Category: Arkansas

  • The Secret Life of Marijuana Plants

    by Kyle Massey  on Monday, Feb. 11, 2019 12:00 am   2 min read

    Grow Tech Eric Pruitt helps a valuable little plant get off to a good start. (Kerry Prichard)

    The town is Cotton Plant, but since Bold Team LLC opened the state’s first operating medical marijuana cultivation center on Industrial Park Road, the municipality stands to reap a windfall from the cannabis plant.

    Bold Team’s first plants are growing now, and some are expected to be ready for Arkansas’ new medical marijuana market by April. Customer Relations Director Robert Lercher described a four-month cultivation, harvest and drying process, step by step.

    • On day one, a clip or “clone” is taken from one of the nursery’s mother plants and placed in a growing medium called Rockwool. There it spends 10 to 15 days under LED lights developing roots.
    • Afterward, they go into 2-inch pots with a grow medium for a couple of days. All plants above eight-and-a-half inches must be tagged with a bar code for state tracking.
    • Plants are placed in 3-gallon pots in Bold Team’s Vegbay, a bright holding area where they will spend three to four weeks under 18 hours of daily light, six hours of darkness.
    • The still-budless cannabis plants are shifted into one of seven “flower bays” where they will spend another 60-65 days developing the buds that are used to create most medicinal cannabis products. During this time, they get 12 hours of dark, 12 of light.
    • “The plant will then be harvested and cured for seven to 10 days, then packaged for the dispensaries,” said Lercher, whose wife, Kyndall, is a primary owner of the company and its medical director.

    Lercher praised town leaders in Cotton Plant, including former Mayor Willard Ryland, for their support in getting the cultivation center built. Under an August 2017 declaration of intention, Bold Team will remit 1 percent of its gross sales to Cotton Plant.

    State licensing protocols gave extra points to cultivation companies who were willing to set up shop in economically depressed areas.Cotton Plant is just such a place, one of hundreds of Delta towns that spiraled into decline with the mechanization of farm work decades ago.

    Bold Team leaders say that they were looking for a site in line with the state’s economic development goals, but they also liked Cotton Plant because the site, just inside the city limits, easily meets state requirements by being more than 3,000 feet from any church or school.

    “You’d be surprised to find how hard it is to find a well-situated site that meets that rule,” Lercher said.

  • Partner in John Daly Steakhouse Venture Files for Bankruptcy

    by Arkansas Business Staff  on Monday, Feb. 11, 2019 12:00 am   1 min read

    John Daly Steakhouse at 912 and 910 Front St. in Conway is the subject of a minority partner’s Chapter 7 bankruptcy petition. (Sarah Friedman)

    The minority partner in the failed John Daly Steakhouse project in Conway recently filed for Chapter 7 bankruptcy liquidation, listing $4.7 million in debts.

    Most of Adam C. Waldron’s debts stemmed from the S.A.M. Group LLC of Conway, which was behind the steakhouse venture.

    Waldron, a senior vice president at River Town Bank in Dardanelle, where he lives, listed $1.1 million in assets.

    If you recall, the John Daly Steakhouse opened in September 2017 and closed less than a year later.

    Waldron reported owning 17 percent of the S.A.M. Group, which filed for bankruptcy in September and listed $4 million in debts and $1.4 million in assets.

    The other owner of the S.A.M. Group is Ironhorse LLC of Conway. Conway businessman Sam McFadin has said his ex-wife, Chelsea McFadin, owns Ironhorse through a personal trust. Sam McFadin said he has no ownership interest in the S.A.M. Group, although he is listed in its bankruptcy as its CEO.

    Sam McFadin is listed in Waldron’s bankruptcy as a co-debtor.

    McFadin also filed for Chapter 11 bankruptcy in September and listed $8.5 million in debts and $4.95 million in assets. A lot of his debts were also tied to the S.A.M. Group.

    Waldron reported $96,600 in gross income in 2018, which was up from $93,100 in 2017. As for the John Daly Steakhouse building, the S.A.M. Group recently was given approval in bankruptcy court to lease it.

    The S.A.M. Group has a number of people looking “at lease agreements as we speak,” McFadin told Whispers last week. He said the property has furniture, fixtures and restaurant equipment on the first floor, and the second floor features fully furnished lofts, which are also available for lease.

  • River Market Marriott Sold for $20.3M

    A hotel in downtown Little Rock, agri land in Lonoke and Faulkner counties, residential property in Saline County and more fill out the roster of this week’s multimillion-dollar real estate transactions.

    ► SREIT RI Little Rock Propco LLC, an affiliate of Noble Investment Group of Atlanta, bought the 107-room Residence Inn by Marriott at 219 River Market Ave. for more than $20.3 million.

    Seller: NFII/CI Little Rock LLC, an affiliate of Starwood Capital of Greenwich, Connecticut.

    ► Robert E. LaRoche Children’s Trust 2009 sold more than 450 acres on the east side of Highway 161 about 3 miles south of Scott for nearly $2.1 million.

    Buyer? NewQueen Villa Inc., led by Luis Manfio.

    ► Summit Properties LLC, led by Richard Williams, purchased 42.7 acres at the northwest corner of Benton Parkway and Alcoa Road for more than $1.6 million from Reynolds Metals Co. LLC of Pittsburgh.

    ► The Frankie Joe Gardner & Melissa Marie Gardner Living Trust sold a 472-acre spread in northern Faulkner County 6.5 miles south of Quitman for more than $1.4 million.

    Buyer: L&C Properties LLC, led by Brooks Lawrence.

    ► RCME LLC of Fayetteville, an affiliate of Rausch Coleman Homes, acquired 28 residential lots in the Meadows Edge neighborhood of Alexander for more than $1.2 million.

    Seller: Meadows Edge Co. LLC, led by Walter Woodward III.

    ► Taylor Mercantile LLC, an affiliate of Mountain Oil Express Co. of Acworth, Georgia, sold an 8,000-SF convenience store at 9909 Hwy. 5 in Cabot for $1 million.

    Buyer? Vault CS 9909 Hwy 5 LLC, an affiliate Vault Equity Partners of Bloomfield Hills, Michigan.

    The deal was part of a $19 million sale-leaseback encompassing 13 convenience stores in Arkansas and Louisiana.

  • Friday Eldredge & Clark Names New Partners (Movers & Shakers)

    by Arkansas Business Staff  on Monday, Feb. 11, 2019 12:00 am   1 min read

    Angela Artherton, Katie Watson Bingham and Tyler Bone of Friday Eldredge & Clark (Composite photo)

    Angela Artherton, Katie Watson Bingham and Tyler Bone have been elected as partners at Friday Eldredge & Clark.

    Artherton joined the firm’s Rogers office in 2015 and serves as litigation counsel in commercial disputes, employment claims and insurance coverage issues. She earned her Juris Doctor from the University of Arkansas School of Law.

    Bingham joined the firm’s trust and estate planning practice group in 2012. She graduated from the University of Arkansas at Little Rock Bowen School of Law.

    Bone joined the firm in 2012 and is part of the firm’s medical malpractice group. He also earned his law degree from the Bowen School of Law.


    See more of this week’s Movers & Shakers, and submit your own announcement at ArkansasBusiness.com/Movers.

  • Cantrell Drug Seeks Buyer

    by Arkansas Business Staff  on Monday, Feb. 11, 2019 12:00 am   2 min read

    The namesake facility operated by Cantrell Drug Company, owned by Dr. James L. “Dell” McCarley Jr. (inset) and his wife Lynn.

    Cantrell Drug Co. of Little Rock is searching for a buyer after the drug compounding company closed its doors in November, leaving about 50 people out of work.

    “We did not have enough resources to stabilize the company after the long onslaught,” Chief Executive Officer Dell McCarley Jr. told Whispers.

    The onslaught included Cantrell filing for Chapter 11 bankruptcy reorganization in November 2017. That was followed in early 2018 by a legal battle with the U.S. Food & Drug Administration over allegations that Cantrell’s facility and products weren’t sterile. The FDA fought to stop Cantrell’s production and distribution of compounded drugs.

    Cantrell Drug agreed to stop making drugs while it made changes to meet the FDA’s requirements. It finally received the OK in September from the FDA to start manufacturing drugs again.

    Cantrell Drug produced about 50,000 units of morphine for injections, but the pharmaceutical company Pfizer Inc. of New York released a batch at the same time, McCarley said.

    “And, of course, Pfizer produces huge batches [that are] less expensive than ours,” he said. “And we just couldn’t sell it.”

    McCarley said he and his wife thought the company, which was founded in 1952, would survive after receiving the FDA’s approval in September. But it didn’t.

    Between November 2017 and October 2018, Cantrell Drug reported a net loss of $3.43 million, according to its bankruptcy filings.

    McCarley said the legal fight had “drained our resources.”

    McCarley said he’s hired a broker from Atlanta to do a nationwide search for a buyer.

    “We’ve had lots of interest,” he said. “We’ve had multiple parties that have come into Little Rock to look at the facility.”

    Still, the entire situation has been a struggle.

    “I’ve worked for 30 years to build this company just to see it pulled from my arms,” he said.

  • Central Arkansas Lags U.S. in Slow-Growing Economy

    by Arkansas Business Staff  on Monday, Feb. 11, 2019 12:00 am   1 min read

    Job growth in central Arkansas has lagged behind that for the nation as a whole since 2010-11, though it’s starting to catch up, according to Metroplan, the planning agency for Pulaski, Faulkner, Saline, Lonoke and Grant counties.

    “When the U.S. economy was growing jobs at nearly two percent annually from 2010 through 2015, the Little Rock region averaged barely over one-half percent annually. Lately, as U.S. job growth has slowed, the local region has picked up some. Preliminary 2018 figures suggest about 1.2 percent growth locally, not far below the national pace around 1.5 percent,” said the Metroplan report, “Metro Trends: Economic Review and Outlook,” released in December.

  • Arkansas Big 3 Metros Power State Growth

    by Marty Cook  on Thursday, Feb. 7, 2019 2:20 pm   3 min read

    Mervin Jebaraj (University of Arkansas)

    The state of Arkansas had another strong job growth year in 2018, but almost all of it was centered on three main metro areas.

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  • Update: New York Firm Sues NanoMech for $8.9M

    by Sarah Campbell-Miller  on Thursday, Feb. 7, 2019 10:12 am   2 min read

    Michaelson Capital Partners of New York is suing NanoMech Inc. of Springdale in the Supreme Court of New York for $8.9 million plus interest, costs and fees.

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  • Some Business Owners May Be Shocked by Lost Tax Breaks

    NEW YORK — As small business owners compile their income tax returns, they may have an unpleasant surprise — some popular business deductions have disappeared or been reduced under the new tax law.

    While the law gave small business owners new tax breaks including a 20 percent deduction in income for many sole proprietors, partners and owners of S corporations, Congress took back deductions for entertainment expenses, employee transit benefits and what are called net operating loss carrybacks. It also put ceilings on interest deductions for some businesses. Accountants and tax attorneys suspect small business clients to especially miss the break for entertaining clients and customers.

    “I think they’re going to be shocked at how much more they didn’t get as a deduction,” says Joseph Perry, a certified public accountant with Marcum in Melville, New York.

    A look at the disappearing deductions:

    INTEREST

    There is now a limit on how much interest businesses can deduct on their loans and credit lines. While the smallest businesses, those with up to $25 million in average annual revenue over the previous three years, have no ceiling on the interest they can deduct, there are many small businesses above that threshold that are being affected. IRS regulations limit the deduction to 30 percent of a company’s adjusted taxable income plus its interest income, if it has any. A motor vehicle dealer can also deduct its borrowing costs for the vehicles it buys and then sells — what’s known as floor plan financing interest.

    But interest expenses that are above the limit can be carried over and deducted the next year; they will count toward that year’s ceiling. And real property businesses including landlords, developers and real estate managers and brokers can choose to be exempt from the deduction if they follow rules on depreciation of their property.

    ENTERTAINMENT

    Owners who take customers to sporting events or the theater or treat them to a round of golf will have to foot the entire bill for those activities. The new law has done away with the entertainment deduction for businesses. Many owners use entertainment as a key part of building and maintaining relationships with clients.

    But owners can still deduct the cost of taking a client out for breakfast, lunch or dinner; half the amount spent for a business meal is deductible. The IRS also says owners can buy food for a customer at an entertainment event as long as the food is paid for separately. In a notice about meals and entertainment expenses issued in October, the agency used hot dogs at a baseball game as an example. The food is deductible; the tickets are not.

    Owners can also deduct 100 percent of the cost of food at parties or picnics for employees.

    While the loss of the entertainment deduction may discourage some owners from treating customers to tickets or a golf game, others will decide that paying for entertainment is a worthwhile investment in their companies’ future because of the goodwill it creates. That’s good business sense, says Ken Rubin, a CPA with Rubin Brown in St. Louis.

    “Normally, our general statement is, don’t let tax considerations drive the business decisions,” Rubin says. Or, as tax advisers sometimes tell their clients: Don’t let the tax tail wag the dog.

    EMPLOYEE EXPENSES

    The law also eliminated the deduction owners could take for subsidizing their employees’ commuting costs. Similar to their decisions about entertainment expenses, owners must decide whether they want to continue giving employees money toward their mass transit fares or parking tabs; given the tight labor market, owners might want to continue providing the benefits to make their companies better able to compete for talented workers. And taking the benefit away could be a morale-buster, says Leon Dutkiewicz, a CPA with Citrin Cooperman in Philadelphia.

    “When you run the math, you’re going to lose more in goodwill than you would from losing the deduction,” he says.

    Employees also lost a popular deduction — for job-related expenses like the cost of tools, uniforms and publications related to their work. Owners who want to give their staffers a break might want to take on those expenses and deduct the costs.

    NET OPERATING LOSSES

    Businesses that lose money no longer have the ability to “carry back” their losses to offset earnings in previous years and get refunds on taxes they paid. The law does allow companies to carry losses forward to an unlimited number of future years, helping them reduce taxes during profitable times.

    Although the absence of carrybacks takes away some flexibility for businesses, it isn’t likely to be an issue for companies in a strong economy when businesses are doing well, Rubin says. It can, however, be an issue for companies like restaurants and retailers.

    “It’s a bigger deal for cyclical-type businesses that will make money one year, lose money the next,” Rubin says.

    (All contents © copyright 2019 Associated Press. All rights reserved.)

  • USA Truck 4Q Income Down 63 Percent

    by Arkansas Business Staff  on Tuesday, Feb. 5, 2019 11:45 am   1 min read

    USA Truck Inc.

    USA Truck Inc. of Van Buren reported fourth-quarter income for fiscal 2018 of $5.3 million on Monday, down about 63 percent from the same quarter last year.

    The income is a drop from the $14.2 million reported in the same quarter a year ago, but that number was the beneficiary of the federal tax cut that boosted it more than $10 million. USA Truck reported revenue growth for the quarter of $141.1 million, an increase of more than 14 percent from $123.3 million a year ago.

    Earnings per share for the quarter was 64 cents, down from $1.84 a year ago.

    For fiscal 2018, USA Truck reported revenue of $534.1 million, up from $446.5 million in 2017. Income for the year was $12.2 million, up from $7.5 million, and earnings per share was $1.47, up from 93 cents.

    “I am pleased to report that our team successfully delivered a sixth-consecutive quarter of consolidated profitability and achieved several impressive milestones on our path to improved performance,” USA Truck CEO James Reed said. “While we are proud of these results, management still believes significant opportunity exists to drive further improvements.”

    USA Truck’s trucking division reported quarter revenue of $97.9 million and annual revenue of $347.8 million; both were increases from $83.8 million and $302.1 million a year ago. The company’s logistics division reported quarterly revenue of $43.2 million and annual revenue of $186.3 million, also both increases rom $39.5 million and $144.5 million.

    The trucking division reported increases in revenue per tractor per week. For the quarter, it was $3,447, up from $3,417, and for the year it was $3,394, up from $3,045.