ALT5 Sigma (ALTS) 10-Q 16 Aug 16 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jul. 02, 2016	Aug. 10, 2016
Document And Entity Information
Entity Registrant Name	APPLIANCE RECYCLING CENTERS OF AMERICA INC /MN
Entity Central Index Key	862,861
Document Type	10-Q
Document Period End Date	Jul. 2, 2016
Amendment Flag	false
Current Fiscal Year End Date	--01-02
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,950,818
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,017

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands		Jul. 02, 2016	Jan. 02, 2016
Current assets:
Cash and cash equivalents		$ 2,249	$ 1,969
Accounts receivable, net of allowance of $28 and $73, respectively		6,656	11,536
Inventories		15,932	16,733
Income taxes receivable		242	1,126
Other current assets		1,073	1,350
Deferred income tax assets		1,301	1,657
Total current assets		27,453	34,371
Property and equipment, net		10,566	10,985
Restricted cash		500	500
Other assets		583	596
Deferred income tax assets		244	327
Total assets (a)	[1]	39,346	46,779
Current liabilities:
Accounts payable		7,427	7,019
Accrued expenses		8,241	8,934
Line of credit		7,786	12,668
Current maturities of long-term obligations		2,803	1,251
Total current liabilities		26,257	29,872
Long-term obligations, less current maturities		3,270	4,506
Other noncurrent liabilities		402	357
Total liabilities (a)	[1]	29,929	34,735
Commitments and contingencies
Shareholders' equity:
Common Stock, no par value; 10,000 shares authorized; issued and outstanding: 5,951 shares and 5,901 shares, respectively		21,607	21,466
Accumulated deficit		(12,132)	(9,577)
Accumulated other comprehensive loss		(522)	(565)
Total shareholders' equity		8,953	11,324
Noncontrolling interest		464	720
Total equity		9,417	12,044
Total liabilities and shareholders' equity		$ 39,346	$ 46,779
[1]	(a) Assets of ARCA Advanced Processing, LLC (AAP), our consolidated variable interest entity that can only be used to settle obligations of AAP were $8,443 and $8,856 as of July 2, 2016 and January 2, 2016, respectively. Liabilities of AAP for which creditors do not have recourse to the general credit of Appliance Recycling Centers of America, Inc. were $3,414 and $2,838 as of July 2, 2016 and January 2, 2016, respectively.

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jul. 02, 2016	Jan. 02, 2016
Statement of Financial Position [Abstract]
Accounts receivable, allowance	$ 28	$ 73
Common Stock, no par value
Common Stock, shares authorized (in shares)	10,000,000	10,000,000
Common Stock, issued shares (in shares)	5,951,000	5,901,000
Common Stock, outstanding shares (in shares)	5,951,000	5,901,000
Assets of the consolidated variable interest entity	$ 8,443	$ 8,856
Liabilities of the consolidated variable interest entity	$ 3,414	$ 2,838

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 02, 2016	Jul. 04, 2015	Jul. 02, 2016	Jul. 04, 2015
Revenues:
Retail	$ 16,096	$ 17,494	$ 32,666	$ 34,592
Recycling	6,413	9,366	13,349	17,189
Byproduct	2,247	3,304	4,086	5,921
Total revenues	24,756	30,164	50,101	57,702
Costs of revenues	18,320	22,287	37,474	43,957
Gross profit	6,436	7,877	12,627	13,745
Selling, general and administrative expenses	7,529	7,255	14,507	15,123
Operating income (loss)	(1,093)	622	(1,880)	(1,378)
Other income (expense):
Interest expense, net	(304)	(245)	(587)	(566)
Other income (expense), net	(26)	8	94	(141)
Income (loss) before income taxes and noncontrolling interest	(1,423)	385	(2,373)	(2,085)
Provision for (benefit of) income taxes	758	(101)	438	(586)
Net income (loss)	(2,181)	486	(2,811)	(1,499)
Net loss attributable to noncontrolling interest	78	116	257	401
Net income (loss) attributable to controlling interest	$ (2,103)	$ 602	$ (2,554)	$ (1,098)
Income (loss) per common share:
Basic	$ (0.35)	$ 0.10	$ (0.43)	$ (0.19)
Diluted	$ (0.35)	$ 0.10	$ (0.43)	$ (0.19)
Weighted average common shares outstanding:
Basic	5,929	5,801	5,915	5,798
Diluted	5,929	5,802	5,915	5,798
Net income (loss)	$ (2,181)	$ 486	$ (2,811)	$ (1,499)
Other comprehensive income (loss), net of tax:
Effect of foreign currency translation adjustments	24	(15)	43	(133)
Total other comprehensive income (loss), net of tax	24	(15)	43	(133)
Comprehensive income (loss)	(2,157)	471	(2,768)	(1,632)
Comprehensive loss attributable to noncontrolling interest	78	116	257	401
Comprehensive income (loss) attributable to controlling interest	$ (2,079)	$ 587	$ (2,511)	$ (1,231)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jul. 02, 2016	Jul. 04, 2015
Operating activities:
Net loss	$ (2,811)	$ (1,499)
Adjustments to reconcile net loss to net cash and cash equivalents (used in) provided by operating activities:
Depreciation and amortization	634	648
Share-based compensation	141	48
Deferred tax assets	439	0
Amortization of debt issuance costs	89	54
Other	(37)	(25)
Changes in assets and liabilities:
Accounts receivable	4,917	(161)
Inventories	801	544
Other assets	(145)	(225)
Accounts payable and accrued expenses	744	1,517
Income taxes receivable/payable	885	(159)
Net cash flows provided by operating activities	5,657	742
Investing activities:
Purchases of property and equipment	(193)	(209)
Proceeds from sale of property and equipment	0	5
Other	(3)	(46)
Net cash flows used in investing activities	(196)	(250)
Financing activities:
Net payments under line of credit	(4,882)	(133)
Payments on debt obligations	(307)	(486)
Proceeds from issuance of debt obligations	100	356
Proceeds from issuance of common stock	0	24
Payment of debt issuance costs	(125)	0
Net cash flows used in financing activities	(5,214)	(239)
Effect of changes in exchange rate on cash and cash equivalents	33	(135)
Increase in cash and cash equivalents	280	118
Cash and cash equivalents at beginning of period	1,969	3,523
Cash and cash equivalents at end of period	2,249	3,641
Supplemental disclosures of cash flow information:
Cash payments for interest	213	355
Cash receipts for income taxes	871	403
Non-cash investing and financing activities:
Debt issuance costs related to credit agreement renewal	$ 63	$ 0

1. Nature of Business and Basis

1. Nature of Business and Basis of Presentation	6 Months Ended
	Jul. 02, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business and Basis of Presentation	Appliance Recycling Centers of America, Inc. and subsidiaries (“we,” the “Company” or “ARCA”) are in the business of providing turnkey appliance recycling and replacement services for electric utilities and other sponsors of energy efficiency programs. We also sell new major household appliances through a chain of Company-owned stores under the name ApplianceSmart ® The accompanying balance sheet as of January 2, 2016, which has been derived from audited consolidated financial statements and the unaudited consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States of America for interim financial information and Article 8 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion 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 three-month and six-month periods ended July 2, 2016 and July 4, 2015, are presented using 13-week and 26-week periods, respectively. The results of operations for any interim period are not necessarily indicative of the results for the year. In preparation of the Company’s financial statements, management is required 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 financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended January 2, 2016, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 4, 2016. Principles of consolidation ApplianceSmart, Inc., a Minnesota corporation, is a wholly owned subsidiary that was formed through a corporate reorganization in July 2011 to hold our business of selling new major household appliances through a chain of Company-owned retail stores. CA 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”) to support ARCA’s agreement, as amended, with GE. Both ARCA and 4301 have a 50% interest in AAP. GE sells its recyclable appliances generated from twelve states in the Northeast and Mid-Atlantic regions of the United States to ARCA, which collects, processes and recycles the appliances. The agreement requires that ARCA will only recycle, and will not sell for re-use or resale, the recyclable appliances purchased from GE. AAP established a regional processing center in Philadelphia, Pennsylvania, at which the recyclable appliances are processed. AAP commenced operations in February 2010 and has the exclusive rights to service the GE agreement as a subcontractor for ARCA. The financial position and results of operations of AAP are consolidated in our financial statements 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 have a controlling financial interest in AAP, through our contractual agreement with GE, which is material to AAP, and we have provided substantial financial support to fund the operations of AAP since its inception.

2. Inventories

2. Inventories	6 Months Ended
	Jul. 02, 2016
Inventory Disclosure [Abstract]
2. Inventories	Inventories, consisting principally of appliances, are stated at the lower of cost, determined on a specific identification basis, or market and consist of: July 2, 2016 January 2, 2016 Appliances held for resale $ 15,666 $ 16,360 Processed metals from recycled appliances held for resale 260 367 Other 6 6 $ 15,932 $ 16,733 We provide estimated provisions for the obsolescence of our appliance inventories, including adjustments 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 agings and margin analysis in determining our provision estimate. A revised cost basis is used once a provision for obsolescence is recorded.

3. Earnings per Share

3. Earnings per Share	6 Months Ended
	Jul. 02, 2016
Income (loss) per common share:
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 common shares outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive common shares 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 controlling interest by the weighted average number of common shares 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 Common Stock at the average market price during the quarter. For both the three months and the six months ended July 2, 2016, we excluded options and warrants to purchase 754 shares of common stock from the diluted weighted average share outstanding calculation as the effect of these options and warrants were anti-dilutive. For the three months and six months ended July 4, 2015, we excluded options and warrants to purchase 507 and 717 shares of common stock from the diluted weighted average shares outstanding calculation as the effect of these options were anti-dilutive.

4. Share-Based Compensation

4. Share-Based Compensation	6 Months Ended
	Jul. 02, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-Based Compensation	We recognized share-based compensation expense (benefit) of $102 and $(15) for the three months ended July 2, 2016, and July 4, 2015, respectively and $141 and $48 for the six months ended July 2, 2016 and July 4, 2015, respectively. Based on the value of options outstanding as of July 2, 2016, estimated future share-based compensation expense is as follows: Balance of fiscal year 2016 $ 59 Fiscal year 2017 44 $ 103 The estimate above does not include any expense for additional options that may be granted and vest during the remainder of 2016 and 2017.

5. Product Warranty

5. Product Warranty	6 Months Ended
	Jul. 02, 2016
Guarantees [Abstract]
Product Warranty	We provide a warranty for the replacement or repair of certain defective units, which varies based on the product sold. Our standard warranty policy requires us to repair or replace certain defective units at no cost to our customers. We estimate the costs that may be incurred under our warranty and record an accrual in the amount of such costs at the time we recognize product revenue. Factors that affect our warranty accrual for covered units include the number of units sold, historical and anticipated rates of warranty claims on these units, and the cost of such claims. We periodically assess the adequacy of our recorded warranty accrual and adjust the amounts as necessary. Changes in our warranty accrual are as follows: Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 201 Beginning Balance $ 39 $ 28 $ 42 $ 30 Standard accrual based on units sold 3 13 9 19 Actual costs incurred (5 ) (4 ) (8 ) (8 ) Periodic accrual adjustments (4 ) (4 ) (10 ) (8 ) Ending Balance $ 33 $ 33 $ 33 $ 33

6. Variable Interest Entity

6. Variable Interest Entity	6 Months Ended
	Jul. 02, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Variable Interest Entity	The financial position and results of operations of AAP are consolidated in our financial statements 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 have a controlling financial interest in AAP through our contractual agreement with GE, which is material to AAP, and we have provided substantial financial support to fund the operations of AAP since its inception. The financial position and results of operations for AAP are reported in our recycling segment. The following table summarizes the assets and liabilities of AAP as of July 2, 2016, and January 2, 2016: July 2, 2016 January 2, 2016 Assets Current assets $ 659 $ 696 Property and equipment, net 7,701 8,077 Other assets 83 83 Total Assets $ 8,443 $ 8,856 Liabilities Accounts payable (a) $ 1,809 $ 1,872 Accrued expenses 461 399 Current maturities of long-term debt obligations 1,050 946 Long-term debt obligations, net of current maturities 3,337 3,439 Other liabilities (b) 859 759 Total Liabilities $ 7,516 $ 7,415 (a) As of July 2, 2016, AAP has $311 in advances payable to 4301 included in accounts payable. (b) Other liabilities represent loans and advances between ARCA and AAP that are eliminated in consolidation. In April 2016, an officer of the Company loaned $75 to AAP through the issuance of an 8% promissory note. The note is expected to be repaid with the collection of carbon offset program revenues in August 2016. The following table summarizes the operating results of AAP for the three months and six months ended July 2, 2016, and July 4, 2015: Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Revenues $ 1,695 $ 2,028 $ 3,480 $ 3,878 Gross profit 319 297 475 303 Operating loss (93 ) (166 ) (364 ) (682 ) Net loss (159 ) (230 ) (514 ) (800 )

7. Other Assets

7. Other Assets	6 Months Ended
	Jul. 02, 2016
Assets, Noncurrent [Abstract]
Other Assets	Other assets as of July 2, 2016, and January 2, 2016, consist of the following: July 2, 2016 January 2, 2016 Deposits $ 423 $ 416 Cash surrender value 102 102 Finite intangible assets 20 40 Goodwill 38 38 $ 583 $ 596 For the three months ended July 2, 2016, and July 4, 2015, we recorded amortization expense of $0 and $20, respectively, related to our recycling contract. For the six months ended July 2, 2016, and July 4, 2015, we recorded amortization expense of $20 and $40, respectively, related to our recycling contract. For the three months ended July 2, 2016, and July 4, 2015, we recorded non-cash interest expense of $50 and $26, respectively, related to debt issuance costs. For the six months ended July 2, 2016, and July 4, 2015, we recorded non-cash interest expense of $92 and $54, respectively, related to debt issuance costs.

8. Accrued Expenses

8. Accrued Expenses	6 Months Ended
	Jul. 02, 2016
Payables and Accruals [Abstract]
Accrued Expenses	Accrued expenses as of July 2, 2016, and January 2, 2016, consist of the following: July 2, 2016 January 2, 2016 Sales tax estimates, including interest $ 4,147 $ 4,804 Compensation and benefits 2,083 1,446 Accrued incentive and rebate checks 274 293 Accrued rent 188 235 Warranty expense 33 42 Accrued payables 258 749 Deferred revenue 386 413 Other 872 952 $ 8,241 $ 8,934

9. Line of Credit

9. Line of Credit	6 Months Ended
	Jul. 02, 2016
Debt Disclosure [Abstract]
Line of Credit	We have a Revolving Credit, Term Loan and Security Agreement, as amended, (“Revolving Credit Agreement”) with PNC Bank, National Association (“PNC”) that provides us with a $15,000 revolving line of credit. See Note 10 for further discussion regarding the Term Loan entered into with PNC. The Revolving Credit Agreement had a stated maturity date of January 24, 2016, and was renewed on January 22, 2016. Our financial covenants were reset in connection with this renewal. The renewed Revolving Credit Agreement has a stated maturity of January 31, 2017, if not renewed. The Revolving Credit Agreement includes 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 Revolving Credit Agreement is collateralized by a security interest in substantially all of our assets and PNC is also secured by an inventory repurchase agreement with Whirlpool Corporation for Whirlpool purchases only. We also issued a $750 letter of credit in favor of Whirlpool Corporation. The Revolving Credit Agreement requires, starting with the fiscal quarter ending April 2, 2016, that we meet a 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 Revolving Credit Agreement limits investments we can purchase, the amount of other debt and leases we can incur, the amount of loans we can issue to our affiliates and the amount we can spend on fixed assets, along with prohibiting the payment of dividends. In the January 22, 2016 renewal, the affiliate loan balance is capped at $1,000 on December 31, 2015, and thereafter. As of July 2, 2016, we were not in compliance with the fixed charge coverage ratio covenant of the Revolving Credit Agreement. We are working with PNC to obtain an amended credit agreement. As of January 2, 2016, we were not in compliance with all covenants under the Revolving Credit Agreement which were subsequently waived with the January 22, 2016 renewal. The interest rate on the Revolving Credit Agreement, in our renewal agreement on January 22, 2016, is PNC Base Rate 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 shall mean, 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%). As of July 2, 2016, the outstanding line of credit balance was $7,786 with a weighted average interest rate of 4.70%, which included both PNC LIBOR and PNC Base Rate loans. As of January 2, 2016, the outstanding line of credit balance was $12,668 with a weighted average interest rate of 7.25%, which was the PNC Base Rate plus a default premium. The amount of revolving borrowings under the Revolving Credit Agreement is based on a formula using accounts receivable and inventories. We may not have access to the full $15,000 revolving line of credit due to the formula using accounts receivable and inventories, the amount of the letter of credit issued in favor of Whirlpool Corporation and the amount of outstanding loans between PNC and our AAP joint venture. As of July 2, 2016, and January 2, 2016, our available borrowing capacity under the Revolving Credit Agreement was $2,587 and $1,382, respectively.

10. Borrowings

10. Borrowings	6 Months Ended
	Jul. 02, 2016
Debt Disclosure [Abstract]
Borrowings	Long-term debt, capital lease and other financing obligations as of July 2, 2016, and January 2, 2016, consist of the following: July 2, 2016 January 2, 2016 PNC term loan $ 1,148 $ 1,275 Susquehanna term loans 3,242 3,242 2.75% note, due in monthly installments of $3, including interest, due October 2024, collateralized by equipment 300 319 Capital leases and other financing obligations 1,547 988 Debt issuance costs, net (164 ) (67 ) 6,073 5,757 Less current maturities 2,803 1,251 $ 3,270 $ 4,506 On January 24, 2011, we entered into a $2,550 Term Loan (“Term Loan”) with PNC Bank to refinance the mortgage on our California facility. The Term Loan is payable as follows, subject to acceleration upon the occurrence of an event of default or termination of the Revolving Credit Agreement: 119 consecutive monthly principal payments of $21 plus interest commencing on February 1, 2011, and continuing on the first day of each month thereafter followed by a 120th payment of all unpaid principal, interest and fees on February 1, 2021. If the Revolving Credit Agreement is not renewed, a balloon payment of $1,020 in principal plus interest and additional fees will be due on January 31, 2017. The Term Loan is collateralized with our California facility located in Compton, California. The Term Loan interest rate is PNC Base Rate plus 2.25% to 3.75%, or 1-, 2- or 3-month PNC LIBOR Rate plus 3.25% to 4.75%, with the rate being dependent on our level of fixed charge coverage. The interest rate will be fixed for the first half of 2016 at PNC Base Rate plus 3.75%, or 1-,2- or 3-month PNC LIBOR Rate plus 4.75%. As of July 2, 2016, the weighted average interest rate was 5.28%. As of January 2, 2016, the weighted average interest rate was 7.75%, which was the PNC Base Rate plus a default rate premium. As of July 2, 2016, the balance due on the Term Loan is classified as current as the maturity of our credit facility is January 31, 2017. On March 10, 2011, AAP entered into three separate commercial term loans (“Term Loans”) with Susquehanna Bank, pursuant to the guidelines of the U.S. Small Business Administration 7(a) Loan Program. The total amount of the Term Loans is $4,750, split into three separate loans for $2,100; $1,400; and $1,250. The Term Loans mature in ten years and bear an interest rate of Prime plus 2.75%. As of July 2, 2016, and January 2, 2016, the interest rate was 6.00%. Borrowings under the Term Loans are 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 are a guarantor of the Term Loans along with 4301 Operations, LLC and its owners. In connection with these Term Loans, Susquehanna Bank also has a security interest in the assets of the Company. In March of 2015, an entity controlled by one of the noncontrolling interest holders of AAP loaned AAP $325 through the issuance of promissory notes. The notes bear interest at an annual rate of 8%. In May of 2015, one of the March 2015 notes totaling $125 was repaid in full by AAP. In February 2016, an entity controlled by one of the noncontrolling interest holders of AAP loaned AAP $100 through the issuance of an 8% promissory note. The remaining notes totaling $300 are expected to be repaid with the collection of the carbon offset program revenues by the end of the third quarter of 2016. Capital leases and other financing obligations

11. Commitments and Contingenci

11. Commitments and Contingencies	6 Months Ended
	Jul. 02, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Contracts Litigation On November 6, 2015, a complaint was filed in the Minnesota District Court for Hennepin County, Minnesota, by David Gray and Michael Boller, purporting to bring suit derivatively and on behalf of the Company against twelve current and former officers and directors of the Company. The complaint alleges that the defendants breached their fiduciary duties based on substantially similar allegations to those asserted in Mr. Feola's putative securities class action complaint, and that the defendants have been unjustly enriched as a result thereof. The complaint seeks damages, disgorgement, an award of attorneys’ fees and other expenses, and an order compelling changes to the Company’s corporate governance and internal procedures. This matter has been stayed by the court, pursuant to a stipulation of the parties, until the United States District Court for the Central District of California determines the legal sufficiency of Mr. Feola's complaint or other specified developments occur in that case. This matter has been submitted to our insurance carriers. Given the uncertainty of litigation and the preliminary stage of these cases, we cannot reasonably estimate the possible loss or range of loss that may result from these actions. The Company maintains liability insurance policies that may reduce the Company’s exposure, if any. 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 ® AMTIM Capital, Inc. (“AMTIM”) acts as our 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 agreements between the parties. A dispute has arisen between AMTIM and us 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 us of approximately $2,000. Although the outcome of this claim is uncertain, we believe that no further amounts are due under the terms of the agreement and 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. Sales and Use Taxes: As previously disclosed, the California Board of Equalization (“BOE”) is conducting a sales and use tax examination covering the California operations of Appliance Recycling Centers of America, Inc. (the “Company”) for 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 indicating they are 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 Managed Audit Program. The period covered under this program includes 2011, 2012, 2013 and extends through the nine-month period ended September 30, 2014. At this time, our best estimate of the amount that will be assessed by the BOE covering all periods under audit is approximately $4.1 million in sales tax and interest related to the appliance replacement programs that we administered on behalf of our customers on which we did not assess, collect or remit sales tax. The Company has been working with outside consultants to arrive at our assessment estimate and will continue to engage the services of these sales tax experts throughout the Managed Audit Program process. The sales tax amounts that we will likely be assessed relate to transactions in the period under examination by the BOE. Such assessment, however, will be subject to protest and appeal, and would not need to be funded until the matter has been fully resolved. Resolution could take up to two years.

12. Income Taxes

12. Income Taxes	6 Months Ended
	Jul. 02, 2016
Income Tax Disclosure [Abstract]
Income Taxes	Our overall effective tax rate, based on projected full-year taxable loss, was (33.3)% and (26.2)% for the three months ended July 2, 2016 and July 4, 2015, respectively. Our overall effective tax rate, based on projected full-year taxable loss, was (20.7)% and (28.1)% for the six months ended July 2, 2016 and July 4, 2015, respectively. The effective tax rate varies from the federal statutory rate of 34% due primarily to the impact of lower foreign tax rates, state taxes, share-based compensation and the book income (loss) of consolidated AAP attributable to noncontrolling interest. We regularly evaluate both positive and negative evidence related to retaining a valuation allowance against our 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 negative evidence that a valuation allowance should be maintained against certain deferred tax assets that we do not expect to utilize as of July 2, 2016.

13. Segment Information

13. Segment Information	6 Months Ended
	Jul. 02, 2016
Segment Reporting [Abstract]
13. Segment Information	We operate within targeted markets through two reportable segments: retail and recycling. The retail segment is comprised of income generated through our ApplianceSmart stores, which includes appliance sales and byproduct revenues from collected appliances. The recycling segment includes all fees charged and costs incurred for collecting, recycling and installing appliances for utilities and other customers and includes byproduct revenue, which is primarily generated through the recycling of appliances. We have included the results from consolidating AAP in our recycling segment. The nature of products, services and customers for 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 and income from operations of each segment. Income from operations represents revenues less cost of revenues and operating expenses, including certain allocated selling, general and administrative costs. There are no inter-segment sales or transfers. The following tables present our segment information for periods indicated: Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July , 2015 Revenues: Retail $ 16,294 $ 17,713 $ 32,943 $ 34,933 Recycling 8,462 12,451 17,158 22,769 Total revenues $ 24,756 $ 30,164 $ 50,101 $ 57,702 Operating income (loss): Retail $ (487 ) $ (20 ) $ (437 ) $ (636 ) Recycling (469 ) 820 (1,232 ) (357 ) Unallocated corporate (137 ) (178 ) (211 ) (385 ) Total operating income (loss) $ 1,093 $ 622 $ (1,880 ) $ (1,378 ) Cash capital expenditures: Retail $ (10 ) $ 9 $ 9 $ 38 Recycling 20 32 87 47 Corporate assets not allocable 46 86 97 124 Total cash capital expenditures $ 56 $ 127 $ 193 $ 209 Depreciation and amortization: Retail $ 51 $ 47 $ 105 $ 96 Recycling 219 217 454 436 Unallocated corporate 39 54 75 116 Total depreciation and amortization $ 309 $ 318 $ 634 $ 648

14. Recent Accounting Pronounce

14. Recent Accounting Pronouncements	6 Months Ended
	Jul. 02, 2016
Accounting Changes and Error Corrections [Abstract]
14. Recent Accounting Pronouncements	New Accounting Standards Not Yet Effective Revenue from Contracts with Customers: ASU 2015-02, Amendments to the Consolidation Analysis ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs: In July 2015, FASB issued ASU 2015-11, Inventory (Topic 330) Related to Simplifying the Measurement of Inventory which

1. Nature of Business and Bas20

1. Nature of Business and Basis of Presentation (Policies)	6 Months Ended
	Jul. 02, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of business and basis of presentation	Appliance Recycling Centers of America, Inc. and subsidiaries (“we,” the “Company” or “ARCA”) are in the business of providing turnkey appliance recycling and replacement services for electric utilities and other sponsors of energy efficiency programs. We also sell new major household appliances through a chain of Company-owned stores under the name ApplianceSmart ® The accompanying balance sheet as of January 2, 2016, which has been derived from audited consolidated financial statements and the unaudited consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States of America for interim financial information and Article 8 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion 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 three-month and six-month periods ended July 2, 2016 and July 4, 2015, are presented using 13-week and 26-week periods, respectively. The results of operations for any interim period are not necessarily indicative of the results for the year. In preparation of the Company’s financial statements, management is required 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 financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended January 2, 2016, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 4, 2016.
Principles of consolidation	Principles of consolidation ApplianceSmart, Inc., a Minnesota corporation, is a wholly owned subsidiary that was formed through a corporate reorganization in July 2011 to hold our business of selling new major household appliances through a chain of Company-owned retail stores. CA 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”) to support ARCA’s agreement, as amended, with GE. Both ARCA and 4301 have a 50% interest in AAP. GE sells its recyclable appliances generated from twelve states in the Northeast and Mid-Atlantic regions of the United States to ARCA, which collects, processes and recycles the appliances. The agreement requires that ARCA will only recycle, and will not sell for re-use or resale, the recyclable appliances purchased from GE. AAP established a regional processing center in Philadelphia, Pennsylvania, at which the recyclable appliances are processed. AAP commenced operations in February 2010 and has the exclusive rights to service the GE agreement as a subcontractor for ARCA. The financial position and results of operations of AAP are consolidated in our financial statements 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 have a controlling financial interest in AAP, through our contractual agreement with GE, which is material to AAP, and we have provided substantial financial support to fund the operations of AAP since its inception.

2. Inventories (Tables)

2. Inventories (Tables)	6 Months Ended
	Jul. 02, 2016
Inventory Disclosure [Abstract]
Schedule of inventories	July 2, 2016 January 2, 2016 Appliances held for resale $ 15,666 $ 16,360 Processed metals from recycled appliances held for resale 260 367 Other 6 6 $ 15,932 $ 16,733

4. Share-Based Compensation (Ta

4. Share-Based Compensation (Tables)	6 Months Ended
	Jul. 02, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Estimated future share-based compensation expense	Balance of fiscal year 2016 $ 59 Fiscal year 2017 44 $ 103

5. Product Warranty (Tables)

5. Product Warranty (Tables)	6 Months Ended
	Jul. 02, 2016
Guarantees [Abstract]
Schedule of warranty accrual	Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 201 Beginning Balance $ 39 $ 28 $ 42 $ 30 Standard accrual based on units sold 3 13 9 19 Actual costs incurred (5 ) (4 ) (8 ) (8 ) Periodic accrual adjustments (4 ) (4 ) (10 ) (8 ) Ending Balance $ 33 $ 33 $ 33 $ 33

6. Variable Interest Entity (Ta

6. Variable Interest Entity (Tables)	6 Months Ended
	Jul. 02, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Assets and liabilities of VIE	July 2, 2016 January 2, 2016 Assets Current assets $ 659 $ 696 Property and equipment, net 7,701 8,077 Other assets 83 83 Total Assets $ 8,443 $ 8,856 Liabilities Accounts payable (a) $ 1,809 $ 1,872 Accrued expenses 461 399 Current maturities of long-term debt obligations 1,050 946 Long-term debt obligations, net of current maturities 3,337 3,439 Other liabilities (b) 859 759 Total Liabilities $ 7,516 $ 7,415 (a) As of July 2, 2016, AAP has $311 in advances payable to 4301 included in accounts payable. (b) Other liabilities represent loans and advances between ARCA and AAP that are eliminated in consolidation.
Operating results of VIE	Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Revenues $ 1,695 $ 2,028 $ 3,480 $ 3,878 Gross profit 319 297 475 303 Operating loss (93 ) (166 ) (364 ) (682 ) Net loss (159 ) (230 ) (514 ) (800 )

7. Other Assets (Tables)

7. Other Assets (Tables)	6 Months Ended
	Jul. 02, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Schedule of other assets	July 2, 2016 January 2, 2016 Deposits $ 423 $ 416 Cash surrender value 102 102 Finite intangible assets 20 40 Goodwill 38 38 $ 583 $ 596

8. Accrued Expenses (Tables)

8. Accrued Expenses (Tables)	6 Months Ended
	Jul. 02, 2016
Payables and Accruals [Abstract]
Schedule of accrued expenses	July 2, 2016 January 2, 2016 Sales tax estimates, including interest $ 4,147 $ 4,804 Compensation and benefits 2,083 1,446 Accrued incentive and rebate checks 274 293 Accrued rent 188 235 Warranty expense 33 42 Accrued payables 258 749 Deferred revenue 386 413 Other 872 952 $ 8,241 $ 8,934

10. Borrowings (Tables)

10. Borrowings (Tables)	6 Months Ended
	Jul. 02, 2016
Debt Disclosure [Abstract]
Schedule of long-term debt, capital lease and other financing obligations	July 2, 2016 January 2, 2016 PNC term loan $ 1,148 $ 1,275 Susquehanna term loans 3,242 3,242 2.75% note, due in monthly installments of $3, including interest, due October 2024, collateralized by equipment 300 319 Capital leases and other financing obligations 1,547 988 Debt issuance costs, net (164 ) (67 ) 6,073 5,757 Less current maturities 2,803 1,251 $ 3,270 $ 4,506

13. Segment Information (Tables

13. Segment Information (Tables)	6 Months Ended
	Jul. 02, 2016
Segment Reporting [Abstract]
Segment information	Three Months Ended Six Months Ended July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 Revenues: Retail $ 16,294 $ 17,713 $ 32,943 $ 34,933 Recycling 8,462 12,451 17,158 22,769 Total revenues $ 24,756 $ 30,164 $ 50,101 $ 57,702 Operating income (loss): Retail $ (487 ) $ (20 ) $ (437 ) $ (636 ) Recycling (469 ) 820 (1,232 ) (357 ) Unallocated corporate (137 ) (178 ) (211 ) (385 ) Total operating income (loss) $ 1,093 $ 622 $ (1,880 ) $ (1,378 ) Cash capital expenditures: Retail $ (10 ) $ 9 $ 9 $ 38 Recycling 20 32 87 47 Corporate assets not allocable 46 86 97 124 Total cash capital expenditures $ 56 $ 127 $ 193 $ 209 Depreciation and amortization: Retail $ 51 $ 47 $ 105 $ 96 Recycling 219 217 454 436 Unallocated corporate 39 54 75 116 Total depreciation and amortization $ 309 $ 318 $ 634 $ 648

1. Nature of Business and Bas29

1. Nature of Business and Basis of Presentation (Details Narrative)	3 Months Ended	6 Months Ended
	Jul. 02, 2016Integer	Jul. 02, 2016Integer
Number of weeks reflected in operating results	13	26
GE Agreement [Member]
Number of States in which Entity Operates	12	12
ARCA Advanced Processing, LLC [Member]
Interest in a joint venture (as a percent)	50.00%	50.00%

2. Inventories (Details)

2. Inventories (Details) - USD ($) $ in Thousands	Jul. 02, 2016	Jan. 02, 2016
Inventory Disclosure [Abstract]
Appliances held for resale	$ 15,666	$ 16,360
Processed metals from recycled appliances held for resale	260	367
Other inventories	6	6
Inventories, net	$ 15,932	$ 16,733

3. Earnings per Share (Details

3. Earnings per Share (Details Narrative) - shares	3 Months Ended		6 Months Ended
	Jul. 02, 2016	Jul. 04, 2015	Jul. 02, 2016	Jul. 04, 2015
Income (loss) per common share:
Potentially dilutive shares excluded from earnings per share calculation	754,000	507,000	754,000	717,000

4. Share-Based Compensation (De

4. Share-Based Compensation (Details) $ in Thousands	Jul. 02, 2016USD ($)
Future share-based compensation expense	$ 103
Balance of fiscal year 2016 [Member]
Future share-based compensation expense	59
Fiscal Year 2017 [Member]
Future share-based compensation expense	$ 44

4. Share-Based Compensation (33

4. Share-Based Compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 02, 2016	Jul. 04, 2015	Jul. 02, 2016	Jul. 04, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based compensation	$ 102	$ (15)	$ 141	$ 48

5. Product Warranty (Details)

5. Product Warranty (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 02, 2016	Jul. 04, 2015	Jul. 02, 2016	Jul. 04, 2015
Guarantees [Abstract]
Beginning Balance	$ 39	$ 28	$ 42	$ 30
Standard accrual based on units sold	3	13	9	19
Actual costs incurred	(5)	(4)	(8)	(8)
Periodic accrual adjustments	(4)	(4)	(10)	(8)
Ending Balance	$ 33	$ 33	$ 33	$ 33

6. Variable Interest Entity (De

6. Variable Interest Entity (Details - VIE Assets and Liabilities) - USD ($) $ in Thousands		Jul. 02, 2016	Jan. 02, 2016
Assets
Total Assets		$ 8,443	$ 8,856
Liabilities
Total Liabilities		3,414	2,838
ARCA Advanced Processing, LLC [Member]
Assets
Current assets		659	696
Property and equipment, net		7,701	8,077
Other assets		83	83
Total Assets		8,443	8,856
Liabilities
Accounts payable (a)	[1]	1,809	1,872
Accrued expenses		461	399
Current maturities of long-term debt obligations		1,050	946
Long-term debt obligations, net of current maturities		3,337	3,439
Other liabilities (b)	[2]	859	759
Total Liabilities		$ 7,516	$ 7,415
[1]	As of July 2, 2016, AAP has $311 in advances payable to 4301 included in accounts payable.
[2]	Other liabilities represent loans and advances between ARCA and AAP that are eliminated in consolidation.

6. Variable Interest Entity (36

6. Variable Interest Entity (Details - VIE Operating Results) - ARCA Advanced Processing, LLC [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 02, 2016	Jul. 04, 2015	Jul. 02, 2016	Jul. 04, 2015
Operating results of VIE
Revenues	$ 1,695	$ 2,028	$ 3,480	$ 3,878
Gross profit	319	297	475	303
Operating loss	(93)	(166)	(364)	(682)
Net loss	$ (159)	$ (230)	$ (514)	$ (800)

6. Variable Interest Entity (37

6. Variable Interest Entity (Details Narrative) - ARCA Advanced Processing, LLC [Member] $ in Thousands	6 Months Ended
	Jul. 02, 2016USD ($)
Advance to affiliate	$ 75
Stated interest rate	8.00%

7. Other Assets (Details)

7. Other Assets (Details) - USD ($) $ in Thousands	Jul. 02, 2016	Jan. 02, 2016
Assets, Noncurrent [Abstract]
Deposits	$ 423	$ 416
Cash surrender value	102	102
Finite intangible assets	20	40
Goodwill	38	38
Total other assets	$ 583	$ 596

7. Other Assets (Details Narrat

7. Other Assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 02, 2016	Jul. 04, 2015	Jul. 02, 2016	Jul. 04, 2015
Assets, Noncurrent [Abstract]
Amortization expense related to recycling contract	$ 0	$ 20	$ 20	$ 40
Non-cash interest expense related to debt issuance costs	$ 50	$ 26	$ 89	$ 54

8. Accrued Expenses (Details)

8. Accrued Expenses (Details) - USD ($) $ in Thousands	Jul. 02, 2016	Apr. 02, 2016	Jan. 02, 2016	Jul. 04, 2015	Apr. 04, 2015	Jan. 03, 2015
Payables and Accruals [Abstract]
Sales tax estimates, including interest	$ 4,147		$ 4,804
Compensation and benefits	2,083		1,446
Accrued incentive and rebate checks	274		293
Accrued rent	188		235
Warranty expense	33	$ 39	42	$ 33	$ 28	$ 30
Accrued payables	258		749
Deferred revenue	386		413
Other	872		952
Accrued expenses, current	$ 8,241		$ 8,934

9. Line of Credit (Details Narr

9. Line of Credit (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jul. 02, 2016	Jan. 02, 2016
Line of Credit Facility [Line Items]
Outstanding balance under the Revolving Credit Agreement	$ 7,786	$ 12,668
Revolving Credit Facility [Member] | PNC Bank National Association [Member]
Line of Credit Facility [Line Items]
Amount of revolving line of credit	$ 15,000
Credit line maturity date	Jan. 31, 2017
Minimum fixed charge coverage ratio	1.1 to 1.0
Interest rate on the revolving line of credit	PNC Base Rate 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
Outstanding balance under the Revolving Credit Agreement	$ 7,786	$ 12,668
Weighted average interest rate (as a percent)	30.47%	7.25%
Available borrowing capacity under the Revolving Credit Agreement	$ 2,587	$ 1,382
Letter of Credit [Member] | PNC Bank National Association [Member]
Line of Credit Facility [Line Items]
Letter of credit issued in favor of Whirlpool Corporation	$ 750

10. Borrowings (Details)

10. Borrowings (Details) - USD ($) $ in Thousands	Jul. 02, 2016	Jan. 02, 2016
Capital leases and other financing obligations	$ 1,547	$ 988
Debt issuance costs, net	(164)	(67)
Total debt and capital lease obligations	6,073	5,757
Less current maturities	2,803	1,251
Debt, noncurrent portion	3,270	4,506
PNC Bank [Member]
Total debt and capital lease obligations	1,148	1,275
Susquehanna Bank [Member]
Total debt and capital lease obligations	3,242	3,242
2.75% note [Member]
Total debt and capital lease obligations	$ 300	$ 319

10. Borrowings (Details Narrati

10. Borrowings (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jul. 02, 2016	Jan. 02, 2016
Debt and capital lease obligations	$ 6,073	$ 5,757
Capital leased equipment cost	2,611	2,667
Accumulated amortization of capital leased equipment	1,724	1,635
Term Loan [Member] | PNC Bank [Member]
Debt and capital lease obligations	$ 1,148	$ 1,275
Debt issuance date	Jan. 24, 2011
Debt face amount	$ 2,550
Debt interest rate description	PNC Base Rate plus 2.25% to 3.75%, or 1-, 2- or 3-month PNC LIBOR Rate plus 3.25% to 4.75%, with the rate being dependent on our level of fixed charge coverage.
Weighted average interest rate	5.28%	7.75%
Debt maturity date	Jan. 31, 2017
Term Loan [Member] | Susquehanna Bank [Member]
Debt and capital lease obligations	$ 3,242	$ 3,242
Debt issuance date	Mar. 10, 2011
Debt face amount	$ 4,750
Debt interest rate description	Prime plus 2.75%
Weighted average interest rate	6.00%	6.00%
Term Loan [Member] | 2.75% note [Member]
Debt and capital lease obligations	$ 300	$ 319
Debt issuance date	Mar. 15, 2015
Debt face amount		$ 325
Debt interest rate description	8%

11. Commitments and Contingen44

11. Commitments and Contingencies (Details Narrative) $ in Thousands	Jul. 02, 2016USD ($)
Commitments and Contingencies Disclosure [Abstract]
Sales tax liability from tax examination	$ 4,100

12. Income Taxes (Details Narra

12. Income Taxes (Details Narrative)	3 Months Ended		6 Months Ended
	Jul. 02, 2016	Jul. 04, 2015	Jul. 02, 2016	Jul. 04, 2015
Income Tax Disclosure [Abstract]
Effective tax rate	33.30%	26.20%	20.70%	28.10%
Statutory rate			34.00%

13. Segment Information (Detail

13. Segment Information (Details - Operations) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 02, 2016	Jul. 04, 2015	Jul. 02, 2016	Jul. 04, 2015
Total revenues	$ 24,756	$ 30,164	$ 50,101	$ 57,702
Total operating income (loss)	(1,093)	622	(1,880)	(1,378)
Total cash capital expenditures	56	127	193	209
Total depreciation and amortization	309	318	634	648
Corporate [Member]
Total operating income (loss)	(137)	(178)	(211)	(385)
Total cash capital expenditures	46	86	97	124
Total depreciation and amortization	39	54	75	116
Retail [Member]
Total revenues	16,294	17,713	32,943	34,933
Total operating income (loss)	(487)	(20)	(437)	(636)
Total cash capital expenditures	(10)	9	9	38
Total depreciation and amortization	51	47	105	96
Recycling [Member]
Total revenues	8,462	12,451	17,158	22,769
Total operating income (loss)	(469)	820	(1,232)	(357)
Total cash capital expenditures	20	32	87	47
Total depreciation and amortization	$ 219	$ 217	$ 454	$ 436