements in decision-making can be faulty, and control and process breakdowns can occur because of simple errors or mistakes, controls can be circumvented by individuals, acting alone or in collusion with each other, or by management override. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Our management assessed the design and effectiveness of our internal control over financial reporting as of March 31, 2024. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission of 2013 regarding Internal Control – Integrated Framework. Based on our assessment using those criteria, as of March 31, 2024, our management concluded that our internal controls over financial reporting were operating effectively.
There were no changes in our internal control over financial reporting that occurred during the six months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. Legal Proceedings
The information in response to this item is included in Note 17, Commitments and Contingencies, to the Consolidated Financial Statements included in Part I, Item 1, of this Form 10-Q. Please also refer to “Item 3. Legal Proceedings” in our 2023 Form 10-K for information regarding material pending legal proceedings. Except as set forth herein and therein, there have been no new material legal proceedings and no material developments in the legal proceedings previously disclosed.


ITEM 1A. Risk Factors
None.
ITEM 2. Unregistered Sales of Equity Securities and Use of funds
On February 20, 2018, the Company announced a $10 million common stock repurchase program. During the three months ended March 31, 2024, the Company made the following repurchases:
MonthNumber of Shares PurchasedAverage Purchase Price PaidNumber of Shares Purchased as Part of a Publicly Announced Plan or ProgramMaximum Amount that May be Purchased Under the Announced Plan or Program
January 2024135$26.10 135$3,189,629 
February 202410,114$25.15 10,114$2,935,292 
March 20241,600$25.19 1,600$2,894,985 
Totals11,849$25.16 11,849$2,894,985 
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
None.
ITEM 5. Other Information
None.
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ITEM 6. Exhibits
The following exhibits are filed with or incorporated by reference into this Quarterly Report.
Exhibit Number
Exhibit Description
Form
File Number
Exhibit Number
Filing Date
3.18-K001-339373.108/15/07
3.2
8-K
001-339373.109/07/10
3.3
8-K
001-339373.103/11/13
3.4
10-Q
001-339373.102/14/14
3.5
8-K
001-33937
3.1.4
10/08/15
3.6
8-K
001-33937
3.1.5
11/25/16
3.7
10-K
001-33937
3.1.6
12/29/16
3.810-Q001-339373.808/14/18
10.128
10-Q
001-3393710.12802/08/24
10.129
8-K
001-33937
10.12904/30/24
10.130*
10.131*
10.132*
10.133*
31.1*
31.2*
32.1*
32.2*
101.INS*Inline XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
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101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
_________________________
*Filed herewith
†    Indicates a management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Live Ventures Incorporated
Dated: May 14, 2024
/s/ Jon Isaac
President and Chief Executive Officer
(Principal Executive Officer)
Dated: May 14, 2024
/s/ David Verret
Chief Financial Officer
(Principal Financial Officer)
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