UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the Quarterly Period Ended
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
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(I.R.S. Employer |
incorporation or organization) |
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Identification Number) |
(Address of principal executive offices, Zip code)
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(Registrant’s telephone number, including area code)
Title of class of registered securities |
Ticker Symbol |
Name of exchange on which registered |
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 12 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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller Reporting Company |
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Emerging growth company |
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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
The number of shares of common stock, $0.01 par value per share, outstanding as of August 1, 2022, was
FORWARD-LOOKING STATEMENTS
The statements included in this Form 10-Q regarding future financial performance, results and conditions and other statements that are not historical facts, including, among others, the statements regarding competition, the Company’s intention to retain earnings for use in the Company’s business operations, the Company’s ability to continue to fund its operations and service its indebtedness, the adequacy of the Company’s accrual for tax liabilities, management’s projection of continued taxable income, and the Company’s ability to offset future income against net operating loss carryovers, constitute forward-looking statements. The words “can,” “could,” “may,” “will,” “would,” “plan,” “future,” “believes,” “intends,” “expects,” “anticipates,” “projects,” “estimates,” and similar expressions are also intended to identify forward-looking statements. These forward-looking statements are based on current expectations and are subject to risks and uncertainties. Actual results or events could differ materially from those set forth or implied by such forward-looking statements and related assumptions due to certain important factors, including, without limitation, the risks set forth under the caption “Risk Factors” below, which are incorporated herein by reference. Some, but not all, of the forward-looking statements contained in this Form 10-Q include, among other things, statements about the following:
The Company is also subject to general business risks, including results of tax audits, adverse state, federal or foreign legislation and regulation, changes in general economic conditions, the Company’s ability to retain and attract key employees, acts of war or global terrorism and unexpected natural disasters. Any forward-looking statements included in this Form 10-Q are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statements.
ALJ REGIONAL HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2022
INDEX
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Page |
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4 |
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Item 1 |
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4 |
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4 |
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5 |
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6 |
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8 |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
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9 |
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Item 2 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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28 |
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Item 3 |
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40 |
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Item 4 |
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41 |
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Item 1 |
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41 |
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Item 1A |
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41 |
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Item 2 |
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50 |
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Item 3 |
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51 |
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Item 4 |
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51 |
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Item 5 |
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51 |
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Item 6 |
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52 |
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53 |
3
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
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June 30, |
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September 30, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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— |
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Accounts receivable, net of allowance for doubtful accounts of $ |
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Prepaid expenses and other current assets |
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Current assets of discontinued operations |
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— |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Intangible assets, net |
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Collateral deposits |
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Other assets |
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Long-term assets of discontinued operations |
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— |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Income taxes payable |
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Deferred revenue and customer deposits |
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— |
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Term loans, net of deferred loan costs - current installments |
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— |
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Finance lease obligations - current installments |
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Operating lease obligations - current installments |
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Current portion of workers' compensation reserve |
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Other current liabilities |
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Current liabilities of discontinued operations |
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— |
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Total current liabilities |
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Line of credit, net of deferred loan costs |
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— |
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Term loans, less current portion, net of deferred loan costs |
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Deferred revenue, less current portion |
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— |
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Workers' compensation reserve, less current portion |
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Finance lease obligations, less current installments |
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— |
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Operating lease obligations, less current installments |
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Deferred tax liabilities, net |
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Other non-current liabilities |
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Long-term liabilities of discontinued operations |
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— |
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Total liabilities |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes
4
ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
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Three Months Ended June 30, |
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Nine Months Ended June 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Revenue: |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Other revenue |
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— |
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— |
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Total revenue and other revenue |
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Costs, expenses, and other: |
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Cost of revenue |
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Selling, general, and administrative expense |
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Lease impairment |
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— |
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— |
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— |
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Gain on sale of assets and other |
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( |
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— |
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( |
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— |
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Total operating costs, expenses, and other, net |
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( |
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Operating income (loss) |
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( |
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( |
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Other (expense) income, net: |
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Interest income |
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— |
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— |
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Interest expense |
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( |
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( |
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( |
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( |
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Loss on debt extinguishment |
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( |
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( |
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( |
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( |
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Total other expense, net |
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( |
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( |
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( |
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( |
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Income (loss) from continuing operations before income taxes |
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( |
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( |
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Provision for income taxes |
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( |
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( |
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( |
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( |
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Net income (loss) from continuing operations |
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( |
) |
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( |
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Net income from discontinued operations, |
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Net income (loss) |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Income (loss) per share of common stock–basic: |
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Continuing operations |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Discontinued operations |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) per share (1) |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Income (loss) per share of common stock–diluted: |
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Continuing operations |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Discontinued operations |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) per share (1) |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Weighted average shares of common stock outstanding: |
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Basic |
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Diluted |
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(1)
See accompanying notes
5
ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
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Nine Months Ended June 30, |
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2022 |
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2021 |
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Operating activities: |
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Net income (loss) |
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$ |
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$ |
( |
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Adjustments to reconcile net income (loss) to cash (used for) provided by operating activities: |
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Depreciation and amortization expense |
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Loss on debt extinguishment |
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Lease impairment |
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— |
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Amortization of discount of short-term investments |
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( |
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— |
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Interest expense and other bank fees accreted to term loans |
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— |
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Change in fair value of contingent consideration |
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Amortization of deferred loan costs |
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Stock-based compensation expense |
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Provision (reversal) for bad debts |
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( |
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Gain on sale of assets and other, excluding cash transaction costs paid |
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( |
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— |
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(Gain) loss on sale of subsidiaries, excluding cash transaction costs paid |
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( |
) |
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Deferred income taxes |
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( |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Prepaid expenses, collateral deposits, and other current assets |
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( |
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ROU assets/ROU liabilities |
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( |
) |
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( |
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Other assets |
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( |
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Accounts payable |
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( |
) |
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( |
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Accrued expenses |
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( |
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Income tax payable |
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Deferred revenue |
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( |
) |
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( |
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Other current liabilities and other non-current liabilities |
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( |
) |
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Discontinued operations, net |
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Cash (used for) provided by operating activities |
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( |
) |
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Investing activities: |
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Capital expenditures |
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( |
) |
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( |
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Proceeds from the sale of subsidiaries |
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Proceeds from the sale of assets |
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— |
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Purchase of investments |
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( |
) |
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— |
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Discontinued operations, net |
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( |
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( |
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Cash provided by (used for) investing activities |
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( |
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Financing activities: |
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Proceeds from term loans |
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— |
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Payments on term loans |
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( |
) |
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( |
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Payments on line of credit, net |
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( |
) |
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( |
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Deferred loan costs |
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( |
) |
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( |
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Payments on finance leases |
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( |
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( |
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Payment of debt extinguishment penalties and other |
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( |
) |
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( |
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Discontinued operations, net |
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— |
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( |
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Cash used for financing activities |
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( |
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( |
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Change in cash and cash equivalents |
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Cash and cash equivalents at beginning of the year |
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Cash and cash equivalents at end of the year |
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$ |
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$ |
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See accompanying notes
6
ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
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Nine Months Ended June 30, |
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2022 |
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2021 |
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Supplemental disclosures of cash flow information: |
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Cash paid during the period for: |
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Interest |
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$ |
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$ |
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Taxes |
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$ |
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$ |
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Non-cash investing and financing activities: |
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Capital equipment purchases financed with term loans |
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$ |
— |
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$ |
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See accompanying notes
7
ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
(in thousands)
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Three Months Ended June 30, |
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Nine Months Ended June 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Common stock: |
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Balance, beginning of period |
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$ |
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$ |
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$ |
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$ |
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Issuance of common stock upon cashless exercise of stock options |
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— |
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— |
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— |
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— |
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Balance, end of period |
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$ |
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$ |
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$ |
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$ |
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Additional paid in capital: |
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Balance, beginning of period |
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$ |
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$ |
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$ |
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$ |
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Stock-based compensation expense - options |
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Balance, end of period |
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$ |
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$ |
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$ |
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$ |
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Accumulated deficit: |
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Balance, beginning of period |
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$ |
( |
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$ |
( |
) |
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