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Discontinued Operations | 12 Months Ended
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Dec. 28, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Sale of Recycling Subsidiaries On March 9, 2023, the Company entered into a Stock Purchase Agreement (the “Recycling Purchase Agreement”) with VM7 Corporation, a Delaware corporation (“VM7”), under which it agreed to acquire all of the outstanding equity interests of the Recycling Subsidiaries, consisting of: (a) ARCA Recycling, (b) ARCA Canada, and (c) Connexx. The principal of VM7 is Virland A. Johnson, our Chief Financial Officer. The sale of all of the outstanding equity interests of the Recycling Subsidiaries to VM7 under the Recycling Purchase Agreement was consummated simultaneously with the execution of the Recycling Purchase Agreement. The Recycling Purchase Agreement is retroactive to March 1, 2023 (see Note 4). The valuation, factoring in the discount rate that the Company used, yielded a present value of approximately $6.0 million, which, in addition to the $3,000 paid at close, comprised the approximately 6.0 million of net consideration. The amount of the revised discount amount, or approximately $18.0 million, was recorded as an offset to the principal amount of the Note, and was to have been accreted ratably to interest income over the term of the Note. During the year ended December 30, 2023, approximately $720,000 of the discount was recorded as interest income. During the fourth quarter of fiscal 2023, VM7 determined that, after expending significant amounts of time and resources, it was unable to obtain sufficient equity or debt financing to continue the operations of the Recycling Subsidiaries. Accordingly, the Company was advised that the operations of the Recycling Subsidiaries were wound down and, ultimately, ceased. For a variety of related reasons, the Company determined fully to impair the $5.3 million carrying value of the Disposition Transaction on its balance sheet and determined not to exercise any of its remedies under the Recycling Purchase Agreement so that it could maintain its focus on its clinical-stage biopharmaceutical activities. The preliminary calculation of the gain on sale was approximately $15.8 million. The following table details the final calculation of the gain on sale of the Recycling Subsidiaries, as shown on the income statement (in $000’s):
Total minimum consideration | $ | 6,023 |
Payment from buyer | 3 |
Net consideration | $ | 6,026 |
Accounts payable | 5,323 |
Accrued liabilities | 1,857 |
Accrued liabilities - California state sales tax | 6,320 |
Lease liabilities | 5,285 |
Debt | 2,139 |
Accumulated other comprehensive loss | (604) |
Total disposal of liabilities | 20,320 |
Total consideration | 26,346 |
Cash | 145 |
Accounts receivable | 4,884 |
Inventory | 67 |
Property, plant and equipment | 2,767 |
Intangible assets | 732 |
Right-of-use assets | 5,075 |
Other assets | 574 |
Total disposal of assets | 14,244 |
Total gain on sale | $ | 12,102 |
Discontinued Operations As of December 30, 2023, the Company discontinued operations of its Recycling segment as follows: On March 9, 2023, the Company executed a Recycling Purchase Agreement with VM7, under which, as of March 1, 2023, it agreed to acquire all of the outstanding equity interests of the Recycling Subsidiaries, consisting of (a) ARCA Recycling, (b) ARCA Canada, and (c) Connexx. The principal of VM7 is Virland A. Johnson, our Chief Financial Officer. The sale of all of the outstanding equity interests of the Recycling Subsidiaries to VM7 under the Recycling Purchase Agreement was consummated simultaneously with the execution of the Recycling Purchase Agreement (See Note 4). In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations and comprehensive income (loss). The results of operations for these entities for the year ended December 28, 2024 and December 30, 2023, respectively, have been reflected as discontinued operations in the consolidated statements of operations and comprehensive income (loss) and consist of the following (in $000’s):
| December 28, 2024 |  | December 30, 2023
Revenues | $ | — |  |  | $ | 3,795 |
Cost of revenues | — |  |  | 3,992 |
Gross profit | — |  |  | (197) |
Operating expenses from discontinued operations: |  |  |
Selling, general and administrative expenses | — |  |  | 1,467 |
Gain on sale of ARCA | — |  |  | (12,102) |
Total operating expenses from discontinued operations | — |  |  | (10,635) |
Operating income from discontinued operations | — |  |  | 10,438 |
Other expense from discontinued operations |  |  |
Interest expense, net | — |  |  | (181) |
Other expense, net | — |  |  | (3) |
Total other expense, net | — |  |  | (184) |
Income before provision for income taxes from discontinued operations | — |  |  | 10,254 |
Income tax provision | — |  |  | 971 |
Net income from discontinued operations | $ | — |  |  | $ | 9,283 |
In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows. The cash flow activity from discontinued operations for the year ended December 28, 2024 and December 30, 2023 have been reflected as discontinued operations in the consolidated statements of cash flows and consist of the following (in $000’s):
| December 28, 2024 |  | December 30, 2023
DISCONTINUED OPERATING ACTIVITIES: |  |  |
Net income from discontinued operations | — |  |  | 9,283 |
Depreciation and amortization | — |  |  | 96 |
Amortization of debt issuance costs | — |  |  | 11 |
Amortization of right-of-use assets | — |  |  | 52 |
Gain on sale of ARCA, net of cash | — |  |  | (12,248) |
Changes in assets and liabilities: |  |  |
Accounts receivable | — |  |  | 2,932 |
Inventories | — |  |  | 299 |
Prepaid expenses and other current assets | — |  |  | 56 |
Accounts payable and accrued expenses | — |  |  | 1,837 |
Other assets | — |  |  | 1 |
Net cash provided by operating activities from discontinued operations | $ | — |  |  | $ | 2,319 |
DISCONTINUED INVESTING ACTIVITIES: |  |  |
Purchases of property and equipment | — |  |  | (123) |
Purchase of intangible assets | — |  |  | (32) |
Net cash used in investing activities from discontinued operations | $ | — |  |  | $ | (155) |
DISCONTINUED FINANCING ACTIVITIES: |  |  |
Proceeds from note payable | — |  |  | 5,162 |
Payments on related party note | — |  |  | (38) |
Payments on notes payable | — |  |  | (7,336) |
Net cash used in financing activities from discontinued operations | $ | — |  |  | $ | (2,212) |
Effect of changes in exchange rate on cash and cash equivalents | — |  |  | (5) |
DECREASE IN CASH AND CASH EQUIVALENTS | — |  |  | (53) |
CASH AND CASH EQUIVALENTS, beginning of period | — |  |  | 53 |
CASH AND CASH EQUIVALENTS, end of period | $ | — |  |  | $ | — |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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