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. ý☒ Yes o☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ý☒ Yes o☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”,~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

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.o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o☐ Yes ý☒ No

As of ~~November 13, 2017,~~May 12, 2021, there were 2,823,410 outstanding ~~6,875,365~~ shares of the registrant’s ~~Common Stock, without~~common stock, with a par ~~value.~~value of $0.001.

PART I. FINANCIAL INFORMATION

~~Item~~ITEM 1. Condensed Consolidated Financial Statements

~~APPLIANCE RECYCLING CENTERS OF AMERICA,~~JANONE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(~~In Thousands)~~Dollars in thousands, except per share amounts)

		September 30,			December 31,
		2017			2016
		(Unaudited)						April 3, 2021			January 2, 2021
								(Unaudited)
Assets	Assets
Cash and cash equivalents		$	1,994		$	968		$	5,060		$	379
Trade and other receivables, net			11,991			10,509			3,518			3,600
Inventories, net			11,219			16,291
Income tax receivable			–			16
Income taxes receivable									196			196
Inventories									1,007			1,630
Prepaid expenses and other current assets			891			761			734			1,136
Total current assets			26,095			28,545			10,515			6,941

Property and equipment, net			994			10,116			991			732
Restricted cash			1,298			500
Right to use asset - operating leases									2,531			2,458
Intangible assets, net			15,748			57			13,031			13,989
Deposits and other assets			751			557			237			231
Deferred taxes			1,305			2,081
Total assets		$	46,191		$	41,856		$	27,305		$	24,351

Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity
Liabilities:
Accounts payable		$	2,592		$	6,143		$	4,667		$	4,701
Accrued liabilities			6,227			8,888
Line of credit PNC bank			–			10,333
Notes payable - short term			800			–
Accrued income taxes			1,581			–
Current portion of long term maturities			3,846			2,093
Accrued liabilities - other									4,475			4,888
Accrued liability - California Sales Taxes									5,831			5,769
Lease obligation short term - operating leases									1,266			1,197
Short term debt									216			3,042
Related party note									1,000			1,000
Total current liabilities			15,046			27,457			17,455			20,597

Long term obligations, less current maturities			–			2,826
Other noncurrent liabilities			307			364
Lease obligation long term - operating leases									1,360			1,388
Total liabilities			15,353			30,647			18,815			21,985


Commitments and contingencies (Note 15)
Stockholders' equity:
Preferred stock, series A, 288,588 shares authorized, issued and outstanding at September 30, 2017			14,963			–
Common stock, no par value, 50,000 shares authorized, 6,655 shares issued and outstanding at September 30, 2017 and December 31, 2016			22,437			22,405
Preferred stock, series A - par value $0.001 per share 2,000,000 authorized, 259,729 shares issued and outstanding at April 3, 2021 and January 2, 2021, respectively									—			—
Common stock, par value $0.001 per share, 200,000,000 shares authorized, 2,403,410 and 1,829,982 shares issued and outstanding at April 3, 2021 and at January 2, 2021, respectively									2			2
Additional paid in capital									45,533			39,869
Accumulated other comprehensive loss									(630	)		(588	)
Accumulated deficit			(5,987	)		(11,028	)		(36,415	)		(36,917	)
Accumulated other comprehensive loss			(575	)		(574	)
Total stockholders' equity			30,838			10,803			8,490			2,366
Non controlling interest			–			406
Total liabilities and equity		$	46,191		$	41,856
Total liabilities and stockholders' equity								$	27,305		$	24,351

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~APPLIANCE RECYCLING CENTERS OF AMERICA,~~JANONE INC.

~~UNAUDITED~~ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(Dollars in ~~Thousands)~~thousands, except per share)

13 Weeks Ended 39 Weeks Ended

September 30,
2017

October 1,
2016

September 30,
2017

October 1,
2016

Revenues $ 25,484 $ 27,356 $ 74,505 $ 77,457
Cost of revenues 17,055 18,905 51,334 56,379
Gross profit 8,429 8,451 23,171 21,078

Operating expenses:
Selling, general and administrative expenses 7,301 7,036 21,167 21,543
Operating income (loss) 1,128 1,415 2,004 (465 )
Other income (expense):
Gain on the sale of Compton Facility – – 5,163 –
Gain on the sale of AAP equity interest 81 – 81 –
Interest expense, net (207 ) (341 ) (636 ) (928 )
Other income (expense) 248 61 315 155
Total other income (expense), net 122 (280 ) 4,923 (773 )
Income (loss) before provision for income taxes 1,250 1,135 6,927 (1,238 )
Total provision (benefit) for income taxes 563 – 2,382 438
Net income (loss) 687 1,135 4,545 (1,676 )
Net loss attributed to noncontrolling interest 83 (12 ) 496 245
Net income (loss) attributed to shareholders' of the parent $ 770 $ 1,123 $ 5,041 $ (1,431 )

Earnings (loss) per share:
Basic $ 0.12 $ 0.19 $ 0.76 $ (0.24 )
Diluted $ 0.11 $ 0.19 $ 0.75 $ (0.24 )

Weighted average common shares outstanding:
Basic 6,655 5,991 6,655 5,940
Diluted 6,705 5,991 6,705 5,940

Net income (loss) $ 687 $ 1,135 $ 4,545 $ (1,676 )
Other comprehensive income (loss), net of tax
Effect of foreign currency translation adjustments (37 ) (29 ) (1 ) 14
Total other comprehensive income (loss), net of tax (37 ) (29 ) (1 ) 14
Comprehensive income (loss) 650 1,106 4,544 (1,662 )
Comprehensive loss attributable to noncontrolling interest 83 (12 ) 496 245
Comprehensive income (loss) attributable to shareholders' of the parent $ 733 $ 1,094 $ 5,040 $ (1,417 )

	For the Thirteen Weeks Ended
	April 3, 2021			March 28, 2020
Revenues	$	8,672		$	8,450
Cost of revenues		7,251			6,976
Gross profit		1,421			1,474
Operating expenses:
Selling, general and administrative expenses		3,530			4,873
Operating loss		(2,109	)		(3,399	)
Other income (expense):
Interest expense, net		(73	)		(113	)
Gain on Payroll Protection Program loan forgiveness		1,872			—
Gain on settlement of vendor advance payments		810			—
Other income, net		—			818
Total other income (expense), net		2,609			705
Income (loss) from operations before benefit from income taxes		500			(2,694	)
Income tax benefit		2			411
Net income (loss)	$	502		$	(2,283	)
Dividends declared - Series A-1 preferred stock	$	—		$	—
Dividends declared - Common stock	$	—		$	—
Income (loss) per share:
Basic income (loss) per share	$	0.26		$	(1.33	)
Diluted income (loss) per share	$	0.24		$	(1.33	)
Weighted average common shares outstanding:
Basic		1,922,673			1,711,883
Diluted		2,070,036			1,711,883
Net income (loss)	$	502		$	(2,283	)
Other comprehensive income (loss), net of tax:
Effect of foreign currency translation adjustments		(42	)		6
Total other comprehensive income (loss), net of tax		(42	)		6
Comprehensive income (loss)	$	460		$	(2,277	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~APPLIANCE RECYCLING CENTERS OF AMERICA,~~JANONE INC.

~~UNAUDITED~~ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In ~~Thousands)~~thousands)

39 Weeks Ended
September 30, 2017 October 1, 2016
OPERATING ACTIVITIES:
Net income (loss) $ 4,545 $ (1,676 )
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 1,054 936
Amortization of debt issuance costs 262 136
Stock based compensation expense 32 264
Gain on sale of property (5,163 ) –
Gain on sale and deconsolidation of variable interest entity AAP (81 ) –
Change in reserve for uncollectible accounts 7 –
Change in reserve for inventory obsolescence (124 ) –
Change in deferred income taxes 776 439
Other 679 (37 )
Changes in assets and liabilities:
Accounts receivable (1,531 ) 2,004
Prepaid expenses and other current assets (254 ) 108
Inventories 5,073 385
Accounts payable and accrued expenses (4,509 ) 301
Income tax payable 1,597 859

Net cash provided by operating activities 2,363 3,719

INVESTING ACTIVITIES:
Purchases of property and equipment (107 ) (244 )
Proceeds from sale of property and equipment, net 6,785 –
Purchase of intangible asset, GeoTraq Inc, net of debt and Series A preferred stock issued (200 ) –
Proceeds from sale of equity in AAP less cash retained by AAP as a result of deconsolidation 643 –
Increase in restricted cash (798 ) –
Other – (22 )

Net cash provided by (used) in investing activities 6,323 (266 )

FINANCING ACTIVITIES:
Net payments under line of credit - PNC Bank (10,333 ) (2,859 )
Net borrowing under the line of credit - MidCap Financial Trust 3,616 –
Proceeds from issuance of debt obligations 1,070 100
Payment of debt issuance costs (484 ) (125 )
Payments on debt obligations (1,544 ) (821 )
Net cash used in financing activities (7,675 ) (3,705 )

Effect of changes in exchange rate on cash and cash equivalents 15 (8 )

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 1,026 (260 )

CASH AND CASH EQUIVALENTS, beginning of period 968 1,969

CASH AND CASH EQUIVALENTS, end of period $ 1,994 $ 1,709

Supplemental cash flow disclosures:
Interest paid $ 386 $ 1,033
Income taxes refunded (paid) $ 48 $ 860
Noncash financing and investing activities:
Notes payable issued to sellers of GeoTraq, Inc. (See Note 5) $ 800 $ –
Series A convertible preferred stock issued for the acquisition of GeoTraq, Inc. (See Note 5) $ 14,963 $ –
Debt issuance costs related to credit agreement renewal $ – $ 63

	For the Thirteen Weeks Ended
	April 3, 2021			March 28, 2020
OPERATING ACTIVITIES:
Net income (loss)	$	502		$	(2,283	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,045			1,017
Amortization of debt issuance costs		—			10
Stock based compensation expense		109			376
Gain on Payroll Protection Program loan forgiveness		(1,872	)		—
Gain on settlement of vendor advance payments		(810	)		—
Change in deferred income taxes		—			(473	)
Other		(6	)		28
Changes in assets and liabilities:
Accounts receivable		82			2,629
Income taxes receivable		—			65
Prepaid expenses and other current assets		402			41
Inventories		623			35
Right of use assets		(73	)		—
Lease liability		41			—
Accounts payable and accrued expenses		(385	)		(749	)
Net cash provided by (used in) operating activities		(342	)		696
INVESTING ACTIVITIES:
Purchases of property and equipment		(297	)		(8	)
Purchases of intangibles		(49	)		(56	)
Net cash used in investing activities		(346	)		(64	)
FINANCING ACTIVITIES:
Proceeds from equity financing, net		5,544			—
Proceeds from stock option exercise		11			—
Payments on short term notes payable		(144	)		(280	)
Net cash provided by (used in) financing activities		5,411			(280	)
Effect of changes in exchange rate on cash and cash equivalents		(42	)		4
INCREASE IN CASH AND CASH EQUIVALENTS		4,681			356
CASH AND CASH EQUIVALENTS, beginning of period		379			481
CASH AND CASH EQUIVALENTS, end of period	$	5,060		$	837
Supplemental cash flow disclosures:
Interest paid	$	23		$	56
Income taxes paid		—			—
Right to use asset - operating leases capitalized		424			930

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~APPLIANCE RECYCLING CENTERS~~JANONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~AMERICA, INC.~~CHANGES IN STOCKHOLDERS' EQUITY

~~NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~(UNAUDITED)

(InDollars in thousands)

~~1. Nature of Business and Basis of Presentation~~

	Series A Preferred				Common Stock				Additional Paid in		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit			Equity
Balance, January 2, 2021		259,729	$	—		1,829,982	$	2	$	39,869	$	(36,917	)	$	(588	)	$	2,366
Shares issued		—		—		571,428		—		5,544		—			—			5,544
Share based compensation		—		—		—		—		109		—			—			109
Stock option exercise		—		—		2,000		—		11		—			—			11
Other comprehensive income		—		—		—		—		—		—			(42	)		(42	)
Net income		—		—		—		—		—		502			—			502
Balance, April 3, 2021		259,729	$	—		2,403,410	$	2	$	45,533	$	(36,415	)	$	(630	)	$	8,490

	Series A Preferred				Common Stock				Additional Paid in		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit			Equity
Balance, December 28, 2019		259,729	$	—		1,919,048	$	2	$	39,291	$	(28,419	)	$	(533	)	$	10,341
Share based compensation		—		—		74,530		—		376		—			—			376
Other comprehensive income		—		—		—		—		—		—			6			6
Net loss		—		—		—		—		—		(2,283	)		—			(2,283	)
Balance, March 28, 2020		259,729	$	—		1,993,578	$	2	$	39,667	$	(30,702	)	$	(527	)	$	8,440

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Note 1: Background

The accompanying consolidated financial statements include the accounts of JanOne Inc., a Nevada corporation, and its subsidiaries (collectively the “Company” or “JanOne”). On September 10, 2019, Appliance Recycling Centers of America, Inc. changed its name to JanOne Inc.

The Company has three operating segments – Biotechnology, Recycling, and ~~subsidiaries~~Technology.

During September 2019, JanOne, through its biotechnology segment, broadened its business perspectives to become a pharmaceutical company focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties.

ARCA Recycling, Inc. (“~~we,” the “Company” or “ARCA”~~ARCA Recycling”) ~~are in the business of providing~~provides turnkey ~~appliance~~ recycling ~~and replacement~~ services for electric ~~utilities and other sponsors of~~utility energy efficiency ~~programs. We also sell new major household appliances through~~programs in the United States. ARCA Canada Inc. (“ARCA Canada”) provides turnkey recycling services for electric utility energy efficiency programs in Canada. Customer Connexx, LLC (“Connexx”) provides call center services for ARCA Recycling and ARCA Canada. On February 19, 2021, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with (i) ARCA Affiliated Holdings Corporation, a ~~chain~~Delaware corporation, (ii) ARCA Services Inc., a Delaware corporation, and (iii) Connexx Services Inc, a Delaware corporation (collectively, the “Buyers”), pursuant to which the Buyers agreed to acquire substantially all of ~~Company-owned stores under~~ the ~~name ApplianceSmart~~^®assets, and assume certain liabilities, of ARCA Recycling and Connexx (the “Disposition Transaction”). ~~Through~~The principal of the Buyers is Virland A. Johnson, our Chief Financial Officer. The Disposition Transaction is expected to be consummated during August 2021.

GeoTraq Inc. (“GeoTraq”) ~~subsidiary, a development stage company, we are~~is engaged in the development, design and, ultimately, we expect the sale, of cellular transceiver modules, also known as ~~Cell-ID modules. GeoTraq~~Mobile IoT modules, and associated wireless services.

We report on a 52- or 53-week fiscal year. Our 2020 fiscal year (“2020”) ended on January 2, 2021, and our current fiscal year (“2021”) will end on January 1, 2022.

Going concern

We currently face a challenging competitive environment and are focused on improving our overall profitability, which includes managing expenses. We reported a net income of $502 and net loss of $2,283 in for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively. In addition, as of April 3, 2021 the Company has total current assets of $10,515 and total current liabilities $17,455 resulting in a net negative working capital of $6,940.

The Company has available cash balances and funds available under an accounts receivable factoring program with Prestige Capital Finance, LLC (“Prestige Capital”) to provide sufficient liquidity to fund the entity’s operations, the entity’s continued investments in center openings, and remodeling activities for at least the next twelve months. The Company expects to generate cash from operations for the remainder of fiscal year 2021 given its cost cutting measures in response to the revenue reductions resulting from the Coronavirus. However, depending on the U.S.’ continued restrictions related to the coronavirus public health crisis, the Company cannot be certain its efforts will suffice. The agreement with Prestige Capital allows the Company to get advance funding of 80% of an unpaid customer’s invoice amount within 2 days and the balance less a mutually agreed upon fee upon ultimate collection in cash of the invoice. The Company expects that it will be able to utilize the available funds under the accounts receivable factoring agreement to provide liquidity and to pursue acquisitions and other strategic transactions to expand and grow the business to enhance shareholder value. Management also regularly monitors capital market conditions to ensure no other conditions or events exist that may materially affect the Company’s financial conditions and liquidity and the Company may raise additional funds through borrowings or public or private sales of debt or equity securities, if necessary.

Based on the above, management has concluded that at April 3, 2021 the Company is ~~part~~not aware and did not identify any other conditions or events that would cause the Company to not be able to continue business as a going concern for the next twelve months.

Coronavirus

In December 2019, the 2019 novel coronavirus (COVID-19) surfaced in Wuhan, China. The World Health Organization declared a global emergency on January 30, 2020, and most countries have initiated travel restrictions limiting travel to other countries and lock-downs within their borders. While various vaccines have recently been introduced into the marketplace, the impacts of ~~a new reporting segment~~variant strains of the COVID-19 virus are still unknown. The widespread health crisis has adversely affected the global economy, resulting in an economic downturn that could impact demand for our ~~Company – Technology. On August 15, 2017, we sold~~products. To date, the outbreak had a material adverse impact on our ~~50% interest~~operations. For example, several customers in ~~a joint venture operating under the name ARCA Advanced Processing, LLC (AAP”), which recycles~~our appliance recycling and appliance replacement business have previously suspended our ability to pick up and or replace their customers’ appliances ~~from twelve states~~resulting in ~~the Northeast~~decreased revenues for both recycling and ~~Mid-Atlantic regions~~replacement business. The future impact of the ~~United States.~~outbreak is highly uncertain and cannot be predicted and there is no assurance that the outbreak will not have another material adverse impact on the future results of the Company. The extent of the impact, if any, will depend on future developments, including actions taken to contain the coronavirus. A key task for the Company in 2021 is to begin late-stage clinical development with its pharmaceutical product, JAN101. However, the COVID-19 pandemic significantly impacted clinical trials in 2020, delaying recruitment in most non-COVID-19 clinical trials and even eliminating recruitment in some trials. While clinical sites have largely resumed conducting non-COVID-19 clinical trials, the

backlog of subjects may adversely affect our ability to recruit for its trial, leading to longer and more expensive trials. In addition, the unknown effectiveness of the COVID-19 vaccines, particularly concerning variant strains of COVID-19, could lead to clinical sites terminating patient recruitment again during the course of the study.

During April 2020, as a result of the COVID-19 pandemic, the Company entered into an amendment to its contract services agreement with certain customers, whereby those customers agreed to advance the Company $1,168 against the provision of future services. The advanced payment may only be utilized for the costs associated with labor and sustaining ARCA Recycling’s workforce. The advance agreement provides for partial loan forgiveness if certain conditions are met. See Note 14 for a complete discussion of these advances.

Note 2: Summary of Significant Accounting Policies

Basis of Presentation

The accompanying ~~balance sheet as of December 31, 2016 which has been derived from the audited consolidated financial statements and the~~ unaudited condensed consolidated financial statements have been prepared ~~by the Company~~ in ~~accordance~~conformity with accounting principles generally accepted ~~accounting principles (“GAAP”)~~ in the ~~United States~~U.S. (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 10 of ~~America~~Regulation S-X for interim financial ~~information and Article 8 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”).~~information. Accordingly, ~~they~~these financial statements do not include all of the information and notes required ~~by GAAP~~ for complete financial ~~statements.~~statements prepared in conformity with U.S. GAAP. In ~~the~~our opinion, all adjustments, consisting of ~~management,~~ normal ~~and~~ recurring adjustments, ~~and accruals~~ considered necessary for a fair presentation ~~for the periods indicated~~ have been included. Operating results for the 13 Week and 39 Week periods ended September 30, 2017 and October 1, 2016, are presented in lieu of three month and nine month periods, respectively. The Company reports results on a 52-week fiscal basis. TheHowever, our results of operations for ~~any~~the interim ~~period~~periods presented are not necessarily indicative of the results that may be expected for the full year.

~~In preparation of the Company’s condensed consolidated financial statements, management is required~~ For further information, refer to ~~make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses during~~ the ~~reporting periods. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.~~

~~These condensed consolidated financial statements should be read in conjunction with the Company’s audited~~ consolidated financial statements and ~~related~~ notes thereto included in our Form 10-K for the fiscal year ended ~~December 31, 2016, included in the Company’s Annual Report on Form 10-K, as amended, initially filed with the SEC on March 31, 2017.~~January 2, 2021.

Principles of ~~consolidation~~:Consolidation

The accompanying consolidated financial statements include the accounts of ~~Appliance Recycling Centers of America, Inc.~~the Company and ~~our~~its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

~~ApplianceSmart, Inc., a Minnesota corporation, is a wholly owned subsidiary that was formed through a corporate reorganization~~Certain amounts in July 2011 to hold our business of selling new major household appliances through a chain of Company-owned retail stores. ARCA Canada Inc., a Canadian corporation, is a wholly owned subsidiary that was formed in September 2006 to provide turnkey recycling services for electric utility energy efficiency programs. ARCA Recycling, Inc., a California corporation, is a wholly owned subsidiary that was formed in November 1991 to provide turnkey recycling services for electric utility energy efficiency programs. The operating results of our wholly owned subsidiaries are consolidated in our financial statements.

AAP is a joint venture that was formed in October 2009 between ARCA and 4301 Operations, LLC (“4301”). ARCA and 4301 owned a 50% interest in AAP through August 15, 2017, on which date ARCA sold its 50% interest in AAP. AAP established a regional processing center in Philadelphia, Pennsylvania at which recyclable appliances are processed. The financial position and results of operations of AAP are consolidated in our financial statements through August 15, 2017, based on our conclusion that AAP is a variable interest entity due to our contribution in excess of 50% of the total equity, subordinated debt and other forms of financial support. We had a controlling financial interest in AAP and we have provided substantial financial support to fund the operations of AAP since its inception. On August 15, 2017, ARCA sold it’s 50% interest in AAP and is no longer consolidating the results of AAP in itsprior year consolidated financial statements ashave been reclassified to conform to the current year presentation. These reclassifications had no effect on the previously reported net income (loss) or stockholders’ equity.

Use of ~~that date. Note 6 – Sale and deconsolidation~~Estimates

The preparation of ~~variable interest entity AAP to these condensed~~the consolidated financial ~~statements.~~statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumption that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates made in connection with the accompanying consolidated financial statements include the estimated reserve for doubtful current and long-term trade and other receivables, the estimated reserve for excess and obsolete inventory, estimated fair value and forfeiture rates for stock-based compensation, fair values in connection with the analysis of other intangibles and long-lived assets for impairment, valuation allowance against deferred tax assets and estimated useful lives for intangible assets and property and equipment.

Financial Instruments

~~On August 18, 2017, we acquired GeoTraq. GeoTraq~~Financial instruments consist primarily of cash equivalents, trade and other receivables, notes receivables, and obligations under accounts payable, accrued expenses and notes payable. The carrying amounts of cash equivalents, trade receivables and other receivables, accounts payable, accrued expenses and short-term notes payable approximate fair value because of the short maturity of these instruments. The fair value of the long-term debt is ~~a development stage company that is engaged in the development, design,~~calculated based on interest rates available for debt with terms and ultimately, we expect, sale of cellular transceiver modules, also known as Cell-ID modules. GeoTraq has created a dedicated Cell-ID transceiver module that we believe can enable the design of extremely small, inexpensive products that can operate for years on a single charge, powered by standardly available batteries of diminutive size without the need of recharge. Accordingly, and utilizing Cell-ID technology exclusively, we believe that GeoTraq will provide an exclusive, low-cost solution and service life that will enable new global markets for location-based services (LBS) that could utilize technologymaturities similar to the ~~technology that emergency 911 location systems currently utilize.~~Company’s existing debt arrangements, unless quoted market prices were available (Level 2 inputs). The carrying amounts of short-term debt at April 3, 2021 and January 2, 2021 approximate fair value.

Cash and Cash Equivalents

AsCash and cash equivalents consist of highly liquid investments with a ~~result~~maturity of ~~this transaction, GeoTraq became~~three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value.

Trade Receivables and Allowance for Doubtful Accounts

We carry unsecured trade receivables at the original invoice amount less an estimate made for doubtful accounts based on a ~~wholly-owned subsidiary~~monthly review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and ~~therefore,~~considering a customer’s financial condition, credit history and current economic conditions.

We write off trade receivables when we deem them uncollectible. We record recoveries of trade receivables previously written off when we receive them. We consider a trade receivable to be past due if any portion of the ~~results of GeoTraq are included in our consolidated results~~receivable balance is outstanding for more than ninety days. We do not charge interest on past due receivables. The Company does not have an allowance for doubtful accounts as of ~~August 18, 2017.~~

~~2. Inventories~~April 3, 2021 or January 2, 2021.

Inventories

Inventories, consisting ~~principally~~primarily of appliances, are stated at the lower of cost, determined on a specific identification basis, or net realizable value. We provide estimated provisions for the obsolescence of our appliance inventories, including adjustment to market, based on various factors, including the age of such inventory and our management’s assessment of the need for such provisions. We look at historical inventory aging reports and margin analyses in determining our provision estimate. A revised cost basis is used once a provision for obsolescence is recorded. The Company does not have a reserve for excess or obsolete inventory at April 3, 2021 or January 2, 2021.

Property and Equipment

Property and Equipment are stated at cost less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of assets are capitalized. Upon sale or other retirement of depreciable property, the cost and accumulated depreciation are removed from the related accounts and any gain or loss is reflected in operations. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful life of building and improvements is 3 to 30 years, transportation equipment is 3 to 15 years, machinery and equipment is 5 to 10 years, furnishings and fixtures is 3 to 5 years and office and computer equipment is 3 to 5 years.

We periodically review our property and equipment when events or changes in circumstances indicate that their carrying amounts may not be recoverable or their depreciation or amortization periods should be accelerated. We assess recoverability based on several factors, including our intention with respect to maintaining our facilities and projected discounted cash flows from operations. An impairment loss would be recognized for the amount by which the carrying amount of the assets exceeds their fair value, as approximated by the present value of their projected discounted cash flows.

Intangible Assets

The Company accounts for intangible assets in accordance with ASC 350, Intangibles—Goodwill and ~~consist of:~~Other. Under ASC 350, intangible assets subject to amortization, shall be reviewed for impairment in accordance with the Impairment or Disposal of Long-Lived Assets in ASC 360, Property, Plant, and Equipment.

Under ASC 360, long-lived assets are tested for recoverability whenever events or changes in circumstances (‘triggering event’) indicate that the carrying amount may not be recoverable. In making this determination, triggering events that were considered included:

A significant decrease in the market price of a long-lived asset (asset group);

A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition;

A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator;

An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group);

A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and,

A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent.

If a triggering event has occurred, for purposes of recognition and measurement of an impairment loss, a long-lived asset or assets shall be grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If after identifying a triggering event it is determined that the asset group’s carrying value may not be recoverable, a recoverability test is performed by forecasting the expected cash flows to be derived from the asset group for the remaining useful life of the asset group’s primary asset compared to its carrying value. The recoverability test relies upon the undiscounted cash flows (excluding interest and taxes) which are derived from the Company’s specific use of those assets (not how a market participant would use those assets); and are based upon the existing service potential of the current assets (excluding any improvements that would materially enhance the assets). If the expected undiscounted cash flows exceed the carrying value, the assets are considered recoverable.

There was no impairment of intangibles as of April 3, 2021 or January 2, 2021 based on the intangible asset impairment review performed as of those dates.

September 30, 2017 December 31, 2016
Appliances held for resale $ 11,219 $ 16,146
Processed metals from recycled appliances held for resale – 139
Other – 6
$ 11,219 $ 16,291

The Company’s intangible assets consist of customer relationship intangibles, trade names, licenses for the use of internet domain names, Universal Resource Locators, or URL’s, software, patent USPTO reference No. 10,182,402, and historical know-how, designs and related manufacturing procedures. Upon acquisition, critical estimates are made in valuing acquired intangible assets, which include but are not limited to: future expected cash flows from customer contracts, customer lists, and estimating cash flows from projects when completed; tradename and market position, as well as assumptions about the period of time that customer relationships will continue; and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from the assumptions used in determining the fair values. All intangible assets are capitalized at their original cost and amortized over their estimated useful lives as follows: domain name and marketing – 3 to 20 years; software – 3 to 5 years, technology intangibles – 7 years, customer relationships – 7 to 15 years.

Revenue Recognition

Biotechnology Revenue

We currently are not generating any revenue from our Biotechnology segment.

Recycling Revenue

We provide replacement appliances and provide appliance pickup and recycling services for consumers (“end users”) of public utilities, our customers. We receive as part of our de-manufacturing and recycling process revenue from scrap dealers for refrigerant, steel, plastic, glass, copper and other residual items.

We account for revenue in accordance with Accounting Standards Codification 606 Revenue from Contracts with Customers.

Under the revenue standard we determine revenue recognition through the following steps:

Identification of the contract, or contracts, with a customer,

Identification of the performance obligations in the contract,

Determination of the transaction price,

Allocation of the transaction price to the performance obligations in the contract, and

Recognition of revenue when, or as, we satisfy a performance obligation.

As part of its assessment of each contract, the Company evaluates certain factors including the customer’s ability to pay, or credit risk. For each contract, the Company considers the promise to transfer products or services, each of which is distinct, to be the identified performance obligations. In determining the transaction price, the price stated on the contract is typically fixed and represents the net consideration to which the Company expects to be entitled per order, and therefore there is no variable consideration. As the Company’s standard payment terms are less than 90 days, the Company has elected, as a practical expedient, to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product or service based on its relative standalone selling price. The product or service price as specified on the contract is considered the standalone selling price as it is an observable source that depicts the price as if sold to a similar customer in similar circumstances.

Replacement Product Revenue

We generate revenue by providing replacement appliances. We recognize revenue at the point in time when control over the replacement product is transferred to the end user, when our performance obligations are satisfied, which typically occur upon delivery from our center facility and installation at the end user’s home.

Recycling Services Revenue

We generate revenue by providing pickup and recycling services. We recognize revenue at the point in time when we have picked up a to be recycled appliance and transfer of ownership has occurred, and therefore our performance obligations are satisfied, which typically occur upon pickup from our end user’s home.

Byproduct Revenue

We generate other recycling byproduct revenue (the sale of copper, steel, plastic, and other recoverable non-refrigerant byproducts) as part of our de-manufacturing process. We recognize byproduct revenue upon delivery and transfer of control of byproduct to a third-party recycling customer, having a mutually agreed upon price per pound and collection reasonably assured. Transfer of control occurs at the time the customer is in possession of the byproduct material. Revenue recognized is a function of byproduct weight, type and in some cases volume of the byproduct delivered multiplied by the market rate as quoted.

Contract Liability

Receivables are recognized in the period we ship the product or provide the service. Payment terms on invoiced amounts are based on contractual terms with each customer. When we receive consideration, or such consideration is unconditionally due, prior to transferring goods or services to the customer under the terms of a sales contract, we record deferred revenue, which represents a contract liability. We recognize a contract liability as net sales once control of goods and/or services have been transferred to the customer and all revenue recognition criteria have been met and any constraints have been resolved. We defer the product costs until recognition of the related revenue occurs.

Assets Recognized from Costs to Obtain a Contract with a Customer

We recognize an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. We have concluded that no material costs have been incurred to obtain and fulfill our FASB Accounting Standards Codification, or ASC 606 contracts, meet the capitalization criteria, and as such, there are no material costs deferred and recognized as assets on the consolidated balance sheet at April 3, 2021 or January 2, 2020.

Other:

Taxes collected from customers and remitted to government authorities and that are related to sales of our products are excluded from revenues.

Sales commissions are expensed when incurred because the amortization period would have been one year or less. These costs are recorded in Selling, General and Administrative expense.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with original expected lengths of one year or less or (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for the services performed.

Revenue recognized for Company contracts - $7,580 and $8,013 for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively. Byproduct revenue is non-contract revenue and amounts for Byproduct revenue have been excluded from Revenue recognized for Company contracts for all periods presented.

Technology Revenue

We currently are not generating any revenue from our Technology segment.

Shipping and Handling

The Company classifies shipping and handling charged to customers as revenues and classifies costs relating to shipping and handling as cost of revenues.

Advertising Expense

Advertising expense is charged to operations as incurred. Advertising expense totaled $nil and $91 for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows: Level 1 - inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. Level 2 – to the valuation methodology include quoted prices for similar assets and liabilities in active markets,

and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Income Taxes

The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company's assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not be realized. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss).

Significant management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Company uses a two-step process to evaluate tax positions. The first step requires an entity to determine whether it is more likely than not (greater than 50% chance) that the tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Company in future periods.

Lease Accounting

We account for leases in accordance with ASC 842 - Leases This accounting standard requires all lessees to record the impact of leasing contracts on the balance sheet as a right to use asset and corresponding liability. This is measured by taking the present value of the remaining lease payments over the lease term and recording a right to use asset (“ROU”) and corresponding lease obligation for lease payments. Rent expense is realized on a straight-line basis and the lease obligation is amortized based on the effective interest method. The amounts recognized reflect the present value of remaining lease payments for all leases that have a lease term greater than 12 months. The discount rate used is an estimate of the Company’s incremental borrowing rate based on information available at lease commencement.

In considering the lease asset value, the Company considers fixed or variable payment terms, prepayments and options to extend, terminate or purchase. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company uses an estimate of its incremental borrowing rate based on information available at lease commencement in determining present value of lease payments.

We lease warehouse facilities and office space. These assets and properties are generally leased under noncancelable agreements that expire at various dates through 2025 with various renewal options for additional periods. The agreements, which have and continue to be classified as operating leases, generally provide for base rent and require us to pay all insurance, taxes and other maintenance costs. The Company’s operating leases are exclusively for building space in the different cities we have operations. The lease terms typically last from 2-3 years with some being longer or shorter depending on needs of the business and the lease partners. The Company has also engaged in month-to-month leases for parking spaces that the Company has elected to expense as incurred. Our lease agreements do not include variable lease payments. Our lessors do offer options to extend lease terms as leases expire and management evaluates against current rental markets and other strategic factors in making the decision to renew. When leases are within 6 months of being renewed, management will estimate probabilities of renewing for an additional term based on market and strategic factors and if the probability is more likely than not that the lease will be renewed, the financials will assume the lease is renewed under the lease renewal option.

The operating leases we have do not contain residual value guarantees and do not contain restrictive covenants.

Leases accounted under ASC 842 were determined based on analysis of the lease contracts using lease payments and timing as documented in the contract. Non lease contracts were also evaluated to understand if the contract terms provided for an asset that we controlled and provided us with substantially all the economic benefits. We did not observe any contracts with embedded leases. Lease contracts were reviewed, and distinctions made between non lease and lease payments. Only payments related to the lease of the asset were included in lease payment calculations. Management uses an estimation of its incremental borrowing rate at lease commencement over similar terms as the lease contracts in determining the present value of its lease obligations.

Stock-Based Compensation

The Company from time to time grants restricted stock awards and options to employees (including executives), non-employees, and members of the Board of Directors. Such awards are valued based on the grant date fair-value of the instruments, net of estimated forfeitures. The value of each award is amortized on a straight-line basis over the vesting period.

Foreign Currency

The financial statements of the Company’s non-U.S. subsidiary are translated into U.S. dollars in accordance with ASC 830, Foreign Currency Matters. Under ASC 830, if the assets and liabilities of the Company are recorded in certain non-U.S. functional currencies other than the U.S. dollar, they are translated at rates of exchange at year end. Revenue and expense items are translated at the average monthly exchange rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income (loss).

Earnings Per Share

Earnings per share is calculated in accordance with ASC 260, “Earnings Per Share”. Under ASC 260 basic earnings per share is computed using the weighted average number of common shares outstanding during the period except that it does not include unvested restricted stock subject to cancellation. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of warrants, options, restricted shares and convertible preferred stock. The dilutive effect of outstanding restricted shares, options and warrants is reflected in diluted earnings per share by application of the treasury stock method. Convertible preferred stock is reflected on an if-converted basis.

Segment Reporting

ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a Company’s management organizes segments within the Company for making operating decisions and assessing performance. The Company determined it has three reportable segments.

Concentration of Credit Risk

The Company maintains cash balances at several banks in several states including, Minnesota, California, and Nevada. Accounts are insured by the Federal Deposit Insurance Corporation up to $250 per institution as of April 3, 2021. At times, balances may exceed federally insured limits.

Note 3: Trade and other receivables

	April 3, 2021			January 2, 2021
Trade receivables, net	$	3,680		$	4,174
Factored accounts receivable		(346	)		(891	)
Prestige Capital reserve receivable		63			162
Other receivables		121			155
Trade and other receivables, net	$	3,518		$	3,600

Trade accounts receivable	$	2,627		$	2,698
Un-billed trade receivables		1,053			1,476
Total trade receivables, net	$	3,680		$	4,174

Note 4: Inventory

Appliances held for sale are stated at the lower of cost, determined on a specific identification basis, or net realizable value. Inventory raw material - chips, are stated at the lower of average cost or net realizable value. Total inventory consists of the following as of April 3, 2021 and January 2, 2021:

	April 3, 2021		January 2, 2021
Appliances held for resale	$	902	$	1,430
Inventory - raw material - chips		105		200
Total inventory	$	1,007	$	1,630

We provide estimated provisions for the obsolescence of ~~our appliance~~ inventories, including adjustments to net realizable value, based on various factors, including the age of such inventory and our management’s assessment of the need for such provisions. We ~~look at~~review historical inventory ~~aging’s~~aging reports and margin ~~analysis~~analyses in determining our provision estimate. A revised cost basis is used once a provision for obsolescence is recorded.

~~3. Earnings per share~~

Basic income per common share is computed based on the weighted average number of common shares outstanding. Diluted income per common share is computed based on the weighted average number of shares of common stock outstanding adjusted by the number of additional shares that would At April 3, 2021 and January 2, 2021, we do not have been outstanding had the potentially dilutive shares of common stock been issued. Potentially dilutive shares of common stock include unexercised stock options and warrants. Basic per share amounts are computed, generally, by dividing net income attributable to shareholders’ of the parent by the weighted average number of shares of common stock outstanding. Diluted per share amounts assume the conversion, exercise or issuance of all potential common stock instruments unless their effect is anti-dilutive, thereby reducing the loss or increasing the income per common share. In calculating diluted weighted average shares and per share amounts, we included stock options and warrants with exercise prices below average market prices, for the respective reporting periods in which they were dilutive, using the treasury stock method. We calculated the number of additional shares by assuming the outstanding stock options were exercised and that the proceeds from such exercises were used to acquire shares of common stock at the average market price during the quarter. For the 13 weeks and 39 weeks ended September 30, 2017 and October 1, 2016, we excluded options and warrants to purchase 651 and 651 shares of common stock from the diluted weighted average shares outstanding calculation as the effect of these options were anti-dilutive.an inventory reserve.

Note 5: Prepaids and other current assets

13 Weeks Ended 39 Weeks Ended

September 30,
2017

October 1,
2016

September 30,
2017

October 1,
2016

Basic

Net income (loss) attributed to shareholders’ of parent $ 770 $ 1,123 $ 5,041 $ (1,431 )

Weighted average common shares outstanding 6,655 5,991 6,655 5,940

Basic earnings (loss) per share $ 0.12 $ 0.19 $ 0.76 $ (0.24 )

Diluted

Net income (loss) applicable to diluted earnings (loss) per share $ 770 $ 1,123 $ 5,041 $ (1,431 )

Weighted average common shares outstanding 6,655 5,991 6,655 5,940
Add: options – – – –
Add: common stock warrants 50 – 50 –
Assumed diluted weighted average common shares outstanding 6,705 5,991 6,705 5,940

Diluted earnings (loss) per share $ 0.11 $ 0.19 $ 0.75 $ (0.24 )

Prepaids and other current assets as of April 3, 2021 and January 2, 2021 consist of the following:

~~4. Share-based compensation~~

	April 3, 2021		January 2, 2021
Prepaid insurance	$	217	$	371
Prepaid rent		165		95
Prepaid purchase orders		—		366
Prepaid other		352		304
Total prepaid expenses and other current assets	$	734	$	1,136

~~We recognized share-based compensation expense~~Note 6: Note receivable

On December 30, 2017, we sold our retail appliance segment, ApplianceSmart, Inc. (“ApplianceSmart”) to ApplianceSmart Holdings LLC (the “Purchaser”), a wholly owned subsidiary of $0Live Ventures Incorporated, pursuant to a Stock Purchase Agreement (the “Agreement”). Pursuant to the Agreement, the Purchaser purchased from the Company all the issued and ~~$123~~outstanding shares of capital stock (the “Stock”) of ApplianceSmart in exchange for $6,500 (the “Purchase Price”). Per the Agreement, the Purchase Price was due and payable on or before March 31, 2018.

Between March 31, 2018 and April 24, 2018, the Purchaser and the Company 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 Company a 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 and principal payable at the Maturity Date. ApplianceSmart provided the Company a guaranty of repayment of the ApplianceSmart Note. The remaining $2,581 of the Purchase Price was paid in cash by the Purchaser to the Company. The Purchaser may reborrow funds, and pay interest on such re-borrowings, from the Company up to the Original Principal Amount.

On December 26, 2018, the ApplianceSmart Note was amended and restated to grant the Company a security interest in the assets of the Purchaser, ApplianceSmart, and ApplianceSmart Contracting Inc. in exchange for modifying the repayments terms to provide for the ~~13 weeks ended September 30, 2017,~~payment in full of all accrued interest and ~~October~~principal on April 1, ~~2016 respectively. We recognized share-based compensation expense~~2021, the maturity date of ~~$32 and $264 for~~ the ~~39 weeks ended September 30, 2017 and October 1, 2016, respectively. There is no estimated future share-based compensation expense as of September 30, 2017.~~

5.~~Acquisition of GeoTraq, Inc.~~

ApplianceSmart Note.

On ~~August 18, 2017,~~March 15, 2019, the Company entered into agreements with third parties pursuant to which it agreed to subordinate the payment of indebtedness under the ApplianceSmart Note and the Company’s security interest in the assets of ApplianceSmart in exchange for a ~~series~~prepayment of ~~transactions, acquiring all~~up to $1,200.

On December 9, 2019, ApplianceSmart filed a voluntary petition in the United States Bankruptcy Court for the Southern District of New York seeking relief under Chapter 11 of Title 11 of the ~~assets and capital stock of GeoTraq by way of merger. GeoTraq is~~United States Code. As a ~~development stage company that is engaged in~~result, the ~~development, design, and, ultimately, the sale of cellular transceiver modules, also known as Cell-ID modules. As of August 18, 2017, GeoTraq became a wholly-owned subsidiary of the Company.~~

The final fair value of the single identifiable intangible asset acquired in the GeoTraq acquisition is a U.S. patent application USPTO reference No. 14724039 titled “Locator Device with Low Power Consumption” together with the assignment of intellectual property that included historical know-how, designs and related manufacturing procedures is $15,963. Total consideration paid for GeoTraq included cash $200, unsecured promissory notes bearing interest at the annual rate of 1.29%, and maturing on August 18, 2017 in the aggregate principal of $800, and 288,588 shares of newly created convertible series A preferred stock with a final fair value of $14,963. See Note 16 – Series A Preferred Stock to these condensed consolidated financial statements. There were no other assets acquired or liabilities assumed.

At the time of the acquisition of GeoTraq, GeoTraq was a shell company with no business operations, one intangible asset and historical know-how andesigns. GeoTraq is in the development stage and has yet to begin operations. The Company has ~~elected~~recorded an impairment charge of $2,992 for the amount owed by ApplianceSmart to ~~early adopt ASU 2017-01, which clarifies~~ the ~~definition of a business for purposes of applying ASC 805. The~~ Company ~~has determined that GeoTraq is a single or group of related assets, not a business as clarified by ASU 2017-01 at the time of acquisition.~~

~~6. Sale and deconsolidation of variable interest entity - AAP~~

The financial position and results of operations of AAP have been consolidated in our financial statements since AAP’s inception based on our conclusion that AAP is a variable interest entity that we controlled due to our contribution in excess of 50% of the total equity, subordinated debt and other forms of financial support. Since inception we provided substantial financial support to fund the operations of AAP. The financial position and results of operations for AAP are reported in our recycling segment. On August 15, 2017, we sold our 50% interest in AAP, and therefore, as of August 15, 2017, no longer consolidate the results of AAP in our financial statements.

~~The following table summarizes the assets and liabilities of AAP consolidated in our financial position~~ as of December ~~31, 2016:~~

Assets December 31, 2016
Current assets $ 438
Property and equipment, net 7,322
Other assets 83
Total assets $ 7,843
Liabilities
Accounts payable $ 1,388
Accrued expenses 523
Current maturities of long-term debt obligations 3,558
Long-term debt obligations, net of current maturities 435
Other liabilities (a) 1,126
Total liabilities $ 7,030

~~(a) Other liabilities represent loans and advances between ARCA and AAP that are eliminated in consolidation.~~

28, 2019. The ~~following table summarizes the operating results of AAP consolidated in our financial results for the 13 weeks and 39 weeks ended September 30, 2017, and October 1, 2016, respectively:~~

13 Weeks Ended

September 30,
2017 (b)

October 1,
2016

Revenues $ 306 $ 2,076
Gross profit 38 492
Operating income (loss) (140 ) 79
Net income (loss) (165 ) 24

39 Weeks Ended

September 30,
2017 (b)

October 1,
2016

Revenues $ 1,433 $ 5,557
Gross profit 24 967
Operating loss (848 ) (285 )
Net loss (991 ) (490 )

(b) Operating results for AAP were consolidated in the Company’s operating results from inception of AAP through August 15, 2017, the date of our 50% equity sale in AAP. We recorded a gain of $81Company continues to record interest income on the ~~sale~~ApplianceSmart Note and ~~deconsolidation~~a corresponding impairment charge. The outstanding balance of ~~our 50% equity interest in AAP. Net Cash outflow arising from deconsolidation~~the ApplianceSmart Note at April 3, 2021 and January 2, 2021 was $2,992 and $2,992, respectively, exclusive of ~~AAP was $157. The Company received $800 in cash consideration for its 50% equity interest in AAP.~~the impairment charges.

7.Note 7: Property and ~~equipment~~

Equipment

Property and equipment as of ~~September 30, 2017,~~April 3, 2021 and ~~December 31, 2016,~~January 2, 2021 consist of the following:

Useful Life (Years)
September 30,
2017

December 31,
2016

Land $ – $ 1,140
Buildings and improvements 18-30 2,122 3,780
Equipment (including computer software) 3-15 7,897 19,260
Projects under construction 73 204
Property and equipment 10,092 24,384
Less accumulated depreciation and amortization (9,098 ) (14,268 )
Property and equipment, net $ 994 $ 10,116

	Useful Life (Years)	April 3, 2021			January 2, 2021
Buildings and improvements	3-30	$	77		$	75
Equipment	3-15		2,572			2,528
Projects under construction			638			387
Property and equipment			3,287			2,990
Less accumulated depreciation and amortization			(2,296	)		(2,258	)
Total property and equipment, net		$	991		$	732

Depreciation ~~and amortization~~ expense was ~~$173~~$38 and ~~$302~~$19 for the 13 weeks ended ~~September 30, 2017~~April 3, 2021 and ~~October 1, 2016, respectively. Depreciation and amortization expense was $782 and $936 for the 39 weeks ended September 30, 2017 and October 1, 2016,~~March 28, 2020, respectively.

Equipment Financing Agreement

On ~~January~~March 25, ~~2017, as disclosed~~2021, ARCA Recycling entered into a Master Equipment Finance Agreement (collectively, the “Equipment Finance Agreement”) with KLC Financial, Inc. (“KLC”). Under the terms of the Equipment Finance Agreement, KLC has agreed to make loans to ARCA Recycling secured by certain equipment purchased or to be purchased by ARCA Recycling on terms set forth or to be set forth in schedules to the ~~Company in Item 2.01~~Equipment Finance Agreement. Under the terms of ~~its Current Report on Form 8-K filed with the SEC on January 31, 2017, the Company sold its’ Compton, California facility~~Schedule No. 01 (the ~~“Compton Facility”~~“Initial Loan”) ~~for $7,103~~, KLC has agreed to ~~Terreno Acacia, LLC. The proceeds~~loan ARCA Recycling approximately $1.8 million secured by existing equipment of and new equipment to be purchased by ARCA Recycling. ARCA Recycling will make monthly payments of $27 over a period of five years from the ~~sale paid off~~March 24, 2021, at which time it is intended that the ~~PNC term loan~~Initial Loan will be repaid in full. The Initial Loan bears interest at 7.757% per annum. KLC will have a first priority security interest over, among other things, all equipment identified in the ~~aggregate principal amount~~schedules. The Initial Loan is guaranteed by Virland Johnson, the Chief Financial Officer of ~~$1,020 that was secured by the property~~JanOne and ~~costs~~Chief Financial Officer and Secretary of ~~sale~~ARCA Recycling. The Equipment Finance Agreement contains customary affirmative and negative covenants, representations and warranties, and events of ~~$325, with the remaining proceeds~~default for transactions of ~~$5,758 paid towards the PNC Revolver (as defined below).~~this nature. The ~~Company recorded a gain on the sale of property of $5,163. The Company rented the Compton Facility back from Terreno Acacia, LLC after the completion~~foregoing description of the ~~sale from January 26, 2017 through April 10, 2017.~~Equipment Finance Agreement does not purport to be complete and is qualified in its entirety by reference to the Equipment Finance Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

8.Note 8: Intangible ~~assets~~

Assets

Intangible assets as of ~~September 30, 2017,~~April 3, 2021 and ~~December 31, 2016,~~January 2, 2021 consist of the following:

	April 3, 2021			January 2, 2021
Intangible assets GeoTraq, net	$	26,096		$	26,096
Patent and domains		23			23
Computer software		4,543			4,494
Intangible assets		30,662			30,613
Less accumulated amortization		(17,631	)		(16,624	)
Total intangible assets	$	13,031		$	13,989

September 30, 2017 December 31, 2016
Intangible assets GeoTraq, net (See Note 5) $ 15,691 $ –
Recycling contract, net 19 19
Goodwill 38 38
$ 15,748 $ 57

~~For the 13 Week and 39 Week periods ended September 30, 2017, we recorded amortization expense of $272, related to our finite intangible assets.~~ The useful life and amortization period of the GeoTraq intangible acquired is seven ~~years.~~years from the acquisition date of August 18, 2017. Intangible amortization expense was $1,007 and $998 for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

9.Note 9: Deposits and other assets

Deposits and other assets as of ~~September 30, 2017,~~April 3, 2021 and ~~December 31, 2016,~~January 2, 2021 consist of the following:

September 30, 2017 December 31, 2016
Deposits $ 600 $ 453
Other 151 104
$ 751 $ 557

	April 3, 2021		January 2, 2021
Deposits	$	177	$	169
Other		60		62
Total deposits and other assets	$	237	$	231

Deposits are primarily refundable security deposits with landlords the Company leases property from.

Note 10: Leases

We account for leases in accordance with ASC 842. The amount recorded is the present value of all remaining lease payments for leases with terms greater than 12 months. The right of use asset is offset by a corresponding liability. The discount rate is based on an estimate of our incremental borrowing rate for terms similar to our lease terms at the time of lease commencement. The asset will be amortized over remaining lease terms. See Lease Accounting in Note 2.

Total present value of lease payments as of April 3, 2021:

Remainder 2021	$	1,418
2022		751
2023		452
2024		249
2025		31
2026		—
Total		2,901
Less Interest		(275	)
Present Value of Payments	$	2,626

During the 13 weeks ended April 3, 2021 and March 28, 2020, $398 and $344, respectively, was included in operating cash flow for amounts paid for operating leases.

Additionally, we obtained right-of-use assets in exchange for lease liabilities of approximately $424 upon commencement of operating leases during the 13 weeks ended April 3, 2021. The weighted average lease term for operating leases is 2.6 years and the weighted average discount rate is 8%.

~~10.~~Note 11: Accrued ~~liabilities~~

Liabilities

Accrued liabilities as of ~~September 30, 2017,~~April 3, 2021 and ~~December 31, 2016,~~January 2, 2021 consist of the following:

	April 3, 2021		January 2, 2021
Compensation and benefits	$	822	$	604
Contract liability		240		292
Accrued incentive and rebate checks		1,099		1,220
Accrued transportation costs*		708		662
Accrued guarantees		767		767
Accrued purchase orders		43		177
Accrued taxes		498		299
Other		298		867
Total accrued expenses	$	4,475	$	4,888

September 30, 2017 December 31, 2016
Sales tax estimates, including interest $ 4,610 $ 4,203
Compensation and benefits 741 2,431
Accrued incentive and rebate checks 192 358
Accrued rent 238 263
Warranty 14 26
Accrued payables – 570
Deferred revenue 322 227
Other 110 810
$ 6,227 $ 8,888

*Accrued transportation costs are related to delayed billing from certain vendors.

Contract liabilities rollforward

The following table summarizes the contract liability activity for the 13 weeks ended April 3, 2021:

Beginning balance, January 1, 2021

$
292

Accrued

135

Settled

(187
)
Ending balance, April 3, 2021

$
240

Note 12: Accrued Liability – California Sales ~~and Use~~ Tax ~~Assessment~~

We operate in ~~twenty-three~~fourteen states in the U.S. and in various provinces in Canada. From time to time, we are subject to sales and use tax audits that could result in additional taxes, penalties and interest owed to various taxing authorities.

~~As previously disclosed,~~The California Department of Tax and Fee Administration (formerly known as the California Board of ~~Equalization~~Equalization) (“~~BOE”~~CDTFA”) conducted a sales and use tax examination covering ~~the Company’s~~ARCA Recycling’s California operations for years 2011, 2012 and 2013. The Company believed it was exempt from collecting sales taxes under service agreements with utility customers that included appliance replacement programs. During the fourth quarter of 2014, the Company received communication from the ~~BOE~~CDTFA indicating they were not in agreement with the Company’s interpretation of the law. As a result, the Company applied for and, as of February 9, 2015, received approval to participate in the ~~California Board of Equalization’s~~CDTFA’s Managed Audit Program. The period covered under this program included years 2011, 2012, 2013 and extended through the nine-month period ended September 30, ~~2014.~~2014.

On April 13, 2017 the Company received the formal ~~BOE~~CDTFA assessment for sales tax for tax years 2011, 2012 and 2013 in the amount of ~~$4.1 million~~$4,132 plus applicable interest of ~~$0.5 million~~ $500 related to the appliance replacement programs that wethe Company administered on behalf of ~~our~~its customers on which weit did not assess, collect or remit sales tax. The Company ~~intends to appeal~~has appealed this assessment ~~and continue~~ to ~~engage~~ the ~~services of our existing retained sales tax experts throughout the~~CDTFA Appeals Bureau. The appeal remains in process. ~~The BOE tax assessment is subject~~Interest continues to ~~protest and appeal, and would not need to be funded~~accrue until the matter ~~has been fully resolved through the appeal process. The Company anticipates that resolution of the BOE assessment could take up to two years.~~

~~11. Line of credit - PNC Bank~~

We had a Revolving Credit, Term Loan and Security Agreement, as amended, (“PNC Revolver”) with PNC Bank, National Association (“PNC”) that provided us with a $15,000 revolving line of credit. The PNC Revolver loan agreement included a lockbox agreement and a subjective acceleration clause and as a result we have classified the revolving line of credit as a current liability. The PNC Revolver was collateralized by a security interest in substantially all of our assets and PNC was also secured by an inventory repurchase agreement with Whirlpool Corporation solely with respect to Whirlpool purchases only. In addition, we issued a $750 letter of credit in favor of Whirlpool Corporation. The PNC Revolver required, starting with the fiscal quarter ending April 2, 2016, that we meet a specified minimum earnings before interest, taxes, depreciation and amortization, and continuing at the end of each quarter thereafter, that we meet a minimum fixed charge coverage ratio of 1.1 to 1.0. The PNC Revolver loan agreement limited investments that we could purchase, the amount of other debt and leases that we could incur, the amount of loans that we could issue to our affiliates and the amount we could spend on fixed assets, along with prohibiting the payment of dividends.

The interest rate on the PNC Revolver, as stated in our renewal agreement on January 22, 2016, was PNC Base Rate (as defined below) plus 1.75% to 3.25%, or 1-, 2- or 3-month PNC LIBOR Rate plus 2.75% to 4.25%, with the rate being dependent on our level of fixed charge coverage. The PNC Base Rate meant, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the interest rate per annum announced from time to time by PNC as its prime rate, (ii) the Federal Funds Open Rate plus 0.5%, and (iii) the one-month LIBOR rate plus 100 basis points (1%)is settled.

The amount of available revolving borrowings under the PNC Revolver was based on a formula using accounts receivable and inventories. We did not have access to the full $15,000 revolving line of credit due to such formula, the amount of the letter of credit issued in favor of Whirlpool Corporation and the amount of outstanding loans owed to PNC by out AAP joint venture.

As ~~discussed above, the Company sold its the Compton Facility building~~of April 3, 2021, and ~~land~~January 2, 2021, our accrued liability for ~~$7,103. The net proceeds from the sale, after costs of sale~~California sales tax was $5,831 and ~~payoff of the Term Loan (as defined below), were used to reduce the outstanding balance under our PNC Revolver.~~$5,769, respectively.

On May 1, 2017, the PNC Revolver loan agreement was amended and the term was extended through June 2, 2017. The amendment, effective May 2, 2017, also reduced the maximum amount of borrowing under the PNC Revolver to $6 million. On May 10, 2017 we repaid in full and terminated our existing Revolving Credit, Term Loan and Security Agreement, as amended, with PNC Bank, National Association on the same date.

The PNC Revolver loan agreement terminated and the PNC Revolver was paid in full on May 10, 2017 with funds from MidCap Financial Trust. A letter of credit to Whirlpool Corporation remains outstanding with PNC backed by restricted cash collateral of $750 as of September 30, 2017. See Note ~~13, long term obligations, for additional information.~~

~~12. Notes payable – short term~~

On August 18, 2017, the Company, as part of its’ acquisition of GeoTraq, issued unsecured promissory notes to the sellers of GeoTraq with interest at the annual rate of interest of 1.29% maturing on August 18, 2018. The outstanding balance of the notes payable – short term as of September 30, 2017 is $800. Interest accrued is included in accrued expenses.

~~13. Long term obligations~~

~~Long term debt, capital lease and other financing obligations as of September 30, 2017, and December 31, 2016, consist of the following:~~

September 30, 2017 December 31, 2016

PNC term loan $ – $ 1,020
MidCap financial trust asset based revolving loan 3,616 –
AFCO Finance 639 –
Susquehanna term loans – 3,242
GE 8% loan agreement 482 482
EEI note 103 103
PIDC 2.75% note, due in month installments of $3, including interest, due October 2024 – 287
Capital leases and other financing obligations 36 564
Debt issuance costs, net (1,030 ) (779 )
Total debt obligations 3,846 4,919
Less current maturities (3,846 ) (2,093 )
Long-term debt obligations, net of current maturities $ – $ 2,826

~~PNC Term Loan~~

On January 24, 2011, we entered into a $2,550 Term Loan (“Term Loan”) with the PNC Bank to refinance the mortgage on our Compton Facility. The Term Loan was payable in 119 consecutive monthly principal payments of $21 plus interest commencing on February 1, 2011 and followed by a 120th payment of all unpaid principal, interest and fees on February 1, 2021. The PNC Revolver loan agreement required a balloon payment of $1,020 in principal plus interest and additional fees due on January 31, 2017. The Term Loan was collateralized by the Compton Facility. As disclosed by the Company in Item 2.01 of the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2017, the Term Loan was paid off in full on January 25, 2017 when the Compton Facility was sold.

~~MidCap Financial Trust~~

On May 10, 2017, we entered into a Credit and Security Agreement (“Credit Agreement”) with MidCap Financial Trust (“MidCap Financial Trust”), as a lender and as agent for itself and other lenders under the Credit Agreement. The Credit Agreement provides us with a $12,000 revolving line of credit, which may be increased to $16,000 under certain terms and conditions (the “MidCap Revolver”). The MidCap Revolver has a stated maturity date of May 10, 2020, if not renewed. The MidCap Revolver is collateralized by a security interest in substantially all of our assets. The lender is also secured by an inventory repurchase agreement with Whirlpool Corporation for Whirlpool purchases only. The Credit Agreement requires that we meet a minimum fixed charge coverage ratio of 1.00:1.00 for the applicable measuring period as of the end of each calendar month. The applicable measuring period is (i) the period commencing May 1, 2017 and ending on the last day of each calendar month from May 31, 2017 through April 30, 2018, and (ii) the twelve-month period ending on the last day of such calendar month thereafter. The Credit Agreement limits the amount of other debt we can incur, the amount we can spend on fixed assets, and the amount of investments we can make, along with prohibiting the payment of dividends.

The amount of revolving borrowings available under the Credit Agreement is based on a formula using receivables and inventories. We may not have access to the full $12,000 revolving line of credit due to the formula using our receivables and inventories and the amount of any outstanding letters of credit issued by the Lender. The interest rate on the revolving line of credit is the one-month LIBOR rate plus four and one-half percent (4.50%).

On September 30, 2017 and December 31, 2016, our available borrowing capacity under the Credit Agreement is $2,416 and $0, respectively. The weighted average interest rate for the period of May 10, 2017 through September 30, 2017 was 5.66%. We borrowed $45,099 and repaid $41,483 on the Credit Agreement during the period of May 10, 2017 through September 30, 2017, leaving an outstanding balance on the Credit Agreement of $3,616 and $0 at September 30, 2017 and December 31, 2016, respectively.

On September 20, 2017, we received a written notice of default, dated September 20, 2017 (the “Notice of Default”), from MidCap Funding X Trust (the “Agent”), asserting that events of default had occurred with respect to the Credit Agreement. The Agent alleges in the Notice of Default that, as a result of the Company’s recent acquisition of GeoTraq, and the issuance of promissory notes to the stockholders of GeoTraq in connection with such acquisition, the Borrowers have failed to comply with certain terms of the Loan Agreement, and that such failure constitutes one or more Events of Default under the Loan Agreement. Specifically, the Notice of Default states that as a result of the acquisition and related issuance of promissory notes, the Borrowers have failed to comply with (i) a covenant not to incur additional indebtedness other than Permitted Debt (as defined in the Loan Agreement), without the Agent’s prior written consent, and a covenant not to make acquisitions or investments other than Permitted Acquisitions or Permitted Investments (as defined in the Credit Agreement). The Notice of Default also states that the Borrowers’ failure to pledge the stock in GeoTraq as collateral under the Credit Agreement and to make GeoTraq a “Borrower “under the Credit Agreement will become an Event of Default if not cured within the applicable cure period. The Agent has reserved the right to avail itself of any other rights and remedies available to it at law or by contract, including the right to (a) withhold funding, increase reserves and suspend making further advances under the Credit Agreement, (b) declare all principal, interest and other sums owing in connection with the Credit Agreement immediately due and payable in full, (c) charge the Default Rate on amounts outstanding under the Credit Agreement, and/or (d) exercise one or more rights and remedies with respect to any and all collateral securing the Credit Agreement. The Agent has not declared the amounts outstanding under the Credit Agreement to be immediately due and payable but has imposed the default rate of interest, which is 5% in excess of the rates otherwise payable under the Loan Agreement), effective as of August 18, 2017 and continuing until the Agent notifies the Borrowers that the specified Events of Default have been waived and no other Events of Default exist.

The Company strongly disagrees with the Lenders that any Event of Default has occurred and is reserving all of its options with respect to the Credit Agreement. The Company and the Agent are in active discussions for forbearance and resolution of the default, however there can be no assurance the Company and the Agent will be able to agree on terms of the forbearance. The Company is classifying the Mid-Cap Revolver as a current liability until forbearance and resolution of the default is cured.

On August 14, 2017 as a part of the sale of the Company’s equity interest in AAP, Recleim LLC, a Delaware limited liability company (“Recleim”), agreed to undertake, pay or assume the Company’s GE obligations consisting of a promissory note (GE 8% loan agreement) and other payables which were incurred after the issuance of such promissory note. Recleim has agreed to indemnify, and hold ARCA harmless from any action to be taken by GE relating to such obligations. The Company has an offsetting receivable due from Recleim.

~~AFCO Finance~~

On June 16, 2017, we entered into a financing agreement with AFCO Credit Corporation (“AFCO”) to fund the annual premiums on insurance policies purchased through Marsh Insurance. These policies relate to workers’ compensation and various liability policies including, but not limited to, General, Auto, Umbrella, Property, and Directors’ and Officers’. The total amount of the premiums financed is $1,070 with an interest rate of 3.567%. An initial down payment of $160 was paid on June 16, 2017 and an additional 10 monthly payments of $92 will be made beginning July 1, 2017 and ending April 1, 2018. The outstanding principal at the end of September 30, 2017 and December 31, 2016 was $639 and $0, respectively.

~~Susquehanna Term Loans~~

On March 10, 2011, AAP entered into three separate commercial term loans (“BB&T Term Loans”) with Branch Banking Trust Company, as successor to Susquehanna Bank, (“BB&T”) pursuant to the guidelines of the U.S. Small Business Administration 7(a) Loan Program. The aggregate principal amount of the BB&T Term Loans was $4,750, divided into three separate loans with principal amounts of $2,100; $1,400; and $1,250, respectively. The BB&T Term Loans matured in ten years and bore an interest rate of prime plus 2.75%. Borrowings under the BB&T Term Loans were secured by substantially all of the assets of AAP along with liens on the business assets and certain personal assets of the owners of 4301 Operations, LLC. We were a guarantor of the BB&T Term Loans along with 4301 Operations, LLC and its members. In connection with the BB&T Term Loans, BB&T had a security interest in the recycling equipment assets of the Company. The BB&T Term Loans entered into by AAP were paid in full on August 15, 2017 and BB&T’s security interest in the recycling equipment assets of the Company was terminated and released.

~~Energy Efficiency Investments LLC~~

On November 8, 2016, the Company entered into a securities purchase agreement with Energy Efficiency Investments, LLC, pursuant to which the Company agreed to issue up to $7,732 principal amount of 3% Original Issue Discount Senior Convertible Promissory Notes of the Company and related common stock purchase warrants. These notes will be issued from time to time, up to such aggregate principal amount, at the request of the Company, subject to certain conditions, or at the option of Energy Efficiency Investments, LLC. Interest accrues at the rate of eight percent per annum on the principal amount of the notes outstanding from time to time, and is payable at maturity or, if earlier, upon conversion of these notes. The principal amount of these notes outstanding at September 30, 2017 and December 31, 2016, was $103.

~~14. Commitments and Contingencies~~

~~Contracts~~: We have entered into material contracts with three appliance manufacturers. Under the agreements there are no minimum purchase commitments; however, we have agreed to indemnify the manufacturers for certain claims, allegations or losses with respect to appliances we sell.

~~Litigation:~~

In February 2012, various individuals commenced a class action lawsuit against Whirlpool Corporation (“Whirlpool”) and various distributors of Whirlpool products, including Sears, The Home Depot, Lowe’s and us, alleging certain appliances Whirlpool sold through its distribution chain, which includes us, were improperly designated with the ENERGY STAR® qualification rating established by the U.S. Department of Energy and the Environmental Protection Agency. The claims against us include breach of warranty claims, as well as various state consumer protection claims. The amount of the claim is, as yet, undetermined. Whirlpool has offered to fully indemnify and defend its distributors in this lawsuit, including us, and has engaged legal counsel to defend itself and the distributors. We are monitoring Whirlpool’s defense of the claims and believe the possibility of a material loss is remote.

AMTIM Capital Inc. (“AMTIM”) provided management and sales services in respect of our recycling services in Canada, and was paid pursuant to agreements between AMTIM and us. A dispute arose between AMTIM and us with respect to the calculation of amounts due to AMTIM pursuant to the agreements. In a lawsuit filed in the province of Ontario on March 29, 2011, AMTIM claimed a discrepancy in the calculation of fees due to AMTIM by us in excess of $1.6 million. On December 9, 2011 the United States District Court for the District of Minnesota issued a declaratory default judgment to the effect that our method of calculating of the amounts due to AMTIM is correct. Although the Ontario action continues, and its outcome is uncertain, we believe that no further amounts are due under the terms of these agreements and we will continue to defend our position relative to this lawsuit.

~~We are party from time to time to ordinary course disputes that we do not believe to be material or have merit. We intend to vigorously defend ourselves against these ordinary course disputes.~~

~~15.~~13: Income Taxes

Our overall effective tax rate was ~~34.4%~~0.4% for the 3913 weeks ended ~~September 30, 2017~~April 3, 2021, and we recorded a ~~positive~~ tax provision benefit of ~~$438~~$2 against a pre-provision income of $500. Our overall effective tax rate was 15.3% for the 13 weeks ended March 28, 2020, and we had a tax benefit of $411 against a pre-provision loss of ~~$1,238 for the 39 weeks ended October 1, 2016, respectively.~~$2,694. The effective tax rates and related provisional tax amounts vary from the U.S. federal statutory rate due to state taxes, foreign taxes, share-based compensation, ~~non-controlling interest,~~ valuation allowance, and certain non-deductible expenses.

We regularly evaluate both positive and negative evidence related to retaining a valuation allowance against certain deferred tax assets. The realization of deferred tax assets is dependent upon sufficient future taxable income during the periods when deductible temporary differences and carryforwards are expected to be available to reduce taxable income. We have concluded based on the weight of evidence that a valuation allowance should be maintained against certain deferred tax assets that we do not expect to utilize in the near future. The Company continues to have a full valuation allowance against its Canadian operations.

Note 14: Short Term Debt

~~16. Series A Preferred Stock~~Short term debt and other financing obligations as of April 3, 2021 and January 2, 2021, consist of the following:

	April 3, 2021		January 2, 2021
AFCO Finance	$	—	$	144
Payroll protection program		—		1,872
Vendor advance payments		216		1,026
Total short term debt	$	216	$	3,042

AFCO Finance

Annually, we enter into a financing agreement with AFCO Credit Corporation (“AFCO”) purchased through Marsh Insurance to fund the annual premiums on insurance policies due June 1 of each year. These policies relate to workers’ compensation and various liability policies including, but not limited to, General, Auto, Umbrella, Property, and Directors’ and Officers’ insurance. The total amount of the premiums financed during June 2020 was $429 with an interest rate of 3.3%. An initial down payment of $143 was due before July 1, 2020 with additional monthly payments of: $48 made beginning July 1, 2020.

The outstanding principal due AFCO at April 3, 2021 and January 2, 2021 was $nil and $144, respectively.

Payroll Protection Program

On ~~August 18,~~May 1, 2020, the Company entered into a promissory note (the “Promissory Note”) with Texas Capital Bank, N.A. that provides for a loan in the amount of $1,872 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Loan matures on April 27, 2022 and bears interest at a rate of 1.0% per annum. Monthly amortized principal and interest payments are deferred for six months after the date of disbursement. The Promissory Note contains events of default and other provisions customary for a loan of this type. The Paycheck Protection Program provides that the use of the PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. The PPP Loan was forgiven during the first quarter of fiscal 2021.

Customer Advance Payments

As of the period ending June 27, 2020, the Company received advance payments authorized by the California Public Utilities Commission and processed through two California utilities for the purposes of sustaining the workforce during the COVID-19 pandemic shutdown. The use of these funds was limited to labor and labor benefits for impacted employees. Portions of these advances are forgivable if certain conditions are met the specifics which have not been finalized. Advance payments that are not forgiven will need to be paid back in full by December 31, 2021. Total funding received under this program as of September 2020 amounted to $1,168. As of April 3, 2021, $952 was forgiven, leaving a balance of $216.

Note 15: Commitments and Contingencies

Litigation

On December 29, 2016, the Company served a Minnesota state court complaint for breach of contract on Skybridge Americas, Inc. (“SA”), the Company’s primary call center vendor throughout 2015 and most of 2016. The Company seeks damages in the millions of dollars as a result of alleged overcharging by SA and lost client contracts. On January 25, 2017, SA served a counterclaim for unpaid invoices in the amount of approximately $460 plus interest and attorneys’ fees. On March 29, 2017, the ~~Company acquired GeoTraq by way~~Hennepin County district court (the “District Court”) dismissed the Company’s breach of ~~merger. GeoTraq is~~contract claim based on SA’s overuse of its Canadian call center but permitted the Company’s remaining claims to proceed. Following motion practice, on January 8, 2018 the District Court entered judgment in SA’s favor, which was amended as of February 28, 2018, for a ~~development stage company~~total amount of $614, including interest and attorneys’ fees. On March 4, 2019, the Minnesota Court of Appeals (the “Court of Appeals”) ruled and (i) reversed the District Court’s judgment in favor of Skybridge on the call center location claim and remanded the issue back to the District Court for further proceedings, (ii) reversed the District Court’s judgment in favor of Skybridge on the net payment issue and remanded the issue to the District Court for further proceedings, and (iii) affirmed the District Court’s judgment in Skybridge’s favor against the Company’s claim that ~~is engaged in~~Skybridge breached the ~~development, manufacture, and, ultimately, we expect, sale of cellular transceiver modules, also known as Cell-ID modules.~~contract when it failed to meet the service level agreements. As a result of the decision by the Court of Appeals, the District Court’s award of interest and attorneys’ fees, etc. was reversed. The Company and SA held a mediation session in July 2020. Trial was held in August 2020 and on February 1, 2021, the District Court assessed damages against the Company in the amount of $715, plus interest, fees, and costs. The Company filed a motion for a new trial and is waiting for the District Court to rule.

AMTIM Capital, Inc. (“AMTIM”) acts as the Company’s representative to market our recycling services in Canada under an arrangement that pays AMTIM for revenues generated by recycling services in Canada as set forth in the agreement between the parties. A dispute has arisen between AMTIM and the Company with respect to the calculation of amounts due to AMTIM pursuant to the agreement. In a lawsuit filed in the province of Ontario, AMTIM claims a discrepancy in the calculation of fees due to AMTIM by the Company of approximately $2,000. Although the outcome of this ~~transaction, GeoTraq became a wholly-owned subsidiary~~claim is uncertain, the Company believes that no further amounts are due under the terms of the ~~Company.~~agreement and that we will continue to defend our position relative to this lawsuit. Trial is currently scheduled for September 2021.

Other Commitments

As previously disclosed and as discussed in Note 6: Note receivable, on December 30, 2017, the Company disposed of its retail appliance segment and sold ApplianceSmart to the Purchaser. In connection with ~~this transaction,~~that sale, as of December 28, 2019 the Company ~~tendered~~has an aggregate amount of future real property lease payments of $767, which represents amounts guaranteed or which may be owed under certain lease agreements to third party landlords in which the Company either remains the counterparty, is a guarantor, or has agreed to remain contractually liable under the lease (“ApplianceSmart Leases”).

The Company evaluated the fair value of its potential obligation under the guidance of ASC 450: Contingencies and ASC 460: Guarantees. As a result, the Company accrued the amount of liability associated with these future guaranteed lease payments. The fair value was calculated based on the amounts reported as part of the bankruptcy proceedings as ApplianceSmart terminated the leases prior to the ~~owners~~lease termination date. The fair value was calculated based on the undiscounted lease payments, a discount rate equivalent to current interest rates associated with the leased real estate and a remote probability weighting of ~~GeoTraq $200,000,~~1%.

The ApplianceSmart Leases either have the Company as the contract tenant only, or in the contract reflects a joint tenancy with ApplianceSmart. ApplianceSmart is the occupant of the ApplianceSmart Leases. The Company does not have the right to use the ApplianceSmart lease assets nor is the Company the primary obligor of the lease payments, hence capitalization under ASC 840 is not required. The ApplianceSmart Leases have historically been used by ApplianceSmart for their operations and the consideration has and is being paid by ApplianceSmart historically and in the future.

Any potential amounts paid out for the Company obligations and or guarantees under ApplianceSmart Leases would be recoverable to the extent there are assets available from ApplianceSmart. ApplianceSmart Leases are related party transactions. The Company divested itself of the ApplianceSmart Leases and leaseholds with the sale to Purchaser on December 30, 2017.

The Company is party from time to time to other ordinary course disputes that we do not believe to be material to our financial condition as of April 3, 2021.

Note 16: Shareholders’ Equity

Common Stock: Our Articles of Incorporation authorize 200,000,000 shares of common stock that may be issued from time to ~~them an aggregate~~time having such rights, powers, preferences and designations as the Board of ~~288,588~~Directors may determine. During the 13 weeks ended April 3, 2021 and March 28, 2020, 74,530 shares of common stock were granted and issued in lieu of professional services at a fair value of $345. There were no similar transactions for the 13 weeks ended April 3, 2021.

As of April 3, 2021, and January 2, 2021, there were 2,403,410, and 1,829,982 shares, respectively, of common stock issued and outstanding.

Equity Offering

On January 29, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”) for the sale by the Company in a registered direct offering (the “Offering”) of 571,428 shares of the Company’s ~~Series A Convertible Preferred~~common stock, par value $0.001 per share (the “Common Stock”), at a purchase price per share of Common Stock of $10.50.

On February 2, 2021, the Company closed its registered direct offering (the “Offering”) of an aggregate of 571,428 shares of Common Stock, at a price of $10.50 per share, for gross proceeds to the Company of approximately $6,000, before deducting placement agent fees and other offering expenses. The Company is utilizing the net proceeds for general working capital.

The Purchase Agreement contains customary representations, warranties and agreements by the Company and the Purchasers and customary indemnification rights and obligations of the parties. Pursuant to the terms of the Purchase Agreement, the Company has agreed to certain restrictions on the issuance and sale of its shares of Common Stock or Common Stock Equivalents (as defined in the Purchase Agreement) during the 45-day period following the closing of the Offering.

A.G.P./Alliance Global Partners acted as the sole placement agent (the “Placement Agent”) for the Company on a “reasonable best efforts” basis in connection with the Offering. The Company entered into ~~one-year unsecured promissory notes~~a Placement Agency Agreement, dated as of January 29, 2021, by and between the Company and the Placement Agent (the “Placement Agency Agreement”). Pursuant to the Placement Agency Agreement, the Placement Agent will be entitled to a cash fee of 7% of the gross proceeds paid to the Company for the securities, reimbursement for accountable legal expenses incurred by it in connection with the Offering of up to $35.

The shares of Common Stock sold in the ~~aggregate principal amount of $800,000.~~Offering were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3 (File No. 333-251645) (the “Registration Statement”), which was initially filed with the Securities and Exchange Commission on December 23, 2020 and was declared effective on December 29, 2020.

~~To accomplish~~The representations, warranties and covenants contained in the ~~designation and issuance~~Purchase Agreement were made solely for the benefit of the ~~Series A Preferred Stock, we filed~~parties to the Purchase Agreement. In addition, such representations, warranties, and covenants (i) are intended as a ~~Certificate~~way of ~~Designation~~allocating the risk between the parties to the Purchase Agreement and not as statements of fact, and (ii) may apply standards of materiality in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly, the Purchase Agreement incorporated by reference in this filing only to provide investors with information regarding the ~~Secretary of State~~terms of the ~~State of Minnesota. On November 9, 2017, we filed a Certificate of Correction~~transaction, and not to provide investors with any other factual information regarding the ~~Minnesota Secretary of State. The following summary~~Company. Stockholders should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the ~~Series A Preferred Stock~~actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and ~~Certificate~~warranties may change after the date of ~~Designation does~~the Purchase Agreement, which subsequent information may or may not ~~purport to~~ be fully reflected in public disclosures.

The foregoing descriptions of the Purchase Agreement and the Placement Agency Agreement are not complete and isare qualified in ~~its entirety~~their entireties by reference to the ~~provisions~~full text of ~~applicable law~~the Purchase Agreement and to the ~~Certificate~~Placement Agency Agreement, a copy of ~~Designation and Certificate~~each of ~~Correction,~~ which is filed as Exhibit ~~3.1~~10.1 and Exhibit 1.1, respectively, to the Company’s ~~Quarterly~~Current Report on Form ~~10-Q,~~8-K as ~~amended,~~field on January 29, 2021 and each is incorporated by reference herein.

Stock options: The 2016 Plan, which replaces the 2011 Plan, authorizes the granting of awards in any of the following forms: (i) incentive stock options, (ii) nonqualified stock options, (iii) restricted stock awards, and (iv) restricted stock units, and expires on the earlier of October 28, 2026, or the date that all shares reserved under the 2016 Plan are issued or no longer available. The 2016 Plan provides for the ~~quarterly period ended July 1, 2017, and Certificate~~issuance of ~~Correction, which is filed as Exhibit 3.2. hereto.~~

~~Dividends~~

~~We cannot declare, pay or set aside any dividends on~~up to 800,000 shares of ~~any other class or series of our capital~~common stock ~~unless (in addition~~pursuant to awards granted under the obtaining of any consents required by our Articles of Incorporation) the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend in the aggregate amount of $1.00, regardless of the number of then-issued and outstanding shares of Series A Preferred Stock. Any remaining dividends allocated2016 Plan. The vesting period is determined by the Board of Directors ~~shall~~at the time of the stock option grant. As of April 3, 2021, and January 2, 2021, 112,000 and 78,000 options were outstanding under the 2016 Plan, respectively.

Our 2011 Plan authorizes the granting of awards in any of the following forms: (i) stock options, (ii) stock appreciation rights, and (iii) other share-based awards, including but not limited to, restricted stock, restricted stock units or performance shares, and expires on the earlier of May 12, 2021, or the date that all shares reserved under the 2011 Plan are issued or no longer available.

As of April 3, 2021, and January 2, 2021, 30,500 and 35,900 options, respectively, were outstanding under the 2011 Plan. No additional awards will be ~~distributed in an equal amount~~granted under the 2011 Plan.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. 34,000 options were granted during the 13 weeks ended April 3, 2021.

Additional information relating to all outstanding options is as follows:

				Weighted Average		Aggregate		Weighted Average Remaining
	Options Outstanding			Exercise Price		Intrinsic Value		Contractual Life
Outstanding at December 28, 2019		44,400		$	13.31	$	—		3.0
Granted		74,000		3.84
Cancelled/expired		(4,500	)		9.45
Outstanding at January 2, 2021		113,900		$	11.97	$	78		7.0
Granted		34,000			8.31
Cancelled/expired/forfeited		(5,400	)		14.80
Balance at April 3, 2021		142,500		$	10.69	$	405		5.4

We recognized $109 and $31 share-based compensation expense related to option grants for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

April 3, 2021 the Company has $201 of unrecognized share-based compensation expense (net of estimated forfeitures) associated with stock option awards which the company expects to recognize as share-based compensation expense through January 2022.

Warrants:

As of April 3, 2021, and January 2, 2021, there were 33,363 warrants outstanding to purchase 33,363 shares of common stock at a price of $3.40 per share ~~to the holders of outstanding common stock and Series A Preferred Stock (on an as-if-converted to common stock basis pursuant to the Conversion Ratio as defined below).~~

~~Liquidation Rights~~

Immediately prior to the occurrence of any liquidation, dissolution or winding up of the Company, whether voluntary of involuntary, all shares of Series A Convertible Preferred Stock automatically convert into shares of our common stock based upon the then-applicable “conversion ratio” (as defined below) and shall participatewhich expire in ~~the liquidation proceeds in the same manner as other shares of our common stock.~~

~~Conversion~~

~~The Series A Convertible Preferred Stock is not convertible into shares of our common stock except as described below.~~November 2021.

Note 17: Income (loss) Per Share

Subject to the third sentence of this paragraph, each holder of a share of Series A Preferred Stock has the right, exercisable at any time and from time to time (unless otherwise prohibited by law, rule or regulation, or as restricted below), to convert any or all of such holder’s shares of Series A Preferred Stock into shares of our common stock at the conversion ratio. The “conversation ratio”Net income (loss) per share ofis calculated using the Series A Preferred Stock is a ratio of 1:100, meaning every one share of Series A Preferred Stock, if and when converted into shares of our common stock, converts into 100 shares of our common stock. Notwithstanding anything to the contrary in the Certificate of Designation, a holder of Series A Preferred Stock may not convert any of such holder’s shares and we may not issue any shares of our common stock in connection with a conversation that would trigger any Nasdaq requirement to obtain shareholder approval prior to such conversion or issuance in connection with such conversion that would be in excess of thatweighted average number of shares of common stock ~~equivalent to 19.9%~~outstanding during the applicable period. Basic weighted average common shares outstanding do not include shares of restricted stock that have not yet vested, although such shares are included as outstanding shares in the Company’s Consolidated Balance Sheet. Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential common shares consist of the ~~number~~additional common shares issuable in respect of ~~shares~~restricted share awards, stock options and convertible preferred stock.

The following table presents the computation of ~~common stock as~~basic and diluted net loss per share:

	For the Thirteen Weeks Ended
	April 3, 2021		March 28, 2020
Net income (loss)	$	502	$	(2,283	)
Basic
Basic income (loss) per share	$	0.26	$	(1.33	)
Weighted average common shares outstanding		1,922,673		1,711,883
Diluted
Diluted income (loss) per share	$	0.24	$	(1.33	)
Weighted average common shares outstanding		2,070,036		1,711,883

Potentially dilutive securities totaling 28,500 and 111,763 were excluded from the calculation of ~~August 18, 2017 ;~~ ~~provided~~, ~~however~~~~, that holders~~diluted net loss per share for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively, because the effects were anti-dilutive based on the application of the ~~Series A Preferred Stock may effectuate any conversion~~treasury stock method.

Note 18: Major Customers and ~~we are obligated to issue shares of common stock in connection with a conversion that would not trigger such a requirement. The foregoing restriction is of no further force or effect upon~~Suppliers

For the ~~approval~~13 weeks ended April 3, 2021, one customer represented 19% of our ~~stockholders in compliance with Nasdaq’s shareholder voting requirements. Notwithstanding anything~~total revenues. For the 13 weeks ended March 28, 2020, two customers represented a combined 32% of our total revenue. As of April 3, 2021, one customer represented 16% of our total trade receivables. As of January 2, 2021, three customers represented more than 10% of our total trade receivables, for a total of 37% of our total trade receivables.

During the 13 weeks ended April 3, 2021 and March 28, 2020, we purchased appliances for resale from four suppliers. We have and are continuing to secure other vendors from which to purchase appliances. However, the curtailment or loss of one of these suppliers or any appliance supplier could adversely affect our operations.

Note 19: Defined Contribution Plan

We have a defined contribution salary deferral plan covering substantially all employees under Section 401(k) of the Internal Revenue Code. We contribute an amount equal to 10 cents for each dollar contributed by each employee up to a maximum of 5% of each employee’s compensation. We recognized expense for contributions to the ~~contrary contained in~~plans of $nil and $9 for the ~~Certificate of Designation, the holders of the Series A Preferred Stock may not effectuate any conversion~~13 weeks ended April 3, 2021 and ~~we may not issue any shares of common stock in connection with a conversion until the later of (x) February~~March 28, 2018, or (y) sixty-one days following the date on which our stockholders have approved the voting, conversion, and other potential rights of the holders of Series A Preferred Stock described in the Certificate of Designation in accordance with the relevant Nasdaq requirements.2020, respectively.

~~Redemption~~

~~The shares of Series A Preferred Stock have no redemption rights.~~

~~Preemptive Rights~~

Holders of shares of Series A Preferred Stock are not entitled to any preemptive rights in respect to any securities of the Company, except as set forth in the Certificate of Designation or any other document agreed to by us.

~~Voting Rights~~

Each holder of a share of Series A Preferred Stock has a number of votes as is determined by multiplying (i) the number of shares of Series A Preferred Stock held by such holder, and (ii) 100. The holders of Series A Preferred Stock vote together with all other classes and series of common and preferred stock of the Company as a single class on all actions to be taken by the common stockholders of the Company, except to the extent that voting as a separate class or series is required by law. Notwithstanding anything to the contrary herein, the holders of the Series A Preferred Stock may not engage in any vote where the voting power would trigger any Nasdaq requirement to obtain shareholder approval; ~~provided~~, ~~however~~, the holders do have the right to vote that portion of their voting power that would not trigger such a requirement. The foregoing voting restriction lapses upon the requisite approval of the shareholders in compliance with Nasdaq’s shareholder voting requirements in effect at the time of such approval.

~~Protective Provisions~~

Without first obtaining the affirmative approval of a majority of the holders of the shares of Series A Preferred Stock, we may not directly or indirectly (i) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A Preferred Stock; (ii) effect an exchange, reclassification, or cancellation of all or a part of the Series A Preferred Stock, but excluding a stock split or reverse stock split or combination of the common stock or preferred stock; (iii) effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series A Preferred Stock; or (iii) alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares of such series, including the rights set forth in this Designation; provided, however, that we may, without any vote of the holders of shares of the Series A Preferred Stock, make technical, corrective, administrative or similar changes to the Certificate of Designation that do not, individually or in the aggregate, materially adversely affect the rights or preferences of the holders of shares of the Series A Preferred Stock.

~~17.~~Note 20: Segment Information

We operate within targeted markets through three reportable ~~segments: retail,~~segments for continuing operations: biotechnology, recycling, and technology. The ~~retail~~biotechnology segment commenced operations in September 2019 and is ~~composed~~focused on development of ~~income generated through our ApplianceSmart stores, which includes appliance sales~~new and ~~byproduct revenues~~innovative solutions for ending the opioid epidemic ranging from ~~collected appliances.~~digital technologies to educational advocacy. The recycling segment ~~is composed of income generated by~~includes all fees charged and costs incurred for collecting, recycling and installing appliances for utilities and other ~~customers and~~customers. The recycling segment also includes byproduct revenue, which ~~are~~is primarily generated through the recycling of appliances. We have included the results from consolidating AAP in our recycling segment through August 15, 2017. The technology segment is composed of all revenue and costs incurred or associated with GeoTraq. At this time, GeoTraq. is in the development stage and expects to go to market with products and services in the location based services market. The nature of products, services and customers for ~~each segment~~both segments varies significantly. As such, the segments are managed separately. Our Chief Executive Officer has been identified as the Chief Operating Decision Maker (“CODM”). The CODM evaluates performance and allocates resources based on ~~revenues~~sales and income from operations of each segment. ~~Income from operations~~Operating loss represents revenues less cost of revenues and operating expenses, including certain allocated selling, general and administrative costs. There are no ~~inter-segment~~intersegment sales or ~~transfers.~~transfers.

The following tables present our segment information for ~~periods indicated:~~the 13 weeks ended April 3, 2021 and March 28, 2020:

	13 Weeks Ended						39 Weeks Ended
	September 30, 2017			October 1, 2016			September 30, 2017			October 1, 2016			Thirteen Weeks Ended
													April 3, 2021			March 28, 2020
Revenues
Retail	$	13,678		$	15,102		$	44,334		$	47,769
Biotechnology													$	—		$	—
Recycling		11,806			12,254			30,171			29,688			8,672			8,450
Technology		–			–			–			–			—			—
Total revenues	$	25,484		$	27,356		$	74,505		$	77,457


Total Revenues													$	8,672		$	8,450
Gross profit
Retail	$	3,996		$	4,089		$	12,933		$	13,149
Biotechnology													$	—		$	—
Recycling		4,433			4,362			10,238			7,929			1,421			1,474
Technology		–			–			–			–			—			—
Total gross profit	$	8,429		$	8,451		$	23,171		$	21,078

Operating income (loss)
Retail	$	308		$	(112	)	$	2,110		$	(549	)
Total Gross profit													$	1,421		$	1,474
Operating loss
Biotechnology													$	(242	)	$	(343	)
Recycling		1,092			1,527			166			84			(928	)		(1,929	)
Technology		(272	)		–			(272	)		–			(939	)		(1,127	)
Total operating income (loss)	$	1,128		$	1,415		$	2,004		$	(465	)

Total Operating loss													$	(2,109	)	$	(3,399	)
Depreciation and amortization
Retail	$	42		$	46		$	131		$	151
Biotechnology													$	—		$	—
Recycling		131			256			651			785			108			80
Technology		272			–			272			–			937			937
Total depreciation and amortization	$	445		$	302		$	1,054		$	936
Total Depreciation and amortization													$	1,045		$	1,017
Interest (income) expense, net
Biotechnology													$	—		$	—
Recycling														73			113
Technology														—			—
Total Interest expense, net													$	73		$	113
Net income (loss) before benefit from income taxes
Biotechnology													$	(242	)	$	(343	)
Recycling														1,639			(1,231	)
Technology														(897	)		(1,120	)
Total Net income (loss) before benefit from income taxes													$	500		$	(2,694	)

	As of April 3, 2021		As of January 2, 2021
Assets
Biotechnology	$	—	$	—
Recycling		14,289		10,614
Technology		13,016		13,737
Total Assets	$	27,305	$	24,351

Intangible assets
Biotechnology	$	—	$	—
Recycling		446		470
Technology		12,585		13,519
Total Intangible assets	$	13,031	$	13,989

Note 21: Related Parties

Tony Isaac, the Company’s Chief Executive Officer, is the father of Jon Isaac, President and Chief Executive Officer of Live Ventures Incorporated (“Live Ventures”) and managing member of ICG, a greater than 5% stockholder of the Company. Tony Isaac, Chief Executive Officer, Virland Johnson, Chief Financial Officer, and Richard Butler, Board of Directors member of the Company, are Board of Directors member, Chief Financial Officer, and Board of Directors member, respectively, of Live Ventures. The Company also shares certain executive, accounting and legal services with Live Ventures. The total services shared were $64 and $56 for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively. Customer Connexx rents approximately 9,900 square feet of office space from Live Ventures in Las Vegas, Nevada. The total rent and common area expense were $50 and $44 for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

September 30,
2017

December 31,
2016

Assets
Retail $ 15,285 $ 17,559
Recycling 15,721 24,297
Technology 15,185 –
Total assets $ 46,191 $ 41,856

Intangible assets
Retail $ 2 $ –
Recycling 55 57
Technology 15,691 –
Total intangible assets $ 15,748 $ 57

ApplianceSmart Note

~~18. Subsequent Events~~On December 30, 2017, Purchaser entered into the Agreement and purchased from the Company all of the Stock of ApplianceSmart in exchange for the Purchase Price. Effective April 1, 2018, the Purchaser issued the ApplianceSmart Note with a three-year term in the original principal amount of $3,919 for the balance of the purchase price. ApplianceSmart is guaranteeing the repayment of the ApplianceSmart Note.

On December 30, 2017, Purchaser entered into the Agreement with the Company and ApplianceSmart. Pursuant to the Agreement, the Purchaser purchased from the Company all of the Stock of ApplianceSmart in exchange for the Purchase Price. Effective April 1, 2018, the Purchaser issued the ApplianceSmart Note with a three-year term in the original principal amount of $3,919 for the balance of the purchase price. ApplianceSmart is guaranteeing the repayment of the ApplianceSmart Note.

On March 15, 2019, the Company entered into subordination agreements with third parties pursuant to which it agreed to subordinate the payment of indebtedness under the ApplianceSmart Note and the Company’s security interest in the assets of ApplianceSmart and other related parties in exchange for up to $1,200 payable within 15 days of the agreement. ApplianceSmart can re-borrow up to the principal amount of the Note, $3,919.

On December 9, 2019, ApplianceSmart filed a voluntary petition (the “Chapter 11 Case”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”).

For discussion related to potential obligations and or guarantees under ApplianceSmart Leases, see Note 16.

Related Party Note

On August 28, 2019 (amended August 25, 2020), ARCA Recycling entered into and delivered to ICG a secured revolving line of credit promissory note, whereby ICG agreed to provide the ARCA Recycling with a $2,500 revolving credit facility (the “ICG Note”). The ICG Note matured on December 31, 2020. On March 30, 2021, ARCA Recycling entered into a Second Amendment and Waiver (the “Second Amendment”) to the ICG Note. The Second Amendment extends the maturity date of the ICG Note from December 31, 2020 to August 18, 2020. The ICG Note bears interest at 8.75% per annum and provides for the payment of interest, monthly in arrears. ARCA Recycling will pay a loan fee of 2.0% on each borrowing made under the ICG Note. In connection with entering into the ICG Note, the Borrower also entered into a security agreement in favor of the Lender, pursuant to which ARCA Recycling granted a security interest in all of its assets to the Lender. The obligations of ARCA Recycling under the ICG Note are guaranteed by the Company. The foregoing transaction did not include the issuance of any shares of the Company’s common stock, warrants, or other derivative securities. ICG is a record and beneficial owner of approximately 16% of the outstanding common stock of the Company. Jon Isaac is the manager and sole member of ICG, and the son of Tony Isaac, the Chief Executive Officer of JanOne and ARCA Recycling. The foregoing description of the Second Amendment does not purport to be complete and is qualified in its entirety by reference to the complete text of the Amendment, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference. The Lender is a stockholder of the Company. Jon Isaac is the manager and sole member of the Lender, and the son of Tony Isaac, the Chief Executive Officer of the Company and ARCA Recycling.

~~None.~~Note 22. Sale of ARCA and Connexx

On February 19, 2021, the Company, together with its subsidiaries (a) ARCA Recycling, Inc., a California corporation (“ARCA”), and (b) Customer Connexx LLC, a Nevada limited liability company (“Connexx”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with (i) ARCA Affiliated Holdings Corporation, a Delaware corporation, (ii) ARCA Services Inc., a Delaware corporation, and (iii) Connexx Services Inc, a Delaware corporation (collectively, the “Buyers”), pursuant to which the Buyers agreed to acquire substantially all of the assets, and assume certain liabilities, of ARCA and Connexx (the “Disposition Transaction”). The principal of the Buyers is Virland A. Johnson, our Chief Financial Officer. The Disposition Transaction is expected to be consummated on or before August 18, 2021. In the event the Disposition Transaction is not closed by such date, the Purchase Agreement may be terminated and, in accordance with its terms, the Buyers may be required to pay to us a “break fee” of $250. The Purchase Agreement and the Disposition Transaction were unanimously approved by our Board of Directors at a meeting during the portion of which the Purchase Agreement and Disposition Transaction were considered and voted on Mr. Johnson was not present.

The purchase price that the Buyers have agreed to pay to us in the Disposition Transaction is $25,000, subject to certain adjustments, including a potential increase in the purchase price due to an earnout, the assumption of certain debt of ARCA, Connexx, or us, and potential indemnification claims (collectively, the “Initial Aggregate Consideration”). At closing, $7,500 of the Aggregate Consideration will be paid in immediately available funds, and $17,500 of the Initial Aggregate Consideration will

be paid pursuant to the terms of the Buyers’ promissory note in our favor (the “Note”), which Note will bear interest at the rate of 6% per annum on the unpaid balance thereof. The Buyers’ payment obligations under the Note will be subordinated to the Buyers’ obligations to their Disposition Transaction lender(s), with the terms of such subordination to be determined upon Buyers’ identification of their lender(s). The parties have made customary representations, warranties, covenants, and indemnities in connection with the Disposition Transaction.

Commencing on February 19, 2021, (i) the Buyers will seek financing for the balance of the Initial Aggregate Consideration and (ii) the parties will prepare and negotiate the terms and conditions of certain ancillary documentation, including, without limitation, disclosure schedules, bills of sale, assignment and assumption agreements, the Note, and any related subordination documentation with Buyers’ Disposition Transaction lender(s).

The Purchase Agreement contains certain representations and warranties that the parties made to each other as of the date of the Purchase Agreement or such other date as specifically referenced therein. The representations and warranties were made solely for purposes of the Purchase Agreement and (i) are subject to limitations agreed by the parties in negotiating the terms and conditions thereof, (ii) may not be accurate or complete as of any specified date, (iii) will be qualified by the underlying disclosure schedules, (iv) may be subject to a contractual standard of materiality different from those generally applicable to investors, and (v) may have been used for the purpose of allocating risk among the parties thereto, rather than for establishing any matters as facts. Information concerning the subject matter of the representations and warranties may change after February 19, 2021, which subsequent information may or may not be fully reflected in JanOne’s public disclosures. For the foregoing reasons, the representations and warranties contained in the Purchase Agreement should not be relied upon as statements of factual information.

The foregoing descriptions of the Purchase Agreement and the Disposition Transaction do not purport to be complete and are qualified in their entirety by reference to the Purchase Agreement, a copy of which is filed with the Current Report on Form 8‑K as filed on February 25, 2021 as Exhibit 10.1 and is incorporated herein by reference.

Note 23. Subsequent event

The Company evaluated subsequent events through May 17, 2021, noting no reportable events.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

Dollars stated in thousands, except per share amounts.

Forward-Looking and Cautionary Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve risks and uncertainties. You can identify forward-looking statements because they contain words such as ‘‘believes,’’ ‘‘expects,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘estimates’’ or ‘‘anticipates’’ or similar expressions that concern our strategy, plans or intentions. Any statements we make relating to our future operations, performance and results, and anticipated liquidity are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those we expected. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements included in this Form 10-Q, are disclosed in “Item 1-Business, Item 1A – Risk Factors” of our ~~Annual Report on~~ Form ~~10-K for the fiscal year ended December 31, 2016 and this Quarterly Report on Form 10-Q.~~10-K. Some of the factors that we believe could affect our results include:

the continued effect on the U.S. economy of the coronavirus public health crisis;

~~our individual retail stores’ profitability;~~

our ability to secure additional financing to execute our biotechnology business plan;

~~the volume of appliance sales;~~

our ability to obtain the marketing approval for SR TV1001, our initial drug product candidate;

~~the strength of energy conservation recycling programs;~~

the strength of energy conservation recycling programs;

~~our continued ability to purchase product from our suppliers at acceptable prices;~~

our continued ability to purchase product from our suppliers at acceptable prices;

~~the ability of our individual retail stores to meet planned revenue levels;~~

costs and expenses being realized at higher-than-expected levels;

~~the number of retail stores;~~

our ability to secure an adequate supply of special-buy appliances for resale;

~~costs and expenses being realized at higher than expected levels;~~

the ability to secure appliance recycling and replacement contracts with sponsors of energy efficiency programs;

~~our ability to secure an adequate supply of special-buy appliances for resale;~~

the ability of customers to supply units under their recycling contracts with us;

~~the ability to secure appliance recycling and replacement contracts with sponsors of energy efficiency programs;~~

the outcome of the sales and use tax examination in California; and

~~the ability of customers to supply units under their recycling contracts with us;~~

general economic conditions affecting consumer demand for appliances.

~~the continued availability of our current line of credit and the outcome of the pending sales and use tax examination in California; and~~

~~general economic conditions affecting consumer demand for appliances.~~

We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q may not in fact occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Our MD&A should be read in conjunction with our ~~Annual Report on~~ Form 10-K ~~for the fiscal year ended December 31, 2016~~ (including the information presented therein under the caption Risk Factors), ~~as amended, as well as~~together with our Quarterly Reports on Forms 10-Q and other publicly available information. All amounts herein are unaudited.

Overview

~~Appliance~~JanOne is focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties. In addition, through our subsidiaries ARCA Recycling, ~~Centers of America,~~ Inc., Customer Connexx LLC, and ~~Subsidiaries (“we,” the “Company” or “ARCA”) are~~ARCA Canada Inc., JanOne is engaged in the business of ~~being the bridge between utilities or manufacturers to their customers by~~ recycling ~~replacing, and selling~~ major household appliances in North ~~America. We are committed to~~America by providing turnkey appliance recycling and replacement services for utilities and other sponsors of energy efficiency programs. In addition, through its GeoTraq Inc. (“GeoTraq”) subsidiary, we are engaged in the development, design and, ~~have been a pioneer in appliance recycling programs. We~~ultimately, we expect the sale of wireless transceiver modules with technology that our recent acquisition of GeoTraq, a development stage company, will ultimately allow us to market and sell products and services that capitalize on the large under-served portion of the location based services market that is not addressed by existing solutions. RFID and Wi-Fi require close proximity for asset tracking, while GPS is too bulky and power hungry for many needs. GeoTraq addresses the white space in-between by exclusively using Cell-ID technology. GeoTraq’s patented technology allows for a substantially lower cost solution, extended service life, a small form factor and even disposable devices, which we believe can significantly reduce return logistics costs.

provides LBS directly from global Mobile IoT networks.

We operate three reportable segments:

Biotechnology: Our biotechnology segment is focused on finding treatments for conditions that cause severe pain and bringing to market drugs with non-addictive pain-relieving properties.

	·	~~Retail: Our retail segment offers the latest in innovative appliances from major manufactures. We generate income from the sale of appliances and related services through 18 ApplianceSmart~~^® stores in four geographic areas. We have an online presence. We have two product lines, new and out-of-the-box that give the large manufacturers a channel to move their product without disrupting their normal distribution channels.

	·	Recycling: Our recycling segment is a turnkey appliance recycling program. We receive fees charged for recycling, replacement and additional services for utility energy efficiency programs and have established 17 Regional Processing Centers (“RPCs”) for this segment throughout the United States and Canada.

	·	Technology: Our technology segment is in the development stage with the recent acquisition of GeoTraq. GeoTraq is in the process of developing technology to enable low cost location based products and services through the use of Cell-ID technology.

Recycling: Our recycling segment is a turnkey appliance recycling program. We receive fees charged for recycling, replacement and additional services for utility energy efficiency programs and have established 18 Regional Processing Centers (“RPCs”) for this segment throughout the United States and Canada.

Technology: GeoTraq is in the process of developing technology to enable low cost, location-based products and services.

For the Thirteen Weeks Ended ~~September 30, 2017~~April 3, 2021 and ~~October 1, 2016~~

March 28, 2020

Results of Operations

The following table sets forth certain statement of operations items and as a percentage of revenue, for the periods indicated:

13 Weeks Ended 13 Weeks Ended
September 30, 2017 October 1, 2016
Statement of Income Data (in Thousands):
Revenue $ 25,484 100.0% $ 27,356 100.0%
Cost of revenue 17,055 66.9% 18,905 69.1%
Gross profit 8,429 33.1% 8,451 30.9%
Selling, general and administrative expense 7,301 28.6% 7,036 25.7%
Operating income 1,128 4.4% 1,415 5.2%
Interest (expense), net (207 ) -0.8% (341 ) -1.2%
Other income (expense) 329 1.3% 61 0.2%
Net income before income taxes 1,250 4.9% 1,135 4.1%
Provision (benefit) for income taxes 563 2.2% – 0.0%
Net income before noncontrolling interest 687 2.7% 1,135 4.1%
Net income (loss) attributed to noncontrolling interest 83 0.3% (12 ) 0.0%
Net income attributed to shareholders' of parent $ 770 3.0% $ 1,123 4.1%

	13 Weeks Ended					13 Weeks Ended
	April 3, 2021					March 28, 2020
Statement of Operations Data:
Revenue	$	8,672		100.0	%	$	8,450		100.0	%
Cost of revenue		7,251		83.6	%		6,976		82.6	%
Gross profit		1,421		16.4	%		1,474		17.4	%
Selling, general and administrative expense		3,530		40.7	%		4,873		57.7	%
Operating loss		(2,109	)	-24.3	%		(3,399	)	-40.2	%
Interest expense, net		(73	)	-0.8	%		(113	)	-1.3	%
Gain on Payroll Protection Program loan forgiveness		1,872		25.8	%		—		—
Gain on settlement of vendor advance payments		810		57.0	%		—		—
Other income		—		0.0	%		818		9.7	%
Net income (loss) before income taxes		500		5.8	%		(2,694	)	-31.9	%
Benefit of income taxes		2		0.0	%		411		4.9	%
Net income (loss)	$	502		5.8	%	$	(2,283	)	-27.0	%

The following tables set forth revenues for key product and service categories, percentages of total revenue and gross profits earned by key product and service categories and gross profit percent as compared to revenues for each key product category ~~indicated:~~indicated:

13 Weeks Ended 13 Weeks Ended
September 30, 2017 October 1, 2016
Net Percent Net Percent
(in the Thousands) Revenue of Total Revenue of Total
Revenue
Retail Boxed $ 8,718 34.2% $ 10,236 37.4%
Retail UnBoxed 4,288 16.8% 4,102 15.0%
Retail Delivery 259 1.0% 21 0.1%
Retail Service, Parts & Accessories 195 0.8% 560 2.0%
Extended Warranties, net 218 0.9% 183 0.7%
Recycling, Byproducts, Carbon Offset 8,608 33.8% 8,501 31.1%
Replacement Appliances 3,198 12.5% 3,753 13.7%
Total Revenue $ 25,484 100.0% $ 27,356 100.0%

	13 Weeks Ended					13 Weeks Ended
	April 3, 2021					March 28, 2020
	Net		Percent			Net		Percent
	Revenue		of Total			Revenue		of Total
Revenue
Recycling and Byproducts	$	3,978		45.9	%	$	4,085		48.3	%
Replacement Appliances		4,694		54.1	%		4,365		51.7	%
Total Revenue	$	8,672		100.0	%	$	8,450		100.0	%

13 Weeks Ended 13 Weeks Ended
September 30, 2017 October 1, 2016
Gross Gross Gross Gross
Profit Profit % Profit Profit %
Gross Profit
Retail Boxed $ 1,657 19.0% $ 3,226 31.5%
Retail UnBoxed 2,395 55.9% 1,308 31.9%
Retail Delivery (283 ) -109.3% (1,651 ) -7861.9%
Retail Service, Parts & Accessories (161 ) -82.6% 528 94.3%
Extended Warranties, net 218 100.0% 183 100.0%
Recycling, Byproducts, Carbon Offset 3,476 40.4% 2,914 34.3%
Replacement Appliances 1,127 35.2% 1,943 51.8%
Total Gross Profit $ 8,429 33.1% $ 8,451 30.9%

	13 Weeks Ended						13 Weeks Ended
	April 3, 2021						March 28, 2020
	Gross			Gross			Gross		Gross
	Profit			Profit %			Profit		Profit %
Gross Profit
Recycling and Byproducts		(57	)		-1.4	%		80		2.0	%
Replacement Appliances		1,478			31.5	%		1,394		31.9	%
Total Gross Profit	$	1,421			16.4	%	$	1,474		17.4	%

Revenue

Revenue ~~decreased $1,872 or 6.8%~~remained constant for the 13 weeks ended ~~September 30, 2017~~April 3, 2021, as compared to the 13 weeks ended October 1, 2016. On July 18, 2017 the Company had a fire at its’ Reynoldsburg store in Columbus, OH. The damage caused total loss of inventory of $764. The inventory loss has been received by the Company from our insurance carrier. The Reynoldsburg store is expected to re-open in November 2017. The inventory loss and resulting business interruption and loss of profit is insured subject to a $10 deductible. Sales were adversely affected during the 13 weeks ended September 30, 2017March 28, 2020. Replacement Appliance revenue increased slightly due to ~~lack of operations at the Reynoldsburg store. In the 13 weeks ended October 1, 2016, the Company recorded a one-time carbon offset sale of $1,048.~~

~~Revenue~~higher volumes from customers. Recycling and Byproducts revenue decreased ~~in the following categories as compared~~slightly due to ~~the prior year period:~~

~~Retail Boxed $1,518 or 14.8%, Retail Service, Parts and Accessories $365 or 65.2%, and Replacement Appliances $555 or 14.8%.~~

~~The revenue decreases were partially offset by the following increases in revenue as compared to the prior year period:~~

~~Revenue increased in Recycling, Byproducts, Carbon Offset $107 or 1.3%, Extended Warranties,net $35 or 19.1%, Retail Delivery $238, and Retail Unboxed $186 or 4.5%.~~

lower volumes from customers.

Cost of Revenue

Cost of revenue ~~decreased $1,850, or 9.8%~~remained constant for the 13 weeks ended ~~September 30, 2017~~April 3, 2021, as compared to the 13 weeks ended ~~October 1, 2016, primarily as a result of~~March 28, 2020, proportionately with the ~~change~~increase in revenue ~~discussed above as well as the changes in gross profit discussed below. The Company has made several vendor changes in the area of delivery~~described above.

Selling, General and ~~transportation to improve scalability, cost~~Administrative Expense

Selling, general and ~~customer service. Retail UnBoxed Revenue cost of revenue has~~administrative expense decreased ~~and the resulting gross profit percentage has increased due to re-negotiated purchase discounts with the Company’s UnBoxed vendors.~~

~~Gross Profit~~

~~Gross profit decreased $22~~$1,343 or ~~0.3%~~28%, for the 13 weeks ended ~~September 30, 2017~~April 3, 2021, as compared to the 13 weeks ended ~~October 1, 2016.~~March 28, 2020, due to decreased corporate activity and stock-based compensation.

Interest Expense, net

~~Gross profit~~Interest expense, net decreased ~~in the following categories as compared to the prior year period:~~

~~Retail Boxed $1,569 or 48.6%, Retail Service, Parts and Accessories $689 or 130.5% and Replacement Appliances $816 or 42.0%.~~

~~Gross profit decreases were partially offset by the following increases in gross profit as compared to the prior year period.~~

~~Retail UnBoxed $1,087 or 83.1% and Retail Deliver $1,368, Extended Warranties, net $35 or 19.1% and Recycling, Byproducts, Carbon Offset $562 or 19.3%.~~

~~Gross profit margin as a percentage of sales were improved for Retail UnBoxed 55.9% vs. 31.9%, while Retail Delivery had less of loss, Recycling, Byproducts, Carbon Offset 40.4% vs. 34.3%.~~

~~Gross profit margin as a percentage of sales declined for Retail Boxed 19.0% vs. 31.5%, Retail Service, Parts and Accessories (82.6%) vs. 94.3%.~~

~~Selling, General and Administrative Expense~~

~~Selling, general and administrative expense increased $265 or 3.8%,~~$40 for the 13 weeks ended ~~September 30, 2017~~April 3, 2021, as compared to the 13 weeks ended ~~October 1, 2016.~~March 28, 2020 primarily due to the increase in related party debt.

Gain on Payroll Protection Program Loan Forgiveness

~~Operating~~During the first quarter of fiscal 2021, the PPP Loan was forgiven which resulted in a gain of $1,872. There were no similar transactions during the first quarter of fiscal 2020.

Gain on Settlement of Vendor Advance Payments

During the first quarter of fiscal 2021, a portion of the vendor advance payments were settled which resulted in a gain of $810. There were no similar transactions during the first quarter of fiscal 2020.

Other Income

~~As a result of the factors described above, operating~~Other income of ~~$1,128~~$818 for the 13 weeks ended ~~September 30, 2017, represented a decrease of $287 over~~March 28, 2020, was primarily attributable to an increase in gains on the comparable prior year 13 weeks ended October 1, 2016 of $1,415. We expect to receive the business interruption proceeds from the Reynoldsburg store fire in the last quarter of the Company’s fiscal year.

~~Interest Expense, net~~

~~Interest expense net decreased $134 or 39.3%,~~litigation settlement received. There were no similar transactions for the 13 weeks ended ~~September 30, 2017 as compared to the 13 weeks ended October 1, 2016 primarily due to decreased rates and amounts of interest paid as a result of decreased borrowing.~~

~~Other Income and Expense~~

~~Other income and expense increased $268 for the 13 weeks ended September 30, 2017 as compared to the 13 weeks ended October 1, 2016.~~

~~Provision for (benefit from) Income Taxes~~

We recorded a provision for income taxes of $563 for the 13 weeks ended September 30, 2017, compared with a provision of $0 in the same period of 2016. The provision for income taxes for the 13 weeks ended September 30, 2017, increased over the same period of 2016 by $563.

~~Net Income~~

~~The factors described above led to a net income of $770 for the 13 weeks ended September 30, 2017, a decrease of $353 from a net income of $1,123 for the 13 weeks ended July 2, 2016.~~

~~For the Thirty-Nine Weeks Ended September 30, 2017 and October 1, 2016~~

~~Results of Operations~~

~~The following table sets forth certain statement of operations items and as a percentage of revenue, for the periods indicated:~~

39 Weeks Ended 39 Weeks Ended
September 30, 2017 October 1, 2016
Statement of Income Data (in Thousands):
Revenue $ 74,505 100.0% $ 77,457 100.0%
Cost of revenue 51,334 68.9% 56,379 72.8%
Gross profit 23,171 31.1% 21,078 27.2%
Selling, general and administrative expense 21,167 28.4% 21,543 27.8%
Operating income (loss) 2,004 2.7% (465 ) -0.6%
Interest (expense), net (636 ) -0.9% (928 ) -1.2%
Other income (expense) 5,559 7.5% 155 0.2%
Net income (loss) before income taxes 6,927 9.3% (1,238 ) -1.6%
Provision (benefit) for income taxes 2,382 3.2% 438 -0.6%
Net income (loss) before noncontrolling interest 4,545 6.1% (1,676 ) -2.2%
Net income (loss) attributed to noncontrolling interest 496 0.7% 245 0.3%
Net income (loss) attributed to shareholders' of parent $ 5,041 6.8% $ (1,431 ) -1.8%

39 Weeks Ended 39 Weeks Ended
September 30, 2017 October 1, 2016
Net Percent Net Percent
(in the Thousands) Revenue of Total Revenue of Total
Revenue
Retail Boxed $ 28,405 38.1% $ 31,168 40.2%
Retail UnBoxed 13,206 17.7% 14,042 18.1%
Retail Delivery 959 1.3% 786 1.0%
Retail Service, Parts & Accessories 684 0.9% 1,121 1.4%
Extended Warranties, net 1,080 1.4% 652 0.8%
Recycling, Byproducts, Carbon Offset 20,952 28.1% 19,703 25.4%
Replacement Appliances 9,219 12.4% 9,985 12.9%
Total Revenue $ 74,505 100.0% $ 77,457 100.0%

39 Weeks Ended 39 Weeks Ended
September 30, 2017 October 1, 2016
Gross Gross Gross Gross
Profit Profit % Profit Profit %
Gross Profit
Retail Boxed $ 5,940 20.9% $ 8,693 27.9%
Retail UnBoxed 5,746 43.5% 4,445 31.7%
Retail Delivery (63 ) -6.6% (1,643 ) -209.0%
Retail Service, Parts & Accessories (266 ) -38.9% 1,000 89.2%
Extended Warranties, net 1,080 100.0% 652 100.0%
Recycling, Byproducts, Carbon Offset 7,535 36.0% 4,495 22.8%
Replacement Appliances 3,199 34.7% 3,436 34.4%
Total Gross Profit $ 23,171 31.1% $ 21,078 27.2%

~~Revenue~~

~~Revenue decreased $2,952 or 3.8% for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016.~~

~~Revenue decreased in the following categories as compared to the prior year period:~~

~~Retail Boxed $2,763 or 8.9%, Retail Unboxed $836 or 6.0%, Retail Service, Parts and Accessories $437 or 39.0% and Replacement Appliances $766 or 7.7%.~~

~~The revenue decreases were partially offset by the following increases in revenue as compared to the prior year period:~~

~~Retail Delivery $173 or 22.0%, Extended Warranties, net $428 or 65.6% and Recycling, Byproducts, Carbon Offset $1,249 or 6.3%.~~

~~Cost of Revenue~~

Cost of revenue decreased $5,045, or 8.9% for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016, primarily as a result of the change in revenue discussed above as well as the changes in gross profit discussed below.

~~Gross Profit~~

~~Gross profit increased $2,093 or 9.9%, for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016.~~

~~Gross profit increased in the following categories as compared to the prior year period:~~

~~Retail UnBoxed $1,301 or 29.3%, Retail Delivery $1,580, Extended Warranties, net $428 or 65.6% and Recycling, Byproducts, Carbon Offset $3,040 or 67.6%.~~

~~Gross profit increases were partially offset by the following decreases in gross profit as compared to the prior year period.~~

~~Retail Boxed $2,753 or 31.7%, Retail Service, Parts and Accessories $1,266 or (126.6%), and Replacement Appliances $237 or 6.9%.~~

Gross profit margin as a percentage of sales were improved for Retail UnBoxed 43.5% vs. 31.7%, Retail Delivery (6.6%) vs. -209.0%, Retail Service, Parts and Accessories (38.9%) vs. 89.2%, Recycling, Byproducts and Carbon Offset 36.0% vs. 22.8% and Replacement Appliances 34.7% vs. 34.4%.

~~Gross profit margin as a percentage of sales declined for Retail Boxed 20.9% vs. 27.9% and Retail Service, Parts and Accessories (38.9%) vs. 89.2%.~~

~~Selling, General and Administrative Expense~~

~~Selling, general and administrative expense decreased $376 or 1.7%, for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016.~~

~~Operating Income~~

As a result of the factors described above, operating income of $2,004 for the 39 weeks ended September 30, 2017, represented an increase of $2,469 over the comparable prior year 39 week period of $(465).

~~Interest Expense, net~~

Interest expense net decreased $292 or 31.5%, for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016 primarily due to decreased rates of interest paid and amounts borrowed.

~~Other Income and Expense~~

~~Other income and expense increased $5,404 for the 39 weeks ended September 30, 2017 as compared to the 39 weeks ended October 1, 2016, primarily due to the gain on sale of property of $5,163.~~

~~Provision for (benefit from) Income Taxes~~

We recorded a provision for income taxes of $2,382 for the 39 weeks ended September 30, 2017, compared with a provision of $438 in the same period of 2016. The provision for income taxes for the 39 weeks ended September 30, 2017, increased over the same period of 2016 by $1,944, primarily due to an increase in earnings from the disposition of our Compton California land and building.

~~Net Income~~

The factors described above and the gain from the sale of our Compton California land and building of $5,163 led to a net income of $5,041 for the 39 weeks ended September 30, 2017, an increase of $6,472 from a net loss of $1,431 for the 39 weeks ended October 1, 2016.

April 3, 2021.

Segment Performance

We report our business in the following segments: ~~Retail,~~Biotechnology, Recycling and Technology. We identified these segments based on a combination of business type, customers serviced and how we divide management responsibility. Our revenues and profits are driven through our ~~physical stores, our~~ recycling centers, e-commerce, individual sales reps and our internet ~~services.~~services for our recycling and technology segment. We expect revenues and profits for our biotechnology segment to be driven by the development of pharmaceuticals that treat the root cause of pain but are non-opioid painkillers. We include Corporate expenses within the Recycling segment.

Operating ~~income (loss)~~loss by operating segment, is defined as ~~income (loss)~~loss before net interest expense, other income and expense, provision for income ~~taxes~~taxes.

	13 Weeks Ended April 3, 2021												13 Weeks Ended March 28, 2020
	Biotechnology			Recycling			Technology			Total			Biotechnology			Recycling			Technology			Total
Revenue	$	—		$	8,672		$	—		$	8,672		$	—		$	8,450		$	—		$	8,450
Cost of revenue		—			7,251			—			7,251			—			6,976			—			6,976
Gross profit		—			1,421			—			1,421			—			1,474			—			1,474
Selling, general and administrative expense		242			2,349			939			3,530			343			3,403			1,127			4,873
Operating loss	$	(242	)	$	(928	)	$	(939	)	$	(2,109	)	$	(343	)	$	(1,929	)	$	(1,127	)	$	(3,399	)

Biotechnology Segment

Our biotechnology segment incurred expenses of $242 and ~~income (loss) attributable~~$343 related to ~~non-controlling interest.~~employee costs and professional services related to research for the 13 weeks ended April 3, 2021 and March 28, 2020.

13 Weeks Ended September 30, 2017 13 Weeks Ended October 1, 2016
Segments in $ Segments in $
(in the thousands) Retail Recycling Technology Total Retail Recycling Technology Total
Revenue $ 13,678 $ 11,806 $ – $ 25,484 $ 15,102 $ 12,254 $ – $ 27,356
Cost of revenue 9,852 7,203 – 17,055 11,508 7,397 – 18,905
Gross profit 3,826 4,603 – 8,429 3,594 4,857 – 8,451
Selling, general and administrative expense 3,518 3,511 272 7,301 3,706 3,330 – 7,036
Operating income (loss) $ 308 $ 1,092 $ (272 ) $ 1,128 $ (112 ) $ 1,527 $ – $ 1,415

13 Weeks Ended September 30, 2017 13 Weeks Ended October 1, 2016
Segments in % Segments in %
Retail Recycling Technology Total Retail Recycling Technology Total
Revenue 100.0% 100.0% 0.0% 100.0% 100.0% 100.0% 0.0% 100.0%
Cost of revenue 72.0% 61.0% 0.0% 66.9% 76.2% 60.4% 0.0% 69.1%
Gross profit 28.0% 39.0% 0.0% 33.1% 23.8% 39.6% 0.0% 30.9%
Selling, general and administrative expense 25.7% 29.7% 100.0% 28.6% 24.5% 27.2% 0.0% 25.7%
Operating income (loss) 2.3% 9.2% -100.0% 4.4% -0.7% 12.5% 0.0% 5.2%

~~Retail~~Recycling Segment

~~Segment results for Retail include Appliancesmart.~~The recycling segment consists of ARCA Recycling, Customer Connexx, and ARCA Canada. Revenue for the 13 weeks ended ~~September 30, 2017 decreased $1,424, or 9.4%,~~April 3, 2021, remained constant as compared to the prior year ~~period, as a result of decreases in Retail Boxed $1,518 or 14.8%, Retail Service, Parts~~period. Replacement Appliance revenue increased slightly due to higher volumes from customers. Recycling and ~~Accessories $365 or 65.2%; partially offset by Extended Warranties, net $35 or 19.1%, Retail UnBoxed $186 or 4.5%, and Retail Delivery $238.~~

Byproducts revenue decreased slightly due to lower volumes from customers.

Cost of revenue for the 13 weeks ended ~~September 30, 2017 decreased $1,656 or 14.4%,~~April 3, 2021, remained constant as compared to the prior year period, proportionately with revenue as ~~a result of cost of revenue a decrease in Retail UnBoxed $901 or 32.2% and Retail Delivery $1,130; partially offset by an increase in Retail Service, Parts and Accessories $324, and Retail Boxed $51.~~

described.

Operating ~~income~~loss for the 13 weeks ended ~~September 30, 2017 increased $420,~~April 3, 2021, decreased $1,001 or 52% as compared to the prior year ~~period, as~~period. This represents a ~~result of increased gross profit of $232 and decreased~~decrease in selling, general and administrative expense of ~~$188.~~$1,054.

~~Recycling Segment~~

Segment results for ARCA Recycling, Customer Connexx, ARCA Canada and AAP (through August 15, 2017). Revenue for the 13 weeks ended September 30, 2017 decreased by $448, or 3.7%, as compared to the prior year period, as a result of decreases in Replacement Appliances $555 or 14.8%; partially offset by Recycling, Byproducts, Carbon Offset Revenue of $107 or 1.3%.

Cost of revenue for the 13 weeks ended September 30, 2017 decreased $194 or 2.6%, as compared to the prior year period; as a result of an increase in Replacement Appliances $261 or 14.4%; partially offset by a decrease in cost of revenue of Recycling, Byproducts, Carbon Offset $455 or 8.1%.

Operating income for the 13 weeks ended September 30, 2017 decreased $435, as compared to the prior year period; as a result of decreased gross profit of $254; offset by increased selling, general and administrative expense of $181.

Technology Segment

~~Segment results for Technology include~~The technology segment consists of GeoTraq. Results for the 13 weeks ended ~~September 30, 2017~~April 3, 2021 include a loss of $939 which was a decrease of $188 compared to the 13 weeks ended March 28, 2020 loss of $1,127. The loss represents intangible asset amortization expense ~~for $272. No prior year period results as this acquisition was completed August 18, 2017.~~

39 Weeks Ended September 30, 2017 39 Weeks Ended October 1, 2016
Segments in $ Segments in $
(in the thousands) Retail Recycling Technology Total Retail Recycling Technology Total
Revenue $ 44,334 $ 30,171 $ – $ 74,505 $ 47,769 $ 29,688 $ – $ 77,457
Cost of revenue 31,897 19,437 – 51,334 34,622 21,757 – 56,379
Gross profit 12,437 10,734 – 23,171 13,149 7,929 – 21,078
Selling, general and administrative expense 10,327 10,568 272 21,167 13,698 7,845 – 21,543
Operating income (loss) $ 2,110 $ 166 $ (272 ) $ 2,004 $ (549 ) $ 84 $ – $ (465 )

39 Weeks Ended September 30, 2017 39 Weeks Ended October 1, 2016
Segments in % Segments in %
Retail Recycling Technology Total Retail Recycling Technology Total
Revenue 100.0% 100.0% 0.0% 100.0% 100.0% 100.0% 0.0% 100.0%
Cost of revenue 71.9% 64.4% 0.0% 68.9% 72.5% 73.3% 0.0% 72.8%
Gross profit 28.1% 35.6% 0.0% 31.1% 27.5% 26.7% 0.0% 27.2%
Selling, general and administrative expense 23.3% 35.0% 100.0% 28.4% 28.7% 26.4% 0.0% 27.8%
Operating income (loss) 4.8% 0.6% -100.0% 2.7% -1.1% 0.3% 0.0% -0.6%

~~Retail Segment~~

Segment results for Retail include Appliancesmart. Revenue for the 39 weeks ended September 30, 2017 decreased $3,435, or 7.2%, as compared to the prior year period, as a result of decreases in Retail Boxed $2,763 or 8.9%, Retail UnBoxed $836 or 6.0%, Retail Service, Parts and ~~Accessories $437 or 39.0%; partially offset by Extended Warranties, net $428 or 65.6%, and Retail Delivery $173 or 22.0%.~~

Cost of revenue for the 39 weeks ended September 30, 2017 decreased $2,725 or 7.9%, as compared to the prior year period, as a result of decreases in cost of revenue of Retail Boxed $10, Retail Unboxed $2,137 or 22.3%, Retail Delivery $1,407; partially offset by an increase in Retail Service, Parts and Accessories $829.

~~Operating income for the 39 weeks ended September 30, 2017 increased $2,659, as compared to the prior year period, as a result of decreased~~other selling general and administrative expense ~~of $3,371 partially offset by a decrease in gross profit of $712.~~

~~Recycling Segment~~

~~Segment results~~ for ARCA Recycling, Customer Connexx, ARCA Canada and AAP (through August 15, 2017). Revenue for the 39 weeks ended September 30, 2017 increased by $483, or 1.6%, as compared to the prior year period, as a result of increases in Recycling, Byproducts, Carbon Offset revenue of $1,249 or 6.3%; partially offset by a decrease in Replacement Appliance revenue $766 or 7.7%.

Cost of revenue for the 39 weeks ended September 30, 2017 decreased $2,320 or 10.7%, as compared to the prior year period; as a result of decreases in cost of revenue of Replacement Appliances $529 or 8.1% and Recycling, Byproducts, Carbon Offset $1,791 or 11.8%.

Operating income for the 39 weeks ended September 30, 2017 increased $82, as compared to the prior year period; as a result of increased gross profit of $2,805 partially offset by an increase in selling, general and administrative expense of $2,723.

~~Technology Segment~~

Segment results for Technology include GeoTraq. Results for the 39 weeks ended September 30, 2017 include intangible asset amortization expense for $272. No prior year period results as this acquisition was completed August 18, 2017.

each period.

Liquidity and Capital Resources

Overview

Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities and funds available under (“the MidCap Revolver”), sale of assets and or other refinancing of existing indebtedness will provide sufficient liquidity to fund our operations, our continued investments in store openings and remodeling activities for at least the next 12 months. The Company refinanced and replaced the PNC Bank Revolver loan facility with the MidCap Revolver in May of 2017.

On September 20, 2017 the Company received a written default notice from MidCap Funding Trust X, the Agent representing the Lenders for the MidCap Revolver. The Company strongly disagrees with the Lenders that any Event of Default has occurred and is reserving all of its options with respect to the Loan Agreement. The Company and the Agent are in active discussions for forbearance and resolution of the default, however there can be no assurance the Company and the Agent will be able to agree on terms of the forbearance. The Company is classifying the Mid-Cap Revolver as a current liability until forbearance and resolution of the default is cured.

As of ~~September 30, 2017,~~April 3, 2021, we had total cash on hand of ~~$1,994 and an additional $3,616 of available borrowing under the MidCap Revolver.~~ $5,060. As we continue to prepare to begin late-stage clinical development with our pharmaceutical product, JAN101, and potentially pursue strategic transactions to expand and grow our business, we regularly monitor capital market conditions and may raise additional funds through borrowings or public or private sales of debt or equity securities. The amount, nature and timing of any borrowings or sales of debt or equity securities will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market ~~conditions.~~conditions.

In December 2019, the 2019 novel coronavirus (COVID-19) surfaced in Wuhan, China. The World Health Organization declared a global emergency on January 30, 2020, and most countries have initiated travel restrictions limiting travel to other countries and lock-downs within their borders. While various vaccines have recently been introduced into the marketplace, the impacts of variant strains of the COVID-19 virus are still unknown. The widespread health crisis has adversely affected the global economy, resulting in an economic downturn that could impact demand for our products. To date, the outbreak had a material adverse impact on our operations. For example, several customers in our appliance recycling and appliance replacement business have previously suspended our ability to pick up and or replace their customers’ appliances resulting in decreased revenues for both recycling and replacement business. The future impact of the outbreak is highly uncertain and cannot be predicted and there is no assurance that the outbreak will not have another material adverse impact on the future results of the Company. The extent of the impact, if any, will depend on future developments, including actions taken to contain the coronavirus. A key task for the Company in 2021 is to begin late-stage clinical development with its pharmaceutical product, JAN101. However, the COVID-19 pandemic significantly impacted clinical trials in 2020, delaying recruitment in most non-COVID-19 clinical trials and even eliminating recruitment in some trials. While clinical sites have largely resumed conducting non-COVID-19 clinical trials, the backlog of subjects may adversely affect our ability to recruit for its trial, leading to longer and more expensive trials. In addition, the unknown effectiveness of the COVID-19 vaccines, particularly concerning variant strains of COVID-19, could lead to clinical sites terminating patient recruitment again during the course of the study.

On May 1, 2020, the Company entered into a promissory note (the “Promissory Note”) with Texas Capital Bank, N.A. that provides for a loan in the amount of $1,872 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Loan matures on April 27, 2022 and bears interest at a rate of 1.0% per annum. Monthly amortized principal and interest payments are deferred for six months after the date of disbursement. The Promissory Note contains events of default and other provisions customary for a loan of this type. The Paycheck Protection Program provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. The PPP Loan was forgiven during the first fiscal quarter of 2021.

As of the period ending September 26, 2020, the Company received advance payments authorized by the California Public Utilities Commission and processed through two California utilities for the purposes of sustaining the workforce during the COVID 19 pandemic shutdown. The use of these funds was limited to labor and labor benefits for impacted employees. Portions of these advances are forgivable if certain conditions are met the specifics which have not been finalized. Advance payments that are not forgiven will need to be paid back in full by December 31, 2021. Total funding received under this program as of September 26, 2020 amounted to $1,168. As of April 3, 2021, $952 was forgiven, leaving a balance remaining of $216.

On January 29, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”) for the sale by the Company in a registered direct offering (the “Offering”) of 571,428 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a purchase price per share of Common Stock of $10.50.

On February 2, 2021, the Offering closed and the Company received gross proceeds of approximately $6,000, before deducting placement agent fees and other offering expenses. The Company is utilizing the net proceeds for general working capital.

Based on our current operating plans, we believe that available cash balances, funds available under our factoring agreement with Prestige Capital Finance, LLC (“Prestige Capital”), and or other refinancing of existing indebtedness will provide sufficient liquidity to fund our operations, our continued investments in store openings and remodeling activities for at least the next 12 months.

Cash Flows

During the 3913 weeks ended ~~September 30, 2017,~~April 3, 2021, cash ~~provided by~~used in operations was ~~$2,363,~~$342, compared to cash provided by operations of ~~$3,719~~$696 during the 3913 weeks ended ~~October 1, 2016.~~March 28, 2020. The decrease in cash provided by operations ~~of $1,356 as compared to the prior year period;~~ was primarily due to ~~a decrease~~results of operations, as discussed above.

Cash used in ~~cash provided by stock compensation expense of $232, change in reserve~~investing activities was $346 and $64 for ~~inventory obsolescence of $124, gain on sale~~the 13 weeks ended April 3, 2021 and the 13 weeks ended March 28, 2020, respectively, primarily related to purchases of property ~~of $5,163, gain on sale of~~ and ~~deconsolidation of variable interest entity AAP of $81; partially offset by non-cash depreciation~~equipment and amortization of $118, amortization of debt issuance costs of $126, change in reserve for uncollectible accounts $7, change in deferred income taxes of $337 and change in other of $716. Change in net income represented a positive change in operating cash flow of $6,221 offset by uses of cash in working capital accounts of $3,281.

intangibles.

Cash provided by investing activities was $6,323 and used by investing activities $266 for the 39 weeks ended September 30, 2017 and the 39 weeks ended October 1, 2016, respectively. The $6,589 increase in cash provided by investing activities, as compared to the prior period, is primarily attributable to the proceeds from the sale of property and equipment of $6,785 and a decrease in purchase of property and equipment of $137, proceeds from the sale of our equity investment in AAP of $800 less cash retained by AAP of $157 and other of $22; partially offset by an increase in restricted cash of $798, and cash $200 used to purchase an intangible asset (GeoTraq) net of debt and Series A preferred stock issued.

~~Cash used by~~ financing activities was ~~$7,675 and $3,705~~$5,411 for the 3913 weeks ended ~~September 30, 2017 and~~April 3, 2021 was primarily due to net proceeds of $5,544 from an equity financing. Cash used in financing activities was $280 for the 3913 weeks ended ~~October 1, 2016, respectively. The $3,970 increase in cash used, as compared to the prior period,~~March 28, 2020 was ~~attributable to increased~~related payments ~~under the PNC Revolver of $7,474,~~on debt obligations of $723 and debt issuance costs $359; partially offset by an increase in the proceeds from the issuance of debt obligations of $970 and an increase in net borrowing under the MidCap Revolver of $3,616.obligations.

Sources of Liquidity

We utilize cash on hand and ~~cash generated from operations and have funds available to us under our revolving loan facility with MidCap Financial Trust~~factor on occasion certain accounts receivable invoices to cover normal and seasonal fluctuations in cash flows and to support our various growth initiatives. Our cash and cash equivalents are carried at cost and consist primarily of demand deposits with commercial banks. On March 26, 2018, the Company entered into a purchase and sale agreement with Prestige Capital, whereby from time to time the Company can factor certain accounts receivable to Prestige Capital up to a maximum advance and outstanding balance of $11,000. Discount fees ultimately paid depend upon how long an invoice and related amount is outstanding from ARCA Recycling’s customer. Prestige Capital has been granted a security interest in all ARCA Recycling’s accounts receivable. The current purchase and sale agreement with Prestige Capital automatically renews every six months unless terminated by the parties.

~~MidCap Revolver~~

~~On September 30, 2017~~We acknowledge that we continue to face a challenging competitive environment as we continue to focus on our overall profitability, including managing expenses. We reported a net income of $502 and ~~December 31, 2016, our available borrowing capacity under the Credit Agreement is $2,416 and $0, respectively. The weighted average interest rate~~net loss of $2,283 for the ~~period~~13 weeks ended April 3, 2021 and March 28, 2020, respectively. In addition, the Company has total current assets of ~~May 10, 2017 through September 30, 2017 was 5.66%. We borrowed $45,099~~$10,515 and ~~repaid $41,483~~total current liabilities $17,455 resulting in a net negative working capital of $6,940.

Based on the ~~Credit Agreement during~~above, management has concluded that the ~~period of May 10, 2017 through September 30, 2017, leaving an outstanding balance on~~Company is not aware and did not identify any other conditions or events that would cause the ~~Credit Agreement of $3,616 and $0 at September 30, 2017 and December 31, 2016, respectively.~~Company to not be able to continue business as a going concern for the next twelve months

Future Sources of Cash; New Acquisitions, Products and Services

We may require additional debt financing and/or capital to finance new acquisitions, refinance existing indebtedness or consummate other strategic investments in our business. ~~Other sources of financing may include stock issuances and additional loans; or other forms of financing.~~ Any financing obtained may further dilute or otherwise impair the ownership interest of our existing ~~stockholders.~~stockholders.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risk and Impact of Inflation

Interest Rate Risk. We do not believe there is any significant risk related to interest rate fluctuations on our short and long-term fixed rate debt.

Foreign Currency Exchange Rate ~~Risk.~~Risk. We currently generate revenues in Canada. The reporting currency for our consolidated financial statements is U.S. dollars. It is not possible to determine the exact impact of foreign currency exchange rate changes; however, the effect on reported revenue and net earnings can be estimated. We estimate that the overall strength of the U.S. dollar against the Canadian dollar had an immaterial impact on the revenues and net income for the ~~13 Week and 39 Week periods~~fiscal year ended ~~September 30, 2017.~~January 2, 2021. We do not currently hedge foreign currency fluctuations and do not intend to do so for the foreseeable future.

We do not hold any derivative financial instruments, nor do we hold any securities for trading or speculative purposes.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Evaluation of Disclosure control and Procedures. We ~~have established disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit~~carried out an evaluation, under the ~~Exchange Act is recorded, processed, summarized~~supervision and ~~reported within~~with the ~~time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to~~participation of our management, including our ~~Chief Executive Officer (principal~~principal executive ~~officer)~~officer and ~~Chief Financial Officer (principal~~principal financial ~~officer), to allow timely decisions regarding required disclosure.~~

~~Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated~~officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) ~~promulgated under the Exchange Act), at September 30, 2017.~~). Based onupon that evaluation, our ~~Chief Executive Officer~~principal executive officer and ~~Chief Financial Officer~~principal financial officer concluded that, ~~at September 30, 2017,~~as of April 3, 2021, the period covered in this report, our disclosure controls and procedures were ~~effective.~~not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control ~~over~~Over Financial Reporting. There were no changes in the Company’s internal control over financial reporting during the quarter ended April 3, 2021, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~During the second and third quarters of fiscal 2017, covered by this Quarterly~~Management’s Report on ~~Form 10-Q, we made certain changes to our~~Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in ~~Rule~~Exchange Act Rules 13a-15(f) ~~under~~and 15d-15(f)). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the ~~Exchange Act). We have upgraded to a new accounting system and improved our control structure by adding and making~~risk that controls may become inadequate because of changes in ~~accounting~~conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management ~~and staff for each subsidiary company. We do not believe this has materially affected, or is reasonably likely to materially affect,~~assessed the effectiveness of our internal control over financial ~~reporting.~~reporting as of April 3, 2021. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013 regarding Internal Control – Integrated Framework. Based on our assessment using those criteria, our management concluded that our internal control over financial reporting was not effective as of April 3, 2021.

Management noted material weaknesses in internal control when conducting their evaluation of internal control as of January 2, 2021. (1) Insufficient information technology general controls (“ITGC”) and segregation of duties. It was noted that people who were negotiating a contract, were also involved in approving invoices without proper oversight. Additional controls and procedures are necessary and are being implemented to have check and balance on significant transactions and governance with those charged with governance authority. (2) Inadequate control design or lack of sufficient controls over significant accounting processes. The cutoff and reconciliation procedures were not effective with certain accrued and deferred expenses. (3) Insufficient assessment of the impact of potentially significant transactions, and (4) Insufficient processes and procedures related to proper recordkeeping of agreements and contracts. In addition, contract to invoice reconciliation was not effective with certain transportation service providers. As part of its remediation plan, processes and procedures have been implemented to help ensure accruals and invoices are reviewed for accuracy and properly recorded in the appropriate period. These material weaknesses remained outstanding as of the filing date of this annual report on Form 10-K and management is currently working to remedy these outstanding material weaknesses.

The Company’s management, including the Company’s CEO and CFO, do not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent or detect all error and all fraud. A control system, regardless of how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. These inherent limitations include the following: judgements in decision-making can be faulty, and control and process breakdowns can occur because of simple errors or mistakes, controls can be circumvented by individuals, acting alone or in collusion with each other, or by management override, the design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

PART II. Other Information

Item 1. Legal Proceedings

~~On November 6, 2015, a complaint was filed~~The information in ~~the Minnesota District Court for Hennepin County, Minnesota, by David Gray~~response to this item is included in Note 15, Commitments and Michael Boller, purporting to bring suit derivatively on behalf of the Company against twelve current and former officers and directors of the Company. The complaint alleged that the defendants breached their fiduciary dutiesContingencies, to the ~~Company, and that the defendants have been unjustly enriched as a result thereof. The complaint sought damages, disgorgement, an award~~Consolidated Financial Statements included in Part I, Item 1, of attorneys’ fees and other expenses, and an order compelling changes to the Company’s corporate governance and internal procedures. The Company and the other defendants vigorously denied plaintiffs’ allegations, and have not admitted any liability or wrongdoing as part of the settlement. The court made no findings or determinations with respect to the merit of plaintiffs’ claims, and no payment is being made by the Company or the other defendants. The parties have reached a settlement that fully resolves plaintiffs’ claims and provides for the release of all claims asserted in the litigation. On August 2, 2017, the court entered an order granting preliminary approval of the settlement. On September 29, 2017, the court issued an order granting final approval of the settlement. As a condition of the settlement, the Company has agreed to provide certain training to employees in the Company’s accounting department within one year of the settlement. The court also granted an application by plaintiffs’ counsel for attorneys’ fees, to be paid by the Company’s insurance carrier. Other than this ~~award of attorneys’ fees, no payment or other consideration was paid by the Company nor its officers or directors in connection with the settlement.~~Form 10-Q.

On December 29, 2016, ARCA served a Minnesota state court complaint for breach of contract on Skybridge Americas, Inc. (“SA”), ARCA’s primary call center vendor throughout 2015 and most of 2016. ARCA seeks damages in the millions of dollars as a result of alleged overcharging by SA and lost client contracts. On January 25, 2017, SA served a counterclaim for unpaid invoices in the amount of approximately $460,000 plus interest and attorneys’ fees. On March 29, 2017, the Hennepin County district court dismissed ARCA’s claim based on the currency differential between the United States and Canada, but permitted ARCA’s remaining claims to proceed. The parties are currently conducting discovery. On October 24, 2017, ARCA filed a motion for partial summary judgment. ARCA intends to vigorously dispute SA’s counterclaims.

On November 15, 2016, ARCA served an arbitration demand on Haier US Appliance Solutions, Inc, dba GE Appliances (“GEA”), alleging breach of contract and interference with prospective business advantage. ARCA seeks over $2 million in damages. On April 18, 2017, GEA served a counterclaim for approximately $337,000 in alleged obligation under the parties’ recycling agreement. Simultaneously with serving its counterclaim in the arbitration, which is venued in Chicago, GEA filed a complaint in the United States District Court for the Western District of Kentucky seeking damages of approximately $530,000 plus interest and attorneys’ fees allegedly owed under a previous agreement between the parties. On May 31, 2017, ARCA moved to dismiss or stay the Kentucky lawsuit in favor of the pending arbitration. ARCA’s motions have not been ruled upon. Under the terms of ARCA’s transaction with Recleim LLC, Recleim LLC is obligated to pay GEA on ARCA’s behalf the amounts claimed by GEA in the arbitration and in the lawsuit pending in Kentucky.

~~We are party from time to time to ordinary course disputes that we do not believe to be material or have merit. We intend to vigorously defend ourselves against these ordinary course disputes.~~

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2. Unregistered Sales of Equity Securities and Use of funds

None.

Item 3. Defaults Upon Senior Securities

None.

On September 20, 2017, Appliance Recycling Centers of America, Inc. (the “Company”) received a written notice of default, dated September 20, 2017 (the “Notice of Default”), from MidCap Funding X Trust (the “Agent”), asserting that events of default had occurred with respect to that certain Credit and Security Agreement dated May 10, 2017 (the “Loan Agreement”), by and among the Agent and certain other Lenders (the “Lenders”), and the Company and certain of its subsidiaries (the “Borrowers”). The Agent alleges in the Notice of Default that, as a result of the Company’s recent acquisition of GeoTraq Inc. (“GeoTraq”), and the issuance of promissory notes to the stockholders of GeoTraq in connection with such acquisition, the Borrowers have failed to comply with certain terms of the Loan Agreement, and that such failure constitutes one or more Events of Default under the Loan Agreement. Specifically, the Notice of Default states that as a result of the acquisition and related issuance of promissory notes, the Borrowers have failed to comply with (i) a covenant not to incur additional indebtedness other than Permitted Debt (as defined in the Loan Agreement), without the Agent’s prior written consent, and a covenant not to make acquisitions or investments other than Permitted Acquisitions or Permitted Investments (as defined in the Loan Agreement). The Notice of Default also states that the Borrowers’ failure to pledge the stock in GeoTraq as collateral under the Loan Agreement and to make GeoTraq a “Borrower “under the Loan Agreement will become an Event of Default if not cured within the applicable cure period. The Agent has reserved the right to avail itself of any other rights and remedies available to it at law or by contract, including the right to (a) withhold funding, increase reserves and suspend making further advances under the Loan Agreement, (b) declare all principal, interest and other sums owing in connection with the Loan Agreement immediately due and payable in full, (c) charge the Default Rate on amounts outstanding under the Loan Agreement, and/or (d) exercise one or more rights and remedies with respect to any and all collateral securing the Loan Agreement. The Agent has not declared the amounts outstanding under the Loan Agreement to be immediately due and payable but has imposed the default rate of interest, which is 5% in excess of the rates otherwise payable under the Loan Agreement), effective as of August 18, 2017 and continuing until the Agent notifies the Borrowers that the specified Events of Default have been waived and no other Events of Default exist.Item 4. Mine Safety Disclosures

None.

The Company strongly disagrees with the Lenders that any Event of Default has occurred and is reserving all of its options with respect to the Loan Agreement. The Company and the Agent are in active discussions for forbearance and resolution of the default, however there can be no assurance the Company and the Agent will be able to agree on terms of the forbearance.Item 5. Other Information.

None.

Item 6. ~~Exhibits.~~Exhibits.

Index to Exhibits

Exhibit
Number
Exhibit Description Form File Number Exhibit Number Filing Date
3.1 Restated Articles of Incorporation of Appliance Recycling Centers of America, Inc. 10-K 000-19621 3.1 03/31/17

3.2 * Certificate of Correction of Appliance Recycling Centers of America, Inc.

3.3 Bylaws of Appliance Recycling Centers of America, Inc. 8-K 000-19621 3.2 01/03/08

31.1 * Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 * Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 † Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 † Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 ** The following materials from our Quarterly Report on Form 10-Q for the three-month period ended September 30, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) the Consolidated Statements of Cash Flows, (iv) the Notes to Consolidated Financial Statements, and (v) document and entity information.

Exhibit Number		Exhibit Description	Form	File Number	Exhibit Number	Filing Date

2.1		Asset Purchase Agreement among JanOne Inc., ARCA Recycling, Inc., and Customer Connexx LLC, on the one hand, and ARCA Affiliated Holdings Corporation, ARCA Services Inc., and Connexx Services Inc., on the other hand, dated February 19, 2021	8-K	0-19621	10.1	02/25/2021

3.1		Articles of Incorporation of Appliance Recycling Centers of America, Inc.	8-K	0-19621	3.3	03/13/2018

3.2		Articles of Conversion	8-K	0-19621	3.1	03/13/2018

3.3		Articles of Conversion	8-K	0-19621	3.2	03/13/2018

3.4		Certificate of Correction	10-Q	0-19621	3.1	08/14/2018

3.5		Certificate of Change	8-K	0-19621	3.1	04/22/2019

3.6		Certificate of Correction	8-K	0-19621	3.7	06/24/2019

3.7		Certificate of Designation of Powers, Preferences, and Rights of Series A-1 Convertible Preferred Stock of JanOne Inc. (formerly known as Appliance Recycling Centers of America, Inc.)	8-K	0-19621	3.8	06/24/2019

3.8		Amended and Restated Certificate of Designation of the Preferences, Rights, and Limitations of the Series A-1 Convertible Preferred Stock of JanOne Inc., dated October 1, 2020	8-K	0-19621	3.8(a)	10/02/2020

3.9		Second Amended and Restated Certificate of Designation of the Preferences, Rights, and Limitations of the Series A-1 Convertible Preferred Stock of JanOne Inc., dated April 13, 2021	8-K	0-19621	3.8(b)	04/16/2021

3.10		Articles of Merger for JanOne Inc. into Appliance Recycling Centers of America, Inc., filed with the Secretary of the State of Nevada on September 9, 2019, and effective on September 10, 2019	8-K	0-19621	3.10	09/13/2019
3.10		Bylaws of Appliance Recycling Centers of America, Inc.	8-K	0-19621	3.4	03/13/2018

3.11		First Amendment to Bylaws of Appliance Recycling Centers of America, Inc.	8-K	0-19621	3.1	12/31/2018

10.1		Master Equipment Finance Agreement dated as of March 25, 2021 between KLC Financial, Inc. and ARCA Recycling, Inc.	10-K	0-19621	10.20	03/30/2021

10.2	*	Addendum to Master Equipment Finance Agreement dated as of April 14, 2021 between KLC Financial, LLC and ARCA Recycling, Inc.

10.3		Second Amendment and Waiver to Secured Line of Credit Promissory Note dated March 30, 2021 between ARCA Recycling, Inc. and Isaac Capital Group, LLC	10-K	0-19621	10.12	03/30/2021

10.4		Securities Purchase Agreement dated January 29, 2021 by and between JanOne Inc. and the purchasers listed therein.	8-K	0-19621	10.1	01/29/2021

31.1	*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	*	Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	*	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Ex. 101.INS	*	XBRL Instance Document

Ex. 101.SCH	*	XBRL Taxonomy Extension Schema Document

Ex. 101.CAL	*	XBRL Taxonomy Extension Calculation Linkbase Document

Ex. 101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document

Ex. 101.LAB	*	XBRL Taxonomy Extension Label Linkbase Document

Ex. 101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

~~† Furnished herewith.~~

** Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filings.

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on our behalf by the undersigned, thereunto duly authorized.

		~~Appliance Recycling Centers of America,~~ JanOne Inc.
		(Registrant)

Date:	~~November 14, 2017~~ May 17, 2021	By:	/s/ Tony Isaac
			Tony Isaac
			Chief Executive Officer
			(Principal Executive Officer)

Date:	May 17, 2021	By:
~~Date:~~	~~November 14, 2017~~	~~By:~~	/s/ Virland AA. Johnson
			Virland AA. Johnson
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

Large accelerated filero	☐	Accelerated filero	☐
Non-accelerated filero	☒	Smaller reporting companyx	☒
Emerging growth companyo	☐

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	2 3

	Unaudited Condensed Consolidated Balance Sheets as of ~~September 30, 2017 (Unaudited)~~April 3, 2021 and ~~December 31, 2016~~January 2, 2021	2 3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the 13 weeks ended ~~September 30, 2017~~April 3, 2021 and ~~October 1, 2016 and for the 39 weeks ended September 30, 2017 and October 1, 2016~~March 28, 2020	3 4

	Unaudited Condensed Consolidated Statements of Cash Flows for the 3913 weeks ended ~~September 30, 2017~~April 3, 2021 and ~~October 1, 2016~~March 28, 2020	4 5

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the 13 weeks ended April 3, 2021 and March 28, 2020	6

	Notes to Unaudited Condensed Consolidated Financial Statements	5 7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18 25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27 29

Item 4.	Controls and Procedures	28 29

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	29 31

Item 1A.	Risk Factors	30 31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	30 31

Item 6.4.	~~Exhibits~~Mine Safety Disclosures	31

Item 5	Other Information	31

Item 6.	Exhibits	32

SIGNATURES		32

	39 Weeks Ended
	September 30, 2017			October 1, 2016
OPERATING ACTIVITIES:
Net income (loss)	$	4,545		$	(1,676	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,054			936
Amortization of debt issuance costs		262			136
Stock based compensation expense		32			264
Gain on sale of property		(5,163	)		–
Gain on sale and deconsolidation of variable interest entity AAP		(81	)		–
Change in reserve for uncollectible accounts		7			–
Change in reserve for inventory obsolescence		(124	)		–
Change in deferred income taxes		776			439
Other		679			(37	)
Changes in assets and liabilities:
Accounts receivable		(1,531	)		2,004
Prepaid expenses and other current assets		(254	)		108
Inventories		5,073			385
Accounts payable and accrued expenses		(4,509	)		301
Income tax payable		1,597			859

Net cash provided by operating activities		2,363			3,719

INVESTING ACTIVITIES:
Purchases of property and equipment		(107	)		(244	)
Proceeds from sale of property and equipment, net		6,785			–
Purchase of intangible asset, GeoTraq Inc, net of debt and Series A preferred stock issued		(200	)		–
Proceeds from sale of equity in AAP less cash retained by AAP as a result of deconsolidation		643			–
Increase in restricted cash		(798	)		–
Other		–			(22	)

Net cash provided by (used) in investing activities		6,323			(266	)

FINANCING ACTIVITIES:
Net payments under line of credit - PNC Bank		(10,333	)		(2,859	)
Net borrowing under the line of credit - MidCap Financial Trust		3,616			–
Proceeds from issuance of debt obligations		1,070			100
Payment of debt issuance costs		(484	)		(125	)
Payments on debt obligations		(1,544	)		(821	)
Net cash used in financing activities		(7,675	)		(3,705	)

Effect of changes in exchange rate on cash and cash equivalents		15			(8	)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		1,026			(260	)

CASH AND CASH EQUIVALENTS, beginning of period		968			1,969

CASH AND CASH EQUIVALENTS, end of period	$	1,994		$	1,709

Supplemental cash flow disclosures:
Interest paid	$	386		$	1,033
Income taxes refunded (paid)	$	48		$	860
Noncash financing and investing activities:
Notes payable issued to sellers of GeoTraq, Inc. (See Note 5)	$	800		$	–
Series A convertible preferred stock issued for the acquisition of GeoTraq, Inc. (See Note 5)	$	14,963		$	–
Debt issuance costs related to credit agreement renewal	$	–		$	63

	September 30, 2017		December 31, 2016
Appliances held for resale	$	11,219	$	16,146
Processed metals from recycled appliances held for resale		–		139
Other		–		6
	$	11,219	$	16,291

Assets		December 31, 2016
Current assets	$	438
Property and equipment, net		7,322
Other assets		83
Total assets	$	7,843
Liabilities
Accounts payable	$	1,388
Accrued expenses		523
Current maturities of long-term debt obligations		3,558
Long-term debt obligations, net of current maturities		435
Other liabilities (a)		1,126
Total liabilities	$	7,030

	13 Weeks Ended
	September 30, 2017 (b)			October 1, 2016
Revenues	$	306		$	2,076
Gross profit		38			492
Operating income (loss)		(140	)		79
Net income (loss)		(165	)		24

	Useful Life (Years)	September 30, 2017			December 31, 2016
Land		$	–		$	1,140
Buildings and improvements	18-30		2,122			3,780
Equipment (including computer software)	3-15		7,897			19,260
Projects under construction			73			204
Property and equipment			10,092			24,384
Less accumulated depreciation and amortization			(9,098	)		(14,268	)
Property and equipment, net		$	994		$	10,116

	September 30, 2017		December 31, 2016
Intangible assets GeoTraq, net (See Note 5)	$	15,691	$	–
Recycling contract, net		19		19
Goodwill		38		38
	$	15,748	$	57

	September 30, 2017		December 31, 2016
Sales tax estimates, including interest	$	4,610	$	4,203
Compensation and benefits		741		2,431
Accrued incentive and rebate checks		192		358
Accrued rent		238		263
Warranty		14		26
Accrued payables		–		570
Deferred revenue		322		227
Other		110		810
	$	6,227	$	8,888

Beginning balance, January 1, 2021	$	292
Accrued		135
Settled		(187	)
Ending balance, April 3, 2021	$	240

	September 30, 2017			December 31, 2016

PNC term loan	$	–		$	1,020
MidCap financial trust asset based revolving loan		3,616			–
AFCO Finance		639			–
Susquehanna term loans		–			3,242
GE 8% loan agreement		482			482
EEI note		103			103
PIDC 2.75% note, due in month installments of $3, including interest, due October 2024		–			287
Capital leases and other financing obligations		36			564
Debt issuance costs, net		(1,030	)		(779	)
Total debt obligations		3,846			4,919
Less current maturities		(3,846	)		(2,093	)
Long-term debt obligations, net of current maturities	$	–		$	2,826

	13 Weeks Ended September 30, 2017									13 Weeks Ended October 1, 2016
		Segments in $								Segments in $
(in the thousands)		Retail		Recycling		Technology			Total		Retail			Recycling		Technology		Total
Revenue	$	13,678	$	11,806	$	–		$	25,484	$	15,102		$	12,254	$	–	$	27,356
Cost of revenue		9,852		7,203		–			17,055		11,508			7,397		–		18,905
Gross profit		3,826		4,603		–			8,429		3,594			4,857		–		8,451
Selling, general and administrative expense		3,518		3,511		272			7,301		3,706			3,330		–		7,036
Operating income (loss)	$	308	$	1,092	$	(272	)	$	1,128	$	(112	)	$	1,527	$	–	$	1,415

		13 Weeks Ended September 30, 2017					13 Weeks Ended October 1, 2016
	Segments in %					Segments in %
		Retail	Recycling	Technology	Total		Retail	Recycling	Technology	Total
Revenue		100.0%	100.0%	0.0%	100.0%		100.0%	100.0%	0.0%	100.0%
Cost of revenue		72.0%	61.0%	0.0%	66.9%		76.2%	60.4%	0.0%	69.1%
Gross profit		28.0%	39.0%	0.0%	33.1%		23.8%	39.6%	0.0%	30.9%
Selling, general and administrative expense		25.7%	29.7%	100.0%	28.6%		24.5%	27.2%	0.0%	25.7%
Operating income (loss)		2.3%	9.2%	-100.0%	4.4%		-0.7%	12.5%	0.0%	5.2%

	39 Weeks Ended September 30, 2017									39 Weeks Ended October 1, 2016
		Segments in $								Segments in $
(in the thousands)		Retail		Recycling		Technology			Total		Retail			Recycling		Technology		Total
Revenue	$	44,334	$	30,171	$	–		$	74,505	$	47,769		$	29,688	$	–	$	77,457
Cost of revenue		31,897		19,437		–			51,334		34,622			21,757		–		56,379
Gross profit		12,437		10,734		–			23,171		13,149			7,929		–		21,078
Selling, general and administrative expense		10,327		10,568		272			21,167		13,698			7,845		–		21,543
Operating income (loss)	$	2,110	$	166	$	(272	)	$	2,004	$	(549	)	$	84	$	–	$	(465	)

		39 Weeks Ended September 30, 2017									39 Weeks Ended October 1, 2016
		Segments in %								Segments in %
		Retail		Recycling		Technology			Total		Retail			Recycling		Technology		Total
Revenue		100.0%		100.0%		0.0%			100.0%		100.0%			100.0%		0.0%		100.0%
Cost of revenue		71.9%		64.4%		0.0%			68.9%		72.5%			73.3%		0.0%		72.8%
Gross profit		28.1%		35.6%		0.0%			31.1%		27.5%			26.7%		0.0%		27.2%
Selling, general and administrative expense		23.3%		35.0%		100.0%			28.4%		28.7%			26.4%		0.0%		27.8%
Operating income (loss)		4.8%		0.6%		-100.0%			2.7%		-1.1%			0.3%		0.0%		-0.6%