Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Jul. 02, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | APPLIANCE RECYCLING CENTERS OF AMERICA INC /MN | ||
Entity Central Index Key | 862,861 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 6,655,365 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 6,600 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 968 | $ 1,969 |
Accounts receivable, net of allowance of $54 and $73, respectively | 10,509 | 11,536 |
Inventories | 16,291 | 16,733 |
Income taxes receivable | 16 | 1,126 |
Other current assets | 761 | 1,350 |
Total current assets | 28,545 | 32,714 |
Property and equipment, net | 10,116 | 10,985 |
Restricted cash | 500 | 500 |
Other assets | 614 | 663 |
Deferred income tax assets | 2,081 | 1,984 |
Total assets (a) | 41,856 | 46,846 |
Current liabilities: | ||
Accounts payable | 6,143 | 7,019 |
Accrued expenses | 8,888 | 8,934 |
Line of credit | 10,333 | 12,668 |
Current maturities of long-term obligations | 2,093 | 1,251 |
Total current liabilities | 27,457 | 29,872 |
Long-term obligations, less current maturities | 2,826 | 4,573 |
Other noncurrent liabilities | 364 | 357 |
Total liabilities (a) | 30,647 | 34,802 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common Stock, no par value; 50,000 shares authorized, 6,655 shares issued and outstanding at December 31, 2016; 10,000 shares authorized, 5,901 shares issued and outstanding at January 2, 2016 | 22,405 | 21,466 |
Accumulated deficit | (11,028) | (9,577) |
Accumulated other comprehensive loss | (574) | (565) |
Total shareholders' equity | 10,803 | 11,324 |
Noncontrolling interest | 406 | 720 |
Total equity | 11,209 | 12,044 |
Total liabilities and shareholders' equity | $ 41,856 | $ 46,846 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 54 | $ 73 |
Inventories, reserves | ||
Common Stock, shares authorized (in shares) | 50,000,000 | 10,000,000 |
Common Stock, issued shares (in shares) | 6,655,000 | 5,901,000 |
Common Stock, outstanding shares (in shares) | 6,655,000 | 5,901,000 |
Assets of the consolidated variable interest entity | $ 7,843 | $ 8,915 |
Liabilities of the consolidated variable interest entity | $ 2,180 | $ 2,838 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Revenues: | ||
Retail | $ 61,551 | $ 65,637 |
Recycling | 31,677 | 35,878 |
Byproduct | 10,361 | 10,324 |
Total revenues | 103,589 | 111,839 |
Costs of revenues | 74,924 | 86,391 |
Gross profit | 28,665 | 25,448 |
Selling, general and administrative expenses | 29,210 | 29,552 |
Operating loss | (545) | (4,104) |
Other expense: | ||
Interest expense, net | (1,419) | (1,292) |
Other expense, net | 150 | (250) |
Loss before income taxes and noncontrolling interest | (1,814) | (5,646) |
Benefit of income taxes | (49) | (1,714) |
Net loss | (1,765) | (3,932) |
Net loss attributable to noncontrolling interest | 314 | 1,215 |
Net loss attributable to controlling interest | $ (1,451) | $ (2,717) |
Loss per common share: | ||
Basic (in dollars per share) | $ (.24) | $ (0.47) |
Diluted (in dollars per share) | $ (.23) | $ (0.47) |
Weighted average common shares outstanding: | ||
Basic (in shares) | 6,054,000 | 5,833,000 |
Diluted (in shares) | 6,221,000 | 5,833,000 |
Net loss | $ (1,765) | $ (3,932) |
Other comprehensive loss, net of tax: | ||
Effect of foreign currency translation adjustments | (9) | 110 |
Total other comprehensive loss, net of tax | (9) | 110 |
Comprehensive loss | (1,774) | (3,822) |
Comprehensive loss attributable to noncontrolling interest | 314 | 1,215 |
Comprehensive loss attributable to controlling interest | $ (1,460) | $ (2,607) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, shares at Jan. 03, 2015 | 5,788,000 | ||||
Beginning balance, value at Jan. 03, 2015 | $ 21,137 | $ (675) | $ (6,860) | $ 1,935 | $ 15,537 |
Net loss | (2,717) | (1,215) | (3,932) | ||
Other comprehensive loss, net of tax | 110 | 110 | |||
Issuance of common stock, shares | 13,000 | ||||
Issuance of common stock, value | $ 24 | 24 | |||
Tax deficiency related to share-based compensation | (11) | $ (11) | |||
Share-based compensation, shares | 130,000 | ||||
Share-based compensation | $ 316 | $ 316 | |||
Ending balance, shares at Jan. 02, 2016 | 5,901,000 | ||||
Ending balance, value at Jan. 02, 2016 | $ 21,466 | (565) | (9,577) | 720 | 12,044 |
Net loss | (1,451) | (314) | (1,765) | ||
Other comprehensive loss, net of tax | (9) | (9) | |||
Issuance of common stock, shares | 704,000 | ||||
Issuance of common stock, value | $ 694 | $ 694 | |||
Share-based compensation, shares | 50,000 | 30,000 | |||
Share-based compensation | $ 245 | $ 245 | |||
Ending balance, shares at Dec. 31, 2016 | 6,655,000 | ||||
Ending balance, value at Dec. 31, 2016 | $ 22,405 | $ (574) | $ (11,028) | $ 406 | $ 11,209 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Operating activities | ||
Net loss | $ (1,765) | $ (3,932) |
Adjustments to reconcile net loss to net cash and cash equivalents provided by operating activities: | ||
Depreciation and amortization | 1,264 | 1,270 |
Share-based compensation | 245 | 316 |
Amortization of deferred financing costs | 185 | 107 |
Deferred income taxes | (97) | (612) |
Other | 15 | (5) |
Changes in assets and liabilities: | ||
Accounts receivable | 1,012 | (584) |
Inventories | 442 | (620) |
Income taxes receivable | 1,132 | (414) |
Other current assets | 167 | 66 |
Accounts payable and accrued expenses | 59 | 999 |
Net cash flows (used in) provided by operating activities | 2,659 | (3,409) |
Investing activities | ||
Purchases of property and equipment | (375) | (404) |
Decrease (increase) in restricted cash | 0 | (500) |
Proceeds from sale of property and equipment | 0 | 7 |
Other | (37) | (52) |
Net cash flows used in investing activities | (412) | (949) |
Financing activities | ||
Net (payments) borrowings under line of credit | (2,335) | 3,431 |
Payments on debt obligations | (941) | (757) |
Proceeds from issuance of debt obligations | 200 | 325 |
Debt issuance costs | (148) | 0 |
Tax deficiency related to share-based compensation | 0 | (11) |
Proceeds from issuance of Common Stock | 0 | 24 |
Net cash flows provided by (used in) financing activities | (3,224) | 3,012 |
Effect of changes in exchange rate on cash and cash equivalents | (24) | (208) |
Decrease in cash and cash equivalents | (1,001) | (1,554) |
Cash and cash equivalents at beginning of year | 1,969 | 3,523 |
Cash and cash equivalents at end of year | 968 | 1,969 |
Supplemental disclosures of cash flow information | ||
Cash payments for interest | 1,054 | 970 |
Cash refunds for income taxes | (874) | (694) |
Non-cash investing and financing activities | ||
Debt issuance costs related to credit agreement renewal | 63 | 0 |
Debt issuance costs paid through the issuance of common stock | $ 694 | $ 0 |
1. Nature of Business and Basis
1. Nature of Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Basis of Presentation | Nature of business ® 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. 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 efficiency programs. Customer Connexx, LLC, a Nevada limited liability company, is a wholly owned subsidiary formed in October 13, 2016 to provide call center services for electric utility 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”). Both ARCA and 4301 have a 50% interest in AAP. AAP established a regional processing center in Philadelphia, Pennsylvania, at which the recyclable appliances are processed. AAP commenced operations in February 2010. 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 and have provided substantially all of the financial support to fund the operations of AAP since its inception. Estimates Fair value of financial instruments Cash and cash equivalents, accounts receivable and accounts payable: Short- and long-term debt: No separate comparison of fair values versus carrying values is presented for the aforementioned financial instruments since their fair values are not significantly different than their balance sheet carrying amounts. In addition, the aggregate fair values of the financial instruments would not represent the underlying value of our Company. Fiscal year |
2. Significant Accounting Polic
2. Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Cash and cash equivalents Trade receivables Inventories December 31, January 2, Appliances held for resale $ 16,146 $ 16,360 Processed metals to be sold from recycled appliances 139 367 Other 6 6 Total Inventories $ 16,291 $ 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 aging reports and margin analyses in determining our provision estimate. A revised cost basis is used once a provision for obsolescence is recorded. Property and equipment We amortize leasehold improvements on a straight-line basis over the shorter of their estimated useful lives or the underlying lease term. Repair and maintenance costs are charged to operations as incurred. Property and equipment consists of the following as of December 31, 2016 and January 2, 2016: Useful Life (Years) December 31, 2016 January 2, 2016 Land – $ 1,140 $ 1,140 Buildings and improvements 18-30 3,780 3,714 Equipment (including computer software) 3-15 19,260 19,040 Projects under construction – 204 143 Property and equipment 24,384 24,037 Less accumulated depreciation and amortization (14,268 ) (13,052 ) Property and equipment, net $ 10,116 $ 10,985 Depreciation and amortization expense Software development costs Fiscal year 2017 $ 118 Fiscal year 2018 73 Fiscal year 2019 24 $ 215 Impairment of long-lived assets Restricted cash Goodwill Accounting for leases Product warranty Changes in our warranty accrual, presented as a component of accrued expenses on the consolidated balance sheets, for the fiscal years ended December 31, 2016 and January 2, 2016 are as follows: For the fiscal years ended December 31, January 2, Beginning balance $ 42 $ 30 Standard accrual based on units sold 17 45 Actual costs incurred (16 ) (16 ) Periodic accrual adjustments (17 ) (17 ) Ending balance $ 26 $ 42 Income taxes Share-based compensation Comprehensive income (loss) Foreign Currency: Foreign Currency Matters Revenue recognition Retail segment cost of revenues · Purchase of appliance inventories, including freight to and from our distribution centers. · Shipping, receiving and distribution of appliance inventories to our retail stores, including employee compensation and benefits. · Delivery and service of appliances, including employee compensation and benefits, after the appliances are sold to the consumer. · Early payment discounts and allowances offered by appliance manufacturers. · Inventory markdowns. Recycling segment cost of revenues · Transportation costs, including employee compensation and benefits, related to collecting appliances for recycling and delivering appliances under our replacement programs. · Purchase of appliance inventories, including freight to our recycling center warehouses, early payment discounts, and warehousing costs for appliances used in our replacement programs. · Occupancy costs related to our recycling centers. · Processing costs, including employee compensation and benefits, related to recycling and processing appliances. Selling, general and administrative expenses · Employee compensation and benefits related to management, corporate services, and retail sales; · Outside and outsourced corporate service fees including legal expenses and professional service fees; · Occupancy costs related to our retail stores and corporate office; · Advertising costs; · Bank charges and costs associated with credit and debit card interchange fees; and · Other administrative costs, such as supplies, travel and lodging. Advertising expense Taxes collected from customers Basic and diluted income (loss) per common share: A reconciliation of the denominator in the basic and diluted income (loss) per share is as follows: For the fiscal year ended December 31, January 2, Numerator: Net loss attributable to controlling interest $ (1,451 ) $ (2,717 ) Denominator: Weighted average common shares outstanding - basic 6,054 5,833 Warrants 167 – Weighted average common shares outstanding - diluted 6,221 5,833 Net loss per common share: Basic $ (0.24 ) $ (0.47 ) Diluted $ (0.23 ) $ (0.47 ) Recent Accounting Pronouncements- New Accounting Standards Not Yet Effective: Revenue from Contracts with Customers: Revenue from Contracts with Customers Revenue Recognition ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs: In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330) Related to Simplifying the Measurement of Inventory In February 2016, the FASB issued ASU No. 2016-02, “ Leases |
3. Variable Interest Entity
3. Variable Interest Entity | 12 Months Ended |
Dec. 31, 2016 | |
Variable Interest Entity | |
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 of 50% of the total equity, subordinated debt and other forms of financial support. We have a controlling financial interest in AAP and have provided substantially all of the 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 December 31, 2016 and January 2, 2016: December 31, 16 January 2, Assets Current assets $ 438 $ 696 Property and equipment, net 7,322 8,077 Other assets 83 142 Total assets $ 7,843 $ 8,915 Liabilities Accounts payable $ 1,388 $ 2,342 Accrued expenses 523 399 Current maturities of long-term debt obligations 3,558 946 Long-term debt obligations, net of current maturities 435 3,498 Other liabilities (a) 1,126 289 Total liabilities $ 7,030 $ 7,474 (a) Other liabilities represent outstanding loans from ARCA and are eliminated in consolidation. The following table summarizes the operating results of AAP for fiscal years 2016 and 2015: For the fiscal years ended December 31, January 2, Revenues $ 6,697 $ 6,838 Gross profit (loss) 1,305 (280 ) Operating loss (363 ) (2,205 ) |
4. Other Assets
4. Other Assets | 12 Months Ended |
Dec. 31, 2016 | |
Other Assets, Noncurrent [Abstract] | |
Other Assets | Other assets as of December 31, 2016 and January 2, 2016, consist of the following: Decemb er 31, 2016 January 2, Deposits $ 453 $ 416 Other 104 122 Recycling contract, net 19 20 Goodwill 38 38 Total other assets $ 614 $ 596 For fiscal years 2016 and 2015, we recorded amortization expense of $21 and $80, respectively, related to our finite intangible assets. |
5. Accrued Expenses
5. Accrued Expenses | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued expenses as of December 31, 2016 and January 2, 2016, consist of the following: December 31, January 2, Sales tax estimates, including interest $ 4,203 $ 4,804 Compensation and benefits 2,431 1,446 Accrued rebate and incentive checks 358 293 Accrued rent 263 235 Warranty 26 42 Accrued payables 570 749 Deferred revenue 227 413 Other 810 952 Total accrued expenses $ 8,888 $ 8,934 |
6. Line of Credit
6. Line of Credit | 12 Months Ended |
Dec. 31, 2016 | |
Line of Credit Facility [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 7 for further discussion regarding the Term Loan entered into with PNC. The Revolving Credit Agreement had a stated maturity date of January 31, 2017, and was amended on January 31, 2017. Our financial covenants were reset in connection with this amendment. The renewed Revolving Credit Agreement has an amended maturity of May 1, 2017. 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 March 30, 2014, and continuing at the end of each quarter thereafter, that we meet a minimum earnings before interest, taxes, depreciation and amortization and/or a 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 31, 2017 amendment, the affiliate loan balance is to be capped at $900 on December 31, 2016, and thereafter. As of December 31, 2016, we were not in compliance with certain covenants of the Revolving Credit Agreement which were subsequently waived with the January 31, 2017 amendment. As of January 2, 2016, we were not in compliance with certain covenants of 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 31, 2017, 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 at its prime rate, (ii) the Federal Funds Open Rate plus 0.5%, and (iii) the one-month LIBOR rate plus 1%. As of December 31, 2016, the weighted average interest rate was 9.00%, which was the PNC Base Rate plus a default rate premium. As of January 2, 2016, the weighted average interest rate was 7.25%, which was the PNC Base Rate plus a default rate premium. As of December 31, 2016, and January 2, 2016, the outstanding balance under the Revolving Credit Agreement was $10,333 and $12,668, respectively. As disclosed by the Company in Item 2.01 of its Current Report on Form 8-K filed on January 31, 2017, the Company sold and leased back its Compton building over an initial lease term of six months which can be terminated with a 30 day notice. The net proceeds from the sale were used to reduce the outstanding balance under our revolving credit agreement to $5,752. 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 December 31, 2016, and January 2, 2016, our available borrowing capacity under the Revolving Credit Agreement was $3,234 and $1,382, respectively. |
7. Borrowings
7. Borrowings | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Borrowings | Long-term debt, capital lease and other financing obligations as of December 31, 2016 and January 2, 2016 consist of the following: December 31, 2016 January 2, PNC term loan $ 1,020 $ 1,275 Susquehanna term loans 3,242 3,242 8.00% notes 582 – 2.75% note, due in monthly installments of $3, including interest, due October 2024, collateralized by equipment 287 319 Capital leases and other financing obligations 567 988 Debt issuance costs, net (779 ) (67 ) Total debt obligations 4,919 5,757 Less current maturities 2,093 1,251 Long-term debt obligations, net of current maturities $ 2,826 $ 4,506 On January 24, 2011, we entered into a $2,550 term loan (“Term Loan”) with PNC Bank to finance 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. The Term Loan is collateralized with our California facility located in Compton, California. As disclosed by the Company in Item 2.01 of its Current Report on Form 8-K filed on January 31, 2017, the Company sold and leased back its Compton building over an initial lease term of six months which can be terminated with a 30 day notice. The net proceeds from the sale were used to pay down our term loan with PNC Bank, National Association in full. 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 December 31, 2016, the weighted average interest rate was 9.50%, which was the PNC Base Rate plus a default rate premium. As of January 2, 2016, the weighted average interest rate was 7.75%, which was the PNC Base Rate plus a default rate premium. 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 both December 31, 2016, and January 2, 2016, the interest rate was 6.00%. The total monthly interest and principal payments are $54 and began on July 1, 2011. 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 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. The remaining note totaling $200 was repaid with the revenues expected during the third quarter of 2016 from the disposal of refrigerants through carbon offset programs. 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. The 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 the Investor. 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 the notes. The principal amount of notes outstanding at December 31, 2016, was $100. The future annual maturities of borrowings are as follows: ARCA AAP Total Fiscal year 2017 $ 748 $ 1,037 $ 1,785 Fiscal year 2018 18 685 703 Fiscal year 2019 9 708 717 Fiscal year 2020 – 661 661 Fiscal year 2021 103 503 606 Total future maturities of borrowings $ 878 $ 3,594 $ 4,472 Capital leases and other financing obligations The following schedule by fiscal year is the approximate remaining minimum payments required under the capital leases and other financing obligations, together with the present value as of December 31, 2016: ARCA AAP Total Fiscal year 2017 $ 27 $ 176 $ 203 Fiscal year 2018 20 161 181 Fiscal year 2019 11 76 87 Fiscal year 2020 – – – Total minimum lease and other financing obligation payments 58 413 471 Less amount representing interest 3 21 24 Present value of minimum payments 55 392 447 Less current portion 25 283 308 Capital lease and other financing obligations, net of current portion $ 30 $ 109 $ 139 |
8. Commitments and Contingencie
8. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Operating leases Minimum future rental commitments under noncancelable operating leases as of December 31, 2016, are as follows: ARCA AAP Total Fiscal year 2017 $ 4,618 $ 464 $ 5,082 Fiscal year 2018 3,572 467 4,039 Fiscal year 2019 2,355 488 2,843 Fiscal year 2020 1,917 468 2,385 Fiscal year 2021 2,160 28 2,188 Thereafter 1,214 – 1,214 Total minimum future rental commitments $ 15,836 $ 1,915 $ 17,751 Rent expense for fiscal years 2016 and 2015 was $4,841 and $5,300, respectively. We have agreements to receive future sublease payments of $655 through September 2019. 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 $2.0 million. Although the outcome of this claim is uncertain, we believe that no further amounts are due under the terms of the agreement and that 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. 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 $4.2 million ($2.6 million net of income tax benefit) 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. |
9. Income Taxes
9. Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | For fiscal year 2016, we recorded an income tax benefit of $49. For fiscal year 2015, we recorded an income tax benefit of $1,714. As of December 31, 2016, we maintained a valuation allowance of $1,011 against our net operating loss carryforwards, foreign tax credits and all deferred tax assets in Canada, principally net operating losses. During the second quarter of 2016, we concluded, based upon the assessment of all available evidence that it was more-likely-than-not that we would not be able to realize a portion of our U.S. deferred tax assets in the future. As a result, a valuation allowance of $405 was placed on the overall U.S. net deferred tax asset. The benefit of income taxes for fiscal years 2016 and 2015 consisted of the following: For the fiscal years ended December 31, 2016 January 2, 2016 Current tax expense (benefit): Federal $ 12 $ (855 ) State 36 (18 ) Foreign – (229 ) Current tax expense (benefit) $ 48 $ (1,102 ) Deferred tax expense — domestic (97 ) (831 ) Deferred tax expense — foreign – 219 Benefit of income taxes $ (49 ) $ (1,714 ) A reconciliation of our benefit of income taxes with the federal statutory tax rate for fiscal years 2016 and 2015 is shown below: For the fiscal years ended December 31, 2016 January 2, 2016 Income tax expense at statutory rate $ (617 ) (1,920 ) Portion attributable to noncontrolling interest at statutory rate 107 413 State tax expense, net of federal tax effect (69 ) (288 ) Permanent differences 20 83 Change in valuation allowance 414 (7 ) Recognition of tax effect for the cumulative undistributed earnings from Canada – (16 ) Other 95 21 (49 ) (1,714 ) Loss before benefit of income taxes and noncontrolling interest was derived from the following sources for fiscal years 2016 and 2015 as shown below: For the fiscal years ended December 31, 2016 January 2, 2016 United States $ (1,677 ) $ (5,452 ) Canada (137 ) (194 ) $ (1,814 ) $ (5,646 ) The components of net deferred tax assets (liabilities) as of December 31, 2016 and January 2, 2016, are as follows: December 31, January 2, 2016 Deferred tax assets: Net operating loss carryforwards $ 794 $ 520 Federal and state tax credits 476 442 Reserves 240 218 Accrued expenses 2,015 1,964 Share-based compensation 355 352 Accumulated other comprehensive loss 361 361 Property and equipment 8 191 Unrealized Currency Exchange 238 – Other 161 166 Total deferred tax assets 4,648 4,214 Deferred tax liabilities: Prepaid expenses (56 ) (89 ) Property and equipment (162 ) (138 ) Investments (1,269 ) (1,269 ) Other (69 ) (137 ) Total deferred tax liabilities (1,556 ) (1,633 ) Valuation allowance (1,011 ) (597 ) Net deferred tax assets $ 2,081 $ 1,984 The deferred tax amounts have been classified in the accompanying consolidated balance sheets as follows: December 31, January 2, 2016 Current assets $ – $ – Non-current assets 2,081 1,984 Non-current liabilities – – $ 2,081 $ 1,984 In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-17, “Income Taxes” which simplifies the balance sheet presentation of deferred income taxes. The Company has adopted the provisions of the standard for its 2016 consolidated financial statements including retroactive reclassifications of the $1,657 current deferred income tax asset as of January 2, 2016 to a non-current deferred income tax asset. This reclassification does not have a significant impact on the Company’s consolidated balance sheet and has no effect on the net loss. Future utilization of net operating loss (“NOL”) and tax credit carryforwards is subject to certain limitations under provisions of Section 382 of the Internal Revenue Code (“IRC”). This section relates to a 50 percent change in control over a three-year period. We believe that the issuance of common stock during 1999 resulted in an “ownership change” under Section 382. Accordingly, our ability to utilize NOL and tax credit carryforwards generated prior to February 1999 is limited to approximately $56 per year. As of December 31, 2016, we had a foreign tax credit carryforward of $256 and a federal NOL of $209 not subject Section 382 of the IRC. We also had state NOL carryforwards of $425. The state NOL carryforwards are available to offset future taxable income or reduce taxes payable through 2030. These state loss carryforwards began expiring in 2011. In Canada, we had federal and provincial NOL carryforwards of $85. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% percent likelihood of being realized upon ultimate settlement with the relevant tax authority. As of December 31, 2016 and January 2, 2016, we did not have any material uncertain tax positions. It is our practice to recognize interest related to income tax matters as a component of interest expense and penalties as a component of selling, general and administrative expense. As of December 31, 2016 and January 2, 2016, we had an immaterial amount of accrued interest and penalties. We are subject to income taxes in the U.S. federal jurisdiction, foreign jurisdictions and various state jurisdictions. Tax regulations from each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, we are no longer subject to U.S. federal, foreign, state or local income tax examinations by tax authorities for the years before 2012. We are not currently under examination by any taxing jurisdiction. We had no significant unrecognized tax benefits as of December 31, 2016, that would reasonably be expected to affect our effective tax rate during the next twelve months. |
10. Shareholders' Equity
10. Shareholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Common Stock Stock options The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for fiscal years 2016 and 2015: For the fiscal years ended December 31, 2016 January 2, 2016 Expected dividend yield – – Expected stock price volatility 85.44% 84.80% Risk-free interest rate 2.16% 2.16% Expected life of options (years) 10.00 10.00 Additional information relating to all outstanding options is as follows (in thousands, except per share data): Options Weighted Exercise Price Aggregate Weighted Average Remaining Contractual Life Balance at January 3, 2015 905 $ 3.25 Granted 130 1.33 Exercised (12 ) 1.89 Cancelled/expired (173 ) 4.63 Forfeited (70 ) 2.67 Balance at January 2, 2016 780 2.70 $ – 5.23 Granted 30 1.05 Cancelled/expired (51 ) 0.88 Forfeited (49 ) 2.85 Balance at December 31, 2016 710 $ 2.62 $ – 4.66 Options exercisable at December 31, 2016 651 $ 2.67 $ – The weighted average fair value per option of options granted during fiscal years 2016 and 2015 was $0.88 and $1.12, respectively. We recognized share-based compensation expense of $245 and $316 for fiscal years 2016 and 2015, respectively. The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $1.12 on December 31, 2016, which theoretically could have been received by the option holders had all option holders exercised their options as of that date. As of December 31, 2016, there were no in-the-money options exercisable. Based on the value of options outstanding as of December 31, 2016, estimated future share-based compensation expense is as follows: Fiscal year 2017 $ 32 Fiscal year 2018 – $ 32 The estimate above does not include any expense for additional options that may be granted and vest during 2017. Warrants As of December 31, 2016, we had fully vested warrants outstanding to purchase 24 shares of common stock at a price of $3.55 per share and expire in May 2020 and 167 share of common stock at a price of $0.68 per share. Preferred Stock |
11. Major Customers and Supplie
11. Major Customers and Suppliers | 12 Months Ended |
Dec. 31, 2016 | |
Major Customers and Suppliers [Abstract] | |
Major Customers and Suppliers | For the fiscal year ended December 31, 2016, no customer represented more than 10% of our total revenues. For the fiscal year ended January 2, 2016, no customer represented more than 10% of our total revenues. As of December 31, 2016, two customers, each represented more than 10% of our total trade receivables, for a total of 25% of our total trade receivables. As of January 2, 2016, two customers, each represented more than 10% of our total trade receivables, for a total of 39% of our total trade receivables. During the two fiscal years ended December 31, 2016 and January 2, 2016, we purchased a vast majority of appliances for resale from three 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. |
12. Segment Information
12. Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
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. The recycling segment also includes byproduct revenue, which is primarily generated through the recycling of appliances and includes all revenues from AAP. 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 sales 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 decrease in recycling segment revenues for the fiscal year ended December 31, 2016, presented in the following table was the result of a decrease in revenues related to appliance replacement programs, recycling programs and a significant decline in byproduct revenues that resulted from decreases in the prices of the byproducts that we sell. The following tables present our segment information for fiscal years 2016 and 2015: For the fiscal years ended December 31, January 2, Revenues: Retail $ 61,551 $ 65,637 Recycling 42,038 46,202 Total revenues $ 103,589 $ 111,839 Operating income (loss): Retail $ (1,646 ) $ (1,741 ) Recycling 1,101 (2,363 ) Total operating income $ (545 ) $ (4,104 ) Cash capital expenditures: Retail $ 33 $ 121 Recycling 342 283 Total cash capital expenditures $ 375 $ 404 Depreciation and amortization expense: Retail $ 216 $ 197 Recycling 1,048 1,073 Total depreciation and amortization expense $ 1,264 $ 1,270 Interest expense: Retail $ 251 $ 437 Recycling 1,168 855 Total interest expense $ 1,419 $ 1,292 December 31, 2016 January 2, 2016 Assets: Retail $ 17,559 $ 18,088 Recycling 24,297 28,691 Total assets $ 41,856 $ 46,779 Certain items have been reclassified from prior year for presentation with no effect to net income. |
13. Benefit Contribution Plan
13. Benefit Contribution Plan | 12 Months Ended |
Dec. 31, 2016 | |
Benefit Contribution Plan [Abstract] | |
Benefit 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 plans of $62 and $84 for fiscal years 2016 and 2015, respectively. |
14. Related Party
14. Related Party | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
14. Related Party | Mr. Isaac, the Company’s Chief Executive Officer, is the father to Jon Isaac CEO of Live Ventures and managing member of Isaac Capital Group, a 9% shareholder of the Company. The board of directors of the Company and Live Ventures Incorporated have common directors: Tony Isaac, Richard Butler and Dennis Gao. ARCA Recycling sub-leases call center space from Live Ventures in Las Vegas, NV. Total amount of sublease rent was $35 for year ending December 31, 2016. |
15. Subsequent Event
15. Subsequent Event | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Event | The Company sold and leased back its Compton building over an initial lease term of six months which can be terminated with a 30 day notice. The net proceeds from the sale were used to pay down our term and revolving loans with PNC Bank, National Association. |
2. Significant Accounting Pol22
2. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Cash and cash equivalents | Cash and cash equivalents |
Trade receivables | Trade receivables |
Inventories | Inventories December 31, January 2, Appliances held for resale $ 16,146 $ 16,360 Processed metals to be sold from recycled appliances 139 367 Other 6 6 Total Inventories $ 16,291 $ 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 aging reports and margin analyses in determining our provision estimate. A revised cost basis is used once a provision for obsolescence is recorded. |
Property and equipment | Property and equipment We amortize leasehold improvements on a straight-line basis over the shorter of their estimated useful lives or the underlying lease term. Repair and maintenance costs are charged to operations as incurred. Property and equipment consists of the following as of December 31, 2016 and January 2, 2016: Useful Life (Years) December 31, 2016 January 2, 2016 Land – $ 1,140 $ 1,140 Buildings and improvements 18-30 3,780 3,714 Equipment (including computer software) 3-15 19,260 19,040 Projects under construction – 204 143 Property and equipment 24,384 24,037 Less accumulated depreciation and amortization (14,268 ) (13,052 ) Property and equipment, net $ 10,116 $ 10,985 |
Depreciation and amortization expense | Depreciation and amortization expense |
Software development costs | Software development costs Fiscal year 2017 $ 118 Fiscal year 2018 73 Fiscal year 2019 24 $ 215 |
Impairment of long-lived assets | Impairment of long-lived assets |
Restricted cash | Restricted cash |
Goodwill | Goodwill |
Accounting for leases | Accounting for leases |
Product warranty | Product warranty Changes in our warranty accrual, presented as a component of accrued expenses on the consolidated balance sheets, for the fiscal years ended December 31, 2016 and January 2, 2016 are as follows: For the fiscal years ended December 31, January 2, Beginning balance $ 42 $ 30 Standard accrual based on units sold 17 45 Actual costs incurred (16 ) (16 ) Periodic accrual adjustments (17 ) (17 ) Ending balance $ 26 $ 42 |
Income Taxes | Income taxes |
Share-based compensation | Share-based compensation |
Comprehensive Income (loss) | Comprehensive income (loss) |
Foreign Currency | Foreign Currency: Foreign Currency Matters |
Revenue Recognition | Revenue recognition Retail segment cost of revenues · Purchase of appliance inventories, including freight to and from our distribution centers. · Shipping, receiving and distribution of appliance inventories to our retail stores, including employee compensation and benefits. · Delivery and service of appliances, including employee compensation and benefits, after the appliances are sold to the consumer. · Early payment discounts and allowances offered by appliance manufacturers. · Inventory markdowns. Recycling segment cost of revenues · Transportation costs, including employee compensation and benefits, related to collecting appliances for recycling and delivering appliances under our replacement programs. · Purchase of appliance inventories, including freight to our recycling center warehouses, early payment discounts, and warehousing costs for appliances used in our replacement programs. · Occupancy costs related to our recycling centers. · Processing costs, including employee compensation and benefits, related to recycling and processing appliances. Selling, general and administrative expenses · Employee compensation and benefits related to management, corporate services, and retail sales; · Outside and outsourced corporate service fees including legal expenses and professional service fees; · Occupancy costs related to our retail stores and corporate office; · Advertising costs; · Bank charges and costs associated with credit and debit card interchange fees; and · Other administrative costs, such as supplies, travel and lodging. |
Advertising expense | Advertising expense |
Taxes collected from customers | Taxes collected from customers |
Basic and diluted income (loss) per common share | Basic and diluted income (loss) per common share: A reconciliation of the denominator in the basic and diluted income (loss) per share is as follows: For the fiscal year ended December 31, January 2, Numerator: Net loss attributable to controlling interest $ (1,451 ) $ (2,717 ) Denominator: Weighted average common shares outstanding - basic 6,054 5,833 Warrants 167 – Weighted average common shares outstanding - diluted 6,221 5,833 Net loss per common share: Basic $ (0.24 ) $ (0.47 ) Diluted $ (0.23 ) $ (0.47 ) |
Recent Accounting Pronouncements | Recent Accounting Pronouncements- New Accounting Standards Not Yet Effective: Revenue from Contracts with Customers: Revenue from Contracts with Customers Revenue Recognition ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs: In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330) Related to Simplifying the Measurement of Inventory In February 2016, the FASB issued ASU No. 2016-02, “ Leases |
2. Significant Accounting Pol23
2. Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of inventories | December 31, January 2, Appliances held for resale $ 16,146 $ 16,360 Processed metals to be sold from recycled appliances 139 367 Other 6 6 Total Inventories $ 16,291 $ 16,733 |
Schedule of property and equipment | Useful Life (Years) December 31, 2016 January 2, 2016 Land – $ 1,140 $ 1,140 Buildings and improvements 18-30 3,780 3,714 Equipment (including computer software) 3-15 19,260 19,040 Projects under construction – 204 143 Property and equipment 24,384 24,037 Less accumulated depreciation and amortization (14,268 ) (13,052 ) Property and equipment, net $ 10,116 $ 10,985 |
Schedule of Future Amortization Expense | Fiscal year 2017 $ 118 Fiscal year 2018 73 Fiscal year 2019 24 $ 215 |
Schedule of product warranty | For the fiscal years ended December 31, January 2, Beginning balance $ 42 $ 30 Standard accrual based on units sold 17 45 Actual costs incurred (16 ) (16 ) Periodic accrual adjustments (17 ) (17 ) Ending balance $ 26 $ 42 |
Reconciliation of basic and diluted income (loss) per share | For the fiscal year ended December 31, January 2, Numerator: Net loss attributable to controlling interest $ (1,451 ) $ (2,717 ) Denominator: Weighted average common shares outstanding - basic 6,054 5,833 Warrants 167 – Weighted average common shares outstanding - diluted 6,221 5,833 Net loss per common share: Basic $ (0.24 ) $ (0.47 ) Diluted $ (0.23 ) $ (0.47 ) |
3. Variable Interest Entity (Ta
3. Variable Interest Entity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Variable Interest Entity | |
Summary of assets and liabilities | December 31, 16 January 2, Assets Current assets $ 438 $ 696 Property and equipment, net 7,322 8,077 Other assets 83 142 Total assets $ 7,843 $ 8,915 Liabilities Accounts payable $ 1,388 $ 2,342 Accrued expenses 523 399 Current maturities of long-term debt obligations 3,558 946 Long-term debt obligations, net of current maturities 435 3,498 Other liabilities (a) 1,126 289 Total liabilities $ 7,030 $ 7,474 |
Summary of operating results | For the fiscal years ended December 31, January 2, Revenues $ 6,697 $ 6,838 Gross profit (loss) 1,305 (280 ) Operating loss (363 ) (2,205 ) |
4. Other Assets (Tables)
4. Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Assets, Noncurrent [Abstract] | |
Schedule of other assets | Decemb er 31, 2016 January 2, Deposits $ 453 $ 416 Other 104 122 Recycling contract, net 19 20 Goodwill 38 38 Total other assets $ 614 $ 596 |
5. Accrued Expenses (Tables)
5. Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | December 31, January 2, Sales tax estimates, including interest $ 4,203 $ 4,804 Compensation and benefits 2,431 1,446 Accrued rebate and incentive checks 358 293 Accrued rent 263 235 Warranty 26 42 Accrued payables 570 749 Deferred revenue 227 413 Other 810 952 Total accrued expenses $ 8,888 $ 8,934 |
7. Borrowings (Tables)
7. Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt, capital lease and other financing obligations | December 31, 2016 January 2, PNC term loan $ 1,020 $ 1,275 Susquehanna term loans 3,242 3,242 8.00% notes 582 – 2.75% note, due in monthly installments of $3, including interest, due October 2024, collateralized by equipment 287 319 Capital leases and other financing obligations 567 988 Debt issuance costs, net (779 ) (67 ) Total debt obligations 4,919 5,757 Less current maturities 2,093 1,251 Long-term debt obligations, net of current maturities $ 2,826 $ 4,506 |
Schedule of Maturities of Long-term Debt | ARCA AAP Total Fiscal year 2017 $ 748 $ 1,037 $ 1,785 Fiscal year 2018 18 685 703 Fiscal year 2019 9 708 717 Fiscal year 2020 – 661 661 Fiscal year 2021 103 503 606 Total future maturities of borrowings $ 878 $ 3,594 $ 4,472 |
Schedule of Future Minimum Lease Payments for Capital Leases | ARCA AAP Total Fiscal year 2017 $ 27 $ 176 $ 203 Fiscal year 2018 20 161 181 Fiscal year 2019 11 76 87 Fiscal year 2020 – – – Total minimum lease and other financing obligation payments 58 413 471 Less amount representing interest 3 21 24 Present value of minimum payments 55 392 447 Less current portion 25 283 308 Capital lease and other financing obligations, net of current portion $ 30 $ 109 $ 139 |
8. Commitments and Contingenc28
8. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum future rental commitments under noncancelable operating leases | ARCA AAP Total Fiscal year 2017 $ 4,618 $ 464 $ 5,082 Fiscal year 2018 3,572 467 4,039 Fiscal year 2019 2,355 488 2,843 Fiscal year 2020 1,917 468 2,385 Fiscal year 2021 2,160 28 2,188 Thereafter 1,214 – 1,214 Total minimum future rental commitments $ 15,836 $ 1,915 $ 17,751 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | For the fiscal years ended December 31, 2016 January 2, 2016 Current tax expense (benefit): Federal $ 12 $ (855 ) State 36 (18 ) Foreign – (229 ) Current tax expense (benefit) $ 48 $ (1,102 ) Deferred tax expense — domestic (97 ) (831 ) Deferred tax expense — foreign – 219 Benefit of income taxes $ (49 ) $ (1,714 ) |
Schedule of Effective Income Tax Rate Reconciliation | For the fiscal years ended December 31, 2016 January 2, 2016 Income tax expense at statutory rate $ (617 ) (1,920 ) Portion attributable to noncontrolling interest at statutory rate 107 413 State tax expense, net of federal tax effect (69 ) (288 ) Permanent differences 20 83 Change in valuation allowance 414 (7 ) Recognition of tax effect for the cumulative undistributed earnings from Canada – (16 ) Other 95 21 (49 ) (1,714 ) |
Schedule of Income before Income Tax, Domestic and Foreign | For the fiscal years ended December 31, 2016 January 2, 2016 United States $ (1,677 ) $ (5,452 ) Canada (137 ) (194 ) $ (1,814 ) $ (5,646 ) |
Schedule of Deferred Tax Assets and Liabilities | December 31, January 2, 2016 Deferred tax assets: Net operating loss carryforwards $ 794 $ 520 Federal and state tax credits 476 442 Reserves 240 218 Accrued expenses 2,015 1,964 Share-based compensation 355 352 Accumulated other comprehensive loss 361 361 Property and equipment 8 191 Unrealized Currency Exchange 238 – Other 161 166 Total deferred tax assets 4,648 4,214 Deferred tax liabilities: Prepaid expenses (56 ) (89 ) Property and equipment (162 ) (138 ) Investments (1,269 ) (1,269 ) Other (69 ) (137 ) Total deferred tax liabilities (1,556 ) (1,633 ) Valuation allowance (1,011 ) (597 ) Net deferred tax assets $ 2,081 $ 1,984 The deferred tax amounts have been classified in the accompanying consolidated balance sheets as follows: December 31, January 2, 2016 Current assets $ – $ – Non-current assets 2,081 1,984 Non-current liabilities – – $ 2,081 $ 1,984 |
10. Shareholders' Equity (Table
10. Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Summary of the assumptions used to estimate the fair value of stock options granted using the Black-Scholes Model | For the fiscal years ended December 31, 2016 January 2, 2016 Expected dividend yield – – Expected stock price volatility 85.44% 84.80% Risk-free interest rate 2.16% 2.16% Expected life of options (years) 10.00 10.00 |
Schedule of all outstanding options, activity | Options Weighted Exercise Price Aggregate Weighted Average Remaining Contractual Life Balance at January 3, 2015 905 $ 3.25 Granted 130 1.33 Exercised (12 ) 1.89 Cancelled/expired (173 ) 4.63 Forfeited (70 ) 2.67 Balance at January 2, 2016 780 2.70 $ – 5.23 Granted 30 1.05 Cancelled/expired (51 ) 0.88 Forfeited (49 ) 2.85 Balance at December 31, 2016 710 $ 2.62 $ – 4.66 Options exercisable at December 31, 2016 651 $ 2.67 $ – |
Schedule of estimated future share-based compensation expense | Fiscal year 2017 $ 32 Fiscal year 2018 – $ 32 |
12. Segment Information (Tables
12. Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of segment information | For the fiscal years ended December 31, January 2, Revenues: Retail $ 61,551 $ 65,637 Recycling 42,038 46,202 Total revenues $ 103,589 $ 111,839 Operating income (loss): Retail $ (1,646 ) $ (1,741 ) Recycling 1,101 (2,363 ) Total operating income $ (545 ) $ (4,104 ) Cash capital expenditures: Retail $ 33 $ 121 Recycling 342 283 Total cash capital expenditures $ 375 $ 404 Depreciation and amortization expense: Retail $ 216 $ 197 Recycling 1,048 1,073 Total depreciation and amortization expense $ 1,264 $ 1,270 Interest expense: Retail $ 251 $ 437 Recycling 1,168 855 Total interest expense $ 1,419 $ 1,292 December 31, 2016 January 2, 2016 Assets: Retail $ 17,559 $ 18,088 Recycling 24,297 28,691 Total assets $ 41,856 $ 46,779 |
1. Nature of Business and Bas32
1. Nature of Business and Basis of Presentation (Details Narrative) - Integer | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Number of weeks reflected in operating results | 52 | 52 |
ARCA Advanced Processing, LLC [Member] | ||
Interest in a joint venture (as a percent) | 50.00% |
2. Significant Accounting Pol33
2. Significant Accounting Policies (Details - Inventories) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Inventories | ||
Appliances held for resale | $ 16,146 | $ 16,360 |
Processed metals from recycled appliances held for resale | 139 | 367 |
Other inventories | 6 | 6 |
Total inventories | $ 16,291 | $ 16,733 |
2. Significant Accounting Pol34
2. Significant Accounting Policies (Details - Property and equipment) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | $ 24,384 | $ 24,037 |
Less accumulated depreciation and amortization | (14,268) | (13,052) |
Property plant and equipment, net | 10,116 | 10,985 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | 1,140 | 1,140 |
Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | $ 3,780 | 3,714 |
Estimated useful life | 18-30 years | |
Equipment and Computer Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | $ 19,260 | 19,040 |
Estimated useful life | 3-15 years | |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | $ 204 | $ 143 |
2. Significant Accounting Pol35
2. Significant Accounting Policies (Details - Future amortization expense) - Software Development [Member] $ in Thousands | Dec. 31, 2016USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
2,017 | $ 118 |
2,018 | 73 |
2,019 | 24 |
Estimated future amortization expense | $ 215 |
2. Significant Accounting Pol36
2. Significant Accounting Policies (Details - Warranty accrual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Changes in warranty accrual | ||
Beginning Balance | $ 42 | |
Standard accrual based on units sold | 17 | $ 45 |
Actual costs incurred | (16) | (16) |
Periodic accrual adjustments | (17) | (17) |
Ending Balance | $ 26 | $ 42 |
2. Significant Accounting Pol37
2. Significant Accounting Policies (Details - EPS) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Numerator: | ||
Net loss attributable to controlling interest | $ (1,451) | $ (2,717) |
Denominator: | ||
Weighted average shares outstanding - basic | 6,054,000 | 5,833,000 |
Stock warrants (in shares) | 167,000 | 0 |
Weighted average shares outstanding - diluted (in shares) | 6,221,000 | 5,833,000 |
Income per share: | ||
Basic (in dollars per share) | $ (.24) | $ (0.47) |
Diluted (in dollars per share) | $ (.23) | $ (0.47) |
2. Significant Accounting Pol38
2. Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts | $ 54 | $ 73 |
Depreciation and amortization | 1,264 | 1,270 |
Depreciation and amortization, cost of revenues | 873 | 846 |
Software capitalized | 159 | 118 |
Amortization on software development costs | 129 | 117 |
Asset impairment charges | 0 | 0 |
Restricted cash | 500 | 500 |
Goodwill | 38 | 38 |
Foreign currency transaction gains (losses) | 32 | (380) |
Advertising expense | $ 1,124 | $ 1,822 |
Shares excluded from EPS for antidilution | 900,000 | 726,000 |
3. Variable Interest Entity (De
3. Variable Interest Entity (Details - VIE Assets and Liabilities) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Assets | ||
Total Assets | $ 7,843 | $ 8,915 |
Liabilities | ||
Total Liabilities | 2,180 | 2,838 |
ARCA Advanced Processing, LLC [Member] | ||
Assets | ||
Total Assets | 7,843 | 8,915 |
Liabilities | ||
Total Liabilities | 7,030 | 7,474 |
ARCA Advanced Processing, LLC [Member] | Current Assets [Member] | ||
Assets | ||
Total Assets | 438 | 696 |
ARCA Advanced Processing, LLC [Member] | Property and Equipment [Member] | ||
Assets | ||
Total Assets | 7,322 | 8,077 |
ARCA Advanced Processing, LLC [Member] | Other Assets [Member] | ||
Assets | ||
Total Assets | 83 | 142 |
ARCA Advanced Processing, LLC [Member] | Accounts Payable [Member] | ||
Liabilities | ||
Total Liabilities | 1,388 | 2,342 |
ARCA Advanced Processing, LLC [Member] | Accrued Expenses [Member] | ||
Liabilities | ||
Total Liabilities | 523 | 399 |
ARCA Advanced Processing, LLC [Member] | Long-term debt, current [Member] | ||
Liabilities | ||
Total Liabilities | 3,558 | 946 |
ARCA Advanced Processing, LLC [Member] | Long-term debt, noncurrent [Member] | ||
Liabilities | ||
Total Liabilities | 435 | 3,498 |
ARCA Advanced Processing, LLC [Member] | Other Liabilities [Member] | ||
Liabilities | ||
Total Liabilities | $ 1,126 | $ 289 |
3. Variable Interest Entity (40
3. Variable Interest Entity (Details - VIE Operating Results) - ARCA Advanced Processing, LLC [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Operating results of VIE | ||
Revenues | $ 6,697 | $ 6,838 |
Gross profit (loss) | 1,305 | (280) |
Operating loss | $ (363) | $ (2,205) |
4. Other Assets (Details)
4. Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Assets, Noncurrent [Abstract] | ||
Deposits | $ 453 | $ 416 |
Other | 104 | 122 |
Recycling contract, net | 19 | 20 |
Goodwill | 38 | 38 |
Total other assets | $ 614 | $ 663 |
4. Other Assets (Details Narrat
4. Other Assets (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Assets, Noncurrent [Abstract] | ||
Amortization expense related to recycling contract | $ 21 | $ 80 |
5. Accrued Expenses (Details)
5. Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Payables and Accruals [Abstract] | ||
Sales tax estimates, including interest | $ 4,203 | $ 4,804 |
Compensation and benefits | 2,431 | 1,446 |
Accrued incentive and rebate checks | 358 | 293 |
Accrued rent | 263 | 235 |
Warranty | 26 | 42 |
Accrued payables | 570 | 749 |
Deferred revenue | 227 | 413 |
Other | 810 | 952 |
Accrued expenses, current | $ 8,888 | $ 8,934 |
6. Line of Credit (Details Narr
6. Line of Credit (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Line of Credit Facility [Line Items] | ||
Outstanding balance under the Revolving Credit Agreement | $ 10,333 | $ 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 | May 1, 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 | $ 5,752 | 12,668 |
Available borrowing capacity under the Revolving Credit Agreement | 3,234 | $ 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 |
7. Borrowings (Details)
7. Borrowings (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Capital leases and other financing obligations | $ 567 | $ 988 |
Debt issuance costs, net | (779) | (67) |
Total debt and capital lease obligations | 4,919 | 5,757 |
Less current maturities | 2,093 | 1,251 |
Debt, noncurrent portion | 2,826 | 4,573 |
PNC Bank [Member] | ||
Total debt and capital lease obligations | 1,020 | 1,275 |
Susquehanna Bank [Member] | ||
Total debt and capital lease obligations | 3,342 | 3,242 |
2.75% note [Member] | ||
Total debt and capital lease obligations | $ 582 | $ 0 |
7. Borrowings (Details - Future
7. Borrowings (Details - Future maturities) $ in Thousands | Dec. 31, 2016USD ($) |
Future Annual Maturities of borrowings | |
2,017 | $ 1,785 |
2,018 | 703 |
2,019 | 717 |
2,020 | 661 |
2,021 | 606 |
Long-term Debt | 4,472 |
ARCA [Member] | |
Future Annual Maturities of borrowings | |
2,017 | 748 |
2,018 | 18 |
2,019 | 9 |
2,020 | 0 |
2,021 | 103 |
Long-term Debt | 878 |
ARCA Advanced Processing, LLC [Member] | |
Future Annual Maturities of borrowings | |
2,017 | 1,037 |
2,018 | 685 |
2,019 | 708 |
2,020 | 661 |
2,021 | 503 |
Long-term Debt | $ 3,594 |
7. Borrowings (Details - Futu47
7. Borrowings (Details - Future minimum capital lease payments) $ in Thousands | Dec. 31, 2016USD ($) |
Remaining minimum payments required under the capital lease together with the present value | |
2,017 | $ 203 |
2,018 | 181 |
2,019 | 87 |
2,020 | 0 |
Total minimum lease and other financing obligation payments | 471 |
Less amount representing interest | 24 |
Present value of minimum payments | 447 |
Less current portion | 308 |
Capital lease and other financing obligations, net of current portion | 139 |
ARCA [Member] | |
Remaining minimum payments required under the capital lease together with the present value | |
2,017 | 27 |
2,018 | 20 |
2,019 | 11 |
2,020 | 0 |
Total minimum lease and other financing obligation payments | 58 |
Less amount representing interest | 3 |
Present value of minimum payments | 55 |
Less current portion | 25 |
Capital lease and other financing obligations, net of current portion | 30 |
ARCA Advanced Processing, LLC [Member] | |
Remaining minimum payments required under the capital lease together with the present value | |
2,017 | 176 |
2,018 | 161 |
2,019 | 76 |
2,020 | 0 |
Total minimum lease and other financing obligation payments | 413 |
Less amount representing interest | 21 |
Present value of minimum payments | 392 |
Less current portion | 283 |
Capital lease and other financing obligations, net of current portion | $ 109 |
7. Borrowings (Details Narrativ
7. Borrowings (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Debt and capital lease obligations | $ 4,919 | $ 5,757 |
Capital leased equipment cost | 2,601 | 2,606 |
Accumulated amortization of capital leased equipment | $ 1,771 | $ 1,635 |
Term Loan [Member] | PNC Bank [Member] | ||
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 | 9.50% | 7.75% |
Debt maturity date | Feb. 1, 2021 | |
Term Loan [Member] | Susquehanna Bank [Member] | ||
Debt issuance date | Mar. 10, 2021 | |
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 issuance date | Mar. 15, 2015 | |
Debt face amount | $ 325 | |
Debt interest rate description | 8% |
8. Commitments and Contingenc49
8. Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Minimum future payments operating leases | |
2,017 | $ 5,082 |
2,018 | 4,039 |
2,019 | 2,843 |
2,020 | 2,385 |
2,021 | 2,188 |
Thereafter | 1,214 |
Total | 17,751 |
ARCA [Member] | |
Minimum future payments operating leases | |
2,017 | 4,618 |
2,018 | 3,572 |
2,019 | 2,355 |
2,020 | 1,917 |
2,021 | 2,160 |
Thereafter | 1,214 |
Total | 15,836 |
ARCA Advanced Processing, LLC [Member] | |
Minimum future payments operating leases | |
2,017 | 464 |
2,018 | 467 |
2,019 | 488 |
2,020 | 468 |
2,021 | 28 |
Thereafter | 0 |
Total | $ 1,915 |
8. Commitments and Contingenc50
8. Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Leases, Rent Expense | $ 4,841 | $ 5,300 |
Future sublease rentals payments receivable through September 2019 | 655 | |
Sales tax liability from tax examination | $ 4,200 |
9. Income Taxes (Details - Curr
9. Income Taxes (Details - Current tax expense) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Provision for income taxes | ||
Federal | $ 12 | $ (855) |
State | 36 | (18) |
Foreign | 0 | (229) |
Current tax expense (benefit) | 48 | (1,102) |
Deferred tax expense - domestic | (97) | (831) |
Deferred tax expense - foreign | 0 | 219 |
Benefit of income taxes | $ (49) | $ (1,714) |
9. Income Taxes (Details - Inco
9. Income Taxes (Details - Income tax reconciliation) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Reconciliation of provision for income taxes with federal statutory rate | ||
Income tax expense at statutory rate | $ (617) | $ (1,920) |
Portion attributable to noncontrolling interest at statutory rate | 107 | 413 |
State tax expense, net of federal tax effect | (69) | (288) |
Permanent differences | 20 | 83 |
Change in valuation allowance | 414 | (7) |
Recognition of tax effect for the cumulative undistributed earnings from Canada | 0 | (16) |
Other | 95 | 21 |
Provision for income taxes at effective tax rate | $ (49) | $ (1,714) |
9. Income Taxes (Details - Geog
9. Income Taxes (Details - Geographic breakdown) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Income before income taxes and noncontrolling interest | ||
United States | $ (1,677) | $ (5,452) |
Canada | (137) | (194) |
Income (loss) before income taxes and noncontrolling interest | $ (1,814) | $ (5,646) |
9. Income Taxes (Details - Defe
9. Income Taxes (Details - Deferred income taxes) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 794 | $ 520 |
Federal and state tax credits | 476 | 442 |
Reserves | 240 | 218 |
Accrued expenses | 2,015 | 1,964 |
Share-based compensation | 355 | 352 |
Accumulated other comprehensive loss | 361 | 361 |
Property and equipment | 8 | 191 |
Unrealized Currency Exchange | 238 | 0 |
Other | 161 | 166 |
Total deferred tax assets | 4,648 | 4,214 |
Deferred Tax Liabilities: | ||
Prepaid expenses | (56) | (89) |
Property and equipment | (162) | (138) |
Investments | (1,269) | (1,269) |
Other | (69) | (137) |
Total deferred tax liabilities | (1,556) | (1,633) |
Valuation allowance | (1,011) | (597) |
Net deferred tax assets | $ 2,081 | $ 1,984 |
9. Income Taxes (Details - De55
9. Income Taxes (Details - Deferred tax classification) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets, current | $ 0 | $ 0 |
Deferred tax assets, noncurrent | 2,081 | 1,984 |
Net deferred tax liabilities | $ 2,081 | $ 1,984 |
9. Income Taxes (Details Narrat
9. Income Taxes (Details Narrative) $ in Thousands | Dec. 31, 2016USD ($) |
Foreign Tax Credit Carryforward [Member] | |
Carry Forwards [Table] [Line Items] | |
Tax credit carryforward | $ 256 |
Domestic Tax Authority [Member] | |
Carry Forwards [Table] [Line Items] | |
Operating Loss Carryforwards | 0 |
State and Local Jurisdiction [Member] | |
Carry Forwards [Table] [Line Items] | |
Operating Loss Carryforwards | 425 |
Canada Revenue Agency [Member] | |
Carry Forwards [Table] [Line Items] | |
Operating Loss Carryforwards | $ 85 |
10. Shareholders' Equity (Detai
10. Shareholders' Equity (Details - Assumptions) | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Assumptions used to estimate the fair value of stock options granted | ||
Expected dividend yield (as a percent) | ||
Expected stock price volatility (as a percent) | 85.44% | 84.80% |
Risk-free interest rate (as a percent) | 2.16% | 2.16% |
Expected life of options (in years) | 10 years | 10 years |
10. Shareholders' Equity (Det58
10. Shareholders' Equity (Details - Option activity) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Options outstanding, beginning balance | 780,000 | 905,000 |
Options granted | 30,000 | 130,000 |
Options exercised | 0 | (12,000) |
Options cancelled/expired | (51,000) | (173,000) |
Options forfeited | (49,000) | (70,000) |
Options outstanding, ending balance | 710,000 | 780,000 |
Options exercisable | 651,000 | |
Weighted Average Exercise Price | ||
Weighted average exercise price, beginning | $ 2.70 | $ 3.25 |
Weighted average exercise price, granted | 1.05 | 1.33 |
Weighted average exercise price, exercised | 1.89 | |
Weighted average exercise price, expired | .88 | 4.63 |
Weighted average exercise price, forfeited | 2.85 | 2.67 |
Weighted average exercise price, ending | 2.62 | $ 2.70 |
Weighted average exercise price, exercisable | $ 2.67 | |
Aggregate intrinsic value, options outstanding | $ 0 | |
Aggregate intrinsic value, options exercisable | $ 0 | |
Weighted average remaining contractual life | 4 years 7 months 28 days | 5 years 2 months 23 days |
10. Shareholders' Equity (Det59
10. Shareholders' Equity (Details - Share-based compensation) $ in Thousands | Dec. 31, 2016USD ($) |
Future share-based compensation expense | $ 32 |
Fiscal Year 2017 [Member] | |
Future share-based compensation expense | 32 |
Fiscal Year 2018 [Member] | |
Future share-based compensation expense | $ 0 |
10. Shareholders' Equity (Det60
10. Shareholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Stock issued for exercise of options, shares | 0 | 12,000 | |
Options outstanding | 710,000 | 780,000 | 905,000 |
Weighted average fair value per option granted | $ .88 | $ 1.12 | |
Share based compensation expense | $ 245 | $ 316 | |
Aggregate intrinsic value per share outstanding | $ 1.12 | ||
Warrants outstanding | 24,000 | ||
Warrant exercise price | $ 3.55 | ||
Warrant expiration date | May 31, 2020 | ||
Options Exercised [Member] | |||
Stock issued for exercise of options, shares | 13,000 | ||
Proceeds from option exercises | $ 24 | ||
Intrinsic value of options exercised | $ 10 | ||
Energy Efficiency Investments [Member] | |||
Warrants issued | 167,000 | ||
Fair value of warrants issued | $ 106 | ||
2011 Plan [Member] | |||
Options authorized for issuance | 700,000 | ||
Options outstanding | 485,000 | ||
2011 Plan [Member] | Convertible Note Agreement [Member] | |||
Stock issued for convertible note agreement, shares | 620,000 | ||
2011 Plan [Member] | CEO [Member] | |||
Stock issued for compensation, shares | 50,000 | ||
Stock issued for compensation, value | $ 62 | ||
2011 Plan [Member] | Contractor [Member] | |||
Stock issued for services, shares | 85,000 | ||
2011 Plan [Member] | Then CEO [Member] | |||
Stock issued for compensation, shares | 100,000 | ||
Stock issued for compensation, value | $ 114 | ||
2016 Plan [Member] | |||
Options authorized for issuance | 2,000,000 | ||
Options outstanding | 20,000 |
11. Major Customers and Suppl61
11. Major Customers and Suppliers (Details) | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Accounts Receivable [Member] | Two Customers [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 25.00% | 39.00% |
12. Segment Information (Detail
12. Segment Information (Details - Operations) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Total revenues | $ 103,589 | $ 111,839 |
Total operating income (loss) | (545) | (4,104) |
Total cash capital expenditures | 375 | 404 |
Total depreciation and amortization | 1,264 | 1,270 |
Interest expense | 1,419 | 1,292 |
Total assets | 41,856 | 46,846 |
Retail [Member] | ||
Total revenues | 61,551 | 65,637 |
Total operating income (loss) | (1,646) | (1,741) |
Total cash capital expenditures | 33 | 121 |
Total depreciation and amortization | 216 | 197 |
Interest expense | 251 | 437 |
Total assets | 17,559 | 18,088 |
Recycling [Member] | ||
Total revenues | 42,038 | 46,202 |
Total operating income (loss) | 1,101 | (2,363) |
Total cash capital expenditures | 342 | 283 |
Total depreciation and amortization | 1,048 | 1,073 |
Interest expense | 1,168 | 855 |
Total assets | $ 24,297 | $ 28,691 |
13. Benefit Contribution Plan (
13. Benefit Contribution Plan (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Benefit Contribution Plan [Abstract] | ||
Defined Contribution Plan, Employer Matching Contribution, Percent | 5.00% | |
Recognized expenses for contributions | $ 62 | $ 84 |