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

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

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

~~Under the purchase price allocation, the Company recognized goodwill of approximately $3.0~~ million, which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of June 28, 2022, as calculated by an independent third-party firm. Goodwill arising from the acquisition is expected to be fully deductible for tax purposes. The table below outlines the purchase price allocation of the purchase for Kinetic to the acquired identifiable assets, liabilities assumed and goodwill as of March 31, 2023 (in $000’s):

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

In connection with the acquisition, Marquis entered into two 20-year building leases with Spyglass Estate Planning, LLC, a related party (see Note 15), with two options to renew for an additional five years each. The fair value of the buildings and improvement is approximately $~~9.3~~ ~~million. The provisions of the lease agreements include an initial 24-month month-to-month rental period, during which the lessee may cancel with 90-day notice, followed by a~~ ~~20-year~~ lease term with two five-year renewal options. Due to the highly specialized nature of the leased assets, the Company currently believes that it is more likely than not that it will not cancel during the initial 24-month term, and that each of the two five-year options will be exercised. The base rent under the lease agreements is approximately $~~73,000~~ ~~and $32,000~~ ~~per month, respectively, for the first year of the term, and a~~ ~~2.5~~% per annum escalator. The lease agreements are each “net leases”, such that the lessee is also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the property. The Company has evaluated each lease and determined the rent amounts to be at market rates. These leases are being treated as finance leases for accounting purposes, as described in ASC 842 “~~Leases”.~~

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

~~Note 5: Inventory~~

The following table details the Company's inventory as of ~~March~~December 31, 2023 and September 30, ~~2022~~2023 (in $000's):

Inventory, net

March 31, 2023

September 30, 2022

Raw materials

$
32,656

$
35,829

Work in progress

8,694

7,539

Finished goods

33,802

32,814

Merchandise

43,316

23,900

118,468

100,082

Less: Inventory reserves

(2,749
)

(2,423
)
Total inventory, net

$
115,719

$
97,659


Inventory, net	December 31, 2023		September 30, 2023
Raw materials	$	29,690	$	32,590
Work in progress	9,682		9,028
Finished goods	51,806		50,082
Merchandise	46,098		43,438
	137,276		135,138
Less: Inventory reserves	(4,821)		(3,824)
Total inventory, net	$	132,455	$	131,314

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Note 6:5: Property and Equipment

The following table details the Company's property and equipment as of ~~March~~December 31, 2023 and September 30, ~~2022~~2023 (in $000's):

March 31, 2023

September 30, 2022

Property and equipment, net:

Land

$
2,064

$
2,029

Building and improvements

24,408

26,761

Transportation equipment

3,038

622

Machinery and equipment

55,685

53,739

Furnishings and fixtures

6,036

4,407

Office, computer equipment and other

7,564

3,699

98,795

91,257

Less: Accumulated depreciation

(31,697
)

(26,667
)

$
67,098

$
64,590


	December 31, 2023		September 30, 2023
Property and equipment, net:
Land	$	2,029	$	2,029
Building and improvements	36,417		35,684
Transportation equipment	2,088		2,062
Machinery and equipment	68,202		67,575
Furnishings and fixtures	6,287		6,028
Office, computer equipment and other	4,941		4,569
	119,964		117,947
Less: Accumulated depreciation	(40,281)		(37,244)
Total property and equipment, net	$	79,683	$	80,703

Depreciation expense was $~~2.7~~$3.1 million and $~~1.3~~$2.4 million ~~respectively,~~ for the three months ended ~~March~~December 31, 2023 and 2022, respectively.

Note 6: Leases

The Company leases retail stores, warehouse facilities, and $~~5.1~~ ~~million~~office space. These assets and $~~2.5~~ ~~million~~properties are generally leased under noncancelable agreements that expire at various future dates with many agreements containing renewal options for additional periods. The agreements, which have been classified as either operating or finance leases, generally provide for minimum and, in some cases, percentage rent, and require the ~~six months ended March~~Company to pay all insurance, taxes, and other maintenance costs. As a result, the Company recognizes assets and liabilities for all leases with lease terms greater than 12 months. The amounts recognized reflect the present value of remaining lease payments for all leases. The discount rate used is an estimate of the Company’s blended incremental borrowing rate based on information available associated with each subsidiary’s debt outstanding at lease commencement. In considering the lease asset value, the Company considers fixed and variable payment terms, prepayments and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.

The following table details the Company's right of use assets and lease liabilities as of December 31, 2023 and ~~2022.~~

September 30, 2023 (in $000's):

December 31, 2023 September 30, 2023
Right of use asset - operating leases $ 65,799 $ 54,544
Lease liabilities:
Current - operating 12,799 11,369
Current - finance 361 359
Long term - operating 58,291 48,156
Long term - finance 32,981 32,942

As of December 31, 2023, the weighted average remaining lease term for operating leases is 10.3 years. The Company's weighted average discount rate for operating leases is 9.9%. Total cash payments for operating leases for the three months ended December 31, 2023 and 2022 were approximately $4.3 million and $2.4 million, respectively. Additionally, the Company recognized approximately $14.9 million in right of use assets and liabilities upon commencement of operating leases during the three months ended December 31, 2023.

As of December 31, 2023, the weighted average remaining lease term for finance leases is 27.4 years. The Company's weighted average discount rate for finance leases is 11.7%. Total cash payments for finance leases for the three months

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ended December 31, 2023 and 2022 were approximately $793,000 and $481,000, respectively. No finance right-of-use assets or liabilities were recognized during the three months ended December 31, 2023.

The Company records finance lease right of use assets as property and equipment. The balance, as of December 31, 2023 and September 30, 2023 is as follows (in $000’s):


	December 31, 2023		September 30, 2023
Property and equipment, at cost	$	22,526	$	22,526
Accumulated depreciation	$	(861)	$	(702)
Property and equipment, net	$	21,665	$	21,824

Total present value of future lease payments of operating leases as of December 31, 2023 (in $000's):


Twelve months ended December 31,
2024	$	18,564
2025	16,784
2026	14,155
2027	12,252
2028	8,107
Thereafter	36,737
Total	106,599
Less implied interest	(35,509)
Present value of payments	$	71,090

Total present value of future lease payments of finance leases as of December 31, 2023 (in $000's):


Twelve months ended December 31,
2024	$	3,167
2025	3,197
2026	3,241
2027	3,320
2028	3,425
Thereafter	104,066
Total	120,416
Less implied interest	(87,074)
Present value of payments	$	33,342

During the three months ended December 31, 2023 and 2022, the Company recorded no impairment charges relating to any of its leases.

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Note 7: Intangibles

The following table details the Company's intangibles as of ~~March~~December 31, 2023 and September 30, ~~2022~~2023 (in $000's):

March 31, 2023

September 30, 2022

Intangible assets, net:

Intangible assets - Domain names

$
14,082

$
808

Intangible assets - Customer relationships

12,298

4,598

Intangible assets - Other

2,261

587

28,641

5,993

Less: Accumulated amortization

(3,392
)

(2,149
)
Total intangibles, net

$
25,249

$
3,844


	December 31, 2023		September 30, 2023
Intangible assets, net:
Intangible assets - Tradenames	$	14,940	$	14,940
Intangible assets - Customer relationships	15,175		13,874
Intangible assets - Other	3,811		2,316
	33,926		31,130
Less: Accumulated amortization	(5,763)		(4,562)
Total intangibles, net	$	28,163	$	26,568

Amortization expense was $~~992,000~~$1.2 million and $~~210,000, respectively,~~$253,000 for the three months ended ~~March~~December 31, 2023 and 2022, ~~and $1.2~~ ~~million and $496,000~~ ~~for the six months ended March 31, 2023 and 2022.~~

respectively.

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

2024

$
4,308

2025

4,207

2026

4,207

2027

4,139

2028

3,835

Thereafter

4,553

$
25,249


Twelve months ending December 31,
2024	$	4,984
2025	4,984
2026	4,945
2027	4,866
2028	4,335
Thereafter	4,049
	$	28,163

Note 8: Goodwill

The following table details the Company's goodwill as of ~~March~~September 30, 2023 and December 31, 2023 (in $000's):

Retail

Flooring Manufacturing

Steel Manufacturing

Corporate

Total

September 30, 2022

36,947

807

3,339

—

41,093

Additions

—

—

—

—

—

Kinetic fair value adjustment

—

—

(312
)

—

(312
)
Flooring Liquidators acquisition

25,394

25,394

Flooring Liquidators tax adjustment

3,331

3,331

Impairment

—

—

—

—

—

March 31, 2023

$
65,672

$
807

$
3,027

$
—

$
69,506


	Retail - Entertainment		Retail - Flooring		Flooring Manufacturing		Steel Manufacturing		Total
September 30, 2023	36,947		30,419		807		7,693		75,866

CRO acquisition	—		425		—		—		425
PMW adjustment	—		—		—		(652)		(652)
Flooring Liquidators adjustment	—		1,000		—		—		1,000
December 31, 2023	$	36,947	$	31,844	$	807	$	7,041	$	76,639

During the three months ended December 31, 2023, the Company made fair value adjustments, in the amount of approximately $652,000, related to the acquisition of PMW, and $1.0 million related to the acquisition of Flooring Liquidators (see Note 3).

As of ~~March~~December 31, 2023, the Company did not identify any triggering events that would require impairment testing.

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Note 9: Accrued Liabilities

The following table details the Company's accrued liabilities as of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, respectively (in $000's):

March 31, 2023

September 30, 2022

Accrued liabilities:

Accrued payroll and bonuses

$
4,657

$
4,838

Accrued sales and use taxes

1,862

1,905

Accrued customer deposits

3,996

—

Accrued gift card and escheatment liability

1,780

1,696

Accrued interest payable

963

390

Accrued accounts payable and bank overdrafts

1,008

1,731

Accrued professional fees

1,054

1,924

Accrued expenses - other

6,145

4,002

Total accrued liabilities

$
21,465

$
16,486


	December 31, 2023		September 30, 2023
Accrued liabilities:
Accrued payroll and bonuses	$	5,775	$	5,802
Accrued sales and use taxes	1,921		1,529
Accrued customer deposits	6,093		4,579
Accrued gift card and escheatment liability	1,873		1,819
Accrued interest payable	697		669
Accrued inventory	7,262		5,700
Accrued professional fees	5,454		3,146
Accrued expenses - other	10,048		8,582
Total accrued liabilities	$	39,123	$	31,826

Note 10: Long-Term Debt

Long-term debt as of ~~March~~December 31, 2023 and September 30, ~~2022~~2023 consisted of the following (in $000's):

March 31, 2023

September 30, 2022

Revolver loans

$
55,419

$
43,107

Equipment loans

17,525

13,716

Term loans

9,288

7,941

Other notes payable

16,176

14,501

Total notes payable

98,408

79,265

Less: unamortized debt issuance costs

(590
)

(626
)
Net amount

97,818

78,639

Less: current portion

(30,288
)

(18,935
)
Total long-term debt

$
67,530

$
59,704

December 31, 2023 September 30, 2023
Revolver loans $ 56,022 $ 56,779
Equipment loans 14,419 15,486
Term loans 13,669 14,290
Other notes payable 16,011 15,789
Total notes payable 100,121 102,344
Less: unamortized debt issuance costs (541) (557)
Net amount 99,580 101,787
Less: current portion (21,223) (23,077)
Total long-term debt $ 78,357 $ 78,710

Future maturities of long-term debt at ~~March~~December 31, 2023, are as follows which does not include related party debt separately stated (in $000's):


Twelve months ending December 31,
2024	$	21,223
2025	7,504
2026	28,217
2027	31,134
2028	1,306
Thereafter	10,196
Total future maturities of long-term debt	$	99,580

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

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Twelve months ending March 31,

2024

$
30,288

2025

5,723

2026

15,290

2027

5,299

2028

30,281

Thereafter

10,937

Total future maturities of long-term debt

$
97,818

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 December 31, 2023 and September 30, 2023, the outstanding balance was approximately $6.5 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 December 31, 2023 and September 30, 2023, the outstanding balance on the revolving loan was approximately $26.0 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 $2.2 million and $2.3 million, respectively. The revolving loan has a variable interest rate and matures in January 2027. As of December 31, 2023 and September 30, 2023, the outstanding balance on Kinetic Term Loan #1 was approximately $3.1 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. The outstanding balance on the Capex loan was $1.4 million as of each of December 31, 2023 and September 30, 2023.

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~~$25.0 million in revolving credit (“Eclipse Revolver”) and $~~3.5~~$3.5 million in M&E lending (“Eclipse M&E”). The Eclipse Revolver is a three-year, asset-based facility that is secured by substantially all of Flooring Liquidators’ assets. Availability under the Eclipse Revolver is subject to a monthly borrowing base calculation. Flooring Liquidators’ ability to borrow under the Eclipse Revolver is subject to the satisfaction of certain conditions, including meeting all loan covenants under the credit agreement with Eclipse. The Eclipse Revolver bears interest at ~~4.5~~%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~~%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~~.2026. As of ~~March~~December 31, 2023 and September 30, 2023, the outstanding balance on the Eclipse Revolver was approximately $~~9.7~~$8.8 million and $8.2 million, respectively, and the outstanding balance on the Eclipse M&E loan was approximately $~~2.8~~ ~~million.~~

$2.3 million and $2.4 million, respectively.

Loan with Fifth Third Bank (PMW)

In connection with the acquisition of ~~America Revolver Loan~~

On ~~January 31, 2020~~PMW (see Note 3), ~~Marquis~~on July 20, 2023, PMW entered into ~~an amended $25.0~~ ~~million~~a revolving credit ~~agreement (“BofA Revolver”)~~facility with ~~Bank~~Fifth Third Bank. The facility consists of ~~America Corporation (“BofA”).~~$15.0 million in revolving credit and approximately $5.0 million in M&E lending. The ~~BofA~~Fifth-Third Revolver is a ~~five-year,~~three-year, asset-based facility that is secured by substantially all of ~~Marquis’~~PMW's assets. Availability under the ~~BofA~~Fifth-Third Revolver is subject to a monthly borrowing base calculation. ~~Marquis’~~PMW's ability to borrow under the ~~BofA~~Fifth-Third Revolver is subject to the satisfaction of certain conditions, including meeting all loan covenants under the credit agreement with ~~BofA.~~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

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lowest or most favorable rate in effect at any time) in effect from time to time. The ~~BofA Revolver has a variable interest rate and~~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 ~~January 2025.~~July 2026. As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the outstanding balance on the Fifth-Third Revolver was approximately $~~10.7~~$10.2 million and $~~10.1~~$11.0 million, respectively, and the balance on the Fifth-Third M&E loan was approximately $4.7 million and $4.8 million, respectively.

Bank Midwest Revolver Loan

On October 17, 2023, Vintage entered into a $15.0 million credit agreement with ~~Fifth Third~~ Bank

~~On January 20, 2022, Precision Marshall refinanced its Encina Business~~ 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 ~~loans with Fifth Third~~Agreement, the revolving credit facility between Vintage Stock and Texas Capital Bank was terminated and the balance outstanding was repaid. The ~~refinanced credit facility, totaling $~~29 ~~million, is comprised~~Bank Midwest Revolver interest accrues daily on the outstanding principal at a rate of $~~23.0~~ ~~million in revolving credit, $3.5~~ ~~million in M&E lending, and $2.5~~ ~~million for capital Capex lending. Advances under~~ the ~~new credit facility will bear interest at~~greater of (a) the ~~30-day~~one-month forward-looking term rate based on SOFR, plus ~~200 basis points for lending under the revolving facility,~~2.36% per annum, or (b) 6.5% per annum, and ~~30-day SOFR plus 225 basis points for M&E and Capex lending (Effective~~matures on October 17, 2024. As of December 31, 2021, SOFR replaced the USD LIBOR for most financial benchmarking). 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 term loans were opened in the amounts of $4.0 million and $1.0~~ ~~million, respectively. The $4.0~~ ~~million term loan, which matures on~~ ~~January 20, 2027, carries the same terms for M&E term lending as stated above. The $1.0~~ ~~million term loan, 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,~~ 2023, ~~and September 30, 2022,~~ the outstanding balance on the ~~revolving loan~~Bank Midwest Revolver was approximately $~~27.1~~ ~~million and $23.6~~ ~~million, respectively, and~~$4.5 million. As of September 30, 2023, the outstanding balance on the ~~original term note~~TCB Revolver was approximately $~~2.9~~ ~~million and $3.2~~ million, respectively. The revolving loan has a variable interest rate and matures in January 2027. As of March 31, 2023 and September 30, 2022, the outstanding balances on the two term loans to fund the Kinetic acquisition were approximately $~~3.6~~ ~~million and $4.8~~ ~~million, respectively. As of March 31, 2023, the “Special Advance Term Loan” was fully repaid.~~

~~Texas Capital Bank Revolver Loan~~

~~On November 3, 2016, Vintage Stock entered into an amended $12.0~~ ~~million credit agreement with Texas Capital Bank (“TCB Revolver”). The TCB Revolver is a~~ ~~five-year, asset-based facility that is secured by substantially all of Vintage Stock’s assets. Availability under the TCB Revolver is subject to a~~ ~~monthly~~ ~~borrowing base calculation. The TCB Revolver has a variable interest rate and matures in November 2023. The effective rate, as of March 31, 2023, was~~ ~~6.79%. As of March 31, 2023 and September 30, 2022, the balance outstanding was approximately $7.5~~ ~~million and $9.4~~ ~~million, respectively.~~

$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~~December 31, 2023:

Note #3 is for approximately $~~3.7~~$3.7 million, secured by equipment. The Equipment Loan #3 ~~is due~~ matured in December 2023,, payable in 84 monthly payments of $~~52,000~~$52,000 beginning January 2017,, bearing interest rate at ~~4.8~~%4.8% per annum. As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the balance was ~~approximately $456,000~~$0 and $~~751,000~~,$154,000, respectively.

Note #4 is for approximately $~~1.1~~$1.1 million, secured by equipment. The Equipment Loan #4 ~~is due~~ matured in December 2023,, payable in 81 monthly payments of $~~16,000~~$16,000 beginning April 2017,, bearing interest at ~~4.9~~%4.9% per annum. As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the balance was ~~approximately $140,000~~$0 and $~~231,000~~,$47,000, respectively.

Note #5 is for approximately $~~4.0~~$4.0 million, secured by equipment. The Equipment Loan #5 is due December 2024,, payable in 84 monthly payments of $~~55,000~~$55,000 beginning January 2018,, bearing interest at ~~4.7~~%4.7% per annum. As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the balance was approximately $~~1.1~~ ~~million~~$643,000 and $~~1.4~~ ~~million,~~$799,000, respectively.

Note #6 is for $~~913,000~~,$913,000, secured by equipment. The Equipment Loan #6 is due July 2024,, payable in 60 monthly payments of $~~14,000~~$14,000 beginning August 2019,, with a final payment of $~~197,000~~,$197,000, bearing interest at ~~4.7~~%4.7% per annum. As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the balance was approximately $~~395,000~~$277,000 and $~~471,000~~,$317,000, respectively.

Note #7 is for $~~5.0~~$5.0 million, secured by equipment. The ~~equipment loan~~Equipment Loan #7 is due February 2027,, payable in 84 monthly payments of $~~59,000~~$59,000 beginning March 2020,, with the final payment of $~~809,000~~,$809,000, bearing interest at ~~3.2~~%3.2% per annum. As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the balance was approximately $~~3.2~~$2.8 million and $~~3.5~~$2.9 million, respectively.

Note #8 is for approximately $~~3.4~~$3.4 million, secured by equipment. The ~~equipment loan~~Equipment Loan #8 is due September 2027,, payable in 84 monthly payments of $~~46,000~~$46,000 beginning October 2020,, bearing interest at ~~4.0~~%4.0%. As of ~~March~~December 31, 2023 and September 30, ~~20222,~~2023, the balance was approximately $~~2.3~~$1.9 million and $~~2.5~~$2.0 million, respectively.

In December 2021, Marquis funded the acquisition of $~~5.5~~$5.5 million of new equipment under Note #9 of its master agreement. The ~~note,~~Equipment Loan #9, which is secured by the equipment, matures December 2026, and is payable in 60 monthly ~~installments~~payments of $~~92,000~~,$92,000 beginning January 2022, with the final payment in the amount of approximately $~~642,000, beginning January 2022,~~$642,000, bearing interest at ~~3.75~~%.3.75% per annum. As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the balance was approximately $~~4.3~~$3.6 million and $~~4.8~~$3.9 million, respectively.

In December 2022, Marquis funded the acquisition of $~~5.7~~$5.7 million of new equipment under ~~note~~Note #10 of its master agreement. The ~~note,~~Equipment Loan #10, which is secured by the equipment, matures December 2029, and is payable in 84 monthly ~~installments~~payments of $~~79,000~~,$79,000, beginning January 2023, with the final payment in the amount of approximately $~~650,000, beginning January 2023,~~$650,000, bearing interest at ~~6.50~~%6.50%. As of ~~March~~December 31, 2023 and September 30, 2023, the balance was approximately $$5.1 million and $5.3 million.

Table of Contents~~5.6~~ ~~million.~~

Loan Covenant Compliance

As of ~~March~~December 31, 2023, the Company was in compliance with all covenants under its existing revolving and other loan agreements.

Note 11: Notes ~~Payable, Related~~Payable-Related Parties

Long-term debt payable to related parties (see Note 16) as of ~~March~~December 31, 2023 and September 30, ~~2022~~2023 consisted of the following (in $000's):

March 31, 2023

September 30, 2022

Isaac Capital Group, LLC, 12.5% interest rate, matures May 2025

$
2,000

$
2,000

Spriggs Investments, LLC, 10% interest rate, matures July 2024

2,000

2,000

Spriggs Investments, LLC for Flooring Liquidators, 12% interest rate, matures July 2024

1,000

—

Isaac Capital Group, LLC revolver, 12% interest rate, matures April 2024

1,000

—

Isaac Capital Group, LLC for Flooring Liquidators, 12% interest rate, matures January 2028

5,000

—

Seller of Flooring Liquidators, 8.24% interest rate, matures January 2028

34,000

—

Seller of Kinetic, 7.% interest rate, matures September 2027

3,000

3,000

Total notes payable - related parties

48,000

7,000

Less: unamortized debt issuance costs

(2,325
)

—

Net amount

45,675

7,000

Less: current portion

—

(2,000
)
Total long-term portion, related parties

$
45,675

$
5,000

Twelve months ending March 31,

2023

$
—

2024

4,000

2025

2,000

2026

—

2027

3,000

Thereafter

39,000

Total future maturities of long-term debt, related parties

$
48,000


	December 31, 2023		September 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 2024	2,000		2,000
Spriggs Investments, LLC for Flooring Liquidators, 12% interest rate, matures July 2024	1,000		1,000
Isaac Capital Group, LLC revolver, 12% interest rate, matures April 2024	1,000		1,000
Isaac Capital Group, LLC for Flooring Liquidators, 12% interest rate, matures January 2028	5,000		5,000
Total notes payable - related parties	11,000		11,000
Less: unamortized debt issuance costs	(81)		(86)
Net amount	10,919		10,914
Less: current portion	(4,000)		(4,000)
Total long-term portion, related parties	$	6,919	$	6,914


Twelve months ending December 31,
2024	$	4,000
2025	2,000


2028	5,000

Total future maturities of long-term debt, related parties	$	11,000

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Note 12: Related Party Seller Notes

Seller notes as of December 31, 2023 and September 30, 2023 consisted of the following (in $000’s):


	December 31, 2023		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 payable	39,500		39,500
Unamortized debt premium (discount)	172		(502)
Net amount	39,672		38,998
Less current portion	—		—
Long-term portion of Related party seller notes payable	$	39,672	$	38,998

Future maturities of seller notes at December 31, 2023 are as follows (in $000’s):


Twelve months ending December 31,


2026	500
2027	3,500
2028	35,672

Total	$	39,672

Note ~~12:~~13: Stockholders’ Equity

Series E Convertible Preferred Stock

As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, there were 47,840 shares of Series E Convertible Preferred Stock issued and outstanding, respectively.

Treasury Stock

As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the Company had ~~646,355~~664,409 and ~~620,971~~660,063 shares of Treasury Stock, respectively. During the ~~six~~three months ended ~~March~~December 31, 2023 and 2022, ~~respectively,~~ the Company ~~purchased~~ ~~25,384~~repurchased 4,346 and ~~65,668~~24,710 shares of its common stock ~~on the open market~~ for approximately $~~639,000~~$106,532 and ~~approximately $2.1~~ ~~million, respectively~~.

$622,000, respectively. During the three months ended December 31, 2023 and 2022, the average price paid per share was $24.51 and $25.16, respectively.

Note ~~13:~~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.

Table of Contents

The following table summarizes stock option activity for the fiscal year ended September 30, ~~2022~~2023 and the ~~six~~three months ended ~~March~~December 31, 2023:

Number of
Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual Life

Intrinsic
Value

Outstanding at September 30, 2021

87,500

$
18.81

1.78

$
1,626

Outstanding at September 30, 2022

87,500

$
18.81

0.78

$
771

Exercisable at September 30, 2022

87,500

$
18.81

0.78

$
771

Outstanding at September 30, 2022

87,500

$
18.81

0.78

$
771

Outstanding at March 31, 2023

87,500

$
18.81

0.85

$
1,160

Exercisable at March 31, 2023

87,500

$
18.81

0.85

$
1,160

~~The following table presents the number and weighted average fair value ("WAFV") of unvested restricted stock awards:~~

Series A Restricted Stock Awards

WAFV

Outstanding at September 30, 2022

—

$
—

Granted

27,307

$
36.62

Vested

—

$
—

Canceled

$
—

Non-vested at December 31, 2022

27,307

$
36.62


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Intrinsic Value
Outstanding at September 30, 2022	87,500	$	18.81	0.78	$	771
Outstanding at December 31, 2022	87,500	$	18.81	0.52	$	1,201
Exercisable at December 31, 2022	87,500	$	18.81	0.52	$	1,201

Outstanding at September 30, 2023	53,750	$	21.51	1.54	$	540


Outstanding at December 31, 2023	53,750	$	21.51	1.29	$	450
Exercisable at December 31, 2023	53,750	$	21.51	1.29	$	450

The Company recognized compensation expense of approximately $~~109,000~~$50,000 and $~~19,000~~$0 during the three months ended ~~March 31, 2023 and 2022, respectively, and approximately $109,000~~ ~~and $37,000~~ ~~during the six months ended March~~December 31, 2023 and 2022, 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~~December 31, 2023, the Company had ~~approximately $960,000~~ ofno unrecognized compensation expense associated with stock option ~~awards and Restricted Stock Units outstanding.~~

awards.

Note ~~14:~~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, 2023

Six Months Ended March 31,
2023

2023

2022

2023

2022

Basic

Net income

$
1,558

$
15,358

$
3,402

$
21,904

Less: preferred stock dividends

—

—

—

—

Net income applicable to common stock

$
1,558

$
15,358

$
3,402

$
21,904

Weighted average common shares outstanding

3,143,911

3,134,540

3,101,007

3,148,059

Basic earnings per share

$
0.50

$
4.90

$
1.10

$
6.96

Diluted

Net income applicable to common stock

$
1,558

$
15,358

$
3,402

$
21,904

Add: preferred stock dividends

—

—

—

—

Net income applicable for diluted earnings per share

$
1,558

$
15,358

$
3,402

$
21,904

Weighted average common shares outstanding

3,143,911

3,134,540

3,101,007

3,148,059

Add: Options

40,832

38,102

36,379

38,825

Add: Series B Preferred Stock

—

—

—

—

Add: Series B Preferred Stock Warrants

��

—

—

—

Add: Series E Preferred Stock

239

239

239

239

Assumed weighted average common shares outstanding

3,184,982

3,172,881

3,137,625

3,187,123

Diluted earnings per share

$
0.49

$
4.84

$
1.08

$
6.87

~~There are~~ ~~17,000~~


	Three Months Ended December 31,
	2023		2022
Basic
Net (loss) income	$	(682)	$	1,844
Less: preferred stock dividends	—		—
Net (loss) income applicable to common stock	$	(682)	$	1,844

Weighted average common shares outstanding	3,163,541		3,059,035
Basic (loss) earnings per share	$	(0.22)	$	0.60

Diluted
Net (loss) income applicable to common stock	$	(682)	$	1,844
Add: preferred stock dividends	—		—
Net (loss) income applicable for diluted earnings per share	$	(682)	$	1,844

Weighted average common shares outstanding	3,163,541		3,059,035
Add: Options	—		30,467


Add: Series E Preferred Stock	—		239
Assumed weighted average common shares outstanding	3,163,541		3,089,741
Diluted (loss) earnings per share	$	(0.22)	$	0.60

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 0the effect of dilutive securities. No diluted EPS computation was made for the three months ended December 31, 2023, as the Company recorded a net loss. Had the Company calculated diluted EPS for the three months ended December 31, 2023, the total assumed weighted average common shares outstanding would have been 3,182,083. For the three months ended December 31, 2022, there were 17,000 options to purchase shares of common stock that ~~are~~were anti-dilutive, and ~~are~~ not included in the ~~three months ended March 31, 2023 and 2022~~ diluted ~~earnings per share computations, respectively.~~

EPS computation.

Note ~~15:~~16: Related Party Transactions

Transactions with Isaac Capital Group, LLC

As of ~~March~~December 31, 2023, Isaac Capital Group, LLC (“ICG”) beneficially owns ~~48.8~~%48.9% 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~~$10.00 per share, all of which are currently exercisable. Mr. Isaac's options to purchase 25,000 shares of common stock were originally scheduled to expire on January 15, 2023, but, as amended on January 13, 2023, the expiration date was extended to January 15, 2025.

ICG Term Loan

~~As of March 31, 2023, the Company was~~

During 2015, Marquis entered into a ~~party to a term~~mezzanine loan ~~with ICG~~ in the amount of $~~2.0~~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 ~~matures on~~ ~~May 1, 2025~~ ~~and~~ bears interest at ~~a rate of~~ ~~12.5%. Interest is payable~~12.5% and matures in ~~arrears on the last day of each month.~~May 2025. As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the outstanding balance on this ~~loan~~note was $$2.0 million.

Table of Contents~~2.0~~ ~~million.~~

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~~$1.0 million revolving credit facility (the “ICG Revolver”). ~~The ICG Revolver bears interest at~~ ~~10.0% per annum and provides for~~On June 23, 2022, as approved by unanimous consent of the ~~payment~~Board of ~~interest monthly in arrears and matures~~ ~~April 2023~~.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 First Amendment of the ICG Revolver that extended the maturity date to April 8, 2024 and increased the interest rate from 10% to 12%12% per annum. As of ~~March~~each of December 31, 2023 and September 30, ~~2022,~~2023, the ~~outstanding balance on this note~~the ICG Revolver was $~~1.0~~ ~~million and $~~0~~, respectively.~~

$1.0 million.

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, ~~was~~as borrower, entered into a ~~party to a term loan with~~promissory note for the benefit of ICG in the amount of $~~5.0~~$5.0 million (“ICG Flooring Liquidators Loan”). The ICG Flooring Liquidators Loan matures on January 18, 2028,, and bears interest at 12%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~~December 31, 2023, the outstanding balance on this loan was $~~5.0~~$5.0 million.

Transactions with JanOne Inc.

Tony Isaac, a member of the Company's board of directors, and father of the Company's CEO, 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 ~~wholly-owned~~ subsidiary of JanOne, ~~Inc. (“JanOne”),~~ rents 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 $~~112,000~~$36,000 and $~~75,000~~$52,000 in rent and other reimbursed expenses for three months ended ~~March~~December 31, 2023 and 2022, ~~and $256,000~~ ~~and $144,000~~ ~~in rent and other reimbursed expenses for the six months ended March 31, 2023 and 2022,~~ respectively. ~~Tony Isaac is the Chief Executive Officer, President, Secretary, and a member of the Board of Directors of JanOne.~~

Purchase Agreement with ARCA ~~Recycling.~~

Recycling

On April 5, 2022, the Company entered into a Purchasing Agreement with ARCA Recycling ~~Inc. (“ARCA”~~("ARCA"), ~~then~~which was a ~~wholly-owned~~wholly owned subsidiary of ~~JanOne.~~JanOne, Inc. until March 2023. Pursuant to the agreement, the Company ~~agrees~~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. ~~The term~~As of ~~the Agreement is one year, and automatically renews if not terminated by either party. Due to significant doubt that the full balance due from ARCA will be paid, on March~~December 31, 2023, the Company ~~recorded an~~has a full allowance of approximately $~~267,000~~ ~~against~~$690,000 recorded in the reserve for doubtful accounts for the amount due. ~~Consequently, as of March 31, 2023, the amount due from ARCA was approximately $267,000, net of the allowance recorded, and the inventory balance was approximately $99,000~~.

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 LLC (“Spriggs Investments”), a limited liability company whose sole member is Rodney Spriggs, the President and Chief Executive Officer of Vintage Stock, Inc., a wholly-owned subsidiary of the Company, that memorializes a loan by Spriggs Investments to the Company in the initial principal amount of $~~2.0~~$2.0 million (the “Spriggs Loan I”). The Spriggs Loan I originally matured on July 10, 2022; however, the maturity date was extended 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~~%10.0% per annum. On January 19, 2023, the Company entered into a modification agreement of the Spriggs Loan I. Consequently, the Spriggs Promissory Note I will bear interest at a rate of 12%12% per annum, and the maturity date was extended to July 31, 2024. As of ~~March~~December 31, 2023 and September 30, ~~2022,~~2023, the amount owed was $~~2.0~~ ~~million~~.

$2.0 million.

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~~$1.0 million (the “Spriggs Loan II”). The Spriggs Loan II matures on July 31, 2024, and bears interest at a rate of 12%12% per annum. As of ~~March~~December 31, 2023 and September 30, 2023, the amount owed was $$1.0 million.

Table of Contents~~1.0~~ ~~million.~~

Transactions with Spyglass Estate Planning, ~~LLC.~~

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 Better Backers, Marquis entered into two building leases with ~~Spyglass Estate Planning, LLC, a limited liability company whose sole member is Jon Isaac, the Company’s President and Chief Executive Officer.~~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, Inc., 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, ~~(see Note 3),~~ 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~~$3.0 million with the previous ~~owners~~owner of Kinetic. The Sellers Subordinated Acquisition Note bears interest at ~~7.0~~%7.0% per annum, with interest payable quarterly in arrears.The Sellers Subordinated Acquisition Note has a maturity date of September 27, ~~2027~~.2027. As of ~~March~~December 31, 2023 and September 30, 2023, the remaining principal balance was $~~3.0~~$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 ~~Affiliated Holdings, LLC (“Buyer”)~~Liquidators to serve as its Chief Executive Officer. 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, the Company entered into a seller financed mezzanine loan, which is fully guaranteed by the Company, in the amount of $~~34.0~~$34.0 million with the previous owners of Flooring Liquidators. The Seller Subordinated Acquisition Note ~~(“Sellers Note”)~~ bears interest at ~~8.24~~%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~~.2028. The fair value assigned to the Sellers Note, as calculated by an independent third-party firm, was $~~31.7~~$31.7 million, or a discount of $~~2.3~~$2.3 million. The $~~2.3~~$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~~December 31, 2023 and September 30, 2023, the carrying value of the Sellers Note was approximately $$34.2 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 an consulting agreement with the previous owner of PMW ~~31.8~~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 December 31, 2023 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.

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Note ~~16:~~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 iswas 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 ~~Company’s previously-disclosed~~ 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 ~~has~~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 ~~(the “SEC 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"~~“Company Defendants”) as well as certain other related third ~~parties.~~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 ~~Securities~~ Exchange Act ~~of 1934 (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 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 ~~have agreed to participate~~participated in a mediation ~~and to continue the remainder of discovery until after the mediation, scheduled to take place~~ 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. Since that time, JanOne Inc. and Virland Johnson have obtained new counsel who have appeared in the case. In light of the new counsel in this case, 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 and the two executive officers named in the SEC Complaint described above.~~"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

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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 ~~his~~an Amended Complaint on March 6, 2023. On May 5, 2023, the Company ~~and its executives~~Defendants filed a Motion to Dismiss the Amended ~~Complaint. They~~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 ~~Marshall~~Industries, Inc. filed a civil complaint in the Court of Chancery of the State of Delaware. The complaint ~~alleges~~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~~. Plaintiff alleged that he effectuated service of the complaint on the Company, but the Company did not receive notification of the action until it received an Application for Default Judgment filed with the court on December 26, 2022. On December 28, 2022, the Court issued a letter order questioning its jurisdiction over the matter and directed plaintiff’s counsel to submit briefing as to why it believes jurisdiction is proper. Plaintiff filed its brief on January 13, 2023. On April 13, 2023, the$2,500,000. The Chancery Court dismissed ~~the~~that action ~~in its entirety~~ for lack of ~~jurisdiction, rendering the Application for Default Judgment moot.~~

jurisdiction. On January 12, 2023, ~~and after jurisdiction over~~ the ~~case was questioned by~~representative re-filed the same action in the United States District Court ~~of Chancery, State of Delaware, plaintiff filed a substantially identical complaint in~~for the Western District of Pennsylvania. ~~After the Delaware action was dismissed, plaintiff requested that counsel waive service of the Pennsylvania complaint.~~ On ~~April 19,~~October 26, 2023, the Company ~~agreed~~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. Several of the individual shareholders have moved to ~~waive service. The Company’s response to~~dismiss the ~~Complaint is now due on June 19, 2023.~~counterclaim. The Company ~~intends~~expects discovery to ~~defend against these claims vigorously.~~

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 has 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. ~~A Motion~~The Court has set this for ~~Change of Venue~~a Case Management Conference on September 30, 2024 after the parties have had a chance to ~~Stanislaus County was filed by~~exchange discovery regarding the claims. Elite Builders ~~on December 7, 2022. The hearing on the motion was heard on February 8, 2023. Elite Builders’ motion to change venue was granted. Company believes~~maintains that ~~Mr.~~Ms. Sanchez’s claims lack merit and intends to defend this action vigorously. The Company is currently unable to estimate the range of possible losses associated with this proceeding ~~since no~~as we are in the early stages of discovery ~~has commenced~~ and the scope of class is not yet known.

~~Consumer Protection Act~~

On December 4, 2022, Sheila Thompson and Dennis Thompson filed a Complaint in the 21st Judicial Circuit Court of St. Louis County, Missouri asserting putative class claims arising under the Telephone Consumer Protection Act, 47 U.S.C. 227, and related Missouri state law claims pertaining to purportedly unsolicited text message advertisements. Vintage Stock, Inc. (“Vintage”) was served on December 13, 2022. On January 11, 2023, Vintage timely removed the case from the state court into federal court. On February 8, 2023, Vintage filed a Motion to Dismiss and Motion to Strike Class Allegations. On March 1, 2023, plaintiffs filed their First Amended Complaint that mooted the pending motion. On March 15, 2023, Vintage moved to dismiss and/or strike the First Amended Complaint.

The motion is fully briefed and stands submitted to the Court for decision. Vintage disputes the allegations and intends to defend itself vigorously against the claims in the First Amended Complaint. As the case is still in the pleading stage, it is premature to estimate potential liability.

~~Salomon Whitney Settlement~~

~~Effective March 31, 2023, the Company entered into a settlement agreement with the Principal ownership of Salomon Whitney, LLC to pay the Company $1.0~~ ~~million within 10 days of the effective date, and agreed to pay an additional $1.0~~ ~~million within 45 days of the effective date if certain conditions of the settlement agreement are not met. The Company recorded a receivable for the initial payment of $1.0~~ ~~million on March 31, 2023, which it has recorded as other income in its condensed consolidated statements of income, and payment was received on April 17, 2023.~~

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 ~~17:~~18: Segment Reporting

The Company operates in ~~four~~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,;~~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,

2023

2022

2023

2022

Revenues

Retail-Entertainment

$
19,188

$
20,741

$
42,461

$
46,952

Retail-Flooring

20,769

—

20,769

—

Flooring Manufacturing

30,340

32,772

56,772

65,644

Steel Manufacturing

19,916

14,027

37,897

26,393

Corporate & Other

909

2,166

2,209

5,875

Total revenues

$
91,122

$
69,706

$
160,108

$
144,864

Gross profit

Retail-Entertainment

$
10,654

$
11,110

$
22,864

$
24,500

Retail-Flooring

7,742

—

7,742

—

Flooring Manufacturing

7,328

8,580

11,989

17,609

Steel Manufacturing

5,647

4,252

10,040

7,867

Corporate & Other

237

1,011

917

2,593

Total gross profit

$
31,608

$
24,953

$
53,552

$
52,569

Operating income (loss)

Retail-Entertainment

$
2,327

$
3,132

$
5,991

$
7,942

Retail-Flooring

(216
)

—

(216
)

—

Flooring Manufacturing

2,406

3,875

3,158

8,483

Steel Manufacturing

2,814

2,719

4,270

4,373

Corporate & Other

(2,379
)

(1,277
)

(3,684
)

(1,942
)
Total operating income

$
4,952

$
8,449

$
9,519

$
18,856

Depreciation and amortization

Retail-Entertainment

$
321

$
296

$
633

$
636

Retail-Flooring

995

—

995

—

Flooring Manufacturing

1,082

780

2,193

1,559

Steel Manufacturing

1,114

281

2,207

515

Corporate & Other

133

139

269

335

Total depreciation and amortization

$
3,645

$
1,496

$
6,297

$
3,045

Interest expense

Retail-Entertainment

$
152

$
84

$
306

$
236

Retail-Flooring

1,021

—

1,021

—

Flooring Manufacturing

1,067

462

2,054

893

Steel Manufacturing

841

182

1,628

479

Corporate & Other

154

130

273

267

Total interest expenses

$
3,235

$
858

$
5,282

$
1,875

Net income before provision for income taxes

Retail-Entertainment

$
2,178

$
14,593

$
5,716

$
19,293

Retail-Flooring

(1,390
)

—

(1,390
)

—

Flooring Manufacturing

1,214

3,337

901

7,382

Steel Manufacturing

1,715

2,002

1,983

3,315

Corporate & Other

(1,609
)

(1,051
)

(2,643
)

(1,603
)
Total net income before provision for income taxes

$
2,108

$
18,881

$
4,567

$
28,387


	For the Three Months Ended December 31,
	2023		2022
Revenues
Retail-Entertainment	$	20,586	$	23,273
Retail-Flooring	34,319		—
Flooring Manufacturing	29,245		26,432

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Steel Manufacturing	33,354		17,981
Corporate & Other	89		1,300
Total revenues	$	117,593	$	68,986

Gross profit
Retail-Entertainment	$	11,528	$	12,210
Retail-Flooring	13,032		—
Flooring Manufacturing	6,422		4,661
Steel Manufacturing	5,262		4,392
Corporate & Other	83		681
Total gross profit	$	36,327	$	21,944

Operating income (loss)
Retail-Entertainment	$	3,143	$	3,664
Retail-Flooring	90		—
Flooring Manufacturing	945		751
Steel Manufacturing	982		1,455
Corporate & Other	(1,619)		(1,303)
Total operating income	$	3,541	$	4,567

Depreciation and amortization
Retail-Entertainment	$	266	$	311
Retail-Flooring	1,352		—
Flooring Manufacturing	1,056		1,111
Steel Manufacturing	1,617		1,093
Corporate & Other	4		136
Total depreciation and amortization	$	4,295	$	2,651

Interest expense
Retail-Entertainment	$	164	$	154
Retail-Flooring	1,200		—
Flooring Manufacturing	984		987
Steel Manufacturing	1,622		787
Corporate & Other	193		119
Total interest expense	$	4,163	$	2,047

Net (loss) income before provision for income taxes
Retail-Entertainment	$	3,055	$	3,538
Retail-Flooring	(1,628)		—
Flooring Manufacturing	(163)		(313)
Steel Manufacturing	(1,018)		268
Corporate & Other	(1,152)		(1,034)
Total (loss) net income before provision for income taxes	$	(906)	$	2,459

Note ~~18:~~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~~December 31, 2023, 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, ~~2022~~2023 (the ~~“2022~~“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 ~~about the Chapter 11 Case, (vi) 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 ~~(vii)~~(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 ~~2022~~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.~~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 ~~four~~five segments to our business: ~~Retail,~~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. ~~(“Vintage Stock”).~~

~~Vintage Stock Holdings LLC,~~, doing business as Vintage Stock, V-Stock, Movie Trading Company and EntertainMart (collectively, “Vintage Stock”).

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,

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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. Founded by Steve Kellogg in 1997, Modesto, California-based Flooring Liquidators provides floor, cabinets, countertops, and installation services 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 ~~three~~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 CRO, a floor covering retailer and installer serving residential and ~~business~~commercial customers throughout Northwest Arkansas.

On November 30, 2023, CRO acquired certain assets and assumed certain liabilities of Johnson, a floor covering retailer and installer serving residential and commercial customers through ~~7 Day Stone, Inc.~~

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, 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”), ~~and~~ 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 ~~nearly~~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 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

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one-stop shop for in-house grinding, machining, and heat-treating. Kinetic ~~was founded by the Masters family in 1948 and~~ 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 ~~10-K report as filed on December 16, 2022.~~

2023 Form 10-K.

Adjusted EBITDA

We evaluate the performance of our operations based on financial measures such as ~~revenue and~~ “Adjusted ~~EBITDA.”~~EBITDA”, which is a non-GAAP financial measure. We define Adjusted EBITDA ~~is defined~~ 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 of 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. ~~Adjusted EBITDA is a non-GAAP financial measure.~~ As companies often define non-GAAP financial measures differently, Adjusted EBITDA, as calculated by ~~Live Ventures Incorporated,~~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~~December 31, 2023 and 2022

The following table sets forth certain statement of income items and as a percentage of revenue, for the three months ended ~~March~~December 31, 2023 and 2022 (in $000’s):

For the Three Months Ended March 31, 2023

For the Three Months Ended March 31, 2022

% of Total
Revenue

% of Total
Revenue

Selected Data

Revenues

$
91,122

$
69,706

Cost of revenues

59,514

65.3
%

44,753

64.2
%
General and administrative expenses

22,617

24.8
%

13,154

18.9
%
Sales and marketing expenses

4,039

4.4
%

3,350

4.8
%
Interest expense, net

3,235

3.6
%

858

1.2
%
Income before provision for income taxes

2,108

2.3
%

18,881

27.1
%
Provision for income taxes

550

0.6
%

3,523

5.1
%
Net income

$
1,558

1.7
%

$
15,358

22.0
%

Adjusted EBITDA (a)

Retail-Entertainment

$
2,652

$
3,610

Retail-Flooring

1,111

—

Flooring Manufacturing

3,363

4,579

Steel Manufacturing

3,670

2,828

Corporate & Other

(1,609
)

(762
)

Total Adjusted EBITDA

$
9,187

$
10,255

Adjusted EBITDA as a percentage of revenue

Retail-Entertainment

13.8
%

17.4
%

Retail-Flooring

5.4
%

N/A

Flooring Manufacturing

11.1
%

14.0
%

Steel Manufacturing

18.4
%

20.2
%

Corporate & Other

N/A

N/A

Consolidated adjusted EBITDA as a percentage of revenue

10.1
%

14.7
%


	Three Months Ended December 31, 2023					Three Months Ended December 31, 2022
				% of Total Revenue					% of Total Revenue
Selected Data
Revenues	$	117,593				$	68,986
Cost of revenues	81,266			69.1	%	47,042			68.2	%
General and administrative expenses	27,679			23.5	%	14,600			21.2	%
Sales and marketing expenses	5,107			4.3	%	2,777			4.0	%
Interest expense, net	4,163			3.5	%	2,047			3.0	%
(Loss) income before provision for income taxes	(906)			(0.8	%)	2,459			3.6	%
(Benefit) provision for income taxes	(224)			(0.2	%)	615			0.9	%
Net (loss) income	$	(682)		(0.6	%)	$	1,844		2.7	%

Adjusted EBITDA (a)
Retail-Entertainment	$	3,667				$	4,003
Retail-Flooring	1,303					—
Flooring Manufacturing	1,877					1,785
Steel Manufacturing	2,802					2,525
Corporate & Other	(953)					(774)
Total Adjusted EBITDA	$	8,696				$	7,539

Adjusted EBITDA as a percentage of revenue
Retail-Entertainment	17.8		%			17.2		%
Retail-Flooring	3.8		%			N/A
Flooring Manufacturing	6.4		%			6.8		%
Steel Manufacturing	8.4		%			14.0		%
Corporate & Other	N/A					N/A
Consolidated adjusted EBITDA as a percentage of revenue	7.4		%			10.9		%

(a)See reconciliation of net income to Adjusted EBITDA below.

Table of Contents

The following table sets forth revenues by segment (in $000's):

For the Three Months Ended March 31, 2023

For the Three Months Ended March 31, 2022

Net
Revenue

% of
Total
Revenue

Net
Revenue

% of
Total
Revenue

Revenue

Retail-Entertainment

$
19,188

21.1
%

$
20,741

29.8
%
Retail-Flooring

20,769

22.8
%

—

0.0
%
Flooring Manufacturing

30,340

33.3
%

32,772

47.0
%
Steel Manufacturing

19,916

21.9
%

14,027

20.1
%
Corporate & Other

909

1.0
%

2,166

3.1
%
Total Revenue

$
91,122

100.0
%

$
69,706

100.0
%


	For the Three Months Ended December 31, 2023				For the Three Months Ended December 31, 2022
	Net Revenue		% of Total Revenue		Net Revenue		% of Total Revenue
Revenue
Retail-Entertainment	$	20,586	17.5	%	$	23,273	33.7	%
Retail-Flooring	34,319		29.2	%	—		0.0	%
Flooring Manufacturing	29,245		24.9	%	26,432		38.3	%
Steel Manufacturing	33,354		28.4	%	17,981		26.1	%
Corporate & Other	89		0.1	%	1,300		1.9	%
Total Revenue	$	117,593	100.0	%	$	68,986	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, 2023

For the Three Months Ended March 31, 2022

Gross
Profit

Gross
Profit % of Total Revenue

Gross
Profit

Gross
Profit % of Total Revenue

Gross Profit

Retail-Entertainment

$
10,654

11.7
%

$
11,110

15.9
%
Retail-Flooring

7,742

8.5
%

—

0.0
%
Flooring Manufacturing

7,328

8.0
%

8,580

12.3
%
Steel Manufacturing

5,647

6.2
%

4,252

6.1
%
Corporate & Other

237

0.3
%

1,011

1.5
%
Total Gross Profit

$
31,608

34.7
%

$
24,953

35.8
%


	For the Three Months Ended December 31, 2023				For the Three Months Ended December 31, 2022
	Gross Profit		Gross Profit % of Total Revenue		Gross Profit		Gross Profit % of Total Revenue
Gross Profit
Retail-Entertainment	$	11,528	9.8	%	$	12,210	17.7	%
Retail-Flooring	13,032		11.1	%	—		—	%
Flooring Manufacturing	6,422		5.5	%	4,661		6.8	%
Steel Manufacturing	5,262		4.5	%	4,392		6.4	%
Corporate & Other	83		0.1	%	681		1.0	%
Total Gross Profit	$	36,327	30.9	%	$	21,944	31.8	%

Revenue

Revenue increased approximately ~~$21.4~~$48.6 million, or ~~30.7%~~70.5%, to approximately ~~$91.2~~$117.6 million for the three months ended ~~March~~December 31, 2023, as compared to the corresponding prior year period. The increase is primarily attributable to ~~increased revenue in the Retail-Flooring and Steel Manufacturing segments due to the acquisitions of~~ Flooring Liquidators and ~~Kinetic,~~PMW, both of which were acquired after the first quarter of fiscal year 2023, as well as an increase of approximately $2.8 million in the Flooring Manufacturing segment. The increase was partially offset by decreased revenues of approximately ~~$3.7~~$6.2 million in ~~the~~our other businesses. ~~The decreases in revenue are primarily due to reduced demand and inflationary pressures, as well as product mix at Vintage Stock in the Retail-Entertainment segment.~~

Cost of Revenue

Cost of revenue as a percentage of revenue was ~~65.3%~~69.1% for three months ended ~~March~~December 31, 2023 as compared to ~~64.2%~~68.2% for the three months ended ~~March~~December 31, 2022. The increase iswas primarily attributable to ~~inflationary cost increases.~~

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, partially offset by the acquisition of Flooring Liquidators, which historically has generated higher margins.

General and Administrative Expense

General and Administrative expenses increased by ~~71.9%~~89.6% to approximately ~~$22.6~~$27.9 million for the three months ended ~~March~~December 31, 2023, as compared to the three months ended ~~March~~December 31, 2022. The increase is primarily due to ~~increased General and Administrative expenses of approximately $9.4 million in the Retail and Steel Manufacturing segments due to~~ the acquisitions of Flooring Liquidators and ~~Kinetic.~~PMW during fiscal 2023.

Table of Contents

~~Selling~~

Sales and Marketing Expense

~~Selling~~

Sales and marketing expense increased by ~~20.6%~~83.9% to approximately ~~$4.0~~$5.1 million for the three months ended ~~March~~December 31, 2023, as compared to the three months ended ~~March~~December 31, 2022, primarily due to increased compensation for sales personnel acquired as part of the acquisition of the Harris Flooring Group® brands from Q.E.P, and increased convention and trade show activity in our Flooring Manufacturing ~~segment.~~

segment, as well as the acquisition of Flooring Liquidators.

Interest Expense, net

Interest expense, net, increased by approximately ~~$2.4~~$2.1 million for the three months ended ~~March~~December 31, 2023, as compared to the three months ended ~~March~~December 31, 2022, primarily due to increased debt balances related to the acquisitions of Flooring Liquidators and ~~Kinetic,~~PMW, and to fund operations, and increased interest rates during the period.

~~Results of Operations Six Months Ended March 31, 2023 and 2022~~

~~The following table sets forth certain statement of income items and as a percentage of revenue, for the six months ended March 31, 2023 and 2022 (in $000's):~~

For the Six Months Ended March 31, 2023

For the Six Months Ended March 31, 2022

% of Total
Revenue

% of Total
Revenue

Statement of Income Data:

Revenues

$
160,108

$
144,864

Cost of revenues

106,556

66.6
%

92,295

63.7
%
General and administrative expenses

37,217

23.2
%

27,311

18.9
%
Sales and marketing expenses

6,816

4.3
%

6,402

4.4
%
Interest expense, net

5,282

3.3
%

1,875

1.3
%
Income before provision for income taxes

4,567

2.9
%

28,387

19.6
%
Provision for income taxes

1,165

0.7
%

6,483

4.5
%
Net income

$
3,402

2.1
%

$
21,904

15.1
%

Adjusted EBITDA (a)

Retail-Entertainment

$
6,656

$
8,813

Retail-Flooring

1,111

—

Flooring Manufacturing

5,147

9,834

Steel Manufacturing

6,195

4,672

Corporate & Other

(2,382
)

(964
)

Total Adjusted EBITDA

$
16,727

$
22,355

Adjusted EBITDA as a percentage of revenue

Retail-Entertainment

15.7
%

18.8
%

Retail-Flooring

5.4
%

N/A

Flooring Manufacturing

9.1
%

15.0
%

Steel Manufacturing

16.3
%

17.7
%

Corporate & Other

N/A

N/A

Consolidated adjusted EBITDA as a percentage of revenue

10.4
%

15.4
%

~~(a) See reconciliation of net income to Adjusted EBITDA below.~~

~~The following table sets forth revenues by segment (in $000's):~~

For the Six Months Ended March 31, 2023

For the Six Months Ended March 31, 2022

Net
Revenue

% of
Total Revenue

Net
Revenue

% of Total
Revenue

Revenue

Retail-Entertainment

$
42,461

26.5
%

$
46,952

32.4
%
Retail-Flooring

20,769

13.0
%

—

0.0
%
Flooring Manufacturing

56,772

35.5
%

65,644

45.3
%
Steel Manufacturing

37,897

23.7
%

26,393

18.2
%
Corporate & other

2,209

1.4
%

5,875

4.1
%
Total Revenue

$
160,108

100.0
%

$
144,864

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, 2023

For the Six Months Ended March 31, 2022

Gross
Profit

Gross
Profit % of Total Revenue

Gross
Profit

Gross
Profit % of Total Revenue

Gross Profit

Retail-Entertainment

$
22,864

14.3
%

$
24,500

16.9
%
Retail-Flooring

7,742

4.8
%

—

0.0
%
Flooring Manufacturing

11,989

7.5
%

17,609

12.2
%
Steel Manufacturing

10,040

6.3
%

7,867

5.4
%
Corporate & other

917

0.6
%

2,593

1.8
%
Total Gross Profit

$
53,552

33.4
%

$
52,569

36.3
%

~~Revenue~~

Revenue increased approximately $15.2 million, or 10.5%, to $160.1 million for the six months ended March 31, 2023, as compared to the corresponding prior year period. The increase is primarily attributable to increased revenue in the Retail-Flooring and Steel Manufacturing segments due to Flooring Liquidators and Kinetic acquisitions, offset by decreased revenues in the other businesses. The decreases in revenue are primarily due to reduced demand and inflationary pressures, as well as product mix at Vintage Stock in the Retail-Entertainment segment.

~~Cost of Revenue~~

Cost of revenue as a percentage of revenue was 66.6% for the six months ended March 31, 2023 as compared to 63.7% for the six months ended March 31, 2022. The increase is primarily attributable to inflationary cost increases.

~~General and Administrative Expense~~

General and Administrative expenses increased by 36.3% to approximately $37.2 million for the six months ended March 31, 2023, as compared to the six months ended March 31, 2022. The increase is primarily due to increased General and Administrative expenses of approximately $10.3 million in the Retail-Flooring and Steel Manufacturing segments due to the acquisitions of Flooring Liquidators and Kinetic.

~~Selling and Marketing Expense~~

Selling and marketing expense increased by 6.5% to approximately $6.8 million for the six months ended March 31, 2023, as compared to the six months ended March 31, 2022, primarily due to convention and trade show activity in our Flooring Manufacturing segment.

~~Interest Expense, net~~

Interest expense, net, increased by approximately $3.4 million for the six months ended March 31, 2023, as compared to the six months ended March 31, 2022. primarily due to increased debt balances related to the acquisitions of Flooring Liquidators and Kinetic, and to fund operations, and also increased interest rates during the period.

Results of Operations by Segment

For the Three Months Ended March 31, 2023

For the Three Months Ended March 31, 2022

Retail-Entertainment

Retail-Flooring

Flooring
Manufacturing

Steel
Manufacturing

Corporate
& Other

Total

Retail-Entertainment

Retail-Flooring

Flooring
Manufacturing

Steel
Manufacturing

Corporate
& Other

Total

Revenue

$
19,188

$
20,769

$
30,340

$
19,916

$
909

$
91,122

$
20,741

$
—

$
32,772

$
14,027

$
2,166

$
69,706

Cost of Revenue

8,534

13,027

23,012

14,269

672

59,514

9,631

—

24,192

9,775

1,155

44,753

Gross Profit

10,654

7,742

7,328

5,647

237

31,608

11,110

—

8,580

4,252

1,011

24,953

General and
   Administrative
   Expense

8,164

7,873

1,438

2,676

2,466

22,617

7,888

—

1,586

1,395

2,285

13,154

Selling and
   Marketing
   Expense

163

85

3,484

157

150

4,039

90

—

3,119

138

3

3,350

Operating Income
   (Loss)

$
2,327

$
(216
)

$
2,406

$
2,814

$
(2,379
)

$
4,952

$
3,132

$
—

$
3,875

$
2,719

$
(1,277
)

$
8,449

for the Three Months Ended December 31, 2023 and 2022


	For the Three Months Ended December 31, 2023																For the Three Months Ended December 31, 2022
	Retail-Entertainment			Retail-Flooring			Flooring Manufacturing			Steel Manufacturing			Corporate & Other		Total		Retail-Entertainment		Retail-Flooring			Flooring Manufacturing			Steel Manufacturing			Corporate & Other		Total
Revenue	$	20,586		$	34,319		$	29,245		$	33,354		$	89	$	117,593	$	23,273	$	—		$	26,432		$	17,981		$	1,300	$	68,986
Cost of Revenue	9,058		—	21,287		—	22,823		—	28,092		—	6		81,266		11,063		—		—	21,771		—	13,589		—	619		47,042
Gross Profit	11,528			13,032			6,422			5,262			83		36,327		12,210		—			4,661			4,392			681		21,944
General and Administrative Expense	8,200			12,019			1,605			4,157			1,698		27,679		8,385		—			1,491			2,792			1,932		14,600
Selling and Marketing Expense	185			923			3,872			123			4		5,107		161		—			2,419			145			52		2,777
Operating Income (Loss)	$	3,143		$	90		$	945		$	982		$	(1,619)	$	3,541	$	3,664	$	—		$	751		$	1,455		$	(1,303)	$	4,567

Retail-Entertainment Segment

Revenue for the three months ended ~~March~~December 31, 2023 decreased by approximately ~~$1.6~~$2.7 million, or ~~7.5%~~11.5%, as compared to the prior year, primarily due to ~~inflationary pressures,~~reduced consumer demand and ~~overall product mix. Cost of revenue as~~ a ~~percentage of revenue was 44.5%~~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 56.0% for the ~~three months~~quarter ended ~~March~~December 31, 2023, ~~as opposed~~compared to ~~46.4%~~52.5% for the ~~three months ended March 31, 2022.~~prior year period. Operating income for the ~~three months~~quarter ended ~~March~~December 31, 2023, was approximately ~~$2.3~~$3.1 million, as compared to operating income of approximately ~~$3.1~~$3.7 million for the prior year period.

Retail-Flooring Segment

Our Retail-Flooring segment consists of Flooring Liquidators, which we acquired in January 2023. Revenue for the three months ended ~~March~~December 31, 2023 was ~~$20.8~~$34.3 million, and cost of revenue as a percentage of revenue was ~~62.7%~~62.0%. Operating ~~loss~~income for the three months ended ~~March~~December 31, 2023 was ~~$216,000.~~

approximately $90,000. During the three months ended December 31, 2023, Flooring Liquidators acquired certain assets and assumed certain liabilities of CRO. Additionally, during the three months ended December 31, 2023, CRO acquired certain assets and assumed certain liabilities of Johnson.

Flooring Manufacturing Segment

Revenue for the three months ended ~~March~~December 31, 2023 ~~decreased~~increased by approximately ~~$2.4~~$2.8 million, or ~~7.4%~~10.6%, as compared to the prior year ~~period,~~period. The gross margin was 22.0% for the quarter ended December 31, 2023, compared to 17.6% for the prior year period. The increase in revenue and gross margin is primarily due to the buildup of the sales force as a result of the acquisition of the Harris Flooring Group® brands in the fourth quarter of fiscal year 2023. Operating income for the year ended December 31, 2023, was approximately $0.95 million, compared to operating income of approximately $0.75 million for the prior year.

Steel Manufacturing Segment

Revenue for the three months ended December 31, 2023 increased by approximately $15.4 million, or 85.5%, as compared to the prior year period. The increase is primarily due to increased revenues of approximately $18.3 million at The Kinetic Co., Inc. and PMW, partially offset by a $2.9 million decrease in our other Steel Manufacturing business. This decrease is primarily due to reduced customer demand as a result of ~~inflationary factors. Cost of revenue as a percentage of revenue~~general economic conditions. The gross margin was ~~75.8%~~15.8% for the ~~three months~~quarter ended ~~March~~December 31, 2023, ~~as opposed~~compared to ~~73.8%~~24.4% for the ~~three months ended March 31, 2022.~~prior year period. The decrease in gross margin is primarily due to the acquisition of PMW, which has historically generated lower margins and decreased margins in the Steel

Table of Contents

Manufacturing segment due to reduced production. Operating income for the ~~three months~~year ended ~~March~~December 31, 2023, was approximately ~~$2.4~~$1.0 million, as compared to operating income of approximately ~~$3.9~~$1.5 million ~~for~~in the prior year period.

~~Steel Manufacturing~~

Corporate and Other Segment

~~Revenue~~

Revenues for the three months ended ~~March~~December 31, 2023 ~~increased~~decreased by ~~approximately $5.9~~$1.2 million, or ~~42.0%~~93.2%, as compared to the prior year period, primarily due to the acquisition of Kinetic. Revenue for Kinetic was $6.4 million, while Precision revenues decreased by approximately $0.5 million. Cost of revenue as a percentage of revenue was 71.6% for the three months ended March 31, 2023, as opposed to 69.7% for the three months ended March 31, 2022. Operating income for the three months ended March 31, 2023 was approximately $2.8 million, as compared to operating income of approximately $2.7 in the prior period.

~~Corporate and Other Segment~~

~~Revenues for the three months ended March 31, 2023 decreased by $1.3 million, or 58.0% primarily due to decreased revenue for SW Financial.~~ The decrease was primarily due to ~~a decrease~~the closure of SW Financial in stock market trading activity due to decreased trade activity as a result of market uncertainty. Cost of revenue as a percentage of revenue was 73.9% for the three months ended March 31, 2023, as opposed to 53.3% for the three months ended March 31, 2022.May 2023. Operating loss for the ~~three months~~quarter ended ~~March~~December 31, 2023, was approximately ~~$2.4~~$1.6 million, as compared to a loss of approximately $1.3 million in the prior period. Revenues and operating income for our directory services business continue to decline due to decreasing renewals. We expect revenue and operating income from this segment to continue to decrease in the future. We are no longer accepting new customers in our directory services business.

For the Six Months Ended March 31, 2023

For the Six Months Ended March 31, 2022

Retail-Entertainment

Retail-Flooring

Flooring
Manufacturing

Steel
Manufacturing

Corporate
& Other

Total

Retail-Entertainment

Retail-Flooring

Flooring
Manufacturing

Steel
Manufacturing

Corporate
& Other

Total

Revenue

$
42,461

$
20,769

$
56,772

$
37,897

$
2,209

$
160,108

$
46,952

$
—

$
65,644

$
26,393

$
5,875

$
144,864

Cost of Revenue

19,597

13,027

44,783

27,857

1,292

106,556

22,452

—

48,035

18,526

3,282

92,295

Gross Profit

22,864

7,742

11,989

10,040

917

53,552

24,500

—

17,609

7,867

2,593

52,569

General and
   Administrative
   Expense

16,549

7,873

2,928

5,468

4,399

37,217

16,342

—

3,225

3,216

4,528

27,311

Selling and
   Marketing
   Expense

324

85

5,903

302

202

6,816

216

—

5,901

278

7

6,402

Operating Income
   (Loss)

$
5,991

$
(216
)

$
3,158

$
4,270

$
(3,684
)

$
9,519

$
7,942

$
—

$
8,483

$
4,373

$
(1,942
)

$
18,856

~~Retail-Entertainment Segment~~

Revenue for the six months ended March 31, 2023 decreased by approximately $4.5 million, or 9.6%, as compared to the prior year, primarily due to inflationary pressures, and overall product mix. Cost of revenue as a percentage of revenue was 46.2% for the six months ended March 31, 2023, as opposed to 47.8% for the six months ended March 31, 2022. Operating income for the six months ended March 31, 2023 was approximately $6.0 million, as compared to operating income of approximately $7.9 million for the prior year period.

~~Retail-Flooring Segment~~

Our Retail-Flooring segment consists of Flooring Liquidators, which we acquired in January 2023. Revenue for the six months ended March 31, 2023 was $20.8 million, and cost of revenue as a percentage of revenue was 62.7%. Operating loss for the six months ended March 31, 2023 was $216,000.

~~Flooring Manufacturing Segment~~

Revenue for the six months ended March 31, 2023 decreased by approximately $8.9 million, or 13.5%, as compared to the prior year period, primarily due to reduced customer demand as a result of inflationary factors. Cost of revenue as a percentage of revenue was 78.9% for the six months ended March 31, 2023, as opposed to 73.2% for the six months ended March 31, 2022. Operating income for the six months ended March 31, 2023 was approximately $3.2 million, as compared to operating income of approximately $8.5 million for the prior year period.

~~Steel Manufacturing Segment~~

Revenue for the six months ended March 31, 2023 increased by $11.5 million, or 43.6%, as compared to the prior year period, primarily due to the acquisition of Kinetic. Revenue for Kinetic was $12.2 million, while Precision revenues decreased by approximately $0.6 million. Cost of revenue as a percentage of revenue was 73.5% for the six months ended March 31, 2023, as opposed to 70.2% for the six months ended March 31, 2022. Operating income for the six months ended March 31, 2023 was approximately $4.3 million, as compared to operating income of approximately $4.4 in the prior period.

~~Corporate and Other Segment~~

Revenues for the six months ended March 31, 2023 decreased by $3.7 million primarily due to decreased revenue for SW Financial. The decrease was primarily due to a decrease in stock market trading activity due to decreased trade activity as a result of market uncertainty. Cost of revenue as a percentage of revenue was 58.5% for the six months ended March 31, 2023, as opposed to 55.9% for the six months ended March 31, 2022. Operating loss for the six months ended March 31, 2023 was approximately $3.7 million, as compared to a loss of approximately $1.9 million in the prior period. Revenues and operating income for our directory services business continue to decline due to decreasing renewals. We expect revenue and operating income from this segment to continue to decrease in the future. We are no longer accepting new customers in our directory services business.

year.

Adjusted EBITDA Reconciliation

The following ~~tables present~~table presents a reconciliation of net income to Adjusted EBITDA ~~from net income~~ for the three ~~and six~~ months ended ~~March~~December 31, 2023 (in 000's):

For the Three Months Ended

For the Six Months Ended

March 31, 2023

March 31, 2022

March 31, 2023

March 31, 2022

Net income

$
1,558

$
15,358

$
3,402

$
21,904

Depreciation and amortization

3,647

1,496

6,298

3,045

Stock-based compensation

109

19

109

37

Interest expense, net

3,235

858

5,282

1,875

Income tax expense

550

3,523

1,165

6,483

Gain on bankruptcy settlement

—

(11,362
)

—

(11,352
)
Loss on extinguishment of debt

—

363

—

363

SW Financial settlement gain

(1,000
)

—

(1,000
)

—

Non-recurring costs for acquisitions

1,088

—

1,471

—

Adjusted EBITDA

$
9,187

$
10,255

$
16,727

$
22,355


	For the Three Months Ended
	December 31, 2023		December 31, 2022
Net (loss) income	$	(682)	$	1,844
Depreciation and amortization	4,295		2,651
Stock-based compensation	50		—
Interest expense, net	4,163		2,047
Income tax (benefit) expense	(224)		615
Debt refinancing costs	183		—



Acquisition costs	406		382


Other noncash charges	505		—
Adjusted EBITDA	$	8,696	$	7,539

Adjusted EBITDA ~~decreased~~increased by approximately ~~$1.1~~$1.2 million, or ~~10.4%~~15.3%, for the three months ended ~~March~~December 31, 2023, as compared to the prior year period. The ~~decrease~~increase is primarily due to an increase in non-operating and other non-recurring expenses, partially offset by decreases in ~~gross profit and~~ operating income, as discussed above.

Adjusted EBITDA decreased by approximately $5.6 million, or 25.2%, for the six months ended March 31, 2023, as 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~~December 31, 2023, we had total cash on hand of approximately ~~$4.2~~$5.6 million and approximately ~~$21.7~~$39.4 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.

Working Capital

We had working capital of approximately ~~$80.7~~$81.8 million as of ~~March~~December 31, 2023, as compared to working capital of approximately ~~$78.4~~$85.0 million as of September 30, ~~2022; an increase~~2023; a decrease of approximately ~~$2.3~~$3.2 million. The ~~increase~~decrease is primarily due to increases in ~~inventories, trade receivables,~~accrued liabilities and the current portion of operating lease obligations, and a decrease in prepaid expenses of approximately ~~$23.6~~$8.6 million, partially offset by ~~increases~~decreases in ~~the current portion of long-term debt, accrued liabilities,~~ accounts payable, and ~~the current portion operating lease obligations~~increases in accounts receivable, inventories, and cash of approximately ~~$18.7~~$5.3 million.

Table of Contents

Cash Flows from Operating Activities

The Company’s cash, as of ~~March~~December 31, 2023, was approximately ~~$4.2~~$5.6 million compared to approximately ~~$4.6~~$4.3 million as of September 30, ~~2022, a decrease~~2023, an increase of approximately ~~$432,000.~~$1.3 million. Net cash provided by operations was approximately ~~$14.2~~$7.9 million for the ~~six~~three months ended ~~March~~December 31, 2023, as compared to net cash provided by operations of approximately ~~$5.3~~$6.3 million for the ~~six~~three months ended ~~March~~December 31, 2022. The increase was primarily due to ~~reduced purchases of~~increases in accrued liabilities, depreciation and amortization expense, and allowance for obsolete inventory, ~~reduced expenditures for prepaid expenses, and increased accounts receivable,~~ partially offset by ~~payments on~~an increase in accounts ~~payable.~~

receivable and decrease in deferred income tax liabilities.

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 ~~$36.8~~$3.2 million for the ~~six~~three months ended ~~March~~December 31, 2023 consisted of the ~~acquisition~~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 ~~$7.5~~$1.3 million for the ~~six~~three months ended ~~March~~December 31, 2022 consisted of purchases of property and equipment.

Cash Flows from Financing Activities

Our cash flows used in financing activities of approximately $3.4 million during the three months ended December 31, 2023 consisted of payments on notes payable of approximately $1.8 million, purchases of treasury stock and payments for finance leases of approximately $900,000, and net payments under revolver loans of approximately $750,000.

Our cash flows provided by financing activities of approximately ~~$22.2~~$3.2 million during the ~~six~~three months ended March 31, 2023 consisted of proceeds from net proceeds under revolver loans of approximately $12.3 million, proceeds from notes payable of approximately $8.4 million, proceeds from related party notes payable of approximately $7.0 million, partially offset by payments of notes payable, financing leases, seller financing arrangements, and debt acquisition costs of approximately $4.9 million, and purchases of treasury stock in the amount of approximately $639,000.

~~Our cash flows provided by financing activities of approximately $3.8 million during the six months ended March~~December 31, 2022 consisted of proceeds from notes payable of approximately ~~$9.0~~$5.7 million, ~~and approximately $4.9 million in net proceeds under revolver loans,~~ partially offset by payments of notes payable and financing leases of approximately ~~$8.1~~$1.8 million, and purchases of treasury stock ~~in the amount~~and net borrowings under revolver loans of approximately ~~$2.1 million.~~

$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~~December 31, 2023, 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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure ~~control~~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 December 31, ~~2022~~, 2023, we concluded that the Company's disclosure, controls, and procedures were ~~effective~~effective.

.Table of Contents

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 CEO and CFO, do 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~~December 31, 2023. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) of 2013 regarding Internal Control – Integrated Framework. Based on our assessment using those criteria, as of ~~March~~December 31, 2023, 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 three ~~or six~~ months ended ~~March~~December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

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 ~~2021 Annual Report on~~2023 Form 10-K for information regarding material pending legal proceedings. Except as set forth ~~therein and below,~~herein, there have been no new material legal proceedings and no material developments in the legal proceedings previously disclosed.

~~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 is 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 Company’s previously-disclosed 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 has 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 (the “SEC Complaint”) in the United States District Court for the District of Nevada naming the Company and two of its executive officers as defendants (collectively, the "Company Defendants") as well as certain other third parties. The SEC Complaint alleges various financial, disclosure, and reporting violations related to income and earnings per share, purported undisclosed stock promotion and trading, and undisclosed executive compensation from 2016 through 2018. The violations are brought under Section 10(b) of the Securities Exchange Act of 1934 (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 SEC seeks permanent injunctions against the Company Defendants, 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 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 have agreed to participate in a mediation and to continue the remainder of discovery until after the mediation, scheduled to take place in June 2023.

~~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, filed a class action complaint for violation of federal securities laws in the United States District Court for the District of Nevada, naming as defendants the Company and the two executive officers named in the SEC Complaint described above. The allegations asserted are similar to those in the SEC Complaint. Among other 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 his Amended Complaint on March 6, 2023. On May 5, 2023, the Company and its executives filed a Motion to Dismiss the Amended Complaint. They 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 alleges 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. Plaintiff alleged that he effectuated service of the complaint on the Company, but the Company did not receive notification of the action until it received an Application for Default Judgment filed with the court on December 26, 2022. On December 28, 2022, the Court issued a letter order questioning its jurisdiction over the matter and directed plaintiff’s counsel to submit briefing as to why it believes jurisdiction is proper. Plaintiff filed its brief on January 13, 2023. On April 13, 2023, the Court dismissed the action in its entirety for lack of jurisdiction, rendering the Application for Default Judgment moot.

On January 12, 2023, and after jurisdiction over the case was questioned by the Court of Chancery, State of Delaware, plaintiff filed a substantially identical complaint in the Western District of Pennsylvania. After the Delaware action was dismissed, plaintiff requested that counsel waive service of the Pennsylvania complaint. On April 19, 2023, the Company agreed to waive service. The Company’s response to the Complaint is now due on June 19, 2023. The Company intends to defend against these claims vigorously.

~~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 has 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. A Motion for Change of Venue to Stanislaus County was filed by Elite Builders on December 7, 2022. The hearing on the motion was heard on February 8, 2023. Elite Builders’ motion to change venue was granted. Company believes that Mr. Sanchez’s claims lack merit and intends to defend this action vigorously. The Company is currently unable to estimate the range of possible losses associated with this proceeding since no discovery has commenced and the scope of class is not yet known.

~~Consumer Protection Act~~

On December 4, 2022, Sheila Thompson and Dennis Thompson filed a Complaint in the 21st Judicial Circuit Court of St. Louis County, Missouri asserting putative class claims arising under the Telephone Consumer Protection Act, 47 U.S.C. 227, and related Missouri state law claims pertaining to purportedly unsolicited text message advertisements. Vintage Stock, Inc. (“Vintage”) was served on December 13, 2022. On January 11, 2023, Vintage timely removed the case from the state court into federal court. On February 8, 2023, Vintage filed a Motion to Dismiss and Motion to Strike Class Allegations. On March 1, 2023, plaintiffs filed their First Amended Complaint, that mooted the pending motion. On March 15, 2023, Vintage moved to dismiss and/or strike the First Amended Complaint. The motion is fully briefed and stands submitted to the Court for decision. Vintage disputes the allegations and intends to defend itself vigorously against the claims in the First Amended Complaint. As the case is still in the pleading stage, it is premature to estimate potential liability.

~~Salomon Whitney Settlement~~

Effective March 31, 2023, the Company entered into a settlement agreement with the Principal ownership of Salomon Whitney to pay the Company $1.0 million within 10 days of the effective date, and agreed to pay an additional $1.0 million within 45 days of the effective date if certain conditions of the settlement agreement are not met. The Company recorded a receivable for the initial payment of $1.0 million on March 31, 2023, which it has recorded as other income in its condensed consolidated statements of income, and payment was received during the first week of April 2023..

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 ~~six~~three months ended ~~March~~December 31, 2023, the Company ~~repurchased 25,384 shares of common stock under this program at a cost of approximately $639,000. As of March 31, 2023,~~made the ~~Company has approximately $3.4 million available for repurchases under this program.~~

following repurchases:


Month	Number of Shares Purchased	Average Purchase Price Paid		Number of Shares Purchased as Part of a Publicly Announced Plan or Program	Maximum Amount that May be Purchased Under the Announced Plan or Program
October 2023	—	$	—	—	$	3,299,685
November 2023	—	—		—	3,299,685
December 2023	4,346	24.51		4,346	3,193,153
Totals	4,346	$	24.51	4,346	$	3,193,153

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

None.

ITEM 5. Other Information

None.

~~None.~~Table of Contents

ITEM 6. Exhibits

The following exhibits are filed with or incorporated by reference into this Quarterly Report.

3.1

Amended and Restated Articles of Incorporation

8-K

001-33937

3.1

08/15/07

3.8

Bylaws

10-Q

001-33937

3.8

08/14/18

10.122

Credit Agreement by and between Vintage Stock, Inc. and Bank Midwest, a division of NBH BANK, dated October 17, 2023.

8-K

001-33937

10.122

10/23/23

10.123

Revolving Credit Note by and between Vintage Stock, Inc. and Bank Midwest, a division of NBH BANK, dated October 17, 2023.

8-K

001-33937

10.123

10/23/23

10.124

Security Agreement by and between Vintage Stock, Inc. and Bank Midwest, a division of NBH BANK, dated October 17, 2023.

8-K

001-33937

10.124

10/23/23

10.125

First Amendment of a Credit and Security Agreement by and among Precision Metal Works, Inc. and PMW Affiliated Holdings, Inc. and Fifth Third Bank, National Association, dated as of December 22, 2023.

10.126

*†

First Amendment to Employment Agreement by and between Flooring Liquidators, Inc. and Stephen J. Kellogg, dated December 2 8, 2023.

10.127

*†

First Amendment to Employment Agreement between Live Ventures Incorporated and David Verret, effective October 1 , 202 3.

10.128

*†

Thir d Amendment to Employment Agreement, dated as of January 6, 2024 , by and between Precision Industries, Inc. and Thomas Sedlak .

31.1

Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

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

104

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

_________________________

Table of Contents

41Filed herewith

† Indicates a management contract or compensatory plan or arrangement.

Table of Contents

10.104

Employment Agreement between Live Ventures Incorporated and Wayne Ipsen, effective October 24, 2022.

8-K

001-33937

10.104

10/28/22
10.105

Securities Purchase Agreement by and among Flooring Affiliated Holdings, LLC, Stephen J. Kellogg, the other equity holders of the Acquired Companies listed on Exhibit A thereto and, solely for the purposes of Section 3.4 thereof, Live Ventures Incorporated, dated January 18, 2023.

8-K

001-33937

10.105

01/24/23
10.106

Employment Agreement by and between Flooring Liquidators, Inc. and Stephen J. Kellogg, dated January 18, 2023.

8-K

001-33937

10.106

01/24/23
10.107

Employment Agreement by and between Elite Builder Services, Inc. and Benjamin Rowe, dated January 18, 2023.

8-K

001-33937

10.107

01/24/23
10.108

Restricted Stock Unit Agreement between Live Ventures Incorporated and Benjamin Rowe, dated January 18, 2023.

8-K

001-33937

10.108

01/24/23
10.109

Subordinated Promissory Note dated January 18, 2023 issued by Flooring Affiliated Holdings, LLC in favor of (i) the Stephen J. Kellogg Revocable Trust Dated April 17, 2015, (ii) the Kaitlyn Kellogg 2022 Irrevocable Trust, (iii) the Augustus Kellogg 2022 Irrevocable Trust, and (iv) the Kellogg 2022 Family Irrevocable Nevada Trust.

8-K

001-33937

10.109

01/24/23
10.110

Subordinated Promissory Note dated January 18, 2023 issued by Flooring Affiliated Holdings, LLC in favor of Isaac Capital Group, LLC.

8-K

001-33937

10.110

01/24/23
10.111

Subordinated Promissory Note dated January 18, 2023 issued by Live Ventures Incorporated in favor of Spriggs Investments LLC.

8-K

001-33937

10.111

01/24/23
10.112

Loan and Security Agreement by and among Flooring Affiliated Holdings, LLC, Flooring Liquidators, Inc., Elite Builder Services, Inc., 7 Day Stone, Inc., K2L Leasing, LLC, SJ & K Equipment, Inc. and Eclipse Business Capital LLC, dated January 18, 2023.

8-K

001-33937

10.112

01/24/23
10.113
*
Second Amendment to ICG Promissory Note dated April 9, 2020, and as Amended June 23, 2022, dated April 1, 2023

10.114
*
First Amendment to ICG Unsecured Revolving Line of Credit dated April 9, 2020, dated April 1, 2023

31.1
*
Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
*
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
*
Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
*
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
*
Inline XBRL Instance Document
101.SCH
*
Inline XBRL Taxonomy Extension Schema Document
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

~~104~~

~~Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)~~


*	~~Filed herewith~~

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 11, 2023~~ February 8, 2024			/s/ Jon Isaac
			President and Chief Executive Officer
			(Principal Executive Officer)

Dated: ~~May 11, 2023~~ February 8, 2024			/s/ David Verret
			Chief Financial Officer
			(Principal Financial Officer)


Nevada		85-0206668
~~Nevada~~		~~85-0206668~~
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

325 E. Warm Springs Road,, Suite 102 Las Vegas,, Nevada		89119
(Address of principal executive offices)		(Zip Code)


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


	March 31, 2023			September 30, 2022
	(Unaudited)
Assets
Cash	$	4,168		$	4,600
Trade receivables, net of allowance for doubtful accounts of $482,000 at March 31, 2023 and $132,000 at September 30, 2022		29,703			25,665
Inventories, net of reserves of $2.6 million at March 31, 2023 and $2.4 million at September 30, 2022		115,050			97,659
Income taxes receivable		4,237			4,403
Prepaid expenses and other current assets		2,748			2,477
Total current assets		155,906			134,804
Property and equipment, net of accumulated depreciation of $31.7 million at March 31, 2023, and $26.7 million at September 30, 2022		67,098			64,590
Right of use asset - operating leases		45,504			33,659
Right of use asset - finance leases		387			—
Deposits and other assets		1,741			647
Intangible assets, net of accumulated amortization of $3.4 million at March 31, 2023 and $2.1 million at September 30, 2022		25,249			3,844
Goodwill		69,506			41,093
Total assets	$	365,391		$	278,637
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable	$	12,420		$	10,899
Accrued liabilities		21,465			16,486
Current portion of lease obligations - operating leases		10,688			7,851
Current portion of lease obligations - finance leases		341			217
Current portion of long-term debt		30,288			18,935
Current portion of notes payable related parties		—			2,000
Total current liabilities		75,202			56,388
Long-term debt, net of current portion		67,530			59,704
Lease obligation long term - operating leases		39,611			30,382
Lease obligation long term - finance leases		19,930			19,568
Notes payable related parties, net of current portion		45,675			5,000
Deferred taxes		12,986			8,818
Other non-current obligations		1,222			1,615
Total liabilities		262,156			181,475
Commitments and contingencies
Stockholders' equity:
Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively, with a liquidation preference of $0.30 per share outstanding		—			—
Common stock, $0.001 par value, 10,000,000 shares authorized, 3,165,890 and 3,074,833 shares issued and outstanding at March 31, 2023 and September 30, 2022, respectively		2			2
Paid in capital		68,630			65,321
Treasury stock common 646,355 and 620,971 shares as of March 31, 2023 and September 30, 2022, respectively		(7,853	)		(7,215	)
Treasury stock Series E preferred 80,000 shares as of March 31, 2023 and of September 30, 2022, respectively		(7	)		(7	)
Retained earnings		42,911			39,509
Equity attributable to Live stockholders		103,683			97,610
Non-controlling interest		(448	)		(448	)
Total stockholders' equity		103,235			97,162
Total liabilities and stockholders' equity	$	365,391		$	278,637


	December 31, 2023		September 30, 2023
	(Unaudited)
Assets
Cash	$	5,569	$	4,309
Trade receivables, net of allowance for doubtful accounts of $1.5 million at December 31, 2023 and $1.6 million at September 30, 2023	42,350		41,194
Inventories, net	132,455		131,314
Income taxes receivable	—		1,116
Prepaid expenses and other current assets	4,751		4,919
Total current assets	185,125		182,852
Property and equipment, net	79,683		80,703
Right of use asset - operating leases	65,799		54,544

Deposits and other assets	1,240		1,282

Intangible assets, net	28,163		26,568
Goodwill	76,639		75,866
Total assets	$	436,649	$	421,815
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable	$	25,406	$	27,190
Accrued liabilities	39,123		31,826
Income taxes payable	431		—
Current portion of lease obligations - operating leases	12,799		11,369
Current portion of lease obligations - finance leases	361		359
Current portion of long-term debt	21,223		23,077
Current portion of notes payable related parties	4,000		4,000
Total current liabilities	103,343		97,821
Long-term debt, net of current portion	78,357		78,710
Lease obligation long term - operating leases	58,291		48,156
Lease obligation long term - finance leases	32,981		32,942
Notes payable related parties, net of current portion	6,919		6,914
Seller notes - related parties	39,672		38,998
Deferred taxes	11,714		14,035
Other non-current obligations	5,975		4,104
Total liabilities	337,252		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 December 31, 2023 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, 3,159,984 and 3,164,330 shares issued and outstanding at December 31, 2023 and September 30, 2023, respectively	2		2
Paid in capital	69,437		69,387
Treasury stock common 664,409 and 660,063 shares as of December 31, 2023 and September 30, 2023, respectively	(8,312)		(8,206)
Treasury stock Series E preferred 80,000 shares as of December 31, 2023 and September 30, 2023, respectively	(7)		(7)
Retained earnings	38,277		38,959
Total stockholders' equity	99,397		100,135


Total liabilities and stockholders' equity	$	436,649	$	421,815


	For the Six Months Ended March 31,
	2023			2022
Operating Activities:
Net income	$	3,402		$	21,904
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition:
Depreciation and amortization		6,297			3,045
(Gain)/loss on disposal of property and equipment		(7	)		1
Gain on bankruptcy settlement		—			(11,501	)
Amortization of debt issuance cost		105			(112	)
Stock based compensation expense		109			37
Amortization of right-of-use assets		1,397			55
Change in reserve for uncollectible accounts		350			27
Change in reserve for obsolete inventory		169			146
Change in deferred income taxes		4,168			2,257
Changes in assets and liabilities:
Trade receivables		436			(698	)
Inventories		2,384			(8,658	)
Income taxes payable/receivable		166			(148	)
Prepaid expenses and other current assets		3,453			(422	)
Deposits and other assets		(1,095	)		(116	)
Accounts payable		(3,668	)		3,911
Accrued liabilities		(3,547	)		(4,500	)
Other Liabilities		59			23
Net cash provided by operating activities		14,178			5,251

Investing Activities:
Acquisition of Flooring Liquidators, net of cash acquired		(33,929	)		—
Purchase of property and equipment		(2,900	)		(7,503	)
Net cash used in investing activities		(36,829	)		(7,503	)

Financing Activities:
Net borrowings (payments) under revolver loans		12,312			4,887
Proceeds from issuance of notes payable		8,449			9,000
Payments on notes payable		(3,679	)		(8,020	)
Proceeds from issuing related party notes payable		7,000			—
Payments for debt acquisition costs		(96	)		—
Purchase of common treasury stock		(639	)		(2,084	)
Payments on financing leases		(1,077	)		(80	)
Payments on seller financing arrangements		(51	)		—
Debtor-in-possession cash		—			75
Net cash provided by financing activities		22,219			3,778

Increase in cash		(432	)		1,526
Cash, beginning of period		4,600			4,664
Cash, end of period	$	4,168		$	6,190

Supplemental cash flow disclosures:
Interest paid	$	4,602		$	1,823
Income taxes paid	$	43		$	4,458
Noncash financing and investing activities:
Noncash items related to Flooring Liquidators acquisition	$	36,900		$	—


					Page
		PART I

		FINANCIAL INFORMATION			3				~~Page~~

Item 1.		Financial Statements			~~PART I~~3

						~~FINANCIAL INFORMATION~~		3

~~Item 1.~~	~~Financial Statements~~		3

	Condensed Consolidated Balance Sheets as of ~~March~~December 31 , 2023 (Unaudited) and September 30, ~~2022~~202 3	3			3

						Condensed Consolidated Statements of (Loss) Income (Unaudited) for the Three ~~and Six~~ Months Ended ~~March~~December 31 , 2023 and 2022	4			4

						Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~Six~~Three Months Ended ~~March~~December 31 , 2023 and 2022	5			5

						Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three ~~and Six~~ Months Ended ~~March~~December 31 , 2023 and 2022	6			6

						Notes to the Condensed Consolidated Financial Statements (Unaudited)	7			7

Item 2.					Management’s Discussion and Analysis of Financial Condition and Results of Operations	28			27

Item 3.					Quantitative and Qualitative Disclosures about Market Risk	35			37

Item 4.					Controls and Procedures	35			37

		PART II

		OTHER INFORMATION			37

Item 1.		Legal Proceedings			~~PART II~~37

Item 1A.		Risk Factors			37
					~~OTHER INFORMATION~~				38

~~Item 1.~~	~~Legal Proceedings~~		38

~~Item 1A.~~	~~Risk Factors~~		39

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	37			39

Item 3.					Defaults upon Senior Securities	37			40

Item 4.					Mine Safety Disclosures	37			40

Item 5.		Other Information			37

Item 5.6.		Exhibits			~~Other Information~~38				40

~~Item 6.~~SIGNATURES					40			~~Exhibits~~		41

~~SIGNATURES~~			44


	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2023			2022			2023			2022
Revenues	$	91,122		$	69,706		$	160,108		$	144,864
Cost of revenues		59,514			44,753			106,556			92,295
Gross profit		31,608			24,953			53,552			52,569

Operating expenses:
General and administrative expenses		22,617			13,154			37,217			27,311
Sales and marketing expenses		4,039			3,350			6,816			6,402
Total operating expenses		26,656			16,504			44,033			33,713
Operating income		4,952			8,449			9,519			18,856
Other (expense) income:
Interest expense, net		(3,235	)		(858	)		(5,282	)		(1,875	)
Loss on debt extinguishment		—			(363	)		—			(363	)
Gain on disposal of fixed assets		7			(1	)		7			(1	)
Gain on bankruptcy settlement		—			11,362			—			11,352
Other income (expense)		384			292			323			418
Total other expense, net		(2,844	)		10,432			(4,952	)		9,531
Income before provision for income taxes		2,108			18,881			4,567			28,387
Provision for income taxes		550			3,523			1,165			6,483
Net income		1,558			15,358			3,402			21,904
Net income attributable to Live stockholders	$	1,558		$	15,358		$	3,402		$	21,904

Income per share:
Basic	$	0.50		$	4.90		$	1.10		$	6.96
Diluted	$	0.49		$	4.84		$	1.08		$	6.87

Weighted average common shares outstanding:
Basic		3,143,911			3,134,540			3,101,007			3,148,059
Diluted		3,184,982			3,172,881			3,137,625			3,187,123


	Series B Preferred Stock				Series E Preferred Stock				Common Stock							Series E Preferred Stock			Common Stock
	Shares		Amount		Shares		Amount		Shares			Amount		Paid-In Capital		Treasury Stock			Treasury Stock			Retained Earnings		Non-controlling Interest			Total Equity
Balance, September 30, 2022		—	$	—		47,840	$	—		3,074,833		$	2	$	65,321	$	(7	)	$	(7,215	)	$	39,509	$	(448	)	$	97,162
Purchase of common treasury stock		—		—		—		—		(24,710	)		—		—		—			(621	)		—		—			(621	)
Net income		—		—		—		—		—			—		—		—			—			1,844		—			1,844
Balance, December 31, 2022		—	$	—		47,840	$	—		3,050,123		$	2	$	65,321	$	(7	)	$	(7,836	)	$	41,353	$	(448	)	$	98,385
Purchase of common treasury stock		—		—		—		—		(674	)		—		—		—			(17	)		—		—			(17	)
Stock based compensation		—		—		—		—		—			—		109													109
Issuance of common stock		—		—		—		—		116,441			—		3,200		—			—			—					3,200
Net income		—		—		—		—		—			—		—		—			—			1,558		—			1,558
Balance, March 31, 2023		—	$	—		47,840	$	—		3,165,890		$	2	$	68,630	$	(7	)	$	(7,853	)	$	42,911	$	(448	)	$	103,235


Cash	$	1,034
Additional consideration	425
Holdback	300
Purchase price	$	1,759


Total purchase price		$	1,759
Accounts payable		770
Accrued liabilities		1,298
Total liabilities assumed		2,068
Total consideration		3,827
Accounts receivable		259
Inventory		1,406
Property, plant and equipment		261
Intangible assets
Non-compete agreement	1,190
Subtotal intangible assets		1,190
Other assets		286
Total assets acquired		3,402
Total goodwill		$	425


Cash	$	500
Deferred consideration	1,200
Earnout	301
Purchase price	$	2,001


Purchase price	$	25,000
Fair value of earnout	2,675
Cash from balance sheet	1,602
Working capital adjustment	(2,500)
Net purchase price	$	26,777


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


Purchase price	$	83,800
Fair value adjustment, sellers note	(3,300)
Fair value adjustment, restricted stock	(1,800)
Net purchase price	$	78,700


Total purchase price			$	78,700
Less fair value of the holdback option				—
Net purchase price			$	78,700
Accounts payable				5,189
Accrued liabilities				9,182
Debt				60
Total liabilities assumed				14,431
Total consideration				93,131
Cash				7,871
Accounts receivable				4,824
Inventory				19,944
Property, plant and equipment				4,678
Intangible assets
Trade names	$	13,275
Customer relationships		7,700
Non-compete agreements		1,625
Other		49
Subtotal intangible assets				22,649
Other				4,440
Total assets acquired				64,406
Total goodwill			$	28,725


	As Reported					Adjustments			Proforma
	Live Unaudited Three Months Ended March 31, 2023		Flooring 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 Reported					Adjustments			Proforma
	Live Unaudited Three Months Ended March 31, 2022		Flooring Liquidators Unaudited Three Months Ended March 31, 2022			Adjustments(1)			LIVE for the Three Months Ended March 31, 2022
Net revenue	$	69,706	$	29,205					$	98,911
Net income	$	15,358	$	1,886		$	(1,946	)	$	15,298
Earnings per basic common share	$	4.90							$	4.88
Earnings per basic diluted share	$	4.84							$	4.82

	As Reported					Adjustments			Proforma
	Live Unaudited Six Months Ended March 31, 2023		Flooring 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

	As Reported					Adjustments			Proforma
	Live Unaudited Six Months Ended March 31, 2022		Flooring Liquidators Unaudited Six Months Ended March 31, 2022			Adjustments(1)			LIVE for the Six Months Ended March 31, 2022
Net revenue	$	144,864	$	59,850					$	204,714
Net income	$	21,904	$	5,221		$	(3,818	)	$	23,307
Earnings per basic common share	$	6.96							$	7.40
Earnings per basic diluted share	$	6.87							$	7.31


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


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


Twelve months ended March 31,
2023	$	10,688
2024		8,941
2025		7,580
2026		6,167
2027		4,796
Thereafter		15,338
Total		53,510
Less implied interest		(3,211	)
Present value of payments	$	50,299


2024	$	4,308
2025		4,207
2026		4,207
2027		4,139
2028		3,835
Thereafter		4,553
	$	25,249


	Retail		Flooring Manufacturing		Steel Manufacturing			Corporate		Total
September 30, 2022		36,947		807		3,339			—		41,093
Additions		—		—		—			—		—
Kinetic fair value adjustment		—		—		(312	)		—		(312	)
Flooring Liquidators acquisition		25,394									25,394
Flooring Liquidators tax adjustment		3,331									3,331
Impairment		—		—		—			—		—
March 31, 2023	$	65,672	$	807	$	3,027		$	—	$	69,506


	March 31, 2023			September 30, 2022
Revolver loans	$	55,419		$	43,107
Equipment loans		17,525			13,716
Term loans		9,288			7,941
Other notes payable		16,176			14,501
Total notes payable		98,408			79,265
Less: unamortized debt issuance costs		(590	)		(626	)
Net amount		97,818			78,639
Less: current portion		(30,288	)		(18,935	)
Total long-term debt	$	67,530		$	59,704


Twelve months ending March 31,
2024	$	30,288
2025		5,723
2026		15,290
2027		5,299
2028		30,281
Thereafter		10,937
Total future maturities of long-term debt	$	97,818


	Series A Restricted Stock Awards		WAFV
Outstanding at September 30, 2022		—	$	—
Granted		27,307	$	36.62
Vested		—	$	—
Canceled			$	—
Non-vested at December 31, 2022		27,307	$	36.62


	Three Months Ended March 31, 2023				Six Months Ended March 31, 2023
	2023		2022		2023		2022
Basic
Net income	$	1,558	$	15,358	$	3,402	$	21,904
Less: preferred stock dividends		—		—		—		—
Net income applicable to common stock	$	1,558	$	15,358	$	3,402	$	21,904

Weighted average common shares outstanding		3,143,911		3,134,540		3,101,007		3,148,059
Basic earnings per share	$	0.50	$	4.90	$	1.10	$	6.96

Diluted
Net income applicable to common stock	$	1,558	$	15,358	$	3,402	$	21,904
Add: preferred stock dividends		—		—		—		—
Net income applicable for diluted earnings per share	$	1,558	$	15,358	$	3,402	$	21,904

Weighted average common shares outstanding		3,143,911		3,134,540		3,101,007		3,148,059
Add: Options		40,832		38,102		36,379		38,825
Add: Series B Preferred Stock		—		—		—		—
Add: Series B Preferred Stock Warrants		��		—		—		—
Add: Series E Preferred Stock		239		239		239		239
Assumed weighted average common shares outstanding		3,184,982		3,172,881		3,137,625		3,187,123
Diluted earnings per share	$	0.49	$	4.84	$	1.08	$	6.87


	For the Six Months Ended March 31, 2023						For the Six Months Ended March 31, 2022
				% of Total Revenue						% of Total Revenue
Statement of Income Data:
Revenues	$	160,108					$	144,864
Cost of revenues		106,556			66.6	%		92,295			63.7	%
General and administrative expenses		37,217			23.2	%		27,311			18.9	%
Sales and marketing expenses		6,816			4.3	%		6,402			4.4	%
Interest expense, net		5,282			3.3	%		1,875			1.3	%
Income before provision for income taxes		4,567			2.9	%		28,387			19.6	%
Provision for income taxes		1,165			0.7	%		6,483			4.5	%
Net income	$	3,402			2.1	%	$	21,904			15.1	%

Adjusted EBITDA (a)
Retail-Entertainment	$	6,656					$	8,813
Retail-Flooring		1,111						—
Flooring Manufacturing		5,147						9,834
Steel Manufacturing		6,195						4,672
Corporate & Other		(2,382	)					(964	)
Total Adjusted EBITDA	$	16,727					$	22,355

Adjusted EBITDA as a percentage of revenue
Retail-Entertainment		15.7	%					18.8	%
Retail-Flooring		5.4	%				N/A
Flooring Manufacturing		9.1	%					15.0	%
Steel Manufacturing		16.3	%					17.7	%
Corporate & Other	N/A						N/A
Consolidated adjusted EBITDA as a percentage of revenue		10.4	%					15.4	%


	For the Three Months Ended						For the Six Months Ended
	March 31, 2023			March 31, 2022			March 31, 2023			March 31, 2022
Net income	$	1,558		$	15,358		$	3,402		$	21,904
Depreciation and amortization		3,647			1,496			6,298			3,045
Stock-based compensation		109			19			109			37
Interest expense, net		3,235			858			5,282			1,875
Income tax expense		550			3,523			1,165			6,483
Gain on bankruptcy settlement		—			(11,362	)		—			(11,352	)
Loss on extinguishment of debt		—			363			—			363
SW Financial settlement gain		(1,000	)		—			(1,000	)		—
Non-recurring costs for acquisitions		1,088			—			1,471			—
Adjusted EBITDA	$	9,187		$	10,255		$	16,727		$	22,355