0001493152-18-006417.txt : 20180508 0001493152-18-006417.hdr.sgml : 20180508 20180508165045 ACCESSION NUMBER: 0001493152-18-006417 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 88 CONFORMED PERIOD OF REPORT: 20180331 FILED AS OF DATE: 20180508 DATE AS OF CHANGE: 20180508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BALLANTYNE STRONG, INC. CENTRAL INDEX KEY: 0000946454 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 470587703 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13906 FILM NUMBER: 18815408 BUSINESS ADDRESS: STREET 1: 11422 MIRACLE HILLS DRIVE STREET 2: SUITE 300 CITY: OMAHA STATE: NE ZIP: 68154 BUSINESS PHONE: 4024534444 MAIL ADDRESS: STREET 1: 11422 MIRACLE HILLS DRIVE STREET 2: SUITE 300 CITY: OMAHA STATE: NE ZIP: 68154 FORMER COMPANY: FORMER CONFORMED NAME: BALLANTYNE OF OMAHA INC DATE OF NAME CHANGE: 19950608 10-Q 1 form10q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

(Mark One)

 

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2018

 

OR

 

[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                 to               

 

 

 

Commission File Number: 1-13906

 

BALLANTYNE STRONG, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware   47-0587703
(State or Other Jurisdiction of   (IRS Employer
Incorporation or Organization)   Identification Number)

 

11422 Miracle Hills Drive, Suite 300, Omaha, Nebraska   68154
(Address of Principal Executive Offices)   (Zip Code)

 

(402) 453-4444

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

 

Large accelerated filer [  ] Accelerated filer [X]
Non-accelerated filer [  ]   (Do not check if a smaller reporting company)    
Smaller reporting company [  ] Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:

 

Class   Outstanding as of April 30, 2018
Common Stock, $.01, par value   14,422,090 shares

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page No.
     
  PART I. FINANCIAL INFORMATION
   
Item 1. Financial Statements 3
     
  Condensed Consolidated Balance Sheets, March 31, 2018 and December 31, 2017 3
     
  Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017 4
     
  Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2018 and 2017 5
     
  Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 6
     
  Notes to the Condensed Consolidated Financial Statements 8
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 32
     
Item 4. Controls and Procedures 33
     
  PART II. OTHER INFORMATION  
     
Item 1. Legal Proceedings 33
     
Item 1A. Risk Factors 33
     

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

     
Item 6. Exhibits 34
     
  Signatures 35

 

 2 

 

 

PART I. Financial Information

Item 1. Financial Statements

Ballantyne Strong, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except par values)

 

   March 31, 2018   December 31, 2017 
   (Unaudited)     
Assets          
Current assets:          
Cash and cash equivalents  $3,348   $4,870 
Accounts receivable (net of allowance for doubtful accounts of $1,976 and $1,877, respectively)   10,749    10,766 
Inventories:          
Raw materials and components, net   1,248    1,376 
Work in process   496    362 
Finished goods, net   2,449    3,083 
Total inventories, net   4,193    4,821 
Recoverable income taxes   492    495 
Other current assets   1,572    1,290 
Total current assets   20,354    22,242 
Property, plant and equipment (net of accumulated depreciation of $9,037 and $8,780 respectively)   10,542    10,826 
Equity method investments   17,833    18,053 
Intangible assets, net   3,947    3,972 
Goodwill   926    952 
Notes receivable   2,773    2,815 
Other assets   656    154 
Total assets  $57,031   $59,014 
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable  $4,221   $3,425 
Accrued expenses   3,562    3,071 
Short-term debt   500    500 
Current portion of long-term debt   65    65 
Deferred revenue and customer deposits   2,314    1,619 
Income tax payable   40    - 
Total current liabilities   10,702    8,680 
Long-term debt, net of current portion and debt issuance costs   1,855    1,870 
Deferred revenue and customer deposits, net of current portion   1,207    1,207 
Deferred income taxes   2,852    2,816 
Other accrued expenses, net of current portion   257    319 
Total liabilities   16,873    14,892 
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 17,216 shares; outstanding 14,422 shares   169    169 
Additional paid-in capital   40,820    40,565 
Accumulated other comprehensive income (loss):          
Foreign currency translation   (4,515)   (4,048)
Postretirement benefit obligations   108    99 
Unrealized gain on available-for-sale securities of equity method investments   301    353 
Retained earnings   21,861    25,570 
    58,744    62,708 
Less 2,794 of common shares in treasury, at cost   (18,586)   (18,586)
Total stockholders’ equity   40,158    44,122 
Total liabilities and stockholders’ equity  $57,031   $59,014 

 

See accompanying notes to condensed consolidated financial statements.

 

 3 

 

 

Ballantyne Strong, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2018 and 2017

(In thousands, except per share data)

(Unaudited)

 

   Three Months Ended March 31, 
   2018   2017 
Net product sales  $8,639   $12,456 
Net service revenues   7,189    5,470 
Total net revenues   15,828    17,926 
Cost of products sold   5,812    10,308 
Cost of services   7,166    3,179 
Total cost of revenues   12,978    13,487 
Gross profit   2,850    4,439 
Selling and administrative expenses:          
Selling   1,225    1,490 
Administrative   4,709    3,547 
Total selling and administrative expenses   5,934    5,037 
Loss from operations   (3,084)   (598)
Other income (expense):          
Interest income   -    22 
Interest expense   (45)   (10)
Foreign currency transaction gain   104    3 
Fair value adjustment to notes receivable   (42)   - 
Other (expense) income, net   (10)   5 
Total other income   7    20 
Loss before income taxes and equity method investment (loss) income   (3,077)   (578)
Income tax expense   698    1,493 
Equity method investment (loss) income   (10)   2,481 
Net (loss) earnings from continuing operations   (3,785)   410 
Net loss from discontinued operations, net of tax   -    (23)
Net (loss) earnings  $(3,785)  $387 
Net (loss) earnings per share - basic          
Net (loss) earnings from continuing operations  $(0.26)  $0.03 
Net loss from discontinued operations   -    (0.00)
Net (loss) earnings   (0.26)   0.03 
Net (loss) earnings per share - diluted          
Net (loss) earnings from continuing operations  $(0.26)  $0.03 
Net loss from discontinued operations   -    (0.00)
Net (loss) earnings   (0.26)   0.03 

 

See accompanying notes to condensed consolidated financial statements.

 

 4 

 

 

Ballantyne Strong, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive (Loss) Income

Three Months Ended March 31, 2018 and 2017

(In thousands)

(Unaudited)

 

   Three Months Ended March 31, 
   2018   2017 
Net (loss) earnings  $(3,785)  $387 
Adjustment to postretirement benefits   9    - 
Currency translation adjustment:          
Unrealized net change arising during period   (467)   109 
Unrealized loss on available-for-sale securities of equity method investments, net of tax   (52)   - 
Total other comprehensive (loss) income   (510)   109 
Comprehensive (loss) income  $(4,295)  $496 

 

See accompanying notes to condensed consolidated financial statements.

 

 5 

 

 

Ballantyne Strong, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2018 and 2017

(In thousands)

(Unaudited)

 

   Three Months Ended March 31, 
   2018   2017 
Cash flows from operating activities:          
Net (loss) earnings  $(3,785)  $387 
Net loss from discontinued operations, net of tax   -    (23)
Net (loss) earnings from continuing operations   (3,785)   410 
Adjustments to reconcile net (loss) earnings from continuing operations to net cash (used in) provided by operating activities:          
Provision for doubtful accounts   103    3 
Provision for obsolete inventory   44    68 
Provision for warranty   79    18 
Depreciation and amortization   524    482 
Equity method investment loss (income)   10    (2,481)
Fair value adjustment to notes receivable   42    - 
Deferred income taxes   87    867 
Amortization of contract acquisition costs   57    - 
Stock-based compensation expense   255    136 
Changes in operating assets and liabilities:          
Accounts receivable   (178)   (282)
Inventories   537    (514)
Other current assets   5    (102)
Accounts payable   256    2,321 
Accrued expenses   429    154 
Customer deposits/deferred revenue   704    (86)
Current income taxes   36    (156)
Other assets   (796)   (271)
Net cash flows (used in) provided by operating activities - continuing operations   (1,591)   567 
Net cash flows used in operating activities - discontinued operations   -    (24)
Net cash (used in) provided by operating activities   (1,591)   543 

 

(Continued on following page)

 

See accompanying notes to condensed consolidated financial statements.

 

 6 

 

 

Ballantyne Strong, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows - Continued

Three Months Ended March 31, 2018 and 2017

(In thousands)

(Unaudited)

 

   Three Months Ended March 31, 
   2018   2017 
Cash flows from investing activities:          
Purchase of equity securities  $-   $(2,525)
Dividends received from investee in excess of cumulative earnings   23    103 
Capital expenditures   (356)   (1,120)
Net cash used in investing activities - continuing operations   (333)   (3,542)
           
Cash flows from financing activities:          
Principal payments on long-term debt   (16)   - 
Purchase of treasury stock   -    (65)
Payments on capital lease obligations   (53)   (67)
Net cash used in financing activities - continuing operations   (69)   (132)
Effect of exchange rate changes on cash and cash equivalents - continuing operations   471    39 
Net decrease in cash and cash equivalents   (1,522)   (3,092)
Discontinued operations activity included above:          
Add: Cash balance included in assets held for sale at beginning of period   -    175 
Less: Cash balance included in assets held for sale at end of period   -    (150)
Cash and cash equivalents at beginning of period   4,870    7,596 
Cash and cash equivalents at end of period  $3,348   $4,529 

 

See accompanying notes to condensed consolidated financial statements.

 

 7 

 

 

Ballantyne Strong, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

 

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 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.

 

2. Discontinued Operations

 

In May 2017, the Company sold the operational assets of Strong Westrex, Inc. for total proceeds of $60 thousand.

 

The summary financial results of discontinued operations for the three months ended March 31, 2017 were as follows (in thousands):

 

Total net revenues  $12 
Total cost of revenues   26 
Total selling and administrative expenses   9 
Loss from operations of discontinued operations   (23)
Loss before income taxes   (23)
Income tax expense   - 
Net loss from discontinued operations, net of tax  $(23)

 

There was no depreciation and amortization related to discontinued operations recorded for the three month period ended March 31, 2017. There were no capital expenditures related to discontinued operations during the three month period ended March 31, 2017.

 

3. 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 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, 2017.

 

The condensed consolidated balance sheet as of December 31, 2017 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.

 

 8 

 

 

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.

 

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 (loss) income” 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. The Company did not record any impairments related to its investments during the three months ended March 31, 2018 or 2017. Note 6 contains additional information on our equity method investments, which are held by our Cinema segment.

 

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

 

 9 

 

 

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 fall, as of March 31, 2018 and December 31, 2017.

 

Fair values measured on a recurring basis at March 31, 2018 (in thousands):

 

   Level 1   Level 2   Level 3   Total 
Cash and cash equivalents  $3,348   $-   $-   $3,348 
Notes receivable   -    -    2,773   $2,773 
Total  $3,348   $-   $2,773   $6,121 

 

Fair values measured on a recurring basis at December 31, 2017 (in thousands):

 

   Level 1   Level 2   Level 3   Total 
Cash and cash equivalents  $4,870   $-   $-   $4,870 
Notes receivable   -    -    2,815   $2,815 
Total  $4,870   $-   $2,815   $7,685 

 

Quantitative information about the Company’s level 3 fair value measurements at March 31, 2018 is set forth below:

 

  

Fair value at 3/31/18

(in thousands)

   Valuation technique   Unobservable input   Range 
Notes receivable  $2,773    Discounted cash flow    Default percentage    49%
           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. During the first quarter of 2018, the Company updated its estimated future cash flow assumptions. This resulted in a decrease to the fair value of the notes receivable of $42 thousand recorded in earnings during the quarter ended March 31, 2018. There was no adjustment to the estimated fair value of the notes receivable during the quarter ended March 31, 2017.

 

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, 2018, the Company’s long-term debt, including current maturities, had a carrying value of $1.95 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, 2018 was $1.90 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). During the three months ended March 31, 2018 and 2017, the Company did not have any significant non-recurring measurements of non-financial assets or liabilities.

 

 10 

 

 

Recently Adopted Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” “(ASC 606)”. The ASU replaced most existing revenue recognition guidance in U.S. GAAP. The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method. The Company recorded a transition adjustment of approximately $76 thousand increasing the opening balance of retained earnings, primarily related to the deferral and amortization of direct and incremental costs of obtaining contracts. See Note 4 for further information about the nature and pattern of revenue recognition for the different types of contracts with customers.

 

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 requires equity investments that do not result in consolidation and are not accounted under the equity method to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets; and modifies certain fair value disclosure requirements. The Company adopted ASU 2016-01 prospectively on January 1, 2018. The adoption of this ASU did not significantly impact the Company’s results of operations and financial position.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The new guidance describes the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The Company adopted this ASU effective January 1, 2018. The adoption of this ASU did not significantly impact the Company’s results of operations and financial position.

 

Recently Issued Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” 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, with early adoption permitted, and requires a modified retrospective transition method. The Company is evaluating the requirements of ASU 2016-02 and its potential impact on the Company’s financial statements. The Company has leases primarily for property and equipment and is in the process of identifying and evaluating these leases for purposes of ASU 2016-02. For each of these leases, the term will be evaluated, including extension and renewal options as well as the lease payments. While the Company has not yet quantified the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements, the Company expects to record assets and liabilities on its balance sheet upon adoption of this standard, which may be material. The Company will continue to provide enhanced disclosures as it continues its assessment.

 

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.

 

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. The Company does not believe its adoption will significantly impact the Company’s results of operations or financial position.

 

 11 

 

 

4. Revenue

 

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method for all contracts not completed as of the date of adoption. Results for reporting periods beginning on or after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period.

 

Under ASC 606, 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 when one is 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.

 

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Deferred contract acquisition costs are included in other assets. Beginning January 1, 2018, with the adoption of ASC 606, 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. Prior to 2018, all contract acquisition costs were expensed as incurred. The Company recorded a transition adjustment of approximately $76 thousand increasing the opening balance of retained earnings, primarily related to the deferral and amortization of direct and incremental costs of obtaining contracts. The following table summarizes the changes in the Company’s contract asset balance during the three months ended March 31, 2018 (in thousands):

 

Deferred contract acquisition costs as of January 1, 2018  $76 
Costs capitalized   10 
Amortization   (14)
Impairment   - 
Deferred contract acquisition costs as of March 31, 2018  $72 

 

The following tables summarize the impact the adoption of ASC 606 had on the Company’s consolidated financial statements (in thousands, except per share data):

 

Condensed Consolidated Balance Sheet:

 

   As reported
March 31, 2018
   Adjustments   Balances
without
adoption of ASC 606
 
Total current assets  $20,354   $146   $20,500 
Total noncurrent assets   36,677    (14)   36,663 
Total assets  $57,031   $132   $57,163 
                
Total current liabilities  $10,702   $258   $10,960 
Total noncurrent liabilities   6,171    -    6,171 
Total liabilities   16,873    258    17,131 
                
Retained earnings   21,861    (126)   21,735 
Other stockholders’ equity   18,297    -    18,297 
Total stockholders’ equity   40,158    (126)   40,032 
Total liabilities and stockholders’ equity  $57,031   $132   $57,163 

 

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Condensed Consolidated Statement of Operations:

 

   As reported for
the three
months ended
March 31, 2018
   Adjustments   Balances
without
adoption of ASC 606
 
Total net revenues  $15,828   $(57)  $15,771 
Total cost of revenues   12,978    (2)   12,976 
Gross profit   2,850    (55)   2,795 
Total selling and administrative expenses   5,934    (5)   5,929 
Loss from operations   (3,084)   (50)   (3,134)
Other income   7    -    7 
Loss before income taxes and equity method investment loss   (3,077)   (50)   (3,127)
Income tax expense   698    -    698 
Equity method investment loss   (10)   -    (10)
Net loss  $(3,785)  $(50)  $(3,835)
Net loss per share of common stock:               
Basic  $(0.26)   (0.00)  $(0.26)
Diluted  $(0.26)   (0.00)  $(0.26)

 

The adoption of ASC 606 did not have any net impact on other comprehensive loss or cash flows.

 

The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2018:

 

   Cinema   Digital Media   Other   Eliminations   Total 
Screen system sales  $4,005   $-   $-   $-   $4,005 
Digital equipment sales   3,158    766    -    (216)   3,708 
Field maintenance and monitoring services   2,944    2,114    -    (138)   4,920 
Installation services   328    1,360    -    -    1,688 
Extended warranty sales   342    -   -    -    342 
Other   672    477    16    -    1,165 
Total  $11,449   $4,717   $16   $(354)  $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.

 

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 Cinema and Digital Media customers. In the Cinema segment, these contracts are generally 12 months in length, while the term for service contracts in the Digital Media segment can be for multiple years. Revenue is recognized over the term of the agreement in proportion to the costs incurred in fulfilling performance obligations under the contract.

 

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The Company also performs time and materials-based maintenance and repair work for customers in the Cinema and Digital Media segments. Revenue 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 Cinema and Digital Media customers and recognizes revenue upon completion of the installations.

 

Extended warranty sales

 

The Company sells extended warranties to its 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.

 

At January 1, 2018, $0.8 million of unearned revenue associated with maintenance and monitoring services and extended warranty sales in which the Company is the primary obligor was reported in deferred revenue and customer deposits. During the three months ended March 31, 2018, $0.4 million of this balance was earned and recognized as revenue. At March 31, 2018, the unearned revenue amount was $0.8 million. The Company expects to recognize $0.7 million of unearned revenue amounts throughout the rest of 2018, and immaterial amounts each year from 2019 through 2023.

 

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):

 

   Cinema   Digital Media   Other   Eliminations   Total 
Point in time  $9,598   $2,529   $16   $(354)  $11,789 
Over time   1,851    2,188    -    -    4,039 
Total  $11,449   $4,717   $16   $(354)  $15,828 

 

5. (Loss) Earnings Per Common Share

 

Basic (loss) earnings per share has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted (loss) earnings per share has been 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. The following table provides the reconciliation between average shares used to compute basic and diluted (loss) earnings per share:

 

   Three Months Ended March 31, 
   2018   2017 
Weighted average shares outstanding (in thousands):          
Basic weighted average shares outstanding   14,341    14,264 
Dilutive effect of stock options and certain non-vested shares of restricted stock   -    156 
Diluted weighted average shares outstanding   14,341    14,420 

 

For the three month period ended March 31, 2018, options to purchase 490,000 shares of common stock were outstanding but were not included in the computation of diluted loss per share as the option’s exercise price was greater than the average market price of the common shares for each period. An additional 129,525 common stock equivalents related to options and restricted stock awards were excluded for the three months ended March 31, 2018, respectively, as their inclusion would be anti-dilutive, thereby decreasing the net losses per share. For the three month period ended March 31, 2017, options to purchase 385,000 shares of common stock were outstanding but were not included in the computation of diluted earnings per share as the option’s exercise price was greater than the average market price of the common shares for the respective periods.

 

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6. Equity Method Investments

 

The following summarizes our equity method investments (dollars in thousands):

 

   March 31, 2018   December 31, 2017 
Entity  Carrying Amount   Economic Interest   Carrying Amount   Economic Interest 
RELM Wireless Corporation  $4,102    8.3%  $4,473    8.3%
Itasca Capital, Ltd.   5,814    32.3%   5,870    32.3%
1347 Property Insurance Holdings, Inc.   7,917    17.4%   7,710    17.4%
Total  $17,833        $18,053      

 

The following summarizes the (loss) income of equity method investees reflected in the Statement of Operations (in thousands):

 

   Three months ended March 31, 
Entity   2018    2017 
RELM Wireless Corporation  $(354)  $8 
Itasca Capital, Ltd.   103    2,461 
1347 Property Insurance Holdings, Inc.   241    12 
Total  $(10)  $2,481 

 

RELM Wireless Corporation (“RELM”) is a publicly traded company that designs, manufactures and markets two-way land mobile radios, repeaters, base stations and related components and subsystems. The Company’s Chief Executive Officer is chairman of the board of directors of RELM, and controls entities that, when combined with the Company’s ownership in RELM, own greater than 20% of RELM, providing the Company with significant influence over RELM, but not controlling interest. The Company received dividends of $23 thousand and $0.1 million for the three month periods ended March 31, 2018 and 2017, respectively. Based on quoted market prices, the market value of the Company’s ownership in RELM was $4.5 million at March 31, 2018.

 

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 a member 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, 2018 or 2017. Based on quoted market prices, the market value of the Company’s ownership in Itasca was $3.5 million at March 31, 2018.

 

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 a member 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, 2018 and 2017. Based on quoted market prices, the market value of the Company’s ownership in PIH was $7.4 million at March 31, 2018.

 

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As of March 31, 2018, the Company’s retained earnings included undistributed earnings from our equity method investees of $1.5 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, 2017, consistent with the Company’s recognition of the results of its equity method investments on a one-quarter lag.

 

For the three months ended December 31,  2017   2016 
    (in thousands) 
Revenue  $20,576   $15,358 
Operating loss from continuing operations  $(2,034)  $2,590 
Net income  $(2,557)  $9,351 

 

7. Intangible Assets

 

Intangible assets consisted of the following at March 31, 2018 (dollars in thousands):

 

   Useful life   Gross   Accumulated Amortization   Net 
   (Years)             
Intangible assets not yet subject to amortization:                    
Software in development       $877   $-   $877 
Intangible assets subject to amortization:                    
Software in service   5    3,718    (768)   2,950 
Product formulation   10    473    (353)   120 
Total       $5,068   $(1,121)  $3,947 

 

Intangible assets consisted of the following at December 31, 2017 (dollars in thousands):

 

   Useful life   Gross   Accumulated Amortization   Net 
   (Years)             
Intangible assets not yet subject to amortization:                    
Software in development       $1,243   $-   $1,243 
Intangible assets subject to amortization:                    
Software in service   5    3,191    (597)   2,594 
Product formulation   10    486    (351)   135 
Total       $4,920   $(948)  $3,972 

 

Amortization expense relating to intangible assets was $0.2 million and $0.1 million for the three months ended March 31, 2018 and 2017, respectively.

 

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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):

 

   Amount 
Remainder 2018  $639 
2019   840 
2020   831 
2021   670 
2022   86 
Thereafter   4 
Total  $3,070 

 

8. Goodwill

 

The following represents a summary of changes in the Company’s carrying amount of goodwill for the three months ended March 31, 2018 (in thousands):

 

Balance as of December 31, 2017  $952 
Foreign currency translation   (26)
Balance as of March 31, 2018  $926 

 

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, 2018 and 2017 (in thousands):

 

   Three Months Ended March 31, 
   2018   2017 
Warranty accrual at beginning of period  $521   $645 
Charged to expense   84    47 
Claims paid, net of recoveries   (30)   (231)
Foreign currency adjustment   (11)   1 
Warranty accrual at end of period  $564   $462 

 

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10. Debt

 

The Company’s debt consists of the following (in thousands):

 

   March 31, 2018   December 31, 2017 
Short-term debt:          
Revolving line of credit  $500   $500 
Current portion of long-term debt   65    65 
Total short-term debt   565    565 
Long-term debt:          
$2 million term loan   1,951    1,968 
Less: current portion   (65)   (65)
Less: unamortized debt issuance costs   (31)   (33)
Total long-term debt   1,855    1,870 
Total short-term and long-term debt  $2,420   $2,435 

 

On April 27, 2017, the Company entered into a debt agreement with a bank consisting of 1) a $2.0 million five-year term loan secured by a first lien deed of trust on the Company’s Alpharetta, GA facility, bearing interest at a fixed rate of 4.5% and payable in equal monthly installments of principal and interest calculated based on a 20-year amortization schedule with a final balloon payment of approximately $1.7 million due on May 10, 2022 and 2) a line of credit of up to $1.0 million secured by a second lien deed of trust on the Company’s Alpharetta, GA facility, bearing interest at the Prime Rate published in the Wall Street Journal plus 0.25% (5.00% at March 31, 2018) and with a term ending May 10, 2018. On April 23, 2018, the Company entered into a one-year extension of the maturity date of the line of credit through May 10, 2019. The debt agreement requires the Company to maintain a ratio of total liabilities to tangible net worth not in excess of 3:1 and maintain minimum liquidity of $2.0 million. The Company was in compliance with its debt covenants as of March 31, 2018. The Company’s Chairman and Chief Executive Officer is also a member of the bank’s board of directors.

 

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 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. There were no borrowings outstanding at March 31, 2018 on any of the Strong/MDI credit facilities, as Strong/MDI had not yet drawn on the facilities. On April 24, 2018, the Company borrowed CDN$3.5 million on the 20-year installment loan. Strong/MDI was in compliance with its debt covenants as of March 31, 2018.

 

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Scheduled repayments are as follows for the Company’s long-term debt outstanding as of March 31, 2018 (in thousands):

 

Remainder of 2018  $48 
2019   68 
2020   70 
2021   74 
2022   1,691 
Thereafter   - 
Total  $1,951 

 

11. 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, 2018 and December 31, 2017.

 

In December 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was signed into law in the United States. The law includes significant changes to the United States corporate income tax system, including a federal corporate rate reduction and the transition of the United States from a worldwide tax system to a territorial tax system. As part of the transition to a territorial tax system, the 2017 Tax Act requires taxpayers to calculate a one-time transition tax based on the deemed repatriation of undistributed earnings of foreign subsidiaries. The Company is currently analyzing the 2017 Tax Act, and in certain areas, has made provisional estimates of the effects on our consolidated financial statements and tax disclosures, including the amount of the repatriation tax and changes to existing deferred tax balances.

 

The Company is subject to possible examinations not yet initiated for Federal purposes for fiscal years 2014 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.

 

12. 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 $0.3 million and $0.1 million for the three months ended March 31, 2018 and 2017, 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 758,354 shares remaining available for grant at March 31, 2018.

 

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Options

 

The Company granted a total of 387,500 and 285,000 options during the three month periods ended March 31, 2018 and 2017, respectively. Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant.

 

The weighted average grant date fair value of stock options granted during the three month periods ended March 31, 2018 and 2017 was $1.82 and $2.41, respectively. The fair value of each stock option granted was estimated on the date of grant using a Black-Scholes valuation model with the following weighted average assumptions:

 

   2018   2017 
Expected dividend yield at date of grant   0.00%   0.00%
Risk-free interest rate   2.49%   2.04%
Expected stock price volatility   35.65%   34.71%
Expected life of options (in years)   6.0    6.0 

 

The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatility is based on historical daily price changes of the Company’s stock for six years prior to the date of grant. The expected life of options is the average number of years the Company estimates that options will be outstanding.

 

The following table summarizes stock option activity for the three months ended March 31, 2018:

 

   Number of Options   Weighted Average Exercise Price Per Share   Weighted Average Remaining Contractual Term   Aggregate Intrinsic Value (in thousands) 
Outstanding at December 31, 2017   930,300   $5.63    8.7   $150 
Granted   387,500    4.70           
Exercised   -    -           
Forfeited   (32,000)   5.59           
Expired   (8,000)   5.41           
Outstanding at March 31, 2018   1,277,800   $5.29    8.8   $64 
Exercisable at March 31, 2018   269,300   $4.88    7.9   $31 

 

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, 2018, 1,008,500 stock option awards were non-vested. Unrecognized compensation cost related to stock option awards was approximately $1.9 million, which is expected to be recognized over a weighted average period of 4.0 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, 2018, the total unrecognized compensation cost related to non-vested restricted stock awards was approximately $1.1 million, which is expected to be recognized over a weighted average period of 2.4 years.

 

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The following table summarizes restricted stock share activity for the three months ended March 31, 2018:

 

   Number of Restricted Stock Shares   Weighted Average Grant Price Fair Value 
Non-vested at December 31, 2017   85,000   $6.50 
Granted   -    - 
Shares vested   (28,333)   6.50 
Shares forfeited   -    - 
Non-vested at March 31, 2018   56,667   $6.50 

 

The following table summarizes restricted stock unit activity for the three months ended March 31, 2018:

 

   Number of Restricted Stock Units   Weighted Average Grant Price Fair Value 
Non-vested at December 31, 2017   35,835   $6.45 
Granted   147,500    4.70 
Shares vested   -    - 
Shares forfeited   -    - 
Non-vested at March 31, 2018   183,335   $5.04 

 

13. 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 56% of total consolidated net revenues for the three months ended March 31, 2018. Trade accounts receivable from these customers represented approximately 37% of net consolidated receivables at March 31, 2018. 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.

 

Leases

 

The Company and its subsidiaries lease plant and office facilities, furniture, autos and equipment under operating leases expiring through 2022. These leases generally contain renewal options and the Company expects to renew or replace certain of these leases in the ordinary course of business.

 

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The Company’s future minimum lease payments for leases at March 31, 2018 are as follows:

 

   Capital Leases   Operating Leases 
   (in thousands) 
Remainder 2018  $185   $1,342 
2019   116    1,768 
2020   -    1,543 
2021   -    1,415 
2022   -    1,081 
Thereafter   -    - 
Total minimum lease payments  $301   $7,149 
Less: Amount representing interest   (10)     
Present value of minimum lease payments   291      
Less: Current maturities   (226)     
Capital lease obligations, net of current portion  $65      

 

14. Business Segment Information

 

As of March 31, 2018, the Company’s operations were conducted principally through two business segments: Cinema and Digital Media. The Cinema segment provides a full range of product and service solutions primarily for the theater exhibition industry, including a wide spectrum of premier audio-visual products and accessories such as digital projectors, state of the art projection screens, servers, library management systems, menu boards, flat panel displays, and sound systems, as well as network monitoring and on-site service for cinema equipment. The Digital Media segment develops and delivers solutions for out-of-home messaging, advertising and communication and provides managed services including monitoring of networked equipment. While there is digital signage equipment sold within this segment, the primary focus of this segment is providing solutions and services to our customers.

 

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Summary by Business Segments

 

   Three Months Ended March 31, 
(In thousands)  2018   2017 
Net revenues          
Cinema  $11,449   $12,689 
Digital Media   4,717    5,345 
Other   16    - 
Total segment net revenues   16,182    18,034 
Eliminations   (354)   (108)
Total net revenues   15,828    17,926 
           
Gross profit (loss)          
Cinema   3,385    3,616 
Digital Media   (551)   823 
Other   16    - 
Total gross profit   2,850    4,439 
           
Operating income (loss)          
Cinema   2,325    2,679 
Digital Media   (2,496)   (1,113)
Other   (113)   (117)
Total segment operating (loss) income   (284)   1,449 
Unallocated general and administrative expenses   (2,800)   (2,047)
Loss from operations   (3,084)   (598)
Other income   7    20 
Loss before income taxes and equity method investment (loss) income  $(3,077)  $(578)

 

(In thousands)  March 31, 2018   December 31, 2017 
Identifiable assets          
Cinema  $24,845   $27,358 
Digital Media   14,353    13,603 
Corporate   17,833    18,053 
Total  $57,031   $59,014 

 

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Summary by Geographical Area

 

   Three Months Ended March 31, 
(In thousands)  2018   2017 
Net revenue          
United States  $12,830   $14,393 
Canada   1,400    1,220 
Mexico   556    356 
China   541    1,466 
Latin America   270    284 
Europe   158    116 
Asia (excluding China)   73    72 
Other   -    19 
Total  $15,828   $17,926 

 

(In thousands)  March 31, 2018   December 31, 2017 
Identifiable assets          
United States  $38,325   $37,230 
Canada   18,706    21,784 
Total  $57,031   $59,014 

 

Net revenues by business segment are to unaffiliated customers. Identifiable assets by geographical area are based on location of facilities. Net sales by geographical area are based on destination of sales.

 

15. Subsequent Event

 

On April 27, 2018, the Company executed a definitive agreement for a sale-leaseback of its Alpharetta, Georgia office facility. The Company agreed to sell the Alpharetta facility for $7.0 million in cash and enter into a 10-year leaseback of the facility for rent in the amount of $600,000 per year, escalating at the rate of 2% per year. In addition, the Company agreed to issue 100,000 warrants to the buyer or its designee to purchase Company stock, consisting of 25,000 warrants at each of $10, $12, $14 and $16 purchase prices per share. The warrants will have a 10-year maturity. The closing of the transaction is expected to occur within 30 days after the completion of a 60-day due diligence period and satisfaction of customary contingencies. Upon closing of the sale-leaseback transaction, the Company’s term loan and revolving line of credit that are currently secured by the Alpharetta facility will be repaid and the related debt agreement would be terminated. The Company expects to receive net proceeds of approximately $4.0 million on the sale-leaseback after repayment of the loans.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report. Management’s discussion and analysis contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements that are not historical are forward-looking and reflect expectations for future Company performance. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

Forward-looking statements involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section contained in Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and the following risks and uncertainties: the Company’s ability to expand its revenue streams, potential interruptions of supplier relationships or higher prices charged by suppliers, the Company’s ability to successfully compete and introduce enhancements and new features that achieve market acceptance and that keep pace with technological developments, the Company’s ability to successfully execute its capital allocation strategy, the Company’s ability to retain or replace its significant customers, the impact of a challenging global economic environment or a downturn in the markets, economic and political risks of selling products in foreign countries, risks of non-compliance with U.S. and foreign laws and regulations, cybersecurity risks and risks of damage and interruptions of information technology systems, the Company’s ability to retain key members of management and successfully integrate new executives, the Company’s ability to complete acquisitions, strategic investments, entry into new lines of business, divestitures, mergers or other transactions on acceptable terms or at all, the Company’s ability to assert its intellectual property rights, the impact of natural disasters and other catastrophic events, the adequacy of insurance and the impact of having a controlling stockholder. Given the risks and uncertainties, readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein, as well as others not now anticipated. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except where required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

 

Overview

 

Ballantyne Strong, Inc. (“BTN”, “Ballantyne”, “the Company”, “we”, “our” and “us”) is a holding company with diverse business activities focused on serving the cinema, retail, financial, advertising and government markets. The Company and its subsidiaries 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. We add value through our design, engineering, manufacturing excellence and customer service.

 

We conduct our operations through two primary business segments: Cinema and Digital Media. The Cinema segment provides a full range of product solutions primarily for the theater exhibition industry, including a wide spectrum of premier audio-visual products and accessories such as digital projectors, state of the art projection screens, servers, library management systems, menu boards, flat panel displays and sound systems. The Digital Media segment delivers solutions and services across two primary markets: digital out-of-home and enterprise video.

 

Our segments were determined based on the manner in which management organizes segments for making operating decisions and assessing performance. Approximately 71% of our revenues for the three months ended March 31, 2018 were from Cinema and approximately 29% were from Digital Media. Additional information related to our reporting segments can be found in the notes to the condensed consolidated financial statements.

 

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Results of Operations:

 

Three Months Ended March 31, 2018 Compared to the Three Months Ended March 31, 2017

 

Revenues

 

Net revenues during the quarter ended March 31, 2018 decreased 11.7% to $15.8 million from $17.9 million during the quarter ended March 31, 2017.

 

   Three Months Ended March 31,         
   2018   2017   $ Change   % Change 
   (dollars in thousands) 
Cinema  $11,449   $12,689   $(1,240)   (9.8)%
Digital Media   4,717    5,345    (628)   (11.7)%
Other   16    -    16    N/A
Total segment revenues   16,182    18,034    (1,852)   (10.3)%
Eliminations   (354)   (108)   (246)   227.8%
Total net revenues  $15,828   $17,926   $(2,098)   (11.7)%

 

Cinema

 

Sales of Cinema products and services decreased 9.8% to $11.4 million in the first quarter of 2018 from $12.7 million in the first quarter of 2017. The decrease was driven primarily by a decrease in lamp sales, as we terminated our distributorship for certain cinema lamp products in July 2017 due to the very low margins earned on these products. Smaller decreases in sales of screens, screen support systems and projectors were offset by increases in sales of audio equipment, displays and installation services.

 

Digital Media

 

Sales of Digital Media products and services decreased 11.7% to $4.7 million in the first quarter of 2018 from $5.3 million in the first quarter of 2017. Decreased sales of digital signage equipment was partially offset by increases in sales of installation services and digital signage as a service (“DSaaS”).

 

Export Revenues

 

Sales outside the United States (primarily from the Cinema segment) decreased to $3.0 million in the first quarter of 2018 from $3.5 million a year ago due primarily to decreased sales in China, partially offset by increased sales in Canada and Mexico. Export sales are sensitive to worldwide economic and political conditions that lead to volatility. Certain areas of the world are more cost conscious than the U.S. market and there are instances where our products are priced higher than local manufacturers, making it more difficult to generate sufficient profit to justify selling into these regions. Additionally, foreign exchange rates and excise taxes sometimes make it difficult to market our products overseas at reasonable selling prices.

 

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Gross Profit

 

Gross profit during the quarter ended March 31, 2018 decreased 35.8% to $2.9 million from $4.4 million during the quarter ended March 31, 2017.

 

   Three Months Ended March 31,         
   2018   2017   $ Change   % Change 
   (dollars in thousands) 
Cinema  $3,385   $3,616   $(231)   (6.4)%
Digital Media   (551)   823    (1,374)   (167.0)%
Other   16    -    16    N/A 
Total gross profit  $2,850   $4,439   $(1,589)   (35.8)%

 

Cinema

 

Gross profit in the Cinema segment was $3.4 million or 29.6% of revenues in the first quarter of 2018 compared to $3.6 million or 28.5% of revenues in the first quarter of 2017. The decrease in gross margin dollars was driven by lower revenues as described above, partially offset by slightly higher margins as a percentage of revenues. Favorable product mix in sales of cinema equipment due to the termination of the low margin cinema lamp distributorship last year was partially offset by unfavorable product mix in screen sales, as sales of lower margin screens made up a larger percentage of total revenues.

 

Digital Media

 

Gross loss in the Digital Media segment was $0.6 million in the first quarter of 2018 compared to gross profit of $0.8 million in the first quarter of 2017. The decrease in gross margin dollars was driven by the fixed costs associated with our new advertising operations that we did not incur in the prior year. During the first quarter of 2018, we signed an agreement to provide advertising services on over 3,500 New York City taxicabs. The advertising will be on a combination of vinyl printed signs and digital signs. We have leased 300 digital signs, which we began installing in February and we expect to complete installations for by the end of the second quarter of 2018. In addition to lease expense for the digital signs, we incur fixed fees payable to our taxicab counterparties for advertising access and maintenance. While we will continue to incur these fixed costs, we expect advertising revenues to gradually increase throughout 2018, absorbing a larger portion of the fixed costs until the business generates a positive gross profit in late 2018 or early 2019. Excluding the new costs associated with the advertising business, Digital Media gross margin dollars and gross margin as a percentage of revenues did not change significantly from the same quarter of the prior year.

 

Operating (Loss) Income

 

We generated an operating loss of $3.1 million in the first quarter of 2018 compared to an operating loss of $0.6 million in the first quarter of 2017.

 

   Three Months Ended March 31,         
   2018   2017   $ Change   % Change 
   (dollars in thousands) 
Cinema  $2,325   $2,679   $(354)   (13.2)%
Digital Media   (2,496)   (1,113)   (1,383)   124.3%
Other   (113)   (117)   4    (3.4)%
Total segment operating (loss) income   (284)   1,449    (1,733)   (119.6)%
Unallocated general and administrative expenses   (2,800)   (2,047)   (753)   36.8%
Total operating loss  $(3,084)  $(598)  $(2,486)   415.7%

 

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We generated operating income in the Cinema segment of $2.3 million in the first quarter of 2018 compared to $2.7 million in the first quarter of 2017. The decrease in operating income was driven primarily by lower gross profit as described above.

 

The Digital Media segment generated an operating loss of $2.5 million in the first quarter of 2018 compared to $1.1 million in the first quarter of 2017. The decrease was driven primarily by lower gross profit as described above.

 

Unallocated general and administrative expenses increased to $2.8 million in the first quarter of 2018 compared to $2.0 million in the first quarter of 2017. The increase was driven primarily by increased employee compensation and benefits, stock-based compensation, audit, tax and legal expenses.

 

Other Financial Items

 

The effective tax rate differs from the statutory rates primarily as a result of the valuation allowance recorded against the Company’s U.S. tax jurisdiction deferred tax assets and differing foreign and U.S. tax rates applied to respective pre-tax earnings by tax jurisdiction. Our income tax expense consists primarily of income tax on foreign earnings.

 

In December 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”), was signed into law in the United States. The law includes significant changes to the United States corporate income tax system, including a federal corporate rate reduction and the transition of the United States from a worldwide tax system to a territorial tax system. As part of the transition to a territorial tax system, the 2017 Tax Act requires taxpayers to calculate a one-time transition tax based on the deemed repatriation of undistributed earnings of foreign subsidiaries. We currently are analyzing the 2017 Tax Act, and in certain areas, have made provisional estimates of the effects on our consolidated financial statements and tax disclosures, including the amount of the repatriation tax and changes to our existing deferred tax balances.

 

The first quarter of 2018 includes an overall insignificant equity method net investment loss, consisting of a $0.4 million loss from RELM, partially offset by income of $0.2 million from PIH and $0.1 million from Itasca. Equity method investment income in the first quarter of 2017 amounted to $2.5 million, almost exclusively from Itasca.

 

As a result of the items outlined above, we generated net losses from continuing operations of approximately $3.8 million and basic and diluted losses per share from continuing operations of $0.26 in the first quarter of 2018, compared to net earnings from continuing operations of $0.4 million and basic and diluted earnings per share from continuing operations of $0.03 in the first quarter of 2017.

 

Liquidity and Capital Resources

 

During the past several years, we have primarily met our working capital and capital resource needs from our operating cash flows and credit facilities. During the first quarter of 2018, we signed an agreement to provide advertising services on over 3,500 New York City taxicabs. The advertising will be on a combination of vinyl printed signs and digital signs. We have leased 300 digital signs, which we began installing in February and we expect to complete installations for by the end of the second quarter of 2018. In addition to lease expense for the digital signs, we incur fixed fees payable to our taxicab counterparties for advertising access and maintenance. We expect that the new advertising business will negatively impact our cash flow for the first half of 2018 as we incur costs without collecting significant revenues during the start-up phase. However, we believe that our existing sources of liquidity, including cash and cash equivalents, credit facilities, operating cash flow and anticipated net proceeds from the sale-leaseback of our Alpharetta, Georgia facility as described below, will be sufficient to meet our projected capital needs for the foreseeable future. We ended the first quarter of 2018 with total cash and cash equivalents of $3.3 million, compared to $4.9 million at December 31, 2017.

 

As of March 31, 2018, $0.6 million of the $3.3 million in cash and cash equivalents was held by our Canadian subsidiary, Strong/MDI. If these funds are repatriated to our operations in the U.S., we would be required to pay Canadian withholding taxes, which have been fully accrued as of March 31, 2018. Strong/MDI also may make intercompany loans to the U.S. parent company, which do not trigger Canadian withholding taxes if they meet certain requirements. As of March 31, 2018, the parent company had outstanding intercompany loans from Strong/MDI of approximately $24.1 million, compared to approximately $19.4 million at December 31, 2017.

 

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In 2017, we entered into a debt agreement consisting of a $2.0 million five-year term loan and a line of credit of up to $1.0 million, secured by deeds of trust on our Alpharetta, Georgia office facility. The revolving line of credit bears interest at 5.00% as of March 31, 2018. At March 31, 2018, the balance of the term loan, including current maturities, was $1.95 million. We also had outstanding borrowings on our line of credit of $0.5 million as of March 31, 2018 and borrowed an additional $0.5 million in April 2018. At March 31, 2018, we were in compliance with our debt covenants. On April 27, 2018, we executed a definitive agreement for a sale-leaseback of the Alpharetta facility. We agreed to sell the Alpharetta facility for $7.0 million in cash and enter into a 10-year leaseback of the facility for rent in the amount of $600,000 per year, escalating at the rate of 2% per year. The closing of the transaction is expected to occur within 30 days after the completion of a 60-day due diligence period and satisfaction of customary contingencies. Upon closing of the sale-leaseback transaction, the term loan and revolving line of credit will be repaid and the debt agreement would be terminated. We expect to receive net proceeds of approximately $4.0 million on the sale-leaseback after repayment of the loans.

 

In 2017, our Canadian subsidiary, Strong/MDI, also entered into a demand credit agreement consisting of a revolving line of credit for up 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. 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. There were no borrowings outstanding at March 31, 2018 on any of the Strong/MDI credit facilities, as we had not yet drawn on the facilities. On April 24, 2018, we borrowed CDN$3.5 million on the 20-year installment loan. Strong/MDI was in compliance with its debt covenants as of March 31, 2018.

 

Cash Flows from Operating Activities

 

The following table provides information that we use in analyzing our cash flows from operating activities of continuing operations (in thousands):

 

   Three Months Ended March 31, 
   2018   2017 
Net cash (used in) provided by operating activities - continuing operations  $(1,591)  $567 
Less:          
Changes in working capital   993    1,064 
Foreign currency transaction gain   104    3 
Current income tax expense   (636)   (630)
Net interest (expense) income   (45)   12 
Other   15    9 
Subtotal - reconciling items   431    458 
Operating (loss) income, excluding noncash operating expenses (non-GAAP)  $(2,022)  $109 

 

Operating (loss) income, excluding noncash operating expenses, is a non-GAAP financial measure that we use only for the purpose of analyzing net cash provided by (used in) operating activities. It is defined as operating income (loss), adjusted to remove noncash operating expenses consisting of provisions for doubtful accounts, obsolete inventory and warranty, depreciation and amortization, impairment of intangible assets, loss on disposal or transfer of assets, amortization of contract acquisition costs and stock-based compensation expense.

 

Net cash used in operating activities from continuing operations was $1.6 million in the first quarter of 2018, as operating loss, excluding noncash expenses, of $2.0 million and current income tax expense of $0.6 million were partially offset by favorable net changes in working capital items of $1.0 million and foreign currency transaction gains of $0.1 million. The favorable net change in working capital was primarily due to a $0.7 million increase in customer deposits and deferred revenue, a $0.7 million increase in accrued expenses and accounts payable and a $0.5 million decrease in inventories, partially offset by a $0.8 million increase in other assets.

 

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Net cash provided by operating activities from continuing operations was $0.6 million in the first quarter of 2017, as operating income, excluding noncash expenses, of $0.1 million and favorable net changes in working capital items of $1.1 million were partially offset by current income tax expense of $0.6 million. The favorable net change in working capital was primarily due to a $2.5 million increase in accounts payable and accrued liabilities, partially offset by increases in inventories, accounts receivable and other assets. Accounts payable and accrued liabilities increased $2.5 million primarily due to timing of orders and payments to vendors at the end of the quarter.

 

Cash Flows from Investing Activities

 

Net cash used in investing activities was $0.3 million in the first quarter of 2018, consisting primarily of capital expenditures. Net cash used in investing activities was $3.5 million in the first quarter of 2017, due primarily to $2.5 million in purchases of equity securities and $1.1 million in capital expenditures.

 

Cash Flows from Financing Activities

 

Net cash used in financing activities was $0.1 million in the first quarter of 2018, consisting primarily of payments on capital leases. Net cash used in financing activities in the first quarter of 2017 was $0.1 million, primarily for the purchase of treasury stock and payments on capital leases.

 

The effect of changes in foreign exchange rates increased cash and cash equivalents by $0.5 million and $39 thousand in the first quarter of 2018 and 2017, respectively.

 

Hedging and Trading Activities

 

Our primary exposure to foreign currency fluctuations pertains to our subsidiary in Canada. In certain instances, we may enter into a foreign exchange contract to manage a portion of this risk. We do not have any trading activities that include non-exchange traded contracts at fair value.

 

Off Balance Sheet Arrangements and Contractual Obligations

 

The future estimated payments as of March 31, 2018 under contractual obligations are summarized below (in thousands):

 

Contractual Obligations  Total   2018   2019-2020   2021-2022   Thereafter 
Long-term debt, including current maturities  $2,296   $115   $306   $1,875   $- 
Short-term debt   503    503    -    -    - 
Postretirement benefits   112    11    30    30    41 
Capital leases   301    185    116    -    - 
Operating leases   7,149    1,342    3,311    2,496    - 
Contractual cash obligations  $10,361   $2,156   $3,763   $4,401   $41 

 

There were no other material contractual obligations other than inventory and property, plant and equipment purchases in the ordinary course of business.

 

Seasonality

 

Generally, our quarterly revenue and earnings fluctuate moderately from quarter to quarter. As we increase our sales in our current markets, and as we expand into new markets in different geographies, it is possible we may experience different seasonality patterns in our business. As a result, the results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for an entire fiscal year.

 

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Recently Issued Accounting Pronouncements

 

See Note 3, Summary of Significant Accounting Policies to the condensed consolidated financial statements for a description of recently issued accounting pronouncements.

 

Critical Accounting Policies and Estimates

 

In preparing our consolidated financial statements in conformity with U.S. generally accepted accounting principles, management must make a variety of decisions which impact the reported amounts and the related disclosures. These decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In making these decisions, management applies its judgment based on its understanding and analysis of the relevant circumstances and our historical experience.

 

Our accounting policies and estimates that are most critical to the presentation of our results of operations and financial condition, and which require the greatest use of judgments and estimates by management, are designated as our critical accounting policies. See further discussion of our critical accounting policies under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for our year ended December 31, 2017. We periodically re-evaluate and adjust our critical accounting policies as circumstances change. Other than policies related to the adoption of ASC 606 as described in Note 4 to the condensed consolidated financial statements, there were no significant changes in our critical accounting policies during the three months ended March 31, 2018.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

The principal market risks affecting us are exposure to interest rates and foreign currency exchange rates. We market our products throughout the United States and the world. As a result, we could be adversely affected by such factors as changes in foreign currency rates and weak economic conditions. As a majority of our sales are currently denominated in U.S. dollars, a strengthening of the dollar can and sometimes has made our products less competitive in foreign markets.

 

Interest Rates—Interest rate risks from our interest related accounts such as our postretirement obligations are not deemed significant. We currently have long-term notes receivable, recorded at fair value, bearing fixed interest rates of 15% and long-term debt with a fixed interest rate of 4.5%. A change in long-term interest rates for comparable types of instruments would have the effect of us recording changes in fair value of the notes receivable through our statement of operations. As of March 31, 2018, we also have $500,000 borrowed on a revolving line of credit that bears variable interest at the Prime Rate published by the Wall Street Journal plus 0.25%, or 5.00% as of March 31, 2018. Changes in the Prime Rate would increase or decrease our interest expense on outstanding line of credit borrowings.

 

Foreign Exchange—Exposures to transactions denominated in currencies other than the entity’s functional currency are primarily related to our Canadian subsidiary. Fluctuations in the value of foreign currencies create exposures, which can adversely affect our results of operations. From time to time, as market conditions indicate, we will enter into foreign currency contracts to manage the risks associated with forecasted transactions. A portion of our cash in our Canadian subsidiary is denominated in foreign currencies, where fluctuations in exchange rates will impact our cash balances in U.S. dollar terms. A hypothetical 10% change in the value of the U.S. dollar would not have a material impact on our reported cash balance as of March 31, 2018.

 

Equity Price Risk—We are exposed to price risk related to our investments in equity securities. At March 31, 2018, our carrying value of investments in equity securities aggregated $17.8 million, all of which were accounted for using the equity method. The fair value of these investments was $15.4 million at March 31, 2018. A change in the equity price of the equity method investments would result in a change in the fair value or economic value of such securities.

 

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Item 4. Controls and Procedures

 

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective at ensuring that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 (as amended) is (1) accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

 

On January 1, 2018, we adopted ASC 606 (see Note 4 to the Condensed Consolidated Financial Statements). We implemented internal controls to ensure we adequately evaluated our contracts with customers and properly assessed the impact of the standard on our financial statements. We also implemented changes to our business processes related to revenue recognition and the control activities within them. The changes included internal training, ongoing contract review and monitoring and gathering of information for disclosures.

 

There have been no other changes in the Company’s internal control over financial reporting during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, such internal control over financial reporting.

 

PART II. Other Information

 

Item 1. Legal Proceedings

 

In the ordinary course of business operations, we are involved, from time to time, in certain legal disputes. No such disputes, individually or in the aggregate, are expected to have a material effect on our business or financial condition.

 

Item 1A. Risk Factors

 

Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 includes a detailed discussion of the Company’s risk factors. There have been no material changes to the risk factors as previously disclosed.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On August 20, 2015, we announced that our Board of Directors adopted a stock repurchase program authorizing the repurchase of up to 700,000 shares of our outstanding Common Stock pursuant to a plan adopted under Rule 10b5-1 of the Securities Exchange Act of 1934 (as amended). The repurchase program has no expiration date. There were no repurchases during the three months ended March 31, 2018. As of March 31, 2018, there were 636,931 shares that may yet be purchased under the stock repurchase program.

 

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Item 6. Exhibits

 

        Incorporated by Reference    
Exhibit Number   Document Description   Form   Exhibit   Filing
Date
  Filed
Herewith
10.1   Amendment to the Credit Agreement, dated as of November 14, 2017, between Canadian Imperial Bank of Commerce and Strong/MDI Screen Systems, Inc.   10-K   10.22   3-15-2018    
                     
10.2   Note Modification Agreement, dated as of April 18, 2018, by and between Convergent Media Systems Corporation, as Borrower, and blueharbor bank, as Lender.   8-K   10.1   4-24-2018    
                     
10.3   Contract of Sale, dated as of April 27, 2018, by and among Convergent Media Systems Corporation, as seller, and Metrolina Alpharetta, LLC, as Buyer.   8-K   10.1   5-1-2018    
                     
10.4   Form of Lease Agreement, to be entered into by and between Metrolina Alpharetta, LLC, as Landlord, and Ballantyne Strong, Inc., as Tenant   8-K   10.2   5-1-2018    
                     
10.5   Form of Warrant, to be issued by Ballantyne Strong, Inc.   8-K   10.3   5-1-2018    
                     
31.1   Rule 13a-14(a) Certification of Chief Executive Officer.               X
                     
31.2   Rule 13a-14(a) Certification of Chief Financial Officer.               X
                     
32.1*   18 U.S.C. Section 1350 Certification of Chief Executive Officer.               X
                     
32.2*   18 U.S.C. Section 1350 Certification of Chief Financial Officer.               X
                     
101   The following materials from Ballantyne Strong, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements.               X

 

 

* Furnished herewith.

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

BALLANTYNE STRONG, INC.      
         
By:

/s/ D. Kyle Cerminara

  By:

/s/ Lance V. Schulz

 

D. Kyle Cerminara,

Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)

 

    Lance V. Schulz,
Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
         
Date: May 8, 2018   Date: May 8, 2018

 

 35 

 

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATION

 

I, D. Kyle Cerminara, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2018 of Ballantyne Strong, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  By: /s/ D. KYLE CERMINARA
    D. Kyle Cerminara
    Chairman and Chief Executive Officer
     
May 8, 2018    

 

 
 

 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

CERTIFICATION

 

I, Lance V. Schulz, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2018 of Ballantyne Strong, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  By: /s/ LANCE V. SCHULZ
    Lance V. Schulz
    Chief Financial Officer
     
May 8, 2018    

 

 
 

 

 

EX-32.1 4 ex32-1.htm

 

Exhibit 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to 18 U.S.C. Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

The undersigned, D. Kyle Cerminara, Chief Executive Officer of Ballantyne Strong, Inc. (the “Company”), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2018 (the “Report”).

 

The undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to his knowledge that:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 8th day of May, 2018.

 

/s/ D. KYLE CERMINARA  
D. Kyle Cerminara  
Chairman and Chief Executive Officer  

 

A signed original of this written statement required by Section 906 has been provided to Ballantyne Strong, Inc. and will be retained by Ballantyne Strong, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
 

 

EX-32.2 5 ex32-2.htm

 

Exhibit 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to 18 U.S.C. Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

The undersigned, Lance V. Schulz, Chief Financial Officer of Ballantyne Strong, Inc. (the “Company”), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2018 (the “Report”).

 

The undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to his knowledge that:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 8th day of May, 2018.

 

/s/ LANCE V. SCHULZ  
Lance V. Schulz  
Chief Financial Officer  

 

A signed original of this written statement required by Section 906 has been provided to Ballantyne Strong, Inc. and will be retained by Ballantyne Strong, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
 

 

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Provision for warranty Depreciation and amortization Equity method investment loss (income) Fair value adjustment to notes receivable Deferred income taxes Amortization of contract acquisition costs Stock-based compensation expense Changes in operating assets and liabilities: Accounts receivable Inventories Other current assets Accounts payable Accrued expenses Customer deposits/deferred revenue Current income taxes Other assets Net cash flows (used in) provided by operating activities - continuing operations Net cash flows used in operating activities - discontinued operations Net cash (used in) provided by operating activities Cash flows from investing activities: Purchase of equity securities Dividends received from investee in excess of cumulative earnings Capital expenditures Net cash used in investing activities - continuing operations Cash flows from financing activities: Principal payments on long-term debt Purchase of treasury stock Payments on capital lease obligations Net cash used in financing activities - continuing operations Effect of exchange rate changes on cash and cash equivalents - continuing operations Net decrease in cash and cash equivalents Discontinued operations activity included above: Add: Cash balance included in assets held for sale at beginning of period Less: Cash balance included in assets held for sale at end of period Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Organization, Consolidation and Presentation of Financial Statements [Abstract] Nature of Operations Discontinued Operations and Disposal Groups [Abstract] Discontinued Operations Accounting Policies [Abstract] Summary of Significant Accounting Policies Revenue from Contract with Customer [Abstract] Revenue Earnings Per Share [Abstract] (Loss) Earnings Per Common Share Equity Method Investments and Joint Ventures [Abstract] Equity Method Investments Goodwill and Intangible Assets Disclosure [Abstract] Intangible Assets Goodwill Guarantees and Product Warranties [Abstract] Warranty Reserves Debt Disclosure [Abstract] Debt Income Tax Disclosure [Abstract] Income Taxes Disclosure of Compensation Related Costs, Share-based Payments [Abstract] Stock Compensation Commitments and Contingencies Disclosure [Abstract] Commitments, Contingencies and Concentrations Segment Reporting [Abstract] Business Segment Information Subsequent Events [Abstract] Subsequent Event Basis of Presentation and Principles of Consolidation Use of Management Estimates Equity Method Investments Fair Value of Financial Instruments Recently Adopted Accounting Pronouncements Recently Issued Accounting Pronouncements Schedule of Financial Results of Discontinued Operations Schedule of Fair Value Measured Financial Assets and Liabilities Summary of Quantitative Information About Company's Level 3 Fair Value Measurements Statement [Table] Statement [Line Items] Schedule of Changes in Contract Cost Schedule of Impact the Adoption of ASC 606 on Consolidated Financial Statements Schedule of Disaggregation of Revenue Schedule of Reconciliation Between Basic and Diluted Earnings Per Share Summary of Equity Method Investments Summary of Income (Loss) of Equity Method Investees Summarized Financial Information Schedule of Intangible Assets Schedule of Intangible Assets Future Amortization Expense Summary of Changes in Carrying Amount of Goodwill Schedule of Product Warranty Liability Schedule of Debt Schedule of Long-term Debt Maturities Schedule of Weighted Average Assumptions for Fair Value of Stock Options Granted During the Period Summary of Stock Options Activities Summary of Restricted Stock Activity Schedule of Nonvested Restricted Stock Units Activity Schedule of Capital and Operating Leases Future Minimum Lease Payments Schedule of Segment Reporting Information by Segment Reconciliation of Assets from Segment to Consolidated Schedule of Segment Reporting Information by Geographic Area Summary of Identifiable Assets by Geographical Area Report Date [Axis] Proceeds from sale of subsidiaries Total net revenues Total cost of revenues Total selling and administrative expenses Loss from operations of discontinued operations Loss before income taxes Income tax expense Net loss from discontinued operations, net of tax Property, Plant and Equipment, Type [Axis] Percentage of notes receivable accrue interest rate Description of accrues interest rate Fair value adjustment Long-term debt Long-term debt fair value Change in accounting principle effect of adoption quantification Cash and cash equivalents Notes receivable Total Note receivable Valuation Technique Probability of default Discount rate Contract liability (or deferred revenue) Unearned revenue reported in deferred revenue and customer deposits Revenue recognized Contract duration or term with field maintenance Deferred contract acquisition costs, beginning balance Costs capitalized Amortization Impairment Deferred contract acquisition costs, ending balance Total current assets Total noncurrent assets Total assets Total current liabilities Total noncurrent liabilities Total liabilities Other stockholders’ equity Total stockholders’ equity Total liabilities and stockholders’ equity Total net revenues Total cost of revenues Gross profit Total selling and administrative expenses Loss from operations Other income Loss before income taxes and equity method investment loss Equity method investment loss Net loss Net loss per share of common stock: Basic Net loss per share of common stock: Diluted DisaggregationOfRevenueAxis [Axis] Anti dilutive securities excluded from computation of earnings per share Basic weighted average shares outstanding Dilutive effect of stock options and certain non-vested shares of restricted stock Diluted weighted average shares outstanding Combined equity ownership percentage Dividend received Quoted market value of the company's ownership Equity method ownership percentage Retained earnings undistributed earnings from our equity method investees Equity investment, Carrying Amount Equity investment, Economic Interest Equity method investment income Revenue Operating loss from continuing operations Net income Amortization expense Intangible assets, Useful life Intangible assets, Gross Intangible assets, Accumulated amortization Intangible assets, Net Remainder 2018 2019 2020 2021 2022 Thereafter Total Balance Foreign currency translation Balance Extended Product Warranty Disclosure [Abstract] Warranty accrual at beginning of period Charged to expense Claims paid, net of recoveries Foreign currency adjustment Warranty accrual at end of period Secured loan Loan term Debt bearing interest fixed rate Debt installment determination period Debt balloon payment amount Debt maturity date Line of credit maximum borrowing capacity Interest rate of installment loans Line of credit bearing interest rate Line of credit extended maturity date Maximum allowed liabilities to tangible net worth, description Minimum liquidity value Description on effective equity Maximum liabilities to effective equity Minimum current ratio Minimum effective equity Revolving line of credit Total short-term debt $2 million term loan Less: current portion Less: unamortized debt issuance costs Total long-term debt Total short-term and long-term debt Remainder of 2018 2019 2020 2021 2022 Thereafter Total Share based compensation expense Number of shares authorized for issuance Share based compensation arrangement by share based payment award number of shares available for grant Number of shares granted Share based compensation arrangement by share based payment award options grants in period weighted average grant date fair value Share-based compensation arrangement by share-based payment award, options, non-vested, number Total unrecognized compensation cost related to stock option awards Compensation cost expected to be recognized, weighted average period Unrecognized for restricted stock, value Expected dividend yield at date of grant Risk-free interest rate Expected stock price volatility Expected life of options (in years) Number of Options, Outstanding beginning balance Number of Options, Granted Number of Options, Exercised Number of Options, Forfeited Number of Options, Expired Number of Options, Outstanding ending balance Number of Options, Exercisable Weighted Average Exercise Price Per Share, Outstanding beginning balance Weighted Average Exercise Price Per Share, Granted Weighted Average Exercise Price Per Share, Exercised Weighted Average Exercise Price Per Share, Forfeited Weighted Average Exercise Price Per Share, Expired Weighted Average Exercise Price Per Share, Outstanding ending balance Weighted Average Exercise Price Per Share, Exercisable Weighted Average Remaining Contractual Term, beginning balance Weighted Average Remaining Contractual Term, ending balance Weighted Average Remaining Contractual Term, Exercisable Aggregate Intrinsic Value, beginning balance Aggregate Intrinsic Value, ending balance Aggregate Intrinsic Value, Exercisable Number of Restricted Stock, Non-vested beginning balance Number of Restricted Stock, Granted Number of Restricted Stock, vested Number of Restricted Stock, forfeited Number of Restricted Stock, Non-vested ending balance Weighted Average Grant Price Fair Value, Non-vested beginning balance Weighted Average Grant Price Fair Value, Granted Weighted Average Grant Price Fair Value, Vested Weighted Average Grant Price Fair Value, Forfeited Weighted Average Grant Price Fair Value, Non-vested ending balance Number of Restricted Stock Units, Non-vested beginning balance Number of Restricted Stock Units, Granted Number of Restricted Stock Units, vested Number of Restricted Stock Units, forfeited Number of Restricted Stock Units, Non-vested ending balance Weighted Average Grant Date Fair Value, Non-vested beginning balance Weighted Average Grant Date Fair Value, Granted Weighted Average Grant Date Fair Value, Vested Weighted Average Grant Date Fair Value, Forfeited Weighted Average Grant Date Fair Value, Non-vested ending balance Concentration risk, percentage Operating lease expire, term Capital Leases, Remainder 2018 Capital Leases, 2019 Capital Leases, 2020 Capital Leases, 2021 Capital Leases, 2022 Capital Leases, Thereafter Total minimum Capital lease payments Less: Amount representing interest Present value of minimum lease payments Less: Current maturities Capital lease obligations, net of current portion Operating Leases, Remainder 2018 Operating Leases, 2019 Operating Leases, 2020 Operating Leases, 2021 Operating Leases, 2022 Operating Leases, Thereafter Total minimum Operating lease payments Number of business segment Schedule of Segment Reporting Information, by Segment [Table] Segment Reporting Information [Line Items] Total segment net revenue Eliminations Total net revenue Total gross profit Total segment operating (loss) income Unallocated general and administrative expenses Other income Loss before taxes and equity method investment (loss) income Identifiable assets Net revenue Agreed to sale leaseback in cash Net proceeds from sale leaseback after repayment of debt Sale leaseback term Sale lease back rent expense Sale leaseback escalating rate Warrants description Number of warrants to purchase shares Warrant maturity term Represents the geographical region of Asia excluding China, where the entity operates. Disclosures about total assets that are (1) located in the entity's country of domicile, and (2) located in all foreign countries in which the entity holds assets. Business Segments [Member] Canada [Member] China [Member] Cinema [Member] Digital Media [Member] The reduction or addition to the fair value of Notes Receivable that was recorded as income or expense during the period. Itasca Capital Ltd [Member] Mexico [Member] Represents other geographic areas which have not been specified elsewhere in the taxonomy. Production Formulation [Member] 1347 Property Insurance Holdings Inc [Member] Relm Wireless Corp [Member] Restricted Stock Shares [Member] Restricted Stock Units [Member] Schedule Of Future Minimum Payments For Capital And Operating Leases [Table Text Block] Software in Development [Member] Stock Option In Which Exercise Price Exceeds The Average Market Price [Member] Summarized Financial info of Equity Method [Table Text Block]. Strong Westrex, Inc. 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April 23, 2018 [Member] April 24, 2018 [Member] The period used to determine monthly payment amount of long term debt installments. Maximum ratio of total liabilities to tangible net worth to maintain compliance with debt covenant. Minimum liquidity value required to maintain compliance with debt covenant. Description on effective equity. Maxium amount allowed to be in compliance with debt covenants of liabilities divided by the tangible stockholders' equity less amounts receivable from affilities and equity method investments. Minimum amount allowed to be in compliance with debt covenants of current assets (excluding amounts due from related parties) divided by current liabilities. Minimum effective equity to required to maintain compliance with debt covenant. The number of non-vested equity-based payment options, that validly exist and are outstanding as of the balance sheet date. custom:Note16StockCompensationDetailsWeightedAverageFairValueAssumptionsUsedInGrantDateFairValueOfPurchaseRightsOutstandingTable custom:Note16StockCompensationDetailsWeightedAverageFairValueAssumptionsUsedInGrantDateFairValueOfPurchaseRightsOutstandingLineItems Weighted average remaining contractual term for option awards outstanding, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Operating lease expire. Elimination for sales between segments. Operating income (Loss). Unallocated general and administrative expenses. Carrying amount of net assets exclusive of assets held for sale. Definitive Agreement [Member] Buyer [Member] Warrants description. 2018 [Member] Amount of contract acquisition costs capitalized in the period. Balances without Adoption of ASC 606 [Member] Other stockholders’ equity. Eliminations [Member] Screen System Sales [Member] Digital Equipment Sales [Member] Field Maintenance and Monitoring Services [Member] Installation Services [Member] Extended Warranty Sales [Member] CommonStockEquivalents [Member] The weighted average fair value of nonvested awards on equity-based plans excluding option plans (for example, phantom stock or unit plan, stock or unit appreciation rights plan, revenue or profit achievement stock award plan) for which the employer is contingently obligated to issue equity instruments or transfer assets to an employee who has not yet satisfied service or performance criteria necessary to gain title to proceeds from the sale of the award or underlying shares or units. Alpharetta Facility [Member] Warrant maturity term. Major source [Member]. Timing of transfer [Member]. Tabular disclosure of the entity's proportionate share for the period of the net income(loss) of its investees to which the equity method of accounting is applied. The amount of contract liability that is expected to be recognized in revenue during the remainder of the current fiscal year. Contract duration or term with field maintenance. Monitoring Services [Member]. Debt agreement [Member]. Annual percentage that rent is to increase under sale leaseback. The net proceeds the company expects to receive after the sale leaseback transaction and repayment of the existing debt on the property. Disaggregation of revenue [Axis] Term Loan [Member] January 1, 2018 [Member] Other Countries [Member] Inventory, Net Defined Benefit Plan, Accumulated Other Comprehensive (Income) Loss, before Tax Stockholders' Equity before Treasury Stock Treasury Stock, Value Cost of Goods and Services Sold Selling, General and Administrative Expense Interest Expense, Other Income Tax Expense (Benefit) Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent Income (Loss) from Continuing Operations, Per Diluted Share Income (Loss) from Discontinued Operations and Disposal of Discontinued Operations, Net of Tax, Per Diluted Share Comprehensive Income (Loss), Net of Tax, Attributable to Parent Deferred Income Tax Expense (Benefit) Increase (Decrease) in Accounts Receivable Increase (Decrease) in Inventories Increase (Decrease) in Other Current Assets Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Liabilities Increase (Decrease) in Other Operating Assets Net Cash Provided by (Used in) Operating Activities, Continuing Operations Net Cash Provided by (Used in) Operating Activities Payments to Acquire Equity Method Investments Payments to Acquire Productive Assets Net Cash Provided by (Used in) Investing Activities, Continuing Operations Repayments of Long-term Debt Payments for Repurchase of Equity Repayments of Long-term Capital Lease Obligations Net Cash Provided by (Used in) Financing Activities, Continuing Operations Cash and Cash Equivalents, Period Increase (Decrease) Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents Goodwill Disclosure [Text Block] Equity Method Investments [Policy Text Block] Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest Cash and Cash Equivalents, Fair Value Disclosure Capitalized Contract Cost, Net Equity Method Investment, Summarized Financial Information, Revenue Goodwill, Foreign Currency Translation Gain (Loss) Standard and Extended Product Warranty Accrual ProductWarrantyAccrualWarrantiesWrittenOffNetOfRecoveries Debt, Current Unamortized Debt Issuance Expense Debt, Long-term and Short-term, Combined Amount Long-term Debt, Maturities, Repayments of Principal in Year Two Long-term Debt, Maturities, Repayments of Principal in Year Three Long-term Debt, Maturities, Repayments of Principal in Year Four Long-term Debt, Maturities, Repayments of Principal in Year Five Long-term Debt, Maturities, Repayments of Principal after Year Five Long-term Debt Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValueOne Capital Leases, Future Minimum Payments Due Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments Capital Lease Obligations, Current Capital Lease Obligations, Noncurrent Operating Leases, Future Minimum Payments Due EX-101.PRE 11 btn-20180331_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT v3.8.0.1
Document And Entity Information - shares
3 Months Ended
Mar. 31, 2018
Apr. 30, 2018
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, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Common Stock, Shares Outstanding   14,422,090
Trading Symbol BTN  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2018  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.8.0.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 3,348 $ 4,870
Accounts receivable (net of allowance for doubtful accounts of $1,976 and $1,877, respectively) 10,749 10,766
Inventories:    
Raw materials and components, net 1,248 1,376
Work in process 496 362
Finished goods, net 2,449 3,083
Total inventories, net 4,193 4,821
Recoverable income taxes 492 495
Other current assets 1,572 1,290
Total current assets 20,354 22,242
Property, plant and equipment (net of accumulated depreciation of $9,037 and $8,780 respectively) 10,542 10,826
Equity method investments 17,833 18,053
Intangible assets, net 3,947 3,972
Goodwill 926 952
Notes receivable 2,773 2,815
Other assets 656 154
Total assets 57,031 59,014
Current liabilities:    
Accounts payable 4,221 3,425
Accrued expenses 3,562 3,071
Short-term debt 500 500
Current portion of long-term debt 65 65
Deferred revenue and customer deposits 2,314 1,619
Income tax payable 40
Total current liabilities 10,702 8,680
Long-term debt, net of current portion and debt issuance costs 1,855 1,870
Deferred revenue and customer deposits, net of current portion 1,207 1,207
Deferred income taxes 2,852 2,816
Other accrued expenses, net of current portion 257 319
Total liabilities 16,873 14,892
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 17,216 shares; outstanding 14,422 shares 169 169
Additional paid-in capital 40,820 40,565
Accumulated other comprehensive income (loss):    
Foreign currency translation (4,515) (4,048)
Postretirement benefit obligations 108 99
Unrealized gain on available-for-sale securities of equity method investments 301 353
Retained earnings 21,861 25,570
Stockholders' equity before treasury stock 58,744 62,708
Less 2,794 of common shares in treasury, at cost (18,586) (18,586)
Total stockholders' equity 40,158 44,122
Total liabilities and stockholders' equity $ 57,031 $ 59,014
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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Statement of Financial Position [Abstract]    
Accounts receivable, allowance for doubtful accounts $ 1,976 $ 1,877
Property, plant and equipment, accumulated depreciation $ 9,037 $ 8,780
Preferred stock par value $ 0.01 $ 0.01
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 17,216,000 17,216,000
Common stock, shares outstanding 14,422,000 14,422,000
Common shares in treasury, shares 2,794,000 2,794,000
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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Net product sales $ 8,639 $ 12,456
Net service revenues 7,189 5,470
Total net revenues 15,828 17,926
Cost of products sold 5,812 10,308
Cost of services 7,166 3,179
Total cost of revenues 12,978 13,487
Gross profit 2,850 4,439
Selling and administrative expenses:    
Selling 1,225 1,490
Administrative 4,709 3,547
Total selling and administrative expenses 5,934 5,037
Loss from operations (3,084) (598)
Other income (expense):    
Interest income 22
Interest expense (45) (10)
Foreign currency transaction gain 104 3
Fair value adjustment to notes receivable (42)
Other (expense) income, net (10) 5
Total other income 7 20
Loss before income taxes and equity method investment (loss) income (3,077) (578)
Income tax expense 698 1,493
Equity method investment (loss) income (10) 2,481
Net (loss) earnings from continuing operations (3,785) 410
Net loss from discontinued operations, net of tax (23)
Net (loss) earnings $ (3,785) $ 387
Net (loss) earnings per share - basic    
Net (loss) earnings from continuing operations $ (0.26) $ 0.03
Net loss from discontinued operations (0.00)
Net (loss) earnings (0.26) 0.03
Net (loss) earnings per share - diluted    
Net (loss) earnings from continuing operations (0.26) 0.03
Net loss from discontinued operations (0.00)
Net (loss) earnings $ (0.26) $ 0.03
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Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Statement of Comprehensive Income [Abstract]    
Net (loss) earnings $ (3,785) $ 387
Adjustment to postretirement benefits 9
Currency translation adjustment:    
Unrealized net change arising during period (467) 109
Unrealized loss on available-for-sale securities of equity method investments, net of tax (52)
Total other comprehensive (loss) income (510) 109
Comprehensive (loss) income $ (4,295) $ 496
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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash flows from operating activities:    
Net (loss) earnings $ (3,785) $ 387
Net loss from discontinued operations, net of tax (23)
Net (loss) earnings from continuing operations (3,785) 410
Adjustments to reconcile net (loss) earnings from continuing operations to net cash (used in) provided by operating activities:    
Provision for doubtful accounts 103 3
Provision for obsolete inventory 44 68
Provision for warranty 79 18
Depreciation and amortization 524 482
Equity method investment loss (income) 10 (2,481)
Fair value adjustment to notes receivable 42
Deferred income taxes 87 867
Amortization of contract acquisition costs 57
Stock-based compensation expense 255 136
Changes in operating assets and liabilities:    
Accounts receivable (178) (282)
Inventories 537 (514)
Other current assets 5 (102)
Accounts payable 256 2,321
Accrued expenses 429 154
Customer deposits/deferred revenue 704 (86)
Current income taxes 36 (156)
Other assets (796) (271)
Net cash flows (used in) provided by operating activities - continuing operations (1,591) 567
Net cash flows used in operating activities - discontinued operations (24)
Net cash (used in) provided by operating activities (1,591) 543
Cash flows from investing activities:    
Purchase of equity securities (2,525)
Dividends received from investee in excess of cumulative earnings 23 103
Capital expenditures (356) (1,120)
Net cash used in investing activities - continuing operations (333) (3,542)
Cash flows from financing activities:    
Principal payments on long-term debt (16)
Purchase of treasury stock (65)
Payments on capital lease obligations (53) (67)
Net cash used in financing activities - continuing operations (69) (132)
Effect of exchange rate changes on cash and cash equivalents - continuing operations 471 39
Net decrease in cash and cash equivalents (1,522) (3,092)
Discontinued operations activity included above:    
Add: Cash balance included in assets held for sale at beginning of period 175
Less: Cash balance included in assets held for sale at end of period (150)
Cash and cash equivalents at beginning of period 4,870 7,596
Cash and cash equivalents at end of period $ 3,348 $ 4,529
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Nature of Operations
3 Months Ended
Mar. 31, 2018
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 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.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
Discontinued Operations
3 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

2. Discontinued Operations

 

In May 2017, the Company sold the operational assets of Strong Westrex, Inc. for total proceeds of $60 thousand.

 

The summary financial results of discontinued operations for the three months ended March 31, 2017 were as follows (in thousands):

 

Total net revenues   $ 12  
Total cost of revenues     26  
Total selling and administrative expenses     9  
Loss from operations of discontinued operations     (23 )
Loss before income taxes     (23 )
Income tax expense     -  
Net loss from discontinued operations, net of tax   $ (23 )

 

There was no depreciation and amortization related to discontinued operations recorded for the three month period ended March 31, 2017. There were no capital expenditures related to discontinued operations during the three month period ended March 31, 2017.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

3. 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 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, 2017.

 

The condensed consolidated balance sheet as of December 31, 2017 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.

 

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 (loss) income” 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. The Company did not record any impairments related to its investments during the three months ended March 31, 2018 or 2017. Note 6 contains additional information on our equity method investments, which are held by our Cinema segment.

 

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 fall, as of March 31, 2018 and December 31, 2017.

 

Fair values measured on a recurring basis at March 31, 2018 (in thousands):

 

    Level 1     Level 2     Level 3     Total  
Cash and cash equivalents   $ 3,348     $ -     $ -     $ 3,348  
Notes receivable     -       -       2,773     $ 2,773  
Total   $ 3,348     $ -     $ 2,773     $ 6,121  

 

Fair values measured on a recurring basis at December 31, 2017 (in thousands):

 

    Level 1     Level 2     Level 3     Total  
Cash and cash equivalents   $ 4,870     $ -     $ -     $ 4,870  
Notes receivable     -       -       2,815     $ 2,815  
Total   $ 4,870     $ -     $ 2,815     $ 7,685  

 

Quantitative information about the Company’s level 3 fair value measurements at March 31, 2018 is set forth below:

 

   

Fair value at 3/31/18

(in thousands)

    Valuation technique     Unobservable input     Range  
Notes receivable   $ 2,773       Discounted cash flow       Default percentage       49 %
                      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. During the first quarter of 2018, the Company updated its estimated future cash flow assumptions. This resulted in a decrease to the fair value of the notes receivable of $42 thousand recorded in earnings during the quarter ended March 31, 2018. There was no adjustment to the estimated fair value of the notes receivable during the quarter ended March 31, 2017.

 

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, 2018, the Company’s long-term debt, including current maturities, had a carrying value of $1.95 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, 2018 was $1.90 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). During the three months ended March 31, 2018 and 2017, the Company did not have any significant non-recurring measurements of non-financial assets or liabilities.

 

Recently Adopted Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” “(ASC 606)”. The ASU replaced most existing revenue recognition guidance in U.S. GAAP. The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method. The Company recorded a transition adjustment of approximately $76 thousand increasing the opening balance of retained earnings, primarily related to the deferral and amortization of direct and incremental costs of obtaining contracts. See Note 4 for further information about the nature and pattern of revenue recognition for the different types of contracts with customers.

 

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 requires equity investments that do not result in consolidation and are not accounted under the equity method to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets; and modifies certain fair value disclosure requirements. The Company adopted ASU 2016-01 prospectively on January 1, 2018. The adoption of this ASU did not significantly impact the Company’s results of operations and financial position.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The new guidance describes the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The Company adopted this ASU effective January 1, 2018. The adoption of this ASU did not significantly impact the Company’s results of operations and financial position.

 

Recently Issued Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” 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, with early adoption permitted, and requires a modified retrospective transition method. The Company is evaluating the requirements of ASU 2016-02 and its potential impact on the Company’s financial statements. The Company has leases primarily for property and equipment and is in the process of identifying and evaluating these leases for purposes of ASU 2016-02. For each of these leases, the term will be evaluated, including extension and renewal options as well as the lease payments. While the Company has not yet quantified the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements, the Company expects to record assets and liabilities on its balance sheet upon adoption of this standard, which may be material. The Company will continue to provide enhanced disclosures as it continues its assessment.

 

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.

 

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. The Company does not believe its adoption will significantly impact the Company’s results of operations or financial position.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
Revenue
3 Months Ended
Mar. 31, 2018
Revenue from Contract with Customer [Abstract]  
Revenue

4. Revenue

 

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method for all contracts not completed as of the date of adoption. Results for reporting periods beginning on or after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period.

 

Under ASC 606, 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 when one is 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. Beginning January 1, 2018, with the adoption of ASC 606, 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. Prior to 2018, all contract acquisition costs were expensed as incurred. The Company recorded a transition adjustment of approximately $76 thousand increasing the opening balance of retained earnings, primarily related to the deferral and amortization of direct and incremental costs of obtaining contracts. The following table summarizes the changes in the Company’s contract asset balance during the three months ended March 31, 2018 (in thousands):

 

Deferred contract acquisition costs as of January 1, 2018   $ 76  
Costs capitalized     10  
Amortization     (14 )
Impairment     -  
Deferred contract acquisition costs as of March 31, 2018   $ 72  

 

The following tables summarize the impact the adoption of ASC 606 had on the Company’s consolidated financial statements (in thousands, except per share data):

 

Condensed Consolidated Balance Sheet:

 

    As reported
March 31, 2018
    Adjustments     Balances
without
adoption of ASC 606
 
Total current assets   $ 20,354     $ 146     $ 20,500  
Total noncurrent assets     36,677       (14 )     36,663  
Total assets   $ 57,031     $ 132     $ 57,163  
                         
Total current liabilities   $ 10,702     $ 258     $ 10,960  
Total noncurrent liabilities     6,171       -       6,171  
Total liabilities     16,873       258       17,131  
                         
Retained earnings     21,861       (126 )     21,735  
Other stockholders’ equity     18,297       -       18,297  
Total stockholders’ equity     40,158       (126 )     40,032  
Total liabilities and stockholders’ equity   $ 57,031     $ 132     $ 57,163  

  

Condensed Consolidated Statement of Operations:

 

    As reported for
the three
months ended
March 31, 2018
    Adjustments     Balances
without
adoption of ASC 606
 
Total net revenues   $ 15,828     $ (57 )   $ 15,771  
Total cost of revenues     12,978       (2 )     12,976  
Gross profit     2,850       (55 )     2,795  
Total selling and administrative expenses     5,934       (5 )     5,929  
Loss from operations     (3,084 )     (50 )     (3,134 )
Other income     7       -       7  
Loss before income taxes and equity method investment loss     (3,077 )     (50 )     (3,127 )
Income tax expense     698       -       698  
Equity method investment loss     (10 )     -       (10 )
Net loss   $ (3,785 )   $ (50 )   $ (3,835 )
Net loss per share of common stock:                        
Basic   $ (0.26 )     (0.00 )   $ (0.26 )
Diluted   $ (0.26 )     (0.00 )   $ (0.26 )

 

The adoption of ASC 606 did not have any net impact on other comprehensive loss or cash flows.

 

The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2018:

 

    Cinema     Digital Media     Other     Eliminations     Total  
Screen system sales   $ 4,005     $ -     $ -     $ -     $ 4,005  
Digital equipment sales     3,158       766       -       (216 )     3,708  
Field maintenance and monitoring services     2,944       2,114       -       (138 )     4,920  
Installation services     328       1,360       -       -       1,688  
Extended warranty sales     342       -       -       -       342  
Other     672       477       16       -       1,165  
Total   $ 11,449     $ 4,717     $ 16     $ (354 )   $ 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.

 

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 Cinema and Digital Media customers. In the Cinema segment, these contracts are generally 12 months in length, while the term for service contracts in the Digital Media segment can be for multiple years. Revenue 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 Cinema and Digital Media segments. Revenue 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 Cinema and Digital Media customers and recognizes revenue upon completion of the installations.

 

Extended warranty sales

 

The Company sells extended warranties to its 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.

 

At January 1, 2018, $0.8 million of unearned revenue associated with maintenance and monitoring services and extended warranty sales in which the Company is the primary obligor was reported in deferred revenue and customer deposits. During the three months ended March 31, 2018, $0.4 million of this balance was earned and recognized as revenue. At March 31, 2018, the unearned revenue amount was $0.8 million. The Company expects to recognize $0.7 million of unearned revenue amounts throughout the rest of 2018, and immaterial amounts each year from 2019 through 2023.

 

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):

 

    Cinema     Digital Media     Other     Eliminations     Total  
Point in time   $ 9,598     $ 2,529     $ 16     $ (354 )   $ 11,789  
Over time     1,851       2,188       -       -       4,039  
Total   $ 11,449     $ 4,717     $ 16     $ (354 )   $ 15,828  

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
(Loss) Earnings Per Common Share
3 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
(Loss) Earnings Per Common Share

5. (Loss) Earnings Per Common Share

 

Basic (loss) earnings per share has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted (loss) earnings per share has been 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. The following table provides the reconciliation between average shares used to compute basic and diluted (loss) earnings per share:

 

    Three Months Ended March 31,  
    2018     2017  
Weighted average shares outstanding (in thousands):                
Basic weighted average shares outstanding     14,341       14,264  
Dilutive effect of stock options and certain non-vested shares of restricted stock     -       156  
Diluted weighted average shares outstanding     14,341       14,420  

 

For the three month period ended March 31, 2018, options to purchase 490,000 shares of common stock were outstanding but were not included in the computation of diluted loss per share as the option’s exercise price was greater than the average market price of the common shares for each period. An additional 129,525 common stock equivalents related to options and restricted stock awards were excluded for the three months ended March 31, 2018, respectively, as their inclusion would be anti-dilutive, thereby decreasing the net losses per share. For the three month period ended March 31, 2017, options to purchase 385,000 shares of common stock were outstanding but were not included in the computation of diluted earnings per share as the option’s exercise price was greater than the average market price of the common shares for the respective periods.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Equity Method Investments
3 Months Ended
Mar. 31, 2018
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, 2018     December 31, 2017  
Entity   Carrying Amount     Economic Interest     Carrying Amount     Economic Interest  
RELM Wireless Corporation   $ 4,102       8.3 %   $ 4,473       8.3 %
Itasca Capital, Ltd.     5,814       32.3 %     5,870       32.3 %
1347 Property Insurance Holdings, Inc.     7,917       17.4 %     7,710       17.4 %
Total   $ 17,833             $ 18,053          

 

The following summarizes the (loss) income of equity method investees reflected in the Statement of Operations (in thousands):

 

    Three months ended March 31,  
Entity     2018       2017  
RELM Wireless Corporation   $ (354 )   $ 8  
Itasca Capital, Ltd.     103       2,461  
1347 Property Insurance Holdings, Inc.     241       12  
Total   $ (10 )   $ 2,481  

 

RELM Wireless Corporation (“RELM”) is a publicly traded company that designs, manufactures and markets two-way land mobile radios, repeaters, base stations and related components and subsystems. The Company’s Chief Executive Officer is chairman of the board of directors of RELM, and controls entities that, when combined with the Company’s ownership in RELM, own greater than 20% of RELM, providing the Company with significant influence over RELM, but not controlling interest. The Company received dividends of $23 thousand and $0.1 million for the three month periods ended March 31, 2018 and 2017, respectively. Based on quoted market prices, the market value of the Company’s ownership in RELM was $4.5 million at March 31, 2018.

 

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 a member 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, 2018 or 2017. Based on quoted market prices, the market value of the Company’s ownership in Itasca was $3.5 million at March 31, 2018.

 

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 a member 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, 2018 and 2017. Based on quoted market prices, the market value of the Company’s ownership in PIH was $7.4 million at March 31, 2018.

 

As of March 31, 2018, the Company’s retained earnings included undistributed earnings from our equity method investees of $1.5 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, 2017, consistent with the Company’s recognition of the results of its equity method investments on a one-quarter lag.

 

For the three months ended December 31,   2017     2016  
      (in thousands)  
Revenue   $ 20,576     $ 15,358  
Operating loss from continuing operations   $ (2,034 )   $ 2,590  
Net income   $ (2,557 )   $ 9,351  

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
Intangible Assets
3 Months Ended
Mar. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

7. Intangible Assets

 

Intangible assets consisted of the following at March 31, 2018 (dollars in thousands):

 

    Useful life     Gross     Accumulated Amortization     Net  
    (Years)                    
Intangible assets not yet subject to amortization:                                
Software in development           $ 877     $ -     $ 877  
Intangible assets subject to amortization:                                
Software in service     5       3,718       (768 )     2,950  
Product formulation     10       473       (353 )     120  
Total           $ 5,068     $ (1,121 )   $ 3,947  

 

Intangible assets consisted of the following at December 31, 2017 (dollars in thousands):

 

    Useful life     Gross     Accumulated Amortization     Net  
    (Years)                    
Intangible assets not yet subject to amortization:                                
Software in development           $ 1,243     $ -     $ 1,243  
Intangible assets subject to amortization:                                
Software in service     5       3,191       (597 )     2,594  
Product formulation     10       486       (351 )     135  
Total           $ 4,920     $ (948 )   $ 3,972  

 

Amortization expense relating to intangible assets was $0.2 million and $0.1 million for the three months ended March 31, 2018 and 2017, respectively.

 

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):

 

    Amount  
Remainder 2018   $ 639  
2019     840  
2020     831  
2021     670  
2022     86  
Thereafter     4  
Total   $ 3,070  

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
Goodwill
3 Months Ended
Mar. 31, 2018
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, 2018 (in thousands):

 

Balance as of December 31, 2017   $ 952  
Foreign currency translation     (26 )
Balance as of March 31, 2018   $ 926  

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Warranty Reserves
3 Months Ended
Mar. 31, 2018
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, 2018 and 2017 (in thousands):

 

    Three Months Ended March 31,  
    2018     2017  
Warranty accrual at beginning of period   $ 521     $ 645  
Charged to expense     84       47  
Claims paid, net of recoveries     (30 )     (231 )
Foreign currency adjustment     (11 )     1  
Warranty accrual at end of period   $ 564     $ 462  

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
Debt
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Debt

10. Debt

 

The Company’s debt consists of the following (in thousands):

 

    March 31, 2018     December 31, 2017  
Short-term debt:                
Revolving line of credit   $ 500     $ 500  
Current portion of long-term debt     65       65  
Total short-term debt     565       565  
Long-term debt:                
$2 million term loan     1,951       1,968  
Less: current portion     (65 )     (65 )
Less: unamortized debt issuance costs     (31 )     (33 )
Total long-term debt     1,855       1,870  
Total short-term and long-term debt   $ 2,420     $ 2,435  

 

On April 27, 2017, the Company entered into a debt agreement with a bank consisting of 1) a $2.0 million five-year term loan secured by a first lien deed of trust on the Company’s Alpharetta, GA facility, bearing interest at a fixed rate of 4.5% and payable in equal monthly installments of principal and interest calculated based on a 20-year amortization schedule with a final balloon payment of approximately $1.7 million due on May 10, 2022 and 2) a line of credit of up to $1.0 million secured by a second lien deed of trust on the Company’s Alpharetta, GA facility, bearing interest at the Prime Rate published in the Wall Street Journal plus 0.25% (5.00% at March 31, 2018) and with a term ending May 10, 2018. On April 23, 2018, the Company entered into a one-year extension of the maturity date of the line of credit through May 10, 2019. The debt agreement requires the Company to maintain a ratio of total liabilities to tangible net worth not in excess of 3:1 and maintain minimum liquidity of $2.0 million. The Company was in compliance with its debt covenants as of March 31, 2018. The Company’s Chairman and Chief Executive Officer is also a member of the bank’s board of directors.

 

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 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. There were no borrowings outstanding at March 31, 2018 on any of the Strong/MDI credit facilities, as Strong/MDI had not yet drawn on the facilities. On April 24, 2018, the Company borrowed CDN$3.5 million on the 20-year installment loan. Strong/MDI was in compliance with its debt covenants as of March 31, 2018.

 

Scheduled repayments are as follows for the Company’s long-term debt outstanding as of March 31, 2018 (in thousands):

 

Remainder of 2018   $ 48  
2019     68  
2020     70  
2021     74  
2022     1,691  
Thereafter     -  
Total   $ 1,951  

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Income Taxes
3 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

11. 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, 2018 and December 31, 2017.

 

In December 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was signed into law in the United States. The law includes significant changes to the United States corporate income tax system, including a federal corporate rate reduction and the transition of the United States from a worldwide tax system to a territorial tax system. As part of the transition to a territorial tax system, the 2017 Tax Act requires taxpayers to calculate a one-time transition tax based on the deemed repatriation of undistributed earnings of foreign subsidiaries. The Company is currently analyzing the 2017 Tax Act, and in certain areas, has made provisional estimates of the effects on our consolidated financial statements and tax disclosures, including the amount of the repatriation tax and changes to existing deferred tax balances.

 

The Company is subject to possible examinations not yet initiated for Federal purposes for fiscal years 2014 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.

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
Stock Compensation
3 Months Ended
Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Compensation

12. 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 $0.3 million and $0.1 million for the three months ended March 31, 2018 and 2017, 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 758,354 shares remaining available for grant at March 31, 2018.

 

Options

 

The Company granted a total of 387,500 and 285,000 options during the three month periods ended March 31, 2018 and 2017, respectively. Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant.

 

The weighted average grant date fair value of stock options granted during the three month periods ended March 31, 2018 and 2017 was $1.82 and $2.41, respectively. The fair value of each stock option granted was estimated on the date of grant using a Black-Scholes valuation model with the following weighted average assumptions:

 

    2018     2017  
Expected dividend yield at date of grant     0.00 %     0.00 %
Risk-free interest rate     2.49 %     2.04 %
Expected stock price volatility     35.65 %     34.71 %
Expected life of options (in years)     6.0       6.0  

 

The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatility is based on historical daily price changes of the Company’s stock for six years prior to the date of grant. The expected life of options is the average number of years the Company estimates that options will be outstanding.

 

The following table summarizes stock option activity for the three months ended March 31, 2018:

 

    Number of Options     Weighted Average Exercise Price Per Share     Weighted Average Remaining Contractual Term     Aggregate Intrinsic Value (in thousands)  
Outstanding at December 31, 2017     930,300     $ 5.63       8.7     $ 150  
Granted     387,500       4.70                  
Exercised     -       -                  
Forfeited     (32,000 )     5.59                  
Expired     (8,000 )     5.41                  
Outstanding at March 31, 2018     1,277,800     $ 5.29       8.8     $ 64  
Exercisable at March 31, 2018     269,300     $ 4.88       7.9     $ 31  

 

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, 2018, 1,008,500 stock option awards were non-vested. Unrecognized compensation cost related to stock option awards was approximately $1.9 million, which is expected to be recognized over a weighted average period of 4.0 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, 2018, the total unrecognized compensation cost related to non-vested restricted stock awards was approximately $1.1 million, which is expected to be recognized over a weighted average period of 2.4 years.

 

The following table summarizes restricted stock share activity for the three months ended March 31, 2018:

 

    Number of Restricted Stock Shares     Weighted Average Grant Price Fair Value  
Non-vested at December 31, 2017     85,000     $ 6.50  
Granted     -       -  
Shares vested     (28,333 )     6.50  
Shares forfeited     -       -  
Non-vested at March 31, 2018     56,667     $ 6.50  

 

The following table summarizes restricted stock unit activity for the three months ended March 31, 2018:

 

    Number of Restricted Stock Units     Weighted Average Grant Price Fair Value  
Non-vested at December 31, 2017     35,835     $ 6.45  
Granted     147,500       4.70  
Shares vested     -       -  
Shares forfeited     -       -  
Non-vested at March 31, 2018     183,335     $ 5.04  

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments, Contingencies and Concentrations
3 Months Ended
Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments, Contingencies and Concentrations

13. 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 56% of total consolidated net revenues for the three months ended March 31, 2018. Trade accounts receivable from these customers represented approximately 37% of net consolidated receivables at March 31, 2018. 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.

 

Leases

 

The Company and its subsidiaries lease plant and office facilities, furniture, autos and equipment under operating leases expiring through 2022. These leases generally contain renewal options and the Company expects to renew or replace certain of these leases in the ordinary course of business.

 

The Company’s future minimum lease payments for leases at March 31, 2018 are as follows:

 

    Capital Leases     Operating Leases  
    (in thousands)  
Remainder 2018   $ 185     $ 1,342  
2019     116       1,768  
2020     -       1,543  
2021     -       1,415  
2022     -       1,081  
Thereafter     -       -  
Total minimum lease payments   $ 301     $ 7,149  
Less: Amount representing interest     (10 )        
Present value of minimum lease payments     291          
Less: Current maturities     (226 )        
Capital lease obligations, net of current portion   $ 65          

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
Business Segment Information
3 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
Business Segment Information

 

14. Business Segment Information

 

As of March 31, 2018, the Company’s operations were conducted principally through two business segments: Cinema and Digital Media. The Cinema segment provides a full range of product and service solutions primarily for the theater exhibition industry, including a wide spectrum of premier audio-visual products and accessories such as digital projectors, state of the art projection screens, servers, library management systems, menu boards, flat panel displays, and sound systems, as well as network monitoring and on-site service for cinema equipment. The Digital Media segment develops and delivers solutions for out-of-home messaging, advertising and communication and provides managed services including monitoring of networked equipment. While there is digital signage equipment sold within this segment, the primary focus of this segment is providing solutions and services to our customers.

 

Summary by Business Segments

 

    Three Months Ended March 31,  
(In thousands)   2018     2017  
Net revenues                
Cinema   $ 11,449     $ 12,689  
Digital Media     4,717       5,345  
Other     16       -  
Total segment net revenues     16,182       18,034  
Eliminations     (354 )     (108 )
Total net revenues     15,828       17,926  
                 
Gross profit (loss)                
Cinema     3,385       3,616  
Digital Media     (551 )     823  
Other     16       -  
Total gross profit     2,850       4,439  
                 
Operating income (loss)                
Cinema     2,325       2,679  
Digital Media     (2,496 )     (1,113 )
Other     (113 )     (117 )
Total segment operating (loss) income     (284 )     1,449  
Unallocated general and administrative expenses     (2,800 )     (2,047 )
Loss from operations     (3,084 )     (598 )
Other income     7       20  
Loss before income taxes and equity method investment (loss) income   $ (3,077 )   $ (578 )

 

(In thousands)   March 31, 2018     December 31, 2017  
Identifiable assets                
Cinema   $ 24,845     $ 27,358  
Digital Media     14,353       13,603  
Corporate     17,833       18,053  
Total   $ 57,031     $ 59,014  

 

Summary by Geographical Area

 

    Three Months Ended March 31,  
(In thousands)   2018     2017  
Net revenue                
United States   $ 12,830     $ 14,393  
Canada     1,400       1,220  
Mexico     556       356  
China     541       1,466  
Latin America     270       284  
Europe     158       116  
Asia (excluding China)     73       72  
Other     -       19  
Total   $ 15,828     $ 17,926  

 

(In thousands)   March 31, 2018     December 31, 2017  
Identifiable assets                
United States   $ 38,325     $ 37,230  
Canada     18,706       21,784  
Total   $ 57,031     $ 59,014  

 

Net revenues by business segment are to unaffiliated customers. Identifiable assets by geographical area are based on location of facilities. Net sales by geographical area are based on destination of sales.

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
Subsequent Event
3 Months Ended
Mar. 31, 2018
Subsequent Events [Abstract]  
Subsequent Event

15. Subsequent Event

 

On April 27, 2018, the Company executed a definitive agreement for a sale-leaseback of its Alpharetta, Georgia office facility. The Company agreed to sell the Alpharetta facility for $7.0 million in cash and enter into a 10-year leaseback of the facility for rent in the amount of $600,000 per year, escalating at the rate of 2% per year. In addition, the Company agreed to issue 100,000 warrants to the buyer or its designee to purchase Company stock, consisting of 25,000 warrants at each of $10, $12, $14 and $16 purchase prices per share. The warrants will have a 10-year maturity. The closing of the transaction is expected to occur within 30 days after the completion of a 60-day due diligence period and satisfaction of customary contingencies. Upon closing of the sale-leaseback transaction, the Company’s term loan and revolving line of credit that are currently secured by the Alpharetta facility will be repaid and the related debt agreement would be terminated. The Company expects to receive net proceeds of approximately $4.0 million on the sale-leaseback after repayment of the loans.

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2018
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 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, 2017.

 

The condensed consolidated balance sheet as of December 31, 2017 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.

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 (loss) income” 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. The Company did not record any impairments related to its investments during the three months ended March 31, 2018 or 2017. Note 6 contains additional information on our equity method investments, which are held by our Cinema segment.

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 fall, as of March 31, 2018 and December 31, 2017.

 

Fair values measured on a recurring basis at March 31, 2018 (in thousands):

 

    Level 1     Level 2     Level 3     Total  
Cash and cash equivalents   $ 3,348     $ -     $ -     $ 3,348  
Notes receivable     -       -       2,773     $ 2,773  
Total   $ 3,348     $ -     $ 2,773     $ 6,121  

 

Fair values measured on a recurring basis at December 31, 2017 (in thousands):

 

    Level 1     Level 2     Level 3     Total  
Cash and cash equivalents   $ 4,870     $ -     $ -     $ 4,870  
Notes receivable     -       -       2,815     $ 2,815  
Total   $ 4,870     $ -     $ 2,815     $ 7,685  

 

Quantitative information about the Company’s level 3 fair value measurements at March 31, 2018 is set forth below:

 

   

Fair value at 3/31/18

(in thousands)

    Valuation technique     Unobservable input     Range  
Notes receivable   $ 2,773       Discounted cash flow       Default percentage       49 %
                      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. During the first quarter of 2018, the Company updated its estimated future cash flow assumptions. This resulted in a decrease to the fair value of the notes receivable of $42 thousand recorded in earnings during the quarter ended March 31, 2018. There was no adjustment to the estimated fair value of the notes receivable during the quarter ended March 31, 2017.

 

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, 2018, the Company’s long-term debt, including current maturities, had a carrying value of $1.95 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, 2018 was $1.90 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). During the three months ended March 31, 2018 and 2017, the Company did not have any significant non-recurring measurements of non-financial assets or liabilities.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” “(ASC 606)”. The ASU replaced most existing revenue recognition guidance in U.S. GAAP. The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method. The Company recorded a transition adjustment of approximately $76 thousand increasing the opening balance of retained earnings, primarily related to the deferral and amortization of direct and incremental costs of obtaining contracts. See Note 4 for further information about the nature and pattern of revenue recognition for the different types of contracts with customers.

 

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 requires equity investments that do not result in consolidation and are not accounted under the equity method to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets; and modifies certain fair value disclosure requirements. The Company adopted ASU 2016-01 prospectively on January 1, 2018. The adoption of this ASU did not significantly impact the Company’s results of operations and financial position.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The new guidance describes the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The Company adopted this ASU effective January 1, 2018. The adoption of this ASU did not significantly impact the Company’s results of operations and financial position.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” 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, with early adoption permitted, and requires a modified retrospective transition method. The Company is evaluating the requirements of ASU 2016-02 and its potential impact on the Company’s financial statements. The Company has leases primarily for property and equipment and is in the process of identifying and evaluating these leases for purposes of ASU 2016-02. For each of these leases, the term will be evaluated, including extension and renewal options as well as the lease payments. While the Company has not yet quantified the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements, the Company expects to record assets and liabilities on its balance sheet upon adoption of this standard, which may be material. The Company will continue to provide enhanced disclosures as it continues its assessment.

 

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.

 

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. The Company does not believe its adoption will significantly impact the Company’s results of operations or financial position.

XML 34 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
Discontinued Operations (Tables)
3 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Financial Results of Discontinued Operations

The summary financial results of discontinued operations for the three months ended March 31, 2017 were as follows (in thousands):

 

Total net revenues   $ 12  
Total cost of revenues     26  
Total selling and administrative expenses     9  
Loss from operations of discontinued operations     (23 )
Loss before income taxes     (23 )
Income tax expense     -  
Net loss from discontinued operations, net of tax   $ (23 )

XML 35 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Schedule of Fair Value Measured Financial Assets and Liabilities

Fair values measured on a recurring basis at March 31, 2018 (in thousands):

 

    Level 1     Level 2     Level 3     Total  
Cash and cash equivalents   $ 3,348     $ -     $ -     $ 3,348  
Notes receivable     -       -       2,773     $ 2,773  
Total   $ 3,348     $ -     $ 2,773     $ 6,121  

 

Fair values measured on a recurring basis at December 31, 2017 (in thousands):

 

    Level 1     Level 2     Level 3     Total  
Cash and cash equivalents   $ 4,870     $ -     $ -     $ 4,870  
Notes receivable     -       -       2,815     $ 2,815  
Total   $ 4,870     $ -     $ 2,815     $ 7,685  

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, 2018 is set forth below:

 

   

Fair value at 3/31/18

(in thousands)

    Valuation technique     Unobservable input     Range  
Notes receivable   $ 2,773       Discounted cash flow       Default percentage       49 %
                      Discount rate       18 %

XML 36 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
Revenue (Tables)
3 Months Ended
Mar. 31, 2018
Schedule of Changes in Contract Cost

The following table summarizes the changes in the Company’s contract asset balance during the three months ended March 31, 2018 (in thousands):

 

Deferred contract acquisition costs as of January 1, 2018   $ 76  
Costs capitalized     10  
Amortization     (14 )
Impairment     -  
Deferred contract acquisition costs as of March 31, 2018   $ 72  

Schedule of Impact the Adoption of ASC 606 on Consolidated Financial Statements

The following tables summarize the impact the adoption of ASC 606 had on the Company’s consolidated financial statements (in thousands, except per share data):

 

Condensed Consolidated Balance Sheet:

 

    As reported
March 31, 2018
    Adjustments     Balances
without
adoption of ASC 606
 
Total current assets   $ 20,354     $ 146     $ 20,500  
Total noncurrent assets     36,677       (14 )     36,663  
Total assets   $ 57,031     $ 132     $ 57,163  
                         
Total current liabilities   $ 10,702     $ 258     $ 10,960  
Total noncurrent liabilities     6,171       -       6,171  
Total liabilities     16,873       258       17,131  
                         
Retained earnings     21,861       (126 )     21,735  
Other stockholders’ equity     18,297       -       18,297  
Total stockholders’ equity     40,158       (126 )     40,032  
Total liabilities and stockholders’ equity   $ 57,031     $ 132     $ 57,163  

  

Condensed Consolidated Statement of Operations:

 

    As reported for
the three
months ended
March 31, 2018
    Adjustments     Balances
without
adoption of ASC 606
 
Total net revenues   $ 15,828     $ (57 )   $ 15,771  
Total cost of revenues     12,978       (2 )     12,976  
Gross profit     2,850       (55 )     2,795  
Total selling and administrative expenses     5,934       (5 )     5,929  
Loss from operations     (3,084 )     (50 )     (3,134 )
Other income     7       -       7  
Loss before income taxes and equity method investment loss     (3,077 )     (50 )     (3,127 )
Income tax expense     698       -       698  
Equity method investment loss     (10 )     -       (10 )
Net loss   $ (3,785 )   $ (50 )   $ (3,835 )
Net loss per share of common stock:                        
Basic   $ (0.26 )     (0.00 )   $ (0.26 )
Diluted   $ (0.26 )     (0.00 )   $ (0.26 )

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, 2018:

 

    Cinema     Digital Media     Other     Eliminations     Total  
Screen system sales   $ 4,005     $ -     $ -     $ -     $ 4,005  
Digital equipment sales     3,158       766       -       (216 )     3,708  
Field maintenance and monitoring services     2,944       2,114       -       (138 )     4,920  
Installation services     328       1,360       -       -       1,688  
Extended warranty sales     342       -       -       -       342  
Other     672       477       16       -       1,165  
Total   $ 11,449     $ 4,717     $ 16     $ (354 )   $ 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, 2018 (in thousands):

 

    Cinema     Digital Media     Other     Eliminations     Total  
Point in time   $ 9,598     $ 2,529     $ 16     $ (354 )   $ 11,789  
Over time     1,851       2,188       -       -       4,039  
Total   $ 11,449     $ 4,717     $ 16     $ (354 )   $ 15,828  

XML 37 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
(Loss) Earnings Per Common Share (Tables)
3 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
Schedule of Reconciliation Between Basic and Diluted Earnings Per Share

The following table provides the reconciliation between average shares used to compute basic and diluted (loss) earnings per share:

 

    Three Months Ended March 31,  
    2018     2017  
Weighted average shares outstanding (in thousands):                
Basic weighted average shares outstanding     14,341       14,264  
Dilutive effect of stock options and certain non-vested shares of restricted stock     -       156  
Diluted weighted average shares outstanding     14,341       14,420  

XML 38 R27.htm IDEA: XBRL DOCUMENT v3.8.0.1
Equity Method Investments (Tables)
3 Months Ended
Mar. 31, 2018
Equity Method Investments and Joint Ventures [Abstract]  
Summary of Equity Method Investments

The following summarizes our equity method investments (dollars in thousands):

 

    March 31, 2018     December 31, 2017  
Entity   Carrying Amount     Economic Interest     Carrying Amount     Economic Interest  
RELM Wireless Corporation   $ 4,102       8.3 %   $ 4,473       8.3 %
Itasca Capital, Ltd.     5,814       32.3 %     5,870       32.3 %
1347 Property Insurance Holdings, Inc.     7,917       17.4 %     7,710       17.4 %
Total   $ 17,833             $ 18,053          

Summary of Income (Loss) of Equity Method Investees

The following summarizes the (loss) income of equity method investees reflected in the Statement of Operations (in thousands):

 

    Three months ended March 31,  
Entity     2018       2017  
RELM Wireless Corporation   $ (354 )   $ 8  
Itasca Capital, Ltd.     103       2,461  
1347 Property Insurance Holdings, Inc.     241       12  
Total   $ (10 )   $ 2,481  

Summarized Financial Information

For the three months ended December 31,   2017     2016  
      (in thousands)  
Revenue   $ 20,576     $ 15,358  
Operating loss from continuing operations   $ (2,034 )   $ 2,590  
Net income   $ (2,557 )   $ 9,351  

XML 39 R28.htm IDEA: XBRL DOCUMENT v3.8.0.1
Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Intangible Assets

Intangible assets consisted of the following at March 31, 2018 (dollars in thousands):

 

    Useful life     Gross     Accumulated Amortization     Net  
    (Years)                    
Intangible assets not yet subject to amortization:                                
Software in development           $ 877     $ -     $ 877  
Intangible assets subject to amortization:                                
Software in service     5       3,718       (768 )     2,950  
Product formulation     10       473       (353 )     120  
Total           $ 5,068     $ (1,121 )   $ 3,947  

 

Intangible assets consisted of the following at December 31, 2017 (dollars in thousands):

 

    Useful life     Gross     Accumulated Amortization     Net  
    (Years)                    
Intangible assets not yet subject to amortization:                                
Software in development           $ 1,243     $ -     $ 1,243  
Intangible assets subject to amortization:                                
Software in service     5       3,191       (597 )     2,594  
Product formulation     10       486       (351 )     135  
Total           $ 4,920     $ (948 )   $ 3,972  

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):

 

    Amount  
Remainder 2018   $ 639  
2019     840  
2020     831  
2021     670  
2022     86  
Thereafter     4  
Total   $ 3,070  

XML 40 R29.htm IDEA: XBRL DOCUMENT v3.8.0.1
Goodwill (Tables)
3 Months Ended
Mar. 31, 2018
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, 2018 (in thousands):

 

Balance as of December 31, 2017   $ 952  
Foreign currency translation     (26 )
Balance as of March 31, 2018   $ 926  

XML 41 R30.htm IDEA: XBRL DOCUMENT v3.8.0.1
Warranty Reserves (Tables)
3 Months Ended
Mar. 31, 2018
Guarantees and Product Warranties [Abstract]  
Schedule of Product Warranty Liability

The following table summarizes warranty activity for the three months ended March 31, 2018 and 2017 (in thousands):

 

    Three Months Ended March 31,  
    2018     2017  
Warranty accrual at beginning of period   $ 521     $ 645  
Charged to expense     84       47  
Claims paid, net of recoveries     (30 )     (231 )
Foreign currency adjustment     (11 )     1  
Warranty accrual at end of period   $ 564     $ 462  

XML 42 R31.htm IDEA: XBRL DOCUMENT v3.8.0.1
Debt (Tables)
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Schedule of Debt

The Company’s debt consists of the following (in thousands):

 

    March 31, 2018     December 31, 2017  
Short-term debt:                
Revolving line of credit   $ 500     $ 500  
Current portion of long-term debt     65       65  
Total short-term debt     565       565  
Long-term debt:                
$2 million term loan     1,951       1,968  
Less: current portion     (65 )     (65 )
Less: unamortized debt issuance costs     (31 )     (33 )
Total long-term debt     1,855       1,870  
Total short-term and long-term debt   $ 2,420     $ 2,435  

Schedule of Long-term Debt Maturities

Scheduled repayments are as follows for the Company’s long-term debt outstanding as of March 31, 2018 (in thousands):

 

Remainder of 2018   $ 48  
2019     68  
2020     70  
2021     74  
2022     1,691  
Thereafter     -  
Total   $ 1,951  

XML 43 R32.htm IDEA: XBRL DOCUMENT v3.8.0.1
Stock Compensation (Tables)
3 Months Ended
Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [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     2017  
Expected dividend yield at date of grant     0.00 %     0.00 %
Risk-free interest rate     2.49 %     2.04 %
Expected stock price volatility     35.65 %     34.71 %
Expected life of options (in years)     6.0       6.0  

Summary of Stock Options Activities

The following table summarizes stock option activity for the three months ended March 31, 2018:

 

    Number of Options     Weighted Average Exercise Price Per Share     Weighted Average Remaining Contractual Term     Aggregate Intrinsic Value (in thousands)  
Outstanding at December 31, 2017     930,300     $ 5.63       8.7     $ 150  
Granted     387,500       4.70                  
Exercised     -       -                  
Forfeited     (32,000 )     5.59                  
Expired     (8,000 )     5.41                  
Outstanding at March 31, 2018     1,277,800     $ 5.29       8.8     $ 64  
Exercisable at March 31, 2018     269,300     $ 4.88       7.9     $ 31  

Summary of Restricted Stock Activity

The following table summarizes restricted stock share activity for the three months ended March 31, 2018:

 

    Number of Restricted Stock Shares     Weighted Average Grant Price Fair Value  
Non-vested at December 31, 2017     85,000     $ 6.50  
Granted     -       -  
Shares vested     (28,333 )     6.50  
Shares forfeited     -       -  
Non-vested at March 31, 2018     56,667     $ 6.50  

Schedule of Nonvested Restricted Stock Units Activity

The following table summarizes restricted stock unit activity for the three months ended March 31, 2018:

 

    Number of Restricted Stock Units     Weighted Average Grant Price Fair Value  
Non-vested at December 31, 2017     35,835     $ 6.45  
Granted     147,500       4.70  
Shares vested     -       -  
Shares forfeited     -       -  
Non-vested at March 31, 2018     183,335     $ 5.04  

XML 44 R33.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments, Contingencies and Concentrations (Tables)
3 Months Ended
Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Capital and Operating Leases Future Minimum Lease Payments

The Company’s future minimum lease payments for leases at March 31, 2018 are as follows:

 

    Capital Leases     Operating Leases  
    (in thousands)  
Remainder 2018   $ 185     $ 1,342  
2019     116       1,768  
2020     -       1,543  
2021     -       1,415  
2022     -       1,081  
Thereafter     -       -  
Total minimum lease payments   $ 301     $ 7,149  
Less: Amount representing interest     (10 )        
Present value of minimum lease payments     291          
Less: Current maturities     (226 )        
Capital lease obligations, net of current portion   $ 65          

XML 45 R34.htm IDEA: XBRL DOCUMENT v3.8.0.1
Business Segment Information (Tables)
3 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information by Segment

Summary by Business Segments

 

    Three Months Ended March 31,  
(In thousands)   2018     2017  
Net revenues                
Cinema   $ 11,449     $ 12,689  
Digital Media     4,717       5,345  
Other     16       -  
Total segment net revenues     16,182       18,034  
Eliminations     (354 )     (108 )
Total net revenues     15,828       17,926  
                 
Gross profit (loss)                
Cinema     3,385       3,616  
Digital Media     (551 )     823  
Other     16       -  
Total gross profit     2,850       4,439  
                 
Operating income (loss)                
Cinema     2,325       2,679  
Digital Media     (2,496 )     (1,113 )
Other     (113 )     (117 )
Total segment operating (loss) income     (284 )     1,449  
Unallocated general and administrative expenses     (2,800 )     (2,047 )
Loss from operations     (3,084 )     (598 )
Other income     7       20  
Loss before income taxes and equity method investment (loss) income   $ (3,077 )   $ (578 )

Reconciliation of Assets from Segment to Consolidated

(In thousands)   March 31, 2018     December 31, 2017  
Identifiable assets                
Cinema   $ 24,845     $ 27,358  
Digital Media     14,353       13,603  
Corporate     17,833       18,053  
Total   $ 57,031     $ 59,014  

Schedule of Segment Reporting Information by Geographic Area

Summary by Geographical Area

 

    Three Months Ended March 31,  
(In thousands)   2018     2017  
Net revenue                
United States   $ 12,830     $ 14,393  
Canada     1,400       1,220  
Mexico     556       356  
China     541       1,466  
Latin America     270       284  
Europe     158       116  
Asia (excluding China)     73       72  
Other     -       19  
Total   $ 15,828     $ 17,926  

Summary of Identifiable Assets by Geographical Area

(In thousands)   March 31, 2018     December 31, 2017  
Identifiable assets                
United States   $ 38,325     $ 37,230  
Canada     18,706       21,784  
Total   $ 57,031     $ 59,014  

XML 46 R35.htm IDEA: XBRL DOCUMENT v3.8.0.1
Discontinued Operations (Details Narrative)
$ in Thousands
1 Months Ended
May 31, 2017
USD ($)
Strong Westrex, Inc. [Member]  
Proceeds from sale of subsidiaries $ 60
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.8.0.1
Discontinued Operations - Schedule of Financial Results of Discontinued Operations (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2017
USD ($)
Discontinued Operations and Disposal Groups [Abstract]  
Total net revenues $ 12
Total cost of revenues 26
Total selling and administrative expenses 9
Loss from operations of discontinued operations (23)
Loss before income taxes (23)
Income tax expense
Net loss from discontinued operations, net of tax $ (23)
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Fair value adjustment $ (42)  
Long-term debt 1,951   $ 1,968
Long-term debt fair value 1,900    
Adjustment to Retained Earnings - Deferred Contract Acquisition Costs [Member]      
Change in accounting principle effect of adoption quantification $ 76    
CDF2 Holdings, LLC [Member] | Unsecured Notes Receivable Arrangements [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%.    
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies - Schedule of Fair Value Measured Financial Assets and Liabilities (Details) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Cash and cash equivalents $ 3,348 $ 4,870
Notes receivable 2,773 2,815
Total 6,121 7,685
Level 1 [Member]    
Cash and cash equivalents 3,348 4,870
Notes receivable
Total 3,348 4,870
Level 2 [Member]    
Cash and cash equivalents
Notes receivable
Total
Level 3 [Member]    
Cash and cash equivalents
Notes receivable 2,773 2,815
Total $ 2,773 $ 2,815
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.8.0.1
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, 2018
Dec. 31, 2017
Accounting Policies [Abstract]    
Note receivable $ 2,773 $ 2,815
Valuation Technique Discounted cash flow  
Probability of default 49.00%  
Discount rate 18.00%  
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.8.0.1
Revenue (Details Narrative)
$ in Thousands
3 Months Ended
Mar. 31, 2018
USD ($)
Contract liability (or deferred revenue) $ 800
Revenue recognized 400
January 1, 2018 [Member]  
Contract liability (or deferred revenue) 800
2018 [Member]  
Unearned revenue reported in deferred revenue and customer deposits $ 700
Field Maintenance and Monitoring Services [Member]  
Contract duration or term with field maintenance 12 months
Adjustment to Retained Earnings - Deferred Contract Acquisition Costs [Member]  
Change in accounting principle effect of adoption quantification $ 76
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.8.0.1
Revenue - Schedule of Changes in Contract Cost (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2018
USD ($)
Revenue from Contract with Customer [Abstract]  
Deferred contract acquisition costs, beginning balance $ 76
Costs capitalized 10
Amortization (14)
Impairment
Deferred contract acquisition costs, ending balance $ 72
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.8.0.1
Revenue - Schedule of Impact the Adoption of ASC 606 on Consolidated Financial Statements (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Total current assets $ 20,354   $ 22,242
Total noncurrent assets 36,677    
Total assets 57,031   59,014
Total current liabilities 10,702   8,680
Total noncurrent liabilities 6,171    
Total liabilities 16,873   14,892
Retained earnings 21,861   25,570
Other stockholders’ equity 18,297    
Total stockholders’ equity 40,158   44,122
Total liabilities and stockholders’ equity 57,031   $ 59,014
Total net revenues 15,828 $ 17,926  
Total cost of revenues 12,978 13,487  
Gross profit 2,850 4,439  
Total selling and administrative expenses 5,934 5,037  
Loss from operations (3,084) (598)  
Other income 7 20  
Loss before income taxes and equity method investment loss (3,077) (578)  
Income tax expense 698 1,493  
Equity method investment loss (10) 2,481  
Net loss $ (3,785) $ 387  
Net loss per share of common stock: Basic $ (0.26) $ 0.03  
Net loss per share of common stock: Diluted $ (0.26) $ 0.03  
Balances without Adoption of ASC 606 [Member]      
Total current assets $ 20,500    
Total noncurrent assets 36,663    
Total assets 57,163    
Total current liabilities 10,960    
Total noncurrent liabilities 6,171    
Total liabilities 17,131    
Retained earnings 21,735    
Other stockholders’ equity 18,297    
Total stockholders’ equity 40,032    
Total liabilities and stockholders’ equity 57,163    
Total net revenues 15,771    
Total cost of revenues 12,976    
Gross profit 2,795    
Total selling and administrative expenses 5,929    
Loss from operations (3,134)    
Other income 7    
Loss before income taxes and equity method investment loss (3,127)    
Income tax expense 698    
Equity method investment loss (10)    
Net loss $ (3,835)    
Net loss per share of common stock: Basic $ (0.26)    
Net loss per share of common stock: Diluted $ (0.26)    
Difference Between Revenue Guidance in Effect Before and After Topic 606 [Member] | Adjustments for New Accounting Pronouncement [Member]      
Total current assets $ 146    
Total noncurrent assets (14)    
Total assets 132    
Total current liabilities 258    
Total noncurrent liabilities    
Total liabilities 258    
Retained earnings (126)    
Other stockholders’ equity    
Total stockholders’ equity (126)    
Total liabilities and stockholders’ equity 132    
Total net revenues (57)    
Total cost of revenues (2)    
Gross profit (55)    
Total selling and administrative expenses (5)    
Loss from operations (50)    
Other income    
Loss before income taxes and equity method investment loss (50)    
Income tax expense    
Equity method investment loss    
Net loss $ (50)    
Net loss per share of common stock: Basic $ (0.00)    
Net loss per share of common stock: Diluted $ (0.00)    
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.8.0.1
Revenue - Schedule of Revenue by Major Source (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Total net revenues $ 15,828 $ 17,926
Screen System Sales [Member]    
Total net revenues 4,005  
Digital Equipment Sales [Member]    
Total net revenues 3,708  
Field Maintenance and Monitoring Services [Member]    
Total net revenues 4,920  
Installation Services [Member]    
Total net revenues 1,688  
Extended Warranty Sales [Member]    
Total net revenues 342  
Other [Member]    
Total net revenues 1,165  
Cinema [Member]    
Total net revenues 11,449  
Cinema [Member] | Screen System Sales [Member]    
Total net revenues 4,005  
Cinema [Member] | Digital Equipment Sales [Member]    
Total net revenues 3,158  
Cinema [Member] | Field Maintenance and Monitoring Services [Member]    
Total net revenues 2,944  
Cinema [Member] | Installation Services [Member]    
Total net revenues 328  
Cinema [Member] | Extended Warranty Sales [Member]    
Total net revenues 342  
Cinema [Member] | Other [Member]    
Total net revenues 672  
Digital Media [Member]    
Total net revenues 4,717  
Digital Media [Member] | Screen System Sales [Member]    
Total net revenues  
Digital Media [Member] | Digital Equipment Sales [Member]    
Total net revenues 766  
Digital Media [Member] | Field Maintenance and Monitoring Services [Member]    
Total net revenues 2,114  
Digital Media [Member] | Installation Services [Member]    
Total net revenues 1,360  
Digital Media [Member] | Extended Warranty Sales [Member]    
Total net revenues  
Digital Media [Member] | Other [Member]    
Total net revenues 477  
Other [Member]    
Total net revenues 16  
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  
Eliminations [Member]    
Total net revenues (354)  
Eliminations [Member] | Screen System Sales [Member]    
Total net revenues  
Eliminations [Member] | Digital Equipment Sales [Member]    
Total net revenues (216)  
Eliminations [Member] | Field Maintenance and Monitoring Services [Member]    
Total net revenues (138)  
Eliminations [Member] | Installation Services [Member]    
Total net revenues  
Eliminations [Member] | Extended Warranty Sales [Member]    
Total net revenues  
Eliminations [Member] | Other [Member]    
Total net revenues  
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.8.0.1
Revenue - Schedule of Revenue by Timing of Transfer of Goods or Services to Customer (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Total net revenues $ 15,828 $ 17,926
Cinema [Member]    
Total net revenues 11,449  
Digital Media [Member]    
Total net revenues 4,717  
Other [Member]    
Total net revenues 16  
Eliminations [Member]    
Total net revenues (354)  
Transferred at Point in Time [Member]    
Total net revenues 11,789  
Transferred over Time [Member]    
Total net revenues 4,039  
Cinema [Member] | Transferred at Point in Time [Member]    
Total net revenues 9,598  
Cinema [Member] | Transferred over Time [Member]    
Total net revenues 1,851  
Digital Media [Member] | Transferred at Point in Time [Member]    
Total net revenues 2,529  
Digital Media [Member] | Transferred over Time [Member]    
Total net revenues 2,188  
Other [Member] | Transferred at Point in Time [Member]    
Total net revenues 16  
Other [Member] | Transferred over Time [Member]    
Total net revenues  
Eliminations [Member] | Transferred at Point in Time [Member]    
Total net revenues (354)  
Eliminations [Member] | Transferred over Time [Member]    
Total net revenues  
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.8.0.1
(Loss) Earnings Per Common Share (Details Narrative) - shares
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
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 490,000 385,000
Common Stock Equivalents [Member]    
Anti dilutive securities excluded from computation of earnings per share 129,525  
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.8.0.1
(Loss) Earnings Per Common Share - Schedule of Reconciliation Between Basic and Diluted Earnings Per Share (Details) - shares
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Earnings Per Share [Abstract]    
Basic weighted average shares outstanding 14,341,000 14,264,000
Dilutive effect of stock options and certain non-vested shares of restricted stock 156,000
Diluted weighted average shares outstanding 14,341,000 14,420,000
XML 58 R47.htm IDEA: XBRL DOCUMENT v3.8.0.1
Equity Method Investments (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Retained earnings undistributed earnings from our equity method investees $ 1,500    
RELM Wireless Corp [Member]      
Dividend received 23 $ 100  
Quoted market value of the company's ownership $ 4,500    
Equity method ownership percentage 8.30%   8.30%
RELM Wireless Corp [Member] | Chief Executive Officer [Member] | Minimum [Member]      
Combined equity ownership percentage 20.00%    
Itasca Capital Ltd [Member]      
Quoted market value of the company's ownership $ 3,500    
Equity method ownership percentage 32.30%   32.30%
1347 Property Insurance Holdings Inc [Member]      
Quoted market value of the company's ownership $ 7,400    
Equity method ownership percentage 17.40%   17.40%
1347 Property Insurance Holdings Inc [Member] | Minimum [Member]      
Combined equity ownership percentage 20.00%    
XML 59 R48.htm IDEA: XBRL DOCUMENT v3.8.0.1
Equity Method Investments - Summary of Equity Method Investments (Details) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Equity investment, Carrying Amount $ 17,833 $ 18,053
RELM Wireless Corp [Member]    
Equity investment, Carrying Amount $ 4,102 $ 4,473
Equity investment, Economic Interest 8.30% 8.30%
Itasca Capital Ltd [Member]    
Equity investment, Carrying Amount $ 5,814 $ 5,870
Equity investment, Economic Interest 32.30% 32.30%
1347 Property Insurance Holdings Inc [Member]    
Equity investment, Carrying Amount $ 7,917 $ 7,710
Equity investment, Economic Interest 17.40% 17.40%
XML 60 R49.htm IDEA: XBRL DOCUMENT v3.8.0.1
Equity Method Investments - Summary of Income (Loss) of Equity Method Investees (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Equity method investment income $ (10) $ 2,481
Equity Method Investments [Member]    
Equity method investment income (10) 2,481
RELM Wireless Corporation [Member] | Equity Method Investments [Member]    
Equity method investment income (354) 8
Itasca Capital Ltd [Member] | Equity Method Investments [Member]    
Equity method investment income 103 2,461
1347 Property Insurance Holdings Inc [Member] | Equity Method Investments [Member]    
Equity method investment income $ 241 $ 12
XML 61 R50.htm IDEA: XBRL DOCUMENT v3.8.0.1
Equity Method Investments - Summarized Financial Information (Details) - USD ($)
$ in Thousands
3 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Equity Method Investments and Joint Ventures [Abstract]    
Revenue $ 20,576 $ 15,358
Operating loss from continuing operations (2,034) 2,590
Net income $ (2,557) $ 9,351
XML 62 R51.htm IDEA: XBRL DOCUMENT v3.8.0.1
Intangible Assets (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]    
Amortization expense $ 200 $ 100
XML 63 R52.htm IDEA: XBRL DOCUMENT v3.8.0.1
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Intangible assets, Gross $ 5,068 $ 4,920
Intangible assets, Accumulated amortization (1,121) (948)
Intangible assets, Net $ 3,947 $ 3,972
Software in Service [Member]    
Intangible assets, Useful life 5 years 5 years
Intangible assets, Gross $ 3,718 $ 3,191
Intangible assets, Accumulated amortization (768) (597)
Intangible assets, Net $ 2,950 $ 2,594
Production Formulation [Member]    
Intangible assets, Useful life 10 years 10 years
Intangible assets, Gross $ 473 $ 486
Intangible assets, Accumulated amortization (353) (351)
Intangible assets, Net 120 135
Software in Development [Member]    
Intangible assets, Gross 877 1,243
Intangible assets, Accumulated amortization
Intangible assets, Net $ 877 $ 1,243
XML 64 R53.htm IDEA: XBRL DOCUMENT v3.8.0.1
Intangible Assets - Schedule of Intangible Assets Future Amortization Expense (Details) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Total $ 3,947 $ 3,972
Intangible Assets [Member]    
Remainder 2018 639  
2019 840  
2020 831  
2021 670  
2022 86  
Thereafter 4  
Total $ 3,070  
XML 65 R54.htm IDEA: XBRL DOCUMENT v3.8.0.1
Goodwill - Summary of Changes in Carrying Amount of Goodwill (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2018
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
Balance $ 952
Foreign currency translation (26)
Balance $ 926
XML 66 R55.htm IDEA: XBRL DOCUMENT v3.8.0.1
Warranty Reserves - Schedule of Product Warranty Liability (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Extended Product Warranty Disclosure [Abstract]    
Warranty accrual at beginning of period $ 521 $ 645
Charged to expense 84 47
Claims paid, net of recoveries (30) (231)
Foreign currency adjustment (11) 1
Warranty accrual at end of period $ 564 $ 462
XML 67 R56.htm IDEA: XBRL DOCUMENT v3.8.0.1
Debt (Details Narrative)
$ in Thousands, $ in Thousands
1 Months Ended 3 Months Ended
Sep. 05, 2017
CAD ($)
Apr. 27, 2017
USD ($)
Mar. 31, 2018
USD ($)
Mar. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Secured loan     $ 2,000 $ 2,000 $ 2,000
Line of Credit [Member]          
Debt maturity date   May 10, 2018      
Line of credit maximum borrowing capacity   $ 1,000      
Line of Credit [Member] | April 23, 2018 [Member]          
Line of credit extended maturity date       May 10, 2019  
Line of Credit [Member] | Prime Rate [Member]          
Interest rate of installment loans   0.25%      
Line of credit bearing interest rate       5.00%  
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        
Maximum liabilities to effective equity 200.00%        
Minimum current ratio 150.00%        
Demand Credit Agreement [Member] | Canadian Dollar [Member]          
Minimum effective equity $ 8,000        
Demand Credit Agreement [Member] | Line of Credit [Member] | Canadian Dollar [Member]          
Line of credit maximum borrowing capacity $ 3,500        
Term Loan [Member]          
Secured loan   $ 2,000      
Loan term   5 years      
Debt bearing interest fixed rate   4.50%      
Debt installment determination period   20 years      
Debt balloon payment amount   $ 1,700      
Debt maturity date   May 10, 2022      
Term Loan [Member] | Debt Agreement [Member] | Line of Credit [Member]          
Maximum allowed liabilities to tangible net worth, description   3:1      
Minimum liquidity value   $ 2,000      
20-year Installment Loan [Member] | April 24, 2018 [Member]          
Loan term     20 years    
20-year Installment Loan [Member] | April 24, 2018 [Member] | Canadian Dollar [Member]          
Secured loan     $ 3,500 $ 3,500  
20-year Installment Loan [Member] | Demand Credit Agreement [Member]          
Loan term 20 years        
20-year Installment Loan [Member] | Demand Credit Agreement [Member] | Canadian Dollar [Member]          
Line of credit maximum borrowing capacity $ 6,000        
20-year Installment Loan [Member] | Demand Credit Agreement [Member] | Prime Rate [Member]          
Interest rate of installment loans 0.50%        
5-year Installment Loan [Member] | Demand Credit Agreement [Member]          
Loan term 5 years        
5-year Installment Loan [Member] | Demand Credit Agreement [Member] | Canadian Dollar [Member]          
Line of credit maximum borrowing capacity $ 500        
5-year Installment Loan [Member] | Demand Credit Agreement [Member] | Prime Rate [Member]          
Interest rate of installment loans 0.50%        
XML 68 R57.htm IDEA: XBRL DOCUMENT v3.8.0.1
Debt - Schedule of Debt (Details) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Debt Disclosure [Abstract]    
Revolving line of credit $ 500 $ 500
Current portion of long-term debt 65 65
Total short-term debt 565 565
$2 million term loan 1,951 1,968
Less: current portion (65) (65)
Less: unamortized debt issuance costs (31) (33)
Total long-term debt 1,855 1,870
Total short-term and long-term debt $ 2,420 $ 2,435
XML 69 R58.htm IDEA: XBRL DOCUMENT v3.8.0.1
Debt - Schedule of Debt (Details) (Parenthetical) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Debt Disclosure [Abstract]    
Secured loan $ 2,000 $ 2,000
XML 70 R59.htm IDEA: XBRL DOCUMENT v3.8.0.1
Debt - Schedule of Long-term Debt Maturities (Details)
$ in Thousands
Mar. 31, 2018
USD ($)
Debt Disclosure [Abstract]  
Remainder of 2018 $ 48
2019 68
2020 70
2021 74
2022 1,691
Thereafter
Total $ 1,951
XML 71 R60.htm IDEA: XBRL DOCUMENT v3.8.0.1
Stock Compensation (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Number of shares granted 387,500  
Restricted Stock [Member]    
Compensation cost expected to be recognized, weighted average period 2 years 4 months 24 days  
Unrecognized for restricted stock, value $ 1,100  
Stock Option [Member]    
Number of shares granted 387,500 285,000
Share based compensation arrangement by share based payment award options grants in period weighted average grant date fair value $ 1.82 $ 2.41
Share-based compensation arrangement by share-based payment award, options, non-vested, number 1,008,500  
Total unrecognized compensation cost related to stock option awards $ 1,900  
Compensation cost expected to be recognized, weighted average period 4 years  
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 758,354  
Selling, General and Administrative Expenses [Member]    
Share based compensation expense $ 300 $ 100
XML 72 R61.htm IDEA: XBRL DOCUMENT v3.8.0.1
Stock Compensation - Schedule of Weighted Average Assumptions for Fair Value of Stock Options Granted During the Period (Details)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]    
Expected dividend yield at date of grant 0.00% 0.00%
Risk-free interest rate 2.49% 2.04%
Expected stock price volatility 35.65% 34.71%
Expected life of options (in years) 6 years 6 years
XML 73 R62.htm IDEA: XBRL DOCUMENT v3.8.0.1
Stock Compensation - Summary of Stock Options Activities (Details)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2018
USD ($)
$ / shares
shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Number of Options, Outstanding beginning balance | shares 930,300
Number of Options, Granted | shares 387,500
Number of Options, Exercised | shares
Number of Options, Forfeited | shares (32,000)
Number of Options, Expired | shares (8,000)
Number of Options, Outstanding ending balance | shares 1,277,800
Number of Options, Exercisable | shares 269,300
Weighted Average Exercise Price Per Share, Outstanding beginning balance | $ / shares $ 5.63
Weighted Average Exercise Price Per Share, Granted | $ / shares 4.70
Weighted Average Exercise Price Per Share, Exercised | $ / shares
Weighted Average Exercise Price Per Share, Forfeited | $ / shares 5.59
Weighted Average Exercise Price Per Share, Expired | $ / shares 5.41
Weighted Average Exercise Price Per Share, Outstanding ending balance | $ / shares 5.29
Weighted Average Exercise Price Per Share, Exercisable | $ / shares $ 4.88
Weighted Average Remaining Contractual Term, beginning balance 8 years 8 months 12 days
Weighted Average Remaining Contractual Term, ending balance 8 years 9 months 18 days
Weighted Average Remaining Contractual Term, Exercisable 7 years 10 months 25 days
Aggregate Intrinsic Value, beginning balance | $ $ 150
Aggregate Intrinsic Value, ending balance | $ 64
Aggregate Intrinsic Value, Exercisable | $ $ 31
XML 74 R63.htm IDEA: XBRL DOCUMENT v3.8.0.1
Stock Compensation - Summary of Restricted Stock Activity (Details) - Restricted Stock Shares [Member]
3 Months Ended
Mar. 31, 2018
$ / shares
shares
Number of Restricted Stock, Non-vested beginning balance | shares 85,000
Number of Restricted Stock, Granted | shares
Number of Restricted Stock, vested | shares (28,333)
Number of Restricted Stock, forfeited | shares
Number of Restricted Stock, Non-vested ending balance | shares 56,667
Weighted Average Grant Price Fair Value, Non-vested beginning balance | $ / shares $ 6.50
Weighted Average Grant Price Fair Value, Granted | $ / shares
Weighted Average Grant Price Fair Value, Vested | $ / shares 6.50
Weighted Average Grant Price Fair Value, Forfeited | $ / shares
Weighted Average Grant Price Fair Value, Non-vested ending balance | $ / shares $ 6.50
XML 75 R64.htm IDEA: XBRL DOCUMENT v3.8.0.1
Stock Compensation - Schedule of Nonvested Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member]
3 Months Ended
Mar. 31, 2018
$ / shares
shares
Number of Restricted Stock Units, Non-vested beginning balance | shares 35,835
Number of Restricted Stock Units, Granted | shares 147,500
Number of Restricted Stock Units, vested | shares
Number of Restricted Stock Units, forfeited | shares
Number of Restricted Stock Units, Non-vested ending balance | shares 183,335
Weighted Average Grant Date Fair Value, Non-vested beginning balance | $ / shares $ 6.45
Weighted Average Grant Date Fair Value, Granted | $ / shares 4.70
Weighted Average Grant Date Fair Value, Vested | $ / shares
Weighted Average Grant Date Fair Value, Forfeited | $ / shares
Weighted Average Grant Date Fair Value, Non-vested ending balance | $ / shares $ 5.04
XML 76 R65.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments, Contingencies and Concentrations (Details Narrative)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Operating lease expire, term expiring through 2022  
Sales Revenue, Net [Member] | Customer Concentration Risk [Member]    
Concentration risk, percentage 56.00%  
Accounts Receivable [Member] | Customer Concentration Risk [Member]    
Concentration risk, percentage   37.00%
XML 77 R66.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments, Contingencies and Concentrations - Schedule of Capital and Operating Leases Future Minimum Lease Payments (Details)
$ in Thousands
Mar. 31, 2018
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Capital Leases, Remainder 2018 $ 185
Capital Leases, 2019 116
Capital Leases, 2020
Capital Leases, 2021
Capital Leases, 2022
Capital Leases, Thereafter
Total minimum Capital lease payments 301
Less: Amount representing interest (10)
Present value of minimum lease payments 291
Less: Current maturities (226)
Capital lease obligations, net of current portion 65
Operating Leases, Remainder 2018 1,342
Operating Leases, 2019 1,768
Operating Leases, 2020 1,543
Operating Leases, 2021 1,415
Operating Leases, 2022 1,081
Operating Leases, Thereafter
Total minimum Operating lease payments $ 7,149
XML 78 R67.htm IDEA: XBRL DOCUMENT v3.8.0.1
Business Segment Information (Details Narrative)
3 Months Ended
Mar. 31, 2018
Segments
Segment Reporting [Abstract]  
Number of business segment 2
XML 79 R68.htm IDEA: XBRL DOCUMENT v3.8.0.1
Business Segment Information - Schedule of Segment Reporting Information by Segment (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Segment Reporting Information [Line Items]    
Total segment net revenue $ 15,828 $ 17,926
Total gross profit 2,850 4,439
Loss from operations (3,084) (598)
Other income (10) 5
Loss before taxes and equity method investment (loss) income (3,077) (578)
Business Segments [Member]    
Segment Reporting Information [Line Items]    
Total segment net revenue 16,182 18,034
Eliminations (354) (108)
Total net revenue 15,828 17,926
Total gross profit 2,850 4,439
Total segment operating (loss) income (284) 1,449
Unallocated general and administrative expenses (2,800) (2,047)
Loss from operations (3,084) (598)
Other income 7 20
Loss before taxes and equity method investment (loss) income (3,077) (578)
Business Segments [Member] | Cinema [Member]    
Segment Reporting Information [Line Items]    
Total segment net revenue 11,449 12,689
Total gross profit 3,385 3,616
Total segment operating (loss) income 2,325 2,679
Business Segments [Member] | Digital Media [Member]    
Segment Reporting Information [Line Items]    
Total segment net revenue 4,717 5,345
Total gross profit (551) 823
Total segment operating (loss) income (2,496) (1,113)
Business Segments [Member] | Other [Member]    
Segment Reporting Information [Line Items]    
Total segment net revenue 16
Total gross profit 16
Total segment operating (loss) income $ (113) $ (117)
XML 80 R69.htm IDEA: XBRL DOCUMENT v3.8.0.1
Business Segment Information - Reconciliation of Assets from Segment to Consolidated (Details) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Identifiable assets $ 57,031 $ 59,014
Cinema [Member] | Business Segments [Member]    
Identifiable assets 24,845 27,358
Digital Media [Member] | Business Segments [Member]    
Identifiable assets 14,353 13,603
Corporate Assets [Member] | Business Segments [Member]    
Identifiable assets $ 17,833 $ 18,053
XML 81 R70.htm IDEA: XBRL DOCUMENT v3.8.0.1
Business Segment Information - Schedule of Segment Reporting Information by Geographic Area (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Net revenue $ 15,828 $ 17,926
United States [Member]    
Net revenue 12,830 14,393
Canada [Member]    
Net revenue 1,400 1,220
Mexico [Member]    
Net revenue 556 356
China [Member]    
Net revenue 541 1,466
Latin America [Member]    
Net revenue 270 284
Europe [Member]    
Net revenue 158 116
Asia (Excluding China) [Member]    
Net revenue 73 72
Other [Member]    
Net revenue $ 19
XML 82 R71.htm IDEA: XBRL DOCUMENT v3.8.0.1
Business Segment Information - Summary of Identifiable Assets by Geographical Area (Details) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Identifiable assets $ 57,031 $ 59,014
United States [Member]    
Identifiable assets 38,325 37,230
Canada [Member]    
Identifiable assets $ 18,706 $ 21,784
XML 83 R72.htm IDEA: XBRL DOCUMENT v3.8.0.1
Subsequent Event (Details Narrative) - Subsequent Event [Member]
$ in Thousands
Apr. 27, 2018
USD ($)
shares
Net proceeds from sale leaseback after repayment of debt $ 4,000
Buyer [Member]  
Number of warrants to purchase shares | shares 100,000
Definitive Agreement [Member] | Alpharetta Facility [Member]  
Agreed to sale leaseback in cash $ 7,000
Sale leaseback term P10Y
Sale lease back rent expense $ 600
Sale leaseback escalating rate 2.00%
Warrant maturity term 10 years
Demand Credit Agreement [Member]  
Warrants description 25,000 warrants at each of $10, $12, $14 and $16 purchase prices per share.
Number of warrants to purchase shares | shares 25,000
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