Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | BALLANTYNE STRONG, INC. | |
Entity Central Index Key | 0000946454 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,518,756 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 2,869 | $ 6,698 |
Restricted cash | 350 | 350 |
Accounts receivable (net of allowance for doubtful accounts of $1,549 and $1,832, respectively) | 13,638 | 13,841 |
Inventories, net | 3,459 | 3,490 |
Recoverable income taxes | 435 | 281 |
Other current assets | 1,669 | 1,663 |
Total current assets | 22,420 | 26,323 |
Property, plant and equipment (net of accumulated depreciation of $9,290 and $9,046, respectively) | 11,755 | 14,483 |
Operating lease right-of-use assets | 5,831 | |
Finance lease right-of-use assets | 1,236 | 692 |
Investments | 14,381 | 11,167 |
Intangible assets, net | 1,685 | 1,795 |
Goodwill | 899 | 875 |
Notes receivable | 2,658 | 3,965 |
Other assets | 247 | 337 |
Total assets | 61,112 | 59,637 |
Current liabilities: | ||
Accounts payable | 5,089 | 4,724 |
Accrued expenses | 2,986 | 2,782 |
Short-term debt | 3,237 | 3,152 |
Current portion of long-term debt | 970 | 1,094 |
Current portion of operating lease obligations | 982 | |
Current portion of finance lease obligations | 1,052 | 160 |
Deferred revenue and customer deposits | 3,885 | 2,310 |
Total current liabilities | 18,201 | 14,222 |
Long-term debt, net of current portion and debt issuance costs | 3,518 | 10,053 |
Operating lease obligations, net of current portion | 5,111 | |
Finance lease obligations, net of current portion | 3,437 | 427 |
Deferred revenue and customer deposits, net of current portion | 1,160 | 1,167 |
Deferred income taxes | 2,329 | 2,516 |
Other accrued expenses, net of current portion | 84 | 254 |
Total liabilities | 33,840 | 28,639 |
Commitments and contingencies (Note 14) | ||
Stockholders' equity: | ||
Preferred stock, par value $.01 per share; authorized 1,000 shares, none outstanding | ||
Common stock, par value $.01 per share; authorized 25,000 shares; issued 17,313 and 17,237 shares at June 30, 2019 and December 31, 2018, respectively; outstanding 14,519 and 14,443 shares at June 30, 2019 and December 31, 2018, respectively | 169 | 169 |
Additional paid-in capital | 41,938 | 41,474 |
Accumulated other comprehensive loss | (4,785) | (5,378) |
Retained earnings | 8,536 | 13,319 |
Less 2,794 of common shares in treasury, at cost | (18,586) | (18,586) |
Total stockholders' equity | 27,272 | 30,998 |
Total liabilities and stockholders' equity | $ 61,112 | $ 59,637 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 1,549 | $ 1,832 |
Property, plant and equipment, accumulated depreciation | $ 9,290 | $ 9,046 |
Preferred stock par value | $ .01 | $ .01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | ||
Common stock par value | $ .01 | $ .01 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 17,313,000 | 17,237,000 |
Common stock, shares outstanding | 14,519,000 | 14,443,000 |
Common shares in treasury, shares | 2,794,000 | 2,794,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Total net revenues | $ 14,269 | $ 14,178 | $ 28,575 | $ 30,005 |
Total cost of revenues | 11,035 | 12,886 | 22,696 | 25,864 |
Gross profit | 3,234 | 1,292 | 5,879 | 4,141 |
Selling and administrative expenses: | ||||
Selling | 1,222 | 1,274 | 2,450 | 2,500 |
Administrative | 4,297 | 4,208 | 8,226 | 8,917 |
Total selling and administrative expenses | 5,519 | 5,482 | 10,676 | 11,417 |
Loss on disposal of assets | (38) | (1,331) | (102) | (1,331) |
Loss from operations | (2,323) | (5,521) | (4,899) | (8,607) |
Other income (expense): | ||||
Interest expense | (186) | (42) | (305) | (87) |
Fair value adjustment to notes receivable | (797) | 192 | (1,307) | 150 |
Foreign currency transaction (loss) gain | (77) | 3 | (220) | 107 |
Other income (expense), net | 418 | (5) | 453 | (11) |
Total other (expense) income | (642) | 148 | (1,379) | 159 |
Loss before income taxes and equity method investment loss | (2,965) | (5,373) | (6,278) | (8,448) |
Income tax expense | 423 | 642 | 564 | 1,339 |
Equity method investment loss | (30) | (740) | (727) | (751) |
Net loss | $ (3,418) | $ (6,755) | $ (7,569) | $ (10,538) |
Basic loss per share | $ (0.24) | $ (0.47) | $ (0.52) | $ (0.73) |
Diluted loss per share | $ (0.24) | $ (0.47) | $ (0.52) | $ (0.73) |
Weighted-average shares used in computing net loss per share: | ||||
Basic | 14,494 | 14,364 | 14,467 | 14,352 |
Diluted | 14,494 | 14,364 | 14,467 | 14,352 |
Product [Member] | ||||
Total net revenues | $ 6,082 | $ 7,450 | $ 11,648 | $ 16,184 |
Total cost of revenues | 3,747 | 5,492 | 9,781 | 11,469 |
Service [Member] | ||||
Total net revenues | 8,187 | 6,728 | 16,927 | 13,821 |
Total cost of revenues | $ 7,288 | $ 7,394 | $ 12,915 | $ 14,395 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (3,418) | $ (6,755) | $ (7,569) | $ (10,538) |
Adjustment to postretirement benefit obligation | 2 | 9 | ||
Unrealized gain (loss) on available-for-sale securities of equity method investments, net of tax | 332 | (118) | 241 | (170) |
Currency translation adjustment: | ||||
Unrealized net change arising during period | 93 | (363) | 350 | (830) |
Total other comprehensive income (loss) | 425 | (481) | 593 | (991) |
Comprehensive loss | $ (2,993) | $ (7,236) | $ (6,976) | $ (11,529) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Balance at Dec. 31, 2017 | $ 169 | $ 40,565 | $ 25,570 | $ (18,586) | $ (3,596) | $ 44,122 |
Net loss | (3,785) | (3,785) | ||||
Net other comprehensive income (loss) | (510) | (510) | ||||
Cumulative effect of adoption of ASC 606 | 76 | 76 | ||||
Stock-based compensation expense | 255 | 255 | ||||
Balance at Mar. 31, 2018 | 169 | 40,820 | 21,861 | (18,586) | (4,106) | 40,158 |
Balance at Dec. 31, 2017 | 169 | 40,565 | 25,570 | (18,586) | (3,596) | 44,122 |
Net loss | (10,538) | |||||
Balance at Jun. 30, 2018 | 169 | 41,122 | 15,106 | (18,586) | (4,587) | 33,224 |
Balance at Mar. 31, 2018 | 169 | 40,820 | 21,861 | (18,586) | (4,106) | 40,158 |
Net loss | (6,755) | (6,755) | ||||
Net other comprehensive income (loss) | (481) | (481) | ||||
Issuance of warrants to purchase 100 shares of common stock, net of issuance costs | 75 | 75 | ||||
Stock-based compensation expense | 227 | 227 | ||||
Balance at Jun. 30, 2018 | 169 | 41,122 | 15,106 | (18,586) | (4,587) | 33,224 |
Balance at Dec. 31, 2018 | 169 | 41,474 | 13,319 | (18,586) | (5,378) | 30,998 |
Net loss | (4,150) | (4,150) | ||||
Net other comprehensive income (loss) | 168 | 168 | ||||
Cumulative effect of adoption of ASC 842 | 2,785 | 2,785 | ||||
Stock-based compensation expense | 243 | 243 | ||||
Balance at Mar. 31, 2019 | 169 | 41,717 | 11,954 | (18,586) | (5,210) | 30,044 |
Balance at Dec. 31, 2018 | 169 | 41,474 | 13,319 | (18,586) | (5,378) | 30,998 |
Net loss | (7,569) | |||||
Balance at Jun. 30, 2019 | 169 | 41,938 | 8,536 | (18,586) | (4,785) | 27,272 |
Balance at Mar. 31, 2019 | 169 | 41,717 | 11,954 | (18,586) | (5,210) | 30,044 |
Net loss | (3,418) | (3,418) | ||||
Net other comprehensive income (loss) | 425 | 425 | ||||
Stock-based compensation expense | 221 | 221 | ||||
Balance at Jun. 30, 2019 | $ 169 | $ 41,938 | $ 8,536 | $ (18,586) | $ (4,785) | $ 27,272 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) | Jun. 30, 2018shares |
Statement of Stockholders' Equity [Abstract] | |
Number of warrants share purchased | 100,000 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (7,569) | $ (10,538) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
(Recovery of) provision for doubtful accounts | (404) | 143 |
Provision for obsolete inventory | 96 | 535 |
Provision for warranty | 25 | 58 |
Depreciation and amortization | 1,644 | 1,140 |
Amortization and accretion of operating leases | 1,132 | |
Fair value adjustment to notes receivable | 1,307 | (150) |
Equity method investment loss | 727 | 751 |
Recognition of contract acquisition costs | 29 | |
Loss on disposal of assets | 102 | 1,331 |
Gain on Firefly transaction (Note 6) | (220) | |
Deferred income taxes | (198) | 18 |
Impairment of operating lease | 74 | |
Stock-based compensation expense | 464 | 482 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,691 | (297) |
Inventories | (19) | 557 |
Current income taxes | (144) | 22 |
Other assets | 120 | (591) |
Accounts payable and accrued expenses | (316) | 1,115 |
Deferred revenue and customer deposits | (438) | 1,156 |
Operating lease obligations | (1,234) | |
Net cash used in operating activities | (2,234) | (4,165) |
Cash flows from investing activities: | ||
Proceeds from sale of property, plant and equipment | 86 | |
Dividends received from investee in excess of cumulative earnings | 46 | |
Capital expenditures | (1,136) | (887) |
Net cash used in investing activities | (1,050) | (841) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 237 | 3,234 |
Proceeds from sale-leaseback financing | 7,000 | |
Principal payments on short-term debt | (200) | (1,039) |
Principal payments on long-term debt | (491) | (1,974) |
Payment of debt issuance costs | (17) | |
Payments on capital lease obligations | (137) | (96) |
Other | (8) | |
Net cash (used in) provided by financing activities | (591) | 7,100 |
Effect of exchange rate changes on cash and cash equivalents | 46 | (117) |
Net (decrease) increase in cash and cash equivalents and restricted cash | (3,829) | 1,977 |
Cash and cash equivalents and restricted cash at beginning of period | 7,048 | 4,870 |
Cash and cash equivalents and restricted cash at end of period | 3,219 | 6,847 |
Components of cash and cash equivalents and restricted cash: | ||
Cash and cash equivalents | 2,869 | 6,847 |
Restricted cash | 350 | |
Total cash and cash equivalents and restricted cash | 3,219 | 6,847 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Term loan borrowings to finance equipment purchases | 364 | 1,608 |
Capital lease obligations for property and equipment | 710 | |
Investment in Firefly Systems, Inc. (Note 6) | 3,614 | |
Short-term borrowings to finance insurance | $ 114 |
Nature of Operations
Nature of Operations | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 1. Nature of Operations Ballantyne Strong, Inc. (“Ballantyne” or the “Company”), a Delaware corporation, is a holding company with diverse business activities focused on serving the cinema, retail, financial, advertising and government markets. The Company, and its wholly owned subsidiaries Strong Technical Services, Inc., Strong/MDI Screen Systems, Inc. (“Strong/MDI”), Convergent Media Systems Corporation (“Convergent”) and Strong Digital Media, LLC (“SDM”), design, integrate and install technology solutions for a broad range of applications; develop and deliver out-of-home messaging, advertising and communications; manufacture projection screens; and provide managed services including monitoring of networked equipment to our customers. Effective August 8, 2019, the Company’s Board of Directors approved the relocation of Ballantyne’s headquarters from 11422 Miracle Hills Drive, Suite 300, Omaha, Nebraska to 4201 Congress Street, Suite 175, Charlotte, North Carolina, 28209. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and all majority owned and controlled domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements included in this report are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America (also referred to as “GAAP”) for annual reporting purposes or those made in the Company’s Annual Report on Form 10-K. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The condensed consolidated balance sheet as of December 31, 2018 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary to present a fair statement of the financial position and the results of operations and cash flows for the respective interim periods. Certain prior period balances have been reclassified to conform to current period presentation. The results for interim periods are not necessarily indicative of trends or results expected for a full year. Unless otherwise indicated, all references to “dollars” and “$” in this Quarterly Report on Form 10-Q are to, and amounts are presented in, U.S. dollars. Use of Management Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and changes in facts and circumstances may alter such estimates and affect results of operations and financial position in future periods. Restricted Cash Restricted cash represents amounts held in a collateral account for the Company’s corporate travel and purchasing credit card program. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for doubtful accounts based on several factors, including overall customer credit quality, historical write-off experience and a specific analysis that projects the ultimate collectability of the account. As such, these factors may change over time causing the allowance level and bad debt expense to be adjusted accordingly. Investments We apply the equity method of accounting to investments when we have significant influence, but not controlling interest, in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The Company’s proportionate share of the net income (loss) resulting from these investments is reported under the line item captioned “equity method investment income (loss)” in our condensed consolidated statements of operations. The Company’s equity method investments are reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company’s share of the investee’s income or loss is recorded on a one quarter lag for all equity method investments. The Company classifies distributions received from equity method investments using the cumulative earnings approach on the condensed consolidated statements of cash flows. We apply the cost method of accounting to investments when we do not have significant influence or a controlling interest in the investee and the fair value of the investment is not readily determinable. Dividends on cost method investments received are recorded as income. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of the investments during the three and six months ended June 30, 2019 and determined that the Company’s proportionate economic interest in the investments indicate that the investments were not other than temporarily impaired. The carrying value of our equity method and cost method investments is reported in “investments” in the condensed consolidated balance sheets. Note 6 contains additional information on our equity method and cost method investments. Fair Value of Financial Instruments Assets and liabilities measured at fair value are categorized into a fair value hierarchy based upon the observability of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: ● Level 1 – inputs to the valuation techniques are quoted prices in active markets for identical assets or liabilities ● Level 2 – inputs to the valuation techniques are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly ● Level 3 – inputs to the valuation techniques are unobservable for the assets or liabilities The following tables present the Company’s financial assets measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements are classified, as of June 30, 2019 and December 31, 2018. Fair values measured on a recurring basis at June 30, 2019 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2,869 $ - $ - $ 2,869 Restricted cash 350 - - 350 Notes receivable - - 2,658 2,658 Total $ 3,219 $ - $ 2,658 $ 5,877 Fair values measured on a recurring basis at December 31, 2018 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 6,698 $ - $ - $ 6,698 Restricted cash 350 - 350 Notes receivable - - 3,965 3,965 Total $ 7,048 $ - $ 3,965 $ 11,013 The following table reconciles the beginning and ending balance of the Company’s notes receivable at fair value (in thousands): Six Months Ended June 30, 2019 2018 Notes receivable balance, beginning of period $ 3,965 $ 2,815 Fair value adjustment (1,307 ) 150 Notes receivable balance, end of period $ 2,658 $ 2,965 Quantitative information about the Company’s level 3 fair value measurements at June 30, 2019 is set forth below (in thousands): Fair value at June 30, 2019 Valuation technique Unobservable input Value Notes receivable $ 2,658 Discounted cash flow Default percentage 59 % Discount rate 18 % During 2011, the Company entered into certain unsecured notes receivable arrangements with CDF2 Holdings, LLC pertaining to the sale and installation of digital projection equipment. The notes receivable accrue interest at a rate of 15% per annum. Interest not paid in any particular year is added to the principal and also accrues interest at 15%. The notes receivable are recorded at estimated fair value. In order to estimate the fair value, the Company reviews the financial position and estimated cash flows of the debtor of the notes receivable on a quarterly basis. The Company recorded a decrease to the fair value of the notes receivable of $1.3 million during the six months ended June 30, 2019 and an increase to the fair value of the notes receivable of $0.2 million during the six months ended June 30, 2018. The adjustments to the fair value of the notes receivable are included in other expense (income) on the Company’s condensed consolidated statements of operations. The significant unobservable inputs used in the fair value measurement of the Company’s notes receivable are discount rate and percentage of default. Significant increases (decreases) in any of these inputs in isolation would result in a significantly lower (higher) fair value measurement. The Company’s short-term and long-term debt is recorded at historical cost. As of June 30, 2019, the Company’s long-term debt, including current maturities, had a carrying value of $4.5 million. Based on discounted cash flows using current quoted interest rates (Level 2 of the fair value hierarchy), the estimated fair value at June 30, 2019 was $4.0 million. The carrying values of all other financial assets and liabilities, including accounts receivable, accounts payable, accrued expenses and short-term debt, reported in the condensed consolidated balance sheets equal or approximate their fair values due to the short-term nature of these instruments. Note 6 includes fair value information related to our equity and cost method investments. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which include non-financial long-lived assets, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). The Company did not have any significant non-recurring measurements of non-financial assets or liabilities during the three and six months ended June 30, 2019 or 2018. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases (Topic 842),” which was further clarified by ASU 2018-11, “Leases – Targeted Improvements,” issued in July 2018. ASU 2016-02 requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months, on its balance sheet. This ASU is effective in fiscal years beginning after December 15, 2018 and initially required a modified retrospective transition method under which entities would initially apply Topic 842 at the beginning of the earliest period presented in the financial statements. ASU 2018-11 added an additional optional transition method allowing entities to apply Topic 842 as of the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted Topic 842 using the optional transition method from ASU 2018-11 as of January 1, 2019. Upon adoption, the Company recorded a balance sheet gross-up of approximately $4.7 million to record operating lease liabilities and related right-of-use assets. In addition, the sale-leaseback of the Company’s Alpharetta, Georgia office facility in June 2018, which did not qualify for sale-leaseback accounting under the previous lease accounting standard, qualified for sale-leaseback accounting under Topic 842, as Topic 842 eliminated the concept of continuing involvement by the seller-lessee precluding sale-leaseback accounting. Upon adoption, the Company recorded a cumulative effect adjustment increasing retained earnings by approximately $2.8 million, which represents the gain on the sale of the facility. The Company also derecognized approximately $4.0 million of net land and building assets and approximately $6.8 million of debt associated with the previous accounting as a failed sale-leaseback and recorded approximately $5.0 million of operating lease right-of-use assets and liabilities for the leaseback under Topic 842. See Note 11 for more information about the Company’s leases. In August 2018, the Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The final rule is effective for all filings made on and after November 5, 2018. Given the effective date and proximity to most filers’ quarterly reports, the SEC did not object to filers deferring the presentation of changes in stockholders’ equity in their quarterly reports on Forms 10-Q until the quarter beginning after November 5, 2018. The Company elected to provide the required disclosure in a separate statement of stockholders’ equity beginning with Form 10-Q for the quarter ended March 31, 2019. In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new guidance eliminates Step 2 of the goodwill impairment testing which requires the fair value of individual assets and liabilities of a reporting unit to be determined when measuring goodwill impairment. The new guidance may result in different amounts of impairment that could be recognized compared to existing guidance. In addition, failing step 1 of the impairment test may not result in impairment under existing guidance. However, under the revised guidance, failing step 1 will always result in a goodwill impairment. ASU 2017-04 is to be applied prospectively for goodwill impairment testing performed in years beginning after December 15, 2019 with early adoption permitted. The Company adopted ASU 2017-04 in the first quarter of 2019. Adoption of ASU 2017-04 did not significantly impact the Company’s results of operations or financial position. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. In July 2019, the FASB announced its intention to propose an extended effective date of January 1, 2023 for adoption of the ASU by smaller reporting companies. The Company may qualify for this extension, and management will evaluate its compliance timetable in the event that the FASB finalizes its extension. The Company believes the adoption of this ASU will not significantly impact the Company’s results of operations and financial position. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 3. Revenue The Company accounts for revenue using the following steps: ● Identify the contract, or contracts, with a customer ● Identify the performance obligations in the contract ● Determine the transaction price ● Allocate the transaction price to the identified performance obligations ● Recognize revenue when, or as, the Company satisfies the performance obligations The Company combines contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract, or the services are considered a single performance obligation. If an arrangement involves multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost plus margin approach. The Company estimates the amount of total contract consideration it expects to receive for variable arrangements by determining the most likely amount it expects to earn from the arrangement based on the expected quantities of services it expects to provide and the contractual pricing based on those quantities. The Company only includes some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company considers the sensitivity of the estimate, its relationship and experience with the client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company does not have any material extended payment terms as payment is due at or shortly after the time of the sale. Observable prices are used to determine the standalone selling price of separate performance obligations, or a cost plus margin approach is used when observable prices are not available. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue. The Company recognizes contract assets or unbilled receivables related to revenue recognized for services completed but not yet invoiced to the clients. Unbilled receivables are recorded as accounts receivable when the Company has an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when the Company invoices clients in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when the Company has satisfied the related performance obligation. Deferred contract acquisition costs are included in other assets. The Company defers costs to acquire contracts, including commissions, incentives and payroll taxes, if they are incremental and recoverable costs of obtaining a customer contract with a term exceeding one year. Deferred contract costs are reported within other assets and amortized to selling expense over the contract term, which generally ranges from one to five years. The Company has elected to recognize the incremental costs of obtaining a contract with a term of less than one year as a selling expense when incurred. The Company did not have any deferred contract costs as of June 30, 2019 or December 31, 2018. The following tables disaggregate the Company’s revenue by major source for the three and six months ended June 30, 2019 (in thousands): Three Months Ended June 30, 2019 Strong Cinema Convergent Strong Outdoor Other Total Screen system sales $ 3,110 $ - $ - $ - $ 3,110 Digital equipment sales 1,631 866 - - 2,497 Extended warranty sales 151 - - - 151 Other product sales 324 - - - 324 Total product sales 5,216 866 - - 6,082 Field maintenance and monitoring services 2,122 2,786 175 - 5,083 Installation services 397 1,464 - - 1,861 Advertising - - 914 - 914 Other service revenues 144 19 46 120 329 Total service revenues 2,663 4,269 1,135 120 8,187 Total $ 7,879 $ 5,135 $ 1,135 $ 120 $ 14,269 Six Months Ended June 30, 2019 Strong Cinema Convergent Strong Outdoor Other Total Screen system sales $ 5,931 $ - $ - $ - $ 5,931 Digital equipment sales 3,115 1,491 - - 4,606 Extended warranty sales 385 - - - 385 Other product sales 720 6 - - 726 Total product sales 10,151 1,497 - - 11,648 Field maintenance and monitoring services 4,088 5,559 228 - 9,875 Installation services 1,067 3,582 - - 4,649 Advertising - - 1,955 - 1,955 Other service revenues 173 32 46 197 448 Total service revenues 5,328 9,173 2,229 197 16,927 Total $ 15,479 $ 10,670 $ 2,229 $ 197 $ 28,575 The following tables disaggregate the Company’s revenue by major source for the three and six months ended June 30, 2018 (in thousands): Three Months Ended June 30, 2018 Strong Cinema Convergent Strong Outdoor Other Total Screen system sales $ 4,246 $ - $ - $ - $ 4,246 Digital equipment sales 1,914 539 - - 2,453 Extended warranty sales 249 - - - 249 Other product sales 502 - - - 502 Total product sales 6,911 539 - - 7,450 Field maintenance and monitoring services 3,026 2,188 - - 5,214 Installation services 379 628 - - 1,007 Advertising - - 460 - 460 Other service revenues 37 - (54 ) 64 47 Total service revenues 3,442 2,816 406 64 6,728 Total $ 10,353 $ 3,355 $ 406 $ 64 $ 14,178 Six Months Ended June 30, 2018 Strong Cinema Convergent Strong Outdoor Other Total Screen system sales $ 8,264 $ - $ - $ - $ 8,264 Digital equipment sales 5,072 1,155 - - 6,227 Extended warranty sales 591 - - - 591 Other product sales 1,102 - - - 1,102 Total product sales 15,029 1,155 - - 16,184 Field maintenance and monitoring services 5,832 4,603 - - 10,435 Installation services 708 1,988 - - 2,696 Advertising - - 468 - 468 Other service revenues 95 - - 127 222 Total service revenues 6,635 6,591 468 127 13,821 Total $ 21,664 $ 7,746 $ 468 $ 127 $ 30,005 Screen system sales The Company recognizes revenue on the sale of its screen systems when control of the screen is transferred to the customer, usually at time of shipment. However, revenue is recognized upon delivery for certain international shipments with longer shipping transit time because control does not transfer to the customer until delivery. The cost of freight and shipping to the customer is recognized in cost of sales at the time of transfer of control to the customer. Digital equipment sales The Company recognizes revenue on sales of digital equipment when the control of the equipment is transferred, which occurs at the time of shipment from the Company’s warehouse or drop-shipment from a third party. The cost of freight and shipping to the customer is recognized in cost of sales at the time of transfer of control to the customer. Field maintenance and monitoring services The Company sells service contracts that provide maintenance and monitoring services to Strong Cinema and Convergent customers. In the Strong Cinema segment, these contracts are generally 12 months in length, while the term for service contracts in the Convergent segment can be for multiple years. Revenue related to service contracts is recognized over the term of the agreement in proportion to the costs incurred in fulfilling performance obligations under the contract. In addition to selling service contracts, the Company also performs discrete time and materials-based maintenance and repair work for customers in the Strong Cinema and Convergent segments. Revenue related to time and materials-based maintenance and repair work is recognized at the point in time when the performance obligation has been fully satisfied. Installation services The Company performs installation services for both its Strong Cinema and Convergent customers and recognizes revenue upon completion of the installations. Extended warranty sales The Company sells extended warranties to its Strong Cinema customers. When the Company is the primary obligor, revenue is recognized on a gross basis over the term of the extended warranty in proportion to the costs incurred in fulfilling performance obligations under the extended warranty. In third party extended warranty sales, the Company is not the primary obligor, and revenue is recognized on a net basis at the time of the sale. Advertising Strong Outdoor sells advertising space on top of taxicabs. Advertising revenue is recognized ratably over the contracted advertising periods. Timing of Revenue Recognition The following tables disaggregate the Company’s revenue by the timing of transfer of goods or services to the customer for the three and six months ended June 30, 2019 (in thousands): Three Months Ended June 30, 2019 Strong Cinema Convergent Strong Outdoor Other Total Point in time $ 6,340 $ 2,408 $ 221 $ 69 $ 9,038 Over time 1,539 2,727 914 51 5,231 Total $ 7,879 $ 5,135 $ 1,135 $ 120 $ 14,269 Six Months Ended June 30, 2019 Strong Cinema Convergent Strong Outdoor Other Total Point in time $ 12,384 $ 5,400 $ 274 $ 115 $ 18,173 Over time 3,095 5,270 1,955 82 10,402 Total $ 15,479 $ 10,670 $ 2,229 $ 197 $ 28,575 The following tables disaggregate the Company’s revenue by the timing of transfer of goods or services to the customer for the three and six months ended June 30, 2018 (in thousands): Three Months Ended June 30, 2018 Strong Cinema Convergent Strong Outdoor Other Total Point in time $ 8,614 $ 1,583 $ - $ - $ 10,197 Over time 1,740 1,771 406 64 3,981 Total $ 10,354 $ 3,354 $ 406 $ 64 $ 14,178 Six Months Ended June 30, 2018 Strong Cinema Convergent Strong Outdoor Other Total Point in time $ 18,073 $ 3,834 $ - $ - $ 21,907 Over time 3,591 3,912 468 127 8,098 Total $ 21,664 $ 7,746 $ 468 $ 127 $ 30,005 At June 30, 2019, the unearned revenue amount associated with maintenance and monitoring services, extended warranty sales and advertising services in which the Company is the primary obligor was $2.7 million. The Company expects to recognize $1.4 million of unearned revenue amounts throughout the rest of 2019, $1.3 million during 2020 and immaterial amounts during 2021-2023. |
Loss Per Common Share
Loss Per Common Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Loss Per Common Share | 4. Loss Per Common Share Basic loss per share has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted loss per share would be computed on the basis of the weighted average number of shares of common stock outstanding after giving effect to potential common shares from dilutive stock options and certain non-vested shares of restricted stock and restricted stock units. However, because the Company reported losses in all periods presented, there were no differences between average shares used to compute basic and diluted loss per share for the three and six months ended June 30, 2019 and 2018. The following table summarizes the weighted average shares used to compute basic and diluted loss per share: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Weighted average shares outstanding: Basic weighted average shares outstanding 14,494 14,364 14,467 14,352 Dilutive effect of stock options and certain non-vested restricted stock awards - - - - Diluted weighted average shares outstanding 14,494 14,364 14,467 14,352 For the three and six months ended June 30, 2019, options to purchase 762,000 shares of common stock were outstanding but were not included in the computation of diluted loss per share as the option’s exercise price was greater than the average market price of the common shares for each period. An additional 104,879 and 70,236 common stock equivalents related to options and restricted stock awards were excluded for the three and six months ended June 30, 2019, respectively, as their inclusion would be anti-dilutive, thereby decreasing the net losses per share. For the three and six months ended June 30, 2018, options to purchase 410,000 shares of common stock were outstanding but were not included in the computation of diluted loss per share as the option’s exercise price was greater than the average market price of the common shares for each period. An additional 134,402 and 120,352 common stock equivalents related to options and restricted stock awards were excluded for the three and six months ended June 30, 2018, respectively, as their inclusion would be anti-dilutive, thereby decreasing the net losses per share. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. Inventories Inventories consist of the following (in thousands): June 30, 2019 December 31, 2018 Raw materials and components $ 1,622 $ 1,422 Work in process 222 - Finished goods 1,615 2,068 $ 3,459 $ 3,490 The inventory balances are net of reserves of approximately $1.4 million as of both June 30, 2019 and December 31, 2018, respectively. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | 6. Investments The following summarizes our investments (dollars in thousands): June 30, 2019 December 31, 2018 Carrying Amount Economic Interest Carrying Amount Economic Interest Equity Method Investments 1347 Property Insurance Holdings, Inc. $ 8,139 17.3 % $ 7,738 17.3 % Itasca Capital, Ltd. 2,628 32.3 % 3,429 32.3 % Total Equity Method Investments 10,767 11,167 Cost Method Investment Firefly Systems, Inc. 3,614 - Total Investments $ 14,381 $ 11,167 Equity Method Investments The following summarizes the income (loss) of equity method investees reflected in the condensed consolidated statements of operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Entity 1347 Property Insurance Holdings, Inc. $ 17 $ 339 $ 161 $ 579 Itasca Capital, Ltd. (47 ) (1,042 ) (888 ) (939 ) BK Technologies Corporation - (37 ) - (391 ) Total $ (30 ) $ (740 ) $ (727 ) $ (751 ) 1347 Property Insurance Holdings, Inc. (“PIH”) is a publicly traded company that provides property and casualty insurance in the States of Louisiana, Texas and Florida. The Company’s Chief Executive Officer is chairman of the board of directors of PIH, and controls entities that, when combined with the Company’s ownership in PIH, own greater than 20% of PIH, providing the Company with significant influence over PIH, but not controlling interest. The Company did not receive dividends from PIH during the three and six months ended June 30, 2019 or 2018. On February 25, 2019, PIH announced a definitive agreement pursuant to which FedNat Holding Company will acquire substantially all of PIH’s homeowners’ insurance operations. PIH intends to maintain its Nasdaq listing and utilize the proceeds from the transaction to launch a new growth strategy focused on reinsurance, investment management and new investment opportunities. PIH intends to provide additional details on the rollout of this strategy prior to the closing of the transaction. On June 10, 2019, PIH held a special meeting of stockholders at which PIH’s stockholders approved the transaction. In addition, regulatory approvals have been obtained, subject to compliance with the consent orders issued by the insurance regulators, and the transaction is currently expected to close in December 2019. Based on quoted market prices, the market value of the Company’s ownership in PIH was $5.1 million at June 30, 2019. Itasca Capital, Ltd. (“Itasca”) is a publicly traded Canadian company that is an investment vehicle seeking transformative strategic investments. The Company’s Chief Executive Officer is chairman of the board of directors of Itasca. This board seat, combined with the Company’s 32.3% ownership of Itasca, provide the Company with significant influence over Itasca, but not controlling interest. The Company did not receive dividends from Itasca during the three and six months ended June 30, 2019 or 2018. Based on quoted market prices, the market value of the Company’s ownership in Itasca was $2.4 million at June 30, 2019. BK Technologies Corporation (“BKTI”) is a publicly traded holding company that, through its wholly-owned operating subsidiary BK Technologies, Inc., designs, manufactures and markets two-way land mobile radios, repeaters, base stations and related components and subsystems. BK Technologies Corporation became the parent company of BK Technologies, Inc. following the completion of a holding company reorganization on March 28, 2019. On September 9, 2018, the Company entered into an agreement with Fundamental Global Investors, LLC (“FGI”), a related party, where the Company sold its shares of common stock of BKTI to FGI. Due to the Company’s significant influence, but not controlling interest, in BKTI, the Company’s investment in BKTI was accounted for using the equity method. Prior to the sale of the BKTI common stock, the Company received dividends of $23 thousand and $46 thousand during the three and six months ended June 30, 2018, respectively. As of June 30, 2019, the Company’s retained earnings included accumulated deficit from its equity method investees of $0.5 million. The summarized financial information presented below reflects the financial information of the Company’s equity method investees for the six months ended March 31, 2019 and 2018, consistent with the Company’s recognition of the results of its equity method investments on a one-quarter lag. For the six months ended March 31, 2019 2018 Revenue $ 33,373 $ 45,862 Operating income $ 391 $ 987 Net loss $ (1,835 ) $ (2,268 ) Cost Method Investment On May 21, 2019, SDM entered into a Taxicab Advertising Collaboration Agreement (the “Commercial Agreement”) and a Unit Purchase Agreement (the “Unit Purchase Agreement”) with Firefly Systems, Inc. (“Firefly”), pursuant to which SDM has agreed to make available to Firefly 300 digital taxi tops and the parties have agreed to coordinate the fulfilling of SDM’s agreements with the Metropolitan Taxicab Board of Trade, Inc. (“MTBOT”) and Creative Mobile Media, LLC (“CMM”), each dated February 8, 2018. Firefly has agreed to fulfill the digital taxi top advertising obligations under the MTBOT agreement and CMM agreement, and SDM has agreed to fulfill the non-digital taxi top advertising obligations under the MTBOT agreement and CMM agreement. The Company is a party to the Unit Purchase Agreement and has agreed to guarantee the payment obligations of SDM under the Commercial Agreement. As consideration for entering into these agreements, the Company received $4.8 million of Firefly’s Series A-2 preferred shares (“Firefly Shares”). The Firefly Shares, including those subsequently issued pursuant to an earn-out provision (if any), will be subject to a repurchase option for a period of three years to cover SDM’s indemnity obligations and other post-closing covenants under the Commercial Agreement and the Unit Purchase Agreement. As a condition of the transaction, SDM has agreed to hold the Firefly Shares in an investment fund managed by Fundamental Global Investors, LLC, the controlling stockholder of the Company, that is wholly owned by SDM. The 300 digital tops the Company has made available to Firefly are subject to a master equipment lease agreement the Company entered into during 2017. Pursuant to the master lease agreement and the Unit Purchase Agreement, the Company will remain the primary obligor until such time the lease expires. In addition, of the $4.8 million of Firefly Shares received, $1.2 million are eligible for repurchase by Firefly if the Company does not exercise the purchase option contained within the master lease agreement. Accordingly, the Company has deferred recognizing an investment related to these Firefly Shares eligible for repurchase until such time it is reasonably certain the Company will exercise the purchase option. The transaction, in effect, transferred control of the underlying asset to Firefly. Therefore, the Company accounted for the transaction as a sales-type lease resulting in the derecognition of the $3.4 million right-of-use asset related to the master lease agreement and a selling profit of $0.2 million, which is recorded within other income (expense) on the condensed consolidated statement of operations. As additional consideration for the right to use the digital taxi tops, Firefly has agreed to pay for certain of Company’s operating expenses associated with the non-digital taxi tops. The Company concluded the payments that Firefly will make on its behalf are considered variable payments and were not included in the calculation of the gain. Therefore, the Company will record the benefit and the related operating expenses in the period when the changes in facts and circumstances on which the variable lease payments are based occur. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 7. Intangible Assets Intangible assets consisted of the following at June 30, 2019 (dollars in thousands): Useful life Gross Accumulated Amortization Net (Years) Intangible assets not yet subject to amortization: Software in development $ 186 $ - $ 186 Intangible assets subject to amortization: Software in service 5 2,269 (834 ) 1,435 Product formulation 10 460 (396 ) $ 64 Total $ 2,915 $ (1,230 ) $ 1,685 Intangible assets consisted of the following at December 31, 2018 (dollars in thousands): Useful life Gross Accumulated Amortization Net (Years) Intangible assets not yet subject to amortization: Software in development $ 119 $ - $ 119 Intangible assets subject to amortization: Software in service 5 2,188 (595 ) 1,593 Product formulation 10 447 (364 ) 83 Total $ 2,754 $ (959 ) $ 1,795 Amortization expense relating to intangible assets was $0.2 million for each of the three months ended June 30, 2019 and 2018 and $0.4 million during each of the six months ended June 30, 2019 and 2018. During the three and six months ended June 30, 2018, the Company also recorded an impairment charge of $1.3 million related to abandoned software in service in the Convergent segment as a loss on disposal of assets in the condensed consolidated statement of operations. The following table shows the Company’s estimated future amortization expense related to intangible assets currently subject to amortization for the next five years (in thousands): Remainder 2019 $ 250 2020 502 2021 463 2022 227 2023 57 Thereafter - Total $ 1,499 |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 8. Goodwill The following represents a summary of changes in the Company’s carrying amount of goodwill for the six months ended June 30, 2019 (in thousands): Balance as of December 31, 2018 $ 875 Foreign currency translation 24 Balance as of June 30, 2019 $ 899 |
Warranty Reserves
Warranty Reserves | 6 Months Ended |
Jun. 30, 2019 | |
Extended Product Warranty Disclosure [Abstract] | |
Warranty Reserves | 9. Warranty Reserves In most instances, the Company’s digital projection products are covered by the manufacturing firm’s original warranty; however, for certain customers the Company may grant warranties in excess of the manufacturer’s warranty. In addition, the Company provides warranty coverage on screens it manufactures. The Company accrues for these costs at the time of sale. The following table summarizes warranty activity for the three and six months ended June 30, 2019 and 2018 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Warranty accrual at beginning of period $ 390 $ 564 $ 350 $ 521 Charged to expense (31 ) (19 ) 25 65 Claims paid, net of recoveries (32 ) (87 ) (54 ) (117 ) Foreign currency adjustment 1 (9 ) 7 (20 ) Warranty accrual at end of period $ 328 $ 449 $ 328 $ 449 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | 10. Debt The Company’s debt consists of the following (in thousands): June 30, 2019 December 31, 2018 Short-term debt: Strong/MDI installment loan $ 3,124 $ 3,152 Insurance note payable 113 - Current portion of long-term debt 970 1,094 Total short-term debt 4,207 4,246 Long-term debt: Sale-leaseback financing - 6,769 Equipment term loans 4,505 4,398 Total principal balance of long-term debt 4,505 11,167 Less: current portion (970 ) (1,094 ) Less: unamortized debt issuance costs (17 ) (20 ) Total long-term debt 3,518 10,053 Total short-term and long-term debt $ 7,725 $ 14,299 Equipment Term Loans On May 22, 2018, the Company’s subsidiary, Convergent, entered into an installment payment agreement with an equipment financing company in order to purchase media players and related equipment in an aggregate amount of up to approximately $4.4 million. Installment payments under each contract for purchase of the equipment are due monthly for a period of 60 months. The financing provided in the agreement is secured by the equipment, and the obligations under the agreement are recorded as long-term debt on the Company’s condensed consolidated balance sheet. In December 2018, Convergent entered into additional installment payment agreements with other financing companies in order to purchase additional media players and related equipment. This round of financing totaled approximately $0.6 million. In June 2019, Convergent entered into additional installment payment agreements with other financing companies in order to purchase additional media players and related equipment. This round of financing totaled approximately $0.2 million. Installment payments under each contract are due monthly for a period of 60 months. The financing under the agreements is secured by the equipment. The borrowings under the agreements are recorded as long-term debt on the Company’s consolidated balance sheet. Collectively, the Company had $4.5 million of outstanding borrowings under equipment term loan agreements at June 30, 2019, which bear interest at a weighted-average fixed rate of 7.6%. Strong/MDI Installment Loan On September 5, 2017, the Company’s Canadian subsidiary, Strong/MDI, entered into a demand credit agreement with a bank consisting of a revolving line of credit for up to CDN$3.5 million subject to a borrowing base requirement, a 20-year installment loan for up to CDN$6.0 million and a 5-year installment loan for up to CDN$500,000. Amounts outstanding under the line of credit are payable on demand and bear interest at the prime rate established by the lender. Amounts outstanding under the installment loans bear interest at the lender’s prime rate plus 0.5% and are payable in monthly installments, including interest, over their respective borrowing periods. The lender may also demand repayment of the installment loans at any time. The Strong/MDI credit facilities are secured by a lien on Strong/MDI’s Quebec, Canada facility and substantially all of Strong/MDI’s assets. The credit agreement requires Strong/MDI to maintain a ratio of liabilities to “effective equity” (tangible stockholders’ equity, less amounts receivable from affiliates and equity method investments) not exceeding 2 to 1, a current ratio (excluding amounts due from related parties) of at least 1.5 to 1 and minimum “effective equity” of CDN$8.0 million. On April 24, 2018, the Company borrowed CDN$3.5 million on the 20-year installment loan. There was CDN$4.2 million of principal outstanding on the 20-year installment loan as of June 30, 2019, which bears variable interest at 4.45%. Strong/MDI was in compliance with its debt covenants as of June 30, 2019. Sale-leaseback Financing On June 29, 2018 the Company and Convergent completed a sale-leaseback of Convergent’s Alpharetta, Georgia office facility. The transaction did not qualify for sale-leaseback accounting under the previous lease accounting standard and was accounted for as a financing liability. Upon adoption of ASC 842 during the first quarter of 2019, the Company derecognized approximately $6.8 million of debt associated with the previous accounting as a failed sale-leaseback. See Note 2 for additional details. Scheduled repayments are as follows for the Company’s long-term debt outstanding as of June 30, 2019 (in thousands): Remainder of 2019 $ 474 2020 1,002 2021 1,079 2022 1,146 2023 785 Thereafter 19 Total $ 4,505 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | 11. Leases The Company and its subsidiaries lease plant and office facilities and equipment under operating and finance leases expiring through 2028. The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Right-of-use assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. Certain of the leases contain extension options; however, the Company has not included such options as part of its right-of-use assets and lease liabilities because it does not expect to extend the leases. The Company measures and records a right-of-use asset and lease liability based on the discount rate implicit in the lease, if known. In cases where the discount rate implicit in the lease is not known, the Company measures the right-of-use assets and lease liabilities using a discount rate equal to the Company’s estimated incremental borrowing rate for loans with similar collateral and duration. The Company elected to not apply the recognition requirements of Topic 842 to leases of all classes of underlying assets that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Instead, lease payments for such short-term leases are recognized in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. The Company elected, as a lessee, for all classes of underlying assets, to not separate nonlease components from lease components and instead to account for each separate lease component and the nonlease components associated with that lease component as a single lease component. The following tables present the Company’s lease costs and other lease information (dollars in thousands): Lease cost Three Months Ended Six Months Ended Finance lease cost: Amortization of right-of-use assets $ 88 $ 137 Interest on lease liabilities 23 42 Operating lease cost 746 1,432 Short-term lease cost 3 9 Sublease income (106 ) (192 ) Net lease cost $ 754 $ 1,428 Other information Three Months Ended Six Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 23 $ 42 Operating cash flows from operating leases $ 644 $ 1,234 Financing cash flows from finance leases $ 88 $ 137 Right-of-use assets obtained in exchange for new finance lease liabilities $ 478 $ 710 Right-of-use assets obtained in exchange for new operating lease liabilities $ - $ 644 Derecognition of right-of-use asset in connection with Firefly transaction $ 3,394 $ - As of June 30, 2019 Weighted-average remaining lease term - finance leases (years) 4.6 Weighted-average remaining lease term - operating leases (years) 6.1 Weighted-average discount rate - finance leases 12.9 % Weighted-average discount rate - operating leases 7.8 % The following table presents a maturity analysis of the Company’s finance and operating lease liabilities as of June 30, 2019 (in thousands): Operating Leases Finance Leases Remainder 2019 $ 655 $ 791 2020 1,159 1,555 2021 1,061 1,555 2022 721 1,395 2023 656 314 Thereafter 3,117 66 Total lease payments 7,369 5,676 Less: Amount representing interest (1,276 ) (1,187 ) Present value of lease payments 6,093 4,489 Less: Current maturities (982 ) (1,052 ) Lease obligations, net of current portion $ 5,111 $ 3,437 The Company subleases certain office and warehouse space and equipment to third parties. Sublease income is included in net service revenues in the condensed consolidated statements of operations. The following table presents a maturity analysis of the Company’s long-term subleases (in thousands): Remainder 2019 $ 109 2020 163 2021 137 2022 23 2023 - Thereafter - Total sublease payments $ 432 The Company leases certain equipment to customers as a component of its Digital Signage as a Service (“DSaaS”) offering. Under DSaaS, the Company provides support, maintenance and content management services in addition to the use of a media player to the customer. The Company elected, as a lessor, for all classes of underlying assets, to not separate nonlease components from lease components and, instead, to account for each separate lease component and the nonlease components associated with that lease component as a single component if the nonlease components otherwise would be accounted for under Accounting Standards Codification Topic 606 on revenue from contracts with customers, and both of the following conditions are met: 1) the timing and pattern of transfer for the lease component and nonlease components associated with that lease component are the same and 2) the lease component, if accounted for separately, would be classified as an operating lease in accordance with Topic 842. The combined component is accounted for as a single performance obligation under Topic 606 if the nonlease component or components are the predominant component(s) of the combined component. Otherwise, if the lease component is the predominant component, the combined component is accounted for as an operating lease under ASC 842. In the case of the Company’s DSaaS contracts, the nonlease components are predominant; therefore, revenue from DSaaS contracts is accounted for under Topic 606 and is included in net service revenues in the condensed consolidated statements of operations. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. The Company considers the scheduled reversal of taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. A cumulative loss in a particular tax jurisdiction in recent years is a significant piece of evidence with respect to the realizability that is difficult to overcome. Based on the available objective evidence, including recent updates to the taxing jurisdictions generating income, the Company concluded that a valuation allowance should be recorded against all of the Company’s U.S. tax jurisdiction deferred tax assets as of June 30, 2019 and December 31, 2018. The Company is subject to possible examinations not yet initiated for Federal purposes for fiscal years 2015 through 2018. In most cases, the Company is subject to possible examinations by state or local jurisdictions based on the particular jurisdiction’s statute of limitations. |
Stock Compensation
Stock Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Compensation | 13. Stock Compensation The Company recognizes compensation expense for all stock-based payment awards made to employees and directors based on estimated grant date fair values. Stock-based compensation expense included in selling and administrative expenses approximated $0.2 million for each of the three months ended June 30, 2019 and 2018, and $0.5 million during each of the six months ended June 30, 2019 and 2018. The Company’s 2017 Omnibus Equity Compensation Plan (“2017 Plan”) was approved by the Company’s stockholders and provides the Compensation Committee of the Board of Directors with the discretion to grant stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares, performance units and other stock-based awards and cash-based awards. Vesting terms vary with each grant and may be subject to vesting upon a “change in control” of the Company. The total number of shares authorized for issuance under the 2017 Plan is 1,371,189 shares, with 499,156 shares remaining available for grant at June 30, 2019. Stock Options The Company granted a total of 285,000 and 387,500 stock options during the six months ended June 30, 2019 and 2018, respectively. Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant. The weighted average grant date fair value of stock options granted during the six months ended June 30, 2019 and 2018 was $2.90 and $1.82, respectively. The fair value of each stock option granted was estimated on the date of grant using a Black-Scholes valuation model with the following weighted average assumptions: 2019 2018 Expected dividend yield at date of grant 0.00 % 0.00 % Risk-free interest rate 1.95% - 1.98 % 2.49 % Expected stock price volatility 47.9 % 35.6 % Expected life of options (in years) 6.0 6.0 The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatility is based on historical daily price changes of the Company’s stock for six years prior to the date of grant. The expected life of options is the average number of years the Company estimates that stock options will be outstanding. The following table summarizes stock option activity for the six months ended June 30, 2019: Number of Weighted Weighted Aggregate Outstanding at December 31, 2018 867,000 $ 5.06 8.3 $ - Granted 285,000 2.90 Exercised - - Forfeited (41,500 ) 5.29 Expired (13,500 ) 5.38 Outstanding at June 30, 2019 1,097,000 $ 4.49 8.4 $ 144 Exercisable at June 30, 2019 288,000 $ 5.15 7.2 $ - The aggregate intrinsic value in the table above represents the total that would have been received by the option holders if all in-the-money options had been exercised and sold on the date indicated. As of June 30, 2019, 809,000 stock option awards were non-vested. Unrecognized compensation cost related to stock option awards was approximately $1.2 million, which is expected to be recognized over a weighted average period of 3.6 years. Restricted Stock Shares and Restricted Stock Units The Company granted a total of 320,000 and 147,500 restricted stock units during the six months ended June 30, 2019 and 2018, respectively. The Company estimates the fair value of restricted stock awards based upon the market price of the underlying common stock on the date of grant. The following table summarizes restricted stock share activity for the six months ended June 30, 2019: Number of Weighted Average Non-vested at December 31, 2018 46,667 $ 6.50 Granted - - Shares vested (23,333 ) 6.50 Shares forfeited - - Non-vested at June 30, 2019 23,334 $ 6.50 The following table summarizes restricted stock unit activity for the six months ended June 30, 2019: Number of Weighted Average Non-vested at December 31, 2018 277,498 $ 3.33 Granted 320,000 2.90 Shares vested (75,833 ) 3.87 Shares forfeited - - Non-vested at June 30, 2019 521,665 $ 3.12 As of June 30, 2019, the total unrecognized compensation cost related to non-vested restricted stock awards was approximately $1.4 million, which is expected to be recognized over a weighted average period of 2.4 years. |
Commitments, Contingencies and
Commitments, Contingencies and Concentrations | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Concentrations | 14. Commitments, Contingencies and Concentrations Litigation The Company is involved, from time to time, in certain legal disputes in the ordinary course of business operations. No such disputes, individually or in the aggregate, are expected to have a material effect on the Company’s business or financial condition. Concentrations The Company’s top ten customers accounted for approximately 50% and 48% of total consolidated net revenues for the three and six months ended June 30, 2019, respectively. Trade accounts receivable from these customers represented approximately 58% of net consolidated receivables at June 30, 2019. The Company had one customer account for more than 10% of its net revenues during the three and six months ended June 30, 2019. In addition, the Company had one customer account for more than 10% of net consolidated receivables at June 30, 2019. While the Company believes its relationships with such customers are stable, most arrangements are made by purchase order and are terminable at will by either party. A significant decrease or interruption in business from the Company’s significant customers could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company could also be adversely affected by such factors as changes in foreign currency rates and weak economic and political conditions in each of the countries in which the Company sells its products. Financial instruments that potentially expose the Company to a concentration of credit risk principally consist of accounts receivable. The Company sells product to a large number of customers in many different geographic regions. To minimize credit risk, the Company performs ongoing credit evaluations of its customers’ financial condition. Insurance Recoveries During February 2019, one portion of Strong/MDI’s Quebec, Canada facility sustained damage as a result of inclement weather. The Company has property and casualty and business interruption insurance and has been working with its insurance carrier with regard to the insurance claims for reimbursement of incurred costs of the affected portion of the facility and compensation for the Company’s business interruption losses. The insurance company has informed the Company that is has established preliminary loss reserves for both property and casualty claims and business interruption claims. However, those claims reserves are estimates based on preliminary information and are subject to change as the insurance carrier completes its analyses and continues its claims review process over the next several months. The ultimate amount of insurance proceeds to be received by the Company could be significantly different than the insurance company’s reserve estimates. During the six months ended June 30, 2019, the insurance carrier advanced $1.3 million of insurance proceeds to the Company, which includes $0.7 million related to the property and casualty claim and the remaining $0.6 million related to our business interruption claim. The insurance carrier also informed the Company that a third advance payment of CDN$0.5 million was in process as of June 30, 2019, which the Company expects to receive in the third quarter of 2019. Any additional future claims payments are at the discretion of the insurance carrier based on its continuing claims analysis. For the six months ended June 30, 2019, the Company recorded total insurance recoveries of its incurred costs totaling $0.6 million. Of the $0.6 million of insurance recoveries during the six months ended June 30, 2019, $0.5 million related to the property and casualty claim and $0.1 million related to the business interruption claim. Those recoveries offset the operating costs detailed above, and effectively offset the incremental costs incurred by the Company in the first half of 2019. During the six months ended June 30, 2019, the Company recorded a gain of $0.2 million related to its property and casualty claim. The remaining $0.5 million of proceeds received in connection with the business interruption claim has been recorded within accrued expenses on the condensed consolidated balance sheet as of June 30, 2019. Recovery of lost profit under the business interruption coverage will be reflected in future periods as contingencies are resolved and the amounts are confirmed with the insurer. |
Business Segment Information
Business Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Business Segment Information | 15. Business Segment Information The Company conducts its operations through three primary business segments: Strong Cinema, Convergent and Strong Outdoor. Strong Cinema is one of the largest manufacturers of premium projection screens and also manufactures customized screen support systems, distributes other products and provides technical support services to the cinema, amusement park and other markets. Convergent delivers digital signage solutions and related services to large multi-location organizations in the United States and Canada. Strong Outdoor provides outdoor advertising and experiential marketing to corporate customers. The Company’s operating segments were determined based on the manner in which management organizes segments for making operating decisions and assessing performance. During the fourth quarter 2018, the Company separated its former Digital Media segment into separate Convergent and Strong Outdoor segments. All prior periods have been recast in our segment reporting to reflect the current segment organization. Summary by Business Segments Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) (in thousands) Net revenues Strong Cinema $ 7,879 $ 10,353 $ 15,479 $ 21,664 Convergent 5,135 3,355 10,670 7,746 Strong Outdoor 1,135 406 2,229 468 Other 120 64 197 127 Total net revenues 14,269 14,178 28,575 30,005 Gross profit (loss) Strong Cinema 2,537 3,215 4,953 6,600 Convergent 1,584 (34 ) 3,153 632 Strong Outdoor (1,007 ) (1,953 ) (2,424 ) (3,218 ) Other 120 64 197 127 Total gross profit 3,234 1,292 5,879 4,141 Operating income (loss) Strong Cinema 1,256 1,973 2,415 4,298 Convergent 321 (2,731 ) 1,073 (3,756 ) Strong Outdoor (1,593 ) (2,278 ) (3,605 ) (3,776 ) Other (159 ) (58 ) (396 ) (145 ) Total segment operating loss (175 ) (3,094 ) (513 ) (3,379 ) Unallocated administrative expenses (2,148 ) (2,427 ) (4,386 ) (5,228 ) Loss from operations (2,323 ) (5,521 ) (4,899 ) (8,607 ) Other (expense) income, net (642 ) 148 (1,379 ) 159 Loss before income taxes and equity method investment loss $ (2,965 ) $ (5,373 ) $ (6,278 ) $ (8,448 ) (In thousands) June 30, 2019 December 31, 2018 Identifiable assets Strong Cinema $ 22,379 $ 27,009 Convergent 16,435 14,024 Strong Outdoor 2,546 3,454 Corporate assets 19,752 15,150 Total $ 61,112 $ 59,637 Summary by Geographical Area Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2019 2018 2019 2018 Net revenue United States $ 11,877 $ 10,872 $ 24,742 $ 23,701 Canada 754 1,514 1,553 2,914 China 918 531 1,130 1,087 Mexico 1 745 5 1,286 Latin America 269 133 298 403 Europe 257 195 537 353 Asia (excluding China) 110 104 167 177 Other 83 84 143 84 Total $ 14,269 $ 14,178 $ 28,575 $ 30,005 (In thousands) June 30, 2019 December 31, 2018 Identifiable assets United States $ 45,078 $ 42,780 Canada 16,034 16,857 Total $ 61,112 $ 59,637 Net revenues by business segment are to unaffiliated customers. Net revenues by geographical area are based on destination of sales. Identifiable assets by geographical area are based on location of facilities. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and all majority owned and controlled domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements included in this report are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America (also referred to as “GAAP”) for annual reporting purposes or those made in the Company’s Annual Report on Form 10-K. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The condensed consolidated balance sheet as of December 31, 2018 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary to present a fair statement of the financial position and the results of operations and cash flows for the respective interim periods. Certain prior period balances have been reclassified to conform to current period presentation. The results for interim periods are not necessarily indicative of trends or results expected for a full year. Unless otherwise indicated, all references to “dollars” and “$” in this Quarterly Report on Form 10-Q are to, and amounts are presented in, U.S. dollars. |
Use of Management Estimates | Use of Management Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and changes in facts and circumstances may alter such estimates and affect results of operations and financial position in future periods. |
Restricted Cash | Restricted Cash Restricted cash represents amounts held in a collateral account for the Company’s corporate travel and purchasing credit card program. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for doubtful accounts based on several factors, including overall customer credit quality, historical write-off experience and a specific analysis that projects the ultimate collectability of the account. As such, these factors may change over time causing the allowance level and bad debt expense to be adjusted accordingly. |
Investments | Investments We apply the equity method of accounting to investments when we have significant influence, but not controlling interest, in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The Company’s proportionate share of the net income (loss) resulting from these investments is reported under the line item captioned “equity method investment income (loss)” in our condensed consolidated statements of operations. The Company’s equity method investments are reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company’s share of the investee’s income or loss is recorded on a one quarter lag for all equity method investments. The Company classifies distributions received from equity method investments using the cumulative earnings approach on the condensed consolidated statements of cash flows. We apply the cost method of accounting to investments when we do not have significant influence or a controlling interest in the investee and the fair value of the investment is not readily determinable. Dividends on cost method investments received are recorded as income. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of the investments during the three and six months ended June 30, 2019 and determined that the Company’s proportionate economic interest in the investments indicate that the investments were not other than temporarily impaired. The carrying value of our equity method and cost method investments is reported in “investments” in the condensed consolidated balance sheets. Note 6 contains additional information on our equity method and cost method investments. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Assets and liabilities measured at fair value are categorized into a fair value hierarchy based upon the observability of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: ● Level 1 – inputs to the valuation techniques are quoted prices in active markets for identical assets or liabilities ● Level 2 – inputs to the valuation techniques are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly ● Level 3 – inputs to the valuation techniques are unobservable for the assets or liabilities The following tables present the Company’s financial assets measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements are classified, as of June 30, 2019 and December 31, 2018. Fair values measured on a recurring basis at June 30, 2019 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2,869 $ - $ - $ 2,869 Restricted cash 350 - - 350 Notes receivable - - 2,658 2,658 Total $ 3,219 $ - $ 2,658 $ 5,877 Fair values measured on a recurring basis at December 31, 2018 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 6,698 $ - $ - $ 6,698 Restricted cash 350 - 350 Notes receivable - - 3,965 3,965 Total $ 7,048 $ - $ 3,965 $ 11,013 The following table reconciles the beginning and ending balance of the Company’s notes receivable at fair value (in thousands): Six Months Ended June 30, 2019 2018 Notes receivable balance, beginning of period $ 3,965 $ 2,815 Fair value adjustment (1,307 ) 150 Notes receivable balance, end of period $ 2,658 $ 2,965 Quantitative information about the Company’s level 3 fair value measurements at June 30, 2019 is set forth below (in thousands): Fair value at June 30, 2019 Valuation technique Unobservable input Value Notes receivable $ 2,658 Discounted cash flow Default percentage 59 % Discount rate 18 % During 2011, the Company entered into certain unsecured notes receivable arrangements with CDF2 Holdings, LLC pertaining to the sale and installation of digital projection equipment. The notes receivable accrue interest at a rate of 15% per annum. Interest not paid in any particular year is added to the principal and also accrues interest at 15%. The notes receivable are recorded at estimated fair value. In order to estimate the fair value, the Company reviews the financial position and estimated cash flows of the debtor of the notes receivable on a quarterly basis. The Company recorded a decrease to the fair value of the notes receivable of $1.3 million during the six months ended June 30, 2019 and an increase to the fair value of the notes receivable of $0.2 million during the six months ended June 30, 2018. The adjustments to the fair value of the notes receivable are included in other expense (income) on the Company’s condensed consolidated statements of operations. The significant unobservable inputs used in the fair value measurement of the Company’s notes receivable are discount rate and percentage of default. Significant increases (decreases) in any of these inputs in isolation would result in a significantly lower (higher) fair value measurement. The Company’s short-term and long-term debt is recorded at historical cost. As of June 30, 2019, the Company’s long-term debt, including current maturities, had a carrying value of $4.5 million. Based on discounted cash flows using current quoted interest rates (Level 2 of the fair value hierarchy), the estimated fair value at June 30, 2019 was $4.0 million. The carrying values of all other financial assets and liabilities, including accounts receivable, accounts payable, accrued expenses and short-term debt, reported in the condensed consolidated balance sheets equal or approximate their fair values due to the short-term nature of these instruments. Note 6 includes fair value information related to our equity and cost method investments. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which include non-financial long-lived assets, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). The Company did not have any significant non-recurring measurements of non-financial assets or liabilities during the three and six months ended June 30, 2019 or 2018. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases (Topic 842),” which was further clarified by ASU 2018-11, “Leases – Targeted Improvements,” issued in July 2018. ASU 2016-02 requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months, on its balance sheet. This ASU is effective in fiscal years beginning after December 15, 2018 and initially required a modified retrospective transition method under which entities would initially apply Topic 842 at the beginning of the earliest period presented in the financial statements. ASU 2018-11 added an additional optional transition method allowing entities to apply Topic 842 as of the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted Topic 842 using the optional transition method from ASU 2018-11 as of January 1, 2019. Upon adoption, the Company recorded a balance sheet gross-up of approximately $4.7 million to record operating lease liabilities and related right-of-use assets. In addition, the sale-leaseback of the Company’s Alpharetta, Georgia office facility in June 2018, which did not qualify for sale-leaseback accounting under the previous lease accounting standard, qualified for sale-leaseback accounting under Topic 842, as Topic 842 eliminated the concept of continuing involvement by the seller-lessee precluding sale-leaseback accounting. Upon adoption, the Company recorded a cumulative effect adjustment increasing retained earnings by approximately $2.8 million, which represents the gain on the sale of the facility. The Company also derecognized approximately $4.0 million of net land and building assets and approximately $6.8 million of debt associated with the previous accounting as a failed sale-leaseback and recorded approximately $5.0 million of operating lease right-of-use assets and liabilities for the leaseback under Topic 842. See Note 11 for more information about the Company’s leases. In August 2018, the Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The final rule is effective for all filings made on and after November 5, 2018. Given the effective date and proximity to most filers’ quarterly reports, the SEC did not object to filers deferring the presentation of changes in stockholders’ equity in their quarterly reports on Forms 10-Q until the quarter beginning after November 5, 2018. The Company elected to provide the required disclosure in a separate statement of stockholders’ equity beginning with Form 10-Q for the quarter ended March 31, 2019. In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new guidance eliminates Step 2 of the goodwill impairment testing which requires the fair value of individual assets and liabilities of a reporting unit to be determined when measuring goodwill impairment. The new guidance may result in different amounts of impairment that could be recognized compared to existing guidance. In addition, failing step 1 of the impairment test may not result in impairment under existing guidance. However, under the revised guidance, failing step 1 will always result in a goodwill impairment. ASU 2017-04 is to be applied prospectively for goodwill impairment testing performed in years beginning after December 15, 2019 with early adoption permitted. The Company adopted ASU 2017-04 in the first quarter of 2019. Adoption of ASU 2017-04 did not significantly impact the Company’s results of operations or financial position. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. In July 2019, the FASB announced its intention to propose an extended effective date of January 1, 2023 for adoption of the ASU by smaller reporting companies. The Company may qualify for this extension, and management will evaluate its compliance timetable in the event that the FASB finalizes its extension. The Company believes the adoption of this ASU will not significantly impact the Company’s results of operations and financial position. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value Measured Financial Assets and Liabilities | The following tables present the Company’s financial assets measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements are classified, as of June 30, 2019 and December 31, 2018. Fair values measured on a recurring basis at June 30, 2019 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2,869 $ - $ - $ 2,869 Restricted cash 350 - - 350 Notes receivable - - 2,658 2,658 Total $ 3,219 $ - $ 2,658 $ 5,877 Fair values measured on a recurring basis at December 31, 2018 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 6,698 $ - $ - $ 6,698 Restricted cash 350 - 350 Notes receivable - - 3,965 3,965 Total $ 7,048 $ - $ 3,965 $ 11,013 |
Summary of Notes Receivable Reconciliation | The following table reconciles the beginning and ending balance of the Company’s notes receivable at fair value (in thousands): Six Months Ended June 30, 2019 2018 Notes receivable balance, beginning of period $ 3,965 $ 2,815 Fair value adjustment (1,307 ) 150 Notes receivable balance, end of period $ 2,658 $ 2,965 |
Summary of Quantitative Information About Company's Level 3 Fair Value Measurements | Quantitative information about the Company’s level 3 fair value measurements at June 30, 2019 is set forth below (in thousands): Fair value at June 30, 2019 Valuation technique Unobservable input Value Notes receivable $ 2,658 Discounted cash flow Default percentage 59 % Discount rate 18 % |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Major Source [Member] | |
Schedule of Disaggregation of Revenue | The following tables disaggregate the Company’s revenue by major source for the three and six months ended June 30, 2019 (in thousands): Three Months Ended June 30, 2019 Strong Cinema Convergent Strong Outdoor Other Total Screen system sales $ 3,110 $ - $ - $ - $ 3,110 Digital equipment sales 1,631 866 - - 2,497 Extended warranty sales 151 - - - 151 Other product sales 324 - - - 324 Total product sales 5,216 866 - - 6,082 Field maintenance and monitoring services 2,122 2,786 175 - 5,083 Installation services 397 1,464 - - 1,861 Advertising - - 914 - 914 Other service revenues 144 19 46 120 329 Total service revenues 2,663 4,269 1,135 120 8,187 Total $ 7,879 $ 5,135 $ 1,135 $ 120 $ 14,269 Six Months Ended June 30, 2019 Strong Cinema Convergent Strong Outdoor Other Total Screen system sales $ 5,931 $ - $ - $ - $ 5,931 Digital equipment sales 3,115 1,491 - - 4,606 Extended warranty sales 385 - - - 385 Other product sales 720 6 - - 726 Total product sales 10,151 1,497 - - 11,648 Field maintenance and monitoring services 4,088 5,559 228 - 9,875 Installation services 1,067 3,582 - - 4,649 Advertising - - 1,955 - 1,955 Other service revenues 173 32 46 197 448 Total service revenues 5,328 9,173 2,229 197 16,927 Total $ 15,479 $ 10,670 $ 2,229 $ 197 $ 28,575 The following tables disaggregate the Company’s revenue by major source for the three and six months ended June 30, 2018 (in thousands): Three Months Ended June 30, 2018 Strong Cinema Convergent Strong Outdoor Other Total Screen system sales $ 4,246 $ - $ - $ - $ 4,246 Digital equipment sales 1,914 539 - - 2,453 Extended warranty sales 249 - - - 249 Other product sales 502 - - - 502 Total product sales 6,911 539 - - 7,450 Field maintenance and monitoring services 3,026 2,188 - - 5,214 Installation services 379 628 - - 1,007 Advertising - - 460 - 460 Other service revenues 37 - (54 ) 64 47 Total service revenues 3,442 2,816 406 64 6,728 Total $ 10,353 $ 3,355 $ 406 $ 64 $ 14,178 Six Months Ended June 30, 2018 Strong Cinema Convergent Strong Outdoor Other Total Screen system sales $ 8,264 $ - $ - $ - $ 8,264 Digital equipment sales 5,072 1,155 - - 6,227 Extended warranty sales 591 - - - 591 Other product sales 1,102 - - - 1,102 Total product sales 15,029 1,155 - - 16,184 Field maintenance and monitoring services 5,832 4,603 - - 10,435 Installation services 708 1,988 - - 2,696 Advertising - - 468 - 468 Other service revenues 95 - - 127 222 Total service revenues 6,635 6,591 468 127 13,821 Total $ 21,664 $ 7,746 $ 468 $ 127 $ 30,005 |
Timing of Transfer [Member] | |
Schedule of Disaggregation of Revenue | The following tables disaggregate the Company’s revenue by the timing of transfer of goods or services to the customer for the three and six months ended June 30, 2019 (in thousands): Three Months Ended June 30, 2019 Strong Cinema Convergent Strong Outdoor Other Total Point in time $ 6,340 $ 2,408 $ 221 $ 69 $ 9,038 Over time 1,539 2,727 914 51 5,231 Total $ 7,879 $ 5,135 $ 1,135 $ 120 $ 14,269 Six Months Ended June 30, 2019 Strong Cinema Convergent Strong Outdoor Other Total Point in time $ 12,384 $ 5,400 $ 274 $ 115 $ 18,173 Over time 3,095 5,270 1,955 82 10,402 Total $ 15,479 $ 10,670 $ 2,229 $ 197 $ 28,575 The following tables disaggregate the Company’s revenue by the timing of transfer of goods or services to the customer for the three and six months ended June 30, 2018 (in thousands): Three Months Ended June 30, 2018 Strong Cinema Convergent Strong Outdoor Other Total Point in time $ 8,614 $ 1,583 $ - $ - $ 10,197 Over time 1,740 1,771 406 64 3,981 Total $ 10,354 $ 3,354 $ 406 $ 64 $ 14,178 Six Months Ended June 30, 2018 Strong Cinema Convergent Strong Outdoor Other Total Point in time $ 18,073 $ 3,834 $ - $ - $ 21,907 Over time 3,591 3,912 468 127 8,098 Total $ 21,664 $ 7,746 $ 468 $ 127 $ 30,005 |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation Weighted Average Between Basic and Diluted Earnings Per Share | The following table summarizes the weighted average shares used to compute basic and diluted loss per share: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Weighted average shares outstanding: Basic weighted average shares outstanding 14,494 14,364 14,467 14,352 Dilutive effect of stock options and certain non-vested restricted stock awards - - - - Diluted weighted average shares outstanding 14,494 14,364 14,467 14,352 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following (in thousands): June 30, 2019 December 31, 2018 Raw materials and components $ 1,622 $ 1,422 Work in process 222 - Finished goods 1,615 2,068 $ 3,459 $ 3,490 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summary of Investments | The following summarizes our investments (dollars in thousands): June 30, 2019 December 31, 2018 Carrying Amount Economic Interest Carrying Amount Economic Interest Equity Method Investments 1347 Property Insurance Holdings, Inc. $ 8,139 17.3 % $ 7,738 17.3 % Itasca Capital, Ltd. 2,628 32.3 % 3,429 32.3 % Total Equity Method Investments 10,767 11,167 Cost Method Investment Firefly Systems, Inc. 3,614 - Total Investments $ 14,381 $ 11,167 |
Summary of Income (Loss) of Equity Method Investees | The following summarizes the income (loss) of equity method investees reflected in the condensed consolidated statements of operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Entity 1347 Property Insurance Holdings, Inc. $ 17 $ 339 $ 161 $ 579 Itasca Capital, Ltd. (47 ) (1,042 ) (888 ) (939 ) BK Technologies Corporation - (37 ) - (391 ) Total $ (30 ) $ (740 ) $ (727 ) $ (751 ) |
Summarized Financial Information | The summarized financial information presented below reflects the financial information of the Company’s equity method investees for the six months ended March 31, 2019 and 2018, consistent with the Company’s recognition of the results of its equity method investments on a one-quarter lag. For the six months ended March 31, 2019 2018 Revenue $ 33,373 $ 45,862 Operating income $ 391 $ 987 Net loss $ (1,835 ) $ (2,268 ) |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consisted of the following at June 30, 2019 (dollars in thousands): Useful life Gross Accumulated Amortization Net (Years) Intangible assets not yet subject to amortization: Software in development $ 186 $ - $ 186 Intangible assets subject to amortization: Software in service 5 2,269 (834 ) 1,435 Product formulation 10 460 (396 ) $ 64 Total $ 2,915 $ (1,230 ) $ 1,685 Intangible assets consisted of the following at December 31, 2018 (dollars in thousands): Useful life Gross Accumulated Amortization Net (Years) Intangible assets not yet subject to amortization: Software in development $ 119 $ - $ 119 Intangible assets subject to amortization: Software in service 5 2,188 (595 ) 1,593 Product formulation 10 447 (364 ) 83 Total $ 2,754 $ (959 ) $ 1,795 |
Schedule of Intangible Assets Future Amortization Expense | The following table shows the Company’s estimated future amortization expense related to intangible assets currently subject to amortization for the next five years (in thousands): Remainder 2019 $ 250 2020 502 2021 463 2022 227 2023 57 Thereafter - Total $ 1,499 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Carrying Amount of Goodwill | The following represents a summary of changes in the Company’s carrying amount of goodwill for the six months ended June 30, 2019 (in thousands): Balance as of December 31, 2018 $ 875 Foreign currency translation 24 Balance as of June 30, 2019 $ 899 |
Warranty Reserves (Tables)
Warranty Reserves (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Extended Product Warranty Disclosure [Abstract] | |
Schedule of Product Warranty Liability | The following table summarizes warranty activity for the three and six months ended June 30, 2019 and 2018 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Warranty accrual at beginning of period $ 390 $ 564 $ 350 $ 521 Charged to expense (31 ) (19 ) 25 65 Claims paid, net of recoveries (32 ) (87 ) (54 ) (117 ) Foreign currency adjustment 1 (9 ) 7 (20 ) Warranty accrual at end of period $ 328 $ 449 $ 328 $ 449 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company’s debt consists of the following (in thousands): June 30, 2019 December 31, 2018 Short-term debt: Strong/MDI installment loan $ 3,124 $ 3,152 Insurance note payable 113 - Current portion of long-term debt 970 1,094 Total short-term debt 4,207 4,246 Long-term debt: Sale-leaseback financing - 6,769 Equipment term loans 4,505 4,398 Total principal balance of long-term debt 4,505 11,167 Less: current portion (970 ) (1,094 ) Less: unamortized debt issuance costs (17 ) (20 ) Total long-term debt 3,518 10,053 Total short-term and long-term debt $ 7,725 $ 14,299 |
Schedule of Long-term Debt Maturities | Scheduled repayments are as follows for the Company’s long-term debt outstanding as of June 30, 2019 (in thousands): Remainder of 2019 $ 474 2020 1,002 2021 1,079 2022 1,146 2023 785 Thereafter 19 Total $ 4,505 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of Lease Costs and Other Lease Information | The following tables present the Company’s lease costs and other lease information (dollars in thousands): Lease cost Three Months Ended Six Months Ended Finance lease cost: Amortization of right-of-use assets $ 88 $ 137 Interest on lease liabilities 23 42 Operating lease cost 746 1,432 Short-term lease cost 3 9 Sublease income (106 ) (192 ) Net lease cost $ 754 $ 1,428 Other information Three Months Ended Six Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 23 $ 42 Operating cash flows from operating leases $ 644 $ 1,234 Financing cash flows from finance leases $ 88 $ 137 Right-of-use assets obtained in exchange for new finance lease liabilities $ 478 $ 710 Right-of-use assets obtained in exchange for new operating lease liabilities $ - $ 644 Derecognition of right-of-use asset in connection with Firefly transaction $ 3,394 $ - As of June 30, 2019 Weighted-average remaining lease term - finance leases (years) 4.6 Weighted-average remaining lease term - operating leases (years) 6.1 Weighted-average discount rate - finance leases 12.9 % Weighted-average discount rate - operating leases 7.8 % |
Schedule of Future Minimum Lease Payments | The following table presents a maturity analysis of the Company’s finance and operating lease liabilities as of June 30, 2019 (in thousands): Operating Leases Finance Leases Remainder 2019 $ 655 $ 791 2020 1,159 1,555 2021 1,061 1,555 2022 721 1,395 2023 656 314 Thereafter 3,117 66 Total lease payments 7,369 5,676 Less: Amount representing interest (1,276 ) (1,187 ) Present value of lease payments 6,093 4,489 Less: Current maturities (982 ) (1,052 ) Lease obligations, net of current portion $ 5,111 $ 3,437 |
Schedule of Maturity Analysis of Long-term Subleases | The following table presents a maturity analysis of the Company’s long-term subleases (in thousands): Remainder 2019 $ 109 2020 163 2021 137 2022 23 2023 - Thereafter - Total sublease payments $ 432 |
Stock Compensation (Tables)
Stock Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Weighted Average Assumptions for Fair Value of Stock Options Granted During the Period | The fair value of each stock option granted was estimated on the date of grant using a Black-Scholes valuation model with the following weighted average assumptions: 2019 2018 Expected dividend yield at date of grant 0.00 % 0.00 % Risk-free interest rate 1.95% - 1.98 % 2.49 % Expected stock price volatility 47.9 % 35.6 % Expected life of options (in years) 6.0 6.0 |
Summary of Stock Options Activities | The following table summarizes stock option activity for the six months ended June 30, 2019: Number of Weighted Weighted Aggregate Outstanding at December 31, 2018 867,000 $ 5.06 8.3 $ - Granted 285,000 2.90 Exercised - - Forfeited (41,500 ) 5.29 Expired (13,500 ) 5.38 Outstanding at June 30, 2019 1,097,000 $ 4.49 8.4 $ 144 Exercisable at June 30, 2019 288,000 $ 5.15 7.2 $ - |
Summary of Restricted Stock Activity | The following table summarizes restricted stock share activity for the six months ended June 30, 2019: Number of Weighted Average Non-vested at December 31, 2018 46,667 $ 6.50 Granted - - Shares vested (23,333 ) 6.50 Shares forfeited - - Non-vested at June 30, 2019 23,334 $ 6.50 |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes restricted stock unit activity for the six months ended June 30, 2019: Number of Weighted Average Non-vested at December 31, 2018 277,498 $ 3.33 Granted 320,000 2.90 Shares vested (75,833 ) 3.87 Shares forfeited - - Non-vested at June 30, 2019 521,665 $ 3.12 |
Business Segment Information (T
Business Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information by Segment | Summary by Business Segments Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 (in thousands) (in thousands) Net revenues Strong Cinema $ 7,879 $ 10,353 $ 15,479 $ 21,664 Convergent 5,135 3,355 10,670 7,746 Strong Outdoor 1,135 406 2,229 468 Other 120 64 197 127 Total net revenues 14,269 14,178 28,575 30,005 Gross profit (loss) Strong Cinema 2,537 3,215 4,953 6,600 Convergent 1,584 (34 ) 3,153 632 Strong Outdoor (1,007 ) (1,953 ) (2,424 ) (3,218 ) Other 120 64 197 127 Total gross profit 3,234 1,292 5,879 4,141 Operating income (loss) Strong Cinema 1,256 1,973 2,415 4,298 Convergent 321 (2,731 ) 1,073 (3,756 ) Strong Outdoor (1,593 ) (2,278 ) (3,605 ) (3,776 ) Other (159 ) (58 ) (396 ) (145 ) Total segment operating loss (175 ) (3,094 ) (513 ) (3,379 ) Unallocated administrative expenses (2,148 ) (2,427 ) (4,386 ) (5,228 ) Loss from operations (2,323 ) (5,521 ) (4,899 ) (8,607 ) Other (expense) income, net (642 ) 148 (1,379 ) 159 Loss before income taxes and equity method investment loss $ (2,965 ) $ (5,373 ) $ (6,278 ) $ (8,448 ) |
Reconciliation of Assets from Segment to Consolidated | (In thousands) June 30, 2019 December 31, 2018 Identifiable assets Strong Cinema $ 22,379 $ 27,009 Convergent 16,435 14,024 Strong Outdoor 2,546 3,454 Corporate assets 19,752 15,150 Total $ 61,112 $ 59,637 |
Schedule of Segment Reporting Information by Geographic Area | Summary by Geographical Area Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2019 2018 2019 2018 Net revenue United States $ 11,877 $ 10,872 $ 24,742 $ 23,701 Canada 754 1,514 1,553 2,914 China 918 531 1,130 1,087 Mexico 1 745 5 1,286 Latin America 269 133 298 403 Europe 257 195 537 353 Asia (excluding China) 110 104 167 177 Other 83 84 143 84 Total $ 14,269 $ 14,178 $ 28,575 $ 30,005 |
Summary of Identifiable Assets by Geographical Area | (In thousands) June 30, 2019 December 31, 2018 Identifiable assets United States $ 45,078 $ 42,780 Canada 16,034 16,857 Total $ 61,112 $ 59,637 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2011 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jan. 02, 2019 | Dec. 31, 2018 |
Fair value adjustment of notes receivable | $ (797) | $ 192 | $ (1,307) | $ 150 | ||||
Long-term debt | 4,505 | 4,505 | $ 11,167 | |||||
Estimated fair value of long term debt | 4,000 | 4,000 | ||||||
Operating lease, right-of-use asset | 5,831 | 5,831 | ||||||
Operating lease, liability | 6,093 | 6,093 | ||||||
Cumulative effect adjustment increasing retained earnings | $ 2,785 | |||||||
ASU 2016-02 [Member] | ||||||||
Operating lease, right-of-use asset | 5,000 | 5,000 | $ 4,700 | |||||
Operating lease, liability | $ 5,000 | 5,000 | $ 4,700 | |||||
Cumulative effect adjustment increasing retained earnings | 2,800 | |||||||
Derecognized land and building assets net | 4,000 | |||||||
Derecognized debt | $ 6,800 | |||||||
Unsecured Notes Receivable Arrangements [Member] | CDF2 Holdings, LLC [Member] | ||||||||
Percentage of notes receivable accrue interest rate | 15.00% | |||||||
Description of accrued interest rate | The notes receivable accrue interest at a rate of 15% per annum. Interest not paid in any particular year is added to the principal and also accrues interest at 15%. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Fair Value Measured Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Cash and cash equivalents | $ 2,869 | $ 6,698 | |
Restricted cash | 350 | 350 | |
Notes receivable | 2,658 | 3,965 | |
Total | 5,877 | 11,013 | |
Level 1 [Member] | |||
Cash and cash equivalents | 2,869 | 6,698 | |
Restricted cash | 350 | 350 | |
Notes receivable | |||
Total | 3,219 | 7,048 | |
Level 2 [Member] | |||
Cash and cash equivalents | |||
Restricted cash | |||
Notes receivable | |||
Total | |||
Level 3 [Member] | |||
Cash and cash equivalents | |||
Restricted cash | |||
Notes receivable | 2,658 | 3,965 | |
Total | $ 2,658 | $ 3,965 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Notes Receivable Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Notes receivable balance, beginning of period | $ 3,965 | $ 2,815 | ||
Fair value adjustment | $ (797) | $ 192 | (1,307) | 150 |
Notes receivable balance, end of period | $ 2,658 | $ 2,965 | $ 2,658 | $ 2,965 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Summary of Quantitative Information About Company's Level 3 Fair Value Measurements (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Note receivable | $ 2,658 | $ 3,965 |
Valuation Technique | Discounted cash flow | |
Default Percentage [Member] | ||
Unobservable input | 59.00% | |
Discount Rate [Member] | ||
Unobservable input | 18.00% |
Revenue (Details Narrative)
Revenue (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Deferred contract costs | ||
Unearned revenue | 2,700 | |
Rest of 2019 [Member] | ||
Unearned revenue | 1,400 | |
2020 [Member] | ||
Unearned revenue | 1,300 | |
2021-2023 [Member] | ||
Unearned revenue | ||
Field Maintenance and Monitoring Services [Member] | ||
Contract duration or term with field maintenance | 12 months | |
Minimum [Member] | ||
Capitalized contract cost, amortization period | 1 year | |
Maximum [Member] | ||
Capitalized contract cost, amortization period | 5 years |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Major Source) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Total net revenues | $ 14,269 | $ 14,178 | $ 28,575 | $ 30,005 |
Strong Cinema [Member] | ||||
Total net revenues | 7,879 | 10,353 | 15,479 | 21,664 |
Convergent [Member] | ||||
Total net revenues | 5,135 | 3,355 | 10,670 | 7,746 |
Strong Outdoor [Member] | ||||
Total net revenues | 1,135 | 406 | 2,229 | 468 |
Other [Member] | ||||
Total net revenues | 120 | 64 | 197 | 127 |
Product [Member] | ||||
Total net revenues | 6,082 | 7,450 | 11,648 | 16,184 |
Product [Member] | Screen System Sales [Member] | ||||
Total net revenues | 3,110 | 4,246 | 5,931 | 8,264 |
Product [Member] | Digital Equipment Sales [Member] | ||||
Total net revenues | 2,497 | 2,453 | 4,606 | 6,227 |
Product [Member] | Extended Warranty Sales [Member] | ||||
Total net revenues | 151 | 249 | 385 | 591 |
Product [Member] | Other Product Sales [Member] | ||||
Total net revenues | 324 | 502 | 726 | 1,102 |
Product [Member] | Strong Cinema [Member] | ||||
Total net revenues | 5,216 | 6,911 | 10,151 | 15,029 |
Product [Member] | Strong Cinema [Member] | Screen System Sales [Member] | ||||
Total net revenues | 3,110 | 4,246 | 5,931 | 8,264 |
Product [Member] | Strong Cinema [Member] | Digital Equipment Sales [Member] | ||||
Total net revenues | 1,631 | 1,914 | 3,115 | 5,072 |
Product [Member] | Strong Cinema [Member] | Extended Warranty Sales [Member] | ||||
Total net revenues | 151 | 249 | 385 | 591 |
Product [Member] | Strong Cinema [Member] | Other Product Sales [Member] | ||||
Total net revenues | 324 | 502 | 720 | 1,102 |
Product [Member] | Convergent [Member] | ||||
Total net revenues | 866 | 539 | 1,497 | 1,155 |
Product [Member] | Convergent [Member] | Screen System Sales [Member] | ||||
Total net revenues | ||||
Product [Member] | Convergent [Member] | Digital Equipment Sales [Member] | ||||
Total net revenues | 866 | 539 | 1,491 | 1,155 |
Product [Member] | Convergent [Member] | Extended Warranty Sales [Member] | ||||
Total net revenues | ||||
Product [Member] | Convergent [Member] | Other Product Sales [Member] | ||||
Total net revenues | 6 | |||
Product [Member] | Strong Outdoor [Member] | ||||
Total net revenues | ||||
Product [Member] | Strong Outdoor [Member] | Screen System Sales [Member] | ||||
Total net revenues | ||||
Product [Member] | Strong Outdoor [Member] | Digital Equipment Sales [Member] | ||||
Total net revenues | ||||
Product [Member] | Strong Outdoor [Member] | Extended Warranty Sales [Member] | ||||
Total net revenues | ||||
Product [Member] | Strong Outdoor [Member] | Other Product Sales [Member] | ||||
Total net revenues | ||||
Product [Member] | Other [Member] | ||||
Total net revenues | ||||
Product [Member] | Other [Member] | Screen System Sales [Member] | ||||
Total net revenues | ||||
Product [Member] | Other [Member] | Digital Equipment Sales [Member] | ||||
Total net revenues | ||||
Product [Member] | Other [Member] | Extended Warranty Sales [Member] | ||||
Total net revenues | ||||
Product [Member] | Other [Member] | Other Product Sales [Member] | ||||
Total net revenues | ||||
Service [Member] | ||||
Total net revenues | 8,187 | 6,728 | 16,927 | 13,821 |
Service [Member] | Field Maintenance and Monitoring Services [Member] | ||||
Total net revenues | 5,083 | 5,214 | 9,875 | 10,435 |
Service [Member] | Installation Services [Member] | ||||
Total net revenues | 1,861 | 1,007 | 4,649 | 2,696 |
Service [Member] | Advertising [Member] | ||||
Total net revenues | 914 | 460 | 1,955 | 468 |
Service [Member] | Other Service Revenues [Member] | ||||
Total net revenues | 329 | 47 | 448 | 222 |
Service [Member] | Strong Cinema [Member] | ||||
Total net revenues | 2,663 | 3,442 | 5,328 | 6,635 |
Service [Member] | Strong Cinema [Member] | Field Maintenance and Monitoring Services [Member] | ||||
Total net revenues | 2,122 | 3,026 | 4,088 | 5,832 |
Service [Member] | Strong Cinema [Member] | Installation Services [Member] | ||||
Total net revenues | 397 | 379 | 1,067 | 708 |
Service [Member] | Strong Cinema [Member] | Advertising [Member] | ||||
Total net revenues | ||||
Service [Member] | Strong Cinema [Member] | Other Service Revenues [Member] | ||||
Total net revenues | 144 | 37 | 173 | 95 |
Service [Member] | Convergent [Member] | ||||
Total net revenues | 4,269 | 2,816 | 9,173 | 6,591 |
Service [Member] | Convergent [Member] | Field Maintenance and Monitoring Services [Member] | ||||
Total net revenues | 2,786 | 2,188 | 5,559 | 4,603 |
Service [Member] | Convergent [Member] | Installation Services [Member] | ||||
Total net revenues | 1,464 | 628 | 3,582 | 1,988 |
Service [Member] | Convergent [Member] | Advertising [Member] | ||||
Total net revenues | ||||
Service [Member] | Convergent [Member] | Other Service Revenues [Member] | ||||
Total net revenues | 19 | 32 | ||
Service [Member] | Strong Outdoor [Member] | ||||
Total net revenues | 1,135 | 406 | 2,229 | 468 |
Service [Member] | Strong Outdoor [Member] | Field Maintenance and Monitoring Services [Member] | ||||
Total net revenues | 175 | 228 | ||
Service [Member] | Strong Outdoor [Member] | Installation Services [Member] | ||||
Total net revenues | ||||
Service [Member] | Strong Outdoor [Member] | Advertising [Member] | ||||
Total net revenues | 914 | 460 | 1,955 | 468 |
Service [Member] | Strong Outdoor [Member] | Other Service Revenues [Member] | ||||
Total net revenues | 46 | (54) | 46 | |
Service [Member] | Other [Member] | ||||
Total net revenues | 120 | 64 | 197 | 127 |
Service [Member] | Other [Member] | Field Maintenance and Monitoring Services [Member] | ||||
Total net revenues | ||||
Service [Member] | Other [Member] | Installation Services [Member] | ||||
Total net revenues | ||||
Service [Member] | Other [Member] | Advertising [Member] | ||||
Total net revenues | ||||
Service [Member] | Other [Member] | Other Service Revenues [Member] | ||||
Total net revenues | $ 120 | $ 64 | $ 197 | $ 127 |
Revenue - Schedule of Disaggr_2
Revenue - Schedule of Disaggregation of Revenue (Timing of Transfer) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Total net revenues | $ 14,269 | $ 14,178 | $ 28,575 | $ 30,005 |
Transferred at Point in Time [Member] | ||||
Total net revenues | 9,038 | 10,197 | 18,173 | 21,907 |
Transferred Over Time [Member] | ||||
Total net revenues | 5,231 | 3,981 | 10,402 | 8,098 |
Strong Cinema [Member] | ||||
Total net revenues | 7,879 | 10,353 | 15,479 | 21,664 |
Strong Cinema [Member] | Transferred at Point in Time [Member] | ||||
Total net revenues | 6,340 | 8,614 | 12,384 | 18,073 |
Strong Cinema [Member] | Transferred Over Time [Member] | ||||
Total net revenues | 1,539 | 1,740 | 3,095 | 3,591 |
Convergent [Member] | ||||
Total net revenues | 5,135 | 3,355 | 10,670 | 7,746 |
Convergent [Member] | Transferred at Point in Time [Member] | ||||
Total net revenues | 2,408 | 1,583 | 5,400 | 3,834 |
Convergent [Member] | Transferred Over Time [Member] | ||||
Total net revenues | 2,727 | 1,771 | 5,270 | 3,912 |
Strong Outdoor [Member] | ||||
Total net revenues | 1,135 | 406 | 2,229 | 468 |
Strong Outdoor [Member] | Transferred at Point in Time [Member] | ||||
Total net revenues | 221 | 274 | ||
Strong Outdoor [Member] | Transferred Over Time [Member] | ||||
Total net revenues | 914 | 406 | 1,955 | 468 |
Other [Member] | ||||
Total net revenues | 120 | 64 | 197 | 127 |
Other [Member] | Transferred at Point in Time [Member] | ||||
Total net revenues | 69 | 115 | ||
Other [Member] | Transferred Over Time [Member] | ||||
Total net revenues | $ 51 | $ 64 | $ 82 | $ 127 |
Loss Per Common Share (Details
Loss Per Common Share (Details Narrative) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock Option In Which Exercise Price Exceeds The Average Market Price of Common Shares [Member] | ||||
Anti-dilutive securities excluded from computation of earnings per share | 762,000 | 410,000 | 762,000 | 410,000 |
Common Stock Equivalents [Member] | ||||
Anti-dilutive securities excluded from computation of earnings per share | 104,879 | 134,402 | 70,236 | 120,352 |
Loss Per Common Share - Schedul
Loss Per Common Share - Schedule of Reconciliation Weighted Average Between Basic and Diluted Earnings Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Basic weighted average shares outstanding | 14,494 | 14,364 | 14,467 | 14,352 |
Dilutive effect of stock options and certain non-vested restricted stock awards | ||||
Diluted weighted average shares outstanding | 14,494 | 14,364 | 14,467 | 14,352 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Inventory valuation reserves | $ 1,400 | $ 1,400 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials and components | $ 1,622 | $ 1,422 |
Work in process | 222 | |
Finished goods | 1,615 | 2,068 |
Inventories net | $ 3,459 | $ 3,490 |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) $ in Thousands | May 21, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Retained earnings undistributed earnings from our equity method investees | $ 500 | $ 500 | ||||
Master Lease Agreement and Unit Purchase Agreement [Member] | ||||||
Number of shares can be repurchased, amount | $ 4,800 | |||||
Master Lease Agreement [Member] | ||||||
Sales-type lease transaction de-recognition of right-of-use asset | 3,400 | |||||
Master Lease Agreement [Member] | Other Income (Expense) [Member] | ||||||
Selling profit | 200 | |||||
1347 Property Insurance Holdings, Inc. [Member] | ||||||
Dividend received | ||||||
Quoted market value of the company's ownership | $ 5,100 | $ 5,100 | ||||
Equity method ownership percentage | 17.30% | 17.30% | 17.30% | |||
1347 Property Insurance Holdings, Inc. [Member] | Minimum [Member] | ||||||
Combined equity ownership percentage | 20.00% | 20.00% | ||||
Itasca Capital, Ltd. [Member] | ||||||
Dividend received | ||||||
Quoted market value of the company's ownership | $ 2,400 | $ 2,400 | ||||
Equity method ownership percentage | 32.30% | 32.30% | 32.30% | |||
BK Technologies, Inc. [Member] | ||||||
Dividend received | $ 23 | $ 46 | ||||
Firefly Systems, Inc. [Member] | Taxicab Advertising Collaboration Agreement [Member] | Series A-2 Preferred Shares [Member] | ||||||
Consideration received for agreement | $ 4,800 |
Investments - Summary of Invest
Investments - Summary of Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Equity method investments, Carrying Amount | $ 10,767 | $ 11,167 |
Total Investments | 14,381 | 11,167 |
1347 Property Insurance Holdings, Inc. [Member] | ||
Equity method investments, Carrying Amount | $ 8,139 | $ 7,738 |
Equity method investments, Economic Interest | 17.30% | 17.30% |
Itasca Capital, Ltd. [Member] | ||
Equity method investments, Carrying Amount | $ 2,628 | $ 3,429 |
Equity method investments, Economic Interest | 32.30% | 32.30% |
Firefly Systems, Inc. [Member] | ||
Cost method investment, Carrying Amount | $ 3,614 |
Investments - Summary of Income
Investments - Summary of Income (Loss) of Equity Method Investees (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Equity method investment income (loss) | $ (30) | $ (740) | $ (727) | $ (751) |
1347 Property Insurance Holdings, Inc. [Member] | ||||
Equity method investment income (loss) | 17 | 339 | 161 | 579 |
Itasca Capital, Ltd. [Member] | ||||
Equity method investment income (loss) | (47) | (1,042) | (888) | (939) |
BK Technologies Corporation [Member] | ||||
Equity method investment income (loss) | $ (37) | $ (391) |
Investments - Summarized Financ
Investments - Summarized Financial Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
Revenue | $ 33,373 | $ 45,862 |
Operating income (loss) | 391 | 987 |
Net income | $ (1,835) | $ (2,268) |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Amortization expense | $ 200 | $ 200 | $ 400 | $ 400 |
Loss on disposal of assets | $ (38) | (1,331) | $ (102) | (1,331) |
Convergent [Member] | Service [Member] | Abandoned Software [Member] | ||||
Loss on disposal of assets | $ 1,300 | $ 1,300 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Intangible assets, Gross | $ 2,915 | $ 2,754 |
Intangible assets, Accumulated amortization | (1,230) | (959) |
Intangible assets, Net | $ 1,685 | $ 1,795 |
Software in Service [Member] | ||
Intangible assets, Useful life | 5 years | 5 years |
Intangible assets, Gross | $ 2,269 | $ 2,188 |
Intangible assets, Accumulated amortization | (834) | (595) |
Intangible assets, Net | $ 1,435 | $ 1,593 |
Product Formulation [Member] | ||
Intangible assets, Useful life | 10 years | 10 years |
Intangible assets, Gross | $ 460 | $ 447 |
Intangible assets, Accumulated amortization | (396) | (364) |
Intangible assets, Net | 64 | 83 |
Software in Development [Member] | ||
Intangible assets, Gross | 186 | 119 |
Intangible assets, Accumulated amortization | ||
Intangible assets, Net | $ 186 | $ 119 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Intangible Assets Future Amortization Expense (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Total | $ 1,685 | $ 1,795 |
Intangible Assets [Member] | ||
Remainder 2019 | 250 | |
2020 | 502 | |
2021 | 463 | |
2022 | 227 | |
2023 | 57 | |
Thereafter | ||
Total | $ 1,499 |
Goodwill - Summary of Changes i
Goodwill - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Balance | $ 875 |
Foreign currency translation | 24 |
Balance | $ 899 |
Warranty Reserves - Schedule of
Warranty Reserves - Schedule of Product Warranty Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Extended Product Warranty Disclosure [Abstract] | ||||
Warranty accrual at beginning of period | $ 390 | $ 564 | $ 350 | $ 521 |
Charged to expense | (31) | (19) | 25 | 58 |
Claims paid, net of recoveries | (32) | (87) | (54) | (117) |
Foreign currency adjustment | 1 | (9) | 7 | (20) |
Warranty accrual at end of period | $ 328 | $ 449 | $ 328 | $ 449 |
Debt (Details Narrative)
Debt (Details Narrative) $ in Thousands, $ in Thousands | May 22, 2018USD ($) | Apr. 24, 2018CAD ($) | Sep. 05, 2017CAD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2019CAD ($) | Dec. 31, 2018USD ($) |
Long-term debt | $ 4,505 | $ 11,167 | ||||
ASU 2016-02 [Member] | ||||||
Derecognized debt | $ 6,800 | |||||
20-year Installment Loan [Member] | ||||||
Loan term | 20 years | 20 years | ||||
Debt bearing interest fixed rate | 4.45% | 4.45% | ||||
Canadian Dollar [Member] | 20-year Installment Loan [Member] | ||||||
Long-term debt | $ 4,200 | |||||
Proceeds from issuance of debt | $ 3,500 | |||||
Installment Payment Agreement [Member] | ||||||
Line of credit facility, maximum borrowing capacity | $ 4,400 | |||||
Number of installment payments | 60 months | |||||
Debt description | Installment payments under each contract for purchase of the equipment are due monthly for a period of 60 months. The financing provided in the agreement is secured by the equipment, and the obligations under the agreement are recorded as long-term debt on the Company's condensed consolidated balance sheet. In December 2018, Convergent entered into additional installment payment agreements with other financing companies in order to purchase additional media players and related equipment. This round of financing totaled approximately $0.6 million. In June 2019, Convergent entered into additional installment payment agreements with other financing companies in order to purchase additional media players and related equipment. This round of financing totaled approximately $0.2 million. Installment payments under each contract are due monthly for a period of 60 months. | |||||
Equipment Term Loans [Member] | ||||||
Long-term debt | $ 4,500 | |||||
Weighted average fixed rate | 7.60% | 7.60% | ||||
Demand Credit Agreement [Member] | ||||||
Description on effective equity | The credit agreement requires Strong/MDI to maintain a ratio of liabilities to "effective equity" (tangible stockholders' equity, less amounts receivable from affiliates and equity method investments) not exceeding 2 to 1, a current ratio (excluding amounts due from related parties) of at least 1.5 to 1 and minimum "effective equity" of CDN$8.0 million. | |||||
Maximum liabilities to effective equity | 200.00% | |||||
Minimum current ratio | 150.00% | |||||
Demand Credit Agreement [Member] | Prime Rate [Member] | ||||||
Interest rate on lender of installment loans | 0.50% | |||||
Demand Credit Agreement [Member] | 20-year Installment Loan [Member] | ||||||
Loan term | 20 years | |||||
Demand Credit Agreement [Member] | 5-year Installment Loan [Member] | ||||||
Loan term | 5 years | |||||
Demand Credit Agreement [Member] | 5-year Installment Loan [Member] | Prime Rate [Member] | ||||||
Interest rate on lender of installment loans | 0.50% | |||||
Demand Credit Agreement [Member] | Canadian Dollar [Member] | ||||||
Minimum effective equity | $ 8,000 | |||||
Demand Credit Agreement [Member] | Canadian Dollar [Member] | 20-year Installment Loan [Member] | ||||||
Line of credit facility, maximum borrowing capacity | 6,000 | |||||
Demand Credit Agreement [Member] | Canadian Dollar [Member] | 5-year Installment Loan [Member] | ||||||
Line of credit facility, maximum borrowing capacity | 500 | |||||
Demand Credit Agreement [Member] | Line of Credit [Member] | Canadian Dollar [Member] | ||||||
Line of credit facility, maximum borrowing capacity | $ 3,500 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Strong/MDI installment loan | $ 3,237 | $ 3,152 |
Insurance note payable | 113 | |
Current portion of long-term debt | 970 | 1,094 |
Total short-term debt | 4,207 | 4,246 |
Total principal balance of long-term debt | 4,505 | 11,167 |
Less: current portion | (970) | (1,094) |
Less: unamortized debt issuance costs | (17) | (20) |
Total long-term debt | 3,518 | 10,053 |
Total short-term and long-term debt | 7,725 | 14,299 |
Strong/MDI Installment Loan [Member] | ||
Strong/MDI installment loan | 3,124 | 3,152 |
Sale-leaseback Financing [Member] | ||
Total principal balance of long-term debt | 6,769 | |
Equipment Term Loans [Member] | ||
Total principal balance of long-term debt | $ 4,505 | $ 4,398 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Remainder of 2019 | $ 474 | |
2020 | 1,002 | |
2021 | 1,079 | |
2022 | 1,146 | |
2023 | 785 | |
Thereafter | 19 | |
Total | $ 4,505 | $ 11,167 |
Leases (Details Narrative)
Leases (Details Narrative) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Operating lease expire, term | expiring through 2028 |
Finance lease, expire term | expiring through 2028 |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Costs And Other Lease Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Leases [Abstract] | ||
Finance lease cost: Amortization of right-of-use assets | $ 88 | $ 137 |
Finance lease cost: Interest on lease liabilities | 23 | 42 |
Operating lease cost | 746 | 1,432 |
Short-term lease cost | 3 | 9 |
Sublease income | (106) | (192) |
Net lease cost | 754 | 1,428 |
Operating cash flows from finance leases | 23 | 42 |
Operating cash flows from operating leases | 644 | 1,234 |
Financing cash flows from finance leases | 88 | 137 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 478 | 710 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 644 | |
Derecognition of right-of-use asset in connection with Firefly transaction | $ 3,394 | |
Weighted-average remaining lease term - finance leases (years) | 4 years 7 months 6 days | 4 years 7 months 6 days |
Weighted-average remaining lease term - operating leases (years) | 6 years 1 month 6 days | 6 years 1 month 6 days |
Weighted-average discount rate - finance leases | 12.90% | 12.90% |
Weighted-average discount rate - operating leases | 7.80% | 7.80% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Operating Leases, Remainder 2019 | $ 655 | |
Operating Leases, 2020 | 1,159 | |
Operating Leases, 2021 | 1,061 | |
Operating Leases, 2022 | 721 | |
Operating Leases, 2023 | 656 | |
Operating Leases, Thereafter | 3,117 | |
Operating Leases, Total lease payments | 7,369 | |
Less: Amount representing interest | (1,276) | |
Present value of lease payments | 6,093 | |
Less: Current maturities | (982) | |
Lease obligations, net of current portion | 5,111 | |
Finance Leases, Remainder 2019 | 791 | |
Finance Leases, 2020 | 1,555 | |
Finance Leases, 2021 | 1,555 | |
Finance Leases, 2022 | 1,555 | |
Finance Leases, 2023 | 314 | |
Finance Leases, Thereafter | 66 | |
Finance Leases, Total lease payments | 5,676 | |
Less: Amount representing interest | (1,187) | |
Present value of lease payments | 4,489 | |
Less: Current maturities | (1,052) | (160) |
Lease obligations, net of current portion | $ 3,437 | $ 427 |
Leases - Schedule of Maturity A
Leases - Schedule of Maturity Analysis of Long-term Subleases (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
Remainder 2019 | $ 109 |
2020 | 163 |
2021 | 137 |
2022 | 23 |
2023 | |
Thereafter | |
Total sublease payments | $ 432 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income tax examination description | The Company is subject to possible examinations not yet initiated for Federal purposes for fiscal years 2015 through 2018. In most cases, the Company is subject to possible examinations by state or local jurisdictions based on the particular jurisdiction's statute of limitations. |
Stock Compensation (Details Nar
Stock Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Number of shares granted | 285,000 | |||
Restricted Stock [Member] | ||||
Compensation cost expected to be recognized, weighted average period | 2 years 4 months 24 days | |||
Number of restricted shares granted | 320,000 | 147,500 | ||
Unrecognized compensation cost related to non-vested restricted stock awards, value | $ 1,400 | $ 1,400 | ||
Stock Options [Member] | ||||
Number of shares granted | 285,000 | 387,500 | ||
Share based compensation arrangement by share based payment award options grants in period weighted average grant date fair value | $ 2.90 | $ 1.82 | ||
Share-based compensation arrangement by share-based payment award, options, non-vested, number | 809,000 | 809,000 | ||
Total unrecognized compensation cost related to stock option awards | $ 1,200 | $ 1,200 | ||
Compensation cost expected to be recognized, weighted average period | 3 years 7 months 6 days | |||
Year 2017 Plan [Member] | ||||
Number of shares authorized for issuance | 1,371,189 | 1,371,189 | ||
Share based compensation arrangement by share based payment award number of shares available for grant | 499,156 | 499,156 | ||
Selling, General and Administrative Expenses [Member] | ||||
Share based compensation expense | $ 200 | $ 200 | $ 500 | $ 500 |
Stock Compensation - Schedule o
Stock Compensation - Schedule of Weighted Average Assumptions for Fair Value of Stock Options Granted During the Period (Details) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Expected dividend yield at date of grant | 0.00% | 0.00% |
Risk-free interest rate, minimum | 1.95% | |
Risk-free interest rate, maximum | 1.98% | |
Risk-free interest rate | 2.49% | |
Expected stock price volatility | 47.90% | 35.60% |
Expected life of options (in years) | 6 years | 6 years |
Stock Compensation - Summary of
Stock Compensation - Summary of Stock Options Activities (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Options, Outstanding Beginning Balance | shares | 867,000 |
Number of Options, Granted | shares | 285,000 |
Number of Options, Exercised | shares | |
Number of Options, Forfeited | shares | (41,500) |
Number of Options, Expired | shares | (13,500) |
Number of Options, Outstanding Ending Balance | shares | 1,097,000 |
Number of Options, Exercisable | shares | 288,000 |
Weighted Average Exercise Price Per Share, Outstanding Beginning Balance | $ / shares | $ 5.06 |
Weighted Average Exercise Price Per Share, Granted | $ / shares | 2.90 |
Weighted Average Exercise Price Per Share, Exercised | $ / shares | |
Weighted Average Exercise Price Per Share, Forfeited | $ / shares | 5.29 |
Weighted Average Exercise Price Per Share, Expired | $ / shares | 5.38 |
Weighted Average Exercise Price Per Share, Outstanding Ending Balance | $ / shares | 4.49 |
Weighted Average Exercise Price Per Share, Exercisable | $ / shares | $ 5.15 |
Weighted Average Remaining Contractual Term, Beginning Balance | 8 years 3 months 19 days |
Weighted Average Remaining Contractual Term, Ending Balance | 8 years 4 months 24 days |
Weighted Average Remaining Contractual Term, Exercisable | 7 years 2 months 12 days |
Aggregate Intrinsic Value, Beginning Balance | $ | |
Aggregate Intrinsic Value, Ending Balance | $ | 144 |
Aggregate Intrinsic Value, Exercisable | $ |
Stock Compensation - Summary _2
Stock Compensation - Summary of Restricted Stock Activity (Details) - Restricted Stock Shares [Member] | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Number of Restricted Stock, Non-vested beginning balance | shares | 46,667 |
Number of Restricted Stock, Granted | shares | |
Number of Restricted Stock, Vested | shares | (23,333) |
Number of Restricted Stock, Forfeited | shares | |
Number of Restricted Stock, Non-vested ending balance | shares | 23,334 |
Weighted Average Grant Date Fair Value, Non-vested Beginning Balance | $ / shares | $ 6.50 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 6.50 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | |
Weighted Average Grant Date Fair Value, Non-vested Ending Balance | $ / shares | $ 6.50 |
Stock Compensation - Schedule_2
Stock Compensation - Schedule of Nonvested Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member] | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Number of Restricted Stock, Non-vested beginning balance | shares | 277,498 |
Number of Restricted Stock, Granted | shares | 320,000 |
Number of Restricted Stock, vested | shares | (75,833) |
Number of Restricted Stock, forfeited | shares | |
Number of Restricted Stock, Non-vested ending balance | shares | 521,665 |
Weighted Average Grant Date Fair Value, Non-vested beginning balance | $ / shares | $ 3.33 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 2.90 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 3.87 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | |
Weighted Average Grant Date Fair Value, Non-vested ending balance | $ / shares | $ 3.12 |
Commitments, Contingencies an_2
Commitments, Contingencies and Concentrations (Details Narrative) $ in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2019CAD ($) | |
Strong/MDI's Quebec [Member] | |||
Proceeds from insurance | $ 1,300 | ||
Insurance recoveries | 600 | ||
Strong/MDI's Quebec [Member] | Property and Casualty Claim [Member] | |||
Proceeds from insurance | 700 | ||
Insurance recoveries | 500 | ||
Gain related to insurance claim | 200 | ||
Strong/MDI's Quebec [Member] | Business Interruption Claim [Member] | |||
Proceeds from insurance | 600 | ||
Insurance recoveries | 100 | ||
Accrued expenses | $ 500 | $ 500 | |
Strong/MDI's Quebec [Member] | Canadian Dollar [Member] | Third Quarter 2019 [Member] | |||
Proceeds from insurance | $ 500 | ||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Top 10 Customers [Member] | |||
Concentration risk, percentage | 50.00% | 48.00% | 48.00% |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | One Customer [Member] | |||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Top 10 Customers [Member] | |||
Concentration risk, percentage | 58.00% | 58.00% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | One Customer [Member] | |||
Concentration risk, percentage | 10.00% | 10.00% |
Business Segment Information (D
Business Segment Information (Details Narrative) | 6 Months Ended |
Jun. 30, 2019Segments | |
Segment Reporting [Abstract] | |
Number of business segments | 3 |
Business Segment Information -
Business Segment Information - Schedule of Segment Reporting Information by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Total net revenues | $ 14,269 | $ 14,178 | $ 28,575 | $ 30,005 |
Total gross profit | 3,234 | 1,292 | 5,879 | 4,141 |
Total segment operating loss | (175) | (3,094) | (513) | (3,379) |
Unallocated administrative expenses | (2,148) | (2,427) | (4,386) | (5,228) |
Loss from operations | (2,323) | (5,521) | (4,899) | (8,607) |
Other (expense) income, net | (642) | 148 | (1,379) | 159 |
Loss before income taxes and equity method investment loss | (2,965) | (5,373) | (6,278) | (8,448) |
Strong Cinema [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 7,879 | 10,353 | 15,479 | 21,664 |
Total gross profit | 2,537 | 3,215 | 4,953 | 6,600 |
Total segment operating loss | 1,256 | 1,973 | 2,415 | 4,298 |
Convergent [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 5,135 | 3,355 | 10,670 | 7,746 |
Total gross profit | 1,584 | (34) | 3,153 | 632 |
Total segment operating loss | 321 | (2,731) | 1,073 | (3,756) |
Strong Outdoor [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 1,135 | 406 | 2,229 | 468 |
Total gross profit | (1,007) | (1,953) | (2,424) | (3,218) |
Total segment operating loss | (1,593) | (2,278) | (3,605) | (3,776) |
Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 120 | 64 | 197 | 127 |
Total gross profit | 120 | 64 | 197 | 127 |
Total segment operating loss | $ (159) | $ (58) | $ (396) | $ (145) |
Business Segment Information _2
Business Segment Information - Reconciliation of Assets from Segment to Consolidated (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Identifiable assets | $ 61,112 | $ 59,637 |
Strong Cinema [Member] | ||
Identifiable assets | 22,379 | 27,009 |
Convergent [Member] | ||
Identifiable assets | 16,435 | 14,024 |
Strong Outdoor [Member] | ||
Identifiable assets | 2,546 | 3,454 |
Corporate Assets [Member] | ||
Identifiable assets | $ 19,752 | $ 15,150 |
Business Segment Information _3
Business Segment Information - Schedule of Segment Reporting Information by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net revenue | $ 14,269 | $ 14,178 | $ 28,575 | $ 30,005 |
United States [Member] | ||||
Net revenue | 11,877 | 10,872 | 24,742 | 23,701 |
Canada [Member] | ||||
Net revenue | 754 | 1,514 | 1,553 | 2,914 |
China [Member] | ||||
Net revenue | 918 | 531 | 1,130 | 1,087 |
Mexico [Member] | ||||
Net revenue | 1 | 745 | 5 | 1,286 |
Latin America [Member] | ||||
Net revenue | 269 | 133 | 298 | 403 |
Europe [Member] | ||||
Net revenue | 257 | 195 | 537 | 353 |
Asia (Excluding China) [Member] | ||||
Net revenue | 110 | 104 | 167 | 177 |
Other [Member] | ||||
Net revenue | $ 83 | $ 84 | $ 143 | $ 84 |
Business Segment Information _4
Business Segment Information - Summary of Identifiable Assets by Geographical Area (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Identifiable assets | $ 61,112 | $ 59,637 |
United States [Member] | ||
Identifiable assets | 45,078 | 42,780 |
Canada [Member] | ||
Identifiable assets | $ 16,034 | $ 16,857 |