v3.19.1

Stockholders' Deficit | 12 Months Ended
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Dec. 31, 2018
Equity [Abstract] |
Stockholders' Deficit | NOTE 13—STOCKHOLDERS’ DEFICIT Preferred Stock The Company has authorized the issuance of 10,000,000 shares of 0% Series A Convertible Preferred Stock. As of December 31, 2018, a total of 322,000 shares were outstanding. The preferred shares rank senior to the common stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding-up of the Company, and are entitled to vote on all shareholder matters. The preferred shares are essentially convertible into common stock of the Company on a one-for-one basis at the election of the holder. On March 12, 2018, in connection with the Cooltech Merger, the Company issued 763,000 preferred shares. On June 1, 2018, in connection with a sale of stock and warrants described further below, the Company issued an additional 298,000 preferred shares. During the remainder of 2018, holders of 739,000 preferred shares elected to convert their preferred shares to common shares. As of December 31, 2017, Cooltech had 4,408,000 Series A Convertible Preferred Stock outstanding, all of which was exchanged into shares of the Company’s stock upon the Merger. Common Stock and Warrants The Company has authorized the issuance of 150,000,000 shares of common stock. This represents a 110,000,000 increase from 40,000,000 shares authorized at December 31, 2017, which increase was approved by shareholders in connection with the Cooltech Merger. As of December 31, 2018, a total of 7,792,918 shares were outstanding. On August 3, 2017, the Company entered into a stock purchase agreement for the private placement of 175,000 shares of common stock at a purchase price of $10.00 per share and warrants to purchase 175,000 shares of common stock at $12.10 per share with investors related to Cooltech. The aggregate purchase price of $1,750,000 was placed into escrow and the closing of the offering, including the issuance of the shares and warrants, was contingent upon approval of the transaction by the Company’s stockholders and the closing of the Merger. On October 10, 2017, the Company effected a 1-for-5 reverse stock split in order to regain compliance with the minimum bid price requirement of the NASDAQ Stock Market. On October 25, 2017, after 10 consecutive days of trading, the Company received notification from NASDAQ that it had regained compliance. On March 9, 2018, the Company effected a second 1-for-5 reverse stock split in order to achieve the $4.00 minimum bid price required by NASDAQ for a new issuer listing that was triggered by the change of control that resulted from the Merger. All references to shares and per share amounts have been restated to give effect to both reverse splits. On March 12, 2018, in connection with the closing of the Merger and as further discussed in Note 18, the Company completed the August 3, 2017 private placement noted above, received the escrow proceeds and issued the common shares, and issued 1,111,000 shares to Cooltech shareholders in exchange for their stock. On June 1, 2018, the Company sold 885,346 shares of its common stock and 297,770 shares of its preferred stock in a public offering at $3.14 per unit, which price included the concurrent private placement of warrants to purchase 1,183,116 shares of common stock at an exercise price of $3.02 per share. Net proceeds from the offering after expenses amounted to $3,585,000. The warrants, which have a cashless exercise feature, have a 3-year life and may not be exercised until 6 months from the date of issuance. On August 15, 2018, the Company entered into debt exchange agreements with twenty-one holders of certain then outstanding promissory notes in the principal amount of $11,019,000 and related accrued interest of $426,000. The aggregate amount owed of $11,445,000 was exchanged into 3,110,000 units at a price of $3.68 per unit (the “Exchange”). Each unit was comprised of one share of Company common stock and a warrant to purchase one common share at an exercise price of $3.56 per share. The warrants, which have a cashless exercise feature, are exercisable beginning February 15, 2019 and expire August 15, 2021. The Exchange was made in reliance on the exemption from the registration requirements of the Securities Act of 1933 (the “Act”), as amended, provided by Section 3(a)(9) of the Act. All of the common stock issued in the transaction were “restricted securities,” as defined in Rule 144(a)(3), promulgated under the Act. The fair value of the restricted stock on the date of issuance was estimated to be $8,280,000 using a 25% discount for trading restrictions computed using a risk-free interest rate of 2.23% for the 6-month hold period and an expected volatility of 90% based on the Company’s historical stock price fluctuation. The fair value of the warrants was estimated at $4,292,000 using the Black-Scholes pricing model and assuming, a 25% discount on the value of the underlying stock due to trading restrictions, a risk-free interest rate of 2.68% based on the U.S. Treasury rate then in effect, a 3-year life and an expected volatility of 90% based on the Company’s historical stock price fluctuations for a 3-year period. The combined value of the stock and warrants was $12,572,000, and the Company recorded a loss on early extinguishment of debt of $1,227,000. On August 17, 2018, as discussed in Note 20, the Company exercised an option to acquire the assets of a chain of seven retail electronics stores in the Dominican Republic referred to as the “Unitron Assets.” The Option Agreement, as amended, was issued on January 5, 2018 as part of the Company’s Merger with Cooltech. The Option Agreement provided that upon exercise of the Option by the Company, the Cooltech shareholders at the date of the merger would receive 625,000 shares of the Company’s common stock that was originally carved out of the Merger consideration when the Unitron acquisition had to be unwound as a result of the inability to produce pre-acquisition audited financial statements. On September 13, 2018, the Company entered into release agreements pursuant to which the Company exchanged outstanding obligations to three parties in the aggregate amount of $1,023,000 into 290,000 units at a price of $3.53 per unit (the “Exchange”). Each unit was comprised of one share of Company common stock and a warrant to purchase one common share at an exercise price of $3.41 per share. The warrants, which have a cashless exercise feature, are exercisable beginning March 13, 2019 and expire September 13, 2021. The Exchange was made in reliance on the exemption from the registration requirements of the Securities Act of 1933 (the “Act”), as amended, provided by Section 4(a)(2) of the Act. All of the common stock issued in the transaction were “restricted securities,” as defined in Rule 144(a)(3), promulgated under the Act. The fair value of the restricted stock on the date of issuance was estimated to be $739,000 using a 25% discount for lack of marketability computed using a risk-free interest rate of 2.23% for the 6-month hold period and an expected volatility of 90% based on the Company’s historical stock price fluctuation. The fair value of the warrants was estimated on the date of issuance at $384,000 using the Black-Scholes pricing model and assuming a risk-free interest rate of 2.68% based on the U.S. Treasury rate then in effect, a 3-year life and an expected volatility of 90% based on the Company’s historical stock price fluctuations for a 3-year period. The combined value of the stock and warrants was $1,123,000, and the Company recorded a loss on early extinguishment of debt of $100,000. During the year ended December 31, 2018, holders of 233,000 warrants exercised their warrants at a weighted average price of $11.38 per share in cashless exercise transactions in which the Company issued 81,000 common shares. At December 31, 2018, warrants on a total of 5,348,601 shares were outstanding at an average exercise price of $3.73 per share, of which 156,543 shares were exercisable at an average exercise price of $11.02. Stock Options and Stock-based Compensation The Company has two stock-based compensation plans: the 2006 Equity Incentive Plan (“2006 Plan”) and the 2015 Equity Incentive Plan (“2015 Plan”), both of which were approved by our stockholders. As of December 31, 2018, options to purchase 2,000 shares were outstanding under each of the 2006 Plan and the 2015 Plan, respectively, and a total of 779,000 shares were available for grant under the 2015 Plan. No options or other equity awards are available for grant under the 2006 Plan. The 2015 Plan was approved by stockholders in June 2015, with 48,230 shares of the Company’s common stock authorized for issuance thereunder. In December 2018, stockholders approved an amendment to the 2015 Plan to increase the number of shares authorized for issuance thereunder by 775,000 shares. Shares subject to outstanding options under the 2006 Plan that cease to be subject to such options, such as by expiration or forfeiture, also become available for issuance under the 2015 Plan, up to an aggregate maximum of 38,347 shares. The 2015 Plan is intended to provide incentives to key employees, officers, directors and consultants who provide significant services to the Company. The exercise price is determined by the Compensation Committee, but must be at least equal to the fair market value of the common stock on the date of grant of such option. The Compensation Committee also establishes the vesting schedule for each option granted and the term of each option, which cannot exceed 10 years from the date of grant. In the event of termination, vested options generally must be exercised within three months. In a change of control, if outstanding awards under the 2015 Plan are assumed or substituted by a successor company, such awards do not automatically fully vest but may become fully vested in the event of a qualifying termination following such change of control. Outstanding options granted under the 2006 Plan provide 100% vesting upon a change of control of the Company. The Company’s stock options vest on an annual or a monthly basis. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. Options granted generally vest over a two-year or three-year period. Income tax effects of share-based payments are recognized in the financial statements for those awards which will normally result in tax deductions under existing tax law. Under current U.S. federal tax law, we would receive a compensation expense deduction related to non-qualified stock options only when those options are exercised and vested shares are received. Accordingly, the financial statement recognition of compensation expense for non-qualified stock options creates a deductible temporary difference which results in a deferred tax asset and a corresponding deferred tax benefit in the income statement. No stock options were granted by the Company during the years ended December 31, 2017 or 2018. A summary of stock option activity for the year ended December 31, 2018 is as follows (shares and aggregate intrinsic value in thousands):
|  | Shares |  |  | Wtd. Avg. Exercise Price |  |  | Wtd. Avg. Remaining Contractual Life |  | Aggregate Intrinsic Value |
Outstanding at December 31, 2017 |  |  | 34 |  |  | $ | 27.20 |  |  |  |  |  |  |
Granted |  |  | — |  |  | $ | — |  |  |  |  |  |  |
Expired |  |  | (30 | ) |  | $ | 26.52 |  |  |  |  |  |  |
Forfeited |  |  | — |  |  | $ | — |  |  |  |  |  |  |
Outstanding at December 31, 2018 |  |  | 4 |  |  | $ | 31.89 |  |  | 1.69 years |  | $ | — |
Vested and expected to vest |  |  | 4 |  |  | $ | 31.89 |  |  | 1.69 years |  | $ | — |
Exercisable at December 31, 2018 |  |  | 4 |  |  | $ | 31.89 |  |  | 1.69 years |  | $ | — |
There was no aggregate intrinsic value in the outstanding stock options at December 31, 2018 because the closing price of our stock at that date was $1.94 per share, which price was below the exercise price of all outstanding options. All options outstanding at December 31, 2018 and 2017 were fully vested at December 31, 2017. During the quarter ended June 30, 2018, the Company granted a restricted stock award on 42,000 shares with 17,000 shares vesting on the date of grant and the remaining 25,000 shares vesting in four equal installments on the last day of each calendar quarter beginning June 30, 2018. The total value of the award was $200,000. During the quarter ended September 30, 2018, the Company granted a fully vested stock award of 59,000 shares of its common stock valued at $260,000. Total stock-based compensation expense recorded in the year ended December 31, 2018 amounted to $430,000. At December 31, 2018, a total of $30,000 remains in prepaid assets related to the first grant. During the year ended December 31, 2017, prior to the Cooltech Merger, Cooltech issued common stock to the founding shareholders of Cooltech Distribution with a value of $2,938,000, which was recorded as stock-based compensation expense.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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