Archimedes Tech SPAC Partners I (ARCI) research, news, and more from GeoInvesting

Company description

Wed, 05 Mar 2008 05:00:00 GMT

Appliance Recycling Centers of America, Inc., the nation's largest recycler of major household appliances, provides and integrated range of collection, reuse and recycling services.

One of the nation’s largest recyclers of major household appliances for the energy conservation programs of electric utilities, currently provides services for more than 175 utility programs in the U.S. and Canada. Toxic chemicals and environmentally harmful materials such as ozone-depleting refrigerants, PCBs, mercury and oil are carefully recovered in the decommissioning process for destruction or disposal, preventing them from contaminating soil, air and water resources. The company is also the exclusive North American distributor for UNTHA Recycling Technology (URT), a materials recovery system for household refrigeration appliances.

Research

Thu, 25 Apr 2019 04:00:00 GMT

Appliance Recycling Centers (NASDAQ:ARCI) ($4.70; $7.9M market cap) engages in the recycling of household appliances in North America. Yesterday we mentioned that ARCI just completed a reverse split, and that we were watching the story very carefully to see if a pump and dump campaign would begin based on an asset sale announcement. This morning, ARCI issued a press release discussing GeoTraq’s new class of mobile IoT modules:

“the transition from GSM to LTE-M/NB-IoT connectivity, creating a new class of Mobile IoT modules. GeoTraq is developing a Tracker-Module for asset tracking and location-based services, along with a Sensor-Module used for remote monitoring. GeoTraq believes that the new ultra-small Mobile IoT modules will radically change the way businesses locate assets and communicate data globally.”

This was not related to the asset sale news we were specifically watching for, but shares are up sharply ( 50%) in the pre-market on this release.

Research

Tue, 23 Apr 2019 15:44:45 GMT

Appliance Recycling Centers (NASDAQ:ARCI) ($4.25; $6.9M market cap) engages in the recycling of household appliances in North America. In 2017 we had a series of research notes on ARCI, highlighting the Company’s plan for “restructuring”. The company, in its recent past, has been unsuccessful in growing its business, amid recurring losses.

As part of its restructuring, on September 13, 2017, the Company announced it had acquired GeoTraq, a manufacturer of what is widely regarded as the world's smallest cellular tracking module designed specifically for the Internet of Things (IoT) market. We also noted that GeoTraq was a development stage company, which we found quite odd. We found that GeoTraq assets seem to have ties to LIVE’s CEO, Jon Isaac. For those unfamiliar with LIVE, we suggest you look at Richard Pearson’s Seeking Alpha article titled, “Live Ventures Exposed: Massive Paid Promotions, Heavy Accounting Manipulation, Deficient Auditor And More”.

Interestingly, LIVE is also involved in an ongoing SEC investigation.

“On February 21, 2018, the Company received a subpoena from the Securities and Exchange Commission (“SEC”) and a letter from the SEC stating that it is conducting an investigation. The subpoena requests documents and information concerning, among other things the restatement of the Company’s financial statements for the quarterly periods ended December 31, 2016, March 31, 2017, and June 30, 2017, the acquisition of Marquis Industries, Inc., Vintage Stock, Inc., and ApplianceSmart, Inc., and the change in auditors. We have incurred significant legal and accounting expenditures in connection with the SEC’s investigation. We are unable to predict how long the SEC’s investigation will continue or its outcome”.

Isaac Capital Group’s ownership in ARCI goes back to 2014 when they disclosed a nearly 6% stake in the company. In its most recent 13D/A, Isaac Capital discloses that it owns roughly 16%. Although LIVE has talked about its appliance subsidiary in its 10-Ks, we noticed now that LIVE’s business description in press releases includes ApplianceSmart, as a retail store operator.

Finally, on April 2, 2019 ARCI filed a 10K/A describing its intent to sell some of its assets.

“As part of the Company’s overall strategy to diversify and focus on technology and provide shareholder value, the Company previously announced that it engaged an investment banker to pursue strategic alternatives with respect to the possible sale of the Company’s Recycling business. The investment banker has received, and management continues to evaluate interest from outside potential buyers with respect to such sale. The Company also previously announced that it signed a non-binding exclusive letter of intent with one potential buyer which conducted a due diligence process and decided not to proceed with a firm and binding offer. During the most recent fiscal quarter, we have seen increased interest expressed from other outside potential buyers with respect to the possible purchase of the Company’s Recycling business. Letters of interest or intent have been provided to the Company with potential purchase prices ranging from $30 to $35 million. The Company is engaged in discussions with these outside potential buyers. There are no guarantees that any of these discussions will result in a sale of the Recycling business. The Company expects to continue to operate the Recycling business until such time as a sale of the Recycling business is consummated, if at all.”

Given all the facts, and that ARCI just completed a reverse split, we are watching the story very carefully to see if a pump and dump campaign will begin based on an asset sale announcement.

We are going to continue to look into LIVE CEO’s role in GeoTraq as well ARCI.

Research

Mon, 25 Sep 2017 15:33:35 GMT

ARCI ($1.16) - In our September 22, 2017 e-mail, we highlighted some red flags that we came across in respect to ARCI’s recent GeoTraq acquisition (telematics). The company sells and recycles household appliances.

You can see our original note addressing these red flags here.

One of the major red flags (not clearly evident in press releases) was that ARCI issued Series A convertible stock with a 1:100 conversion ratio, which will ultimately lead to massive dilution. While looking closer at the transaction, we noticed the preferred stock is being issued to Isaac Capital, run by $LIVE CEO Jon Isaac. For those unfamiliar with LIVE, we suggest you look at Richard Pearson’s Seeking Alpha article titled, “Live Ventures Exposed: Massive Paid Promotions, Heavy Accounting Manipulation, Deficient Auditor And More”.

Lastly, in an 8-K filed after hours on Friday, ARCI received a default notice on a loan agreement due to the issuance of promissory notes to the stockholders of GeoTraq. You can read the full 8-K in its entirety here.

Research

Fri, 22 Sep 2017 14:53:29 GMT

ARCI ($1.14) - ARCI’s acquisition of GeoTraq, a manufacturer of what is widely regarded as the world's smallest cellular tracking module designed specifically for the Internet of Things (IoT) market, has raised some red flags. ARCI sells and recycles household appliances.

We recently highlighted ARCI when the company announced strong Q2 2017 results in late August 2017. On September 13, 2017 ARCI announced that it had acquired GeoTraq.

The press release did not contain any details regarding the transaction. However, when looking through the 10-Q we noticed that the company tendered to the owners of GeoTraq $200,000, issued to them an aggregate of 288,588 shares of Series A Convertible Preferred Stock, and entered into one-year unsecured promissory notes for an aggregate of $800,000.

The Series A Convertible Preferred Stock has 1:100 ratio when it converts to common stock. The transaction will ultimately lead to major dilution for ARCI shareholders. Prior to this transaction, ARCI had 6.6 million diluted shares. Upon conversion of the Series A preferred, the new share count would be 35 million shares outstanding.

Beyond the massive dilution, the 10-Q also shows that as of August 18, 2017, GeoTraq was a developmental stage company (meaning zero revenues). Per the 10-Q:

“On August 18, 2017, subsequent to these condensed consolidated financial statements, we acquired GeoTraq, Inc. (“GeoTraq”). GeoTraq is a development stage company that is engaged in the development, manufacture, and, ultimately, sale of cellular transceiver modules, also known as Cell-ID modules.”

As we stated in our original note, the Company’s balance sheet was a concern. The weak balance sheet coupled with the details surrounding the GeoTraq acquisition will leave us watching ARCI with a cautious eye. We are continuing our due diligence.

Research

Wed, 13 Sep 2017 15:41:11 GMT

ARCI ($1.36) announced that it has acquired GeoTraq, a manufacturer of what is widely regarded as the world's smallest cellular tracking module designed specifically for the Internet of Things (IoT) market. Quotes from management:

"As we have previously announced, we believe that expanding our offerings beyond our current business model will be highly valuable for shareholders, and therefore we will continue to seek such opportunities to enhance our product and service offerings," said Tony Isaac, CEO of ARCA. "The addition of the GeoTraq technology increases our offerings as we enter the IoT market. We believe this acquisition will benefit our overall efficiency and provide GeoTraq access to a large base of new customers."

We recently highlighted ARCI when the company reported strong Q2 2017 results in mid August. At that time the company also announced it was actively looking for acquisition targets in high margin, high growth industries.

Investors should note that there are no financial details in the press release regarding the transaction so we do not know if this is a cash or stock transaction.

Research

Fri, 25 Aug 2017 14:50:57 GMT

ARCI ($1.40) announced it anticipates continued profitability following recent strategic cost reduction efforts. We recently highlighted ARCI’s strong Q2 2017 results where the Company posted EPS of $0.31 vs. a loss of $0.35 in the prior year.

"It is essential that we regularly evaluate our operations to maintain efficiency, making cuts that we anticipate streamlining our operations," said Tony Isaac, CEO of ARCA. "We believe that these strategic cost reductions will naturally result in efficient operations and potentially increased profitability, which, of course, translates to increased shareholder value."

Research

Tue, 22 Aug 2017 15:04:18 GMT

ARCI ($1.45) - Yesterday, we highlighted ARCI’s strong Q2 2017 results in our morning earnings table. The company reported Q2 2017 EPS of $0.31 vs a loss of $0.35 in the prior year. Wunclear if the quarter included any one time items, late in the afternoon the Company filed its 10-Q filing showing that its performance was indeed from its organic operations without including any special or one time items.

Shares rose 137% in yesterday’s trading session. This morning, shares are up in the pre-market on the heels of the strong report coupled with a new press release stating the Company is “seeking” to acquire targets in high margin, high growth industries such as the technology sector.

Management’s comment:

"We believe we can achieve more for shareholders by navigating into new territories," said Tony Isaac, CEO of ARCA. "As a result, we are exploring the many opportunities for our company which presently exist in high growth sectors and we look forward to sharing our progress with shareholders as these explorations come to fruition."

With only $191,000 in cash on the balance sheet as of the most recent 10-Q filing, it is unclear to us how management intends to pay for any such acquisition. With the recent sale of its joint venture, ARCA Advanced Processing, the Company will net another $800,000.