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7. Assets of held for sale - discontinued operations | 3 Months Ended
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Mar. 31, 2018
Notes to Financial Statements |
Assets of held for sale - discontinued operations | Note 7: Assets of held for sale – discontinued operations On December 30, 2017, we signed an agreement to dispose of our Appliancesmart retail appliance segment. ApplianceSmart Holdings LLC (the “Purchaser”), a wholly owned subsidiary of Live Ventures Incorporated, entered into a Stock Purchase Agreement (the “Agreement”) with the Company and ApplianceSmart, Inc. (“ApplianceSmart”), a subsidiary of the Company. ApplianceSmart is a 17-store chain specializing in new and out-of-the-box appliances with annualized revenues of approximately $65 million. Pursuant to the Agreement, the Purchaser purchased from the Company all the issued and outstanding shares of capital stock (the “Stock”) of ApplianceSmart in exchange for $6,500 (the “Purchase Price”). See Note 23. The Purchase Price per agreement was due and payable on or before March 31, 2018. As of December 30, 2017, the Company had an amount due from ApplianceSmart Holdings LLC a subsidiary of Live Ventures Incorporated in the sum of $6,500 recorded as a current asset. As of March 31, 2018, the Company had an amount due from ApplianceSmart Holdings LLC in the sum of $2,550. Between March 31, 2018 and April 24, 2018, the Purchaser and the Seller negotiated in good faith the method of payment of the remaining outstanding balance of the Purchase Price. On April 25, 2018, the Purchaser delivered to the Seller that certain Promissory Note (the “ApplianceSmart Note”) in the original principal amount of $3,919 (the “Original Principal Amount”), as such amount may be adjusted per the terms of the ApplianceSmart Note. The ApplianceSmart Note is effective as of April 1, 2018 and matures on April 1, 2021 (the “Maturity Date”). The ApplianceSmart Note bears interest at 5% per annum with interest payable monthly in arrears. Ten percent of the outstanding principal amount will be repaid annually on a quarterly basis, with the accrued and unpaid principal due on the Maturity Date. ApplianceSmart has agreed to guaranty repayment of the ApplianceSmart Note. The remaining $2,581 of the Purchase Price was paid in cash by the Purchaser to the Seller. The Purchaser may reborrow funds, and pay interest on such reborrowings, from the Seller up to the Original Principal Amount. Subsequent to December 30, 2017, ApplianceSmart assumed $1,901 in liabilities from the Company. Discontinued operations and assets held for sale include our retail appliance business Appliancesmart. Results of operations, financial position and cash flows for this business are separately reported as discontinued operations for all periods presented. The Company made the decision to sell Appliancesmart to eliminate losses and poor financial performance from our retail segment, decrease existing leverage, assign and eliminate long term lease liabilities for store leases, increase cash balances, enhance shareholder value and focus Company resources on its’ two remaining segments, Recycling and Technology. FINANCIAL INFORMATION FOR HELD FOR SALE AND DISCONTINUED OPERATIONS (In Thousands)
|  | 13 Weeks |  |  | 13 Weeks |
|  | Ended |  |  | Ended |
|  | March 31, 2018 |  |  | April 1, 2017 |
Revenue |  | $ | – |  |  | $ | 15,789 |
Cost of revenue |  |  | – |  |  |  | 11,582 |
Gross profit |  |  | – |  |  |  | 4,207 |
Selling, general and administrative expense |  |  | – |  |  |  | 4,285 |
Operating (loss) - discontinued operations |  |  | – |  |  |  | (78 | )
Other income |  |  | – |  |  |  | – |
Other expense |  |  | – |  |  |  | – |
Net (loss) - discontinued operations before income tax benefit |  |  | – |  |  |  | (78 | )
Income tax benefit |  |  | – |  |  |  | 21 |
Net (loss) - discontinued operations, net of tax |  | $ | – |  |  | $ | (57 | )

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