10-Q 1 live-10q_20200630.htm 10-Q live-10q_20200630.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 June 30, 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 August 4, 2020 was 1,603,031.

 

 


 

INDEX TO FORM 10-Q FILING

FOR THE NINE MONTHS ENDED JUNE 30, 2020

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

PART I

 

 

 

 

 

 

 

 

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2020 (Unaudited) and September 30, 2019

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended June 30, 2020 and 2019

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three and Nine Months Ended June 30, 2020 and 2019

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Nine Months Ended June 30, 2020 and 2019

 

6

 

 

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

 

8

 

 

 

 

 

Item 2.

 

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

 

35

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

45

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

46

 

 

 

 

 

 

 

PART II

 

 

 

 

 

 

 

 

 

OTHER INFORMATION

 

47

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

47

 

 

 

 

 

Item 1A.

 

Risk Factors

 

47

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

47

 

 

 

 

 

Item 3.

 

Defaults upon Senior Securities

 

47

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

48

 

 

 

 

 

Item 5.

 

Other Information

 

48

 

 

 

 

 

Item 6.

 

Exhibits

 

49

 

 

 

 

 

SIGNATURES

 

50

 

2


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts)

 

 

 

June 30, 2020

 

 

September 30, 2019

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash

 

$

5,689

 

 

$

2,681

 

Trade receivables, net

 

 

13,540

 

 

 

11,901

 

Inventories, net

 

 

42,927

 

 

 

38,558

 

Income taxes receivable

 

 

83

 

 

 

235

 

Prepaid expenses and other current assets

 

 

2,313

 

 

 

2,377

 

Debtor in possession assets

 

 

611

 

 

 

 

Total current assets

 

 

65,163

 

 

 

55,752

 

Property and equipment, net

 

 

24,687

 

 

 

22,596

 

Right of use asset - operating leases

 

 

24,585

 

 

 

 

Deposits and other assets

 

 

88

 

 

 

90

 

Deferred taxes

 

 

2,678

 

 

 

4,869

 

Intangible assets, net

 

 

1,196

 

 

 

2,199

 

Goodwill

 

 

37,577

 

 

 

36,947

 

Total assets

 

$

155,974

 

 

$

122,453

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

9,841

 

 

$

14,144

 

Accrued liabilities

 

 

6,724

 

 

 

12,984

 

Lease obligation short term - operating leases

 

 

6,900

 

 

 

 

Current portion of long-term debt

 

 

18,075

 

 

 

7,897

 

Debtor-in-possession liabilities

 

 

12,022

 

 

 

 

Total current liabilities

 

 

53,562

 

 

 

35,025

 

Long-term debt, net of current portion

 

 

39,250

 

 

 

47,819

 

Lease obligation long term - operating leases

 

 

18,439

 

 

 

 

Notes payable related parties, net of current portion

 

 

4,826

 

 

 

4,826

 

Other non-current obligations

 

 

318

 

 

 

654

 

Total liabilities

 

 

116,395

 

 

 

88,324

 

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 March 31, 2020 and September 30, 2019

 

 

 

 

 

 

Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840  and 77,840

  shares issued and outstanding at June 30, 2020 and September 30, 2019, respectively, with a

  liquidation preference of $0.30 per share outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 10,000,000 shares authorized, 1,613,281 and 1,826,009 shares issued

   and outstanding at June 30, 2020 and September 30, 2019, respectively

 

 

2

 

 

 

2

 

Paid in capital

 

 

64,359

 

 

 

63,924

 

Treasury stock common 474,905 shares as of June 30, 2020 and 262,177 shares as of

   September 30, 2019

 

 

(3,871

)

 

 

(2,438

)

Treasury stock Series E preferred 80,000 shares as of June 30, 2020 and 50,000 shares as

   of September 30, 2019

 

 

(7

)

 

 

(4

)

Accumulated deficit

 

 

(20,904

)

 

 

(27,355

)

Total stockholders' equity

 

 

39,579

 

 

 

34,129

 

Total liabilities and stockholders' equity

 

$

155,974

 

 

$

122,453

 

 

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

3


 

LIVE VENTURES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(dollars in thousands, except per share)

 

 

 

For the Three Months Ended June 30,

 

 

For the Nine Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues

 

$

42,472

 

 

$

47,043

 

 

$

130,904

 

 

$

147,212

 

Cost of revenues

 

 

25,759

 

 

 

27,797

 

 

 

79,789

 

 

 

89,978

 

Gross profit

 

 

16,713

 

 

 

19,246

 

 

 

51,115

 

 

 

57,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

8,221

 

 

 

12,191

 

 

 

30,731

 

 

 

37,886

 

Sales and marketing expenses

 

 

2,502

 

 

 

3,246

 

 

 

7,839

 

 

 

11,403

 

Total operating expenses

 

 

10,723

 

 

 

15,437

 

 

 

38,570

 

 

 

49,289

 

Operating income

 

 

5,990

 

 

 

3,809

 

 

 

12,545

 

 

 

7,945

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(1,155

)

 

 

(1,605

)

 

 

(3,782

)

 

 

(4,793

)

Gain on lease settlement, net

 

 

 

 

 

 

 

 

223

 

 

 

 

Other income (expense)

 

 

173

 

 

 

(162

)

 

 

(133

)

 

 

1,663

 

Total other (expense) income, net

 

 

(982

)

 

 

(1,767

)

 

 

(3,692

)

 

 

(3,130

)

Income before provision for income taxes

 

 

5,008

 

 

 

2,042

 

 

 

8,853

 

 

 

4,815

 

Provision for income taxes

 

 

1,423

 

 

 

562

 

 

 

2,402

 

 

 

1,331

 

Net income

 

$

3,585

 

 

$

1,480

 

 

$

6,451

 

 

$

3,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared - series B convertible preferred stock

 

$

 

 

$

 

 

$

 

 

$

 

Dividends declared - series E convertible preferred stock

 

$

 

 

$

 

 

$

 

 

$

 

Dividends declared - common stock

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.18

 

 

$

0.78

 

 

$

3.72

 

 

$

1.81

 

Diluted

 

$

1.07

 

 

$

0.41

 

 

$

1.87

 

 

$

0.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

1,646,836

 

 

 

1,886,445

 

 

 

1,735,416

 

 

 

1,919,221

 

Diluted

 

 

3,356,043

 

 

 

3,625,652

 

 

 

3,444,623

 

 

 

3,663,038

 

 

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

4


 

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(dollars in thousands)

 

 

 

 

For the Nine Months Ended June 30,

 

 

 

2020

 

 

2019

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

6,451

 

 

$

3,484

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,954

 

 

 

4,132

 

Gain on lease settlement, net

 

 

(223

)

 

 

 

Gain or loss on disposal of property and equipment

 

 

263

 

 

 

(1,407

)

Amortization of debt issuance cost

 

 

274

 

 

 

299

 

Stock based compensation expense

 

 

67

 

 

 

110

 

Warrant extension fair value adjustment

 

 

368

 

 

 

 

Amortization of right-to-use assets

 

 

985

 

 

 

 

 

Change in deferred rent

 

 

 

 

 

370

 

Change in reserve for uncollectible accounts

 

 

424

 

 

 

(193

)

Change in reserve for obsolete inventory

 

 

(84

)

 

 

(569

)

Change in deferred income taxes

 

 

2,190

 

 

 

1,211

 

Change in other

 

 

(316

)

 

 

256

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade receivables

 

 

2,702

 

 

 

2,807

 

Inventories

 

 

9,398

 

 

 

6,898

 

Income taxes receivable

 

 

152

 

 

 

114

 

Prepaid expenses and other current assets

 

 

24

 

 

 

483

 

Deposits and other assets

 

 

173

 

 

 

29

 

Accounts payable

 

 

(6,266

)

 

 

(2,230

)

Accrued liabilities

 

 

(2,461

)

 

 

(1,008

)

Net cash provided by operating activities

 

 

18,075

 

 

 

14,786

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of intangible assets

 

 

(30

)

 

 

(112

)

Lonesome Oak acquisition

 

 

(550

)

 

 

 

Note receivable

 

 

(55

)

 

 

 

Proceeds from the sale of property and equipment

 

 

 

 

 

4,382

 

Purchase of property and equipment

 

 

(2,357

)

 

 

(2,019

)

Net cash provided by (used in) investing activities

 

 

(2,992

)

 

 

2,251

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Net borrowings (payments) under revolver loans

 

 

(5,169

)

 

 

(5,446

)

Purchase of series E preferred treasury stock

 

 

(3

)

 

 

 

Payment of debt issuance cost

 

 

 

 

 

(168

)

Proceeds from issuance of notes payable

 

 

9,768

 

 

 

 

Purchase of common treasury stock

 

 

(1,433

)

 

 

(631

)

Payments on related party notes payable

 

 

 

 

 

(1,069

)

Debtor-in-possession cash

 

 

(86

)

 

 

 

Payments on notes payable

 

 

(15,152

)

 

 

(10,048

)

Net cash used in financing activities

 

 

(12,075

)

 

 

(17,362

)

 

 

 

 

 

 

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

3,008

 

 

 

(325

)

CASH AND CASH EQUIVALENTS, beginning of period

 

 

2,681

 

 

 

2,742

 

CASH AND CASH EQUIVALENTS, end of period

 

$

5,689

 

 

$

2,417

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

 

 

Interest paid

 

$

3,415

 

 

$

4,437

 

Income taxes paid (refunded)

 

$

 

 

$

86

 

 

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

 

 

5


 

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(dollars in thousands)

 

 

 

 

Series B

Preferred Stock

 

 

Series E

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

Series E

Preferred

Stock

 

 

Common

Stock

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-In

Capital

 

 

Treasury

Stock

 

 

Treasury

Stock

 

 

Accumulated

Deficit

 

 

Total

Equity

 

Balance, March 31, 2020

 

 

214,244

 

 

$

 

 

 

47,840

 

 

$

 

 

 

1,719,442

 

 

$

2

 

 

$

64,340

 

 

$

(7

)

 

$

(3,197

)

 

$

(24,489

)

 

$

36,649

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

 

 

 

 

 

 

19

 

Warrant extension fair value adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of common treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(106,161

)

 

 

 

 

 

 

 

 

 

 

 

(674

)

 

 

 

 

 

(674

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,585

 

 

 

3,585

 

Balance, June 30, 2020

 

 

214,244

 

 

$

 

 

 

47,840

 

 

$

 

 

 

1,613,281

 

 

$

2

 

 

$

64,359

 

 

$

(7

)

 

$

(3,871

)

 

$

(20,904

)

 

$

39,579

 

 

 

 

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, March 31, 2019

 

 

214,244

 

 

$

 

 

 

77,840

 

 

$

 

 

 

1,901,900

 

 

$

2

 

 

$

63,732

 

 

$

(4

)

 

$

(1,871

)

 

$

(20,650

)

 

$

41,209

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

 

 

 

 

 

 

32

 

Purchase of common treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,618

)

 

 

 

 

 

 

 

 

 

 

 

(310

)

 

 

 

 

 

(310

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,480

 

 

 

1,480

 

Balance, June 30, 2019

 

 

214,244

 

 

$

 

 

 

77,840

 

 

$

 

 

 

1,860,282

 

 

$

2

 

 

$

63,764

 

 

$

(4

)

 

$

(2,181

)

 

$

(19,170

)

 

$

42,411

 

 

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


6


 

LIVE VENTURES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(dollars in thousands)

 

 

 

Series B

Preferred Stock

 

 

Series E

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

Series E

Preferred

Stock

 

 

Common

Stock

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-In

Capital

 

 

Treasury

Stock

 

 

Treasury

Stock

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67

 

 

 

 

 

 

 

 

 

 

 

 

67

 

Warrant extension fair value adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

368

 

 

 

 

 

 

 

 

 

 

 

 

368

 

Purchase of common treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(212,728

)

 

 

 

 

 

 

 

 

 

 

 

(1,433

)

 

 

 

 

 

(1,433

)

Purchase of Series E preferred stock

 

 

 

 

 

 

 

 

(30,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,451

 

 

 

6,451

 

Balance, June 30, 2020

 

 

214,244

 

 

$

 

 

 

47,840

 

 

$

 

 

 

1,613,281

 

 

$

2

 

 

$

64,359

 

 

$

(7

)

 

$

(3,871

)

 

$

(20,904

)

 

$

39,579

 

 

 

 

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