Live: Report And Financial Statements

The following excerpt is from the company's SEC filing.

Period January 1 to November 3, 2016 (unaudited)

and the Years Ended December 31, 2015 and 2014

INDEPENDENT ACCOUNTANTS' REVIEW REPORT

To the Board of Directors and Stockholders

Vintage Stock, Inc.

Joplin, Missouri

We have reviewed the accompanying financial statements of Vintage Stock, Inc., which comprise the balance sheet as of November 3, 2016, and the related statements of income, stockholders’ equity and cash flows for the period January 1, 2016 to November 3, 2016, and related notes to the financial statements. A review includes primarily applying analytical proced ures to management's financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement whether due to fraud or error.

Accountants’ Responsibility

Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.

Accountants’ Conclusion

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.

Prior Period Financial Statements

The financial statements of Vintage Stock, Inc. as of December 31, 2015 and 2014 and for the years then ended were audited by us and our report, dated September 19, 2016, expressed an unmodified opinion on those statements. We have not performed any auditing procedures since that date.

/s/ KPM CPAs, PC

January 16, 2017

Springfield, Missouri

www.kpmcpa.com

1445 E. Republic Road, Springfield, MO 65804 | 417-882-4300 | fax 417-882-4343

500 W. Main Street Suite 200, Branson, MO 65616 | 417-334-2987 | fax 417-336-3403

Member CPA Associates International, Inc., with offices in principal U.S. and international cities

VINTAGE STOCK, INC.

BALANCE SHEETS

2015

2014

ASSETS

Current Assets:

Cash and cash equivalents

342,798

1,524,603

2,540,890

Receivables

113,500

99,079

46,323

Merchandise inventories

20,160,092

14,940,547

13,695,393

Prepaid expenses and other assets

860,453

725,926

687,854

Total current assets

21,476,843

17,290,155

16,970,460

Property and Equipment:

9,279,598

7,607,769

6,888,669

Less accumulated depreciation

5,794,274

5,112,067

4,283,681

Net property and equipment

3,485,324

2,495,702

2,604,988

Other Assets:

Goodwill, net

2,349,583

824,167

931,667

Intangible asset, net

413,334

160,000

220,000

Total other assets

2,762,917

984,167

1,151,667

Total assets

27,725,084

20,770,024

20,727,115

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Bank overdraft

139,551

Debt maturing within one year

2,897,122

Accounts payable

4,048,805

1,112,106

1,281,793

Accrued wages

702,303

745,425

721,269

Sales tax payable

247,699

553,315

527,200

Accrued other expenses

819,792

805,208

740,837

Gift certificates outstanding

219,152

312,610

302,575

Total current liabilities

8,934,873

3,668,215

3,573,674

Long-Term Debt

2,181,563

Stockholders' Equity:

Common stock

365,141

Treasury stock

(200,000

Retained earnings

16,443,507

16,936,668

16,988,300

Total stockholders' equity

16,608,648

17,101,809

17,153,441

Total liabilities and stockholders' equity

See independent accountants' review report

The accompanying notes are an integral part of these financial statements

STATEMENTS OF INCOME

For the Period

January 1, 2016 -

For the Years Ended

Revenue

52,500,928

61,563,194

59,867,751

Cost of revenue

22,131,613

26,008,190

24,957,170

Gross profit

30,369,315

35,555,004

34,910,581

Operating expenses:

Salaries and wages

8,625,144

9,240,215

8,882,392

Depreciation and amortization

1,035,707

1,032,618

1,058,941

Trade credit incentive

837,030

1,003,314

1,051,718

Bank and credit card fees

722,910

757,918

793,200

Insurance

927,083

920,512

678,999

Computer and professional fees

577,430

564,602

387,985

Taxes and licenses

846,027

914,225

926,006

Office

916,985

1,106,430

1,112,218

Profit sharing expense

98,625

118,753

124,074

5,865,448

6,246,657

6,086,101

Travel

250,897

232,697

156,312

Utilities

822,612

886,746

876,696

Repairs

311,093

433,935

390,918

Miscellaneous

78,985

88,568

98,324

Total store operating expenses

21,915,976

23,547,190

22,623,884

Income from operations

8,453,339

12,007,814

12,286,697

Other income (expenses):

Gift card breakage

77,173

159,000

161,000

59,759

103,107

82,818

Interest

(81,674

(34,792

(43,992

Loss from disposal of property and equipment

(44,926

(2,017

Total other income

10,332

225,298

199,595

Income before income taxes

8,463,671

12,233,112

12,486,292

Income tax expense

15,187

62,403

59,390

Net income

8,448,484

12,170,709

12,426,902

STATEMENTS OF STOCKHOLDERS' EQUITY

Common Stock

Total Stockholders'

Shares

Amount

Earnings

Balances at December 31, 2013

15,049,474

15,214,615

Distributions

(10,488,076

Balances at December 31, 2014

(12,222,341

Balances at December 31, 2015

(8,941,645

Balances at November 3, 2016 (unaudited)

See independent accountants' review report

The accompanying notes are an integral part of these financial statements

STATEMENTS OF CASH FLOWS

January 1, 2016 -

Adjustments:

749,457

865,118

891,441

Amortization

286,250

167,500

Net change in operating accounts:

(14,421

(52,756

(4,544,545

(1,245,154

(909,330

(134,527

(38,072

(107,463

2,936,699

(169,687

(1,032,288

Accrued expenses and sales tax payable

(334,154

114,642

141,164

(93,458

10,035

Net cash from operating activities

7,344,711

11,824,352

11,623,725

Cash flows used in investing activities:

Acquisition of store

(2,600,000

Acquisition of leasehold rights

(215,000

Acquisition of property and equipment

(1,709,005

(757,849

(245,022

Net cash used in investing activities

(4,524,005

Cash flows from financing activities:

Bank overdrafts

(139,551

Net borrowings/(repayments) under line of credit

2,308,622

(1,000,000

Borrowings from note payable

3,100,000

Repayment of note payable

(329,937

Net cash used in financing activities

(4,002,511

(12,082,790

(11,488,076

Net decrease in cash and cash equivalents

(1,181,805

(1,016,287

(109,373

Cash and cash equivalents - beginning of period

2,650,263

Cash and cash equivalents - end of period

NOTES TO FINANCIAL STATEMENTS

and the Years Ended December 31, 2015 and 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of business

– The Company operates a chain of retail stores throughout the central United States which buy, sell and trade new and pre-owned movies, music, video games, comics, books, and collectibles.

Statements of cash flows

– Cash equivalents include time deposits, certificates of deposit, money market funds, and all highly liquid debt instruments with maturities of three months or less at the date of their acquisition.

Revenue recognition

– Merchandise and rental asset revenue is recognized at the point of sale or rental or at the time the merchandise is shipped to the customer. Additionally, revenues are presented net of estimated returns and exclude all sales taxes.

Gift card liabilities are recorded as deferred revenue at the time of sale. The liability is relieved and revenue is recognized upon redemption of the gift cards or when it is determined that gift cards will not be redeemed.

The Company provides customers with the opportunity to trade in used merchandise in exchange for cash consideration or store credit. Merchandise inventory is recorded at a cost equal to the cash offered to the customer. If a customer chooses store credit, credit is issued for the amount of the cash offer plus a premium. Premiums associated with store credit issued as a result of trade in transactions are recorded as expense in the period in which the credits are issued.

Inventories

– Inventories have been valued at the lower of cost or market using the individual item method, as determined by the average cost method.

Property and equipment and related depreciation

- Property and equipment has been stated at cost. Depreciation has been computed by applying the straight-line method and the following estimated lives:

Category

Estimated Life

Equipment and furnishings

3-10 years

Leasehold improvements

6-19 years

Leasehold improvements are depreciated over the shorter of their economic useful life or their remaining lease term.

Non-compete agreements

– Non-compete agreements have been amortized on a straight-line basis over the five-year life of the agreements. The balance sheets reflect the unamortized amount of such costs.

See independent accountants’ review report

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Leasehold rights

– Leasehold rights are amortized on a straight-line basis over the five-year life of the lease agreements. The balance sheets reflect the unamortized amount of such costs.

Goodwill

– Goodwill has been amortized on a straight-line basis over a ten year period. The balance sheets reflect the unamortized amount of such costs.

Use of estimates

- Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used.

Income taxes

- The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under such provisions, all income, losses and credits are passed through to the stockholders with no income tax consequences resulting to the Company. The Company’s policy is to pay distributions at least equal to the stockholders’ additional individual income taxes incurred for their proportionate share of the corporation’s taxable income.

The Company has analyzed the tax positions taken and has concluded that as of November 03, 2016, there are no uncertain positions taken, or expected to be taken, that would require recognition of an asset or liability or disclosure in the financial statements. A tax asset or liability would be recognized if the Company has taken an uncertain position that more likely than not would not be sustained upon examination by taxing authorities. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Company does not believe it likely that changes will occur within the next fiscal year that will have a material impact on the financial statements.

Advertising costs

- The Company expenses non-direct response advertising costs as they are incurred.

Sales taxes

The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenues or expenses.

Freight costs

- The Company includes freight costs in cost of goods sold. Total freight and shipping expense included for the period from January 1 to November 3, 2016 and the years ended December 31, 2016 and 2015 was $144,918, $132,654 and $131,262, respectively.

BUSINESS ACQUISITION

During the period ended November 3, 2016, the Company acquired a store location from an unrelated third party. Accordingly, the results of the operations of this location are included from the date of the acquisition forward.

The aggregate purchase price for the acquisition made on February 25, 2016 was approximately $2,600,000. The transaction was financed with proceeds from borrowings and was accounted for under the acquisition method of accounting. The following is a condensed balance sheet showing the fair values acquired as of the date of acquisition:

1,500,000

Inventory

675,000

350,000

PROPERTY AND EQUIPMENT

6,874,071

5,413,519

4,805,103

2,405,527

2,194,250

2,083,566

(5,794,274

(5,112,067

(4,283,681

Depreciation amounted to $749,457, $865,118 and $891,441 for the period from January

1 to November 3, 2016 and the years ended December 31, 2015 and 2014, respectively.

INTANGIBLES

2,575,000

1,075,000

650,000

300,000

3,440,000

1,375,000

Less accumulated amortization

(677,083

(390,833

(223,333

Amortization amounted to $286,250, for the period from January 1 to November 3, 2016 and $167,500 for each of the years ended December 31, 2015 and 2014. Future estimated amortization expense is as follows:

429,000

419,000

369,000

323,000

Later years

853,917

Current debt

Prime - .38%, Arvest Bank, secured by all business assets; monthly interest payments; matures March 2017

Add debt maturing within one year

588,500

Long-term debt

3.68%; Arvest Bank; secured by all business assets; monthly principal and interest payments of $56,715; matures February 2021

2,770,063

Less debt maturing within one year

DEBT (CONTINUED)

The Company maintains a line of credit with Arvest Bank maturing March 2017 which permits the Company to borrow up to $4,000,000 at the prime rate minus .38%. There was no balance on the line of credit at December 31, 2015 and 2014.

Principal payments due on long-term debt at November 3, 2016 are as follows:

Aggregate Annual Maturities

610,600

633,400

657,100

280,463

CREDIT CARD PAYABLE

The Company has a $1,000,000 credit limit on a credit card with Security BankCard as of November 3, 2016. The card charges monthly interest on the unpaid balance if the entire balance is not paid by the due date. The credit card payable at November 3, 2016, December 31, 2015 and 2014 was $221,995, $190,466 and $138,956, respectively, and is included in accounts payable on the balance sheets. The card carries no annual fee and no interest was paid during the period from January to November 3, 2016 or the years ended December 31, 2015 and 2014.

STOCKHOLDERS’ EQUITY

At November 3, 2016 and December 31, 2015 and 2014, common stock is composed of the following:

Vintage Stock, Inc. common stock; no par value;

Class A (voting); 1,000 shares authorized; 307 shares issued; 282 shares outstanding

39,399

Class B (nonvoting); 10,000 shares authorized; 2,538 shares issued and outstanding

325,742

At November 3, 2016 and December 31, 2015 and 2014, treasury stock consists of 25 shares of Vintage Stock, Inc. Class A common stock totaling $200,000, at cost.

RETAINED EARNINGS

Retained earnings at November 3, 2016, includes approximately $12,800,000 in undistributed earnings which have been taxed to the stockholders under the provisions of Subchapter S of the Internal Revenue Code. This amount is available for dividend distributions at the discretion of the Board of Directors.

CONTRIBUTION TO PROFIT-SHARING PLAN

The Company maintains a profit-sharing plan covering all full-time employees of the Company who are at least 21 years of age. Contributions to the plan are determined each year by the Board of Directors subject to the maximum deduction limitations allowable under the provisions of the Internal Revenue Code. For the period from January 1 to November 3, 2016 and the years ended December 31, 2015 and 2014, the Company matched 100% of employee contributions up to 4% of compensation. The matching contributions to the plan for the period from January 1 to November 3, 2016 and the years ended December 31, 2015 and 2014 amounted to $98,625, $118,753 and $124,074, respectively.

INCOME TAXES

The provision for income taxes appearing in the statements of income consists of:

The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. The current tax provision for the period from January 1 to November 3, 2016 and the years ended December 31, 2015 and 2014 relates to taxes due to certain state taxing authorities.

OPERATING LEASES

The Company operates all of its current store locations in leased facilities under non-cancelable leases which are accounted for as operating leases. Remaining lease terms range from 1 to 8 years excluding additional renewal periods. The leases on several locations are based on a minimum monthly rate or a stated percent of gross sales. A substantial portion of leases provide for various renewal terms. Total rent expense, including common area maintenance, for the period from January 1 to November 3, 2016 and the years ended December 31, 2015 and 2014 amounted to $5,865,448 and $6,246,657 and $6,086,101, respectively.

OPERATING LEASES (CONTINUED)

Future minimum lease payments under operating leases at November 3, 2016 are as follows:

6,955,200

6,044,000

4,715,100

3,966,500

2,871,700

Thereafter

754,200

Total minimum lease payments

25,306,700

CASH FLOW STATEMENT DISCLOSURES

Supplemental disclosure of cash flow information:

Cash paid during the period for:

43,974

58,184

55,472

77,648

CONTINGENT LIABILITIES

At November 3, 2016, the Company was a direct guarantor for debts of related companies totaling $7,463,354 with outstanding balances of $7,246,808. Included in total guaranteed debt is a $2,000,000 line of credit with an outstanding balance of $1,783,454. The debts mature in April 2017 ($5,463,354) and April 2018 ($1,783,454).

The Company is a defendant in an ongoing litigation regarding general employment and business matters. Outside counsel for the Company has advised that at this stage in the proceedings they cannot offer an opinion as to the probable outcome. The Company is vigorously defending its position and does not believe the lawsuit will have a material impact on the financial statements.

SUBSEQUENT EVENTS

On November 3, 2016, the Company, entered into a series of agreements in connection with its sale to Live Ventures Incorporated (“Live Ventures”), through its newly formed, wholly-owned subsidiary, Vintage Stock Affiliated Holdings LLC (“VSAH”). The purchase and financing transactions were, in the aggregate, valued at approximately $60 million. The purchase was effectuated between VSAH and the shareholders of the Company, with VSAH acquiring 100% of the outstanding capital stock of Vintage Stock.

Management has evaluated subsequent events between the end of the most recent fiscal year end and January 16, 2017, the date the financial statements were available to be issued.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Major owner of Live Ventures just picked up 1,283 shares - Sept. 13, 2017
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