Company Quick10K Filing
Live
Price7.58 EPS1
Shares4 P/E7
MCap28 P/FCF2
Net Debt48 EBIT6
TEV76 TEV/EBIT13
TTM 2019-03-31, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-02-16
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10-K 2020-09-30 Filed 2021-01-13
10-Q 2020-06-30 Filed 2020-08-14
10-Q 2020-06-30 Filed 2020-08-14
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S-1 2020-02-11 Public Filing
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8-K 2020-10-07
8-K 2020-09-30
8-K 2020-08-12
8-K 2020-07-31
8-K 2020-07-24
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8-K 2020-05-15
8-K 2020-05-04
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8-K 2020-02-20
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8-K 2019-12-09
8-K 2019-12-03
8-K 2019-11-01
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8-K 2019-07-24
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8-K 2019-05-14
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8-K 2018-12-27
8-K 2018-10-25
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8-K 2018-08-14
8-K 2018-07-24
8-K 2018-07-07
8-K 2018-06-07
8-K 2018-05-14
8-K 2018-04-25
8-K 2018-03-15
8-K 2018-02-15
8-K 2018-02-14
8-K 2018-02-06
8-K 2018-01-29
8-K 2018-01-18
8-K 2018-01-18
8-K 2017-12-30

LIVE 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1: Background and Basis of Presentation
Note 2: Summary of Significant Accounting Policies
Note 3: Leases
Note 4: Balance Sheet Detail Information
Note 5:Long Term Debt
Note 6: Stockholders' Equity
Note 7: Warrants
Note 8: Stock - Based Compensation
Note 9: Earnings per Share
Note 10: Related Party Transactions
Note 11: Commitments and Contingencies
Note 12: Segment Reporting
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Funds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 live-ex311_12.htm
EX-31.2 live-ex312_6.htm
EX-32.1 live-ex321_10.htm
EX-32.2 live-ex322_9.htm

Live Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
14511687582902012201420172020
Assets, Equity
554331197-52012201420172020
Rev, G Profit, Net Income
603510-15-40-652012201420172020
Ops, Inv, Fin

10-Q 1 live-10q_20201231.htm 10-Q live-10q_20201231.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

QUARTERLY Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended December 31, 2020

 

TRANSITION Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from _____________ to _______________

 

Commission File Number 001-33937

 

Live Ventures Incorporated

(Exact name of registrant as specified in its charter)

 

Nevada

85-0206668

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

 

 

325 E. Warm Springs Road, Suite 102

Las Vegas, Nevada

89119

(Address of principal executive offices)

(Zip Code)

 

(702) 997-5968

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value per share

 

LIVE

 

The NASDAQ Stock Market LLC (The NASDAQ Capital Market)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer 

 

Accelerated filer 

 

Non-accelerated filer 

 

Smaller reporting company 

 

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

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

 

The number of shares of the issuer’s common stock, par value $0.001 per share, outstanding as of February 8, 2021 was 1,555,175.


INDEX TO FORM 10-Q FILING

FOR THE QUARTER ENDED DECEMBER 31, 2020

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

PART I

 

 

 

 

 

 

 

 

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

3

 

 

 

 

 

 

 

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

 

3

 

 

 

 

 

 

 

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

 

4

 

 

 

 

 

 

 

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

 

5

 

 

 

 

 

 

 

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

 

6

 

 

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

 

7

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

30

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

30

 

 

 

 

 

 

 

PART II

 

 

 

 

 

 

 

 

 

OTHER INFORMATION

 

31

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

31

 

 

 

 

 

Item 1A.

 

Risk Factors

 

31

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

31

 

 

 

 

 

Item 3.

 

Defaults upon Senior Securities

 

32

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

32

 

 

 

 

 

Item 5.

 

Other Information

 

32

 

 

 

 

 

Item 6.

 

Exhibits

 

33

 

 

 

 

 

SIGNATURES

 

34

 

2


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

LIVE VENTURES INCORPORATED

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

 

 

 

December 31, 2020

 

 

September 30, 2020

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash

 

$

7,232

 

 

$

8,984

 

Trade receivables, net

 

 

17,564

 

 

 

20,121

 

Inventories, net

 

 

64,739

 

 

 

64,525

 

Prepaid expenses and other current assets

 

 

1,305

 

 

 

1,778

 

Debtor in possession assets

 

 

326

 

 

 

520

 

Total current assets

 

 

91,166

 

 

 

95,928

 

Property and equipment, net

 

 

31,127

 

 

 

30,376

 

Right of use asset - operating leases

 

 

28,971

 

 

 

30,894

 

Deposits and other assets

 

 

590

 

 

 

223

 

Deferred taxes

 

 

 

 

 

1,021

 

Intangible assets, net

 

 

956

 

 

 

1,063

 

Goodwill

 

 

37,754

 

 

 

37,754

 

Total assets

 

$

190,564

 

 

$

197,259

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

8,227

 

 

$

9,117

 

Accrued liabilities

 

 

12,896

 

 

 

14,822

 

Income taxes payable

 

 

806

 

 

 

736

 

Lease obligation short term - operating leases

 

 

6,958

 

 

 

7,176

 

Current portion of long-term debt

 

 

12,066

 

 

 

11,986

 

Current portion of long-term debt related parties

 

 

 

 

 

1,297

 

Debtor in possession liabilities

 

 

11,889

 

 

 

12,228

 

Total current liabilities

 

 

52,842

 

 

 

57,362

 

Long-term debt, net of current portion

 

 

57,961

 

 

 

63,390

 

Lease obligation long term - operating leases

 

 

26,503

 

 

 

28,101

 

Long-term debt related parties, net of current portion

 

 

4,000

 

 

 

4,000

 

Deferred tax liability

 

 

269

 

 

 

 

Other non-current obligations

 

 

404

 

 

 

734

 

Total liabilities

 

 

141,979

 

 

 

153,587

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Series B convertible preferred stock, $0.001 par value, 1,000,000 shares authorized,

   214,244 shares issued and outstanding at December 31, 2020 and September 30, 2020

 

 

 

 

 

 

Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840  shares issued and outstanding at December 31, 2020 and September 30, 2020, with a liquidation preference of $0.30 per share outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 10,000,000 shares authorized, 1,555,175 and 1,589,101 shares issued and outstanding at December 31, 2020 and September 30, 2020, respectively

 

 

2

 

 

 

2

 

Paid in capital

 

 

64,489

 

 

 

64,472

 

Treasury stock common 533,011 shares as of December 31, 2020 and 499,085 shares as of September 30, 2020

 

 

(4,481

)

 

 

(4,098

)

Treasury stock Series E preferred 50,000 shares as of December 31, 2020 and September 30, 2020

 

 

(7

)

 

 

(7

)

Accumulated deficit

 

 

(11,016

)

 

 

(16,429

)

   Equity attributable to Live stockholders

 

 

48,987

 

 

 

43,940

 

   Noncontrolling interest

 

 

(402

)

 

 

(268

)

Total stockholders' equity

 

 

48,585

 

 

 

43,672

 

Total liabilities and stockholders' equity

 

$

190,564

 

 

$

197,259

 

 

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

3


LIVE VENTURES, INCORPORATED

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(dollars in thousands, except per share)

 

 

 

Three Months Ended December 31,

 

 

 

2020

 

 

2019

 

Revenues

 

$

62,454

 

 

$

42,001

 

Cost of revenues

 

 

40,185

 

 

 

25,375

 

Gross profit

 

 

22,269

 

 

 

16,626

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

12,279

 

 

 

10,809

 

Sales and marketing expenses

 

 

2,699

 

 

 

2,330

 

Total operating expenses

 

 

14,978

 

 

 

13,139

 

Operating income

 

 

7,291

 

 

 

3,487

 

Other (expense) income:

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(1,470

)

 

 

(1,357

)

Impairment charges

 

 

 

 

 

(1,207

)

Gain on disposal of fixed assets

 

 

129

 

 

 

 

Other income (expense)

 

 

779

 

 

 

(181

)

Total other (expense) income, net

 

 

(562

)

 

 

(2,745

)

Income before provision for income taxes

 

 

6,729

 

 

 

742

 

Provision for income taxes

 

 

1,450

 

 

 

195

 

Net income

 

 

5,279

 

 

 

547

 

Net loss attributable to non-controlling interest

 

 

134

 

 

 

 

Net income attributable to Live stockholders

 

$

5,413

 

 

$

547

 

Income per share:

 

 

 

 

 

 

 

 

Basic

 

$

3.45

 

 

$

0.30

 

Diluted

 

$

1.63

 

 

$

0.15

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

1,568,213

 

 

 

1,806,746

 

Diluted

 

 

3,318,728

 

 

 

3,540,953

 

Dividends declared - series B convertible preferred stock

 

$

 

 

$

 

Dividends declared - series E convertible preferred stock

 

$

 

 

$

 

 

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

4


LIVE VENTURES INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(dollars in thousands)

 

 

 

 

Three Months Ended December 31,

 

 

 

2020

 

 

2019

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

5,279

 

 

$

547

 

Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,714

 

 

 

1,085

 

Impairment charges

 

 

 

 

 

1,207

 

Gain on disposal of property and equipment

 

 

(129

)

 

 

47

 

Amortization of debt issuance cost

 

 

266

 

 

 

108

 

Stock based compensation expense

 

 

17

 

 

 

29

 

Warrant extension fair value adjustment

 

 

 

 

 

266

 

Change in deferred rent

 

 

 

 

 

370

 

Change in reserve for uncollectible accounts

 

 

658

 

 

 

415

 

Change in reserve for obsolete inventory

 

 

590

 

 

 

(170

)

Change in deferred income taxes

 

 

1,290

 

 

 

126

 

Change in other

 

 

(344

)

 

 

103

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade receivables

 

 

1,909

 

 

 

1,929

 

Inventories

 

 

(716

)

 

 

439

 

Income taxes receivable

 

 

70

 

 

 

74

 

Prepaid expenses and other current assets

 

 

478

 

 

 

290

 

Deposits and other assets

 

 

(366

)

 

 

9

 

Right-of-use assets

 

 

1,923

 

 

 

1,628

 

Accounts payable

 

 

(898

)

 

 

(2,182

)

Accrued liabilities

 

 

(2,256

)

 

 

(2,020

)

Lease liabilities

 

 

(1,817

)

 

 

(1,301

)

Net cash provided by operating activities

 

 

7,668

 

 

 

2,999

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of intangible assets

 

 

 

 

 

(4

)

Purchase of property and equipment

 

 

(3,258

)

 

 

(641

)

Net cash provided by (used in) investing activities

 

 

(3,258

)

 

 

(645

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Net borrowings (payments) under revolver loans

 

 

(3,289

)

 

 

(972

)

Proceeds from issuance of notes payable

 

 

2,130

 

 

 

 

Purchase of common treasury stock

 

 

(383

)

 

 

(343

)

Debtor in possession - cash

 

 

92

 

 

 

(173

)

Payments on long-term debt

 

 

(4,712

)

 

 

(2,042

)

Net cash used in financing activities

 

 

(6,162

)

 

 

(3,533

)

 

 

 

 

 

 

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

(1,752

)

 

 

(1,179

)

CASH AND CASH EQUIVALENTS, beginning of period

 

 

8,984

 

 

 

2,681

 

CASH AND CASH EQUIVALENTS, end of period

 

$

7,232

 

 

$

1,502

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

 

 

Interest paid

 

$

1,223

 

 

$

1,187

 

Income taxes paid

 

$

 

 

$

 

Noncash financing and investing activities:

 

 

 

 

 

 

 

 

Settlement of debt in exchange for property and equipment

 

$

1,000

 

 

$

 

 

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

 

 

5


 

LIVE VENTURES INCORPORATED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(dollars in thousands)

 

 

 

 

Series B

Preferred Stock

 

 

Series E

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

Series E

Preferred

Stock

 

 

Common

Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-In

Capital

 

 

Treasury

Stock

 

 

Treasury

Stock

 

 

Accumulated

Deficit

 

 

Non-controlling interest

 

 

Total

Equity

 

Balance, September 30, 2020

 

 

214,244

 

 

$

 

 

 

47,480

 

 

$

 

 

 

1,589,101

 

 

$

2

 

 

$

64,472

 

 

$

(7

)

 

$

(4,098

)

 

$

(16,429

)

 

$

(268

)

 

$

43,672

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

Purchase of common treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33,926

)

 

 

 

 

 

 

 

 

 

 

 

(383

)

 

 

 

 

 

 

 

 

(383

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,413

 

 

 

(134

)

 

 

5,279

 

Balance, December 31, 2020

 

 

214,244

 

 

$

 

 

 

47,480

 

 

$

 

 

 

1,555,175

 

 

$

2

 

 

$

64,489

 

 

$

(7

)

 

$

(4,481

)

 

$

(11,016

)

 

$

(402

)

 

$

48,585

 

 

 

 

Series B

Preferred Stock

 

 

Series E

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

Series E

Preferred

Stock

 

 

Common

Stock

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-In

Capital

 

 

Treasury

Stock

 

 

Treasury

Stock

 

 

Accumulated

Deficit

 

 

Total Equity

 

Balance, September 30, 2019

 

 

214,244

 

 

$

 

 

 

77,840

 

 

$

 

 

 

1,826,009

 

 

$

2

 

 

$

63,924

 

 

$

(4

)

 

$

(2,438

)

 

$

(27,355

)

 

$

34,129

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

 

 

 

29

 

Warrant extension fair value adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

266

 

 

 

 

 

 

 

 

 

 

 

 

266

 

Purchase of common treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,699

)

 

 

 

 

 

 

 

 

 

 

 

(343

)

 

 

 

 

 

(343

)

Purchase of Series E preferred stock

 

 

 

 

 

 

 

 

(30,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

(3

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

547

 

 

 

547

 

Balance, December 31, 2019

 

 

214,244

 

 

$

 

 

 

47,840

 

 

$

 

 

 

1,784,310

 

 

$

2

 

 

$

64,219

 

 

$

(7

)

 

$

(2,781

)

 

$

(26,808

)

 

$

34,625

 

 

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

 

6


 

LIVE VENTURES INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019

(dollars in thousands, except per share)

Note 1:

Background and Basis of Presentation

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

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

 

Going concern

Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities and funds available under our asset-based revolver lines of credit will provide sufficient liquidity to fund our operations, pay our scheduled loan payments, continue to repurchase shares, and pay dividends on our shares of Series E Preferred Stock as declared by the Board of Directors, for at least the next 12 months.

Coronavirus

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

 

7


Note 2:

Summary of Significant Accounting Policies

Principles of Consolidation

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

Use of Estimates

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

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

Reclassifications

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

Recently Issued Accounting Pronouncements

 

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

 

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

 

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

 

 

Note 3:

Leases

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

8


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

 

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

 

 

 

December 31, 2020

 

 

September 30, 2020

 

Right of use asset - operating leases

 

$

28,971

 

 

$

30,894

 

Operating lease liabilities:

 

 

 

 

 

 

 

 

Current

 

 

6,958

 

 

 

7,176

 

Long term

 

 

26,503

 

 

 

28,101

 

 

Total present value of future lease payments as of December 31, 2020:

 

Twelve months ended December 31,

 

 

 

 

2021

 

$

8,731

 

2022

 

 

6,871

 

2023

 

 

4,879

 

2024

 

 

3,953

 

2025

 

 

2,946

 

Thereafter

 

 

13,660

 

Total

 

 

41,040

 

Less implied interest

 

 

(7,579

)

Present value of payments

 

$

33,461

 

 

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

9


Note 4:

Balance Sheet Detail Information

 

 

 

December 31, 2020

 

 

September 30, 2020

 

Trade receivables, current, net:

 

 

 

 

 

 

 

 

Accounts receivable, current

 

$

17,626

 

 

$

20,197

 

Less: Reserve for doubtful accounts

 

 

(62

)

 

 

(76

)