Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | BALLANTYNE STRONG, INC. | |
Entity Central Index Key | 0000946454 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 14,518,756 | |
Trading Symbol | BTN | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 4,989 | $ 6,698 |
Restricted cash | 350 | 350 |
Accounts receivable (net of allowance for doubtful accounts of $1,624 and $1,832 respectively) | 12,394 | 13,841 |
Inventories, net | 3,615 | 3,490 |
Recoverable income taxes | 735 | 281 |
Other current assets | 1,876 | 1,663 |
Total current assets | 23,959 | 26,323 |
Property, plant and equipment (net of accumulated depreciation of $8,687 and $9,046, respectively) | 10,298 | 14,483 |
Operating lease right-of-use assets | 9,588 | |
Finance lease right-of-use assets | 839 | 692 |
Equity method investments | 10,450 | 11,167 |
Intangible assets, net | 1,748 | 1,795 |
Goodwill | 894 | 875 |
Notes receivable | 3,455 | 3,965 |
Other assets | 326 | 337 |
Total assets | 61,557 | 59,637 |
Current liabilities: | ||
Accounts payable | 4,092 | 4,724 |
Accrued expenses | 2,709 | 2,782 |
Short-term debt | 3,340 | 3,152 |
Current portion of long-term debt | 923 | 1,094 |
Current portion of operating lease obligations | 1,833 | |
Current portion of finance lease obligations | 181 | 160 |
Deferred revenue and customer deposits | 2,323 | 2,310 |
Total current liabilities | 15,401 | 14,222 |
Long-term debt, net of current portion and debt issuance costs | 3,645 | 10,053 |
Operating lease obligations, net of current portion | 8,042 | |
Finance lease obligations, net of current portion | 590 | 427 |
Deferred revenue and customer deposits, net of current portion | 1,171 | 1,167 |
Deferred income taxes | 2,577 | 2,516 |
Other accrued expenses, net of current portion | 87 | 254 |
Total liabilities | 31,513 | 28,639 |
Commitments and contingencies (Note 14) | ||
Stockholders' equity: | ||
Preferred stock, par value $.01 per share; authorized 1,000 shares, none outstanding | ||
Common stock, par value $.01 per share; authorized 25,000 shares; issued 17,313 and 17,237 shares at March 31, 2019 and December 31, 2018, respectively; outstanding 14,519 and 14,443 shares at March 31, 2019 and December 31, 2018, respectively | 169 | 169 |
Additional paid-in capital | 41,717 | 41,474 |
Accumulated other comprehensive income (loss): | ||
Foreign currency translation | (5,051) | (5,308) |
Postretirement benefit obligations | 127 | 125 |
Unrealized loss on available-for-sale securities of equity method investment | (286) | (195) |
Retained earnings | 11,954 | 13,319 |
Stockholder's equity before treasury stock | 48,630 | 49,584 |
Less 2,794 of common shares in treasury, at cost | (18,586) | (18,586) |
Total stockholders' equity | 30,044 | 30,998 |
Total liabilities and stockholders' equity | $ 61,557 | $ 59,637 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 1,624 | $ 1,832 |
Property, plant and equipment, accumulated depreciation | $ 8,687 | $ 9,046 |
Preferred stock par value | $ .01 | $ .01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | ||
Common stock par value | $ .01 | $ .01 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 17,313,000 | 17,237,000 |
Common stock, shares outstanding | 14,519,000 | 14,443,000 |
Common shares in treasury, shares | 2,794,000 | 2,794,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Total net revenues | $ 14,306 | $ 15,828 |
Total cost of revenues | 11,661 | 12,978 |
Gross profit | 2,645 | 2,850 |
Selling and administrative expenses: | ||
Selling | 1,228 | 1,225 |
Administrative | 3,929 | 4,709 |
Total selling and administrative expenses | 5,157 | 5,934 |
Loss on disposal of assets | (64) | |
Loss from operations | (2,576) | (3,084) |
Other income (expense): | ||
Interest expense | (119) | (45) |
Fair value adjustment to notes receivable | (510) | (42) |
Foreign currency transaction (loss) gain | (143) | 104 |
Other income (expense), net | 36 | (10) |
Total other (expense) income | (736) | 7 |
Loss before income taxes and equity method investment loss | (3,312) | (3,077) |
Income tax expense | 141 | 698 |
Equity method investment loss | (697) | (10) |
Net loss | $ (4,150) | $ (3,785) |
Basic loss per share | $ (0.29) | $ (0.26) |
Diluted loss per share | $ (0.29) | $ (0.26) |
Weighted-average shares used in computing net loss per share: | ||
Basic | 14,438 | 14,341 |
Diluted | 14,438 | 14,341 |
Product [Member] | ||
Total net revenues | $ 5,579 | $ 8,639 |
Total cost of revenues | 3,523 | 5,812 |
Service [Member] | ||
Total net revenues | 8,727 | 7,189 |
Total cost of revenues | $ 8,138 | $ 7,166 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (4,150) | $ (3,785) |
Adjustment to postretirement benefit obligation | 2 | 9 |
Unrealized loss on available-for-sale securities of equity method investments, net of tax | (91) | (52) |
Currency translation adjustment: | ||
Unrealized net change arising during period | 257 | (467) |
Total other comprehensive income (loss) | 168 | (510) |
Comprehensive loss | $ (3,982) | $ (4,295) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balance at Dec. 31, 2017 | $ 169 | $ 40,565 | $ 25,570 | $ (18,586) | $ (3,596) | $ 44,122 |
Net loss | (3,785) | (3,785) | ||||
Net other comprehensive income (loss) | (510) | (510) | ||||
Cumulative effect of adoption of ASC 606 | 76 | 76 | ||||
Stock-based compensation expense | 255 | 255 | ||||
Balance at Mar. 31, 2018 | 169 | 40,820 | 21,861 | (18,586) | (4,106) | 40,158 |
Balance at Dec. 31, 2018 | 169 | 41,474 | 13,319 | (18,586) | (5,378) | 30,998 |
Net loss | (4,150) | (4,150) | ||||
Net other comprehensive income (loss) | 168 | 168 | ||||
Cumulative effect of adoption of ASC 842 | 2,785 | 2,785 | ||||
Stock-based compensation expense | 243 | 243 | ||||
Balance at Mar. 31, 2019 | $ 169 | $ 41,717 | $ 11,954 | $ (18,586) | $ (5,210) | $ 30,044 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (4,150) | $ (3,785) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Provision for doubtful accounts, net of recoveries | (310) | 103 |
Provision for obsolete inventory | 53 | 44 |
Provision for warranty | 67 | 79 |
Depreciation and amortization | 795 | 524 |
Amortization and accretion of operating leases | 579 | |
Fair value adjustment to notes receivable | 510 | 42 |
Equity method investment loss | 697 | 10 |
Recognition of contract acquisition costs | 57 | |
Loss on disposal of assets | 64 | |
Deferred income taxes | 50 | 87 |
Stock-based compensation expense | 243 | 255 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,819 | (178) |
Inventories | (145) | 537 |
Other current assets | 2 | 5 |
Accounts payable | (592) | 256 |
Accrued expenses | (13) | 429 |
Operating lease obligations | (590) | |
Deferred revenue and customer deposits | 11 | 704 |
Current income taxes | (444) | 36 |
Other assets | (71) | (796) |
Net cash used in operating activities | (1,425) | (1,591) |
Cash flows from investing activities: | ||
Proceeds from sale of property, plant and equipment | 86 | |
Dividends received from investee in excess of cumulative earnings | 23 | |
Capital expenditures | (257) | (356) |
Net cash used in investing activities | (171) | (333) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 237 | |
Principal payments on short-term debt | (79) | |
Principal payments on long-term debt | (245) | (16) |
Payments on capital lease obligations | (49) | (53) |
Net cash used in financing activities | (136) | (69) |
Effect of exchange rate changes on cash and cash equivalents | 23 | 471 |
Net decrease in cash and cash equivalents and restricted cash | (1,709) | (1,522) |
Cash and cash equivalents and restricted cash at beginning of period | 7,048 | 4,870 |
Cash and cash equivalents and restricted cash at end of period | 5,339 | 3,348 |
Components of cash and cash equivalents and restricted cash: | ||
Cash and cash equivalents | 4,989 | 3,348 |
Restricted cash | 350 | |
Total cash and cash equivalents and restricted cash | 5,339 | 3,348 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Term loan borrowings to finance equipment purchases | 198 | |
Capital lease obligations for property and equipment | 232 | |
Short-term borrowings to finance insurance | $ 202 |
Nature of Operations
Nature of Operations | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 1. Nature of Operations Ballantyne Strong, Inc. (“Ballantyne” or the “Company”), a Delaware corporation, is a holding company with diverse business activities focused on serving the cinema, retail, financial, advertising and government markets. The Company, and its wholly owned subsidiaries Strong Technical Services, Inc., Strong/MDI Screen Systems, Inc. (“Strong/MDI”), Convergent Media Systems Corporation (“Convergent”) and Strong Digital Media, LLC design, integrate and install technology solutions for a broad range of applications; develop and deliver out-of-home messaging, advertising and communications; manufacture projection screens; and provide managed services including monitoring of networked equipment to our customers. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and all majority owned and controlled domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements included in this report are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America (also referred to as “GAAP”) for annual reporting purposes or those made in the Company’s Annual Report on Form 10-K. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The condensed consolidated balance sheet as of December 31, 2018 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary to present a fair statement of the financial position and the results of operations and cash flows for the respective interim periods. The results for interim periods are not necessarily indicative of trends or results expected for a full year. Use of Management Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and changes in facts and circumstances may alter such estimates and affect results of operations and financial position in future periods. Restricted Cash Restricted cash represents amounts held in a collateral account for the Company’s corporate travel and purchasing credit card program. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for doubtful accounts based on several factors, including overall customer credit quality, historical write-off experience and a specific analysis that projects the ultimate collectability of the account. As such, these factors may change over time causing the allowance level and bad debt expense to be adjusted accordingly. Equity Method Investments We apply the equity method of accounting to investments when we have significant influence, but not controlling interest, in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The Company’s proportionate share of the net income (loss) resulting from these investments is reported under the line item captioned “equity method investment income (loss)” in our condensed consolidated statements of operations. The carrying value of our equity method investments is reported in “equity method investments” in the condensed consolidated balance sheets. The Company’s equity method investments are reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company’s share of the investee’s income or loss is recorded on a one quarter lag for all equity method investments. The Company classifies distributions received from equity method investments using the cumulative earnings approach on the condensed consolidated statements of cash flows. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of the equity investments during the three month period ended March 31, 2019 and determined that the Company’s proportionate economic interest in the investments indicate that the investments were not other than temporarily impaired. Note 6 contains additional information on our equity method investments. Fair Value of Financial Instruments Assets and liabilities measured at fair value are categorized into a fair value hierarchy based upon the observability of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: ● Level 1 – inputs to the valuation techniques are quoted prices in active markets for identical assets or liabilities ● Level 2 – inputs to the valuation techniques are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly ● Level 3 – inputs to the valuation techniques are unobservable for the assets or liabilities The following tables present the Company’s financial assets measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements are classified, as of March 31, 2019 and December 31, 2018. Fair values measured on a recurring basis at March 31, 2019 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 4,989 $ - $ - $ 4,989 Restricted cash 350 - - 350 Notes receivable - - 3,455 3,455 Total $ 5,339 $ - $ 3,455 $ 8,794 Fair values measured on a recurring basis at December 31, 2018 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 6,698 $ - $ - $ 6,698 Restricted cash 350 - 350 Notes receivable - - 3,965 3,965 Total $ 7,048 $ - $ 3,965 $ 11,013 The following table reconciles the beginning and ending balance of the Company’s notes receivable at fair value (in thousands): Three Months Ended March 31, 2019 2018 Notes receivable balance, beginning of period $ 3,965 $ 2,815 Fair value adjustment (510 ) (42 ) Notes receivable balance, end of period $ 3,455 $ 2,773 Quantitative information about the Company’s level 3 fair value measurements at March 31, 2019 is set forth below (in thousands): Fair value at March 31, 2019 Valuation technique Unobservable input Value Notes receivable $ 3,455 Discounted cash flow Default percentage 39 % Discount rate 18 % During 2011, the Company entered into certain unsecured notes receivable arrangements with CDF2 Holdings, LLC pertaining to the sale and installation of digital projection equipment. The notes receivable accrue interest at a rate of 15% per annum. Interest not paid in any particular year is added to the principal and also accrues interest at 15%. The notes receivable are recorded at estimated fair value. In order to estimate the fair value, the Company reviews the financial position and estimated cash flows of the debtor of the notes receivable on a quarterly basis. The Company recorded decreases to the fair value of the notes receivable of approximately $0.5 million and $42 thousand, respectively, recorded in other expense in the Company’s condensed consolidated statement of operations during the three months ended March 31, 2019 and 2018, respectively. The significant unobservable inputs used in the fair value measurement of the Company’s notes receivable are discount rate and percentage of default. Significant increases (decreases) in any of these inputs in isolation would result in a significantly lower (higher) fair value measurement. The Company’s short-term and long-term debt is recorded at historical cost. As of March 31, 2019, the Company’s long-term debt, including current maturities, had a carrying value of $4.6 million. Based on discounted cash flows using current quoted interest rates (Level 2 of the fair value hierarchy), the estimated fair value at March 31, 2019 was $4.1 million. The carrying values of all other financial assets and liabilities, including accounts receivable, accounts payable, accrued expenses and short-term debt, reported in the condensed consolidated balance sheets equal or approximate their fair values due to the short-term nature of these instruments. Note 6 includes fair value information related to our equity method investments. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which include non-financial long-lived assets, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). The Company did not have any significant non-recurring measurements of non-financial assets or liabilities during the three months ended March 31, 2019 or 2018. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases (Topic 842),” which was further clarified by ASU 2018-11, “Leases – Targeted Improvements,” issued in July 2018. ASU 2016-02 requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months, on its balance sheet. This ASU is effective in fiscal years beginning after December 15, 2018 and initially required a modified retrospective transition method under which entities would initially apply Topic 842 at the beginning of the earliest period presented in the financial statements. ASU 2018-11 added an additional optional transition method allowing entities to apply Topic 842 as of the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted Topic 842 using the optional transition method from ASU 2018-11 as of January 1, 2019. Upon adoption, the Company recorded a balance sheet gross-up of approximately $4.7 million to record operating lease liabilities and related right-of-use assets. In addition, the sale-leaseback of the Company’s Alpharetta, Georgia office facility in June 2018, which did not qualify for sale-leaseback accounting under the previous lease accounting standard, qualified for sale-leaseback accounting under Topic 842, as Topic 842 eliminated the concept of continuing involvement by the seller-lessee precluding sale-leaseback accounting. Upon adoption, the Company recorded a cumulative effect adjustment increasing retained earnings by approximately $2.8 million, which represents the gain on the sale of the facility. The Company also derecognized approximately $4.0 million of net land and building assets and approximately $6.8 million of debt associated with the previous accounting as a failed sale-leaseback, and recorded approximately $5.0 million of operating lease right-of-use assets and liabilities for the leaseback under Topic 842. See Note 11 for more information about the Company’s leases. In August 2018, the Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The final rule is effective for all filings made on and after November 5, 2018. Given the effective date and proximity to most filers’ quarterly reports, the SEC did not object to filers deferring the presentation of changes in stockholders’ equity in their quarterly reports on Forms 10-Q until the quarter beginning after November 5, 2018. The Company elected to provide the required disclosure in a separate statement of stockholders’ equity beginning with this Form 10-Q. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new guidance eliminates Step 2 of the goodwill impairment testing which requires the fair value of individual assets and liabilities of a reporting unit to be determined when measuring goodwill impairment. The new guidance may result in different amounts of impairment that could be recognized compared to existing guidance. In addition, failing step 1 of the impairment test may not result in impairment under existing guidance. However, under the revised guidance, failing step 1 will always result in a goodwill impairment. ASU 2017-04 is to be applied prospectively for goodwill impairment testing performed in years beginning after December 15, 2019 with early adoption permitted. The Company adopted ASU 2017-04 in the first quarter of 2019. Adoption of ASU 2017-04 did not significantly impact the Company’s results of operations or financial position. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. The Company believes its adoption will not significantly impact the Company’s results of operations and financial position. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 3. Revenue The Company accounts for revenue using the following steps: ● Identify the contract, or contracts, with a customer ● Identify the performance obligations in the contract ● Determine the transaction price ● Allocate the transaction price to the identified performance obligations ● Recognize revenue when, or as, the Company satisfies the performance obligations The Company combines contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract, or the services are considered a single performance obligation. If an arrangement involves multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost plus margin approach. The Company estimates the amount of total contract consideration it expects to receive for variable arrangements by determining the most likely amount it expects to earn from the arrangement based on the expected quantities of services it expects to provide and the contractual pricing based on those quantities. The Company only includes some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company considers the sensitivity of the estimate, its relationship and experience with the client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company does not have any material extended payment terms as payment is due at or shortly after the time of the sale. Observable prices are used to determine the standalone selling price of separate performance obligations, or a cost plus margin approach is used when observable prices are not available. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue. The Company recognizes contract assets or unbilled receivables related to revenue recognized for services completed but not yet invoiced to the clients. Unbilled receivables are recorded as accounts receivable when the Company has an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when the Company invoices clients in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when the Company has satisfied the related performance obligation. Deferred contract acquisition costs are included in other assets. The Company defers costs to acquire contracts, including commissions, incentives and payroll taxes, if they are incremental and recoverable costs of obtaining a customer contract with a term exceeding one year. Deferred contract costs are reported within other assets and amortized to selling expense over the contract term, which generally ranges from one to five years. The Company has elected to recognize the incremental costs of obtaining a contract with a term of less than one year as a selling expense when incurred. The Company did not have any deferred contract costs as of March 31, 2019 or December 31, 2018. The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2019 (in thousands): Strong Cinema Convergent Strong Outdoor Other Eliminations Total Screen system sales $ 2,819 $ - $ - $ - $ - $ 2,819 Digital equipment sales 1,484 628 - - (3 ) 2,109 Field maintenance and monitoring services 2,218 2,773 - - (252 ) 4,739 Installation services 670 2,118 - - - 2,788 Extended warranty sales 234 - - - - 234 Advertising - - 1,080 - - 1,080 Other 428 19 13 123 (46 ) 537 Total $ 7,853 $ 5,538 $ 1,093 $ 123 $ (301 ) $ 14,306 The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2018 (in thousands): Strong Cinema Convergent Strong Outdoor Other Eliminations Total Screen system sales $ 4,018 $ - $ - $ - $ - $ 4,018 Digital equipment sales 3,158 832 - - (216 ) 3,774 Field maintenance and monitoring services 2,944 2,376 - - (139 ) 5,181 Installation services 328 1,360 - - - 1,688 Extended warranty sales 342 - - - - 342 Advertising - - 62 - - 62 Other 660 39 - 64 - 763 Total $ 11,450 $ 4,607 $ 62 $ 64 $ (355 ) $ 15,828 Screen system sales The Company recognizes revenue on the sale of its screen systems when control of the screen is transferred to the customer, usually at time of shipment. However, revenue is recognized upon delivery for certain international shipments with longer shipping transit time because control does not transfer to the customer until delivery. The cost of freight and shipping to the customer is recognized in cost of sales at the time of transfer of control to the customer. Digital equipment sales The Company recognizes revenue on sales of digital equipment when the control of the equipment is transferred, which occurs at the time of shipment from the Company’s warehouse or drop-shipment from a third party. The cost of freight and shipping to the customer is recognized in cost of sales at the time of transfer of control to the customer. Field maintenance and monitoring services The Company sells service contracts that provide maintenance and monitoring services to Strong Cinema and Convergent customers. In the Strong Cinema segment, these contracts are generally 12 months in length, while the term for service contracts in the Convergent segment can be for multiple years. Revenue related to service contracts is recognized over the term of the agreement in proportion to the costs incurred in fulfilling performance obligations under the contract. The Company also performs time and materials-based maintenance and repair work for customers in the Strong Cinema and Convergent segments. Revenue related to time and materials-based maintenance and repair work is recognized at a point in time when the performance obligation has been fully satisfied. Installation services The Company performs installation services for both its Strong Cinema and Convergent customers and recognizes revenue upon completion of the installations. Extended warranty sales The Company sells extended warranties to its Strong Cinema customers. When the Company is the primary obligor, revenue is recognized on a gross basis over the term of the extended warranty in proportion to the costs incurred in fulfilling performance obligations under the extended warranty. In third party extended warranty sales, the Company is not the primary obligor, and revenue is recognized on a net basis at the time of the sale. Advertising Strong Outdoor sells advertising space on top of taxicabs. Advertising revenue is recognized ratably over the contracted advertising periods. Timing of Revenue Recognition The following table disaggregates the Company’s revenue by the timing of transfer of goods or services to the customer for the three months ended March 31, 2019 (in thousands): Strong Cinema Convergent Strong Outdoor Other Eliminations Total Point in time $ 6,297 $ 2,995 $ 13 $ - $ (255 ) $ 9,050 Over time 1,556 2,543 1,080 123 (46 ) 5,256 Total $ 7,853 $ 5,538 $ 1,093 $ 123 $ (301 ) $ 14,306 The following table disaggregates the Company’s revenue by the timing of transfer of goods or services to the customer for the three months ended March 31, 2018 (in thousands): Strong Cinema Convergent Strong Outdoor Other Eliminations Total Point in time $ 9,599 $ 2,467 $ - $ - $ (355 ) $ 11,711 Over time 1,851 2,140 62 64 - 4,117 Total $ 11,450 $ 4,607 $ 62 $ 64 $ (355 ) $ 15,828 At March 31, 2019, the unearned revenue amount associated with maintenance and monitoring services, extended warranty sales and advertising services in which the Company is the primary obligor was $0.8 million. The Company expects to recognize $0.7 million of unearned revenue amounts throughout the rest of 2019 and immaterial amounts each year from 2020 through 2023. |
Loss Per Common Share
Loss Per Common Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Loss Per Common Share | 4. Loss Per Common Share Basic loss per share has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted loss per share would be computed on the basis of the weighted average number of shares of common stock outstanding after giving effect to potential common shares from dilutive stock options and certain non-vested shares of restricted stock and restricted stock units. However, because the Company reported losses in both periods presented, there were no differences between average shares used to compute basic and diluted loss per share for either of the three month periods ended March 31, 2019 and 2018. The following table summarizes the weighted average shares used to compute basic and diluted loss per share: Three Months Ended March 31, 2019 2018 Weighted average shares outstanding: Basic weighted average shares outstanding 14,438 14,341 Dilutive effect of stock options and certain non-vested restricted stock awards - - Diluted weighted average shares outstanding 14,438 14,341 Options to purchase 833,500 and 490,000 shares of common stock were outstanding as of March 31, 2019 and 2018, respectively, but were not included in the computation of diluted loss per share as the option’s exercise price was greater than the average market price of the common shares for each period. An additional 20,994 and 129,525 common stock equivalents related to options and restricted stock awards were excluded for the three months ended March 31, 2019 and 2018, respectively, as their inclusion would be anti-dilutive, thereby decreasing the net losses per share. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. Inventories Inventories consist of the following (in thousands): March 31, 2019 December 31, 2018 Raw materials and components $ 1,372 $ 1,422 Work in process 187 - Finished goods 2,056 2,068 $ 3,615 $ 3,490 The inventory balances are net of reserves of approximately $1.6 million and $1.4 million as of March 31, 2019 and December 31, 2018, respectively. |
Equity Method Investments
Equity Method Investments | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | 6. Equity Method Investments The following summarizes our equity method investments (dollars in thousands): March 31, 2019 December 31, 2018 Entity Carrying Amount Economic Interest Carrying Amount Economic Interest 1347 Property Insurance Holdings, Inc. $ 7,791 17.3 % $ 7,738 17.3 % Itasca Capital, Ltd. 2,659 32.3 % 3,429 32.3 % Total $ 10,450 $ 11,167 The following summarizes the income (loss) of equity method investees reflected in the condensed consolidated statements of operations (in thousands): Three Months Ended March 31, Entity 2019 2018 1347 Property Insurance Holdings, Inc. $ 144 $ 241 Itasca Capital, Ltd. (841 ) 103 BK Technologies Corporation - (354 ) Total $ (697 ) $ (10 ) 1347 Property Insurance Holdings, Inc. (“PIH”) is a publicly traded company that provides property and casualty insurance in the States of Louisiana, Texas and Florida. The Company’s Chief Executive Officer is chairman of the board of directors of PIH, and controls entities that, when combined with the Company’s ownership in PIH, own greater than 20% of PIH, providing the Company with significant influence over PIH, but not controlling interest. The Company did not receive dividends from PIH during the three month periods ended March 31, 2019 or 2018. On February 25, 2019, PIH announced a definitive agreement pursuant to which FedNat Holding Company will acquire substantially all of PIH’s homeowners’ insurance operations. PIH intends to maintain its Nasdaq listing and utilize the proceeds from the transaction to launch a new growth strategy focused on reinsurance, investment management and new investment opportunities. PIH intends to provide additional details on the rollout of this strategy prior to the expected closing of the transaction in the second quarter of 2019. Based on quoted market prices, the market value of the Company’s ownership in PIH was $5.5 million at March 31, 2019. Itasca Capital, Ltd. (“Itasca”) is a publicly traded Canadian company that is an investment vehicle seeking transformative strategic investments. The Company’s Chief Executive Officer is chairman of the board of directors of Itasca. This board seat, combined with the Company’s 32.3% ownership of Itasca, provide the Company with significant influence over Itasca, but not controlling interest. The Company did not receive dividends from Itasca during the three month periods ended March 31, 2019 or 2018. Based on quoted market prices, the market value of the Company’s ownership in Itasca was $1.8 million at March 31, 2019. BK Technologies Corporation (“BKTI”) is a publicly traded holding company that, through its wholly-owned operating subsidiary BK Technologies, Inc., designs, manufactures and markets two-way land mobile radios, repeaters, base stations and related components and subsystems. BK Technologies Corporation became the parent company of BK Technologies, Inc. following the completion of a holding company reorganization on March 28, 2019. On September 9, 2018, the Company entered into an agreement with Fundamental Global Investors, LLC (“FGI”), a related party, where the Company sold its shares of common stock of BKTI to FGI. Due to the Company’s significant influence, but not controlling interest, in BKTI, the Company’s investment in BKTI was accounted for using the equity method. Prior to the sale of the BKTI common stock, the Company received dividends of $23 thousand during the three month periods ended March 31, 2018. As of March 31, 2019, the Company’s retained earnings included accumulated deficit from its equity method investees of $0.4 million. The summarized financial information presented below reflects the financial information of the Company’s equity method investees for the three months ended December 31, 2018 and 2017, consistent with the Company’s recognition of the results of its equity method investments on a one-quarter lag. 2018 2017 For the three months ended December 31, Revenue $ 15,979 $ 20,576 Operating income (loss) $ 246 $ (2,034 ) Net loss $ (1,791 ) $ (2,557 ) |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 7. Intangible Assets Intangible assets consisted of the following at March 31, 2019 (dollars in thousands): Useful life Gross Accumulated Amortization Net (Years) Intangible assets not yet subject to amortization: Software in development $ 159 $ - $ 159 Intangible assets subject to amortization: Software in service 5 2,226 (711 ) 1,515 Product formulation 10 457 (383 ) $ 74 Total $ 2,842 $ (1,094 ) $ 1,748 Intangible assets consisted of the following at December 31, 2018 (dollars in thousands): Useful life Gross Accumulated Amortization Net (Years) Intangible assets not yet subject to amortization: Software in development $ 119 $ - $ 119 Intangible assets subject to amortization: Software in service 5 2,188 (595 ) 1,593 Product formulation 10 447 (364 ) 83 Total $ 2,754 $ (959 ) $ 1,795 Amortization expense relating to intangible assets was $0.2 million for each of the three months ended March 31, 2019 and 2018. The following table shows the Company’s estimated future amortization expense related to intangible assets currently subject to amortization for the next five years (in thousands): Remainder 2019 $ 373 2020 489 2021 450 2022 224 2023 53 Thereafter - Total $ 1,589 |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 8. Goodwill The following represents a summary of changes in the Company’s carrying amount of goodwill for the three months ended March 31, 2019 (in thousands): Balance as of December 31, 2018 $ 875 Foreign currency translation 19 Balance as of March 31, 2019 $ 894 |
Warranty Reserves
Warranty Reserves | 3 Months Ended |
Mar. 31, 2019 | |
Guarantees and Product Warranties [Abstract] | |
Warranty Reserves | 9. Warranty Reserves In most instances, the Company’s digital projection products are covered by the manufacturing firm’s original warranty; however, for certain customers the Company may grant warranties in excess of the manufacturer’s warranty. In addition, the Company provides warranty coverage on screens it manufactures. The Company accrues for these costs at the time of sale. The following table summarizes warranty activity for the three months ended March 31, 2019 and 2018 (in thousands): Three Months Ended March 31, 2019 2018 Warranty accrual at beginning of period $ 350 $ 521 Charged to expense 67 84 Claims paid, net of recoveries (33 ) (30 ) Foreign currency adjustment 6 (11 ) Warranty accrual at end of period $ 390 $ 564 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | 10. Debt The Company’s debt consists of the following (in thousands): March 31, 2019 December 31, 2018 Short-term debt: Strong/MDI installment loan $ 3,162 $ 3,152 Insurance note payable 178 - Current portion of long-term debt 923 1,094 Total short-term debt 4,263 4,246 Long-term debt: Sale-leaseback financing - 6,769 Equipment term loans 4,587 4,398 Total principal balance of long-term debt 4,587 11,167 Less: current portion (923 ) (1,094 ) Less: unamortized debt issuance costs (19 ) (20 ) Total long-term debt 3,645 10,053 Total short-term and long-term debt $ 7,908 $ 14,299 Equipment Term Loans On May 22, 2018, the Company’s subsidiary, Convergent, entered into an installment payment agreement with an equipment financing company in order to purchase media players and related equipment in an aggregate amount of up to approximately $4.4 million. Installment payments under each contract for purchase of the equipment are due monthly for a period of 60 months. The financing provided in the agreement is secured by the equipment, and the obligations under the agreement are recorded as long-term debt on the Company’s condensed consolidated balance sheet. In December 2018, Convergent entered into additional installment payment agreements with other financing companies in order to purchase additional media players and related equipment. This round of financing totaled approximately $0.6 million. Installment payments under each contract are due monthly for a period of 60 months. The financing under the agreements is secured by the equipment. The borrowings under the agreements are recorded as long-term debt on the Company’s consolidated balance sheet. Collectively, the Company had $4.6 million of outstanding borrowings under equipment term loan agreements at March 31, 2019, which bear interest at a weighted-average fixed rate of 7.4%. Strong/MDI Installment Loan On September 5, 2017, the Company’s Canadian subsidiary, Strong/MDI, entered into a demand credit agreement with a bank consisting of a revolving line of credit for up to CDN$3.5 million subject to a borrowing base requirement, a 20-year installment loan for up to CDN$6.0 million and a 5-year installment loan for up to CDN$500,000. Amounts outstanding under the line of credit are payable on demand and will bear interest at the prime rate established by the lender. Amounts outstanding under the installment loans will bear interest at the lender’s prime rate plus 0.5% and are payable in monthly installments, including interest, over their respective borrowing periods. The lender may also demand repayment of the installment loans at any time. The Strong/MDI credit facilities are secured by a lien on Strong/MDI’s Quebec, Canada facility and substantially all of Strong/MDI’s assets. The credit agreement requires Strong/MDI to maintain a ratio of liabilities to “effective equity” (tangible stockholders’ equity, less amounts receivable from affiliates and equity method investments) not exceeding 2 to 1, a current ratio (excluding amounts due from related parties) of at least 1.5 to 1 and minimum “effective equity” of CDN$8.0 million. On April 24, 2018, the Company borrowed CDN$3.5 million on the 20-year installment loan. There was CDN$4.2 million of principal outstanding on the 20-year installment loan as of March 31, 2019, which bears variable interest at 4.45%. Strong/MDI was in compliance with its debt covenants as of March 31, 2019. Sale-leaseback Financing On June 29, 2018 the Company and Convergent completed a sale-leaseback of Convergent’s Alpharetta, Georgia office facility. The transaction did not qualify for sale-leaseback accounting under the previous lease accounting standard and was accounted for as a financing liability. Upon adoption of ASC 842 during the first quarter of 2019, the Company derecognized approximately $6.8 million of debt associated with the previous accounting as a failed sale-leaseback. See Note 2 for additional details. Scheduled repayments are as follows for the Company’s long-term debt outstanding as of March 31, 2019 (in thousands): Remainder of 2019 $ 683 2020 969 2021 1,041 2022 1,120 2023 762 Thereafter 12 Total $ 4,587 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | 11. Leases The Company and its subsidiaries lease plant and office facilities and equipment under operating and finance leases expiring through 2028. The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Right-of-use assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. Certain of the leases contain extension options; however, the Company has not included such options as part of its right-of-use assets and lease liabilities because it does not expect to extend the leases. The Company measures and records a right-of-use asset and lease liability based on the discount rate implicit in the lease, if known. In cases where the discount rate implicit in the lease is not known, the Company measures the right-of-use assets and lease liabilities using a discount rate equal to the Company’s estimated incremental borrowing rate for loans with similar collateral and duration. The Company elected to not apply the recognition requirements of Topic 842 to leases of all classes of underlying assets that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Instead, lease payments for such short-term leases are recognized in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. The Company elected, as a lessee, for all classes of underlying assets, to not separate nonlease components from lease components and instead to account for each separate lease component and the nonlease components associated with that lease component as a single lease component. The following tables present the Company’s lease costs and other lease information as of and for the three months ended March 31, 2019 (dollars in thousands): Lease cost Finance lease cost: Amortization of right-of-use assets $ 49 Interest on lease liabilities 19 Operating lease cost 687 Short-term lease cost 6 Sublease income (86 ) Net lease cost $ 675 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 19 Operating cash flows from operating leases $ 590 Financing cash flows from finance leases $ 49 Right-of-use assets obtained in exchange for new finance lease liabilities $ 232 Right-of-use assets obtained in exchange for new operating lease liabilities $ 644 Weighted-average remaining lease term - finance leases (years) 4.3 Weighted-average remaining lease term - operating leases (years) 6.2 Weighted-average discount rate - finance leases 12.4 % Weighted-average discount rate - operating leases 7.8 % The following table presents a maturity analysis of the Company’s finance and operating lease liabilities as of March 31, 2019 (in thousands): Finance Leases Operating Leases Remainder 2019 $ 216 $ 1,912 2020 202 2,385 2021 202 2,287 2022 202 1,787 2023 187 656 Thereafter 6 3,117 Total lease payments 1,015 12,144 Less: Amount representing interest (244 ) (2,269 ) Present value of lease payments 771 9,875 Less: Current maturities (181 ) (1,833 ) Lease obligations, net of current portion $ 590 $ 8,042 The Company subleases certain office and warehouse space to third parties. Sublease income is included in net service revenues in the condensed consolidated statements of operations. The following table presents a maturity analysis of the Company’s long-term subleases (in thousands): Remainder 2019 $ 161 2020 163 2021 137 2022 23 2023 - Thereafter - Total sublease payments $ 484 The Company leases certain equipment to customers as a component of its Digital Signage as a Service (“DSaaS”) offering. Under DSaaS, the Company provides support, maintenance and content management services in addition to the use of a media player to the customer. The Company elected, as a lessor, for all classes of underlying assets, to not separate nonlease components from lease components and, instead, to account for each separate lease component and the nonlease components associated with that lease component as a single component if the nonlease components otherwise would be accounted for under Accounting Standards Codification Topic 606 on revenue from contracts with customers, and both of the following conditions are met: 1) the timing and pattern of transfer for the lease component and nonlease components associated with that lease component are the same and 2) the lease component, if accounted for separately, would be classified as an operating lease in accordance with Topic 842. The combined component is accounted for as a single performance obligation under Topic 606 if the nonlease component or components are the predominant component(s) of the combined component. Otherwise, if the lease component is the predominant component, the combined component is accounted for as an operating lease under ASC 842. In the case of the Company’s DSaaS contracts, the nonlease components are predominant; therefore, revenue from DSaaS contracts is accounted for under Topic 606 and is included in net service revenues in the condensed consolidated statements of operations. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. The Company considers the scheduled reversal of taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. A cumulative loss in a particular tax jurisdiction in recent years is a significant piece of evidence with respect to the realizability that is difficult to overcome. Based on the available objective evidence, including recent updates to the taxing jurisdictions generating income, the Company concluded that a valuation allowance should be recorded against all of the Company’s U.S. tax jurisdiction deferred tax assets as of March 31, 2019 and December 31, 2018. The Company is subject to possible examinations not yet initiated for Federal purposes for fiscal years 2015 through 2017. In most cases, the Company is subject to possible examinations by state or local jurisdictions based on the particular jurisdiction’s statute of limitations. |
Stock Compensation
Stock Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Compensation | 13. Stock Compensation The Company recognizes compensation expense for all stock-based payment awards made to employees and directors based on estimated grant date fair values. Stock-based compensation expense included in selling and administrative expenses approximated $0.2 million and $0.3 million for the three month periods ended March 31, 2019 and 2018, respectively. The Company’s 2017 Omnibus Equity Compensation Plan (“2017 Plan”) was approved by the Company’s stockholders and provides the Compensation Committee of the Board of Directors with the discretion to grant stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares, performance units and other stock-based awards and cash-based awards. Vesting terms vary with each grant and may be subject to vesting upon a “change in control” of the Company. The total number of shares authorized for issuance under the 2017 Plan is 1,371,189 shares, with 1,082,656 shares remaining available for grant at March 31, 2019. Options The Company did not grant options during the three month period ended March 31, 2019 and granted a total of 387,500 options during the three month period ended March 31, 2018. Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant. The weighted average grant date fair value of stock options granted during the three month period ended March 31, 2018 was $1.82. The fair value of each stock option granted was estimated on the date of grant using a Black-Scholes valuation model with the following weighted average assumptions: 2018 Expected dividend yield at date of grant 0.00 % Risk-free interest rate 2.49 % Expected stock price volatility 35.65 % Expected life of options (in years) 6.0 The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatility is based on historical daily price changes of the Company’s stock for six years prior to the date of grant. The expected life of options is the average number of years the Company estimates that options will be outstanding. The following table summarizes stock option activity for the three months ended March 31, 2019: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2018 867,000 $ 5.06 8.3 $ - Granted - - Exercised - - Forfeited (27,500 ) 5.19 Expired (6,000 ) 5.03 Outstanding at March 31, 2019 833,500 $ 5.06 8.0 $ - Exercisable at March 31, 2019 287,500 $ 5.12 7.5 $ - The aggregate intrinsic value in the table above represents the total that would have been received by the option holders if all in-the-money options had been exercised and sold on the date indicated. As of March 31, 2019, 546,000 stock option awards were non-vested. Unrecognized compensation cost related to stock option awards was approximately $1.0 million, which is expected to be recognized over a weighted average period of 3.3 years. Restricted Stock The Company estimates the fair value of restricted stock awards based upon the market price of the underlying common stock on the date of grant. As of March 31, 2019, the total unrecognized compensation cost related to non-vested restricted stock awards was approximately $0.7 million, which is expected to be recognized over a weighted average period of 1.6 years. The following table summarizes restricted stock share activity for the three months ended March 31, 2019: Number of Restricted Stock Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2018 46,667 $ 6.50 Granted - - Shares vested (23,333 ) 6.50 Shares forfeited - - Non-vested at March 31, 2019 23,334 $ 6.50 The following table summarizes restricted stock unit activity for the three months ended March 31, 2019: Number of Restricted Stock Units Weighted Average Grant Date Fair Value Non-vested at December 31, 2018 277,498 $ 3.33 Granted - - Shares vested (75,833 ) 3.87 Shares forfeited - - Non-vested at March 31, 2019 201,665 $ 3.12 |
Commitments, Contingencies and
Commitments, Contingencies and Concentrations | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Concentrations | 14. Commitments, Contingencies and Concentrations Litigation The Company is involved, from time to time, in certain legal disputes in the ordinary course of business operations. No such disputes, individually or in the aggregate, are expected to have a material effect on the Company’s business or financial condition. Concentrations The Company’s top ten customers accounted for approximately 52% of total consolidated net revenues for the three months ended March 31, 2019. Trade accounts receivable from these customers represented approximately 42% of net consolidated receivables at March 31, 2019. The Company had one customer account for more than 10% of its net revenues during the three months ended March 31, 2019. In addition, the Company had one customer account for more than 10% of net consolidated receivables at March 31, 2019. While the Company believes its relationships with such customers are stable, most arrangements are made by purchase order and are terminable at will by either party. A significant decrease or interruption in business from the Company’s significant customers could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company could also be adversely affected by such factors as changes in foreign currency rates and weak economic and political conditions in each of the countries in which the Company sells its products. Financial instruments that potentially expose the Company to a concentration of credit risk principally consist of accounts receivable. The Company sells product to a large number of customers in many different geographic regions. To minimize credit risk, the Company performs ongoing credit evaluations of its customers’ financial condition. Insurance Recoveries During February 2019, one portion of Strong/MDI’s Quebec, Canada facility sustained damage as a result of inclement weather. In connection with the damage to the facility, during the three months ended March 31, 2019, the Company incurred costs of (i) $0.1 million to write off the net book value of property and equipment and inventories and (ii) $0.3 million of salaries, debris removal, temporary facilities and other incremental operating expenses. The Company has property and casualty and business interruption insurance and has been working with its insurance carrier with regard to the insurance claims for reimbursement of incurred costs of the affected portion of the facility and compensation for the Company’s business interruption losses. The insurance company has informed the Company that is has established preliminary loss reserves for both property and casualty claims and business interruption claims totaling in excess of CDN$5.0 million. Those claims reserves are estimates based on preliminary information and are subject to change as the insurance carrier completes its analyses and continues their claims review process over the next several months. The ultimate amount of insurance proceeds to be received by the Company could be significantly different than the insurance company’s reserve estimates. During the quarter ended March, 31, 2019, the insurance carrier advanced $0.2 million of insurance proceeds to the Company. The insurance carrier has also informed the Company that a second advance payment of CDN$1.5 million is in process, which the Company expects to receive in the second quarter of 2019. For the three months ended March 31, 2019, the Company recorded total insurance recoveries of its incurred costs totaling $0.4 million, of which $0.2 million had been received prior to March 31, 2019 and $0.2 million which was included in Accounts Receivable on our condensed consolidated balance sheet. Those recoveries offset the operating costs detailed above, and effectively offset the incremental costs incurred by the Company in the first quarter. Recovery of lost revenue and profit under the business interruption coverage will be reflected in future periods as contingencies are resolved and the amounts are confirmed and received from the insurer. |
Business Segment Information
Business Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Business Segment Information | 15. Business Segment Information The Company conducts its operations through three primary business segments: Strong Cinema, Convergent and Strong Outdoor. Strong Cinema is one of the largest manufacturers of premium projection screens and also manufactures customized screen support systems, distributes other products and provides technical support services to the cinema, amusement park and other markets. Convergent delivers digital signage solutions and related services to large multi-location organizations in the United States and Canada. Strong Outdoor provides outdoor advertising and experiential marketing to corporate customers. The Company’s operating segments were determined based on the manner in which management organizes segments for making operating decisions and assessing performance. During the fourth quarter 2018, the Company separated its former Digital Media segment into separate Convergent and Strong Outdoor segments. All prior periods have been recast in our segment reporting to reflect the current segment organization. Summary by Business Segments Three Months Ended March 31, 2019 2018 (in thousands) Net revenues Strong Cinema $ 7,853 $ 11,450 Convergent 5,538 4,607 Strong Outdoor 1,093 62 Other 123 64 Total segment net revenues 14,607 16,183 Eliminations (301 ) (355 ) Total net revenues 14,306 15,828 Gross profit (loss) Strong Cinema 2,415 3,385 Convergent 1,569 666 Strong Outdoor (1,416 ) (1,265 ) Other 123 64 Total segment gross profit 2,691 2,850 Eliminations (46 ) - Total gross profit 2,645 2,850 Operating income (loss) Strong Cinema 1,159 2,325 Convergent 752 (1,025 ) Strong Outdoor (2,012 ) (1,497 ) Other (237 ) (87 ) Total segment operating loss (338 ) (284 ) Unallocated administrative expenses (2,238 ) (2,800 ) Loss from operations (2,576 ) (3,084 ) Other (expense) income, net (736 ) 7 Loss before income taxes and equity method investment loss $ (3,312 ) $ (3,077 ) (In thousands) March 31, 2019 December 31, 2018 Identifiable assets Strong Cinema $ 24,764 $ 27,009 Convergent 14,290 14,024 Strong Outdoor 6,516 3,454 Corporate assets 15,987 15,150 Total $ 61,557 $ 59,637 Summary by Geographical Area Three Months Ended March 31, (In thousands) 2019 2018 Net revenue United States $ 12,864 $ 12,830 Canada 798 1,400 China 212 541 Mexico 3 556 Latin America 29 270 Europe 280 158 Asia (excluding China) 58 73 Other 62 - Total $ 14,306 $ 15,828 (In thousands) March 31, 2019 December 31, 2018 Identifiable assets United States $ 46,038 $ 42,780 Canada 15,519 16,857 Total $ 61,557 $ 59,637 Net revenues by business segment are to unaffiliated customers. Net revenues by geographical area are based on destination of sales. Identifiable assets by geographical area are based on location of facilities. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and all majority owned and controlled domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements included in this report are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America (also referred to as “GAAP”) for annual reporting purposes or those made in the Company’s Annual Report on Form 10-K. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The condensed consolidated balance sheet as of December 31, 2018 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary to present a fair statement of the financial position and the results of operations and cash flows for the respective interim periods. The results for interim periods are not necessarily indicative of trends or results expected for a full year. |
Use of Management Estimates | Use of Management Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and changes in facts and circumstances may alter such estimates and affect results of operations and financial position in future periods. |
Restricted Cash | Restricted Cash Restricted cash represents amounts held in a collateral account for the Company’s corporate travel and purchasing credit card program. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for doubtful accounts based on several factors, including overall customer credit quality, historical write-off experience and a specific analysis that projects the ultimate collectability of the account. As such, these factors may change over time causing the allowance level and bad debt expense to be adjusted accordingly. |
Equity Method Investments | Equity Method Investments We apply the equity method of accounting to investments when we have significant influence, but not controlling interest, in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The Company’s proportionate share of the net income (loss) resulting from these investments is reported under the line item captioned “equity method investment income (loss)” in our condensed consolidated statements of operations. The carrying value of our equity method investments is reported in “equity method investments” in the condensed consolidated balance sheets. The Company’s equity method investments are reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company’s share of the investee’s income or loss is recorded on a one quarter lag for all equity method investments. The Company classifies distributions received from equity method investments using the cumulative earnings approach on the condensed consolidated statements of cash flows. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of the equity investments during the three month period ended March 31, 2019 and determined that the Company’s proportionate economic interest in the investments indicate that the investments were not other than temporarily impaired. Note 6 contains additional information on our equity method investments. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Assets and liabilities measured at fair value are categorized into a fair value hierarchy based upon the observability of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: ● Level 1 – inputs to the valuation techniques are quoted prices in active markets for identical assets or liabilities ● Level 2 – inputs to the valuation techniques are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly ● Level 3 – inputs to the valuation techniques are unobservable for the assets or liabilities The following tables present the Company’s financial assets measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements are classified, as of March 31, 2019 and December 31, 2018. Fair values measured on a recurring basis at March 31, 2019 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 4,989 $ - $ - $ 4,989 Restricted cash 350 - - 350 Notes receivable - - 3,455 3,455 Total $ 5,339 $ - $ 3,455 $ 8,794 Fair values measured on a recurring basis at December 31, 2018 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 6,698 $ - $ - $ 6,698 Restricted cash 350 - 350 Notes receivable - - 3,965 3,965 Total $ 7,048 $ - $ 3,965 $ 11,013 The following table reconciles the beginning and ending balance of the Company’s notes receivable at fair value (in thousands): Three Months Ended March 31, 2019 2018 Notes receivable balance, beginning of period $ 3,965 $ 2,815 Fair value adjustment (510 ) (42 ) Notes receivable balance, end of period $ 3,455 $ 2,773 Quantitative information about the Company’s level 3 fair value measurements at March 31, 2019 is set forth below (in thousands): Fair value at March 31, 2019 Valuation technique Unobservable input Value Notes receivable $ 3,455 Discounted cash flow Default percentage 39 % Discount rate 18 % During 2011, the Company entered into certain unsecured notes receivable arrangements with CDF2 Holdings, LLC pertaining to the sale and installation of digital projection equipment. The notes receivable accrue interest at a rate of 15% per annum. Interest not paid in any particular year is added to the principal and also accrues interest at 15%. The notes receivable are recorded at estimated fair value. In order to estimate the fair value, the Company reviews the financial position and estimated cash flows of the debtor of the notes receivable on a quarterly basis. The Company recorded decreases to the fair value of the notes receivable of approximately $0.5 million and $42 thousand, respectively, recorded in other expense in the Company’s condensed consolidated statement of operations during the three months ended March 31, 2019 and 2018, respectively. The significant unobservable inputs used in the fair value measurement of the Company’s notes receivable are discount rate and percentage of default. Significant increases (decreases) in any of these inputs in isolation would result in a significantly lower (higher) fair value measurement. The Company’s short-term and long-term debt is recorded at historical cost. As of March 31, 2019, the Company’s long-term debt, including current maturities, had a carrying value of $4.6 million. Based on discounted cash flows using current quoted interest rates (Level 2 of the fair value hierarchy), the estimated fair value at March 31, 2019 was $4.1 million. The carrying values of all other financial assets and liabilities, including accounts receivable, accounts payable, accrued expenses and short-term debt, reported in the condensed consolidated balance sheets equal or approximate their fair values due to the short-term nature of these instruments. Note 6 includes fair value information related to our equity method investments. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which include non-financial long-lived assets, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). The Company did not have any significant non-recurring measurements of non-financial assets or liabilities during the three months ended March 31, 2019 or 2018. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases (Topic 842),” which was further clarified by ASU 2018-11, “Leases – Targeted Improvements,” issued in July 2018. ASU 2016-02 requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months, on its balance sheet. This ASU is effective in fiscal years beginning after December 15, 2018 and initially required a modified retrospective transition method under which entities would initially apply Topic 842 at the beginning of the earliest period presented in the financial statements. ASU 2018-11 added an additional optional transition method allowing entities to apply Topic 842 as of the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted Topic 842 using the optional transition method from ASU 2018-11 as of January 1, 2019. Upon adoption, the Company recorded a balance sheet gross-up of approximately $4.7 million to record operating lease liabilities and related right-of-use assets. In addition, the sale-leaseback of the Company’s Alpharetta, Georgia office facility in June 2018, which did not qualify for sale-leaseback accounting under the previous lease accounting standard, qualified for sale-leaseback accounting under Topic 842, as Topic 842 eliminated the concept of continuing involvement by the seller-lessee precluding sale-leaseback accounting. Upon adoption, the Company recorded a cumulative effect adjustment increasing retained earnings by approximately $2.8 million, which represents the gain on the sale of the facility. The Company also derecognized approximately $4.0 million of net land and building assets and approximately $6.8 million of debt associated with the previous accounting as a failed sale-leaseback, and recorded approximately $5.0 million of operating lease right-of-use assets and liabilities for the leaseback under Topic 842. See Note 11 for more information about the Company’s leases. In August 2018, the Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The final rule is effective for all filings made on and after November 5, 2018. Given the effective date and proximity to most filers’ quarterly reports, the SEC did not object to filers deferring the presentation of changes in stockholders’ equity in their quarterly reports on Forms 10-Q until the quarter beginning after November 5, 2018. The Company elected to provide the required disclosure in a separate statement of stockholders’ equity beginning with this Form 10-Q. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new guidance eliminates Step 2 of the goodwill impairment testing which requires the fair value of individual assets and liabilities of a reporting unit to be determined when measuring goodwill impairment. The new guidance may result in different amounts of impairment that could be recognized compared to existing guidance. In addition, failing step 1 of the impairment test may not result in impairment under existing guidance. However, under the revised guidance, failing step 1 will always result in a goodwill impairment. ASU 2017-04 is to be applied prospectively for goodwill impairment testing performed in years beginning after December 15, 2019 with early adoption permitted. The Company adopted ASU 2017-04 in the first quarter of 2019. Adoption of ASU 2017-04 did not significantly impact the Company’s results of operations or financial position. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. The Company believes its adoption will not significantly impact the Company’s results of operations and financial position. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value Measured Financial Assets and Liabilities | Fair values measured on a recurring basis at March 31, 2019 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 4,989 $ - $ - $ 4,989 Restricted cash 350 - - 350 Notes receivable - - 3,455 3,455 Total $ 5,339 $ - $ 3,455 $ 8,794 Fair values measured on a recurring basis at December 31, 2018 (in thousands): Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 6,698 $ - $ - $ 6,698 Restricted cash 350 - 350 Notes receivable - - 3,965 3,965 Total $ 7,048 $ - $ 3,965 $ 11,013 |
Summary of Notes Receivable Reconciliation | The following table reconciles the beginning and ending balance of the Company’s notes receivable at fair value (in thousands): Three Months Ended March 31, 2019 2018 Notes receivable balance, beginning of period $ 3,965 $ 2,815 Fair value adjustment (510 ) (42 ) Notes receivable balance, end of period $ 3,455 $ 2,773 |
Summary of Quantitative Information About Company's Level 3 Fair Value Measurements | Quantitative information about the Company’s level 3 fair value measurements at March 31, 2019 is set forth below (in thousands): Fair value at March 31, 2019 Valuation technique Unobservable input Value Notes receivable $ 3,455 Discounted cash flow Default percentage 39 % Discount rate 18 % |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Major Source [Member] | |
Schedule of Disaggregation of Revenue | The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2019 (in thousands): Strong Cinema Convergent Strong Outdoor Other Eliminations Total Screen system sales $ 2,819 $ - $ - $ - $ - $ 2,819 Digital equipment sales 1,484 628 - - (3 ) 2,109 Field maintenance and monitoring services 2,218 2,773 - - (252 ) 4,739 Installation services 670 2,118 - - - 2,788 Extended warranty sales 234 - - - - 234 Advertising - - 1,080 - - 1,080 Other 428 19 13 123 (46 ) 537 Total $ 7,853 $ 5,538 $ 1,093 $ 123 $ (301 ) $ 14,306 The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2018 (in thousands): Strong Cinema Convergent Strong Outdoor Other Eliminations Total Screen system sales $ 4,018 $ - $ - $ - $ - $ 4,018 Digital equipment sales 3,158 832 - - (216 ) 3,774 Field maintenance and monitoring services 2,944 2,376 - - (139 ) 5,181 Installation services 328 1,360 - - - 1,688 Extended warranty sales 342 - - - - 342 Advertising - - 62 - - 62 Other 660 39 - 64 - 763 Total $ 11,450 $ 4,607 $ 62 $ 64 $ (355 ) $ 15,828 |
Timing of Transfer [Member] | |
Schedule of Disaggregation of Revenue | The following table disaggregates the Company’s revenue by the timing of transfer of goods or services to the customer for the three months ended March 31, 2019 (in thousands): Strong Cinema Convergent Strong Outdoor Other Eliminations Total Point in time $ 6,297 $ 2,995 $ 13 $ - $ (255 ) $ 9,050 Over time 1,556 2,543 1,080 123 (46 ) 5,256 Total $ 7,853 $ 5,538 $ 1,093 $ 123 $ (301 ) $ 14,306 The following table disaggregates the Company’s revenue by the timing of transfer of goods or services to the customer for the three months ended March 31, 2018 (in thousands): Strong Cinema Convergent Strong Outdoor Other Eliminations Total Point in time $ 9,599 $ 2,467 $ - $ - $ (355 ) $ 11,711 Over time 1,851 2,140 62 64 - 4,117 Total $ 11,450 $ 4,607 $ 62 $ 64 $ (355 ) $ 15,828 |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation Weighted Average Between Basic and Diluted Earnings Per Share | The following table summarizes the weighted average shares used to compute basic and diluted loss per share: Three Months Ended March 31, 2019 2018 Weighted average shares outstanding: Basic weighted average shares outstanding 14,438 14,341 Dilutive effect of stock options and certain non-vested restricted stock awards - - Diluted weighted average shares outstanding 14,438 14,341 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following (in thousands): March 31, 2019 December 31, 2018 Raw materials and components $ 1,372 $ 1,422 Work in process 187 - Finished goods 2,056 2,068 $ 3,615 $ 3,490 |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summary of Equity Method Investments | The following summarizes our equity method investments (dollars in thousands): March 31, 2019 December 31, 2018 Entity Carrying Amount Economic Interest Carrying Amount Economic Interest 1347 Property Insurance Holdings, Inc. $ 7,791 17.3 % $ 7,738 17.3 % Itasca Capital, Ltd. 2,659 32.3 % 3,429 32.3 % Total $ 10,450 $ 11,167 |
Summary of Income (Loss) of Equity Method Investees | The following summarizes the income (loss) of equity method investees reflected in the condensed consolidated statements of operations (in thousands): Three Months Ended March 31, Entity 2019 2018 1347 Property Insurance Holdings, Inc. $ 144 $ 241 Itasca Capital, Ltd. (841 ) 103 BK Technologies Corporation - (354 ) Total $ (697 ) $ (10 ) |
Summarized Financial Information | The summarized financial information presented below reflects the financial information of the Company’s equity method investees for the three months ended December 31, 2018 and 2017, consistent with the Company’s recognition of the results of its equity method investments on a one-quarter lag. 2018 2017 For the three months ended December 31, Revenue $ 15,979 $ 20,576 Operating income (loss) $ 246 $ (2,034 ) Net loss $ (1,791 ) $ (2,557 ) |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consisted of the following at March 31, 2019 (dollars in thousands): Useful life Gross Accumulated Amortization Net (Years) Intangible assets not yet subject to amortization: Software in development $ 159 $ - $ 159 Intangible assets subject to amortization: Software in service 5 2,226 (711 ) 1,515 Product formulation 10 457 (383 ) $ 74 Total $ 2,842 $ (1,094 ) $ 1,748 Intangible assets consisted of the following at December 31, 2018 (dollars in thousands): Useful life Gross Accumulated Amortization Net (Years) Intangible assets not yet subject to amortization: Software in development $ 119 $ - $ 119 Intangible assets subject to amortization: Software in service 5 2,188 (595 ) 1,593 Product formulation 10 447 (364 ) 83 Total $ 2,754 $ (959 ) $ 1,795 |
Schedule of Intangible Assets Future Amortization Expense | The following table shows the Company’s estimated future amortization expense related to intangible assets currently subject to amortization for the next five years (in thousands): Remainder 2019 $ 373 2020 489 2021 450 2022 224 2023 53 Thereafter - Total $ 1,589 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Carrying Amount of Goodwill | The following represents a summary of changes in the Company’s carrying amount of goodwill for the three months ended March 31, 2019 (in thousands): Balance as of December 31, 2018 $ 875 Foreign currency translation 19 Balance as of March 31, 2019 $ 894 |
Warranty Reserves (Tables)
Warranty Reserves (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Guarantees and Product Warranties [Abstract] | |
Schedule of Product Warranty Liability | The following table summarizes warranty activity for the three months ended March 31, 2019 and 2018 (in thousands): Three Months Ended March 31, 2019 2018 Warranty accrual at beginning of period $ 350 $ 521 Charged to expense 67 84 Claims paid, net of recoveries (33 ) (30 ) Foreign currency adjustment 6 (11 ) Warranty accrual at end of period $ 390 $ 564 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company’s debt consists of the following (in thousands): March 31, 2019 December 31, 2018 Short-term debt: Strong/MDI installment loan $ 3,162 $ 3,152 Insurance note payable 178 - Current portion of long-term debt 923 1,094 Total short-term debt 4,263 4,246 Long-term debt: Sale-leaseback financing - 6,769 Equipment term loans 4,587 4,398 Total principal balance of long-term debt 4,587 11,167 Less: current portion (923 ) (1,094 ) Less: unamortized debt issuance costs (19 ) (20 ) Total long-term debt 3,645 10,053 Total short-term and long-term debt $ 7,908 $ 14,299 |
Schedule of Long-term Debt Maturities | Scheduled repayments are as follows for the Company’s long-term debt outstanding as of March 31, 2019 (in thousands): Remainder of 2019 $ 683 2020 969 2021 1,041 2022 1,120 2023 762 Thereafter 12 Total $ 4,587 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Lease Costs and Other Lease Information | The following tables present the Company’s lease costs and other lease information as of and for the three months ended March 31, 2019 (dollars in thousands): Lease cost Finance lease cost: Amortization of right-of-use assets $ 49 Interest on lease liabilities 19 Operating lease cost 687 Short-term lease cost 6 Sublease income (86 ) Net lease cost $ 675 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 19 Operating cash flows from operating leases $ 590 Financing cash flows from finance leases $ 49 Right-of-use assets obtained in exchange for new finance lease liabilities $ 232 Right-of-use assets obtained in exchange for new operating lease liabilities $ 644 Weighted-average remaining lease term - finance leases (years) 4.3 Weighted-average remaining lease term - operating leases (years) 6.2 Weighted-average discount rate - finance leases 12.4 % Weighted-average discount rate - operating leases 7.8 % |
Schedule of Future Minimum Lease Payments | The following table presents a maturity analysis of the Company’s finance and operating lease liabilities as of March 31, 2019 (in thousands): Finance Leases Operating Leases Remainder 2019 $ 216 $ 1,912 2020 202 2,385 2021 202 2,287 2022 202 1,787 2023 187 656 Thereafter 6 3,117 Total lease payments 1,015 12,144 Less: Amount representing interest (244 ) (2,269 ) Present value of lease payments 771 9,875 Less: Current maturities (181 ) (1,833 ) Lease obligations, net of current portion $ 590 $ 8,042 |
Schedule of Maturity Analysis of Long-term Subleases | The following table presents a maturity analysis of the Company’s long-term subleases (in thousands): Remainder 2019 $ 161 2020 163 2021 137 2022 23 2023 - Thereafter - Total sublease payments $ 484 |
Stock Compensation (Tables)
Stock Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Weighted Average Assumptions for Fair Value of Stock Options Granted During the Period | The fair value of each stock option granted was estimated on the date of grant using a Black-Scholes valuation model with the following weighted average assumptions: 2018 Expected dividend yield at date of grant 0.00 % Risk-free interest rate 2.49 % Expected stock price volatility 35.65 % Expected life of options (in years) 6.0 |
Summary of Stock Options Activities | The following table summarizes stock option activity for the three months ended March 31, 2019: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2018 867,000 $ 5.06 8.3 $ - Granted - - Exercised - - Forfeited (27,500 ) 5.19 Expired (6,000 ) 5.03 Outstanding at March 31, 2019 833,500 $ 5.06 8.0 $ - Exercisable at March 31, 2019 287,500 $ 5.12 7.5 $ - |
Summary of Restricted Stock Activity | The following table summarizes restricted stock share activity for the three months ended March 31, 2019: Number of Restricted Stock Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2018 46,667 $ 6.50 Granted - - Shares vested (23,333 ) 6.50 Shares forfeited - - Non-vested at March 31, 2019 23,334 $ 6.50 |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes restricted stock unit activity for the three months ended March 31, 2019: Number of Restricted Stock Units Weighted Average Grant Date Fair Value Non-vested at December 31, 2018 277,498 $ 3.33 Granted - - Shares vested (75,833 ) 3.87 Shares forfeited - - Non-vested at March 31, 2019 201,665 $ 3.12 |
Business Segment Information (T
Business Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information by Segment | Summary by Business Segments Three Months Ended March 31, 2019 2018 (in thousands) Net revenues Strong Cinema $ 7,853 $ 11,450 Convergent 5,538 4,607 Strong Outdoor 1,093 62 Other 123 64 Total segment net revenues 14,607 16,183 Eliminations (301 ) (355 ) Total net revenues 14,306 15,828 Gross profit (loss) Strong Cinema 2,415 3,385 Convergent 1,569 666 Strong Outdoor (1,416 ) (1,265 ) Other 123 64 Total segment gross profit 2,691 2,850 Eliminations (46 ) - Total gross profit 2,645 2,850 Operating income (loss) Strong Cinema 1,159 2,325 Convergent 752 (1,025 ) Strong Outdoor (2,012 ) (1,497 ) Other (237 ) (87 ) Total segment operating loss (338 ) (284 ) Unallocated administrative expenses (2,238 ) (2,800 ) Loss from operations (2,576 ) (3,084 ) Other (expense) income, net (736 ) 7 Loss before income taxes and equity method investment loss $ (3,312 ) $ (3,077 ) |
Reconciliation of Assets from Segment to Consolidated | (In thousands) March 31, 2019 December 31, 2018 Identifiable assets Strong Cinema $ 24,764 $ 27,009 Convergent 14,290 14,024 Strong Outdoor 6,516 3,454 Corporate assets 15,987 15,150 Total $ 61,557 $ 59,637 |
Schedule of Segment Reporting Information by Geographic Area | Summary by Geographical Area Three Months Ended March 31, (In thousands) 2019 2018 Net revenue United States $ 12,864 $ 12,830 Canada 798 1,400 China 212 541 Mexico 3 556 Latin America 29 270 Europe 280 158 Asia (excluding China) 58 73 Other 62 - Total $ 14,306 $ 15,828 |
Summary of Identifiable Assets by Geographical Area | (In thousands) March 31, 2019 December 31, 2018 Identifiable assets United States $ 46,038 $ 42,780 Canada 15,519 16,857 Total $ 61,557 $ 59,637 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2011 | Mar. 31, 2019 | Mar. 31, 2018 | Jan. 02, 2019 | Dec. 31, 2018 |
Fair value adjustment of notes receivable | $ (510) | $ (42) | |||
Long-term debt | 4,587 | $ 11,167 | |||
Estimated fair value of long term debt | 4,100 | ||||
Operating lease, right-of-use asset | 9,588 | ||||
Operating lease, liability | 9,875 | ||||
Cumulative effect adjustment increasing retained earnings | 2,785 | ||||
Derecognized debt | 6,800 | ||||
ASU 2016-02 [Member] | |||||
Operating lease, right-of-use asset | 5,000 | $ 4,700 | |||
Operating lease, liability | 5,000 | $ 4,700 | |||
Derecognized land and building assets net | 4,000 | ||||
Derecognized debt | $ 6,800 | ||||
Unsecured Notes Receivable Arrangements [Member] | CDF2 Holdings, LLC [Member] | |||||
Percentage of notes receivable accrue interest rate | 15.00% | ||||
Description of accrues interest rate | The notes receivable accrue interest at a rate of 15% per annum. Interest not paid in any particular year is added to the principal and also accrues interest at 15%. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Fair Value Measured Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Cash and cash equivalents | $ 4,989 | $ 6,698 | |
Restricted cash | 350 | 350 | |
Notes receivable | 3,455 | 3,965 | |
Total | 8,794 | 11,013 | |
Level 1 [Member] | |||
Cash and cash equivalents | 4,989 | 6,698 | |
Restricted cash | 350 | 350 | |
Notes receivable | |||
Total | 5,339 | 7,048 | |
Level 2 [Member] | |||
Cash and cash equivalents | |||
Restricted cash | |||
Notes receivable | |||
Total | |||
Level 3 [Member] | |||
Cash and cash equivalents | |||
Restricted cash | |||
Notes receivable | 3,455 | 3,965 | |
Total | $ 3,455 | $ 3,965 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Notes Receivable Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounting Policies [Abstract] | ||
Notes receivable balance, beginning of period | $ 3,965 | $ 2,815 |
Fair value adjustment | (510) | (42) |
Notes receivable balance, end of period | $ 3,455 | $ 2,773 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Summary of Quantitative Information About Company's Level 3 Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Note receivable | $ 3,455 | $ 3,965 |
Valuation Technique | Discounted cash flow | |
Default Percentage [Member] | ||
Unobservable input | 39.00% | |
Discount Rate [Member] | ||
Unobservable input | 18.00% |
Revenue (Details Narrative)
Revenue (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Deferred contract costs | ||
Unearned revenue | 800 | |
Rest of 2019 [Member] | ||
Unearned revenue | 700 | |
2020 [Member] | ||
Unearned revenue | ||
2021 [Member] | ||
Unearned revenue | ||
2022 [Member] | ||
Unearned revenue | ||
2023 [Member] | ||
Unearned revenue | ||
Field Maintenance and Monitoring Services [Member] | ||
Contract duration or term with field maintenance | 12 months | |
Minimum [Member] | ||
Capitalized contract cost, amortization period | 1 year | |
Maximum [Member] | ||
Capitalized contract cost, amortization period | 5 years |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Major Source) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Total net revenues | $ 14,306 | $ 15,828 |
Screen System Sales [Member] | ||
Total net revenues | 2,819 | 4,018 |
Digital Equipment Sales [Member] | ||
Total net revenues | 2,109 | 3,774 |
Field Maintenance and Monitoring Services [Member] | ||
Total net revenues | 4,739 | 5,181 |
Installation Services [Member] | ||
Total net revenues | 2,788 | 1,688 |
Extended Warranty Sales [Member] | ||
Total net revenues | 234 | 342 |
Advertising [Member] | ||
Total net revenues | 1,080 | 62 |
Other Revenue [Member] | ||
Total net revenues | 537 | 763 |
Strong Cinema [Member] | ||
Total net revenues | 7,853 | 11,450 |
Strong Cinema [Member] | Screen System Sales [Member] | ||
Total net revenues | 2,819 | 4,018 |
Strong Cinema [Member] | Digital Equipment Sales [Member] | ||
Total net revenues | 1,484 | 3,158 |
Strong Cinema [Member] | Field Maintenance and Monitoring Services [Member] | ||
Total net revenues | 2,218 | 2,944 |
Strong Cinema [Member] | Installation Services [Member] | ||
Total net revenues | 670 | 328 |
Strong Cinema [Member] | Extended Warranty Sales [Member] | ||
Total net revenues | 234 | 342 |
Strong Cinema [Member] | Advertising [Member] | ||
Total net revenues | ||
Strong Cinema [Member] | Other Revenue [Member] | ||
Total net revenues | 428 | 660 |
Convergent [Member] | ||
Total net revenues | 5,538 | 4,607 |
Convergent [Member] | Screen System Sales [Member] | ||
Total net revenues | ||
Convergent [Member] | Digital Equipment Sales [Member] | ||
Total net revenues | 628 | 832 |
Convergent [Member] | Field Maintenance and Monitoring Services [Member] | ||
Total net revenues | 2,773 | 2,376 |
Convergent [Member] | Installation Services [Member] | ||
Total net revenues | 2,118 | 1,360 |
Convergent [Member] | Extended Warranty Sales [Member] | ||
Total net revenues | ||
Convergent [Member] | Advertising [Member] | ||
Total net revenues | ||
Convergent [Member] | Other Revenue [Member] | ||
Total net revenues | 19 | 39 |
Strong Outdoor [Member] | ||
Total net revenues | 1,093 | 62 |
Strong Outdoor [Member] | Screen System Sales [Member] | ||
Total net revenues | ||
Strong Outdoor [Member] | Digital Equipment Sales [Member] | ||
Total net revenues | ||
Strong Outdoor [Member] | Field Maintenance and Monitoring Services [Member] | ||
Total net revenues | ||
Strong Outdoor [Member] | Installation Services [Member] | ||
Total net revenues | ||
Strong Outdoor [Member] | Extended Warranty Sales [Member] | ||
Total net revenues | ||
Strong Outdoor [Member] | Advertising [Member] | ||
Total net revenues | 1,080 | 62 |
Strong Outdoor [Member] | Other Revenue [Member] | ||
Total net revenues | 13 | |
Other [Member] | ||
Total net revenues | 123 | 64 |
Other [Member] | Screen System Sales [Member] | ||
Total net revenues | ||
Other [Member] | Digital Equipment Sales [Member] | ||
Total net revenues | ||
Other [Member] | Field Maintenance and Monitoring Services [Member] | ||
Total net revenues | ||
Other [Member] | Installation Services [Member] | ||
Total net revenues | ||
Other [Member] | Extended Warranty Sales [Member] | ||
Total net revenues | ||
Other [Member] | Advertising [Member] | ||
Total net revenues | ||
Other [Member] | Other Revenue [Member] | ||
Total net revenues | 123 | 64 |
Eliminations [Member] | ||
Total net revenues | (301) | (355) |
Eliminations [Member] | Screen System Sales [Member] | ||
Total net revenues | ||
Eliminations [Member] | Digital Equipment Sales [Member] | ||
Total net revenues | (3) | (216) |
Eliminations [Member] | Field Maintenance and Monitoring Services [Member] | ||
Total net revenues | (252) | (139) |
Eliminations [Member] | Installation Services [Member] | ||
Total net revenues | ||
Eliminations [Member] | Extended Warranty Sales [Member] | ||
Total net revenues | ||
Eliminations [Member] | Advertising [Member] | ||
Total net revenues | ||
Eliminations [Member] | Other Revenue [Member] | ||
Total net revenues | $ (46) |
Revenue - Schedule of Disaggr_2
Revenue - Schedule of Disaggregation of Revenue (Timing of Transfer) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Total net revenues | $ 14,306 | $ 15,828 |
Transferred at Point in Time [Member] | ||
Total net revenues | 9,050 | 11,711 |
Transferred Over Time [Member] | ||
Total net revenues | 5,256 | 4,117 |
Strong Cinema [Member] | ||
Total net revenues | 7,853 | 11,450 |
Strong Cinema [Member] | Transferred at Point in Time [Member] | ||
Total net revenues | 6,297 | 9,599 |
Strong Cinema [Member] | Transferred Over Time [Member] | ||
Total net revenues | 1,556 | 1,851 |
Convergent [Member] | ||
Total net revenues | 5,538 | 4,607 |
Convergent [Member] | Transferred at Point in Time [Member] | ||
Total net revenues | 2,995 | 2,467 |
Convergent [Member] | Transferred Over Time [Member] | ||
Total net revenues | 2,543 | 2,140 |
Strong Outdoor [Member] | ||
Total net revenues | 1,093 | 62 |
Strong Outdoor [Member] | Transferred at Point in Time [Member] | ||
Total net revenues | 13 | |
Strong Outdoor [Member] | Transferred Over Time [Member] | ||
Total net revenues | 1,080 | 62 |
Other [Member] | ||
Total net revenues | 123 | 64 |
Other [Member] | Transferred at Point in Time [Member] | ||
Total net revenues | ||
Other [Member] | Transferred Over Time [Member] | ||
Total net revenues | 123 | 64 |
Eliminations [Member] | ||
Total net revenues | (301) | (355) |
Eliminations [Member] | Transferred at Point in Time [Member] | ||
Total net revenues | (255) | (355) |
Eliminations [Member] | Transferred Over Time [Member] | ||
Total net revenues | $ (46) |
Loss Per Common Share (Details
Loss Per Common Share (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Stock Option In Which Exercise Price Exceeds The Average Market Price of Common Shares [Member] | ||
Anti dilutive securities excluded from computation of earnings per share | 833,500 | 490,000 |
Common Stock Equivalents [Member] | ||
Anti dilutive securities excluded from computation of earnings per share | 20,994 | 129,525 |
Loss Per Common Share - Schedul
Loss Per Common Share - Schedule of Reconciliation Between Basic and Diluted Earnings Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares outstanding | 14,438 | 14,341 |
Dilutive effect of stock options and certain non-vested restricted stock award | ||
Diluted weighted average shares outstanding | 14,438 | 14,341 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Inventory valuation reserves | $ 1,600 | $ 1,400 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials and components | $ 1,372 | $ 1,422 |
Work in process | 187 | |
Finished goods | 2,056 | 2,068 |
Inventories net | $ 3,615 | $ 3,490 |
Equity Method Investments (Deta
Equity Method Investments (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Retained earnings undistributed earnings from our equity method investees | $ 400 | ||
1347 Property Insurance Holdings Inc [Member] | |||
Dividend received | |||
Quoted market value of the company's ownership | $ 5,500 | ||
Equity method ownership percentage | 17.30% | 17.30% | |
1347 Property Insurance Holdings Inc [Member] | Minimum [Member] | |||
Combined equity ownership percentage | 20.00% | ||
Itasca Capital Ltd [Member] | |||
Dividend received | |||
Quoted market value of the company's ownership | $ 1,800 | ||
Equity method ownership percentage | 32.30% | 32.30% | |
BK Technologies, Inc. [Member] | |||
Dividend received | $ 23 |
Equity Method Investments - Sum
Equity Method Investments - Summary of Equity Method Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Equity investment, Carrying Amount | $ 10,450 | $ 11,167 |
1347 Property Insurance Holdings Inc [Member] | ||
Equity investment, Carrying Amount | $ 7,791 | $ 7,738 |
Equity investment, Economic Interest | 17.30% | 17.30% |
Itasca Capital Ltd [Member] | ||
Equity investment, Carrying Amount | $ 2,659 | $ 3,429 |
Equity investment, Economic Interest | 32.30% | 32.30% |
Equity Method Investments - S_2
Equity Method Investments - Summary of Income (Loss) of Equity Method Investees (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Equity method investment income | $ (697) | $ (10) |
Equity Method Investments [Member] | ||
Equity method investment income | (697) | (10) |
1347 Property Insurance Holdings Inc [Member] | Equity Method Investments [Member] | ||
Equity method investment income | 144 | 241 |
Itasca Capital Ltd [Member] | Equity Method Investments [Member] | ||
Equity method investment income | (841) | 103 |
BK Technologies Corporation [Member] | Equity Method Investments [Member] | ||
Equity method investment income | $ (354) |
Equity Method Investments - S_3
Equity Method Investments - Summarized Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
Revenue | $ 15,979 | $ 20,576 |
Operating income (loss) | 246 | (2,034) |
Net income | $ (1,791) | $ 2,557 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 200 | $ 200 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Intangible assets, Gross | $ 2,842 | $ 2,754 |
Intangible assets, Accumulated amortization | (1,094) | (959) |
Intangible assets, Net | $ 1,748 | $ 1,795 |
Software in Service [Member] | ||
Intangible assets, Useful life | 5 years | 5 years |
Intangible assets, Gross | $ 2,226 | $ 2,188 |
Intangible assets, Accumulated amortization | (711) | (595) |
Intangible assets, Net | $ 1,515 | $ 1,593 |
Product Formulation [Member] | ||
Intangible assets, Useful life | 10 years | 10 years |
Intangible assets, Gross | $ 457 | $ 447 |
Intangible assets, Accumulated amortization | (383) | (364) |
Intangible assets, Net | 74 | 83 |
Software in Development [Member] | ||
Intangible assets, Gross | 159 | 119 |
Intangible assets, Accumulated amortization | ||
Intangible assets, Net | $ 159 | $ 119 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Intangible Assets Future Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Total | $ 1,748 | $ 1,795 |
Intangible Assets [Member] | ||
Remainder 2019 | 373 | |
2020 | 489 | |
2021 | 450 | |
2022 | 224 | |
2023 | 53 | |
Thereafter | ||
Total | $ 1,589 |
Goodwill - Summary of Changes i
Goodwill - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Balance | $ 875 |
Foreign currency translation | 19 |
Balance | $ 894 |
Warranty Reserves - Schedule of
Warranty Reserves - Schedule of Product Warranty Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Extended Product Warranty Disclosure [Abstract] | ||
Warranty accrual at beginning of period | $ 350 | $ 521 |
Charged to expense | 67 | 79 |
Claims paid, net of recoveries | (33) | (30) |
Foreign currency adjustment | 6 | (11) |
Warranty accrual at end of period | $ 390 | $ 564 |
Debt (Details Narrative)
Debt (Details Narrative) $ in Thousands, $ in Thousands | May 22, 2018USD ($) | Apr. 24, 2018CAD ($) | Sep. 05, 2017CAD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2019CAD ($) | Dec. 31, 2018USD ($) |
Long-term debt | $ 4,587 | $ 11,167 | ||||
Derecognized debt | $ 6,800 | |||||
20-year Installment Loan [Member] | ||||||
Loan term | 20 years | 20 years | ||||
Debt bearing interest fixed rate | 4.45% | 4.45% | ||||
Canadian Dollar [Member] | 20-year Installment Loan [Member] | ||||||
Long-term debt | $ 4,200 | |||||
Proceeds from issuance of debt | $ 3,500 | |||||
Installment Payment Agreement [Member] | ||||||
Line of credit facility, maximum borrowing capacity | $ 4,400 | |||||
Number of installment payments | 60 months | |||||
Debt description | Installment payments under each contract for purchase of the equipment are due monthly for a period of 60 months. The financing provided in the agreement is secured by the equipment, and the obligations under the agreement are recorded as long-term debt on the Company's condensed consolidated balance sheet. In December 2018, Convergent entered into additional installment payment agreements with other financing companies in order to purchase additional media players and related equipment. This round of financing totaled approximately $0.6 million. Installment payments under each contract are due monthly for a period of 60 months. | |||||
Equipment Term Loans [Member] | ||||||
Long-term debt | $ 4,600 | |||||
Weighted average fixed rate | 7.40% | 7.40% | ||||
Demand Credit Agreement [Member] | ||||||
Description on effective equity | The credit agreement requires Strong/MDI to maintain a ratio of liabilities to "effective equity" (tangible stockholders' equity, less amounts receivable from affiliates and equity method investments) not exceeding 2 to 1, a current ratio (excluding amounts due from related parties) of at least 1.5 to 1 and minimum "effective equity" of CDN$8.0 million. | |||||
Maximum liabilities to effective equity | 200.00% | |||||
Minimum current ratio | 150.00% | |||||
Demand Credit Agreement [Member] | Prime Rate [Member] | ||||||
Interest rate on lender of installment loans | 0.50% | |||||
Demand Credit Agreement [Member] | 20-year Installment Loan [Member] | ||||||
Loan term | 20 years | |||||
Demand Credit Agreement [Member] | 5-year Installment Loan [Member] | ||||||
Loan term | 5 years | |||||
Demand Credit Agreement [Member] | 5-year Installment Loan [Member] | Prime Rate [Member] | ||||||
Interest rate on lender of installment loans | 0.50% | |||||
Demand Credit Agreement [Member] | Canadian Dollar [Member] | ||||||
Minimum effective equity | $ 8,000 | |||||
Demand Credit Agreement [Member] | Canadian Dollar [Member] | 20-year Installment Loan [Member] | ||||||
Line of credit facility, maximum borrowing capacity | 6,000 | |||||
Demand Credit Agreement [Member] | Canadian Dollar [Member] | 5-year Installment Loan [Member] | ||||||
Line of credit facility, maximum borrowing capacity | 500 | |||||
Demand Credit Agreement [Member] | Line of Credit [Member] | Canadian Dollar [Member] | ||||||
Line of credit facility, maximum borrowing capacity | $ 3,500 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Strong/MDI installment loan | $ 3,340 | $ 3,152 |
Insurance note payable | 178 | |
Current portion of long-term debt | 923 | 1,094 |
Total short-term debt | 4,263 | 4,246 |
Total principal balance of long-term debt | 4,587 | 11,167 |
Less: current portion | (923) | (1,094) |
Less: unamortized debt issuance costs | (19) | (20) |
Total long-term debt | 3,645 | 10,053 |
Total short-term and long-term debt | 7,908 | 14,299 |
Strong/MDI Installment Loan [Member] | ||
Strong/MDI installment loan | 3,162 | 3,152 |
Sale-leaseback Financing [Member] | ||
Total principal balance of long-term debt | 6,769 | |
Equipment Term Loans [Member] | ||
Total principal balance of long-term debt | $ 4,587 | $ 4,398 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Remainder of 2019 | $ 683 | |
2020 | 969 | |
2021 | 1,041 | |
2022 | 1,120 | |
2023 | 762 | |
Thereafter | 12 | |
Total | $ 4,587 | $ 11,167 |
Leases (Details Narrative)
Leases (Details Narrative) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Operating lease expire, term | expiring through 2028 |
Finance lease, expire term | expiring through 2028 |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Costs And Other Lease Information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Finance lease cost: Amortization of right-of-use assets | $ 49 |
Finance lease cost: Interest on lease liabilities | 19 |
Operating lease cost | 687 |
Short-term lease cost | 6 |
Sublease income | (86) |
Net lease cost | 675 |
Operating cash flows from finance leases | 19 |
Operating cash flows from operating leases | 590 |
Financing cash flows from finance leases | 49 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 232 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 644 |
Weighted-average remaining lease term - finance leases (years) | 4 years 3 months 19 days |
Weighted-average remaining lease term - operating leases (years) | 6 years 2 months 12 days |
Weighted-average discount rate - finance leases | 12.40% |
Weighted-average discount rate - operating leases | 7.80% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Finance Leases, Remainder 2019 | $ 216 | |
Finance Leases, 2020 | 202 | |
Finance Leases, 2021 | 202 | |
Finance Leases, 2022 | 202 | |
Finance Leases, 2023 | 187 | |
Finance Leases, Thereafter | 6 | |
Finance Leases, Total lease payments | 1,015 | |
Less: Amount representing interest | (244) | |
Present value of lease payments | 771 | |
Less: Current maturities | (181) | $ (160) |
Lease obligations, net of current portion | 590 | 427 |
Operating Leases, Remainder 2019 | 1,912 | |
Operating Leases, 2020 | 2,385 | |
Operating Leases, 2021 | 2,287 | |
Operating Leases, 2022 | 1,787 | |
Operating Leases, 2023 | 656 | |
Operating Leases, Thereafter | 3,117 | |
Operating Leases, Total lease payments | 12,144 | |
Less: Amount representing interest | (2,269) | |
Present value of lease payments | 9,875 | |
Less: Current maturities | (1,833) | |
Lease obligations, net of current portion | $ 8,042 |
Leases - Schedule of Maturity A
Leases - Schedule of Maturity Analysis of Long-term Subleases (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Leases [Abstract] | |
Remainder 2019 | $ 161 |
2020 | 163 |
2021 | 137 |
2022 | 23 |
2023 | |
Thereafter | |
Total sublease payments | $ 484 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income tax examination description | The Company is subject to possible examinations not yet initiated for Federal purposes for fiscal years 2015 through 2017. In most cases, the Company is subject to possible examinations by state or local jurisdictions based on the particular jurisdiction's statute of limitations. |
Stock Compensation (Details Nar
Stock Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Number of shares granted | ||
Restricted Stock [Member] | ||
Compensation cost expected to be recognized, weighted average period | 1 year 7 months 6 days | |
Unrecognized for restricted stock, value | $ 700 | |
Stock Options [Member] | ||
Number of shares granted | 387,500 | |
Share based compensation arrangement by share based payment award options grants in period weighted average grant date fair value | $ 1.82 | |
Share-based compensation arrangement by share-based payment award, options, non-vested, number | 546,000 | |
Total unrecognized compensation cost related to stock option awards | $ 1,000 | |
Compensation cost expected to be recognized, weighted average period | 3 years 3 months 19 days | |
Year 2017 Plan [Member] | ||
Number of shares authorized for issuance | 1,371,189 | |
Share based compensation arrangement by share based payment award number of shares available for grant | 1,082,656 | |
Selling, General and Administrative Expenses [Member] | ||
Share based compensation expense | $ 200 | $ 300 |
Stock Compensation - Schedule o
Stock Compensation - Schedule of Weighted Average Assumptions for Fair Value of Stock Options Granted During the Period (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Expected dividend yield at date of grant | 0.00% |
Risk-free interest rate | 2.49% |
Expected stock price volatility | 35.65% |
Expected life of options (in years) | 6 years |
Stock Compensation - Summary of
Stock Compensation - Summary of Stock Options Activities (Details) | 3 Months Ended |
Mar. 31, 2019USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Options, Outstanding Beginning Balance | shares | 867,000 |
Number of Options, Granted | shares | |
Number of Options, Exercised | shares | |
Number of Options, Forfeited | shares | (27,500) |
Number of Options, Expired | shares | (6,000) |
Number of Options, Outstanding Ending Balance | shares | 833,500 |
Number of Options, Exercisable | shares | 287,500 |
Weighted Average Exercise Price Per Share, Outstanding Beginning Balance | $ / shares | $ 5.06 |
Weighted Average Exercise Price Per Share, Granted | $ / shares | |
Weighted Average Exercise Price Per Share, Exercised | $ / shares | |
Weighted Average Exercise Price Per Share, Forfeited | $ / shares | 5.19 |
Weighted Average Exercise Price Per Share, Expired | $ / shares | 5.03 |
Weighted Average Exercise Price Per Share, Outstanding Ending Balance | $ / shares | 5.06 |
Weighted Average Exercise Price Per Share, Exercisable | $ / shares | $ 5.12 |
Weighted Average Remaining Contractual Term, Beginning Balance | 8 years 3 months 19 days |
Weighted Average Remaining Contractual Term, Ending Balance | 8 years |
Weighted Average Remaining Contractual Term, Exercisable | 7 years 6 months |
Aggregate Intrinsic Value, Beginning Balance | $ | |
Aggregate Intrinsic Value, Ending Balance | $ | |
Aggregate Intrinsic Value, Exercisable | $ |
Stock Compensation - Summary _2
Stock Compensation - Summary of Restricted Stock Activity (Details) - Restricted Stock Shares [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Number of Restricted Stock, Non-vested beginning balance | shares | 46,667 |
Number of Restricted Stock, Granted | shares | |
Number of Restricted Stock, Vested | shares | (23,333) |
Number of Restricted Stock, Forfeited | shares | |
Number of Restricted Stock, Non-vested ending balance | shares | 23,334 |
Weighted Average Grant Date Fair Value, Non-vested Beginning Balance | $ / shares | $ 6.50 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 6.50 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | |
Weighted Average Grant Date Fair Value, Non-vested Ending Balance | $ / shares | $ 6.50 |
Stock Compensation - Schedule_2
Stock Compensation - Schedule of Nonvested Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Number of Restricted Stock, Non-vested beginning balance | shares | 277,498 |
Number of Restricted Stock, Granted | shares | |
Number of Restricted Stock, vested | shares | (75,833) |
Number of Restricted Stock, forfeited | shares | |
Number of Restricted Stock, Non-vested ending balance | shares | 201,665 |
Weighted Average Grant Date Fair Value, Non-vested beginning balance | $ / shares | $ 3.33 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 3.87 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | |
Weighted Average Grant Date Fair Value, Non-vested ending balance | $ / shares | $ 3.12 |
Commitments, Contingencies an_2
Commitments, Contingencies and Concentrations (Details Narrative) $ in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($) | Mar. 31, 2019CAD ($) | |
Strong/MDI's Quebec [Member] | ||
Write off on net book value of property and equipment and inventories | $ 100 | |
Write off on salaries, debris removal, temporary facilities and other incremental operating expenses | 300 | |
Proceeds from insurance | 200 | |
Insurance recoveries | 400 | |
Strong/MDI's Quebec [Member] | Accounts Receivable [Member] | ||
Insurance recoveries | 200 | |
Strong/MDI's Quebec [Member] | Prior to March 31, 2019 [Member] | ||
Insurance recoveries | $ 200 | |
Strong/MDI's Quebec [Member] | Canadian Dollar [Member] | ||
preliminary loss reserves for property, casualty claims and business interruption claims | $ 5,000 | |
Strong/MDI's Quebec [Member] | Canadian Dollar [Member] | Second Quarter 2019 [Member] | ||
Proceeds from insurance | $ 1,100 | |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Top 10 Customers [Member] | ||
Concentration risk, percentage | 52.00% | 52.00% |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | One Customer [Member] | ||
Concentration risk, percentage | 10.00% | 10.00% |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Top 10 Customers [Member] | ||
Concentration risk, percentage | 42.00% | 42.00% |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | One Customer [Member] | ||
Concentration risk, percentage | 10.00% | 10.00% |
Business Segment Information (D
Business Segment Information (Details Narrative) | 3 Months Ended |
Mar. 31, 2019Segments | |
Segment Reporting [Abstract] | |
Number of business segment | 3 |
Business Segment Information -
Business Segment Information - Schedule of Segment Reporting Information by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Total net revenues | $ 14,306 | $ 15,828 |
Total gross profit | 2,645 | 2,850 |
Loss from operations | 2,576 | 3,084 |
Other (expense) income, net | 36 | (10) |
Loss before income taxes and equity method investment loss | 3,312 | 3,077 |
Business Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Total segment net revenues | 14,607 | 16,183 |
Eliminations | (301) | (355) |
Total net revenues | 14,306 | 15,828 |
Total segment gross profit | 2,691 | 2,850 |
Eliminations | (46) | |
Total gross profit | 2,645 | 2,850 |
Total segment operating loss | (338) | (284) |
Unallocated administrative expenses | (2,238) | (2,800) |
Loss from operations | (2,576) | (3,084) |
Other (expense) income, net | (736) | 7 |
Loss before income taxes and equity method investment loss | (3,312) | (3,077) |
Business Segments [Member] | Strong Cinema [Member] | ||
Segment Reporting Information [Line Items] | ||
Total segment net revenues | 7,853 | 11,450 |
Total segment gross profit | 2,415 | 3,385 |
Total segment operating loss | 1,159 | 2,325 |
Business Segments [Member] | Convergent [Member] | ||
Segment Reporting Information [Line Items] | ||
Total segment net revenues | 5,538 | 4,607 |
Total segment gross profit | 1,569 | 666 |
Total segment operating loss | 752 | (1,025) |
Business Segments [Member] | Strong Outdoor [Member] | ||
Segment Reporting Information [Line Items] | ||
Total segment net revenues | 1,093 | 62 |
Total segment gross profit | (1,416) | (1,265) |
Total segment operating loss | (2,012) | (1,497) |
Business Segments [Member] | Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Total segment net revenues | 123 | 64 |
Total segment gross profit | 123 | 64 |
Total segment operating loss | $ (237) | $ (87) |
Business Segment Information _2
Business Segment Information - Reconciliation of Assets from Segment to Consolidated (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Identifiable assets | $ 61,557 | $ 59,637 |
Business Segments [Member] | Strong Cinema [Member] | ||
Identifiable assets | 24,764 | 27,009 |
Business Segments [Member] | Convergent [Member] | ||
Identifiable assets | 14,290 | 14,024 |
Business Segments [Member] | Strong Outdoor [Member] | ||
Identifiable assets | 6,516 | 3,454 |
Business Segments [Member] | Corporate Assets [Member] | ||
Identifiable assets | $ 15,987 | $ 15,150 |
Business Segment Information _3
Business Segment Information - Schedule of Segment Reporting Information by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net revenue | $ 14,306 | $ 15,828 |
United States [Member] | ||
Net revenue | 12,864 | 12,830 |
Canada [Member] | ||
Net revenue | 798 | 1,400 |
China [Member] | ||
Net revenue | 212 | 541 |
Mexico [Member] | ||
Net revenue | 3 | 556 |
Latin America [Member] | ||
Net revenue | 29 | 270 |
Europe [Member] | ||
Net revenue | 280 | 158 |
Asia (Excluding China) [Member] | ||
Net revenue | 58 | 73 |
Other [Member] | ||
Net revenue | $ 62 |
Business Segment Information _4
Business Segment Information - Summary of Identifiable Assets by Geographical Area (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Identifiable assets | $ 61,557 | $ 59,637 |
United States [Member] | ||
Identifiable assets | 46,038 | 42,780 |
Canada [Member] | ||
Identifiable assets | $ 15,519 | $ 16,857 |