ALT5 Sigma (ALTS) 10-Q 21 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jul. 01, 2017	Aug. 21, 2017
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. 1, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		6,655,365
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
ASSETS
Cash and cash equivalents	$ 191	$ 968
Trade and other receivables, net	8,789	10,509
Inventories, net	12,574	16,291
Income tax receivable	0	16
Prepaid expenses and other current assets	2,326	761
Total current assets	23,880	28,545
Property and equipment, net	7,989	10,116
Restricted cash	1,298	500
Deposits and other assets	871	614
Deferred taxes	1,487	2,081
Total assets	35,525	41,856
Liabilities:
Accounts payable	4,836	6,143
Accrued liabilities	8,607	8,888
Line of credit - PNC Bank	0	10,333
Accrued income taxes	1,200	0
Current portion of long-term maturities	2,054	2,093
Total current liabilities	16,697	27,457
Long-term obligations, less current maturities	3,365	2,826
Other noncurrent liabilities	328	364
Total liabilities	20,390	30,647
Shareholders' equity:
Common stock, no par value, 50,000 shares authorized, 6,655 shares issued and and outstanding at July 1, 2017 and December 31, 2016	22,437	22,405
Accumulated deficit	(6,757)	(11,028)
Accumulated other comprehensive loss	(538)	(574)
Total stockholders' equity	15,142	10,803
Non controlling interest	(7)	406
Total liabilities and stockholders' equity	$ 35,525	$ 41,856

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Jul. 01, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common Stock, no par value	$ 0	$ 0
Common Stock, shares authorized (in shares)	50,000	50,000
Common Stock, issued shares (in shares)	6,655	6,655
Common Stock, outstanding shares (in shares)	6,655	6,655

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Income Statement [Abstract]
Revenues	$ 25,782	$ 24,756	$ 49,021	$ 50,101
Costs of revenues	17,063	18,320	34,279	37,474
Gross profit	8,719	6,436	14,742	12,627
Operating expenses:
Selling, general and administrative expenses	6,134	7,529	13,866	14,507
Operating income (loss)	2,585	(1,093)	876	(1,880)
Other income (expense):
Gain on the sale of property	0	0	5,163	0
Interest expense, net	(132)	(304)	(429)	(587)
Other income (expense)	62	(26)	67	94
Total other income (expense), net	(70)	(330)	4,801	(493)
Income (loss) before provision for income taxes	2,515	(1,423)	5,677	(2,373)
Total provision (benefit) for income taxes	602	758	1,819	438
Net income (loss)	1,913	(2,181)	3,858	(2,811)
Net loss attributed to noncontrolling interest	150	78	413	257
Net income (loss) attributed to controlling interest	$ 2,063	$ (2,103)	$ 4,271	$ (2,554)
Earnings (loss) per share:
Basic and Diluted	$ 0.31	$ (0.35)	$ 0.64	$ (0.43)
Diluted	$ 0.31	$ (0.35)	$ 0.64	$ (0.43)
Weighted average common shares outstanding:
Basic	6,655	5,929	6,655	5,915
Diluted	6,687	5,929	6,706	5,915
Net income (loss)	$ 1,913	$ (2,181)	$ 3,858	$ (2,811)
Other comprehensive income (loss), net of tax:
Effect of foreign currency translation adjustments	23	24	36	43
Total other comprehensive income (loss), net of tax	23	24	36	43
Comprehensive income (loss)	1,936	(2,157)	3,894	(2,768)
Comprehensive loss attributable to noncontrolling interest	150	78	413	257
Comprehensive income (loss) attributable to controlling interest	$ 2,086	$ (2,079)	$ 4,307	$ (2,511)

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016
Operating activities:
Net income (loss)	$ 3,858	$ (2,811)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	609	634
Amortization of debt issuance costs	135	89
Stock based compensation expense	32	141
Gain on sale of property	(5,163)	0
Change in reserve for uncollectible accounts receivable	(27)	0
Change in reserve for inventory obsolescence	32	0
Change in deferred income taxes	594	439
Other	(291)	(37)
Changes in assets and liabilities:
Trade and other receivables	1,777	4,917
Prepaid expenses and other currrent assets	(1,566)	(145)
Inventories	3,697	801
Accounts payable and accrued expenses	(1,605)	744
Accrued income taxes	1,216	885
Net cash provided by operating activities	3,298	5,657
Investing activities:
Purchases of property and equipment	(104)	(193)
Proceeds from sale of property and equipment, net	6,785	0
Increase in restricted cash	(798)	0
Other	0	(3)
Net cash provided by (used in) investing activities	5,883	(196)
Financing activities:
Net payments under line of credit - PNC Bank	(10,333)	(4,882)
Net borrowing under the line of credit - MidCap Financial Trust	1,066	0
Proceeds from issuance of long term debt obligations	1,070	100
Payment of debt issuance costs	(344)	(125)
Payments on debt obligations	(1,427)	(307)
Net cash used in financing activities	(9,968)	(5,214)
Effect of changes in exchange rate on cash and cash equivalents	10	33
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(777)	280
CASH AND CASH EQUIVALENTS, beginning of period	968	1,969
CASH AND CASH EQUIVALENTS, end of period	191	2,249
Supplemental cash flow disclosures:
Interest paid	304	213
Income taxes refunded (paid)	(48)	871
Noncash financing and investing activities:
Debt issuance costs related to credit agreement renewal	$ 0	$ 63

1. Nature of Business and Basis

1. Nature of Business and Basis of Presentation	6 Months Ended
	Jul. 01, 2017
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 December 31, 2016 which has been derived from the 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 1, 2017 and July 2, 2016, 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 condensed consolidated 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 condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2017. 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 energy efficiency programs. The operating results of our wholly owned subsidiaries are consolidated in our financial statements. AAP is a joint venture that was formed in October 2009 between ARCA and 4301 Operations, LLC (“4301”). ARCA and 4301 owned a 50% interest in AAP through August 15, 2017. AAP established a regional processing center in Philadelphia, Pennsylvania at which recyclable appliances are processed. The financial position and results of operations of AAP are consolidated in our financial statements based on our conclusion that AAP is a variable interest entity due to our contribution in excess of 50% of the total equity, subordinated debt and other forms of financial support. We had a controlling financial interest in AAP and we have provided substantial financial support to fund the operations of AAP since its inception. On August 15, 2017, subsequent to these condensed consolidated financial statements, ARCA sold it’s 50% interest in AAP. See Note 14 to these condensed consolidated financial statements. On August 18, 2017, subsequent to these condensed consolidated financial statements, we acquired GeoTraq, Inc. (“GeoTraq”). GeoTraq is a development stage company that is engaged in the development, manufacture, and, ultimately, sale of cellular transceiver modules, also known as Cell-ID modules. GeoTraq has created the world’s first, and only, dedicated Cell-ID transceiver module that can enable the design of extremely small, inexpensive products that can operate for years on a single charge, powered by standardly available batteries of diminutive size without the need of recharge. Accordingly, and utilizing Cell-ID technology exclusively, we believe that GeoTraq will provide an exclusive, low-cost solution and service life that will enable new global markets for location-based services (LBS) that could utilize technology similar to the technology that emergency 911 location systems currently utilize. The GeoTraq platform is a Java-based, scalable, multi-tenant software, designed to manage an unlimited number of Cell-ID devices. Cell-ID transceivers work indoors, unlike GPS, which are only accurate outdoors. Cell-ID transceivers do not require close proximity for asset tracking, unlike both RFID and Wi-Fi. GPS devices are more expensive and utilize significantly more energy than the GeoTraq device. RFID technology will operate indoors, but only over short distances and requires installation of additional hardware. As a result of this transaction, GeoTraq became a wholly-owned subsidiary of ours. In connection with this transaction, we tendered to the owners of GeoTraq $200,000, issued to them an aggregate of 288,588 shares of our Series A Convertible Preferred Stock, and entered into one-year unsecured promissory notes for an aggregate of $800,000. We are in discussions with our bank in respect of harmonizing this transaction with our rights and obligations under our banking agreement. As the information set forth herein is merely a descriptive summary of the transaction, it cannot contain every detail of the transaction. The agreement between GeoTraq and us is filed with this Report as Exhibit 10.9. See Note 14 to these condensed consolidated financial statements.

2. Inventories

2. Inventories	6 Months Ended
	Jul. 01, 2017
Inventory Disclosure [Abstract]
Inventories	Inventories, consisting principally of appliances, are stated at the lower of cost, determined on a specific identification basis, or net realizable value and consist of: July 1, 2017 December 31, 2016 Appliances held for resale $ 12,456 $ 16,146 Processed metals from recycled appliances held for resale 118 139 Other – 6 $ 12,574 $ 16,291 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’s 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. 01, 2017
Earnings (loss) per 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 shares of common stock outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive shares of common stock been issued. Potentially dilutive shares of common stock include unexercised stock options and warrants. Basic per share amounts are computed, generally, by dividing net income attributable to controlling interest by the weighted average number of shares of common stock outstanding. Diluted per share amounts assume the conversion, exercise or issuance of all potential common stock instruments unless their effect is anti-dilutive, thereby reducing the loss or increasing the income per common share. In calculating diluted weighted average shares and per share amounts, we included stock options and warrants with exercise prices below average market prices, for the respective reporting periods in which they were dilutive, using the treasury stock method. We calculated the number of additional shares by assuming the outstanding stock options were exercised and that the proceeds from such exercises were used to acquire shares of common stock at the average market price during the quarter. For the 13 weeks and 26 weeks ended July 1, 2017 and July 2, 2016, we excluded options and warrants to purchase 734 and 734 shares of common stock from the diluted weighted average shares outstanding calculation as the effect of these options were anti-dilutive. 13 Weeks Ended 26 Weeks Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Basic Net income (loss) attributed to controlling interest $ 2,063 $ (2,103 ) $ 4,271 $ (2,554 ) Weighted average common shares outstanding 6,655 5,929 6,655 5,915 Basic earnings (loss) per share $ 0.31 $ (0.35 ) $ 0.64 $ (0.43 ) Diluted Net income (loss) applicable to diluted earnings (loss) per share $ 2,063 $ (2,103 ) $ 4,271 $ (2,554 ) Weighted average common shares outstanding 6,655 5,929 6,655 5,915 Add: Options – – – – Add: Common Stock Warrants 32 – 51 – Assumed diluted weighted average common shares outstanding 6,687 5,929 6,706 5,915 Diluted earnings (loss) per share $ 0.31 $ (0.35 ) $ 0.64 $ (0.43 )

4. Share-Based Compensation

4. Share-Based Compensation	6 Months Ended
	Jul. 01, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-Based Compensation	We recognized share-based compensation expense of $9 and $102 for the 13 weeks ended July 1, 2017, and July 2, 2016 respectively. We recognized share-based compensation expense of $32 and $140 for the 26 weeks ended July 1, 2017 and July 2, 2016, respectively. There is no estimated future share-based compensation expense as of July 1, 2017.

5. Variable Interest Entity

5. Variable Interest Entity	6 Months Ended
	Jul. 01, 2017
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 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. On August 15, 2017, we sold our 50% interest in AAP. See Note 14 – Subsequent Events to these condensed consolidated financial statements. The following table summarizes the assets and liabilities of AAP as of July 1, 2017 and December 31, 2016: July 1, 2017 December 31, 2016 Assets Current assets $ 293 $ 438 Property and equipment, net 6,933 7,322 Other assets 93 83 Total assets $ 7,319 $ 7,843 Liabilities Accounts payable $ 2,569 $ 1,388 Accrued expenses 585 523 Current maturities of long-term debt obligations 728 3,558 Long-term debt obligations, net of current maturities 3,166 435 Other liabilities (a) 289 1,126 Total liabilities $ 7,337 $ 7,030 (a) Other liabilities represent loans and advances between ARCA and AAP that are eliminated in consolidation. The following table summarizes the operating results of AAP for the 13 weeks and 26 weeks ended July 1, 2017, and July 2, 2016, respectively: 13 Weeks Months Ended July 1, 2017 July 2, 2016 Revenues $ 642 $ 1,695 Gross profit 100 319 Operating loss (236 ) (93 ) Net loss (299 ) (159 ) 26 Weeks Ended July 1, 2017 July 2, 2016 Revenues $ 1,127 $ 3,480 Gross profit (14 ) 475 Operating loss (708 ) (364 ) Net loss (826 ) (514 )

6. Property and Equipment

6. Property and Equipment	6 Months Ended
	Jul. 01, 2017
Property, Plant and Equipment [Abstract]
Property and Equipment	Property and equipment as of July 1, 2017, and December 31, 2016, consist of the following: Useful Life (Years) July 1, 2017 December 31, 2016 Land $ – $ 1,140 Buildings and improvements 18-30 2,288 3,780 Equipment (including computer software) 3-15 18,687 19,260 Projects under construction 205 204 Property and equipment 21,180 24,384 Less accumulated depreciation and amortization (13,191 ) (14,268 ) Property and equipment, net $ 7,989 $ 10,116 Depreciation and amortization expense was $284 and $309 for the 13 weeks ended July 1, 2017 and July 2, 2016, respectively. Depreciation and amortization expense was $609 and $634 for the 26 weeks ended July 1, 2017 and July 2, 2016, respectively. On January 25, 2017, the Company sold its’ Compton, California facility (the “Compton Facility”) for $7,103 to Terreno Acacia, LLC. The proceeds from the sale paid off the PNC term loan in the aggregate principal amount of $1,020 that was secured by the property and costs of sale of $325, with the remaining proceeds of $5,758 paid towards the PNC Revolver(as defined below). The Company recorded a gain on the sale of property of $5,163. The Company rented the Compton Facility back from Terreno Acacia, LLC after the completion of the sale from January 26, 2017 through April 10, 2017.

7. Deposits and other assets

7. Deposits and other assets	6 Months Ended
	Jul. 01, 2017
Assets, Noncurrent [Abstract]
Deposits and other assets	Deposits and other assets as of July 1, 2017, and December 31, 2016, consist of the following: July 1, 2017 December 31, 2016 Deposits $ 578 $ 453 Other 236 104 Recycling contract, net 19 19 Goodwill 38 38 $ 871 $ 614 For the 13 weeks and 26 weeks ended July 1, 2017, we recorded amortization expense of $0, related to our finite intangible assets.

8. Accrued liabilities

8. Accrued liabilities	6 Months Ended
	Jul. 01, 2017
Payables and Accruals [Abstract]
Accrued liabilities	Accrued liabilities as of July 1, 2017, and December 31, 2016, consist of the following: July 1, 2017 December 31, 2016 Sales tax estimates, including interest $ 4,573 $ 4,203 Compensation and benefits 1,147 2,431 Accrued incentive and rebate checks 471 358 Accrued rent 242 263 Warranty 42 26 Accrued payables 1,196 570 Deferred revenue 350 227 Other 586 810 $ 8,607 $ 8,888 Sales and Use Tax Assessment We operate in twenty-three states in the U.S. and in various provinces in Canada. From time to time, we are subject to sales and use tax audits that could result in additional taxes, penalties and interest owed to various taxing authorities. As previously disclosed, the California Board of Equalization (“BOE”) conducted a sales and use tax examination covering the California operations of 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 were not in agreement with the Company’s interpretation of the law. As a result, the Company applied for and, as of February 9, 2015, received approval to participate in the California Board of Equalization’s Managed Audit Program. The period covered under this program included 2011, 2012, 2013 and extended through the nine-month period ended September 30, 2014. On April 13, 2017 the Company received the formal BOE assessment for sales tax for tax years 2011, 2012 and 2013 in the amount of $4.1 million plus applicable interest of $0.5 million 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 intends to appeal this assessment and continue to engage the services of our existing retained sales tax experts throughout the appeal process. The BOE tax assessment is subject to protest and appeal, and would not need to be funded until the matter has been fully resolved through the appeal process. The Company anticipates that resolution of the BOE assessment could take up to two years.

9. Line of credit - PNC Bank

9. Line of credit - PNC Bank	6 Months Ended
	Jul. 01, 2017
Debt Disclosure [Abstract]
Line of credit - PNC Bank	We had a Revolving Credit, Term Loan and Security Agreement, as amended, (“PNC Revolver”) with PNC Bank, National Association (“PNC”) that provided us with a $15,000 revolving line of credit. The Revolving Credit Agreement included a lockbox agreement and a subjective acceleration clause and as a result we have classified the revolving line of credit as a current liability. The PNC Revolver was collateralized by a security interest in substantially all of our assets and PNC was also secured by an inventory repurchase agreement with Whirlpool Corporation solely with respect to Whirlpool purchases only. We also issued a $750 letter of credit in favor of Whirlpool Corporation. The PNC Revolver required, starting with the fiscal quarter ending April 2, 2016, that we meet a specified minimum earnings before interest, taxes, depreciation and amortization, and continuing at the end of each quarter thereafter, that we meet a minimum fixed charge coverage ratio of 1.1 to 1.0. The PNC Revolver limited investments that we could purchase, the amount of other debt and leases that we could incur, the amount of loans that we could issue to our affiliates and the amount we could spend on fixed assets, along with prohibiting the payment of dividends. The interest rate on the PNC Revolver, as stated in our renewal agreement on January 22, 2016, was PNC Base Rate plus 1.75% to 3.25%, or 1-, 2- or 3-month PNC LIBOR Rate plus 2.75% to 4.25%, with the rate being dependent on our level of fixed charge coverage. The PNC Base Rate meant, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the interest rate per annum announced from time to time by PNC as its prime rate, (ii) the Federal Funds Open Rate plus 0.5%, and (iii) the one-month LIBOR rate plus 100 basis points (1%). The amount of revolving borrowings under the PNC Revolver was based on a formula using accounts receivable and inventories. We did not have access to the full $15,000 revolving line of credit due to such formula, the amount of the letter of credit issued in favor of Whirlpool Corporation and the amount of outstanding loans owed to PNC by out AAP joint venture. As disclosed by the Company in Item 2.01 of its Current Report on Form 8-K filed on January 31, 2017, the Company sold its the Compton Facility building and land for $7,103. The net proceeds from the sale, after costs of sale and payoff of the Term Loan (as defined below), were used to reduce the outstanding balance under our PNC Revolver. On May 1, 2017, the PNC Revolver loan agreement was amended and the term was extended through June 2, 2017. The amendment, effective May 2, 2017, also reduced the maximum amount of borrowing under the PNC Revolver to $6 million. On May 10, 2017 we repaid in full and terminated our existing Revolving Credit, Term Loan and Security Agreement, as amended, with PNC Bank, National Association on the same date. The PNC Revolver terminated and was paid in full on May 10, 2017 with funds from MidCap Financial Trust. A letter of credit to Whirlpool Corporation remains outstanding with PNC backed by restricted cash collateral of $750 as of July 1, 2017. See Note 11, Borrowings, for additional information.

10. Long term obligations

10. Long term obligations	6 Months Ended
	Jul. 01, 2017
Debt Disclosure [Abstract]
Long term obligations	Long term debt, capital lease and other financing obligations as of July 1, 2017, and December 31, 2016, consist of the following: July 1, 2017 December 31, 2016 PNC term loan $ – $ 1,020 MidCap financial trust asset based revolving loan 1,066 – AFCO Finance 820 – Susquehanna term loans 3,242 3,242 GE 8% loan agreement 482 482 EEI note 103 103 PIDC 2.75% note, due in month installments of $3, including interest, due October 2024 270 287 Capital leases and other financing obligations 424 564 Debt issuance costs, net (988 ) (779 ) Total debt obligations 5,419 4,919 Less current maturities (2,054 ) (2,093 ) Long-term debt obligations, net of current maturities $ 3,365 $ 2,826 On January 24, 2011, we entered into a $2,550 Term Loan (“Term Loan”) with PNC Bank to refinance the mortgage on our Compton Facility. The Term Loan was payable in 119 consecutive monthly principal payments of $21 plus interest commencing on February 1, 2011 and followed by a 120th payment of all unpaid principal, interest and fees on February 1, 2021. The Revolving Credit Agreement required a balloon payment of $1,020 in principal plus interest and additional fees due on January 31, 2017. The Term Loan was collateralized with our California facility located in Compton, California. As disclosed by the Company in Item 2.01 of the Company’s Current Report on Form 8-K filed on January 31, 2017, the Term Loan was paid off in full on January 25, 2017 when the Compton Facility was sold. MidCap Financial Trust On May 10, 2017, we entered into a Credit and Security Agreement (“Credit Agreement”) with MidCap Financial Trust (“MidCap Financial Trust”), as a lender and as agent for itself and other lenders under the Credit Agreement. The Credit Agreement provides us with a $12 million revolving line of credit, which may be increased to $16 million under certain terms and conditions (the “MidCap Revolver”). The Credit Agreement has a stated maturity date of May 10, 2020, if not renewed. The Credit Agreement is collateralized by a security interest in substantially all of our assets. The lender is also secured by an inventory repurchase agreement with Whirlpool Corporation for Whirlpool purchases only. The Credit Agreement requires that we meet a minimum fixed charge coverage ratio of 1.00:1.00 for the applicable measuring period as of the end of each calendar month. The applicable measuring period is (i) the period commencing May 1, 2017 and ending on the last day of each calendar month from May 31, 2017 through April 30, 2018, and (ii) the twelve-month period ending on the last day of such calendar month thereafter. The Credit Agreement limits the amount of other debt we can incur, the amount we can spend on fixed assets, and the amount of investments we can make, along with prohibiting the payment of dividends. The amount of revolving borrowings available under the Credit Agreement is based on a formula using receivables and inventories. We may not have access to the full $12 million revolving line of credit due to the formula using our receivables and inventories and the amount of any outstanding letters of credit issued by the Lender. The interest rate on the revolving line of credit is the one month LIBOR rate plus four and one-half percent (4.50%). On July 1, 2017 and December 31, 2016, our available borrowing capacity under the Credit Agreement is $2,517 and $0, respectively. The weighted average interest rate for the period of May 10, 2017 through July 1, 2017 was 5.73%. We borrowed $16,030 and repaid $14,964 on the Credit Agreement during the period of May 10, 2017 through July 1, 2017, leaving an outstanding balance on the Credit Agreement of $1,066 and $0 at July 1, 2017 and December 31, 2016, respectively. On June 16, 2017, we entered into a financing agreement with AFCO Credit Corporation (“AFCO”) to fund the annual premiums on insurance policies purchased through Marsh Insurance. These policies relate to workers’ compensation and various liability policies including, but not limited to, General, Auto, Umbrella, Property, and Directors’ and Officers’. The total amount of the premiums financed is $1,070 with an interest rate of 3.567%. An initial down payment of $160 was paid on June 16, 2017 and an additional 10 monthly payments of $92 will be made beginning July 1, 2017 and ending April 1, 2018. The outstanding principal at the end of July 1, 2017 and December 31, 2016 was $820 and $0, respectively. On March 10, 2011, AAP entered into three separate commercial term loans (“BB&T Term Loans”) with Branch Banking Trust Company, as successor to Susquehanna Bank, (“BB&T”) pursuant to the guidelines of the U.S. Small Business Administration 7(a) Loan Program. The total amount of the BB&T Term Loans was $4,750, divided into three separate loans of $2,100; $1,400; and $1,250, respectively. The BB&T Term Loans matured in ten years and bore an interest rate of prime plus 2.75%. As of July 1, 2017 and July 2, 2016, the interest rate was 6.50% and 6.00%, respectively. Borrowings under the BB&T Term Loans were secured by substantially all of the assets of AAP along with liens on the business assets and certain personal assets of the owners of 4301 Operations, LLC. We were a guarantor of the BB&T Term Loans along with 4301 Operations, LLC and its members. In connection with the BB&T Term Loans, BB&T had a security interest in the recycling equipment assets of the Company. The BB&T Term Loans entered into by AAP were paid in full on August 15, 2017 and BB&T’s security interest in the recycling equipment assets of the Company was terminated and released. Please see Note 14, Subsequent Events, of these condensed consolidated financial statements. On November 8, 2016, the Company entered into a securities purchase agreement with Energy Efficiency Investments, LLC, pursuant to which the Company agreed to issue up to $7,732 principal amount of 3% Original Issue Discount Senior Convertible Promissory Notes of the Company and related common stock purchase warrants. These notes will be issued from time to time, up to such aggregate principal amount, at the request of the Company, subject to certain conditions, or at the option of Energy Efficiency Investments, LLC. Interest accrues at the rate of eight percent per annum on the principal amount of the notes outstanding from time to time, and is payable at maturity or, if earlier, upon conversion of these notes. The principal amount of these notes outstanding at July 1, 2017 and December 31, 2016, was $103. Capital leases and other financing obligations

11. Commitments and Contingenci

11. Commitments and Contingencies	6 Months Ended
	Jul. 01, 2017
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 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 to the Company, 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. The parties have reached a settlement that, if approved by the court, will fully resolve plaintiffs’ claims and provide for the release of all claims asserted in the litigation. On August 2, 2017, the court entered an order granting preliminary approval of the settlement. The court has scheduled a final approval hearing to take place on September 29, 2017. We can make no assurances that the court will grant final approval of the settlement. This matter has been submitted to our insurance carriers. In February 2012, various individuals commenced a class action lawsuit against Whirlpool Corporation (“Whirlpool”) and various distributors of Whirlpool products, including Sears, The Home Depot, Lowe’s and us, alleging certain appliances Whirlpool sold through its distribution chain, which includes us, were improperly designated with the ENERGY STAR® qualification rating established by the U.S. Department of Energy and the Environmental Protection Agency. The claims against us include breach of warranty claims, as well as various state consumer protection claims. The amount of the claim is, as yet, undetermined. Whirlpool has offered to fully indemnify and defend its distributors in this lawsuit, including us, and has engaged legal counsel to defend itself and the distributors. We are monitoring Whirlpool’s defense of the claims and believe the possibility of a material loss is remote. AMTIM Capital Inc. (“AMTIM”) provides management and sales services in respect of our recycling services in Canada, and is paid pursuant to agreements between AMTIM and us. A dispute has arisen between AMTIM and us with respect to the calculation of amounts due to AMTIM pursuant to the agreements. In a lawsuit filed in the province of Ontario, AMTIM claims a discrepancy in the calculation of fees due to AMTIM by us in excess of $1.6 million. The United States District Court for the District of Minnesota has issued a declaratory judgment to the effect that our method of calculating of the amounts due to AMTIM is correct. Although the outcome of this Ontario claim is uncertain, we believe that no further amounts are due under the terms of the agreement and we will continue to defend our position relative to this lawsuit. We are party from time to time to ordinary course disputes that we do not believe to be material or have merit. We intend to vigorously defend ourselves against these ordinary course disputes.

12. Income Taxes

12. Income Taxes	6 Months Ended
	Jul. 01, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Our overall effective tax rate was 32.0% and (18.5)% for the six months ended July 1, 2017 and July 2, 2016, respectively. The effective tax rate varies from the U.S. federal statutory rate due to state taxes, foreign taxes, share-based compensation, non-controlling interest, valuation allowance, and certain non-deductible expenses. We regularly evaluate both positive and negative evidence related to retaining a valuation allowance against certain deferred tax assets. The realization of deferred tax assets is dependent upon sufficient future taxable income during the periods when deductible temporary differences and carryforwards are expected to be available to reduce taxable income. We have concluded based on the weight of evidence that a valuation allowance should be maintained against certain deferred tax assets that we do not expect to utilize in the near future. The Company continues to have a full valuation allowance against its Canadian operations.

13. Segment Information

13. Segment Information	6 Months Ended
	Jul. 01, 2017
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 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 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Revenues Retail $ 15,038 $ 16,017 $ 30,827 $ 32,666 Recycling 11,344 8,739 18,794 17,435 Total revenues $ 26,382 $ 24,756 $ 49,621 $ 50,101 Gross profit Retail $ 4,730 $ 4,373 $ 8,937 $ 9,060 Recycling 3,989 2,063 5,805 3,567 Total gross profit $ 8,719 $ 6,436 $ 14,742 $ 12,627 Operating income (loss) Retail $ 1,880 $ (487 ) $ 1,802 $ (437 ) Recycling 705 (606 ) (926 ) (1,443 ) Total operating loss $ 2,585 $ (1,093 ) $ 876 $ (1,880 ) Depreciation and amortization Retail $ 44 $ 51 $ 89 $ 105 Recycling 263 258 520 529 Total depreciation and amortization $ 307 $ 309 $ 609 $ 634 Interest Expenses Retail $ 6 $ 1 $ 7 $ 249 Recycling 126 303 422 338 Total interest expenses $ 132 $ 304 $ 429 $ 587 July 1, December 31, 2017 2016 Total Assets Retail $ 14,716 $ 17,559 Recycling 20,809 24,297 $ 35,525 $ 41,856 Intangible assets Retail $ – $ – Recycling 56 56 $ 56 $ 56

14. Subsequent Events

14. Subsequent Events	6 Months Ended
	Jul. 01, 2017
Subsequent Events [Abstract]
Subsequent Events	Sale of AAP Joint Venture Interest On August 15, 2017, the Company sold its 50% joint venture interest in AAP to 4301, ARCA’s joint venture partner in AAP, in consideration of $800 in cash. In a separate related transaction on the same date, ARCA agreed to license certain intellectual property practiced by patent No. 8,931,289 to Recleim LLC, a Delaware limited liability company and parent company of Recleim PA, LLC (“licensee”) for use at 4301 North Delaware Avenue, Philadelphia, PA or any successor facility within 15 miles where licensee conducts business. On August 15, 2017 Recleim PA, LLC paid in full all BB&T indebtedness owed by AAP in the amount of $3,454, and terminated and released all security interests in AAP and ARCA’s equipment as part of Recleim PA LLC’s purchase of certain equipment and assets from AAP on the same date. Recleim PA LLC is also assuming approximately $768 in AAP liabilities and assuming all of ARCA’s liabilities to Haier US Appliance Solutions, Inc, dba GE Appliances (“GEA”). See Item 1. Other Information – Legal Proceedings for additional information. Acquisition of GeoTraq On August 18, 2017, the Company acquired GeoTraq, Inc. (“GeoTraq”). GeoTraq is a development stage company that is engaged in the development, manufacture, and, ultimately, sale of cellular transceiver modules, also known as Cell-ID modules. As a result of this transaction, GeoTraq became a wholly-owned subsidiary of the Company. In connection with this transaction, the Company tendered to the owners of GeoTraq $200, issued to them an aggregate of 288,588 shares of the Company’s Series A Convertible Preferred Stock, and entered into one-year unsecured promissory notes for an aggregate of $800. The Company is in discussions with its bank in respect of harmonizing this transaction with the Company’s rights and obligations under its banking agreement with MidCap Financial Trust.

1. Nature of Business and Bas20

1. Nature of Business and Basis of Presentation (Policies)	6 Months Ended
	Jul. 01, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of business and basis of presentation	1. 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 December 31, 2016 which has been derived from the 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 1, 2017 and July 2, 2016, 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 condensed consolidated 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 condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2017.
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. ARCA Canada Inc., a Canadian corporation, is a wholly owned subsidiary that was formed in September 2006 to provide turnkey recycling services for electric utility energy efficiency programs. ARCA Recycling, Inc., a California corporation, is a wholly owned subsidiary that was formed in November 1991 to provide turnkey recycling services for electric utility energy efficiency programs. The operating results of our wholly owned subsidiaries are consolidated in our financial statements. AAP is a joint venture that was formed in October 2009 between ARCA and 4301 Operations, LLC (“4301”). ARCA and 4301 owned a 50% interest in AAP through August 15, 2017. AAP established a regional processing center in Philadelphia, Pennsylvania at which recyclable appliances are processed. The financial position and results of operations of AAP are consolidated in our financial statements based on our conclusion that AAP is a variable interest entity due to our contribution in excess of 50% of the total equity, subordinated debt and other forms of financial support. We had a controlling financial interest in AAP and we have provided substantial financial support to fund the operations of AAP since its inception. On August 15, 2017, subsequent to these condensed consolidated financial statements, ARCA sold it’s 50% interest in AAP. See Note 14 to these condensed consolidated financial statements. On August 18, 2018, subsequent to these condensed consolidated financial statements, we acquired GeoTraq, Inc. (“GeoTraq”). GeoTraq is a development stage company that is engaged in the development, manufacture, and, ultimately, sale of cellular transceiver modules, also known as Cell-ID modules. GeoTraq has created the world’s first, and only, dedicated Cell-ID transceiver module that can enable the design of extremely small, inexpensive products that can operate for years on a single charge, powered by standardly available batteries of diminutive size without the need of recharge. Accordingly, and utilizing Cell-ID technology exclusively, we believe that GeoTraq will provide an exclusive, low-cost solution and service life that will enable new global markets for location-based services (LBS) that could utilize technology similar to the technology that emergency 911 location systems currently utilize. The GeoTraq platform is a Java-based, scalable, multi-tenant software, designed to manage an unlimited number of Cell-ID devices. Cell-ID transceivers work indoors, unlike GPS, which are only accurate outdoors. Cell-ID transceivers do not require close proximity for asset tracking, unlike both RFID and Wi-Fi. GPS devices are more expensive and utilize significantly more energy than the GeoTraq device. RFID technology will operate indoors, but only over short distances and requires installation of additional hardware. As a result of this transaction, GeoTraq became a wholly-owned subsidiary of ours. In connection with this transaction, we tendered to the owners of GeoTraq $200,000, issued to them an aggregate of 288,588 shares of our Series A Convertible Preferred Stock, and entered into one-year unsecured promissory notes for an aggregate of $800,000. We are in discussions with our bank in respect of harmonizing this transaction with our rights and obligations under our banking agreement. As the information set forth herein is merely a descriptive summary of the transaction, it cannot contain every detail of the transaction. The agreement between GeoTraq and us is filed with this Report as Exhibit 10. XX

2. Inventories (Tables)

2. Inventories (Tables)	6 Months Ended
	Jul. 01, 2017
Inventory Disclosure [Abstract]
Schedule of inventories	July 1, 2017 December 31, 2016 Appliances held for resale $ 12,456 $ 16,146 Processed metals from recycled appliances held for resale 118 139 Other – 6 $ 12,574 $ 16,291

3. Earnings per Share (Tables)

3. Earnings per Share (Tables)	6 Months Ended
	Jul. 01, 2017
Earnings (loss) per share:
Earnings per Share	13 Weeks Ended 26 Weeks Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Basic Net income (loss) attributed to controlling interest $ 2,063 $ (2,103 ) $ 4,271 $ (2,554 ) Weighted average common shares outstanding 6,655 5,929 6,655 5,915 Basic earnings (loss) per share $ 0.31 $ (0.35 ) $ 0.64 $ (0.43 ) Diluted Net income (loss) applicable to diluted earnings (loss) per share $ 2,063 $ (2,103 ) $ 4,271 $ (2,554 ) Weighted average common shares outstanding 6,655 5,929 6,655 5,915 Add: Options – – – – Add: Common Stock Warrants 32 – 51 – Assumed diluted weighted average common shares outstanding 6,687 5,929 6,706 5,915 Diluted earnings (loss) per share $ 0.31 $ (0.35 ) $ 0.64 $ (0.43 )

5. Variable Interest Entity (Ta

5. Variable Interest Entity (Tables)	6 Months Ended
	Jul. 01, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Assets and liabilities of AAP	The following table summarizes the assets and liabilities of AAP as of July 1, 2017 and December 31, 2016: July 1, 2017 December 31, 2016 Assets Current assets $ 293 $ 438 Property and equipment, net 6,933 7,322 Other assets 93 83 Total assets $ 7,319 $ 7,843 Liabilities Accounts payable $ 2,569 $ 1,388 Accrued expenses 585 523 Current maturities of long-term debt obligations 728 3,558 Long-term debt obligations, net of current maturities 3,166 435 Other liabilities (a) 289 1,126 Total liabilities $ 7,337 $ 7,030 (a) Other liabilities represent loans and advances between ARCA and AAP that are eliminated in consolidation. The following table summarizes the operating results of AAP for the 13 weeks and 26 weeks ended July 1, 2017, and July 2, 2016, respectively: 13 Weeks Months Ended July 1, 2017 July 2, 2016 Revenues $ 642 $ 1,695 Gross profit 100 319 Operating loss (236 ) (93 ) Net loss (299 ) (159 ) 26 Weeks Ended July 1, 2017 July 2, 2016 Revenues $ 1,127 $ 3,480 Gross profit (14 ) 475 Operating loss (708 ) (364 ) Net loss (826 ) (514 )

6. Property and Equipment (Tabl

6. Property and Equipment (Tables)	6 Months Ended
	Jul. 01, 2017
Property, Plant and Equipment [Abstract]
Property and Equipment Table	Useful Life (Years) July 1, 2017 December 31, 2016 Land $ – $ 1,140 Buildings and improvements 18-30 2,288 3,780 Equipment (including computer software) 3-15 18,687 19,260 Projects under construction 205 204 Property and equipment 21,180 24,384 Less accumulated depreciation and amortization (13,191 ) (14,268 ) Property and equipment, net $ 7,989 $ 10,116

7. Deposits and other assets (T

7. Deposits and other assets (Tables)	6 Months Ended
	Jul. 01, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Schedule of deposits and other assets	July 1, 2017 December 31, 2016 Deposits $ 578 $ 453 Other 236 104 Recycling contract, net 19 19 Goodwill 38 38 $ 871 $ 614

8. Accrued liabilities (Tables)

8. Accrued liabilities (Tables)	6 Months Ended
	Jul. 01, 2017
Payables and Accruals [Abstract]
Schedule of accrued liabilities	July 1, 2017 December 31, 2016 Sales tax estimates, including interest $ 4,573 $ 4,203 Compensation and benefits 1,147 2,431 Accrued incentive and rebate checks 471 358 Accrued rent 242 263 Warranty 42 26 Accrued payables 1,196 570 Deferred revenue 350 227 Other 586 810 $ 8,607 $ 8,888

10. Long term obligations (Tabl

10. Long term obligations (Tables)	6 Months Ended
	Jul. 01, 2017
Debt Disclosure [Abstract]
Schedule of long-term debt, capital lease and other financing obligations	July 1, 2017 December 31, 2016 PNC term loan $ – $ 1,020 MidCap financial trust asset based revolving loan 1,066 – AFCO Finance 820 – Susquehanna term loans 3,242 3,242 GE 8% loan agreement 482 482 EEI note 103 103 PIDC 2.75% note, due in month installments of $3, including interest, due October 2024 270 287 Capital leases and other financing obligations 424 564 Debt issuance costs, net (988 ) (779 ) Total debt obligations 5,419 4,919 Less current maturities (2,054 ) (2,093 ) Long-term debt obligations, net of current maturities $ 3,365 $ 2,826

13. Segment Information (Tables

13. Segment Information (Tables)	6 Months Ended
	Jul. 01, 2017
Segment Reporting [Abstract]
Segment information	Three Months Ended Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Revenues Retail $ 15,038 $ 16,017 $ 30,827 $ 32,666 Recycling 11,344 8,739 18,794 17,435 Total revenues $ 26,382 $ 24,756 $ 49,621 $ 50,101 Gross profit Retail $ 4,730 $ 4,373 $ 8,937 $ 9,060 Recycling 3,989 2,063 5,805 3,567 Total gross profit $ 8,719 $ 6,436 $ 14,742 $ 12,627 Operating income (loss) Retail $ 1,880 $ (487 ) $ 1,802 $ (437 ) Recycling 705 (606 ) (926 ) (1,443 ) Total operating loss $ 2,585 $ (1,093 ) $ 876 $ (1,880 ) Depreciation and amortization Retail $ 44 $ 51 $ 89 $ 105 Recycling 263 258 520 529 Total depreciation and amortization $ 307 $ 309 $ 609 $ 634 Interest Expenses Retail $ 6 $ 1 $ 7 $ 249 Recycling 126 303 422 338 Total interest expenses $ 132 $ 304 $ 429 $ 587 July 1, December 31, 2017 2016 Total Assets Retail $ 14,716 $ 17,559 Recycling 20,809 24,297 $ 35,525 $ 41,856 Intangible assets Retail $ – $ – Recycling 56 56 $ 56 $ 56

1. Nature of Business and Bas29

1. Nature of Business and Basis of Presentation (Details Narrative) - Integer	6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016
Number of States in which Entity Operates	12
Number of weeks reflected in operating results	13	26
ARCA Advanced Processing, LLC [Member]
Interest in a joint venture (as a percent)	50.00%

2. Inventories (Details)

2. Inventories (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Appliances held for resale	$ 12,456	$ 16,146
Processed metals from recycled appliances held for resale	118	139
Other inventories	0	6
Inventories, net	$ 12,574	$ 16,291

3. Earnings per Share (Details)

3. Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Basic
Net income (loss) attributed to controlling interest	$ 2,063	$ (2,103)	$ 4,271	$ (2,554)
Weighted average common shares outstanding	6,655	5,929	6,655	5,915
Basic earnings (loss) per share	$ 0.31	$ (0.35)	$ 0.64	$ (0.43)
Diluted
Net income (loss) applicable to diluted earnings (loss) per share	$ 2,063	$ (2,103)	$ 4,271	$ (2,554)
Weighted average common shares outstanding diluted	6,655	5,929	6,655	5,915
Add: Options	0	0	0	0
Add: Common Stock Warrants	32	0	51	0
Assumed diluted weighted average common shares outstanding	6,687	5,929	6,706	5,915
Diluted earnings (loss) per share	$ 0.31	$ (0.35)	$ 0.64	$ (0.43)

3. Earnings per Share (Details

3. Earnings per Share (Details Narrative) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Earnings (loss) per share:
Potentially dilutive shares excluded from earnings per share calculation	734	734	734	734

4. Share-Based Compensation (De

4. Share-Based Compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based compensation	$ 9	$ 102	$ 32	$ 141

5. Variable Interest Entity (De

5. Variable Interest Entity (Details - AAP Assets and Liabilities) - ARCA Advanced Processing, LLC [Member] - USD ($) $ in Thousands		Jul. 01, 2017	Dec. 31, 2016
Assets
Current assets		$ 293	$ 438
Property and equipment, net		6,933	7,322
Other assets		93	83
Total Assets		7,319	7,843
Liabilities
Accounts payable		2,569	1,388
Accrued expenses		585	523
Current maturities of long-term debt obligations		728	3,558
Long-term debt obligations, net of current maturities		3,166	435
Other liabilities	[1]	289	1,126
Total Liabilities		$ 7,337	$ 7,030
[1]	Other liabilities represent loans and advances between ARCA and AAP that are eliminated in consolidation.

5. Variable Interest Entity (35

5. Variable Interest Entity (Details - AAP Operating Results) - ARCA Advanced Processing, LLC [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Operating results of AAP
Revenues	$ 642	$ 1,695	$ 1,127	$ 3,480
Gross profit	100	319	(14)	475
Operating loss	(236)	(93)	(708)	(364)
Net loss	$ (299)	$ (159)	$ (826)	$ (514)

6. Property and Equipment (Deta

6. Property and Equipment (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017	Dec. 31, 2016
Property plant and equipment, gross	$ 21,180	$ 24,384
Less accumulated depreciation and amortization	(13,191)	(14,268)
Property plant and equipment, net	7,989	10,116
Equipment (including computer software
Property plant and equipment, gross	$ 18,687	19,260
Estimated useful life	3-15 years
Buildings and improvements [Member]
Property plant and equipment, gross	$ 2,288	3,780
Estimated useful life	18-30 years
Land [Member]
Property plant and equipment, gross	$ 0	1,140
Projects under construction [Member]
Property plant and equipment, gross	$ 205	$ 204

6. Property and Equipment (De37

6. Property and Equipment (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 284	$ 309	$ 609	$ 634
Proceeds from sale of property			7,103
Gain on sale of property	$ 0	$ 0	$ 5,163	$ 0

7. Deposits and other assets (D

7. Deposits and other assets (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Assets, Noncurrent [Abstract]
Deposits	$ 578	$ 453
Other	236	104
Recycling contract, net	19	19
Goodwill	38	38
Total other assets	$ 871	$ 614

7. Deposits and other assets 39

7. Deposits and other assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Assets, Noncurrent [Abstract]
Amortization expense related to recycling contract	$ 0	$ 0	$ 0	$ 0

8. Accrued liabilities (Details

8. Accrued liabilities (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Sales tax estimates, including interest	$ 4,573	$ 4,203
Compensation and benefits	1,147	2,431
Accrued incentive and rebate checks	471	358
Accrued rent	242	263
Warranty	42	26
Accrued payables	1,196	570
Deferred revenue	350	227
Other	586	810
Accrued expenses, current	$ 8,607	$ 8,888

9. Line of credit - PNC Bank (D

9. Line of credit - PNC Bank (Details Narrative) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Line of Credit Facility [Line Items]
Line of credit outstanding	$ 0	$ 10,333
Whirlpool Corporation [Member]
Line of Credit Facility [Line Items]
Restricted cash	$ 750

10. Long term obligations (Deta

10. Long term obligations (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Capital leases and other financing obligations	$ 424	$ 564
Debt issuance costs, net	(988)	(779)
Total debt and capital lease obligations	5,419	4,919
Less current maturities	(2,054)	(2,093)
Debt, noncurrent portion	3,365	2,826
PNC Bank [Member]
Total debt and capital lease obligations	0	1,020
MidCap financial trust asset based revolving loan [Member]
Total debt and capital lease obligations	1,066	0
AFCO Finance [Member]
Total debt and capital lease obligations	820	0
Susquehanna Bank [Member]
Total debt and capital lease obligations	3,242	3,242
GE 8.00% notes [Member]
Total debt and capital lease obligations	482	482
EEI note [Member]
Total debt and capital lease obligations	103	103
PIDC 2.75% note [Member]
Total debt and capital lease obligations	$ 270	$ 287

10. Long term obligations (De43

10. Long term obligations (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017	Dec. 31, 2016
Debt and capital lease obligations	$ 5,419	$ 4,919
Capital leased equipment cost	2,527	2,601
Accumulated amortization of capital leased equipment	1,752	1,771
Line of credit outstanding	0	10,333
Term Loan [Member] | PNC Bank [Member]
Debt and capital lease obligations	$ 0	1,020
Debt issuance date	Jan. 24, 2011
Debt maturity date	Jan. 31, 2017
Term Loan [Member] | MidCap Financial Trust [Member]
Debt and capital lease obligations	$ 1,066
Debt issuance date	May 10, 2017
Debt interest rate description	one month LIBOR plus 4.50%
Weighted average interest rate	5.73%
Line of credit outstanding	$ 2,517
Maximum borrowing capacity	12,000
Available borrowing capacity under the Credit Agreement	2,517
Proceeds from line of credit	16,030
Repayments of line of credit	14,964
Term Loan [Member] | AFCO Credit Corp [Member]
Debt and capital lease obligations	$ 820	0
Debt issuance date	Jun. 16, 2017
Debt face amount	$ 1,070
Debt interest rate description	3.567%
Term Loan [Member] | Susquehanna Bank [Member]
Debt and capital lease obligations	$ 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	6.50%
Debt maturity date	Mar. 10, 2021
Term Loan [Member] | Energy Efficiency Investments [Member]
Debt and capital lease obligations	$ 103	$ 103
Debt issuance date	Nov. 8, 2016
Debt face amount	$ 7,732

11. Commitments and Contingen44

11. Commitments and Contingencies (Details Narrative) $ in Thousands	Jul. 01, 2017USD ($)
Commitments and Contingencies Disclosure [Abstract]
Litigation accrual	$ 1,600

12. Income Taxes (Details Narra

12. Income Taxes (Details Narrative)	6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016
Income Tax Disclosure [Abstract]
Effective tax rate	32.00%	18.50%

13. Segment Information (Detail

13. Segment Information (Details - Operations) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Revenues	$ 25,782	$ 24,756	$ 49,021	$ 50,101
Gross profit	8,719	6,436	14,742	12,627
Operating income (loss)	2,585	(1,093)	876	(1,880)
Depreciation and amortization	284	309	609	634
Interest expense	132	304	429	587
Retail [Member]
Revenues	15,038	16,017	30,827	32,666
Gross profit	4,730	4,373	8,937	9,060
Operating income (loss)	1,880	(487)	1,802	(437)
Depreciation and amortization	44	51	89	105
Interest expense	6	1	7	249
Recycling [Member]
Revenues	11,344	8,739	18,794	17,435
Gross profit	3,989	2,063	5,805	3,567
Operating income (loss)	705	(606)	(926)	(1,443)
Depreciation and amortization	263	258	520	529
Interest expense	$ 126	$ 303	$ 422	$ 338

13. Segment Information (Deta47

13. Segment Information (Details - Balance Sheet) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Assets	$ 35,525	$ 41,856
Intangible assets	56	56
Retail [Member]
Assets	14,716	17,559
Intangible assets	0	0
Recycling [Member]
Assets	20,809	24,297
Intangible assets	$ 56	$ 56