10-K: Live Ventures Swings to Profit, Boosts EBITDA Amid Legal Battles

Live Ventures Incorporated reported a significant financial turnaround in fiscal year 2025, achieving net income and increased Adjusted EBITDA despite a slight revenue decline and ongoing legal challenges.

Summary

• Net income for the fiscal year ended September 30, 2025, was approximately $22.7 million, a substantial improvement from a net loss of $26.7 million in the prior year.
• Adjusted EBITDA increased by 36.3% to $33.4 million in 2025, up from $24.5 million in 2024, driven by cost reduction initiatives.
• Total revenue decreased by 5.9% to $444.9 million in 2025 from $472.8 million in 2024.
• Gross profit increased by 0.6% to $145.7 million, with gross margin improving by 210 basis points to 32.7%.
• Retail-Entertainment segment revenue grew by 9.1% to $77.5 million, while Retail-Flooring, Flooring Manufacturing, and Steel Manufacturing segments experienced revenue declines of 10.7%, 8.6%, and 5.1% respectively.
• Net cash provided by operating activities increased to $28.7 million in 2025 from $20.6 million in 2024.
• Working capital increased by $9.8 million to $62.1 million as of September 30, 2025.
• The company's total consolidated principal indebtedness was approximately $117.7 million as of September 30, 2025.
• An ongoing SEC investigation and a related class-action lawsuit continue, with cross Motions for Summary Judgment filed in the SEC case and a motion to dismiss denied in the class action.
• A material weakness in internal control over financial reporting identified in 2024 was successfully remediated as of September 30, 2025.
• The company received approximately $2.1 million in Employee Retention Credit refunds during the year.

Sentiment

Score: 7

Explanation: The company demonstrated a strong financial turnaround in fiscal year 2025, moving from a substantial net loss to a net income and significantly increasing Adjusted EBITDA. This indicates improved operational efficiency and cost management. However, overall revenue declined, and several segments faced headwinds from reduced consumer demand and the housing market. Crucially, the company is still embroiled in a significant SEC investigation and a related class-action lawsuit, which pose material, unquantified risks and could lead to substantial fines, damages, or management restrictions. While some related party debt has been favorably restructured, the concentrated ownership structure and absence of common stock dividends might limit broader investor appeal.

Positives

• Achieved a net income of $22.7 million in fiscal year 2025, a significant turnaround from a $26.7 million net loss in 2024.
• Adjusted EBITDA increased by 36.3% to $33.4 million in 2025, demonstrating improved operational performance.
• Gross margin improved by 210 basis points to 32.7% in 2025, attributed to improved efficiencies and higher-margin acquisitions.
• The Retail-Entertainment segment saw revenue growth of 9.1% to $77.5 million and an increase in operating income to $10.7 million.
• Steel Manufacturing segment operating income increased to $8.5 million from $4.6 million, with gross margin improving to 20.8%.
• Net cash provided by operating activities rose to $28.7 million in 2025, an increase of $8.1 million from the prior year.
• Working capital improved by $9.8 million, reaching $62.1 million.
• General and administrative expenses decreased by $4.3 million (3.6%), and selling and marketing expenses decreased by $5.1 million (22.6%).
• No goodwill impairment charges were recognized in 2025, contrasting with an $18.1 million charge in 2024.
• Successfully remediated a material weakness in internal control over financial reporting.
• Recorded a gain of approximately $22.8 million on the modification of a seller note related to Flooring Liquidators.
• Recognized a gain of approximately $0.7 million on extinguishment of debt and $2.8 million on settlement of earnout liability related to PMW.
• Received approximately $2.1 million in taxable Employee Retention Credit refunds.

Negatives

• Total revenue decreased by $27.9 million (5.9%) to $444.9 million in 2025.
• The Retail-Flooring segment's revenue decreased by 10.7% to $122.3 million, primarily due to store dispositions and weak housing market demand, resulting in an operating loss of $7.7 million.
• Flooring Manufacturing segment revenue decreased by 8.6% to $121.6 million due to reduced consumer demand and ongoing weakness in the housing market.
• Steel Manufacturing segment revenue decreased by 5.1% to $132.6 million, primarily due to lower sales volumes at certain business units.
• The company carries significant consolidated principal indebtedness of approximately $117.7 million.
• Exposure to interest rate risk due to approximately $48.7 million in floating rate credit borrowings.
• Concentrated stock ownership, with Jon Isaac and Isaac Capital Group LLC controlling approximately 67.4% of the outstanding voting power.
• No current plans to pay cash dividends on common stock for the foreseeable future.
• Ongoing SEC investigation and Sieggreen Class Action lawsuit introduce significant legal and financial uncertainty.

Risks

• Operating results could fluctuate due to factors outside of control, including demand, economic conditions, and consumer spending.
• Significant obligations under consolidated indebtedness could limit flexibility and increase vulnerability to adverse economic conditions.
• Exposure to interest rate risk due to floating rate credit facilities.
• Inability to effectively manage growth and integrate acquired businesses could materially adversely affect growth.
• Potential for future goodwill impairment charges or other asset impairment charges.
• Technological advances in digital content delivery could lower sales in the Retail-Entertainment segment.
• Intense competition in the retail and manufacturing industries could decrease demand or force price reductions.
• The floor covering industry is sensitive to changes in general economic conditions and housing market demand.
• Inability to accurately predict customer preferences or respond to technological developments in the flooring industry.
• Inability to pass raw material, energy, and fuel-related cost increases on to customers.
• Disruptions in the global supply chain (e.g., Red Sea attacks, Panama Canal drought, port strikes) could increase costs and delay deliveries.
• The Uyghur Forced Labor Prevention Act (UFLPA) could impact PVC imports for luxury vinyl flooring, affecting the supply chain.
• Demand for steel manufacturing products may decrease if North American manufacturing declines or automotive sales decrease.
• Limited availability or volatility in prices of raw materials and energy for the steel manufacturing segment.
• Shortages of qualified and trainable labor, or increased labor costs, could disrupt operations.
• Operational footprint, unplanned equipment outages, and other unforeseen disruptions may adversely impact results.
• Potential labor disruptions from unionized workforce in the Steel Manufacturing segment.
• Reliance on third parties for transportation services, with risks of cost increases or availability issues.
• Changes in U.S. and foreign tariffs, trade agreements, and isolationist policies could adversely affect the steel manufacturing segment.
• The highly cyclical nature of the steel industry may have an adverse effect on results of operations.
• Compliance with existing and new environmental regulations could result in delays or increased costs.
• Increasing pressure to reduce greenhouse gas emissions from steelmaking operations could increase costs or reduce material availability.
• Dependence on key persons, and the loss of any key person could adversely affect operations.
• Adverse developments in ongoing legal proceedings (SEC investigation, Sieggreen Class Action, Wage and Hour Matter) could have a material adverse effect.
• Data breaches or other cybersecurity incidents could adversely affect reputation and revenues.
• Tax matters, including changes in corporate tax rates, disagreements with taxing authorities, and imposition of new taxes.
• Concentrated stock ownership may result in public stockholders having no effective voice in management.
• Provisions of Nevada law and organizational documents may prevent or delay a change of control.

Future Outlook

The company intends to continue its strategy of acquiring additional businesses, potentially in new sectors, and anticipates requiring increased capital expenditures to fund this growth. It may seek additional capital through debt or equity issuances. Management believes current cash balances, operating cash flow, and available credit lines will provide sufficient liquidity for at least the next 12 months. The company also expects an improvement in near-term cash flows related to income taxes starting in fiscal year 2026 due to recent tax legislation.

Management Comments

• 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.
• 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.
• 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, and pay our contractual obligations for at least the next 12 months.
• 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.
• 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.
• Management assessed the design and effectiveness of our internal control over financial reporting as of September 30, 2025... our management concluded that our internal controls over financial reporting were effective.

Industry Context

The Retail-Entertainment segment operates in a rapidly evolving market influenced by technological advances in digital content and mobile gaming, with the video game industry reporting over $59 billion in consumer spending in 2024. The Retail-Flooring and Flooring Manufacturing segments are sensitive to the U.S. floor covering industry's estimated $33.2 billion in sales in 2024, which is heavily influenced by housing market conditions, consumer confidence, and competition from large retailers and imports. The Steel Manufacturing segment operates in a highly cyclical niche market within the broader steel industry, closely tied to North American manufacturing, particularly the automotive sector, and is subject to raw material price volatility and environmental regulations.

Comparison to Industry Standards

• The filing does not provide specific industry benchmarks or comparable company results to directly assess performance against global standards. It highlights competition from 'mass merchants and regional chains' like Home Depot and Lowe's in flooring, and 'International Knife and Saw (IKS), Everwear, and TKM' in industrial knives, but does not offer detailed comparative metrics for these competitors.

Management Changes

Corporate Governance

Legal Proceedings

• SEC Investigation: Ongoing civil complaint filed August 2, 2021, alleging financial, disclosure, and reporting violations from 2016-2018. Fact discovery completed May 20, 2024; expert discovery completed September 2025. Cross Motions for Summary Judgment filed October 2025. Case on hold pending court rulings.
• Sieggreen Class Action: Class action complaint filed August 13, 2021, with similar allegations to the SEC complaint. The court denied the motion to dismiss the Second Amended Complaint on September 30, 2025. The company is evaluating its next steps.
• Holdback Matter: A Settlement and Release Agreement was entered on May 2, 2025, to resolve claims regarding a $2.5 million indemnity holdback by paying $850,000 in installments. The company recorded a gain of approximately $1.3 million.
• Wage and Hour Matter: A class action complaint was filed on July 27, 2022, against Elite Builder Services, Inc. (a subsidiary) for alleged violations of California labor laws. Mediation has been postponed, and a key discovery deadline was missed.

Related Party Transactions

• Isaac Capital Group, LLC (ICG), whose sole member is CEO Jon Isaac, controls approximately 67.4% of the company's voting power.
• The ICG Revolving Promissory Note was amended on April 8, 2025, extending its maturity to April 8, 2030, increasing available credit to $12.0 million, and establishing a Fixed Conversion Price of $7.85 per share. This amendment resulted in a non-cash capital contribution of approximately $6.0 million from the lender.
• ICG provided a $5.0 million promissory note to Flooring Affiliated Holdings, LLC (a subsidiary) maturing January 18, 2028, bearing 12.0% interest.
• ICG provided a $2.6 million promissory note (ICG PMW Note) to the company, maturing December 17, 2029, bearing 12.0% interest, with proceeds used to settle PMW Seller Financed Loans.
• ALT5 Sigma Corporation (formerly JanOne Inc.), where director Tony Isaac (CEO Jon Isaac's father) is President and a director, paid the company $117,000 in rent and reimbursed expenses in 2025.
• Spriggs Investments, LLC, whose sole member is Vintage Stock CEO Rodney Spriggs, had a $2.0 million promissory note (Spriggs Promissory Note I) that matured July 31, 2025, and was repaid.
• Spriggs Investments, LLC also has a $1.0 million promissory note (Spriggs Promissory Note II) with the company, bearing 12.0% interest, with its maturity extended to July 31, 2026.
• Marquis Industries, Inc. (a subsidiary) entered into two 20-year building leases with Spyglass Estate Planning, LLC, whose sole member is CEO Jon Isaac, with initial monthly rents of $31,737 and $73,328, increasing annually by 2.5%.
• A seller-financed loan of $3.0 million with the previous owner of Kinetic bears 7.0% interest and matures September 27, 2027.
• A seller-financed loan of $1.0 million with the previous owner of Central Steel bears 8.0% interest and matures May 15, 2029.
• The principal amount of a seller-financed mezzanine loan with the previous owners of Flooring Liquidators was reduced from $34.0 million to $15.0 million, resulting in a $22.8 million gain on modification of seller note. This note bears 8.24% interest and matures February 2028.

Stakeholder Impact

• Shareholders: Positive impact from the significant turnaround to net income and increased Adjusted EBITDA, as well as the common stock repurchase program. However, ongoing legal proceedings and concentrated stock ownership introduce uncertainty, and there are no current plans for common stock dividends.
• Employees: The company aims to attract and retain talent with competitive wages and benefits, and a commitment to workplace satisfaction. Risks include potential labor shortages and increased labor costs, particularly with unionized workforces in the steel manufacturing segment.
• Customers: Retail segments offer competitive pricing and efficient service, but supply chain disruptions could impact product availability and delivery times.
• Creditors: The company has significant indebtedness, but improved financial performance and liquidity, along with compliance with loan covenants, may reassure creditors. Debt modifications with related parties have altered some obligations.
• Regulatory Bodies: The company is subject to an ongoing SEC investigation and other legal matters, indicating continued scrutiny and potential for future regulatory actions or penalties.

Next Steps

• Await court rulings on cross Motions for Summary Judgment in the ongoing SEC investigation.
• Evaluate next steps in the Sieggreen Class Action lawsuit following the denial of the motion to dismiss the Second Amended Complaint.
• Continue to pursue acquisitions and other strategic transactions to expand and grow the business.
• Monitor capital market conditions for potential additional financing through borrowings or public/private sales of debt or equity securities.
• Implement a cyber training curriculum for employees across subsidiaries to enhance cybersecurity efforts.
• Anticipate improvement in near-term cash flows related to income taxes beginning in fiscal year 2026 due to the One Big Beautiful Bill Act.

Key Dates

Recommendation

The company demonstrated a strong financial turnaround in fiscal year 2025, moving from a substantial net loss to a net income of $22.7 million and significantly increasing Adjusted EBITDA. This indicates improved operational efficiency and cost management. However, overall revenue declined, and several segments faced headwinds from reduced consumer demand and the housing market. Crucially, the company is still embroiled in a significant SEC investigation and a related class-action lawsuit, which pose material, unquantified risks and could lead to substantial fines, damages, or management restrictions. While some related party debt has been favorably restructured, the concentrated ownership structure and absence of common stock dividends might limit broader investor appeal. Therefore, a 'Hold' recommendation is appropriate, advising investors to monitor the resolution of legal challenges and observe sustained, broad-based revenue growth before considering a more aggressive position.

Keywords

Diversified Holding Company, Financial Performance, Adjusted EBITDA, Net Income, SEC Investigation, Retail Entertainment, Flooring Retail, Flooring Manufacturing, Steel Manufacturing, Acquisitions, Debt Management, Corporate Governance, Risk Factors, Supply Chain, Internal Controls, Share Repurchase