Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 04, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Swisher Hygiene Inc. | ||
Entity Central Index Key | 1,504,747 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 13,062,751 | ||
Entity Common Stock, Shares Outstanding | 17,675,220 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 25,228 | $ 0 |
Restricted cash | 318 | 0 |
Accounts receivable | 2,158 | 0 |
Other assets | 1,513 | 911 |
Current assets of discontinued operations | 0 | 43,790 |
Total current assets | 29,217 | 44,701 |
Property and equipment, net | 26 | 0 |
Other noncurrent assets | 162 | 203 |
Noncurrent assets of discontinued operations | 0 | 68,295 |
Total assets | 29,405 | 113,199 |
Current liabilities | ||
Accounts payable | 587 | 508 |
Accrued payroll and benefits | 235 | 576 |
Accrued expense | 2,650 | 1,249 |
Long-term debt and obligations due within one year | 0 | 1,790 |
Liabilities of discontinued operations | 0 | 21,979 |
Total current liabilities | 3,472 | 26,102 |
Long-term debt and obligations | 0 | 1,078 |
Deferred income taxes | 0 | 0 |
Other long-term liabilities | 1,575 | 3,340 |
Long-term liabilities of discontinued operations | 0 | 1,389 |
Total noncurrent liabilities | $ 1,575 | $ 5,807 |
Commitments and contingencies | ||
Equity | ||
Preferred stock, par value $0.001, authorized 10,000,000 shares; no shares issued and outstanding at December 31, 2015 and 2014 | $ 0 | $ 0 |
Common stock, par value $0.001, authorized 600,000,000 shares; 17,675,220 shares and 17,612,278 shares issued and outstanding at December 31, 2015 and 2014 | 18 | 18 |
Additional paid-in capital | 390,557 | 389,942 |
Accumulated deficit | (364,953) | (307,363) |
Accumulated other comprehensive loss | (1,264) | (1,307) |
Total equity | 24,358 | 81,290 |
Total liabilities and equity | $ 29,405 | $ 113,199 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Swisher Hygiene Inc. stockholders' equity | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 17,675,220 | 17,612,278 |
Common stock, shares outstanding | 17,675,220 | 17,612,278 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Revenue | $ 0 | $ 0 |
Costs and expenses | ||
Selling, general, and administrative expenses | 9,260 | 6,364 |
Depreciation and amortization | 1 | 0 |
Total costs and expenses | 9,261 | 6,364 |
Other expense, net | (2,065) | (134) |
Loss from continuing operations before income taxes | (11,326) | (6,498) |
Income tax (expense) benefit | 0 | 0 |
Loss from continuing operations | (11,326) | (6,498) |
Discontinued operations | ||
Loss from discontinued operations | (46,307) | (40,399) |
Income tax benefit | 43 | 89 |
Loss on discontinued operations | (46,264) | (40,310) |
Net loss | (57,590) | (46,808) |
Comprehensive loss | ||
Employee benefit plan adjustment, net of tax | (82) | (747) |
Foreign currency translation adjustment | 125 | (31) |
Comprehensive loss | $ (57,547) | $ (47,586) |
Loss per share | ||
Basic and diluted (Continuing operations) | $ (0.64) | $ (0.37) |
Basic and diluted (Discontinued operations) | (2.61) | (2.27) |
Basic and diluted | $ (3.25) | $ (2.64) |
Weighted-average common shares used in the computation of loss per share | ||
Basic and diluted | 17,741,051 | 17,723,866 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Beginning balance, Amount at Dec. 31, 2013 | $ 18 | $ 388,252 | $ (260,555) | $ (529) | $ 127,186 |
Beginning balance, Shares at Dec. 31, 2013 | 17,576,741 | ||||
Stock based compensation | 1,740 | 1,740 | |||
Shares withheld related to income taxes on RSUs, Shares | (10,857) | ||||
Shares withheld related to income taxes on RSUs, Amount | (47) | (47) | |||
Shares issued in connection with RSU delivery, Shares | 46,394 | ||||
Shares issued in connection with RSU delivery, Amount | $ (3) | (3) | |||
Employee benefit plan adjustment, net of tax | $ (747) | (747) | |||
Foreign currency translation adjustment | (31) | (31) | |||
Net loss | $ (46,808) | (46,808) | |||
Ending balance, Amount at Dec. 31, 2014 | $ 18 | $ 389,942 | (307,363) | (1,307) | $ 81,290 |
Ending balance, Shares at Dec. 31, 2014 | 17,612,278 | 17,612,278 | |||
Stock based compensation | 704 | $ 704 | |||
Accelerated vesting of RSUs | (73) | (73) | |||
Payout in lieu of issuing RSUs | (12) | (12) | |||
Shares issued in connection with RSU delivery, Shares | 62,942 | ||||
Shares issued in connection with RSU delivery, Amount | (4) | (4) | |||
Employee benefit plan adjustment, net of tax | (82) | (82) | |||
Foreign currency translation adjustment | 125 | 125 | |||
Net loss | (57,590) | (57,590) | |||
Ending balance, Amount at Dec. 31, 2015 | $ 18 | $ 390,557 | $ (364,953) | $ (1,264) | $ 24,358 |
Ending balance, Shares at Dec. 31, 2015 | 17,675,220 | 17,675,220 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | ||
Net loss | $ (57,590) | $ (46,808) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Net loss from discontinued operations, net of tax | 46,264 | 40,310 |
Depreciation and amortization | 1 | 0 |
Accounts receivable | 2,249 | 0 |
Accounts payable, accrued expense and other current liabilities | (669) | 1,803 |
Other assets and non-current assets | (561) | 6 |
Net cash used in operating activities of continuing operations | (10,306) | (4,689) |
Net cash used in operating activities of discontinued operations | (6,635) | (3,764) |
Cash used in operating activities | (16,941) | (8,453) |
Investing activities | ||
Purchases of property and equipment | (27) | 0 |
Restricted cash | (318) | 0 |
Net cash used in investing activities of continuing operations | (345) | 0 |
Net cash provided by (used in) investing activities of discontinued operations | 38,177 | (1,544) |
Cash provided by (used in) investing activities | 37,832 | (1,544) |
Financing activities | ||
Principal payments on debt | (2,867) | (5,282) |
Proceeds from debt issuances | 0 | 1,097 |
Proceeds from line of credit, net of issuance costs | 40,485 | 0 |
Payments on line of credit | (40,485) | 0 |
Taxes paid related to income tax withheld on settlement of equity awards | 0 | (50) |
Net cash used in financing activities of continuing operations | (2,867) | (4,235) |
Net cash used in financing activities of discontinued operations | (29) | 0 |
Cash used in financing activities | (2,896) | (4,235) |
Net increase (decrease) in cash and cash equivalents | 17,995 | (14,232) |
Cash and cash equivalents at the beginning of the period | 7,233 | 21,465 |
Cash and cash equivalents at the end of the period | 25,228 | 7,233 |
Supplemental Cash Flow Information | ||
Cash paid for interest (including discontinued operations) | 351 | 150 |
Cash received for interest (including discontinued operations) | 0 | 9 |
Cash paid for income taxes (including discontinued operations) | 19 | 51 |
Proceeds on note payable related to insurance financing | 1,789 | 1,097 |
Payments on note payable related to insurance financing | $ 2,559 | $ 0 |
1. Operations and Summary Of Si
1. Operations and Summary Of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Principal Operations On August 13, 2015, Swisher Hygiene Inc. announced that it had agreed to sell the stock of its wholly owned U.S. subsidiary Swisher International, Inc. and other assets relating to Swisher Hygiene Inc.'s U.S. operations, which comprise all of the Company’s remaining operating interests, to Ecolab Inc ("Ecolab"). We refer to the transaction pursuant to the purchase agreement between the Company and Ecolab dated August 12, 2015 as the "Sale Transaction." At closing, Ecolab paid the closing purchase price of $40.5 million, less a $2.0 million holdback to address working capital and other adjustments in accordance with the agreement governing the Sale Transaction. The net proceeds were adjusted by the following items subsequent to closing: $0.2 million receivable for the final adjusted cash balance, $2.0 million of transaction costs for consulting and legal fees, and the $0.9 million purchased cash balance, net of $0.2 million debt assumed. In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. The sale was approved at the Annual Meeting of Stockholders on October 15, 2015, and the sale was completed on November 2, 2015, with an effective date of November 1, 2015. Subsequent to the Sale Transaction, it was determined the $2.0 million holdback would be paid to the Company without any adjustment for working capital. At December 31, 2015, the $2.2 million amount in accounts receivable on the As a result of the Sale Transaction a loss of $2.6 million was recorded after the $22.6 million impairment charge was recognized in the quarter ended September 30, 2015, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss. See Note 2, "Discontinued Operations and Assets Held for Sale," and Note 3, "Goodwill and Other Intangible Assets" for a further description of the $2.6 million loss on sale and the $22.6 million impairment charge. In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. Swisher Hygiene Inc. will no longer have any continuing involvement with the operations or cash flows of Swisher International, Inc., and as a result, Swisher Hygiene Inc. has presented the operations of Swisher International, Inc. as discontinued operations for the current and prior years. Prior to the Sale Transaction, our principal executive offices were located at 4725 Piedmont Row Drive, Suite 400, Charlotte, North Carolina, 28210. Swisher Hygiene Inc. and its wholly-owned subsidiaries (the “Company” or “we” or “our”) provided essential hygiene and sanitizing solutions that included cleaning and sanitizing chemicals, restroom hygiene programs and a full range of related products and services. We sold consumable products such as detergents, cleaning chemicals, soap, paper, water filters and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products as well as additional services such as the cleaning of facilities. We served customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail, and healthcare industries. Basis of Presentation and Principles of Consolidation Intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications, including those described further in Note 2, “Discontinued Operations and Assets Held for Sale,” have been made to prior year amounts for consistency with the current period presentation. Financial information, other than share and per share data, is presented in thousands of dollars. On June 3, 2014, a one-for-ten reverse split of the Company's issued and outstanding common stock, $0.001 par value per share, became effective ("Reverse Stock Split"). Trading of the common stock on a post-Reverse Stock Split adjusted basis began at the open of business on the morning of June 3, 2014. All historic share and per share information, including loss per share, in this Form 10-K have been retroactively adjusted to reflect the Reverse Stock Split. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods. Segments Prior to the Sale Transaction, we operated in one business segment, the manufacturing, distribution and delivery of hygiene and sanitizing services, products and solutions. We defined business segments as components of an organization for which discrete financial information was available and operating results were evaluated on a regular basis by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources. Our CODM was the Company’s President and Chief Executive Officer. Characteristics of our organization which were relied upon in making this determination included the similar nature of the products and services we sold, the functional alignment of our organizational structure, and the reports that were regularly reviewed by the CODM for the purpose of assessing performance and allocating resources. Cash Equivalents The Company considers all cash accounts and all highly liquid short term investments purchased with an original maturity of three months or less at date of purchase to be cash equivalents. As of December 31, 2015 and 2014, the Company did not have any investments with maturities greater than three months. Restricted Cash Restricted cash at December 31, 2015 consists of an account with a maturity of July 3, 2016 to secure a workers’ compensation letter of credit. Restricted cash at December 31, 2014 consists of amounts held in a collateral account to secure purchase card balances and electronic cash transfers and is included in the current assets of discontinued operations in the consolidated balance sheet. Accounts Receivable Accounts receivable at December 31, 2015 relate to receivable amounts related to the Sale Transaction. Prior to the Sale Transaction, accounts receivable principally consisted of amounts due from customers for product sales and services. Accounts receivable were reported net of an allowance for doubtful accounts (“allowance”) and interest was generally not charged to customers on delinquent balances. The allowance was management’s best estimate of uncollectible amounts and was based on a number of factors, including overall credit quality of customers, the age of outstanding customer balances, historical write-off experience and specific customer account analysis that projects the ultimate collectability of the outstanding balances. When accounts receivable amounts were considered uncollectible, the amounts were written-off against the allowance for doubtful accounts. The allowance was zero and $1.0 million at December 31, 2015 and 2014, respectively. The December 31, 2014 amount is included in the assets of discontinued operations in the Inventory Prior to the Sale Transaction, inventory consisted of purchased items, materials, direct labor, and other manufacturing related overhead and was stated at the lower of cost or market determined using the first in-first out costing method. The Company routinely reviewed inventory for excess and slow moving items as well as for damaged or otherwise obsolete items and for items selling at negative margins. When such items were identified, a reserve was recorded to adjust their carrying value to their estimated net realizable value. The reserve was zero and $0.8 million at December 31, 2015 and 2014, respectively. The December 31, 2014 amount is included in the assets of discontinued operations in the Property and Equipment At December 31, 2015, property and equipment consisted of computer software, which is being depreciated using the straight-line method over 1.5 years. A shorter life is being used for the computer software due to the uncertainty of the useful life of the software. Property and equipment is stated at cost, less accumulated depreciation and amortization. Prior to the Sale Transaction, depreciation and amortization was provided using the straight-line method over the estimated useful lives of individual assets or classes of assets as follows: Years Items in service 2 – 7 Equipment, laundry facility equipment and furniture 3 - 20 Vehicles 5 Computer equipment 3 Computer software 3 - 7 Building and leasehold improvements 1 - 40 Items in service consisted of various systems that dispensed the Company’s cleaning and sanitizing products, linens, dish machines and dust control products. Included in the capitalized cost of items in service were costs incurred to install certain equipment for customer locations under long-term contracts. These costs included labor, parts and supplies. Costs of significant additions, renewals and betterments, are capitalized and depreciated. Maintenance and repairs are charged to expense when incurred. The Company capitalized certain costs incurred during the application development stage associated with the development of new software products for internal use. Research and development costs in the preliminary project stage were expensed. Internal and external training costs and maintenance costs in the post-implementation operation stage were also expensed. Capitalized software costs were amortized over the estimated useful lives of the software commencing upon operational use. Purchase Accounting for Business Combinations The Company accounted for acquisitions by allocating the fair value of the consideration transferred to the fair value of the assets acquired and liabilities assumed on the date of the acquisition and any remaining difference was recorded as goodwill. Adjustments may have been made to the preliminary purchase price allocation when facts and circumstances that existed on the date of the acquisition surfaced during the allocation period subsequent to the preliminary purchase price allocation, not to exceed one year from the date of acquisition. Contingent consideration was recorded at fair value based on the facts and circumstances on the date of the acquisition and any subsequent changes in the fair value were recorded through earnings each reporting period. Transactions that occurred in conjunction with or subsequent to the closing date of the acquisition were evaluated and accounted for based on the facts and substance of the transactions. Goodwill Goodwill is not amortized but rather tested for impairment at least annually. The Company tested goodwill for impairment annually during the fourth quarter of each fiscal year. Goodwill was also tested for impairment between annual tests if an event occurred or circumstances changed that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Impairment testing for goodwill was done at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (also known as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. The Company concluded prior to the Sale Transaction that it had one reporting unit. When testing goodwill for impairment, the Company assessed qualitative factors to determine whether it was more likely than not (that is, a likelihood of more than 50 percent) that the Company’s fair value was less than its carrying amount, including goodwill. Alternatively, the Company may have bypassed this qualitative assessment and performed step 1 of the two-step goodwill impairment test. This step required the determination of the fair value of the reporting unit. If we performed step 1 and the carrying amount of the reporting unit exceeded its fair value, we would have performed step 2 to measure such impairment. Determining fair value included the use of significant estimates and assumptions. Management utilized an income approach, specifically the discounted cash flow technique as a means for estimating fair value. This discounted cash flow analysis required various assumptions including those about future cash flows, customer growth rates and discount rates. Expected cash flows were based on historical customer growth, including attrition, future strategic initiatives and continued long-term growth of the business. The discount rates used for the analysis reflected a weighted average cost of capital based on industry and capital structure adjusted for equity risk and size risk premiums. These estimates could have been affected by factors such as customer growth, pricing, and economic conditions that could have been difficult to predict. During the second quarter of 2014, in conjunction with its impairment test, the Company recorded a goodwill impairment charge of $5.8 million, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss as further discussed in Note 3, “Goodwill and Other Intangible Assets”. Other Intangible Assets Identifiable intangible assets included customer relationships, non-compete agreements, trade names and trademarks, and formulas. The fair value of these intangible assets at the time of acquisition was estimated based upon various valuation techniques including replacement cost and discounted future cash flow projections. Customer relationships were amortized on a straight-line basis over the expected average life of the acquired accounts, which was typically five to ten years based upon a number of factors, including historical longevity of customers and contracts acquired and historical retention rates. The non-compete agreements were amortized on a straight-line basis over the term of the agreements, typically not exceeding five years. Formulas were amortized on a straight-line basis over their estimated useful life of twenty years. The Company reviewed the recoverability of these assets if events or circumstances indicated that the assets may have been impaired and periodically reevaluates the estimated remaining lives of these assets. Trade names and trademarks were considered to be indefinite lived intangible assets unless specific evidence existed that a shorter life was more appropriate. Indefinite lived intangible assets were tested, at a minimum, on an annual basis, using a discounted cash flow approach, or sooner whenever events or changes in circumstances indicated that an asset may be impaired. During the third quarter of 2015, as a result of the Sale Transaction, the Company performed an impairment analysis of its intangible assets in accordance with ASC 350, Intangible-Goodwill and Other as discussed in Note 3, " Goodwill and Other Intangible Assets Long-Lived Assets Fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net cash flows expected to be generated by the asset. If such assets or asset groups are considered to be impaired the impairment to be recognized is measured by the amount by which the carrying amount of the assets or asset groups exceeds the related fair values. The Company also performs a periodic assessment of the useful lives assigned to the long-lived assets, as previously discussed. During the third quarter of 2015, as a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets as discussed in Note 5, " Property and Equipment Financial Instruments The Company’s financial instruments, which may expose the Company to concentrations of credit risk, include cash and cash equivalents and accounts receivables. The Company maintains cash deposits with major banks, which from time to time may exceed insured limits. The possibility of loss related to the financial condition of major banks is considered minimal. The carrying amounts of cash and cash equivalents and accounts receivable approximate fair value due to the short maturity of these instruments. The fair value of the Company’s debt was estimated based on the current borrowing rates available to the Company for bank loans with similar terms and maturities and approximated the carrying value of these liabilities. Certain convertible promissory notes were recorded at fair value during 2014 as further described in Note 7, "Fair Value Measurements.” Revenue Recognition Prior to the Sale Transaction, revenue from product sales and service was recognized when the product was delivered to the customer or when services were performed, including product and service sales made under multiple deliverable agreements, which outline the pricing of products and the preferred frequency of delivery. Deliverables under these pricing arrangements were considered to be separate units of accounting, as defined by ASC 605-25, Revenue Recognition – Multiple-Element Arrangement, The Company’s sales policies provide for limited rights of return and, during the fiscal years 2015 and 2014, product returns were insignificant. The Company recorded estimated reductions to revenue for sales returns and for customer programs and incentive offerings, including pricing arrangements, rebates, promotions and other volume-based incentives at the time the sale was recorded. Stock Based Compensation The Company measured and recognized all stock based compensation at fair value at the date of grant and recognized compensation expense over the requisite service period for awards expected to vest. Determining the fair value of stock based awards at the grant dates required judgment, including estimating the share volatility, the expected term the award will be outstanding, and the amount of the awards that are expected to be forfeited. The Company utilized the Black-Scholes option pricing model to determine the fair value for stock options on the date of grant. Effective February 19, 2016, the Swisher Hygiene Inc. 2010 Stock Incentive Plan was terminated by the Board of Directors. All stock options and restricted stock units were cancelled before the plan was terminated. See Note 10, “Equity Matters” for further information regarding the 2010 Stock Incentive Plan. Freight Costs Shipping and handling costs for freight expense on goods shipped were included in cost of sales. Shipping and handling costs for freight expense on goods received were capitalized to inventory where they were relieved to cost of sales when the product was sold. Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets where it is more likely than not that deferred tax assets will not be realized. The Company’s policy is to evaluate uncertain tax positions under ASC 740-10, Income Taxes Loss per Common Share Basic net loss from continuing operations and basic net loss from discontinued operations attributable to common stockholders per share is computed by dividing the applicable net loss by the weighted average number of common shares outstanding during the period. Diluted net loss from continuing operations per share was the same as basic net loss from continuing operations attributable to common stockholders per share for all periods presented, since the effects of any potentially dilutive securities are excluded as they are antidilutive due to the Company’s net losses. Diluted net earnings per share from discontinued operations was calculated in the same manner as diluted net loss from continuing operations per share in accordance with ASC 260, Earnings per Share. Comprehensive Loss Comprehensive loss includes net loss, foreign currency translation adjustments and an employee benefit plan adjustment consisting of changes to unrecognized pension actuarial gains and losses, net of tax. Fair Value Measurements The Company determines the fair value of certain assets and liabilities based on assumptions that market participants would use in pricing the assets or liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or the “exit price.” The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and gives precedence to observable inputs in determining fair value. An instrument’s level within the hierarchy is based on the lowest level of any significant input to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following is a discussion of the levels established for each input. Level 1 Level 2 Level 3 Pension Plan An acquired subsidiary of CoolBrands International Inc. (“CoolBrands”) maintained a defined benefit pension plan ("the Plan") covering approximately 90 employees and is included in the continuing operations. Subsequent to the acquisition of CoolBrands in 2000, all future participation and all benefits under the Plan were frozen. The Plan provides retirement benefits based primarily on employee compensation and years of service up to the date of acquisition. The Company recognizes in its continuing operations consolidated balance sheet the overfunded or underfunded status of the Plan measured as the difference between the fair value of Plan assets and the benefit obligation. The Company recognizes as a separate component of the continuing operations comprehensive loss the actuarial gains and losses that arise during the period that are not recognized as components of net periodic benefit cost. The Company measures the Plan assets and the Plan obligations as of December 31 and discloses additional information in the Notes to Consolidated Financial Statements about certain effects on net periodic benefit cost in the upcoming fiscal year that arise from delayed recognition of the actuarial gains and losses. The calculation of net periodic benefit cost and the corresponding net liability requires the use of critical assumptions, including the expected long-term rate of return on Plan assets and the assumed discount rate. Changes in these assumptions can result in different expense and liability amounts. Net periodic benefit cost increases as the expected rate of return on Plan assets decreases. Future changes in Plan asset returns, assumed discount rates and other factors related to the participants in the Company’s Plan will impact the Company’s future net periodic benefit cost and liabilities. The Company cannot predict with certainty what these factors will be in the future however they are not expected to have a material effect on the Company’s financial position or cash flows. The Company sent a notice of plan termination to participants in December 2015 and expects to terminate the Plan in 2016. In connection with the termination, the Company will fund the Plan so there will be no minimum regulatory funding requirement in 2016. Since the Company will fund the total benefit obligation, there will be no expected benefit payments under the Plan in future years. Newly Issued Accounting Pronouncements In April, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity In August, 2015, the FASB issued ASU No. 2015-14 ASU No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. In April 2015 and August 2015, the FASB issued ASU 2015-03 (ASC Subtopic 835-30), Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements- Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, In September 2015, the FASB issued ASU 2015-16 (ASC Topic 805), Business Combinations Simplifying the Accounting for Measurement-Period Adjustments In November 2015, the FASB issued ASU 2015-17 (ASC Topic 740), Income Taxes Balance Sheet Classification of Deferred Taxes. In January 2016, the FASB issued ASU 2016-01 (ASC Subtopic 825-10), Financial Instruments- Overall Recognition and Measurement of Financial Assets and Financial Liabilities. |
2. Discontinued Operations and
2. Discontinued Operations and Assets Held For Sale | 12 Months Ended |
Dec. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE | Discontinued Operations As described in Note 1, "Operations and Summary of Significant Accounting Policies," on August 13, 2015, Swisher Hygiene Inc. announced that it had agreed to sell the stock of its wholly owned U.S. subsidiary Swisher International, Inc. and other assets relating to Swisher Hygiene Inc.'s U.S. operations, which comprise all of the CompanyÂ’s remaining operating interests, to Ecolab. At closing, Ecolab paid the closing purchase price of $40.5 million, less a $2.0 million holdback to address working capital and other adjustments in accordance with the agreement governing the Sale Transaction. The net proceeds were adjusted by the following items subsequent to the closing: $0.2 million receivable for the final adjusted cash balance, $2.0 million of transaction costs for consulting and legal fees, and the $0.9 million purchased cash balance, net of $0.2 million debt assumed. In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. The sale was approved at the Annual Meeting of Stockholders on October 15, 2015, and the sale was completed on November 2, 2015, with an effective date of November 1, 2015. Subsequent to the Sale Transaction, it was determined the $2.0 million holdback would be paid to the Company without any adjustment for working capital. At December 31, 2015, the $2.2 million amount in accounts receivable on the consolidated balance sheet is due from Ecolab and includes the $2.0 million holdback plus $0.2 million final cash adjustment. The $2.0 million holdback was received from Ecolab in January 2016. As a result of the Sale Transaction a loss of $2.6 million was recorded after the impairment charges described below were recognized in the quarter ended September 30, 2015, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss. Swisher Hygiene Inc. no longer has any continuing involvement with the operations or cash flows of Swisher International, Inc., and as a result, Swisher Hygiene Inc. has presented the operations of Swisher International, Inc. as discontinued operations for the current and prior years. ASC 205 Presentation of Financial Statements and ASC 360, Property, Plant and Equipment in the . As a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets Intangible-Goodwill and Other in the consolidated statement of operations and comprehensive loss as discussed in Note 3, " Goodwill and Other Intangible Assets The following tables provide a reconciliation of the carrying amounts of major classes of assets and liabilities which are included in discontinued operations in the accompanying consolidated balance sheet at December 31, 2014. At December 31, 2015, there were no remaining assets or liabilities of the discontinued operations. December 31, Assets of discontinued operations 2014 Current assets: Cash and cash equivalents $ 7,233 Restricted cash 231 Accounts receivable 18,751 Inventory 15,426 Deferred tax asset 534 Other current assets 1,615 Total current assets 43,790 Property and equipment 37,037 Intangibles 29,446 Other noncurrent assets 1,812 Total noncurrent assets 68,295 Total Assets $ 112,085 Liabilities of discontinued operations Current liabilities: Accounts payable $ 13,119 Accrued payroll and benefits 2,893 Accrued expenses 5,873 Short term obligations 94 Total current liabilities 21,979 Deferred tax liabilities 558 Long term obligations 107 Other long term liabilities 724 Total noncurrent liabilities 1,389 Total liabilities $ 23,368 The following table summarizes the results of discontinued operations for the years ended December 31, 2015 and 2014: Year Ended December 31, 2015 2014 Revenue $ 142,713 $ 193,757 Cost of sales 66,684 89,101 Route expense 37,599 50,595 Selling, general and administrative 46,538 62,905 Depreciation and amortization 13,494 21,216 Impairments 22,807 8,810 Loss on Sale Transaction 2,615 - Other (income) expenses, net (717 ) 1,529 Loss from discontinued operations (46,307 ) (40,399 ) Income tax benefit 43 89 Net loss from discontinued operations $ (46,264 ) $ (40,310 ) Assets Held For Sale The disposal groups mentioned below are included in discontinued operations in the CompanyÂ’s consolidated financial statements. During 2013, the Company commenced an active program to sell certain non-core assets and routes related to its linen and dust operations. In 2014, the Company ceased operations at a linen processing plant. During March 2015, the Board of Directors of the Company approved a resolution to sell the CompanyÂ’s remaining linen operation and in July 2015, the Board of Directors approved the sale of the Canadian operations. During 2014, the Company updated its estimates of the fair value of certain linen routes and operations to reflect various events that occurred during the year. The cumulative impairment loss for the twelve months ended December 31, 2014 was $3.0 million and is included in other expense of discontinued operations in the in the consolidated statements of operations and comprehensive loss, of which $1.9 million was attributable to a reduction in the estimate of net sales proceeds for a linen processing operation. The factors driving the $1.9 million reduction were the cancellation notifications received during April and May 2014 from three major customers resulting in a significant loss of forecasted revenue; and the operationÂ’s 2014 year-to-date loss which was in excess of the CompanyÂ’s estimates. The asset fair value of this linen processing operation was written down to zero in the second quarter of 2014 and was closed during the fourth quarter of 2014. The Company completed the sale of the remaining linen operation on May 12, 2015 receiving $4.0 million in cash and notes receivable plus purchased accounts receivables, resulting in a gain of $0.9 million. The gain is included in other income of discontinued operations in the consolidated statement of operations and comprehensive loss. On August 4, 2015, the Company completed the sale of the Canadian operations for $2.6 million in cash and $0.1 million in respect of outstanding accounts payable, net of outstanding accounts receivable. The sale of the Canadian operations resulted in a gain on the sale of $1.4 million, which is included in other income of discontinued operations in the consolidated statement of operations and comprehensive loss. The Company completed several sales transactions during the twelve months ended December 31, 2014, which resulted in the net receipt of $1.6 million in cash and the remainder in receivables. A loss on these sales of $0.9 million was incurred and included a write-off of $0.6 million of the receivable balances. The receivable balances were primarily for contingent sales proceeds that were based on post-closing revenues of previously sold routes which were lower than estimated. The total loss of $0.9 million for the twelve months ended December 31, 2014, is included in other expense of discontinued operations in the condensed consolidated statements of operations and comprehensive loss. There were no assets held for sale as of December 31, 2014 and December 31, 2015. |
3. Goodwill and Other Intangibl
3. Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | Goodwill and other intangible assets were recognized in connection with the Company’s acquisitions and substantially all of the balance was expected to be fully deductible for income tax purposes over 15 years. Changes in the carrying amount of goodwill during the year ended December 31, 2014 and included in discontinued operations were as follows: 2014 Gross balance- beginning $ 5,821 Impairment loss (5,821 ) Net balance – ending $ - The Company’s accounting policy was to perform an annual goodwill impairment test in the fourth quarter or more frequently whenever events or circumstances indicated that goodwill or the carrying value of intangible assets may not be recoverable. On a quarterly basis, we monitored the key drivers of fair value to detect the existence of indicators or changes that would warrant an interim impairment test for our goodwill and intangible assets. Due to a shortfall in sales compared to expectations in the quarter ended June 30, 2014, the Company elected to bypass the qualitative analysis step and proceed directly to step 1 of the goodwill impairment test. Step 1 of the goodwill impairment test was performed with the assistance of an independent valuation specialist using the discounted cash flow method (“DCF”.) Based on this analysis, it was determined that the Company’s net book value exceeded its fair value thereby necessitating the performance of step 2 of the goodwill impairment test. The decrease in estimated fair value was driven by lower actual revenue compared to 2014 projections. The growth rates for the second half of 2014 and the first half of 2015 were revised to reflect the lower revenue during the six months ended June 30, 2014. The effect of these revisions resulted in a loss of estimated fair value resulting in a write-off of the remaining goodwill balance with a non-cash impairment charge of $5.8 million during 2014, which is included in discontinued operations in the consolidated statement of operations and comprehensive loss. We believe the cash flow projections and valuation assumptions used were reasonable and consistent with market participants. The key variables that drove our cash flows were customer growth and attrition and operational efficiencies. The terminal value growth rate assumption as well as the WACC rate both represented additional key variables in the DCF model. The estimates and assumptions used are subject to uncertainty. Other Intangible Assets Weighted-average Amortization Period (Years) Gross Carrying Amount AccCumulated Amortization Net Book Value At December 31, 2014 Customer relationships 8.9 $ 50,635 $ (27,838 ) $ 22,797 Non-compete agreements 4 9,098 (8,032 ) 1,066 Formulas 20 4,544 (772 ) 3,772 Trademarks/Trade names (A) 2,151 (340 ) 1,811 Total $ 66,428 $ (36,982 ) $ 29,446 (A) Consist of indefinite lived and finite lived intangible assets. All of the other intangible assets at December 31, 2014 were related to the discontinued operations. As of December 31, 2015, there were no intangible assets remaining due to the Sale Transaction. The fair value of the customer relationships acquired were based on future discounted cash flows expected to be generated from those customers. These customer relationships were amortized on a straight-line basis over five to ten years, which was primarily based on historical customer attrition rates. The fair value of the non-compete agreements were amortized on a straight-line basis over the length of the agreements, typically with terms of five years or less. The fair value of formulas was amortized on a straight-line basis over twenty years. The Company performed an assessment of its proprietary chemical formulas in the quarter ended June 30, 2015 because of initiatives throughout the organization to reduce the number of active stock keeping units (“SKUs”). Upon completion of the assessment and impairment testing, it was determined that the fair value of formulas was lower than the net book value, resulting in an impairment charge of $0.2 million for the quarter ended June 30, 2015 , which is included in discontinued operations . As described above in Note 2, “Discontinued Operations and Assets Held for Sale,” the Sale Transaction was completed on November 2, 2015, with an effective date of November 1, 2015. As a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets, Intangible-Goodwill and Other in the consolidated statement of operations and comprehensive loss . Amortization expense was $5.1 million and $7.7 million for the years ended December 31, 2015 and 2014, respectively, which is included in discontinued operations in the consolidated statement of operations and comprehensive loss. |
4. Inventory
4. Inventory | 12 Months Ended |
Dec. 31, 2015 | |
Inventory, Net [Abstract] | |
INVENTORY | Inventory was comprised of the components below at December 31, 2014 and is included in current assets of discontinued operations. All inventory was sold in the Sales Transaction, thus inventory balances at December 31, 2015 are zero. December 31, 2014 Finished goods $ 12,285 Raw materials 2,781 Work in process 360 Total $ 15,426 |
5. Property and Equipment
5. Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | All of the property and equipment and accumulated depreciation at December 31, 2015 is related to continuing operations and all of the property and equipment and accumulated depreciation at December 31, 2014 is related to discontinued operations. Property and equipment, net as of December 31, 2015 and 2014 consist of the following: December 31, 2015 2014 Items in service $ - $ 48,928 Equipment, laundry facility equipment and furniture - 10,276 Vehicles - 2,380 Computer equipment - 2,312 Computer software 27 7,378 Building and leasehold improvements - 6,191 27 77,465 Less accumulated depreciation and amortization (1 ) (40,428 ) Property and equipment, net $ 26 $ 37,037 Discontinued operations’ depreciation expense on property and equipment for the years ended December 2015 and 2014 was $8.4 million and $13.5 million, respectively, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss. The cost and accumulated depreciation of fully depreciated assets are removed from the accounts when assets are disposed. As of December 31, 2015 and 2014, computer software includes costs of zero and $6.3 million, respectively for upgrades to our enterprise reporting management system and the development of our technology platform for field service operations, accounting, billing and collections. The accumulated depreciation was $5.0 million as of December 31, 2014. The costs and accumulated depreciation are included in noncurrent assets of discontinued operations in the consolidated balance sheet. Software costs capitalized during 2015 and 2014 were $0.1 million and $0.3 million, respectively. The weighted average amortization period for capitalized software costs was 7 years. Depreciation and amortization expense for capitalized computer software costs included in discontinued operations in the consolidated statement of operations and comprehensive loss was $0.3 million for the year ended December 31, 2015 and $0.9 million for the year ended December 31, 2014. There are no capital leases included in property and equipment as of December 31, 2015. As of December 31, 2014, property and equipment included $0.4 million in recorded capital leases with $0.2 million in accumulated depreciation and is included in noncurrent assets of discontinued operations in the consolidated balance sheet. The gross amount of property and equipment recorded under capital leases as of December 31, 2014 consisted of $0.2 million in computers and $0.2 million in machinery and equipment. As described above in Note 2, “Discontinued Operations and Assets Held for Sale,” the Sale Transaction was completed on November 2, 2015, with an effective date of November 1, 2015. As a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets, |
6. Long-Term Debt and Obligatio
6. Long-Term Debt and Obligations | 12 Months Ended |
Dec. 31, 2015 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT AND OBLIGATIONS | The major components of debt as of December 31, 2014 are listed below. The amounts shown for discontinued operations are included in liabilities and long term liabilities of discontinued operations. Proceeds from the Sale Transaction were used to pay off the outstanding debt and Ecolab assumed capital leases in conjunction with the Sale Transaction and thus, the long-term debt and obligations balance as of December 31, 2015 is zero. December 31, 2014 Continuing Operations Discontinued Operations Notes payable $ 1,193 $ - Convertible promissory notes, 4.0%: maturing at various dates through 2016 832 - Capitalized lease obligations and other financing 843 201 Total debt and obligations 2,868 201 Long-term debt and obligations due within one year (1,790 ) (94 ) Long-term debt and obligations $ 1,078 $ 107 Notes Payable In connection with certain acquisitions, the Company incurred or assumed notes payable as part of the purchase price. Two of the seller notes payable totaling $1.2 million as of December 31, 2014 were secured by letters of credit and the remaining notes payable were secured by the Company. At December 31, 2014, these obligations bore interest at rates ranging between 3.7% and 4.0%. The remaining notes were paid in full with the proceeds from the Sale Transaction and the letters of credit securing the notes were cancelled. Convertible promissory notes During 2012 and 2011, the Company issued eighteen convertible promissory notes with an aggregate principal value of $10.9 million as part of total consideration paid for acquisitions that were recorded at fair value on the date of issuance. The Company made quarterly cash payments through each note’s maturity date. The ability to settle these notes with shares existed at the Company’s election into a maximum of 2,823,853 shares of common stock. The Company may have settled these notes at any time prior to and including the maturity date any portion of the outstanding principal amount, plus accrued interest in a combination of cash and shares of common stock. To the extent that the Company’s common stock was part of such settlement, the settlement price was the most recent closing price of the Company’s common stock on the trading day prior to the date of settlement. Although none of these notes were settled with shares, if all notes outstanding at December 31, 2014 had been settled with shares, the Company would have issued approximately 444,886 shares of common stock. Capital lease obligations and Other Financing The Company entered into capitalized lease obligations with third party finance companies to finance the cost of certain dish machines. At December 31, 2014, these obligations bore interest at rates ranging between 4.0% and 18.4%. The Company also entered into notes payables with third party finance companies to pay various insurance premiums. At December 31, 2014, these obligations bore interest at rates ranging between 2.3% and 2.8%. The capitalized leases and notes payable were either cancelled or assumed by Ecolab as part of the Sale Transaction. 2014 Revolving Credit Facility On August 29, 2014, the Company entered into a $20.0 million revolving credit facility, through the execution of a Loan and Security Agreement, by and among the Company, as Guarantor, and certain subsidiaries of the Company, collectively, as Borrower, and Siena Lending Group LLC, as Lender (the “Credit Facility”). The Credit Facility was paid in full and terminated on November 2, 2015 in connection with the Sale Transaction. Interest on borrowings under the Credit Facility accrued at the Base Rate plus 2.00% and were payable monthly. Base Rate was defined as the greater of (1) the Prime Rate, (2) the Federal Funds Rate plus 0.50%, or (3) 3.25%. Borrowings and availability under the Credit Facility were subject to a borrowing base and limitations, and compliance with other terms specified in the agreement. Borrowings under the Credit Facility were secured by a first priority lien on certain of the Company’s and its subsidiaries’ assets. The Credit Facility contained certain customary representations and warranties, and certain customary covenants on the Company’s ability to, among other things, incur additional indebtedness, create liens or other encumbrances, sell or otherwise dispose of assets, pay dividends, and merge or consolidate with other entities or enter into a change of control transaction. The Credit Facility contained various events of default. |
7. Fair Value Measurements
7. Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | In connection with a distribution agreement entered into in December 2010, the Company provided a guarantee that the distributor's operating cash flows associated with the agreement would not fall below certain agreed-to minimums, subject to certain pre-defined conditions, over the ten year term of the distribution agreement. If the distributor's annual operating cash flow fell below the agreed-to annual minimums, the Company would have reimbursed the distributor for any such short fall up to a pre-designated amount. No value was assigned to the fair value of the guarantee at December 31, 2014 based on a probability assessment of the projected cash flows. This liability would be considered a Level 3 financial instrument given the unobservable inputs used in the projected cash flow model. There have been no transfers between Level 1, 2, and 3 financial instruments during the two years ended December 31, 2015. This distribution agreement was assumed by Ecolab in conjunction with the Sale Transaction. Non-Recurring Fair Value Measurements There were no assets held for sale at December 31, 2015 and 2014. Total impairment adjustments to the estimated fair value of the Company’s assets held for sale for the twelve months ended December 31, 2015 and 2014 were zero and $3.0 million, respectively, which are included in discontinued operations. Fair value was based on the estimated net proceeds from the sale of the assets which were derived based on a number of factors; including standard industry multiples of revenues or operating metrics and the status of ongoing sales negotiations and asset purchase agreements where available. Our estimates of fair value were regularly reviewed and subject to changes based on market conditions, changes in the customer base of the operations or routes and our continuing evaluation as to the facility's acceptable sale price. These assets were measured using Level 3 inputs. During 2014, in conjunction with its impairment test, the Company recorded a goodwill impairment charge of $5.8 million, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss as further discussed in Note 3, “Goodwill and Other Intangible Assets”. Determining fair value included the use of significant estimates and assumptions. Management utilized an income approach, specifically the discounted cash flow technique as a means for estimating fair value. This discounted cash flow analysis required various assumptions including those about future cash flows, customer growth rates and discount rates. Expected cash flows were based on historical customer growth, including attrition, future strategic initiatives and continued long-term growth of the business. The discount rates used for the analysis reflected a weighted average cost of capital based on industry and capital structure adjusted for equity risk and size risk premiums. These estimates could have been affected by factors such as customer growth, pricing, and economic conditions that could have been difficult to predict. These assets were measured using Level 3 inputs. During the third quarter of 2015, as a result of the Sale Transaction, the Company performed an impairment analysis of its intangible assets in accordance with ASC 350, Intangible-Goodwill and Other Impairment or Disposal of Long-Lived Assets as discussed in Note 3, " Goodwill and Other Intangible Assets an impairment of the Company’s fixed assets had occurred, resulting in an impairment charge of $12.6 million, which is reported as part of discontinued operations as discussed in Note 5, " Property and Equipment |
8. Other Related Party Transact
8. Other Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
OTHER RELATED PARTY TRANSACTIONS | The Company paid fees for training course development and utilization of the delivery platform from a company, the majority of which was owned by a partnership in which a former director and two former executives of the Company had a controlling interest. Fees paid during fiscal years 2015 and 2014 were $0.1 million in each of the two years and are included in discontinued operations in the consolidated statement of operations and comprehensive loss. The Company purchased chemical products from an entity owned, in full or in part, by a Company employee. Purchases were zero and $5.4 million for the fiscal years ended 2015 and 2014, respectively, and are included in discontinued operations. At December 31, 2015 and 2014, the Company had zero and $0.3 million included in accounts payable of discontinued operations to these entities, respectively. During the year ended December 31, 2015, the Company was obligated to make lease payments pursuant to certain real property and equipment lease agreements with employees that were former owners of acquired companies. During 2015 and 2014, the Company paid $0.6 million and $0.9 million, respectively, related to these leases and the amounts are included in discontinued operations in the consolidated statement of operations and comprehensive loss. |
9. Income Taxes
9. Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Net loss from continuing operations before income taxes for the years ended December 31, 2015 and 2014 includes: 2015 2014 Domestic $ (11,326 ) $ (6,498 ) Net loss from continuing operations before income taxes $ (11,326 ) $ (6,498 ) Net loss from discontinued operations before income taxes for the years ended December 31, 2015 and 2014 includes: 2015 2014 Domestic $ (45,441 ) $ (35,959 ) Foreign (866 ) (4,440 ) Net loss from discontinued operations before income taxes $ (46,307 ) $ (40,399 ) There is no income tax benefit or expense on continuing operations for the years ended December 31, 2015 and 2014. The components of the income tax benefit on discontinued operations for the years ended December 31, 2015 and 2014 include: 2015 2014 Current Federal, state and foreign $ (19 ) $ 2 Deferred: Federal and state (24 ) 13 Foreign - (104 ) Total benefit from income taxes $ (43 ) $ (89 ) A reconciliation of the statutory U.S. Federal income tax rate to the Company’s effective income tax rate applicable for continuing operations for the years ended December 31, 2015 and 2014 is as follows: 2015 2014 U.S. Federal statutory rate 34 % 35 % State and local taxes, net of Federal benefit 3 4 Other permanent expenses (6 ) - Change in valuation allowance (31 ) (39 ) Effective income tax rate - % - % Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and amounts used for tax purposes. The major components of deferred tax assets and liabilities from continuing operations are as follows: 2015 2014 Deferred tax assets Capital loss carryforward $ 50,373 $ - Net operating loss carryforward 14,319 11,007 Accrued liabilities 197 - Other 22 - Total deferred income tax assets 64,911 11,007 Valuation allowance (64,911) (11,007) Net deferred tax assets - - Deferred tax liabilities Total deferred tax liabilities - - Total net deferred income tax liabilities $ - $ - The Company has incurred significant net losses for financial reporting purposes. Recognition of deferred tax assets will require generation of future taxable income. A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. During the twelve month period ended December 31, 2015, the Company concluded that the likelihood of realization of the benefits associated with its deferred tax assets does not reach the level of more likely than not. As a result, the Company continues to recognize a full valuation allowance on all deferred tax assets as of at December 31, 2015. As of each reporting date, the Company will consider new evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. The December 31, 2015, net operating loss (“NOL”) carryforward for federal income tax purposes is $38.1 million for continuing operations. The federal and state NOLs will begin to expire in 2029. The Sale Transaction resulted in capital losses for tax purposes. However, due to various tax limitations, including tax matters included in the terms of the Sale Transaction and some of which are controlled by Ecolab, we are unable to determine the amount of capital loss that can be recognized until filing the tax returns. In addition, any capital loss recognized can only be deducted against capital gains and would become a capital loss carryforward which would expire in 2020. We have no recorded uncertain tax positions, therefore there would be no impact to the effective tax rate. The Company includes interest and penalties accrued in the consolidated financial statements as a component of interest expense. No significant amounts were required to be recorded as of December 31, 2015 and 2014 or during the two year period ended December 31, 2015. The tax years ended December 31, 2012 through December 31, 2015 are considered to be open under statute and therefore may be subject to examination by the Internal Revenue Service and various state jurisdictions. We do not expect the unrecognized tax benefits to change significantly over the next 12 months. There are no deferred tax assets or liabilities of discontinued operations at December 31, 2015 due to the Sale Transaction. The major components of deferred tax assets and liabilities from discontinued operations as of December 31, 2014 are as follows: 2014 Deferred tax assets Basis difference in goodwill $ 26,449 Net operating loss carryforward 44,855 Basis difference in other intangible assets 3,462 Stock based compensation 3,498 Allowance for uncollectible receivables 1,184 State basis difference in property and equipment 890 Inventory 550 Accrued liabilities 1,827 Other 127 Total deferred income tax assets 82,842 Valuation allowance (75,777 ) Net deferred tax assets 7,065 Deferred tax liabilities Basis difference in property and equipment 7,089 Total deferred tax liabilities 7,089 Total net deferred income tax liabilities $ 24 The total net deferred income tax liability of $0.1 million as of December 31, 2014 is classified between other current assets of $0.5 million and noncurrent liability of $0.6 million. Due to the Sale Transaction, these deferred tax assets and liabilities are now reflected in discontinued operations. Due to the impairment of goodwill for book purposes as of June 30, 2014, a deferred tax asset existed related to goodwill for the Canadian subsidiary. Given the change from 2013 to 2014, from a deferred tax liability to a deferred tax asset, a tax benefit for 2014 of approximately $0.1 million was recognized and is included in discontinued operations. For the year ended December 31, 2014, there was a deferred tax liability associated with excess book over tax tradenames as it relates to a U.S. subsidiary of the Company. Since tradenames are considered to be an indefinite lived intangible, the associated deferred tax liability is not allowed to be netted with other deferred tax assets in determining the need for a valuation allowance. This resulted in an overall net deferred tax liability after applying the valuation allowance. Due to the impairment of tradenames for book purposes in the third quarter of 2015, a deferred tax asset now exists related to tradenames for a U.S. subsidiary. Given the change from 2014 to 2015 from a deferred tax liability to a deferred tax asset, a tax benefit for 2015 was recognized and is included in discontinued operations. After the Sale Transaction, the net operating loss (“NOL”) carryforwards for federal income tax purposes were $139.6 million. The federal and state NOL relating to the discontinued operations were acquired by Ecolab. |
10. Equity Matters
10. Equity Matters | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
EQUITY MATTERS | Comprehensive Loss A summary of the changes in each component of accumulated other comprehensive loss for the year ended December 31, 2015 is provided below: Foreign Exchange Defined Benefit Plan Total Balance at December 31, 2014 $ (125 ) $ (1,182 ) $ (1,307 ) Current period other comprehensive income 125 (82 ) 43 Balance at December 31, 2015 $ - $ (1,264 ) $ (1,264 ) Stock Based Compensation In November 2010, our board of directors approved, subject to shareholder approval, the Swisher Hygiene Inc. 2010 Stock Incentive Plan (the “SIP Plan”) to attract, retain, motivate and reward key officers and employees. The SIP Plan, which was approved by shareholders in May 2011 allowed for the grant of stock options, restricted stock units and other equity instruments up to a total of 1,140,000 shares of the Company’s common stock. On November 1, 2015 in connection with the Sale Transaction, the change of control under the SIP Plan was triggered and all outstanding stock options became vested. Participants were allowed a period of time to exercise the options, then all unexercised outstanding stock options were cancelled February 2, 2016. On November 5, 2015, as a consequence of the Sale Transaction, the Board of Directors approved the cancellation of outstanding vested and deferred restricted stock units and the payment of $1.05 for each share underlying the restricted stock units in lieu of issuing shares of stock as provided for in the terms of the Restricted Stock Unit plan documents. The payment for the restricted stock units was paid to recipients on January 15, 2016. Effective February 19, 2016, the SIP Plan was terminated by the Board of Directors. All options were exercisable at a price equal to the closing market value of the Company’s common stock on the date immediately preceding the grant. Options generally vested in four equal annual installments beginning on the first anniversary of the grant date and generally expired ten years from the date of grant. Restricted stock units were issued at the closing market value of the Company’s common stock on the date immediately preceding the grant and generally vested over four years with the first vesting occurring twelve months after the award and the remaining vesting occurred on the subsequent anniversary dates of the award. Recipients of both options and restricted stock units were not allowed to sell or transfer their shares until the recipient received the shares underlying the award. Stock Option Activity A summary of the Company’s stock option activity and related information for 2015 and 2014 is as follows: Outstanding Options Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in millions) Balance at December 31, 2013 525,880 $ 22.05 Options granted 378,000 $ 4.10 Options cancelled (194,634 ) $ 18.00 Options exercised - Balance at December 31, 2014 709,246 Options granted - Options cancelled (222,033 ) $ 13.93 Options exercised - Balance at December 31, 2015 487,213 $ 13.45 0.1 $ - Expected to Vest after December 31, 2015 - $ - Exercisable at December 31, 2015 487,213 $ 13.45 0.1 $ - The aggregate intrinsic value represented the value of the Company’s closing stock price on the last trading day of the fiscal period in excess of the weighted average exercise price multiplied by the number of options outstanding or exercisable. Total intrinsic value of options at time of exercise was $0.0 million for 2015 and 2014, respectively. The weighted average grant-date fair value of options granted was $1.47 for 2014. There were no options granted in 2015. In connection with the Merger, options previously issued by CoolBrands that were outstanding at the date of the Merger were fully vested and all related compensation expense was recognized by CoolBrands prior to November 2, 2010, the Merger date. At December 31, 2014, 6,000 options remained outstanding and exercisable at a weighted average price of $11.50, weighted average remaining contractual life of 0.2 years and an aggregate intrinsic value of $0.0 million. At December 31, 2015, none of the options remained outstanding and exercisable. The exercise prices for options granted during 2014 ranged from $4.04 to $4.80 per share. There were no options granted in 2015. As noted above, all unexercised options at February 2, 2016 were cancelled. Restricted Stock Units A summary of the Company’s restricted stock activity for 2015 and 2014 is as follows: Number of Restricted Stock Units Weighted - Average Grant Date Fair Value Aggregate Intrinsic Value (in millions) Balance at December 31, 2013 38,186 $ 56.06 $ 0.2 Granted 53,873 $ 3.71 Vested (73,786 ) $ 17.67 Forfeited (11,507 ) $ 42.26 Balance at December 31, 2014 6,766 Granted - Vested (6,748 ) $ 77.39 Forfeited (18 ) $ 28.83 Balance at December 31, 2015 - $ - $ - There were no restricted stock units granted in 2015 as the Directors received a cash payment in lieu of a restricted stock unit grant. As noted above, the outstanding restricted stock units at November 5, 2015 were cancelled by the Board of Directors and recipients were paid $1.05 per share in lieu of receiving shares of stock. Stock Based Compensation The Company measured and recognized all stock based compensation at fair value at the date of grant and recognized compensation expense over the requisite service period for awards expected to vest. Stock based compensation cost in 2014 for stock options granted were calculated by the Company using Black-Scholes option-pricing model with the following assumptions: 2014 Expected dividend yield - Risk free interest rate 1.9% - 2.0 % Expected volatility 32.70 % Expected life (years) 6.25 The expected dividend yield was assumed to be zero as we had not paid, and did not anticipate paying, cash dividends on our shares of common stock. The risk-free interest rate was determined based on a yield curve of U.S. treasury rates based on the expected life of the options granted. The expected volatility was based on an analysis of industry peers historical stock price and the terms of the equity awards. The Company believed that using a peer group stock volatility rate was appropriate given the Company’s relatively short history as a public company, which involved a high growth phase and the audit committee investigation discussed further in Note 13 “Commitments and Contingencies,” both of which occurred in 2012. The expected life is based on the simplified method as we did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected life of our stock options. The Company estimated forfeitures based on estimated turnover by relevant employee categories. The Company recognized stock based compensation on a straight line basis over the requisite service period. For the years ended December 31, 2015 and 2014, the Company recognized stock based compensation expense of $0.7 million and $1.7 million, respectively, in discontinued operations in the consolidated statements of operations for both stock options and restricted stock units. Due to the change in control as a result of the Sale Transaction, stock compensation through 2018 of $0.4 million was accelerated and recognized in 2015 and is included in the $0.7 million stock compensation expense. At December 31, 2015 there were no unrecognized compensation costs related to outstanding stock options and restricted stock units. |
11. Retirement Plan
11. Retirement Plan | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
RETIREMENT PLAN | An acquired subsidiary of CoolBrands maintained a defined benefit pension plan (the "Plan") covering substantially all salaried and certain executive employees. Subsequent to the acquisition of this subsidiary in 2000 by CoolBrands, all future participation and all benefits under the Plan were frozen. The Plan provides retirement benefits based primarily on employee compensation and years of service up to the date of acquisition. As part of the Merger, on November 2, 2010, Swisher Hygiene Inc. recorded the net underfunded pension obligation of $0.6 million. In December 2015, the Company sent a notice of plan termination to participants and expects to terminate the Plan in 2016. In connection with the termination, the Company will fund the Plan so there will be no minimum regulatory funding requirement in 2016. Since the Company will fund the total benefit obligation, there will be no expected benefit payments under the Plan in future years. The following table reconciles the changes in benefit obligations and Plan assets as of December 31, 2015 and 2014 and reconciles the funded status to accrued benefit cost at December 31, 2015 and 2014: Benefit Obligation (In thousands) At December 31, 2013 $ 3,076 Interest cost 139 Actuarial loss 697 Benefit payments (117 ) At December 31, 2014 3,795 Interest cost 139 Actuarial gain (185 ) Benefit payments (129 ) At December 31, 2015 $ 3,620 Plan Assets (In thousands) At December 31, 2013 $ 2,221 Actual return on plan assets 108 Employer contributions 98 Benefit payments (117 ) At December 31, 2014 2,310 Actual return on plan assets (66 ) Employer contributions 93 Benefit payments (129 ) At December 31, 2015 $ 2,208 As of December 31, 2015 and 2014, the net underfunded status of the defined benefit plan is $1.4 million and $1.5 million, respectively, which is recognized as accrued benefit cost in other long-term liabilities on the Consolidated Financial Statements. Unrecognized (gains) losses recorded in accumulated other comprehensive loss in the consolidated financial statements were ($1.3) million and ($1.2) million for the periods ended December 31, 2015 and 2014, respectively. The following table provides the components of the net periodic benefit cost (income) for each of the respective fiscal years: 2015 2014 Interest cost $ 140 $ 139 Expected return on Plan assets (172 ) (166 ) Recognized net actuarial loss 33 8 Net periodic benefit cost (income) $ 1 $ (19 ) The key assumptions used in the measurement of the benefit obligation are the discount rate and the expected return on Plan assets for each of the respective years are: 2015 2014 Discount rate 3.8 % 3.8 % Expected return on Plan assets 7.5 % 7.5 % The rate used to discount pension benefit plan liabilities was based on the Citigroup Pension Discount Curve at December 31, 2015 and 2014. The estimated future cash flows for the pension obligation were matched to the corresponding rates on the yield curve to derive a weighted average discount rate. The expected return on Plan assets was developed by determining projected stock and bond returns and then applying these returns to the target asset allocations of the employee benefit trusts, resulting in a weighted average return on Plan assets. The actual historical returns of the Plan assets were also considered. The Company sent a notice of plan termination to participants in December 2015 and expects to terminate the Plan in 2016. In connection with the termination, the Company will fund the Plan so there will be no minimum regulatory funding requirement in 2016. Since the Company will fund the total Projected Benefit Obligation of $3.6 million, there will be no expected benefit payments under the Plan in future years. Plan Assets The Company’s investment strategy is to obtain the highest possible return commensurate with the level of assumed risk. Investments are well diversified within each of the major asset categories. The Company’s allocation of Plan assets and target allocations are as follows: Fair Value Measurements Level 1 as of December 31, 2015 2014 Equities: U. S. $ 919 $ 1,116 International 199 337 Fixed Income: U. S. 692 560 International 93 82 Cash, cash equivalents and other 305 215 Total $ 2,208 $ 2,310 The U.S. and International equities are actively traded on a public exchange and are considered Level 1 assets. The fixed income securities are corporate and government bonds that are valued based on prices in active markets for identical transactions and are considered Level 1 assets. There were no Plan assets categorized as Level 2 or Level 3 as of December 31, 2015 or 2014. There were no significant transfers between Level 1, 2, or Level 3 during the fiscal years 2015 or 2014. See Note 1, “Operations and Summary of Significant Accounting Policies,” for a description of the fair value hierarchy. |
12. Loss Per Share
12. Loss Per Share | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | Basic net loss from continuing operations and discontinuing operations attributable to common stockholders per share is computed by dividing the applicable net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Shares of common stock underlying outstanding stock options of which the market price of the common stock is lower than the exercise price of the related options were not considered for any dilutive earnings per share calculation. Shares of common stock underlying unvested restricted stock awards of zero and 6,766 were not included in the computation of diluted loss per share for 2015 and 2014, respectively, since their inclusion would be anti-dilutive. |
13. Commitments and Contingenci
13. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | We may be involved in litigation from time to time in the ordinary course of business. The results of these matters cannot be predicted with certainty and we cannot assure you that the ultimate resolution of any legal or administrative proceedings or disputes will not have a material adverse effect on our financial condition. The Company routinely indemnifies its directors and officers and insures the indemnification risk with various insurance liability policies, primarily directors’ and officers’ coverages. Historically, other than the premiums and the retention associated with the director’s and officers’ coverages, the cost to the company of the indemnifications has been immaterial and based on management’s current knowledge and the Company’s current insurance program, other than the deductible not met at year end of approximately $0.8 million, it is expected that the future cost will also be immaterial; however, we cannot assure that to be the case given the uncertainties inherent in legal proceeding and litigation. Securities Litigation On May 21, 2012, a stockholder derivative action was brought against the Company's former CEO and former CFO and the Company's then directors for alleged breaches of fiduciary duty by a purported Company stockholder in the United States District Court for the Southern District of New York. In this derivative action, captioned Arsenault v. Berrard, et al. On August 13, 2012, the Arsenault derivative action, along with a related putative securities class action pending in the Southern District of New York, was transferred to the United States District Court for the Western District of North Carolina where other related putative securities class actions were pending. All actions were consolidated under the caption In re Swisher Hygiene, Inc. Securities and Derivative Litigation On June 11, 2013, an individual action was filed in the United States District Court for the Southern District of Florida captioned Miller, et al. v. Swisher Hygiene, Inc., et al. On September 8, 2015, a lawsuit seeking to be certified as a class action ( Paul Berger v. Swisher Hygiene Inc., et al., Case No. 2015 CH 13325 (Ill. Cir. Ct. Cook Co.) On October 6, 2015, Defendants filed a motion to dismiss the Illinois action given that a substantially similar action, Raul Raul On September 11, 2015, a derivative and putative class action ( Malka Raul v. Swisher Hygiene Inc. et al., Case No. 15-CVS-16703 (Superior Court, Mecklenburg County, North Carolina) On November 5, 2015, defendants in the Raul case filed motions to dismiss, and on November 23, 2015, the plaintiff filed a motion to dismiss as moot and a motion for an award of attorney’s fees. Oral arguments of the plaintiff’s and defendants’ motions occurred on January 12, 2016. In supplemental briefing plaintiff advised the Court that it intended to withdraw its motion to dismiss and amend its complaint to include “newly discovered information.” On January 28, 2016, the Court granted Ecolab’s motion to dismiss and plaintiff’s permission to file an amended complaint, preserved defendants’ motions to dismiss for future consideration and deferred consideration of plaintiff’s motion for award of attorneys’ fees. On February 11, 2016, the plaintiff in the Raul case filed her amended complaint bringing the action derivatively on behalf of Swisher Hygiene Inc., individually and on behalf of all others similarly, against the members of Swisher Hygiene Inc.’s board of directors and Swisher Hygiene Inc. The plaintiff alleged a claim for declaratory relief against the individual defendants, a claim for breach of fiduciary duty against the individual defendants, and derivative claims for breach of fiduciary duties, unjust enrichment, abuse of control, and waste relating to the Sale Transaction and the Plan of Dissolution. On February 24, 2016, following a review of the amended complaint, defense counsel advised plaintiff’s counsel of certain factual and legal errors contained in the amended complaint, and further advised of defendants’ intention to seek reimbursement for expenses, including attorneys’ fees, if the amended complaint was not withdrawn. On February 29, 2016, defendant filed a notice of voluntary dismissal and, on March 3, 2016, the amended complaint was dismissed with prejudice as to the plaintiff, with each side bearing its own costs and expenses. On October 28, 2015, a civil suit was filed against Swisher Hygiene Inc. and related entities in the Commonwealth of Puerto Rico, Gerardo Jimenez Pacheco v. Service Puerto Rico, LLC, et al. Civil No. D AC2015-2256 (Commonwealth of Puerto Rico). Plaintiff alleges that he sold assets of his privately held company to Service Puerto Rico in February 2011 in exchange for cash and a $375,000 note that was convertible into Swisher Hygiene Inc., shares of common stock. Plaintiff alleges breach of contract, defect in consent, joint and several liability, and abuse of process, all of which appear to be based on plaintiff’s reliance on Swisher Hygiene Inc.’s 2011 financial statements that were subsequently withdrawn and restated. Plaintiff requested a total of $475,000 in damages for all causes of action, plus attorney’s fees and pre-judgment interests. Other Matters The Honeycrest Holdings, Ltd. v. Integrated Brands, Inc. On October 7, 2015, the Company entered into a Deferred Prosecution Agreement (the “DPA”) with the United States Attorney’s Office for the Western District of North Carolina (“USAO”) relating to the USAO’s investigation of the Company’s accounting practices. Under the terms of the DPA, the USAO filed, but deferred prosecution of, a criminal information charging Swisher Hygiene Inc. with conspiracy to commit securities fraud and other charges relating to the Company’s accounting and financial reporting practices reflected in the Company's originally filed Quarterly Reports on Form 10-Q for the periods ended March 31, 2011, June 30, 2011, and September 30, 2011. Pursuant to the DPA, the Company agreed to pay a $2 million fine to the USAO payable in four annual installments of $500,000 each if the Company is financially able to do so. Pursuant to the terms of the DPA, the fine became immediately due and payable in full upon a change in control of the Company. As a result, the fine was paid in full upon the closing of the Sale Transaction, and we are awaiting dismissal of the Bill of Information pursuant to the terms of the DPA. In 2012, the Company was contacted by the staff of the Atlanta Regional Office of the SEC after publicly announcing the Audit Committee's internal review and the delays in filing our periodic reports. The Company has been asked to make certain individuals available and to provide certain information about these matters to the SEC. The Company is fully cooperating with the SEC. Any action by the SEC or other government agency could result in criminal or civil sanctions against the Company and/or certain of its current or former officers, directors or employees. Purchase Obligations and Leases In connection with a distribution agreement entered into in December 2010, the Company provided a guarantee that the distributor's operating cash flows associated with the agreement would not fall below certain agreed-to minimums, subject to certain pre-defined conditions, over the ten year term of the distribution agreement. If the distributor's annual operating cash flow does fall below the agreed-to annual minimums, the Company will reimburse the distributor for any such short fall up to a pre-designated amount. As discussed in Note, 7 “Fair Value Measurements” no value was assigned to the fair value of the guarantee at December 31, 2014 based on a probability assessment of the projected cash flows. This agreement was assumed by Ecolab in connection with the Sale Transaction. The Company entered into a Manufacturing and Supply Agreement (the "Cavalier Agreement") with another plant in conjunction with its acquisition of Sanolite in July of 2011. The Cavalier Agreement, which was scheduled to expire on December 31, 2012, was extended for an additional two year period with an automatic 18-month renewal term and a 6-month termination option. The Cavalier Agreement provided for pricing adjustments, up or down, on the first of each month based on the vendor's actual average product costs incurred during the prior month. Additional product payments made by the Company due to pricing adjustments under the Cavalier Agreement were not significant and did not represent costs materially above the market price for such products. The Cavalier Agreement was terminated in September 2014 pursuant to the terms of the agreement. The Company leased its headquarters and other facilities, equipment and vehicles under operating leases that expired at varying times through 2024. All outstanding leases were either cancelled or transferred to Ecolab in conjunction with the Sale Transaction. Total rent expense for operating leases, including those with terms of less than one year was $5.6 million and $6.5 million for the years ended December 31, 2015 and 2014, respectively, and are included in discontinued operations in the consolidated statement of operations and comprehensive loss. |
14. Other Expense, Net
14. Other Expense, Net | 12 Months Ended |
Dec. 31, 2015 | |
Other Income and Expenses [Abstract] | |
OTHER EXPENSE, NET | Other expense of continuing operations consists of the following for the years ended December 31, 2015 and 2014: 2015 2014 Interest Expense $ (65 ) $ (134 ) Fine Paid to the United States of America (2,000 ) - Total Other Expenses $ (2,065 ) $ (134 ) The “Fine Paid to the United States of America” is pursuant to the terms of a previously announced Deferred Prosecution Agreement entered into between the Company and the United States Attorney’s Office for the Western District of North Carolina. Other income (expense) of discontinued operations consists of the following for the years ended December 31, 2015 and 2014: 2015 2014 Interest Income $ - $ 9 Interest Expense (334 ) (253 ) Foreign Currency (620 ) (167 ) Gain (Loss) on Sale of Assets 2,080 (1,070 ) Loss on Extinguishment of Revolving Credit Facility (923 ) - Other 514 (48 ) Total Other Income (Expenses) $ 717 $ (1,529 ) “Other” primarily consists of a legal settlement received and a refund of insurance in the year ended December 31, 2015. |
15. Geographic Information
15. Geographic Information | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
GEOGRAPHIC INFORMATION | The following table includes our discontinued operationÂ’s revenue from geographic locations for the years ended December 31, 2015 and 2014 were: Geographic Information 2015 2014 Revenue United States $ 138,449 $ 184,854 Canada 4,264 8,903 Total revenue $ 142,713 $ 193,757 The following table summarizes our discontinued operationÂ’s foreign long-lived assets, which relate to our Canadian subsidiaries, as of December 31, 2014. In conjunction with the Sale Transaction, there are no remaining long-lived assets as of December 31, 2015. 2014 Long-Lived Assets Property and equipment, net $ 739 Other intangibles, net 528 Total long-lived assets $ 1,267 |
16. Quarterly Financial Data (U
16. Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | 2015 First Quarter Second Quarter Third Quarter Fourth Quarter Year Loss from continuing operations $ (2,226 ) $ (1,675 ) $ (2,506 ) $ (2,854 ) $ (9,261 ) Net loss from continuing operations $ (2,271 ) $ (1,717 ) $ (4,589 ) $ (2,749 ) $ (11,326 ) Net loss from discontinued operations $ (6,560 ) $ (5,973 ) $ (27,191 ) $ (6,540 ) $ (46,264 ) Basic and diluted loss per share - continuing operations $ (0.13 ) $ (0.10 ) $ (0.26 ) $ (0.15 ) $ (0.64 ) Basic and diluted loss per share - discontinued operations $ (0.37 ) $ (0.34 ) $ (1.53 ) $ (0.37 ) $ (2.61 ) 2014 Loss from continuing operations $ (2,425 ) $ (1,461 ) $ (1,177 ) $ (1,301 ) $ (6,364 ) Net loss from continuing operations $ (2,475 ) $ (1,484 ) $ (1,210 ) $ (1,329 ) $ (6,498 ) Net loss from discontinued operations $ (11,317 ) $ (13,662 ) $ (6,567 ) $ (8,764 ) $ (40,310 ) Basic and diluted loss per share - continuing operations $ (0.14 ) $ (0.08 ) $ (0.07 ) $ (0.08 ) $ (0.37 ) Basic and diluted loss per share - discontinued operations $ (0.64 ) $ (0.77 ) $ (0.37 ) $ (0.49 ) $ (2.27 ) Certain amounts have been reclassified in prior quarters to be consistent with the current discontinued operations classification as of December 31, 2015. |
17. Subsequent Event
17. Subsequent Event | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Event | |
SUBSEQUENT EVENT | Resignation and appointment of officers On February 19, 2016, the Company entered into a Separation Agreement and Release with Mr. Pierce pursuant to which Mr. Pierce will continue to serve as President and Chief Executive Officer of the Company under the same terms as his current employment agreement through the date of his resignation, and Mr. Pierce, or his assignees, will receive severance in the aggregate amount of $234,615, which will be paid in seven installments on a monthly basis. On February 26, 2016, Mr. Pierce tendered his resignation as Chief Executive Officer and President of the Company, effective March 31, 2016. On February 19, 2016, Mr. Nanovsky resigned as Senior Vice President, Chief Financial Officer and Secretary of the Company, effective March 31, 2016. As a result, the Executive Services Agreement between the Company and The SCA Group, LLC, effective June 9, 2013, pursuant to which Mr. Nanovsky provides his services to the Company will be terminated effective March 31, 2016. On February 26, 2016, the Board of Directors appointed Richard Handley as President (principal executive officer) and Secretary of the Company, effective April 1, 2016. The Board of Directors is currently finalizing the terms of a consulting agreement with Mr. Handley. Also, the Company is currently reviewing candidates for the position of Chief Financial Officer. Termination of 2010 Stock Incentive Plan Effective February 19, 2016, the SIP was terminated by the Board of Directors. All stock options and restricted stock units were cancelled before the plan was terminated. See Note 10, “Equity Matters,” for further information regarding the SIP. Termination of Retirement Plan The Company sent a notice of plan termination to participants in December 2015 and expects to terminate the Plan in 2016. In connection with the termination the Company will fund the Plan so there will be no minimum regulatory funding requirement in 2016. Since the Company will fund the total benefit obligation, there will be no expected benefit payments under the Plan in future years. See Note 11, “Retirement Plan” for further information regarding the Plan. |
1. Operations and Summary Of 24
1. Operations and Summary Of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Operations And Summary Of Significant Accounting Policies Policies | |
Principal Operations | On August 13, 2015, Swisher Hygiene Inc. announced that it had agreed to sell the stock of its wholly owned U.S. subsidiary Swisher International, Inc. and other assets relating to Swisher Hygiene Inc.'s U.S. operations, which comprise all of the Company’s remaining operating interests, to Ecolab Inc ("Ecolab"). We refer to the transaction pursuant to the purchase agreement between the Company and Ecolab dated August 12, 2015 as the "Sale Transaction." At closing, Ecolab paid the closing purchase price of $40.5 million, less a $2.0 million holdback to address working capital and other adjustments in accordance with the agreement governing the Sale Transaction. The net proceeds were adjusted by the following items subsequent to closing: $0.2 million receivable for the final adjusted cash balance, $2.0 million of transaction costs for consulting and legal fees, and the $0.9 million purchased cash balance, net of $0.2 million debt assumed. In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. The sale was approved at the Annual Meeting of Stockholders on October 15, 2015, and the sale was completed on November 2, 2015, with an effective date of November 1, 2015. Subsequent to the Sale Transaction, it was determined the $2.0 million holdback would be paid to the Company without any adjustment for working capital. At December 31, 2015, the $2.2 million amount in accounts receivable on the consolidated balance sheet is due from Ecolab and includes the $2.0 million holdback plus $0.2 million final cash adjustment. The $2.0 million holdback was received from Ecolab in January 2016. As a result of the Sale Transaction a loss of $2.6 million was recorded after the $22.6 million impairment charge was recognized in the quarter ended September 30, 2015, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss. See Note 2, "Discontinued Operations and Assets Held for Sale," and Note 3, "Goodwill and Other Intangible Assets" for a further description of the $2.6 million loss on sale and the $22.6 million impairment charge. In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. Swisher Hygiene Inc. will no longer have any continuing involvement with the operations or cash flows of Swisher International, Inc., and as a result, Swisher Hygiene Inc. has presented the operations of Swisher International, Inc. as discontinued operations for the current and prior years. Prior to the Sale Transaction, our principal executive offices were located at 4725 Piedmont Row Drive, Suite 400, Charlotte, North Carolina, 28210. Swisher Hygiene Inc. and its wholly-owned subsidiaries (the “Company” or “we” or “our”) provided essential hygiene and sanitizing solutions that included cleaning and sanitizing chemicals, restroom hygiene programs and a full range of related products and services. We sold consumable products such as detergents, cleaning chemicals, soap, paper, water filters and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products as well as additional services such as the cleaning of facilities. We served customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail, and healthcare industries. |
Basis of Presentation and Principles of Consolidation | Intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications, including those described further in Note 2, “Discontinued Operations and Assets Held for Sale,” have been made to prior year amounts for consistency with the current period presentation. Financial information, other than share and per share data, is presented in thousands of dollars. On June 3, 2014, a one-for-ten reverse split of the Company's issued and outstanding common stock, $0.001 par value per share, became effective ("Reverse Stock Split"). Trading of the common stock on a post-Reverse Stock Split adjusted basis began at the open of business on the morning of June 3, 2014. All historic share and per share information, including loss per share, in this Form 10-K have been retroactively adjusted to reflect the Reverse Stock Split. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods. |
Segments | Prior to the Sale Transaction, we operated in one business segment, the manufacturing, distribution and delivery of hygiene and sanitizing services, products and solutions. We defined business segments as components of an organization for which discrete financial information was available and operating results were evaluated on a regular basis by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources. Our CODM was the Company’s President and Chief Executive Officer. Characteristics of our organization which were relied upon in making this determination included the similar nature of the products and services we sold, the functional alignment of our organizational structure, and the reports that were regularly reviewed by the CODM for the purpose of assessing performance and allocating resources. |
Cash Equivalents | The Company considers all cash accounts and all highly liquid short term investments purchased with an original maturity of three months or less at date of purchase to be cash equivalents. As of December 31, 2015 and 2014, the Company did not have any investments with maturities greater than three months. |
Restricted Cash | Restricted cash at December 31, 2015 consists of an account with a maturity of July 3, 2016 to secure a workersÂ’ compensation letter of credit. Restricted cash at December 31, 2014 consists of amounts held in a collateral account to secure purchase card balances and electronic cash transfers and is included in the current assets of discontinued operations in the consolidated balance sheet. |
Accounts Receivable | Accounts receivable at December 31, 2015 relate to receivable amounts related to the Sale Transaction. Prior to the Sale Transaction, accounts receivable principally consisted of amounts due from customers for product sales and services. Accounts receivable were reported net of an allowance for doubtful accounts (“allowance”) and interest was generally not charged to customers on delinquent balances. The allowance was management’s best estimate of uncollectible amounts and was based on a number of factors, including overall credit quality of customers, the age of outstanding customer balances, historical write-off experience and specific customer account analysis that projects the ultimate collectability of the outstanding balances. When accounts receivable amounts were considered uncollectible, the amounts were written-off against the allowance for doubtful accounts. The allowance was zero and $1.0 million at December 31, 2015 and 2014, respectively. The December 31, 2014 amount is included in the assets of discontinued operations in the |
Inventory | Prior to the Sale Transaction, inventory consisted of purchased items, materials, direct labor, and other manufacturing related overhead and was stated at the lower of cost or market determined using the first in-first out costing method. The Company routinely reviewed inventory for excess and slow moving items as well as for damaged or otherwise obsolete items and for items selling at negative margins. When such items were identified, a reserve was recorded to adjust their carrying value to their estimated net realizable value. The reserve was zero and $0.8 million at December 31, 2015 and 2014, respectively. The December 31, 2014 amount is included in the assets of discontinued operations in the |
Property and Equipment | At December 31, 2015, property and equipment consisted of computer software, which is being depreciated using the straight-line method over 1.5 years. A shorter life is being used for the computer software due to the uncertainty of the useful life of the software. Property and equipment is stated at cost, less accumulated depreciation and amortization. Prior to the Sale Transaction, depreciation and amortization was provided using the straight-line method over the estimated useful lives of individual assets or classes of assets as follows: Years Items in service 2 – 7 Equipment, laundry facility equipment and furniture 3 - 20 Vehicles 5 Computer equipment 3 Computer software 3 - 7 Building and leasehold improvements 1 - 40 Items in service consisted of various systems that dispensed the Company’s cleaning and sanitizing products, linens, dish machines and dust control products. Included in the capitalized cost of items in service were costs incurred to install certain equipment for customer locations under long-term contracts. These costs included labor, parts and supplies. Costs of significant additions, renewals and betterments, are capitalized and depreciated. Maintenance and repairs are charged to expense when incurred. The Company capitalized certain costs incurred during the application development stage associated with the development of new software products for internal use. Research and development costs in the preliminary project stage were expensed. Internal and external training costs and maintenance costs in the post-implementation operation stage were also expensed. Capitalized software costs were amortized over the estimated useful lives of the software commencing upon operational use. |
Purchase Accounting for Business Combinations | The Company accounted for acquisitions by allocating the fair value of the consideration transferred to the fair value of the assets acquired and liabilities assumed on the date of the acquisition and any remaining difference was recorded as goodwill. Adjustments may have been made to the preliminary purchase price allocation when facts and circumstances that existed on the date of the acquisition surfaced during the allocation period subsequent to the preliminary purchase price allocation, not to exceed one year from the date of acquisition. Contingent consideration was recorded at fair value based on the facts and circumstances on the date of the acquisition and any subsequent changes in the fair value were recorded through earnings each reporting period. Transactions that occurred in conjunction with or subsequent to the closing date of the acquisition were evaluated and accounted for based on the facts and substance of the transactions. |
Goodwill | Goodwill is not amortized but rather tested for impairment at least annually. The Company tested goodwill for impairment annually during the fourth quarter of each fiscal year. Goodwill was also tested for impairment between annual tests if an event occurred or circumstances changed that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Impairment testing for goodwill was done at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (also known as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. The Company concluded prior to the Sale Transaction that it had one reporting unit. When testing goodwill for impairment, the Company assessed qualitative factors to determine whether it was more likely than not (that is, a likelihood of more than 50 percent) that the Company’s fair value was less than its carrying amount, including goodwill. Alternatively, the Company may have bypassed this qualitative assessment and performed step 1 of the two-step goodwill impairment test. This step required the determination of the fair value of the reporting unit. If we performed step 1 and the carrying amount of the reporting unit exceeded its fair value, we would have performed step 2 to measure such impairment. Determining fair value included the use of significant estimates and assumptions. Management utilized an income approach, specifically the discounted cash flow technique as a means for estimating fair value. This discounted cash flow analysis required various assumptions including those about future cash flows, customer growth rates and discount rates. Expected cash flows were based on historical customer growth, including attrition, future strategic initiatives and continued long-term growth of the business. The discount rates used for the analysis reflected a weighted average cost of capital based on industry and capital structure adjusted for equity risk and size risk premiums. These estimates could have been affected by factors such as customer growth, pricing, and economic conditions that could have been difficult to predict. During the second quarter of 2014, in conjunction with its impairment test, the Company recorded a goodwill impairment charge of $5.8 million, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss as further discussed in Note 3, “Goodwill and Other Intangible Assets”. |
Other Intangible Assets | Identifiable intangible assets included customer relationships, non-compete agreements, trade names and trademarks, and formulas. The fair value of these intangible assets at the time of acquisition was estimated based upon various valuation techniques including replacement cost and discounted future cash flow projections. Customer relationships were amortized on a straight-line basis over the expected average life of the acquired accounts, which was typically five to ten years based upon a number of factors, including historical longevity of customers and contracts acquired and historical retention rates. The non-compete agreements were amortized on a straight-line basis over the term of the agreements, typically not exceeding five years. Formulas were amortized on a straight-line basis over their estimated useful life of twenty years. The Company reviewed the recoverability of these assets if events or circumstances indicated that the assets may have been impaired and periodically reevaluates the estimated remaining lives of these assets. Trade names and trademarks were considered to be indefinite lived intangible assets unless specific evidence existed that a shorter life was more appropriate. Indefinite lived intangible assets were tested, at a minimum, on an annual basis, using a discounted cash flow approach, or sooner whenever events or changes in circumstances indicated that an asset may be impaired. During the third quarter of 2015, as a result of the Sale Transaction, the Company performed an impairment analysis of its intangible assets in accordance with ASC 350, Intangible-Goodwill and Other as discussed in Note 3, " Goodwill and Other Intangible Assets |
Long-lived Assets | Fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net cash flows expected to be generated by the asset. If such assets or asset groups are considered to be impaired the impairment to be recognized is measured by the amount by which the carrying amount of the assets or asset groups exceeds the related fair values. The Company also performs a periodic assessment of the useful lives assigned to the long-lived assets, as previously discussed. During the third quarter of 2015, as a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets as discussed in Note 5, " Property and Equipment |
Financial Instruments | The Company’s financial instruments, which may expose the Company to concentrations of credit risk, include cash and cash equivalents and accounts receivables. The Company maintains cash deposits with major banks, which from time to time may exceed insured limits. The possibility of loss related to the financial condition of major banks is considered minimal. The carrying amounts of cash and cash equivalents and accounts receivable approximate fair value due to the short maturity of these instruments. The fair value of the Company’s debt was estimated based on the current borrowing rates available to the Company for bank loans with similar terms and maturities and approximated the carrying value of these liabilities. Certain convertible promissory notes were recorded at fair value during 2014 as further described in Note 7, "Fair Value Measurements.” |
Revenue Recognition | Prior to the Sale Transaction, revenue from product sales and service was recognized when the product was delivered to the customer or when services were performed, including product and service sales made under multiple deliverable agreements, which outline the pricing of products and the preferred frequency of delivery. Deliverables under these pricing arrangements were considered to be separate units of accounting, as defined by ASC 605-25, Revenue Recognition – Multiple-Element Arrangement, The Company’s sales policies provide for limited rights of return and, during the fiscal years 2015 and 2014, product returns were insignificant. The Company recorded estimated reductions to revenue for sales returns and for customer programs and incentive offerings, including pricing arrangements, rebates, promotions and other volume-based incentives at the time the sale was recorded. |
Stock Based Compensation | The Company measured and recognized all stock based compensation at fair value at the date of grant and recognized compensation expense over the requisite service period for awards expected to vest. Determining the fair value of stock based awards at the grant dates required judgment, including estimating the share volatility, the expected term the award will be outstanding, and the amount of the awards that are expected to be forfeited. The Company utilized the Black-Scholes option pricing model to determine the fair value for stock options on the date of grant. Effective February 19, 2016, the Swisher Hygiene Inc. 2010 Stock Incentive Plan was terminated by the Board of Directors. All stock options and restricted stock units were cancelled before the plan was terminated. See Note 10, “Equity Matters” for further information regarding the 2010 Stock Incentive Plan. |
Freight Costs | Shipping and handling costs for freight expense on goods shipped were included in cost of sales. Shipping and handling costs for freight expense on goods received were capitalized to inventory where they were relieved to cost of sales when the product was sold. |
Income Taxes | Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets where it is more likely than not that deferred tax assets will not be realized. The CompanyÂ’s policy is to evaluate uncertain tax positions under ASC 740-10, Income Taxes |
Loss per Common Share | Basic net loss from continuing operations and basic net loss from discontinued operations attributable to common stockholders per share is computed by dividing the applicable net loss by the weighted average number of common shares outstanding during the period. Diluted net loss from continuing operations per share was the same as basic net loss from continuing operations attributable to common stockholders per share for all periods presented, since the effects of any potentially dilutive securities are excluded as they are antidilutive due to the CompanyÂ’s net losses. Diluted net earnings per share from discontinued operations was calculated in the same manner as diluted net loss from continuing operations per share in accordance with ASC 260, Earnings per Share. |
Comprehensive Loss | Comprehensive loss includes net loss, foreign currency translation adjustments and an employee benefit plan adjustment consisting of changes to unrecognized pension actuarial gains and losses, net of tax. |
Fair Value Measurements | The Company determines the fair value of certain assets and liabilities based on assumptions that market participants would use in pricing the assets or liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or the “exit price.” The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and gives precedence to observable inputs in determining fair value. An instrument’s level within the hierarchy is based on the lowest level of any significant input to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following is a discussion of the levels established for each input. Level 1 Level 2 Level 3 |
Pension Plan | An acquired subsidiary of CoolBrands International Inc. (“CoolBrands”) maintained a defined benefit pension plan ("the Plan") covering approximately 90 employees and is included in the continuing operations. Subsequent to the acquisition of CoolBrands in 2000, all future participation and all benefits under the Plan were frozen. The Plan provides retirement benefits based primarily on employee compensation and years of service up to the date of acquisition. The Company recognizes in its continuing operations consolidated balance sheet the overfunded or underfunded status of the Plan measured as the difference between the fair value of Plan assets and the benefit obligation. The Company recognizes as a separate component of the continuing operations comprehensive loss the actuarial gains and losses that arise during the period that are not recognized as components of net periodic benefit cost. The Company measures the Plan assets and the Plan obligations as of December 31 and discloses additional information in the Notes to Consolidated Financial Statements about certain effects on net periodic benefit cost in the upcoming fiscal year that arise from delayed recognition of the actuarial gains and losses. The calculation of net periodic benefit cost and the corresponding net liability requires the use of critical assumptions, including the expected long-term rate of return on Plan assets and the assumed discount rate. Changes in these assumptions can result in different expense and liability amounts. Net periodic benefit cost increases as the expected rate of return on Plan assets decreases. Future changes in Plan asset returns, assumed discount rates and other factors related to the participants in the Company’s Plan will impact the Company’s future net periodic benefit cost and liabilities. The Company cannot predict with certainty what these factors will be in the future however they are not expected to have a material effect on the Company’s financial position or cash flows. The Company sent a notice of plan termination to participants in December 2015 and expects to terminate the Plan in 2016. In connection with the termination, the Company will fund the Plan so there will be no minimum regulatory funding requirement in 2016. Since the Company will fund the total benefit obligation, there will be no expected benefit payments under the Plan in future years. |
Newly Issued Accounting Pronouncements | In April, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity In August, 2015, the FASB issued ASU No. 2015-14 ASU No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. In April 2015 and August 2015, the FASB issued ASU 2015-03 (ASC Subtopic 835-30), Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements- Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, In September 2015, the FASB issued ASU 2015-16 (ASC Topic 805), Business Combinations Simplifying the Accounting for Measurement-Period Adjustments In November 2015, the FASB issued ASU 2015-17 (ASC Topic 740), Income Taxes Balance Sheet Classification of Deferred Taxes. In January 2016, the FASB issued ASU 2016-01 (ASC Subtopic 825-10), Financial Instruments- Overall Recognition and Measurement of Financial Assets and Financial Liabilities. |
1. Operations and Summary Of 25
1. Operations and Summary Of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Operations And Summary Of Significant Accounting Policies Tables | |
Schedule of property and equipment | Years Items in service 2 – 7 Equipment, laundry facility equipment and furniture 3 - 20 Vehicles 5 Computer equipment 3 Computer software 3 - 7 Building and leasehold improvements 1 - 40 |
2. Discontinued Operations an26
2. Discontinued Operations and Assets Held For Sale (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Discontinued Operations And Assets Held For Sale Tables | |
Assets held for sale | December 31, Assets of discontinued operations 2014 Current assets: Cash and cash equivalents $ 7,233 Restricted cash 231 Accounts receivable 18,751 Inventory 15,426 Deferred tax asset 534 Other current assets 1,615 Total current assets 43,790 Property and equipment 37,037 Intangibles 29,446 Other noncurrent assets 1,812 Total noncurrent assets 68,295 Total Assets $ 112,085 Liabilities of discontinued operations Current liabilities: Accounts payable $ 13,119 Accrued payroll and benefits 2,893 Accrued expenses 5,873 Short term obligations 94 Total current liabilities 21,979 Deferred tax liabilities 558 Long term obligations 107 Other long term liabilities 724 Total noncurrent liabilities 1,389 Total liabilities $ 23,368 |
Summary of operating results for discontinued operations | Year Ended December 31, 2015 2014 Revenue $ 142,713 $ 193,757 Cost of sales 66,684 89,101 Route expense 37,599 50,595 Selling, general and administrative 46,538 62,905 Depreciation and amortization 13,494 21,216 Impairments 22,807 8,810 Loss on Sale Transaction 2,615 - Other (income) expenses, net (717 ) 1,529 Loss from discontinued operations (46,307 ) (40,399 ) Income tax benefit 43 89 Net loss from discontinued operations $ (46,264 ) $ (40,310 ) |
3. Goodwill And Other Intangi27
3. Goodwill And Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill And Other Intangible Assets Tables | |
Schedule of goodwill | 2014 Gross balance- beginning $ 5,821 Impairment loss (5,821 ) Net balance – ending $ - |
Schedule of other intangible assets | Weighted-average Amortization Period (Years) Gross Carrying Amount AccCumulated Amortization Net Book Value At December 31, 2014 Customer relationships 8.9 $ 50,635 $ (27,838 ) $ 22,797 Non-compete agreements 4 9,098 (8,032 ) 1,066 Formulas 20 4,544 (772 ) 3,772 Trademarks/Trade names (A) 2,151 (340 ) 1,811 Total $ 66,428 $ (36,982 ) $ 29,446 (A) Consist of indefinite lived and finite lived intangible assets. |
4. Inventory (Tables)
4. Inventory (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Tables | |
Schedule of inventory | December 31, 2014 Finished goods $ 12,285 Raw materials 2,781 Work in process 360 Total $ 15,426 |
5. Property and Equipment (Tabl
5. Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property And Equipment Tables | |
Schedule of Property and Equipment | December 31, 2015 2014 Items in service $ - $ 48,928 Equipment, laundry facility equipment and furniture - 10,276 Vehicles - 2,380 Computer equipment - 2,312 Computer software 27 7,378 Building and leasehold improvements - 6,191 27 77,465 Less accumulated depreciation and amortization (1 ) (40,428 ) Property and equipment, net $ 26 $ 37,037 |
6. Long Term Debt and Obligatio
6. Long Term Debt and Obligations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Long Term Debt And Obligations Tables | |
Schedule of long term obligations | December 31, 2014 Continuing Operations Discontinued Operations Notes payable $ 1,193 $ - Convertible promissory notes, 4.0%: maturing at various dates through 2016 832 - Capitalized lease obligations and other financing 843 201 Total debt and obligations 2,868 201 Long-term debt and obligations due within one year (1,790 ) (94 ) Long-term debt and obligations $ 1,078 $ 107 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes Tables | |
Schedule of net loss before income taxes | Net loss from continuing operations before income taxes for the years ended December 31, 2015 and 2014 includes: 2015 2014 Domestic $ (11,326 ) $ (6,498 ) Net loss from continuing operations before income taxes $ (11,326 ) $ (6,498 ) Net loss from discontinued operations before income taxes for the years ended December 31, 2015 and 2014 includes: 2015 2014 Domestic $ (45,441 ) $ (35,959 ) Foreign (866 ) (4,440 ) Net loss from discontinued operations before income taxes $ (46,307 ) $ (40,399 ) |
Schedule of components of the provision for income taxes | 2015 2014 Current Federal, state and foreign $ (19 ) $ 2 Deferred: Federal and state (24 ) 13 Foreign - (104 ) Total benefit from income taxes $ (43 ) $ (89 ) |
Schedule of reconciliation of the statutory U.S. Federal income tax rate | 2015 2014 U.S. Federal statutory rate 34 % 35 % State and local taxes, net of Federal benefit 3 4 Other permanent expenses (6 ) - Change in valuation allowance (31 ) (39 ) Effective income tax rate - % - % |
Schedule of deferred income taxes | 2015 2014 Deferred tax assets Capital loss carryforward $ 50,373 $ - Net operating loss carryforward 14,319 11,007 Accrued liabilities 197 - Other 22 - Total deferred income tax assets 64,911 11,007 Valuation allowance (64,911 ) (11,007 ) Net deferred tax assets - - Deferred tax liabilities Total deferred tax liabilities - - Total net deferred income tax liabilities $ - $ - |
Deferred tax assets and liabilities from discontinued operations | 2014 Deferred tax assets Basis difference in goodwill $ 26,449 Net operating loss carryforward 44,855 Basis difference in other intangible assets 3,462 Stock based compensation 3,498 Allowance for uncollectible receivables 1,184 State basis difference in property and equipment 890 Inventory 550 Accrued liabilities 1,827 Other 127 Total deferred income tax assets 82,842 Valuation allowance (75,777 ) Net deferred tax assets 7,065 Deferred tax liabilities Basis difference in property and equipment 7,089 Total deferred tax liabilities 7,089 Total net deferred income tax liabilities $ 24 |
10. Equity Matters (Tables)
10. Equity Matters (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity Matters Tables | |
Changes in each component of accumulated other comprehensive loss | Foreign Exchange Defined Benefit Plan Total Balance at December 31, 2014 $ (125 ) $ (1,182 ) $ (1,307 ) Current period other comprehensive income 125 (82 ) 43 Balance at December 31, 2015 $ - $ (1,264 ) $ (1,264 ) |
Schedule of Company's stock option activity | Outstanding Options Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in millions) Balance at December 31, 2013 525,880 $ 22.05 Options granted 378,000 $ 4.10 Options cancelled (194,634 ) $ 18.00 Options exercised - Balance at December 31, 2014 709,246 Options granted - Options cancelled (222,033 ) $ 13.93 Options exercised - Balance at December 31, 2015 487,213 $ 13.45 0.1 $ - Expected to Vest after December 31, 2015 - $ - Exercisable at December 31, 2015 487,213 $ 13.45 0.1 $ - |
Schedule of Company's restricted stock activity | Number of Restricted Stock Units Weighted - Average Grant Date Fair Value Aggregate Intrinsic Value (in millions) Balance at December 31, 2013 38,186 $ 56.06 $ 0.2 Granted 53,873 $ 3.71 Vested (73,786 ) $ 17.67 Forfeited (11,507 ) $ 42.26 Balance at December 31, 2014 6,766 Granted - Vested (6,748 ) $ 77.39 Forfeited (18 ) $ 28.83 Balance at December 31, 2015 - $ - $ - |
Schedule of stock options valuation assumptions | 2014 Expected dividend yield - Risk free interest rate 1.9% - 2.0 % Expected volatility 32.70 % Expected life (years) 6.25 |
11. Retirement Plan (Tables)
11. Retirement Plan (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Retirement Plan Tables | |
Schedule of changes in benefit obligations and Plan assets | Benefit Obligation (In thousands) At December 31, 2013 $ 3,076 Interest cost 139 Actuarial loss 697 Benefit payments (117 ) At December 31, 2014 3,795 Interest cost 139 Actuarial gain (185 ) Benefit payments (129 ) At December 31, 2015 $ 3,620 Plan Assets (In thousands) At December 31, 2013 $ 2,221 Actual return on plan assets 108 Employer contributions 98 Benefit payments (117 ) At December 31, 2014 2,310 Actual return on plan assets (66 ) Employer contributions 93 Benefit payments (129 ) At December 31, 2015 $ 2,208 |
Schedule of net periodic benefit costs | 2015 2014 Interest cost $ 140 $ 139 Expected return on Plan assets (172 ) (166 ) Recognized net actuarial loss 33 8 Net periodic benefit cost (income) $ 1 $ (19 ) |
Schedule of measurement of the benefit obligation | 2015 2014 Discount rate 3.8 % 3.8 % Expected return on Plan assets 7.5 % 7.5 % |
Schedule of plan assets | Fair Value Measurements Level 1 as of December 31, 2015 2014 Equities: U. S. $ 919 $ 1,116 International 199 337 Fixed Income: U. S. 692 560 International 93 82 Cash, cash equivalents and other 305 215 Total $ 2,208 $ 2,310 |
14. Other Expense, Net (Tables)
14. Other Expense, Net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes payable issued or assumed on acquisitions (discontinuing operations) | |
Schedule of other expense | Other expense of continuing operations consists of the following for the years ended December 31, 2015 and 2014: 2015 2014 Interest Expense $ (65 ) $ (134 ) Fine Paid to the United States of America (2,000 ) - Total Other Expenses $ (2,065 ) $ (134 ) Other income (expense) of discontinued operations consists of the following for the years ended December 31, 2015 and 2014: 2015 2014 Interest Income $ - $ 9 Interest Expense (334 ) (253 ) Foreign Currency (620 ) (167 ) Gain (Loss) on Sale of Assets 2,080 (1,070 ) Loss on Extinguishment of Revolving Credit Facility (923 ) - Other 514 (48 ) Total Other Income (Expenses) $ 717 $ (1,529 ) |
15. Geographic Information (Tab
15. Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Geographic Information Tables | |
Schedule of revenue from geographic locations | 2015 2014 Revenue United States $ 138,449 $ 184,854 Canada 4,264 8,903 Total revenue $ 142,713 $ 193,757 |
Schedule of Canadian subsidiaries long lived assets | 2014 Long-Lived Assets Property and equipment, net $ 739 Other intangibles, net 528 Total long-lived assets $ 1,267 |
16. QUARTERLY FINANCIAL DATA (
16. QUARTERLY FINANCIAL DATA (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Data Tables | |
Schedule quarterly data | 2015 First Quarter Second Quarter Third Quarter Fourth Quarter Year Loss from continuing operations $ (2,226 ) $ (1,675 ) $ (2,506 ) $ (2,854 ) $ (9,261 ) Net loss from continuing operations $ (2,271 ) $ (1,717 ) $ (4,589 ) $ (2,749 ) $ (11,326 ) Net loss from discontinued operations $ (6,560 ) $ (5,973 ) $ (27,191 ) $ (6,540 ) $ (46,264 ) Basic and diluted loss per share - continuing operations $ (0.13 ) $ (0.10 ) $ (0.26 ) $ (0.15 ) $ (0.64 ) Basic and diluted loss per share - discontinued operations $ (0.37 ) $ (0.34 ) $ (1.53 ) $ (0.37 ) $ (2.61 ) 2014 Loss from continuing operations $ (2,425 ) $ (1,461 ) $ (1,177 ) $ (1,301 ) $ (6,364 ) Net loss from continuing operations $ (2,475 ) $ (1,484 ) $ (1,210 ) $ (1,329 ) $ (6,498 ) Net loss from discontinued operations $ (11,317 ) $ (13,662 ) $ (6,567 ) $ (8,764 ) $ (40,310 ) Basic and diluted loss per share - continuing operations $ (0.14 ) $ (0.08 ) $ (0.07 ) $ (0.08 ) $ (0.37 ) Basic and diluted loss per share - discontinued operations $ (0.64 ) $ (0.77 ) $ (0.37 ) $ (0.49 ) $ (2.27 ) |
1. Operations and Summary Of 37
1. Operations and Summary Of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Items in Service [Member] | Minimum [Member] | |
Estimated useful lives | 2 years |
Items in Service [Member] | Maximum [Member] | |
Estimated useful lives | 7 years |
Equipment, Laundry Facility Equipment and Furniture [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Equipment, Laundry Facility Equipment and Furniture [Member] | Maximum [Member] | |
Estimated useful lives | 20 years |
Vehicles [Member] | |
Estimated useful lives | 5 years |
Computer Equipment [Member] | |
Estimated useful lives | 3 years |
Computer Software [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Computer Software [Member] | Maximum [Member] | |
Estimated useful lives | 7 years |
Building and Leasehold Improvements [Member] | Minimum [Member] | |
Estimated useful lives | 1 year |
Building and Leasehold Improvements [Member] | Maximum [Member] | |
Estimated useful lives | 40 years |
1. Operations and Summary Of 38
1. Operations and Summary Of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Operations And Summary Of Significant Accounting Policies Details Narrative | ||
Allowance for doubtful accounts | $ 0 | $ 1,000 |
Inventory reserve | $ 0 | $ 800 |
2. Discontinued Operations an39
2. Discontinued Operations and Assets Held for Sale (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Assets held for sale, Current assets: | ||
Restricted cash | $ 318 | $ 0 |
Total noncurrent assets | 0 | 68,295 |
Total Assets | 0 | 43,790 |
Liabilities held for sale, Current liabilities: | ||
Short-term obligations | 0 | 1,790 |
Total current liabilities | 0 | 21,979 |
Other long term liabilities | 1,575 | 3,340 |
Total noncurrent liabilities | $ 0 | 1,389 |
Discontinued Operations | ||
Assets held for sale, Current assets: | ||
Cash and cash equivalents | 7,233 | |
Restricted cash | 231 | |
Accounts receivable | 18,751 | |
Inventory | 15,426 | |
Deferred tax asset | 534 | |
Other current assets | 1,615 | |
Total current assets | 43,790 | |
Property and equipment | 37,037 | |
Intangibles | 29,446 | |
Other noncurrent assets | 1,812 | |
Total noncurrent assets | 68,295 | |
Total Assets | 112,085 | |
Liabilities held for sale, Current liabilities: | ||
Accounts payable | 13,119 | |
Accrued payroll and benefits | 2,893 | |
Accrued expenses | 5,873 | |
Short-term obligations | 94 | |
Total current liabilities | 21,979 | |
Deferred tax liabilities | 558 | |
Long-term obligations | 107 | |
Other long term liabilities | 724 | |
Total noncurrent liabilities | 1,389 | |
Total liabilities | $ 23,368 |
2. Discontinued Operations an40
2. Discontinued Operations and Assets Held for Sale (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | $ 142,713 | $ 193,757 | ||||||||
Loss from discontinued operations | (46,307) | (40,399) | ||||||||
Income tax expense | (43) | (89) | ||||||||
Net loss from discontinued operations | $ (6,540) | $ (27,191) | $ (5,973) | $ (6,560) | $ (8,764) | $ (6,567) | $ (13,662) | $ (11,317) | (46,264) | (40,310) |
Discontinued Operations | ||||||||||
Revenue | 142,713 | 193,757 | ||||||||
Cost of sales | 66,684 | 89,101 | ||||||||
Route expense | 37,599 | 50,595 | ||||||||
Selling, general and administrative | 46,538 | 62,905 | ||||||||
Depreciation and amortization | 13,494 | 21,216 | ||||||||
Impairments | 22,807 | 8,810 | ||||||||
Loss on Sale Transaction | 2,615 | 0 | ||||||||
Other (income) expenses, net | (717) | 1,529 | ||||||||
Loss from discontinued operations | (46,307) | (40,399) | ||||||||
Income tax expense | 43 | 89 | ||||||||
Net loss from discontinued operations | $ (46,264) | $ (40,310) |
3. Goodwill And Other Intangi41
3. Goodwill And Other Intangible Assets (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2014USD ($) | |
Goodwill And Other Intangible Assets Details | |
Gross balance- beginning | $ 5,821 |
Impairment loss | (5,821) |
Net balance - ending | $ 0 |
3. Goodwill And Other Intangi42
3. Goodwill And Other Intangible Assets (Details 1) $ in Thousands | 12 Months Ended |
Dec. 31, 2014USD ($) | |
Carrying amount | $ 66,428 |
Accumulated amortization | (36,982) |
Net | 29,446 |
Customer Relationships | |
Carrying amount | 50,635 |
Accumulated amortization | (27,838) |
Net | $ 22,797 |
Weighted-average Amortization Period (Years) | 8 years 10 months 24 days |
Non-compete agreements | |
Carrying amount | $ 9,098 |
Accumulated amortization | (8,032) |
Net | $ 1,066 |
Weighted-average Amortization Period (Years) | 4 years |
Formulas | |
Carrying amount | $ 4,544 |
Accumulated amortization | (772) |
Net | $ 3,772 |
Weighted-average Amortization Period (Years) | 20 years |
Trademarks | |
Carrying amount | $ 2,151 |
Accumulated amortization | (340) |
Net | $ 1,811 |
5. Goodwill And Other Intangibl
5. Goodwill And Other Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
GoodwillAndOtherIntangibleAssetsDetailsNarrativeAbstract | ||
Non-cash impairment charge | $ 5,800 | |
Amortization of intangibles assets | $ 5,100 | $ 7,700 |
4. Inventory (Details)
4. Inventory (Details) $ in Thousands | Dec. 31, 2014USD ($) |
InventoryDetailsAbstract | |
Finished goods | $ 12,285 |
Raw materials | 2,781 |
Work in progress | 360 |
Inventory, net | $ 15,426 |
5. Property and Equipment (Deta
5. Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property and equipment, gross | $ 27 | $ 77,465 |
Less: accumulated depreciation and amortization | (1) | (40,428) |
Property and equipment, net | 26 | 0 |
Items in Service [Member] | ||
Property and equipment, gross | 0 | 48,928 |
Equipment, Laundry Facility Equipment and Furniture [Member] | ||
Property and equipment, gross | 0 | 10,276 |
Vehicles [Member] | ||
Property and equipment, gross | 0 | 2,380 |
Computer Equipment [Member] | ||
Property and equipment, gross | 0 | 2,312 |
Computer Software [Member] | ||
Property and equipment, gross | 27 | 7,378 |
Building and Leasehold Improvements [Member] | ||
Property and equipment, gross | $ 0 | $ 6,191 |
6. Long Term Debt and Obligat46
6. Long Term Debt and Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Notes payable | $ 1,193 | |
Convertible promissory notes, 4.0%: maturing at various dates through 2016 | 832 | |
Capitalized lease obligations and other financing | 843 | |
Total debt and obligations | 2,868 | |
Long-term debt and obligations due within one year | $ 0 | (1,790) |
Long-term debt and obligations | 1,078 | |
Discontinued Operations | ||
Notes payable | 0 | |
Convertible promissory notes, 4.0%: maturing at various dates through 2016 | 0 | |
Capitalized lease obligations and other financing | 201 | |
Total debt and obligations | 201 | |
Long-term debt and obligations due within one year | (94) | |
Long-term debt and obligations | $ 107 |
8. Other Related Party Transa47
8. Other Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Other Related Party Transactions Details Narrative | ||
Purchases from Related Party | $ 0 | $ 5,400 |
Accounts Payable, Related Party | 0 | 300 |
Lease payments, Related Party | 600 | 900 |
Fees paid | $ 100 | $ 100 |
9. Income Taxes (Details)
9. Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Domestic | $ (11,326) | $ (6,498) |
Net loss from continuing operations before income taxes | (11,326) | (6,498) |
Loss from discontinued operations | (46,307) | (40,399) |
Discontinued Operations | ||
Domestic | (45,441) | (35,959) |
Foreign | (866) | (4,440) |
Loss from discontinued operations | $ (46,307) | $ (40,399) |
9. Income Taxes (Details 1)
9. Income Taxes (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred: | ||
Total income tax (benefit) expense | $ 43 | $ 89 |
Discontinued Operations | ||
Current Federal, state and foreign | (19) | 2 |
Deferred: | ||
Federal and state | (24) | 13 |
Foreign | 0 | (104) |
Total income tax (benefit) expense | $ (43) | $ (89) |
9. Income Taxes (Details 2)
9. Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes Details 2 | ||
U.S. Federal statutory rate | 34.00% | 35.00% |
State and local taxes, net of Federal benefit | 3.00% | 4.00% |
Other permanent expenses | (6.00%) | 0.00% |
Change in valuation allowance | (31.00%) | (39.00%) |
Effective income tax rate | 0.00% | 0.00% |
9. Income Taxes (Details 3)
9. Income Taxes (Details 3) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets | ||
Capital loss carryforward | $ 50,373 | $ 0 |
Net operating loss carryforward | 14,319 | 11,007 |
Accrued liabilities | 197 | 0 |
Other | 22 | 0 |
Total deferred income tax assets | 64,911 | 11,007 |
Valuation allowance | (64,911) | (11,007) |
Net deferred tax assets | 0 | 0 |
Deferred tax liabilities | ||
Total deferred tax liabilities | 0 | 0 |
Total net deferred income tax liabilities | $ 0 | 0 |
Discontinued Operations | ||
Deferred tax assets | ||
Basis difference in goodwill | 26,449 | |
Net operating loss carryforward | 44,855 | |
Basis difference in other intangible assets | 3,462 | |
Stock based compensation | 3,498 | |
Allowance for uncollectible receivables | 1,184 | |
State basis difference in property and equipment | 890 | |
Inventory | 550 | |
Accrued liabilities | 1,827 | |
Other | 127 | |
Total deferred income tax assets | 82,842 | |
Valuation allowance | (75,777) | |
Net deferred tax assets | 7,065 | |
Deferred tax liabilities | ||
Basis difference in property and equipment | 7,089 | |
Total deferred tax liabilities | 7,089 | |
Total net deferred income tax liabilities | $ 24 |
10. Equity Matters (Details)
10. Equity Matters (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Balance at December 31, 2014 | $ (1,307) | |
Current period other comprehensive loss | (57,547) | $ (47,586) |
Balance at December 31, 2015 | (1,264) | (1,307) |
Foreign Exchange | ||
Balance at December 31, 2014 | (125) | |
Current period other comprehensive loss | 125 | |
Balance at December 31, 2015 | 0 | (125) |
Defined Benefit Plan | ||
Balance at December 31, 2014 | (1,182) | |
Current period other comprehensive loss | (82) | |
Balance at December 31, 2015 | (1,264) | (1,182) |
Total | ||
Balance at December 31, 2014 | (1,307) | |
Current period other comprehensive loss | 43 | |
Balance at December 31, 2015 | $ (1,264) | $ (1,307) |
10. Equity Matters (Details 1)
10. Equity Matters (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Equity Matters Details 1 | ||
Number of Options Outstanding, Beginning | 709,246 | 525,880 |
Number of Options Granted | 0 | 378,000 |
Number of Options Cancelled | (222,033) | (194,634) |
Number of Options Exercised | 0 | 0 |
Number of Options Outstanding, Ending | 487,213 | 709,246 |
Exercisable at December 31, 2015 | 487,213 | |
Weighted Average Exercise Price Outstanding, Beginning | $ 13.59 | $ 22.05 |
Weighted Average Exercise Price Granted | 4.10 | |
Weighted Average Exercise Priced Cancelled | 13.93 | 18 |
Weighted Average Exercise Price Outstanding, Ending | 13.45 | $ 13.59 |
Weighted Average Exercise Price Exercisable | $ 13.45 | |
Weighted Average Remaining Contractual Term (in years) | 1 month 6 days | |
Exercisable at December 31, 2015 | 1 month 6 days | |
Aggregate Intrinsic Value, Outstanding | $ 0 | |
Aggregate Intrinsic Value, Exercisable | $ 0 |
10. Equity Matters (Details 2)
10. Equity Matters (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Equity Matters Details 2 | ||
Number of Restricted Stock Awards/Units Non-Vested, Beginning | 6,766 | 38,186 |
Granted | 0 | 53,873 |
Vested | (6,748) | (73,786) |
Forfeited | (18) | (11,507) |
Number of Restricted Stock Awards/Units Non-Vested Ending | 0 | 6,766 |
Weighted - Average Grant Date Fair Value, Beginning | $ 81.38 | $ 56.06 |
Granted | 0 | 3.71 |
Vested | 77.39 | 17.67 |
Forfeited | 28.83 | 42.26 |
Weighted - Average Grant Date Fair Value, Ending | $ 0 | $ 81.38 |
Aggregate Intrinsic Value | $ 0 | $ 0 |
10. Equity Matters (Details 3)
10. Equity Matters (Details 3) | 12 Months Ended |
Dec. 31, 2014 | |
Equity Matters Details 3 | |
Expected dividend yield | 0.00% |
Risk free interest rate, min | 1.90% |
Risk free interest rate, max | 2.00% |
Volatility factor | 32.70% |
Expected life | 6 years 3 months |
10. Equity Matters (Details Nar
10. Equity Matters (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Equity Matters Details Narrative | ||
Total intrinsic value of options | $ 0 | $ 0 |
Weighted average grant-date fair value of options granted | $ 1.47 | |
Outstanding and exercisable, options | 0 | 6,000 |
Outstanding and exercisable weighted average price | $ 11.50 | |
Outstanding and exercisable weighted average remaining contractual life | 2 months 12 days | |
Exercise prices for options granted Minimum | $ 4.04 | |
Exercise prices for options granted, Maximum | $ 4.80 | |
Rrecognized stock based compensation expense | $ 700 | $ 1,700 |
Total unrecognized compensation costs | $ 0 |
11. Retirement Plan (Details)
11. Retirement Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Interest cost | $ 140 | $ 139 |
Actuarial loss | 33 | 8 |
Benefit Obligation | ||
Beginning Balance, Benefit Obligation | 3,795 | 3,076 |
Interest cost | 139 | 139 |
Actuarial loss | (185) | 697 |
Benefit payments | (129) | (117) |
Ending Balance, Benefit Obligation | 3,620 | 3,795 |
Benefit payment | (129) | (117) |
Plan Assets | ||
Benefit payments | (129) | (117) |
Beginning Balance, Plan Assets | 2,310 | 2,221 |
Actual return on plan assets | (66) | 108 |
Employer contributions | 93 | 98 |
Benefit payment | (129) | (117) |
Ending Balance, Plan Assets | $ 2,208 | $ 2,310 |
11. Retirement Plan (Details 1)
11. Retirement Plan (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Retirement Plan Details 1 | ||
Interest cost | $ 140 | $ 139 |
Expected return on Plan assets | (172) | (166) |
Recognized net actuarial loss | 33 | 8 |
Net periodic benefit cost (income) | $ 1 | $ (19) |
11. Retirement Plan (Details 2)
11. Retirement Plan (Details 2) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Retirement Plan Details 2 | ||
Discount rate | 3.80% | 3.80% |
Expected return on Plan assets | 7.50% | 7.50% |
11. Retirement Plan (Details 3)
11. Retirement Plan (Details 3) - Fair Value, Inputs, Level 1 [Member] - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Equities: | ||
U. S. | $ 919 | $ 1,116 |
International | 199 | 337 |
Fixed Income: | ||
U. S. | 692 | 560 |
International | 93 | 82 |
Cash, cash equivalents and other | 305 | 215 |
Total | $ 2,208 | $ 2,310 |
12. Loss Per Share (Details Nar
12. Loss Per Share (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Loss Per Share Details Narrative | ||
Anti-Dilutive securities not included in the computation of diluted loss per share | 0 | 6,766 |
13. Commitments and Contingen62
13. Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments And Contingencies Details Narrative | ||
Total rent expense | $ 5,600 | $ 6,500 |
14. Other Expense, Net (Details
14. Other Expense, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Other Expense Net Details | ||
Interest expense | $ (65) | $ (134) |
Fine Paid to the United States of America | (2,000) | 0 |
Total other expense, net | $ (2,065) | $ (134) |
14. Other Expense, Net (Detai64
14. Other Expense, Net (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Interest expense | $ (65) | $ (134) |
Other | (2,065) | (134) |
Total other income (expense), net | (2,065) | (134) |
Discontinued Operations | ||
Interest income | 0 | 9 |
Interest expense | (334) | (253) |
Foreign currency | (620) | (167) |
Gain (Loss) on Sale of Assets | 2,080 | (1,070) |
Loss on Extinguishment of Revolving Credit Facility | (923) | 0 |
Other | 514 | (48) |
Total other income (expense), net | $ 717 | $ (1,529) |
15. Geographic Information (Det
15. Geographic Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | ||
United States | $ 138,449 | $ 184,854 |
Foreign countries | 4,264 | 8,903 |
Total revenue | $ 142,713 | $ 193,757 |
15. Geographic Information (D66
15. Geographic Information (Details 1) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Long-Lived Assets | ||
Property and equipment, net | $ 26 | $ 0 |
Canadian subsidiaries | ||
Long-Lived Assets | ||
Property and equipment, net | 739 | |
Other intangibles, net | 528 | |
Total long-lived assets | $ 1,267 |
16. QUARTERLY FINANCIAL DATA (D
16. QUARTERLY FINANCIAL DATA (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Data Details | ||||||||||
Loss from continuing operations | $ (2,854) | $ (2,506) | $ (1,675) | $ (2,226) | $ (1,301) | $ (1,177) | $ (1,461) | $ (2,425) | $ (9,261) | $ (6,364) |
Net loss from continuing operations | (2,749) | (4,589) | (1,717) | (2,271) | (1,329) | (1,210) | (1,484) | (2,475) | (11,326) | (6,498) |
Net loss from discontinued operations | $ (6,540) | $ (27,191) | $ (5,973) | $ (6,560) | $ (8,764) | $ (6,567) | $ (13,662) | $ (11,317) | $ (46,264) | $ (40,310) |
Basic and diluted loss per share - continuing operations | $ (0.15) | $ (0.26) | $ (0.10) | $ (0.13) | $ (0.08) | $ (0.07) | $ (0.08) | $ (0.14) | $ (0.64) | $ (0.37) |
Basic and diluted loss per share - discontinued operations | $ (0.37) | $ (1.53) | $ (0.34) | $ (0.37) | $ (0.49) | $ (0.37) | $ (0.77) | $ (0.64) | $ (2.61) | $ (2.27) |