LIVE VENTURES INC. Management’s Discussion and Analysis of Financial Position and Operating Results (Form 10-K)

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For a description of our significant accounting policies and an understanding of
the significant factors that influenced our performance during the year ended
September 30, 2021, 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 consolidated financial statements, including the
related notes, appearing in Part II, Item 8 of this Annual Report on Form 10-K
for the fiscal year ended September 30, 2021 (this "Form 10-K").



Expressed in thousands of US dollars, except per share amounts.

Note on forward-looking statements

This Form 10-K 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) 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.
This Form 10-K identifies those factors and risks that could affect our results,
our future performance, and our capital requirements under Item 1A "Risk
Factors". There are also other factors that we are currently unable to identify
or quantify, but that may exist in the future, that could similarly affect us.

In addition, any or all of the factors identified in this Form 10-K 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. Any information contained on our website,
www.liveventures.com, or any other websites referenced in this Annual Report,
are not part of this Annual Report.

Our company

Live Ventures Incorporated is a holding company of diversified companies, which we, together with our subsidiaries, call the “Company”, “Direct companies“,” we “,” our “or” our “. We acquire and operate companies in various industries that have historically demonstrated a strong history of profit power. We currently have three segments to our business: Retail, Manufacturing flooring, steel fabrication, and companies and others.

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 report Form 10-K) is located at
www.liveventures.com. Our common stock trades on the Nasdaq Capital Market under
the symbol "LIVE".

Retail Segment

Our retail segment is comprised of Vintage Stock and ApplianceSmart.

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Vintage stock

Vintage Stock Holdings LLC, Vintage Stock, V-Stock, Movie Trading Company and
EntertainMart (collectively, "Vintage Stock") is an award-winning specialty
entertainment retailer that offers a large selection of entertainment products,
including new and pre-owned movies, video games and music products, as well as
ancillary products, such as books, comics, toys and collectibles, in a single
location. With its integrated buy-sell-trade business model, Vintage Stock buys,
sells and trades new and pre-owned movies, music, video games, electronics and
collectibles through 63 retail locations strategically positioned across
Arkansas, Colorado, Idaho, Illinois, Kansas, Missouri, Nebraska, New Mexico,
Oklahoma, Texas, and Utah.

ApplianceSmart

At September 30, 2021, ApplianceSmart Affiliated Holdings LLC and
ApplianceSmart, Inc. (collectively "ApplianceSmart") operated one store in Ohio.
ApplianceSmart is a household appliance retailer with two product categories:
one consisting of typical and commonly available, innovative appliances, and the
other consisting of affordable value-priced, niche offerings such as close-outs,
factory overruns, discontinued models, and special-buy appliances, including
open box merchandise and others.

On December 9, 2019, ApplianceSmart filed a voluntary petition (the "Chapter 11
Case") in the United States Bankruptcy Court for the Southern District of New
York (the "Bankruptcy Court") seeking relief under Chapter 11 of Title 11 of the
United States Code (the "Bankruptcy Code"). The bankruptcy affects Live
Ventures' indirect subsidiary ApplianceSmart only and does not affect any other
subsidiary of Live Ventures, or Live Ventures itself. ApplianceSmart expects to
continue to operate its business in the ordinary course of business as
debtor-in-possession under the jurisdiction of the Bankruptcy Court and in
accordance with applicable provisions of the Bankruptcy Code and the orders of
the Bankruptcy Court. In addition, ApplianceSmart reserves its right to file a
motion seeking authority to use cash collateral of the lenders under the
reserve-based revolving credit facility. The case is being administrated under
the caption In re: ApplianceSmart, Inc. (case number 19-13887). Court filings
and other information related to the Chapter 11 Case are available at the PACER
Case Locator website for those registered to do so or at the Courthouse located
at One Bowling Green, Manhattan, New York 10004.

On October 13, 2021, a hearing was held to consider approval of the Disclosure
Statement filed by ApplianceSmart in conjunction with its bankruptcy
proceedings. The Disclosure Statement was approved by the court, subject to
minor amendment, and a directive issued that an order for a final confirmation
hearing be drafted and scheduled in the foreseeable future.

Flooring Manufacturing Segment

Our Floor Coverings Manufacturing segment is comprised of Marquis.

Marquis Affiliated Holdings LLC and wholly-owned subsidiaries ("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.





Steel Manufacturing Segment

Our steel fabrication segment is comprised of Precision Industries, Inc.
(otherwise known in the industry as “Precision Marshall”).

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Precision Marshall is the North American leader in providing and manufacturing
pre-finished de-carb free tool and die steel. For nearly 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.



Critical accounting policies

Our 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, Stock Based
Compensation, Income Taxes, Segment Reporting and Concentrations of Credit Risk.

Results of operations

The following table presents certain elements of the income statement and as a percentage of sales, for the periods indicated:


                                                   Year Ended                        Year Ended
                                               September 30, 2021                September 30, 2020
                                                           % of Total                        % of Total
                                                            Revenue                           Revenue

Income statement data:

 Revenues                                 $   272,981            100.0 %    $   191,720            100.0 %
 Cost of revenues                             173,518             63.6 %        116,403             60.7 %
 Gross profit                                  99,463             36.4 %         75,317             39.3 %
 General and administrative expenses           52,246             19.1 %         43,561             22.7 %
 Sales and marketing expenses                  11,427              4.2 %         11,334              5.9 %
 Operating income                              35,790             13.1 %         20,422             10.7 %
 Interest expense, net                         (5,205 )           (1.9 )%        (5,254 )           (2.7 )%
 Gain on lease settlement, net                      -                -              307              0.2 %
 Gain on Payroll Protection Program
loan forgiveness                                6,150              2.3 %              -                -
 Gain on disposal of fixed assets                   -                -                -                -
 Gain on bankruptcy settlement                  1,765              0.6 %              -                -
 Bargain purchase gain                              -                -            1,507              0.8 %
 Impairment charges                                 -                -             (525 )           (0.3 )%
 Other income (loss)                            1,179              0.4 %           (841 )           (0.4 )%
 Income before income taxes                    39,679             14.5 %         15,616              8.1 %
 Provision for income taxes                     8,662              3.2 %          4,957              2.6 %
 Net income                                    31,017             11.4 %         10,659              5.6 %
 Net loss attributable to
non-controlling interest                          180              0.1 %            268              0.1 %
 Net income attributable to Live
stockholders                              $    31,197             11.4 %    $    10,927              5.7 %




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The following table presents the revenues by segment:


                                                  Year Ended                        Year Ended
                                              September 30, 2021                September 30, 2020
                                             Net          % of Total          Net           % of Total
                                           Revenue         Revenue          Revenue        Total Revenue
Revenue
Retail
 Movies, Music, Games and Other          $    87,742             32.1 %   $    69,602                36.3 %
 Appliances                                    1,103              0.4 %         3,961                 2.1 %
Flooring manufacturing                       130,223             47.7 %       109,642                57.2 %
Steel manufacturing                           49,302             18.1 %         7,962                 4.2 %
Corporate and other                            4,611              1.7 %           553                 0.3 %
Total Revenue                            $   272,981            100.0 %   $   191,720               100.0 %




The following table sets forth gross profit and gross profit as a percentage of
total revenue by segment:



                                                    Year Ended                          Year Ended
                                                September 30, 2021                  September 30, 2020
                                                            Gross Profit                        Gross Profit
                                             Gross               %               Gross               %
                                                              of Total                            of Total
                                            Profit            Revenue           Profit            Revenue
Gross Profit
Retail
 Movies, Music, Games and Other           $    47,541                17.4 %   $    39,343                20.5 %
 Appliances                                       518                 0.2 %         1,436                 0.7 %
Flooring manufacturing                         37,893                13.9 %        32,857                17.1 %
Steel manufacturing                            11,954                 4.4 %         1,163                 0.6 %
Corporate and other                             1,557                 0.6 %           518                 0.3 %
Total Gross Profit                        $    99,463                36.4 %   $    75,317                39.3 %




Revenue

Revenue increased by approximately $81.3 million to approximately $273 million
for the year ended September 30, 2021 as compared to the year ended September
30, 2020 of approximately $191.7 million.

Retail: The increase in revenue of approximately $18.1 million for Movies,
Music, Games and Other was primarily due to new video game and movie releases as
compared to the prior year, and the reopening of Vintage Stock retail locations
that were closed temporarily during 2020 due to COVID-19. Appliance revenue
decreased by approximately $2.9 million due to the closure of certain retail
locations that were incurring continual decreases in sales resulting from
increased competition.

Floor Manufacturing: Flooring Manufacturing revenue increased by approximate
$20.6 million as a result of the availability of new product lines due to the
2020 acquisition of Lonesome Oak.

Steel Manufacturing: Steel Manufacturing revenue was approximately $49.3 million
for the year ended September 30, 2021. Revenue for the year ended September 30,
2020 was approximately $8.0 million, and represents revenue for the period of
July 14, 2020, the date of acquisition of Precision Marshall, through September
30, 2020.

Cost of Revenue

Cost of revenue increased by approximately $57.1 million, or 49.1% for the year
ended September 30, 2021 as compared to the year ended September 30, 2020. While
the increase is, in part, due to the factors described above, cost of revenue
also increased due to the steel manufacturing segment constituting a full year's
activity, as well as the influence of an inflationary environment on all
segments.

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General and administrative costs

General and Administrative expense increased by approximately $8.7 million or
19.9%, for the year ended September 30, 2021 as compared to the year ended
September 30, 2020, primarily due to the reopening of Vintage Stock retail
locations following temporary closure of these locations due to COVID-19 during
the year ended September 30, 2020, a full year's general and administrative
expenses for Precision Marshall, which was acquired during the year ended
September 30, 2020, as well as increases in Corporate & Other expenses of
payroll-related costs, professional fees, and general and administrative
expenses for SW Financial.

Sales and marketing costs

Sales and marketing costs increased by approximately $ 93,000 for the year ended September 30, 2021 compared to the closed financial year September 30, 2020
mainly due to increased marketing efforts during the period.

Interest expense, net

Net interest expense decreased by approximately $ 49,000 or 0.9%, for the year ended September 30, 2021 compared to the closed financial year September 30, 2020.

Gain on rental payment, net

During the year ended September 30, 2020, the Company recorded a net gain on
lease settlement of approximately $307,000 which consisted of impairment charges
of approximately $614,000 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, offset by a gain on lease settlement of
approximately $921,000 resulting from the extinguishment of the lease liability
associated with the closed retail locations. There were no such transactions
during the year ended September 30, 2021.



Bargain Purchase Gain



The bargain purchase gain of approximately $1.5 million for year ended September
30, 2020 was related to the acquisition of Precision Marshall. There were no
similar bargain purchase gains for the year ended September 30, 2021.

Payroll Earnings Protection Program

During the year ended September 30, 2021, the Company recorded a gain of approximately $ 6.2 million due to the cancellation of PPP loans. There were no similar transactions during the closed financial year September 30, 2020.

Gain on bankruptcy settlement

During the year ended September 30, 2021, the Company recorded a gain of approximately $ 1.8 million due to the discharge of certain debts resulting from bankruptcy proceedings. There were no similar transactions during the closed financial year
September 30, 2020.

Impairment Charges



Depreciation charges of $ 525,000 for the year ended September 30, 2020 were related to the disposal of fixed assets which were no longer in use. No impairment charge was recorded for the year ended. September 30, 2021.

Provision (Advantage) for Income Taxes

For the year ended September 30, 2021, the Company recorded a provision for income taxes of approximately $ 8.7 million, against a tax provision of around $ 5.0 million for the year ended September 30, 2020. The year-over-year increase is mainly due to an increase in net income during the year ended September 30, 2021. The tax provision

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for the year ended September 30, 2020 was impacted by state income taxes, net of
federal benefit and non-deductible items related to the acquisition of Precision
Marshall.

Operating results by segment


                                                    Year Ended September 30, 2021                                                           Year Ended September 30, 2020
                                           Flooring              Steel           Corporate &                                       Flooring              Steel           Corporate &
                           Retail        Manufacturing       Manufacturing          Other           Total          Retail        Manufacturing       Manufacturing          Other           Total
Revenue                  $   88,845     $       130,223     $        49,302     $       4,611     $  272,981     $   73,563     $       109,642     $         7,962     $         553     $  191,720
Cost of Revenue              40,786              92,330              37,348             3,054        173,518         32,784              76,785               6,797                35        116,401
Gross Profit                 48,059              37,893              11,954             1,557         99,463         40,779              32,857               1,165               518         75,319
General and
  Administrative
  Expense                    31,131               7,614               5,558             7,943         52,246         30,721               7,324                 887             4,630         43,562

Sales and Marketing

  Expense                       588              10,076                 527               236         11,427          1,321               9,451                 105               457         11,334

Operating result

  (Loss)                 $   16,340     $        20,203     $         5,869     $      (6,622 )   $   35,790     $    8,737     $        16,082     $           173     $      (4,569 )   $   20,423




Retail Segment

Segment results for Retail include Vintage Stock and ApplianceSmart. Revenue for
the year ended September 30, 2021 increased by approximately $15.3 million, or
20.8%, as compared to the prior year, primarily due to new video game and movie
releases as compared to the prior year. Cost of revenue for the year ended
September 30, 2021 increased approximately $8.0 million or 24.4%, as compared to
the prior year period, primarily due to increased revenue. Operating income for
the year ended September 30, 2021 was approximately $16.3 million, as compared
to approximately $8.7 million during the prior year period primarily due to an
increase in gross profit of approximately $7.3 million.

Flooring Manufacturing Segment

Segment results for Flooring Manufacturing includes Marquis. Revenue for the
year ended September 30, 2021 increased by approximately $20.6 million, or
18.8%, as compared to the prior year period, due to increased sales of carpets
and hard surface products related to development of new products. Cost of
revenue for the year ended September 30, 2021 increased proportionately with
revenue, as compared to the prior year period. Operating income for the year
ended September 30, 2021 increased by approximately $4.1 million, or 25.6%, as
compared to the prior year period.

Steel fabrication segment

Segment results for Steel Manufacturing includes Precision Marshall. We
completed the acquisition of Precision Marshall in July 2020. Revenue was
approximately $49.3 million, and cost of revenue was approximately $37.3 million
for the year ended September 30, 2021, as compared to approximately $8.0 million
and $6.8 million for the year ended September 30, 2020. Operating income was
approximately $5.9 million and approximately $172,000, for the years ended
September 30, 2021 and 2020, respectively. The results of operations for the
year ended September 30, 2020 represent the period from July 14, 2020 to
September 30, 2020.

Business sector and others

Segment results for Corporate and Other includes our directory services business
and our investment in SW Financial. 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. We anticipate revenues from our investment SW Financial to trend
upward in the future.

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Liquidity and capital resources

Overview

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, 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.

We have the following three asset-based revolver lines of credit: (i) Texas
Capital Bank Revolver Loan ("TCB Revolver") utilized by Vintage Stock, (ii) Bank
of America Revolver Loan ("BofA Revolver") utilized by Marquis, and (iii) Encina
Revolver Loan ("Encina Revolver") utilized by Precision Marshall. Additionally,
we have an unsecured revolving line of credit with Isaac Capital Group ("ICG
Revolver"), a related party, which is utilized by the Company.

As of September 30, 2021, we had total cash on hand of approximately $4.7
million as well as approximately $31.1 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.

Cash flow from operating activities

The Company's cash and cash equivalents at September 30, 2021 were approximately
$4.7 million compared to approximately $9.0 million at September 30, 2020, a
decrease of approximately $4.3 million. Net cash provided by operations was
approximately $28.5 million for the year ended September 30, 2021 as compared to
net cash provided by operations of approximately $28.8 million for the same
period in 2020 primarily due to the results of operations discussed above.

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 flow from investing activities

Our cash flows used in investing activities of approximately $17.4 million for
the year ended September 30, 2021 consisted of purchases of property and
equipment and our investment in SW Financial. Our cash flows used in investing
activities of approximately $8.8 million for the year ended September 30, 2020
consisted primarily of purchases of approximately $4.9 million associated with
the acquisition of Precision Marshall and Lonesome Oak, and property and
equipment of approximately $3.9 million.

Cash flow from financing activities

Our cash flows used in financing activities of approximately $15.4 million for
the year ended September 30, 2021 primarily consisted of payment on notes
payable and related party notes payable of approximately $16.8 million, $737,000
in net payments under revolver loans, and purchase of treasury stock of
approximately $421,000, partially offset by the issuance of notes payable of
approximately $2.3 million, and proceeds of approximately $323,000 from stock
options exercised.

Our cash flows used in financing activities of approximately $13.7 million for
the year ended September 30, 2020 primarily consisted of approximately $12.7
million for payments of notes payable, approximately $6.0 million in net

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payments under revolver loans, and approximately $1.7 million for the purchase
of treasury stock, offset by proceeds of $6.8 million from proceeds received
from the issuance of notes payable.

Currently, the Company is 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 and/or debt
settlement.

Working capital

We had working capital of approximately $33.8 million as of September 30, 2021
as compared to approximately $38.6 million as of September 30, 2020. Changes in
working capital were primarily attributable to the investment in Salomon Whitney
and purchases of property and equipment.

Future sources of liquidity; 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 may further dilute or otherwise
impair the ownership interest of our existing stockholders.

Contractual obligations

The following table summarizes our contractual obligations consisting of operating leases and debt securities and the effect these obligations are expected to have on our future liquidity and cash flow:


                                                                Payments due by Period
                                                                         Three to
                                       Less Than       One to Three        Five         More Than
                                       One Year           Years            Years        Five Years        Total
Notes payable                         $    16,055     $       23,501     $   3,019     $     11,615     $  54,190
Notes Payable - related party               2,000                  -         2,000                -         4,000
Lease obligations                           9,339             13,673         7,734           13,295        44,040
Total                                 $    27,394     $       37,174     $  12,753     $     24,910     $ 102,230



Off-balance sheet provisions

AT September 30, 2021, we had no off-balance sheet arrangements, commitments or guarantees requiring additional information or assessment.

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