Notes receivable

12 Months Ended

Dec. 28, 2024

Receivables [Abstract]

Notes receivable

Notes receivable

SPYR Note

On May 24, 2022, the Company entered into an Asset Purchase Agreement with SPYR Technologies Inc. (“SPYR”), pursuant to which the Company sold to SPYR substantially all of the assets and none of the specified liabilities of GeoTraq. In connection with the Purchase Agreement, SPYR delivered to the Company a five-year Promissory Note in the initial principal amount of $12.6 million. The Promissory Note bears simple interest at the rate of 8.0% per annum, provides quarterly interest payments due on the first day of each calendar quarter, and may be prepaid at any time without penalty. Interest payments may be remitted in either restricted shares of common stock or restricted shares of Series G Convertible Preferred Stock of SPYR, or in cash. The Promissory Note matures on May 24, 2027. The Company had received restricted shares of Series G Convertible Preferred Stock of SPYR equivalent to approximately 26,253,900,000 shares of its common stock during the year ended December 28, 2024, and 922,442,000 shares of SPYR's common stock during the year ended December 30, 2023. As of December 30, 2023, the Company had no accrued receivables related to the Promissory Note.

At December 30, 2023, the Company performed a qualitative analysis of the SPYR note receivable and concluded that, due to a number of triggering factors, it was probable that SPYR would be unable to fulfill its obligation to repay the principal amount under the promissory note on or before the maturity date. Consequently, the Company recorded an impairment charge of approximately $9.8 million for the fiscal year ended December 30, 2023.

During the fiscal years ended December 28, 2024 and December 30, 2023, approximately $0 and $806,000, respectively, of the discount was recorded as interest income. As of December 28, 2024 and December 30, 2023, no principal balance on the Note was outstanding.

VM7 Note

On March 9, 2023, the Company entered into a Stock Purchase Agreement (the “Recycling Purchase Agreement”) with VM7 Corporation, a Delaware corporation (“VM7”), under which it agreed to acquire all of the outstanding equity interests of the Recycling Subsidiaries, consisting of: (a) ARCA Recycling, (b) ARCA Canada, and (c) Connexx. The principal of VM7 is Virland A. Johnson, our Chief Financial Officer. The sale of all of the outstanding equity interests of the Recycling Subsidiaries to VM7 under the Recycling Purchase Agreement was consummated simultaneously with the execution of the Recycling Purchase Agreement. The Recycling Purchase Agreement is retroactive to March 1, 2023 (see Note 4).

The valuation, factoring in the discount rate that the Company used, yielded a present value of approximately $6.0 million, which, in addition to the $3,000 paid at close, comprised the approximately 6.0 million of net consideration. The amount of the revised discount amount, or approximately $18.0 million, was recorded as an offset to the principal amount of the Note, and was to have been accreted ratably to interest income over the term of the Note. During the year ended December 30, 2023, approximately $720,000 of the discount was recorded as interest income.

During the fourth quarter of fiscal 2023, VM7 determined that, after expending significant amounts of time and resources, it was unable to obtain sufficient equity or debt financing to continue the operations of the Recycling Subsidiaries. Accordingly, the Company was advised that the operations of the Recycling Subsidiaries were wound down and, ultimately, ceased. For a variety of related reasons, the Company determined fully to impair the $5.3 million carrying value of the Disposition Transaction on its balance sheet and determined not to exercise any of its remedies under the Recycling Purchase Agreement so that it could maintain its focus on its clinical-stage biopharmaceutical activities.