Good day, everyone and welcome to today's Live Ventures Third Quarter Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions]. Please note this call may be recorded. I will be standing by should you need any assistance. And it is now my pleasure to turn the conference over to CFO of the Live Ventures, Mr. Virland Johnson. Please go ahead, sir.

Thank you. Good afternoon and welcome to the Live Ventures Incorporated fiscal third quarter 2017 conference call. Earlier today, the Company filed its Form 10-Q for the third fiscal quarter ended June 30, 2017, with the SEC. This filing can be found on our website www.live-ventures.com in the Investor Relations section as well as on the SEC website at www.sec.gov. My name is Virland Johnson, Chief Financial Officer, and joining me today is Jon Isaac, Chief Executive Officer. Please note that some of the remarks you will hear today may contain forward-looking statements about the Company's performance. As well there may be forward-looking statements made during the Q&A session that follow our prepared remarks. These statements are neither promises nor guarantees and there are a number of risks and uncertainties that could cause actual results to differ materially from those set forth in these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in our filing and periodic reports filed with the SEC, copies of which are available on our website or maybe requested directly from the Company. Forward-looking statements are made as of today's date and we do not undertake any obligation to update any forward-looking statements made during today's call. Thank you to everyone joining us today for our third fiscal quarter 2017 call. I would also like to express my appreciation to our management and associates of Live Ventures for yet another outstanding quarter. During our call today, we will briefly cover our company's operating and financial results for the quarter and then answer your questions at the end of our prepared remarks. Operating results for the third fiscal quarter 2017. The company reported quarterly revenue of $41.4 million representing an increase of 106.9%…

[Operator Instructions]. . :

Good afternoon. Thanks for taking my call. So you mentioned just seeking active acquisition prior to as far this being discussions or is any other detail you can give us as far as that there's really anything on the table at this point or letters of intent any more details on that progress as far as where we might see the rest the year?

We generally do not comment about possible acquisitions that have not been announced previously. We are looking at several transactions but we have -- we're not at a point to disclose that at this time.

Okay. And then just in general looking at numbers quarter-over-quarter as opposed to year-over-year just with everything that's gone on. As far as gross margins there's been a slight dip the previous quarter is there anything that happened in this quarter specifically reading that detail a lot to us now is there anything specific that would carry-forward or as far as looking forward are these kind of the levels we should expect now that the company's been one year for a few quarters now?

We believe that these are comparable levels that you should see going forward. There's going to be some up and down based on mix of product and the margin of those products that are sold but we feel this is fairly consistent going forward.

Okay, well I appreciate it and thanks for the good information. I'll get back in queue.

Okay.

Thank you. [Operator Instructions].

May be I'll go over some items.

Jon has some items that he would like to cover.

This is Jon. Just had a few points that I broke down that would love to share with our shareholders or prospective shareholders. On the visit spot side, the company had a record month in terms of profitability in the month of June. There was one store that was affected by a severe tornado in the Tulsa, Oklahoma side and it will probably be a total loss. So management is looking at another store that would probably be opened not too far away from that store. The good thing is most importantly nobody got hurt. Secondly, it was one of the smaller stores; I think it was 4,000 less than 5,000 square feet in size. And then three, we have very, very good insurance coverage and that is don't cover for potential losses, the business losses et cetera. So that store was definitely affected and it’s also in the news that you guys can search for. On the refinance side, again, we are still working very hard on reducing our cost of capital. We think that once we are successful in finding the right partner for this that we would add about $1 in earnings per basic common share and this is our estimates but this is not final yet but we will keep shareholders updated on that. Again on the Vintage Stock side in the past few weeks we've released the corporate video and we put this on our website and I encourage all shareholders who if you haven't seen the video yet please do so. It will really enlighten you to the operations, it will give you chance also to meet Mr. Rodney Spriggs, and interview with him and it will give you an insight to a lot of stores that we have in the Mid-West. Do you have any questions coming up?

We'll let you know. Just keep going.

Yes. Also I want to remind everyone that we -- on the Vintage Stock side, Rodney and his team have opened 10 stores since November 1st. So a lot of expenses, we accrued a lot of expenses this year as a result of those. Those to the extent that we don't open another 10 stores soon which we won't not at that level at least, that number should look better going forward. So we're looking forward to the upcoming holiday season which would hopefully generate a good amount of cash flow for us. On the Marquis industry side and I'm just going to keep talking unless until we see a question pop up looking at the screen here. On the Marquis Industry side, the company also achieved the record month in the month of June in terms of sales, the highest recorded revenues in any month ever at Marquis. We have an order in new extrusion lines expected to be delivered next month, we've been waiting about a year for this new line to arrive at our lines and so that's going to increase our extrusion capacity by about 50% 5-0, so about 15 million pounds per year extrusion. The new extrusion and our estimates internally, our management estimates with the new extrusion line will add about $0.50 in earnings per basic common share or about a $1 million a year in our estimates. The company is continually experiencing growth and is looking for ways to further increase its margins. There may be further opportunities next year to acquire yet another extrusion line because we're constantly hitting capacity and that's very good news because the product is in high demand at the Marquis side. We have two questions that popped up maybe we will take one operator.

Yes. We can go next to Daniel Dimora [ph]. Please go ahead. Your line is open.

Thank you for taking my call. I was just wondering why do you think the stock price is pretty much just bouncing around only activity that is going on even if Jon Isaac buys stock that's the only time that really goes up.

That's a good question for which we don't have a real scientific answer for I mean, we don't obviously have control of what happens in the stock price. We today we saw that would go up based on record sales and record financials but it went down. So we have better control of this how we perform as a company and where we invest your money, shareholders' money to maximize every dollar that we have. So it's management’s belief and policy that in the long-term our stock price should rise congruent with our earnings and the growth in our balance sheet. So we don't look at the stock price every day, every hour, every minute but we hope that in time that the stock price will reflect our performance.

That is fair enough, that's a fair enough answer. Thank you.

Thank you. Cara?

Thank you. We can go next to Carl Veredich [ph]. Please go ahead. Your line is open.

Good afternoon and good afternoon fellow investors. I'm sure you must make your own kind of like personal judgement, what's the stock should be based on your actual performance. Now of course that's a very, very unbinding estimate but you guys are investors and you see the performance and where do you think -- where do you think like three what I consider fairly good report, where do you think the stock should be or where do you think a year ago where the stock price should be, if you had performance like this, so what number do you kick around, where you should be right now to react feasibly?

Sure. That's a good question. That answers part, our part science I mean it's a very, if you ask three people you might get four different answers as to where our stock price should be but if you look at comparables or companies, I mean I don't know any company that trade at a PE of 2 and if there are please email us and let us know so we can buy out their stock if we can. So do I think it's undervalued personally yes that's why you see me buying stock in the open market personally and that's why the company has been aggressive in buying back its stock as well? And on that subject I mean we bought 79,000 shares since the inception of our repurchase program and through July 2017 at an average price of 1,027 and it's our belief that those repurchases are by far the best use of capital at the current moment. We fully intend on continuing to buy our shares when the market presents us with these types of opportunities. And in the last couple of months, we've gotten lucky in finding large blocks of shares that were available to us on the offer. So at one point I think it was 24,000 shares and another time 22,000 shares. We don't know who's selling them to us, we don't really care if it's a hedge fund or a short or whoever it may be, we were lucky and we bought those we call our broker and we were able to make those purchases. If you want some interesting facts our stock price last year on this day was $12.30 split adjusted. Our book value bad debt was $21 million and that's after we had recorded our $12 million deferred tax asset on our books. Since last year this time the company shareholders' equity increased by over 53% yet our stock price has decreased. We see this stock price to earnings or stock price to growth in our equity as an anomaly as an opportunity to pile on more of something that's great. The buybacks benefits the remaining shareholders as they enjoy greater piece of earnings in future months, future quarters. And again to put things into perspective, our stockholders equity per basic common share is $16.22 as of the end of June and our stock price today was around $11.50. So that's why management sees this as an opportunity to buy back stock. Did that answer your question?

And we can go next to Luigi Rivetto. Please go ahead. Your line is open.

Hi guys, how are you doing for the day, thank you for having my call?

Hi, Luigi.

Hi, Luigi.

Hi, fantastic, outstanding quarter. I really appreciate it, you did a tremendous job really, really, really surprised us. The question that I was asking you probably pretty much answered the gentleman over there which is we did fine is to buy the -- I mean I buy all I can at this price because there is an opportunity like you just mentioned before that it's a lifetime opportunity for the company because as we know we have a book value of $16 per share. So anything we buy below that price I suggest especially the company to grab all we can and to store it for the equity of the shareholder, which I'm buying -- I'm buying at the market anything I can because like I say it’s fantastic, fantastic price, unbelievable. I think it's an opportunity there it’s almost incredible that what we can see is just one-time of a lifetime, I'm sixty-one-years-old and I haven't seen it quite a bit like company like you mentioned two times and like you said show me a company that is trading up too and then I can buy it, we have this, so we can buy all we can and I appreciate it, all the job you did.

Thank you for your comments and that’s why we believe exactly what you said and that’s why we’re buying back stock in our own company. There is no secret, we put it up, we have announced it many times and we firmly believe that in the long-term common sense will prevail and people will realize what we're doing and might take some time but I think eventually we will win and that, so.

I have another question. I would like to know if you have any update on this little problem of that last action that we have, if you have any update on that.

Yes I have a few points, I will go over them. We will take another question but I will go over after we go through the few questions, I will outline and just go over.

Beautiful. Thank you very much indeed.

Thank you, Luigi. Appreciate it.

Yes, you're very welcome. Bye-bye. Have a good day.

We can take our next question from Philip Stillman. Please go ahead. Your line is open.

Hello and thank you. Could you just speak to the reason, I just didn't get the time for 10-K, so the drop in earnings per share from 2016 to 2017 for that three and nine months?

Yes I think the major reason for the drop is last year we released the deferred tax asset valuation that is the simple reason for the decrease. Again investors that have been with the company for a while know that last year that major release deferred tax valuation occurred because we were making money and it looked like we were going to continue to make money and it seemed to be the right thing to do, looking -- looking back it was clearly the right thing to do and that is the central issue as to why the earnings are down versus last year.

If you remove the one-time add-on that we did last year our earnings about doubled.

Okay, thank you.

The asset was about $12.5 million. I think it was about 13 point something million so that leaves us $6 million, we’ve done about double that this year. So it's about 100% increase year-over-year when you exclude.

If you exclude that.

Yes, ballpark.

Thank you.

And we can go next to Peter Rodriguez. Please go ahead. Your line is open.

Hi guys, thanks for taking my call.

Good morning.

I had a question about the CapEx spending, about how much of it that you spent so far this year, I think cumulatively you spent like a little bit close to almost $8 million. How much of that roughly spent on expanding for new operations versus repairing and replacing existing operations?

Most of the CapEx has to do with our Marquis operation and it's a blend, I'm not going to say that it's all new capacity but there is additional capacity that has been added. Similar to what Jon referred to previously in terms of the extrusion that will be added later this year, there is enhanced capacity as well as replacement of all the machines that were in place, I don’t have exact numbers but it’s both.

So would you say like 50:50 or 80:20?

I would probably say more 60:40, 60% replacement, 40% expansion.

And you expect all that new equipments you want to place this quarter?

All of it is in placement, the exception of the additional extrusion lines.

Okay. So --

So we expanded the building in Marquis, Mr. Tim Bailey and his we had -- we've built an addition, a large addition to what to the extrusion facility in the Georgia area to accommodate not only this extrusion line but future extrusion lines in fact I had a call this morning with Mr. Bailey and the new extrusion line that has start to come in September will definitely almost guarantee to decrease our cost of goods sold in that operation which should drop about $0.50 in basic common shares. But we've also discussed the further expansion into more extrusion lines because it would drop COGS even more. So there is still the questions on this. There is other opportunities in which we can expand Marquis by investing in some growth CapEx.

Okay, great. And another question that I had was about capital and debt, how much did you guys pay down of that this quarter and how much do you plan to pay down of that for the rest of the year?

We pay principal payment of $500,000 a quarter. We pay about $0.25 million a month in reduction in the debt but paid quarterly. It's paid quarterly.

Yes, paid quarterly.

It went up to about $0.25 million a month.

But did you guys make any prepayments in addition to that your quarterly requirement?

We've been paying down principal as agreed upon in the loan agreement. We have the -- as you see we have about $4 million or more in cash on our balance sheet. We also have about $9.8 million I believe mentioned in availability. So we have some liquidity, we have options, so we're just evaluating different options that we have; we’re looking at other ways to reduce cost of capital. So we'll definitely keep shareholders up to speed on what's going on in that front but it’s definitely one of our top one or two projects that we're working on.

And I guess my last question would be about a lawsuit which you said you're going to give us some more information just as you can maybe give us kind of estimate as to how much that is costing or any expectations with regards to the cost?

There is a real cost and then there is a theoretical cost. The real cost of legal fees is not substantial less than six figures. The other cost is the damage to our reputation or what others think of us and all of this and we're going to seek ways to remedy that, one of which will be to seek sanctions against the lawyers who are calling all this non-sense. So I can update shareholders on the losses now, spoke to our class action attorney today. So we're preparing to file -- we're preparing to file a motion to dismiss and we are highly confident that we will prevail as we did nothing wrong and we look forward to the opportunity actually to be able to show that. We're also going to seek to remedy the harm that was done, one of the ways of which would be to seek sanctions against the lawyers involved in this lawsuit. As we stated before, we've done nothing wrong and those are all false and meritless allegations, and the plaintiffs have no proof of any wrongdoing. There's no promotion involved of our stock. There is no sales of stock by officers, insiders or directors, in fact officers and directors bought or acquired or purchased shares during their so-called promotion period we will figure. The noise about our previous auditors is also meritless but nonetheless as you probably know, we have decided to change our independent auditors since then to BDO USA regarded by many as the number five accounting firm in the world with 1,400 global offices in 158 countries. In the meantime, we're continuing to maximize value for shareholders through the purchase of our shares on our company at what we believe is a low stock price or by reinvesting capital back into our existing companies or paying down debt or making new acquisitions. That's the update that we have. Unfortunately we have to go through the judicial process of this but we have a very, very good law firm that is helping us defend this and once it is done, I'm intended on seeking sanctions against those who harmed us, so.

Thank you. And we can go next to David Cockrell [ph]. Please go ahead. Your line is open.

Hi thanks guys for another good quarter. Like some of the others don't really care what the stock price is today are kind of locket low and it will get there? I just had one quick question on the goodwill on the balance sheet. My -- I think that I heard previously that was from the difference in value of the acquisition of the new store chain versus the valuation of it, how long does that stay on the books?

It stays on the books until it sees impaired results. So it stays for quite a while actually, so long as there is that excess value and it's demonstrated in and we measure it every quarter to see if there is some impairment relative to that value, we do not believe that there is any impairment to that value at this time. I should remind investors that the preliminary price allocation is still just that and that in our fourth quarter, we will be making an adjustment and truing up fair value of the assets and liabilities, assets acquired and liabilities assumed relative to that acquisition and there could be some change to goodwill at that time.

Do you know if it’s positive or negative?

It will positively just be within the assets and liabilities and goodwill, if there was an excess purchase price. Did that answer your question? I mean it will stay on the books unless things the conditions of the company changes which we don't foresee company did very well, it is having record quarters year-over-year, months-over-months mostly companywide and some months even we are even seeing increases in same store sales. So a lot of the noise out there about retail going away I mean we have a very highly profitable company run by an excellent management team with the help of almost 900 employees and 60 -- 59 stores or 58 stores somewhere around there in over 10 states so.

I guess it's one less than there was.

Yes, but I think Rodney has got a plan for that couple of days in Tulsa and all over the news but it -- we may even get -- we're actually getting publicity out of it, so it may even help some.

That's a lot for all of your hard work.

Thank you. Thank you, David.

[Operator Instructions]. And we can take our next question from David Bennett. Please go ahead. Your line is open.

Hi guys. Great quarter. This is David Bennett from Alpha Advisors Alliance in New York and I just have two questions one really revolves around Netflix. Disney actually just took their license away for streaming and for Marquis there is a competitive call who just went out of business? Do you see that as a positives to continue to gain market share?

Can you repeat the question? Please yes, can you just ask again?

Yes, the question is really there is a competitor in the carpet industry called Byloom [ph] that just went out of business. Is there an opportunity to gain market share for Marquis and for Vintage Stock basically just took away the streaming license from Netflix is that also a positive for Vintage.

Short answer is probably I mean if there is a competitor in the carpet space that went out of business and there is probably more market share that we could grab. We have excellent management team and salespeople on the Marquis side. On the Vintage side I just see the news about Netflix and Disney and that's, goes to show that you never know really what happens in this space. We hear every day from people from shareholders from partners about Vintage being an outdated model and running the company, they've been telling him this for the past 10 years. But he's still showing growth and is showing very strong financial and his operations. And we don't believe this to be the case. Physical disks are here just to stay for at least while, you don't know how long but I think it's going to be for many, many years into the future so, I'm sure it's an opportunity for Vintage as well.

Thank you.

Other questions.

No, no more questions. Thank you.

[Operator Instructions]. And it appears we have no further questions at this time. I can turn it back over to our speakers.

I have nothing else to say, Virland. Do you have anything else?

Yes. I guess our next call will be at the 10-K.

At the yes, filing time.

Towards the end of the year.

It's going to New Year. Yes. Okay.

Excellent, all right so we’ll wrap up the call. If there’s no other question. Thank you for attending and look forward to talking with you very soon at the end of the year.

Thank you.

Thank you.

And this does conclude today's call. Thank you for your participation. You may disconnect at any time and have a great day.