Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 10, 2018 | |
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 | Jun. 30, 2018 | |
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 | 6,875,365 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 413 | $ 3,313 |
Trade and other receivables, net | 5,964 | 10,036 |
Due From Appliancesmart Holdings LLC a subsidiary of Live Ventures Incorporated | 0 | 6,500 |
Inventories, net | 1,097 | 762 |
Prepaid expenses and other current assets | 1,345 | 506 |
Total current assets | 8,819 | 21,117 |
Note receivable - ApplianceSmart Holdings, LLC a subsidiary of Live Ventures Incorporated | 3,818 | 0 |
Property and equipment, net | 594 | 538 |
Intangible assets, net | 22,852 | 24,718 |
Deposits and other assets | 356 | 518 |
Total assets | 36,439 | 46,891 |
Current liabilities: | ||
Accounts payable | 2,778 | 3,321 |
Accrued liabilities | 5,600 | 6,561 |
Notes payable - short term | 300 | 300 |
Accrued income taxes | (77) | 3 |
Short term debt | 646 | 5,577 |
Total current liabilities | 9,247 | 15,762 |
Deferred income taxes | 3,723 | 4,577 |
Other noncurrent liabilities | 148 | 314 |
Total liabilities | 13,118 | 20,653 |
Stockholders' equity: | ||
Preferred stock, series A - par value .001 per share 2,000 authorized and 288 shares issued and outstanding at June 30, 2018 and December 30, 2017 | 0 | 0 |
Common stock, par value .001 per share, 50,000 shares authorized, 6,875 shares issued and outstanding at June 30, 2018 and December 30, 2017 | 7 | 7 |
Additional paid in capital | 37,634 | 37,634 |
Accumulated deficit | (13,794) | (10,910) |
Accumulated other comprehensive loss | (526) | (493) |
Total stockholders' equity | 23,321 | 26,238 |
Total liabilities and shareholders' equity | $ 36,439 | $ 46,891 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, par value | $ 0.001 | $ .001 |
Preferred Stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred Stock, shares issued (in shares) | 288,000 | 288,000 |
Preferred Stock, outstanding shares (in shares) | 288,000 | 288,000 |
Common Stock, par value | $ .001 | $ .001 |
Common Stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common Stock, issued shares (in shares) | 6,875,000 | 6,875,000 |
Common Stock, outstanding shares (in shares) | 6,875,000 | 6,875,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 8,373 | $ 10,744 | $ 17,286 | $ 18,194 |
Costs of revenues | 6,223 | 6,755 | 12,724 | 12,389 |
Gross profit | 2,150 | 3,989 | 4,562 | 5,805 |
Operating expenses: | ||||
Selling, general and administrative expenses | 3,752 | 2,412 | 7,726 | 5,859 |
Operating income (loss) | (1,602) | 1,577 | (3,164) | (54) |
Other income (expense): | ||||
Gain on the sale of property | 2 | 0 | 2 | 5,163 |
Interest expense, net | (38) | (125) | (629) | (422) |
Other income (expense) | (50) | (176) | 53 | (171) |
Total other income (expense), net | (86) | (301) | (574) | 4,570 |
Income (loss) from continuing operations before provision for income taxes | (1,688) | 1,276 | (3,738) | 4,516 |
Total provision (benefit) for income taxes | (279) | 208 | (854) | 1,446 |
Net income (loss) | (1,409) | 1,068 | (2,884) | 3,070 |
Net (loss) attributed to noncontrolling interest | 0 | 150 | 0 | 413 |
Net income (loss) from continuing operations attributed to company | (1,409) | 1,218 | (2,884) | 3,483 |
Net (loss) from discontinued operations, net of tax | 0 | 845 | 0 | 788 |
Net income (loss) attributed to company | $ (1,409) | $ 2,063 | $ (2,884) | $ 4,271 |
Earnings (loss) per share: | ||||
Basic earnings (loss) per share from continued operations | $ (0.20) | $ 0.18 | $ (0.42) | $ 0.52 |
Basic earnings (loss) per share - discontinued operations and loss on sale, net of tax | .00 | 0.13 | .00 | 0.12 |
Basic earnings (loss) per share | (0.20) | 0.31 | (0.42) | 0.64 |
Diluted earnings (loss) per share from continued operations | (0.20) | 0.18 | (0.42) | 0.52 |
Diluted earnings (loss) per share - discontinued operations and loss on sale, net of tax | .00 | 0.13 | .00 | 0.12 |
Diluted earnings (loss) per share | $ (0.20) | $ 0.31 | $ (0.42) | $ 0.64 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 6,875 | 6,655 | 6,875 | 6,655 |
Diluted (in shares) | 6,875 | 6,687 | 6,875 | 6,706 |
Net income (loss) | $ (1,409) | $ 1,068 | $ (2,884) | $ 3,070 |
Net (loss) from discontinued operations and loss on sale, net of tax | 0 | 845 | 0 | 788 |
Other comprehensive income (loss), net of tax | ||||
Effect of foreign currency translation adjustments | (11) | 23 | (33) | 36 |
Total other comprehensive income (loss), net of tax | (11) | 23 | (33) | 36 |
Comprehensive income (loss) | (1,420) | 1,936 | (2,917) | 3,894 |
Comprehensive income (loss) attributable to noncontrolling interest | 0 | 150 | 0 | 413 |
Comprehensive income (loss) attributable to controlling interest | $ (1,420) | $ 2,086 | $ (2,917) | $ 4,307 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Operating activities | ||
Net income (loss) continuing operations | $ (2,884) | $ 3,070 |
Income from discontinued operations | 0 | 788 |
Net income (loss) | (2,884) | 3,858 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,986 | 504 |
Amortization of debt issuance costs | 515 | 135 |
Stock based compensation expense | 0 | 32 |
Change in provision for doubtful accounts | 277 | (27) |
Gain on sale of property and equipment | (2) | (5,163) |
Change in deferred rent | (2) | (36) |
Change in deferred compensation | 60 | 0 |
Change in deferred income taxes | (854) | 594 |
Other | 159 | (258) |
Changes in assets and liabilities: | ||
Accounts receivable | 3,538 | 1,614 |
Prepaid expenses and other current assets | (838) | (703) |
Inventories | (340) | 98 |
Accounts payable and accrued expenses | 1,019 | (1,605) |
Accrued income taxes | (80) | 1,216 |
Net cash provided by operating activities - continuing operations | 2,554 | 259 |
Net cash provided by operating activities - discontinued operations | 0 | 2,241 |
Net cash provided by operating activities | 2,554 | 2,500 |
Investing activities | ||
Purchases of property and equipment | (177) | (104) |
Proceeds from sale of property and equipment | 2 | 6,785 |
Net payments received from Live Ventures Incorporated note receivable | 159 | |
Net cash provided by (used) in investing activities - continuing operations | (16) | 6,681 |
Net cash provided by (used) in investing activities - discontinued operations | 0 | 0 |
Net cash provided by (used) in investing activities | (16) | 6,681 |
Financing activities | ||
Net payments under line of credit - PNC Bank | 0 | (10,333) |
Net borrowing (payments) under the line of credit - MidCap Financial Trust | (5,605) | 1,066 |
Proceeds from issuance of long term debt obligations | 562 | 1,070 |
Payments on debt obligations | (373) | (1,427) |
Payment of debt issuance costs | 0 | (344) |
Net cash used in financing activities - continuing operations | (5,416) | (9,968) |
Net cash used in financing activities - discontinued operations | 0 | 0 |
Net cash used in financing activities | (5,416) | (9,968) |
Effect of changes in exchange rate on cash and cash equivalents | (22) | 10 |
DECREASE IN CASH AND CASH EQUIVALENTS | (2,900) | (777) |
CASH AND CASH EQUIVALENTS, beginning of year | 3,313 | 968 |
CASH AND CASH EQUIVALENTS, end of year | 413 | 191 |
Supplemental cash flow disclosures: | ||
Interest paid | 114 | 304 |
Income taxes refunded (paid) | (80) | (48) |
Net liabilities assumed by ApplianceSmart | $ 1,901 | $ 0 |
1. Nature of Business and Basis
1. Nature of Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Basis of Presentation | Note 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. Through our GeoTraq Inc. (“GeoTraq”) subsidiary, a development stage company, we are engaged in the development, design and, ultimately, we expect the sale of cellular transceiver modules, also known as Cell-ID modules. GeoTraq is part of a new reporting segment for our Company – Technology. On August 15, 2017, we sold our 50% interest in a joint venture operating under the name ARCA Advanced Processing, LLC (AAP”), which recycles appliances from twelve states in the Northeast and Mid-Atlantic regions of the United States. On December 30, 2017, we sold our 100% interest in Appliancesmart Inc., which is a retail business selling new household appliances through a chain of Company-owned stores under the name ApplianceSmart®. The accompanying balance sheets as of June 30, 2018, and December 30, 2017, respectively, which have 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 13 Week and 26 Week periods ended June 30, 2018 and July 1, 2017, are presented in lieu of three-month periods, respectively. The Company reports results on a 52-week fiscal basis. 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. Reincorporation in the State of Nevada On March 12, 2018, Appliance Recycling Centers of America, Inc. (the “Company”) changed its state of incorporation from the State of Minnesota to the State of Nevada (the “Reincorporation”) pursuant to a plan of conversion, dated March 12, 2018 (the “Plan of Conversion”). The Reincorporation was accomplished by the filing of (i) articles of conversion (the “Minnesota Articles of Conversion”) with the Secretary of State of the State of Minnesota and (ii) articles of conversion (the “Nevada Articles of Conversion”) and articles of incorporation (the “Nevada Articles of Incorporation”) with the Secretary of State of the State of Nevada. Pursuant to the Plan of Conversion, the Company also adopted new bylaws (the “Nevada Bylaws”). 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 30, 2017, included in the Company’s Annual Report on Form 10-K, as amended, initially filed with the SEC on June 12, 2018. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2: Summary of Significant Accounting Policies Principles of consolidation The accompanying consolidated financial statements include the accounts of Appliance Recycling Centers of America, Inc. and our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. 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. 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. Customer Connexx, LLC, a Nevada Corporation, is a wholly owned subsidiary that was formed in formed in October 2016 to provide call center services for electric utility programs. On August 15, 2017, ARCA sold it’s 50% interest in AAP and is no longer consolidating the results of AAP in its consolidated financial statements as of that date. AAP was a joint venture formed in October 2009 between ARCA and 4301 Operations, LLC (“4301”). ARCA and 4301 owned a 50% interest in AAP through August 15, 2017. The financial position and results of operations of AAP were consolidated in our financial statements through August 15, 2017, based on our conclusion that AAP is a variable interest entity due to our contribution in excess of 50% of the total equity, subordinated debt and other forms of financial support. See Note 6 – Sale and deconsolidation of variable interest entity AAP to these consolidated financial statements. On August 18, 2017, we acquired GeoTraq. GeoTraq is a development stage company that is engaged in the development, design, and, ultimately, we expect, sale of cellular transceiver modules, also known as Cell-ID modules. GeoTraq has created a dedicated Cell-ID transceiver module that we believe can enable the design of extremely small, inexpensive products that can operate for years on a single charge, powered by standardly available batteries of diminutive size without the need of recharge. Accordingly, and utilizing Cell-ID technology exclusively, we believe that GeoTraq will provide an exclusive, low-cost solution and service life that will enable new global markets for location-based services (LBS). On December 30, 2017, we sold our 100% interest in ApplianceSmart, Inc., a Minnesota corporation. Appliancesmart Inc. 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. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumption that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in connection with the accompanying consolidated financial statements include the estimated reserve for doubtful current and long-term trade and other receivables, the estimated reserve for excess and obsolete inventory, estimated fair value and forfeiture rates for stock-based compensation, fair values in connection with the analysis of goodwill, other intangibles and long-lived assets for impairment, current portion of notes payable, valuation allowance against deferred tax assets and estimated useful lives for intangible assets and property and equipment. Financial Instruments Financial instruments consist primarily of cash equivalents, trade and other receivables, advances to affiliates and obligations under accounts payable, accrued expenses and notes payable. The carrying amounts of cash equivalents, trade receivables and other receivables, accounts payable, accrued expenses and short-term notes payable approximate fair value because of the short maturity of these instruments. The fair value of the long-term debt is calculated based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements, unless quoted market prices were available (Level 2 inputs). The carrying amounts of long-term debt at June 30, 2018 and December 30, 2017 approximate fair value. Cash and Cash Equivalents Cash and Cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value. Trade Receivables and Allowance for Doubtful Accounts We carry unsecured trade receivables at the original invoice amount less an estimate made for doubtful accounts based on a monthly review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. We write off trade receivables when we deem them uncollectible. We record recoveries of trade receivables previously written off when we receive them. We consider a trade receivable to be past due if any portion of the receivable balance is outstanding for more than ninety days. We do not charge interest on past due receivables. Our management considers the allowance for doubtful accounts of $61 and $61 to be adequate to cover any exposure to loss as of June 30, 2018, and December 30, 2017, respectively. Inventories Inventories, consisting primarily of Appliances, are stated at the lower of cost, determined on a specific identification basis, or market. We provide estimated provisions for the obsolescence of our appliance inventories, including adjustment to market, based on various factors, including the age of such inventory and our management’s assessment of the need for such provisions. We look at historical inventory aging reports and margin analyses in determining our provision estimate. A revised cost basis is used once a provision for obsolescence is recorded. The Company does not have a reserve for obsolete inventory at June 30, 2018 and December 30, 2017. Property and Equipment Property and Equipment are stated at cost less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of assets are capitalized. Upon sale or other retirement of depreciable property, the cost and accumulated depreciation are removed from the related accounts and any gain or loss is reflected in operations. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful lives of building and improvements are three to thirty years, transportation equipment is three to fifteen years, machinery and equipment are five to ten years, furnishings and fixtures are three to five years and office and computer equipment are three to five years. Depreciation expense was $59 and $263 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. Depreciation expense was $120 and $263 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. We periodically review our property and equipment when events or changes in circumstances indicate that their carrying amounts may not be recoverable or their depreciation or amortization periods should be accelerated. We assess recoverability based on several factors, including our intention with respect to our stores and those stores projected undiscounted cash flows. An impairment loss would be recognized for the amount by which the carrying amount of the assets exceeds their fair value, as approximated by the present value of their projected discounted cash flows. Goodwill The Company accounts for purchased goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other We test goodwill at least annually on July 1 of each fiscal year or more frequently if events arise or circumstances change that indicate that goodwill may be impaired. The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed using a two-step approach required by ASC 350 to determine whether a goodwill impairment exists. The first step of the quantitative test is to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized. If the carrying amount exceeds the fair value, then the second step is required to be completed, which involves allocating the fair value of the reporting unit to each asset and liability using the guidance in ASC 805 (“ Business Combinations, A ccounting for Identifiable Intangible Assets in a Business Combination , with the excess being applied to goodwill. An impairment loss occurs if the amount of the recorded goodwill exceeds the implied goodwill. The determination of the fair value of our reporting units is based, among other things, on estimates of future operating performance of the reporting unit being valued. We are required to complete an impairment test for goodwill and record any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have an impact on these estimates and require interim impairment assessments. When performing the two-step quantitative impairment test, the Company's methodology includes the use of an income approach which discounts future net cash flows to their present value at a rate that reflects the Company's cost of capital, otherwise known as the discounted cash flow method ("DCF"). These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued market acceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the future cost structure of the businesses, and future technological changes. The Company also incorporates market multiples for comparable companies in determining the fair value of our reporting units. Any such impairment would be recognized in full in the reporting period in which it has been identified. Intangible Assets The Company’s intangible assets consist of customer relationship intangibles, trade names, licenses for the use of internet domain names, Universal Resource Locators, or URL’s, software, and marketing and technology related intangibles. Upon acquisition, critical estimates are made in valuing acquired intangible assets, which include but are not limited to: future expected cash flows from customer contracts, customer lists, and estimating cash flows from projects when completed; tradename and market position, as well as assumptions about the period of time that customer relationships will continue; and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from the assumptions used in determining the fair values. All intangible assets are capitalized at their original cost and amortized over their estimated useful lives as follows: domain name and marketing – 3 to 20 years; software – 3 to 5 years, customer relationships – 7 to 15 years. Intangible amortization expense is $932 and $0 for the 13 weeks ended June 30, 2018 and April 1, 2017, respectively. Intangible amortization expense is $1,864 and $0 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. Revenue Recognition We record contract revenue with customers in the period when all of the following requirements have been met: (i) there is persuasive evidence of an arrangement, (ii) the sales transaction price is fixed or determinable, (iii) title, ownership and risk of loss have been transferred to the customer (iv) allocation of sales price to specific performance obligations, and (v) performance obligations are satisfied. We recognize revenue and a receivable per customer upon confirmed and accepted pickup of the to be recycled appliance for appliance recycling services when we collect and recycle the old appliance. No provision for bad debt is provided at the time of recording revenue given the credit of our customers. All direct costs are either paid and or accrued for in the period in which the appliance recycling service is provided. We recognize revenue and a receivable per customer upon confirmed and accepted delivery of the replacement appliance, and or pickup of the to be recycled appliance. The delivery of the replacement appliance is one performance obligation and the pickup of the to be recycled appliance is another performance obligation. Revenue is recorded for each performance obligation. No provision for bad debt is provided at the time of recording revenue given the credit of our customers. All direct costs are either paid and or accrued for in the period in which the replacement appliance(s)and program service(s) are provided. Customer’s do not typically have a right to return appliances sold. The manufacturer’s warranty is the only warranty provided to a customer. We do not have any contracts with third-party recycling customers that we sell recycling byproduct or carbon offsets. We recognize the revenue from the sale of carbon offsets and ozone-depleting refrigerants upon having in writing a mutually agreed upon price per pound, confirmed delivery, verification of volume and purity of the refrigerant by the buyer and collectability is reasonably assured. Other recycling byproduct revenue (the sale of copper, steel, plastic and other recoverable non-refrigerant byproducts) is recorded as revenue upon delivery to the third-party recycling customer for processing, having a mutually agreed upon price per pound and collection reasonably assured. Transfer of control occurs at the time the customer is in possession of the byproduct material. Funds are sent to the Company by the customer typically by check for the actual weight, type and in some cases volume of the byproduct delivered multiplied by the market rate as quoted. The Company has changed its accounting for revenue recognition for revenue derived from contracts with our customers and the related costs associated with those contracts effective December 31, 2017 due to the adoption of ASC 606 Revenue from contracts with Customers (“ASC 606”). The Company adopted the modified retrospective transition method, of making the transition effective December 31, 2017. The Company has applied ASC 606 and ASC 340-40 Contracts with Customers (“ASC 340”) to only those contracts that were not completed as of December 31, 2017. The effect of applying ASC 606 and ASC 340-40 as of December 31, 2017, requires the Company to (a) determine that amount of revenue and related costs it would have recognized in the period of adoption if it had continued to apply legacy GAAP in that period and (b) disclose the change for each financial statement item affected and explain the reasons for those changes that are significant. The Company has determined that the effect of applying ASC 606 and ASC 340-40 as of December 31, 2017 is immaterial. For the Quarter ended June 30, 2018 Revenue recognized for Company contracts - $7,396 and $8,609 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. Revenue recognized for Company contracts - $15,218 and $15,000 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. There was no impairment (or credit) losses on accounts receivable or contract assets related to Company contracts that were recognized in accordance with ASC 310 Receivables or ASC 326-30 Financial Instruments – Credit Losses. The Company provides replacement appliances and program services, mainly recycling of aged appliances to Utility customers. The Company operates in twenty-four states within the continental United States, and two provinces of Canada. The Company does not enter into contracts with for byproduct or carbon offset revenue. The Company uses a direct sales channel and typically enters into contracts for recycling program services and replacement appliances lasting a few months up to a couple of years in length. The Company has two reportable segments – Recycling and Technology. The Technology segment currently is a development segment with no revenue. Contract revenue for the recycling segment is recorded upon the confirmed delivery and or pickup of the aged appliance for both replacement appliance revenue and program services revenue. Byproduct revenue is record upon delivery of the byproduct to the customer of the Company’s choice, one price and terms are agreed too. The Company does not have any contract assets or liabilities as of June 30, 2018 and December 30, 2017, respectively. Performance obligations are typically satisfied upon confirmed delivery of replacement appliance(s) revenue, pickup of the aged appliance for program services revenue and delivery to a customer of choice for byproduct revenue. Revenue recorded in the 13 weeks and 26 weeks ended June 30, 2018 related to performance obligations satisfied in the same 13 weeks and 26 weeks ended June 30, 2018. The Company does not capitalize costs under ASC 340-40, or use any other method to amortize costs capitalized. There was no balance of capitalized costs at either June 30, 2018 or December 30, 2017, respectively. The Company has not incurred any impairment losses in the quarter ended June 30, 2018 related to costs capitalized in accordance with ASC 340-40. Shipping and Handling The Company classifies shipping and handling charged to customers as revenues and classifies costs relating to shipping and handling as cost of revenues. Advertising Expense Advertising expense is charged to operations as incurred. Advertising expense totaled $211 and $197 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. Advertising expense totaled $367 and $472 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. Fair Value Measurements ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows: Level 1 - inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. Level 2 – to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. Income Taxes The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company's assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not be realized. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its Consolidated Statements of Income. Significant management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Company uses a two-step process to evaluate tax positions. The first step requires an entity to determine whether it is more likely than not (greater than 50% chance) that the tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Company in future periods. Lease Accounting We lease warehouse facilities and office space. These assets and properties are generally leased under noncancelable agreements that expire at various dates through 2022 with various renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for minimum and, in some cases percentage rent and require us to pay all insurance, taxes and other maintenance costs. Leases with step rent provisions, escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term and includes “rent holidays” (periods in which we are not obligated to pay rent). Cash or lease incentives received upon entering into certain store leases (“tenant improvement allowances”) are recognized on a straight-line basis as a reduction to rent expense over the lease term. We record the unamortized portion of tenant improvement allowances as a part of deferred rent. We do not have leases with capital improvement funding. Stock-Based Compensation. The Company from time to time grants restricted stock awards and options to employees, non-employees and Company executives and directors. Such awards are valued based on the grant date fair-value of the instruments, net of estimated forfeitures. The value of each award is amortized on a straight-line basis over the vesting period. Foreign Currency The financial statements of the Company’s non-U.S. subsidiary are translated into U.S. dollars in accordance with ASC 830, Foreign Currency Matters. Under ASC 830, if the assets and liabilities of the Company are recorded in certain non-U.S. functional currencies other than the U.S. dollar, they are translated at current rates of exchange. Revenue and expense items are translated at the average monthly exchange rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income (loss). Earnings Per Share Earnings per share is calculated in accordance with ASC 260, “ Earnings Per share Segment Reporting ASC Topic 280, “ Segment Reporting Concentration of Credit Risk The Company maintains cash balances at several banks in several states including, Minnesota, California, and Nevada within the United States. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 per institution as of June 30, 2018. At times, balances may exceed federally insured limits. Recently Issued Accounting Pronouncements ASU 2016-02, Leases (Topic 842) ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products ASU 2016-09, Compensation- Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, ASU 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting |
3. Comprehensive Income
3. Comprehensive Income | 6 Months Ended |
Jun. 30, 2018 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Comprehensive Income | Note 3: Comprehensive Income Comprehensive income is the sum of net income and other items that must bypass the income statement because they have not been realized, including items like an unrealized holding gain or loss from available for sale securities and foreign currency translation gains or losses. For the 13 weeks ended June 30, 2018 and July 1, 2017, our comprehensive income (loss) is $(1,420) and $2,086, respectively. For the 26 weeks ended June 30, 2018 and July 1, 2017, our comprehensive income (loss) is $(2,917) and $4,307. Our comprehensive income includes foreign currency translation gains and losses, net loss from discontinued operations, and net loss attributable to non-controlling interest. |
4. Reclassifications
4. Reclassifications | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassifications | Note 4: Reclassifications Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the previously reported net income or stockholders’ equity. On March 12, 2018, the Company changed its state of incorporation from Minnesota to Nevada. Nevada requires a stated par value, which the company stated at $0.001 per share. Amounts for Common stock and additional paid in capital for December 30, 2017 have been reclassified to reflect this change. |
5. Acquisition of GeoTraq, Inc.
5. Acquisition of GeoTraq, Inc. | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisition of GeoTraq, Inc. | Note 5: Acquisition of GeoTraq, Inc. On August 18, 2017, the Company, entered into a series of transactions, acquiring all of the assets and capital stock of GeoTraq by way of merger. GeoTraq is a development stage company that is engaged in the development, design, and, ultimately, the sale of cellular transceiver modules, also known as Cell-ID modules. As of August 18, 2017, GeoTraq became a wholly-owned subsidiary of the Company. The final fair value of the single identifiable intangible asset acquired in the GeoTraq acquisition is a U.S. patent application USPTO reference No. 14724039 titled “Locator Device with Low Power Consumption” together with the assignment of intellectual property that included historical know-how, designs and related manufacturing procedures is $26,097, which includes the deferred income tax liability associated with the intangible asset. Total consideration paid for GeoTraq included cash $200, unsecured promissory notes bearing interest at the annual rate of 1.29%; maturing on August 18, 2018 in the aggregate principal of $800, and 288,588 shares of convertible series A preferred stock with a final fair value of $14,963. See Note 19 – Series A Preferred Stock to these consolidated financial statements. In connection with the acquisition, an additional amount was recorded in the amount of $10,134 and an offsetting deferred tax liability recorded of the same amount, $10,134 to reflect the future tax liability attributable to the Geotraq asset acquired. There were no other assets acquired or liabilities assumed. At the time of the acquisition of GeoTraq, GeoTraq was a shell company with no business operations, one intangible asset and historical know-how and designs. GeoTraq is in the development stage. The Company elected to early adopt ASU 2017-01 Business Combinations, which clarifies the definition of a business for purposes of applying ASC 805 Related Parties. The Company has determined that GeoTraq is a single or group of related assets, not a business as clarified by ASU 2017-01 at the time of acquisition. |
6. Sale and deconsolidation of
6. Sale and deconsolidation of variable Interest Entity - AAP | 6 Months Ended |
Jun. 30, 2018 | |
Sale And Deconsolidation Of Variable Interest Entity - Aap | |
Variable Interest Entity | Note 6: Sale and deconsolidation of variable interest entity - AAP The financial position and results of operations of AAP have been consolidated in our financial statements since AAP’s inception based on our conclusion that AAP is a variable interest entity that we controlled due to our contribution in excess of 50% of the total equity, subordinated debt and other forms of financial support. Since inception we provided substantial financial support to fund the operations of AAP. The financial position and results of operations for AAP are reported in our recycling segment. On August 15, 2017, we sold our 50% interest in AAP, and therefore, as of August 15, 2017, no longer consolidate the results of AAP in our financial statements. The following table summarizes the unaudited assets and liabilities of AAP consolidated in our financial position as of July 1, 2017: July 1, 2017 Assets Current assets $ 293 Property and equipment, net 6,933 Other assets 93 Total assets $ 7,319 Liabilities Accounts payable $ 2,569 Accrued expenses 585 Current maturities of long-term debt obligations 728 Long-term debt obligations, net of current maturities 3,166 Other liabilities (a) 289 Total liabilities $ 7,337 (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 consolidated in our financial results for the 13 weeks and 26 weeks ended June 30, 2018, and July 1, 2017, respectively: 13 Weeks Ended 26 Weeks Ended June 30, 2018 July 1, 2017 (b) June 30, 2018 July 1, 2017 (b) Revenues $ – $ 642 $ – $ 1,127 Gross profit – 100 – (14 ) Operating loss – (236 ) – (708 ) Net loss – (300 ) – (826 ) (b) Operating results for AAP were consolidated in the Company’s operating results from inception of AAP through August 15, 2017, the date of our 50% equity sale in AAP. We recorded a gain of $81 on the sale and deconsolidation of our 50% equity interest in AAP. Net Cash outflow arising from deconsolidation of AAP was $35. The Company received $800 in cash consideration for its 50% equity interest in AAP. |
7. Note receivable - sale of di
7. Note receivable - sale of discontinued operations | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note receivable - sale of discontinued operations | Note 7: Note receivable – sale of discontinued operations On December 30, 2017, we signed an agreement to dispose of our ApplianceSmart retail appliance segment. ApplianceSmart Holdings LLC (the “Purchaser”), a wholly owned subsidiary of Live Ventures Incorporated, entered into a Stock Purchase Agreement (the “Agreement”) with the Company and ApplianceSmart, Inc. (“ApplianceSmart”), a subsidiary of the Company. ApplianceSmart is a 17-store chain specializing in new and out-of-the-box appliances with annualized revenues of approximately $65 million. Pursuant to the Agreement, the Purchaser purchased from the Company all the issued and outstanding shares of capital stock (the “Stock”) of ApplianceSmart in exchange for $6,500 (the “Purchase Price”). The Purchase Price per agreement was due and payable on or before March 31, 2018. As of December 30, 2017, the Company had an amount due from ApplianceSmart Holdings LLC a subsidiary of Live Ventures Incorporated in the sum of $6,500 recorded as a current asset. Between March 31, 2018 and April 24, 2018, the Purchaser and the Seller negotiated in good faith the method of payment of the remaining outstanding balance of the Purchase Price. On April 25, 2018, the Purchaser delivered to the Seller that certain Promissory Note (the “ApplianceSmart Note”) in the original principal amount of $3,919 (the “Original Principal Amount”), as such amount may be adjusted per the terms of the ApplianceSmart Note. The ApplianceSmart Note is effective as of April 1, 2018 and matures on April 1, 2021 (the “Maturity Date”). The ApplianceSmart Note bears interest at 5% per annum with interest payable monthly in arrears. Ten percent of the outstanding principal amount will be repaid annually on a quarterly basis, with the accrued and unpaid principal due on the Maturity Date. ApplianceSmart has agreed to guaranty repayment of the ApplianceSmart Note. The remaining $2,581 of the Purchase Price was paid in cash by the Purchaser to the Seller. The Purchaser may reborrow funds, and pay interest on such reborrowings, from the Seller up to the Original Principal Amount. Subsequent to December 30, 2017, ApplianceSmart assumed $1,901 in liabilities from the Company. For the 26 weeks ended June 30, 2018, the original balance owed to the Company of $6,500, increased with new borrowings of $1,800 and decreased with repayments of $2,581, and debt assumed of $1,901 represents a net amount due from ApplianceSmart Holdings LLC, now in the form of a note receivable, in the sum of $3,818 as of June 30, 2018. Discontinued operations and assets held for sale include our retail appliance business ApplianceSmart. Results of operations, financial position and cash flows for this business are separately reported as discontinued operations for all periods presented. The Company made the decision to sell ApplianceSmart to eliminate losses and poor financial performance from our retail segment, decrease existing leverage, assign and eliminate long term lease liabilities for store leases, increase cash balances, enhance shareholder value and focus Company resources on its’ two remaining segments, Recycling and Technology. FINANCIAL INFORMATION FOR HELD FOR SALE AND DISCONTINUED OPERATIONS (In Thousands) 13 Weeks 13 Weeks 26 Weeks 26 Weeks Ended Ended Ended Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Revenue $ – $ 15,038 $ – $ 30,827 Cost of revenue – 10,308 – 21,890 Gross profit – 4,730 – 8,937 Selling, general and administrative expense – 3,722 – 8,007 Operating (loss) - discontinued operations – 1,008 – 930 Other income – 238 – 238 Other expense – – – – Net income - discontinued operations before income tax provision – 1,246 – 1,168 Income tax provision – 394 – 373 Net income - discontinued operations, net of tax $ – $ 852 $ – $ 795 |
8. Receivables
8. Receivables | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Receivables | Note 8: Receivables June 30, 2018 December 30, 2017 Trade receivables, net $ 5,430 $ 8,826 Factored accounts receivable (471 ) – Prestige Capital reserve receivable 92 – Due from Recleim 819 819 Other receivables 94 391 Trade and other receivables, net $ 5,964 $ 10,036 For the 13 weeks ended June 30, 2018, two customers represented more than 10% of our total revenues. For the 13 weeks ended July 1, 2017, one customer represented more than 10% of our total revenues. For the 26 weeks ended June 30, 2018, two customers represented more than 10% of total revenues. For the 26 weeks ended July 1, 2017, one customer represented more than 10% of total revenues. As of June 30, 2018, two customers, each represented more than 10% of our total trade receivables, for a total of 32% of our total trade receivables. As of December 30, 2017, two customers, each represented more than 10% of our total trade receivables, for a total of 25% of our total trade receivables. During the 26 weeks ended June 30, 2018 and July 1, 2017, respectively, we purchased 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. |
9. Inventory
9. Inventory | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 9: 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: June 30, 2018 December 30, 2017 Appliances held for resale $ 1,097 $ 762 We provide estimated provisions for the obsolescence of our appliance inventories, including adjustments to net realizable value, based on various factors, including the age of such inventory and our management’s assessment of the need for such provisions. We look at 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. For the period ended June 30, 2018 and December 30, 2017, there was no inventory obsolescence reserve. |
10. Prepaids and other current
10. Prepaids and other current assets | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaids and other current assets | Note 10: Prepaids and other current assets Prepaids and other current assets as of June 30, 2018 and December 30, 2017 consist of the following: June 30, 2018 December 30, 2017 Prepaid insurance $ 510 $ 443 Prepaid rent 16 5 Prepaid services 400 – Prepaid vendor draft 295 – Prepaid other 124 58 $ 1,345 $ 506 |
11. Property and Equipment
11. Property and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 11: Property and equipment Property and equipment as of June 30, 2018, and December 30, 2017, consist of the following: Useful Life (Years) June 30, 2018 December 30, 2017 Land $ – $ – Buildings and improvements 18-30 156 156 Equipment (including computer software) 3-15 6,076 5,908 Projects under construction 29 29 Property and equipment 6,261 6,093 Less accumulated depreciation and amortization (5,667 ) (5,555 ) Property and equipment, net $ 594 $ 538 Depreciation and amortization expense for continuing operations was $59 and $263 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. Depreciation and amortization expense for continuing operations was $120 and $520 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. On January 25, 2017, as disclosed by the Company in Item 2.01 of its Current Report on Form 8-K filed with the SEC on January 31, 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. |
12. Intangible assets
12. Intangible assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | Note 12: Intangible assets Intangible assets as of June 30, 2018, and December 30, 2017, consist of the following: June 30, 2018 December 30, 2017 Intangible assets GeoTraq, net $ 22,833 $ 24,699 Patent 19 19 $ 22,852 $ 24,718 For the 13 Week and 26 Week periods ended June 30, 2018, we recorded amortization expense of $932 and $1,864, respectively, related to our finite intangible assets. The useful life and amortization period of the GeoTraq intangible assets acquired is seven years. |
13. Deposits and other assets
13. Deposits and other assets | 6 Months Ended |
Jun. 30, 2018 | |
Assets, Noncurrent [Abstract] | |
Deposits and other assets | Note 13: Deposits and other assets Deposits and other assets as of June 30, 2018, and December 30, 2017, consist of the following: June 30, 2018 December 30, 2017 Deposits $ 247 $ 411 Other 114 107 $ 361 $ 518 Deposits are primarily refundable security deposits with landlords for the Company’s leased property. |
14. Accrued liabilities
14. Accrued liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Accrued liabilities | Note 14: Accrued liabilities Accrued liabilities as of June 30, 2018, and December 30, 2017, consist of the following: June 30, 2018 December 30, 2017 Sales tax estimates, including interest $ 4,925 $ 4,563 Compensation and benefits 612 1,061 Deferred revenue – 300 Accrued incentive and rebate checks 53 285 Accrued rent – 77 Accrued interest – 115 Accrued payables – 129 Other 10 31 $ 5,600 $ 6,561 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 Company’s California operations 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. |
15. Line of credit - PNC Bank
15. Line of credit - PNC Bank | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Line of credit - PNC Bank | Note 15: Line of credit - PNC Bank We had a Revolving Credit, Term Loan and Security Agreement, as amended, (“PNC Revolver”) with PNC Bank, National Association (“PNC”) that provided us with a $15,000 revolving line of credit. The PNC Revolver loan agreement included a lockbox agreement and a subjective acceleration clause and as a result we have classified the revolving line of credit as a current liability. The PNC Revolver was collateralized by a security interest in substantially all of our assets and PNC was also secured by an inventory repurchase agreement with Whirlpool Corporation solely with respect to Whirlpool purchases only. In addition, we issued a $750 letter of credit in favor of Whirlpool Corporation. The PNC Revolver required, starting with the fiscal quarter ending April 2, 2016, that we meet a specified minimum earnings before interest, taxes, depreciation and amortization, and continuing at the end of each quarter thereafter, that we meet a minimum fixed charge coverage ratio of 1.1 to 1.0. The PNC Revolver loan agreement limited investments that we could purchase, the amount of other debt and leases that we could incur, the amount of loans that we could issue to our affiliates and the amount we could spend on fixed assets, along with prohibiting the payment of dividends. The interest rate on the PNC Revolver, as stated in our renewal agreement on January 22, 2016, was PNC Base Rate (as defined below) plus 1.75% to 3.25%, or 1-, 2- or 3-month PNC LIBOR Rate plus 2.75% to 4.25%, with the rate being dependent on our level of fixed charge coverage. The PNC Base Rate meant, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the interest rate per annum announced from time to time by PNC as its prime rate, (ii) the Federal Funds Open Rate plus 0.5%, and (iii) the one-month LIBOR rate plus 100 basis points (1%). The amount of available revolving borrowings under the PNC Revolver was based on a formula using accounts receivable and inventories. We did not have access to the full $15,000 revolving line of credit due to such formula, the amount of the letter of credit issued in favor of Whirlpool Corporation and the amount of outstanding loans owed to PNC by out AAP joint venture. As discussed above, the Company sold its the Compton Facility building 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 loan agreement was terminated, and the PNC Revolver was paid in full on May 10, 2017 with funds from MidCap Financial Trust. See Note 17, long term obligations, for additional information. |
16. Notes payable - short term
16. Notes payable - short term | 6 Months Ended |
Jun. 30, 2018 | |
Notes Payable - Short Term | |
Notes payable - short term | Note 16: Notes payable – short term On August 18, 2017, the Company, as part of its’ acquisition of GeoTraq, issued unsecured promissory notes to the sellers of GeoTraq with interest at the annual rate of interest of 1.29% maturing on August 18, 2018. The outstanding balance of the notes payable – short term as of June 30, 2018 is $300. |
17. Short term debt
17. Short term debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Short term debt | Note 17: Short term debt Short term debt, capital lease and other financing obligations as of June 30, 2018, and December 30, 2017, consist of the following: June 30, 2018 December 30, 2017 MidCap financial trust asset based revolving loan $ – $ 5,605 AFCO Finance 556 367 GE 8% loan agreement 482 482 EEI note 101 103 Capital leases and other financing obligations – 30 Debt issuance costs, net (493 ) (1,010 ) Total short term debt $ 646 $ 5,577 PNC Term Loan On January 24, 2011, we entered into a $2,550 Term Loan (“Term Loan”) with the PNC Bank to refinance the mortgage on our Compton Facility. The Term Loan was payable in 119 consecutive monthly principal payments of $21 plus interest commencing on February 1, 2011 and followed by a 120th payment of all unpaid principal, interest and fees on February 1, 2021. The PNC Revolver loan agreement required a balloon payment of $1,020 in principal plus interest and additional fees due on January 31, 2017. The Term Loan was collateralized by the Compton Facility. As disclosed by the Company in Item 2.01 of the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2017, the Term Loan was paid off in full on January 25, 2017 when the Compton Facility was sold. MidCap Financial Trust On May 10, 2017, we entered into a Credit and Security Agreement (“Credit Agreement”) with MidCap Financial Trust (“MidCap Financial Trust”), as a lender and as agent for itself and other lenders under the Credit Agreement. The Credit Agreement provided us with a $12,000 revolving line of credit, which may have been increased to $16,000 under certain terms and conditions (the “MidCap Revolver”). The MidCap Revolver had a stated maturity date of May 10, 2020, if not renewed. The MidCap Revolver was collateralized by a security interest in substantially all of our assets. The lender was also secured by an inventory repurchase agreement with Whirlpool Corporation for Whirlpool purchases only. The Credit Agreement required 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 was (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 limited the amount of other debt we could incur, the amount we could spend on fixed assets, and the amount of investments we could make, along with prohibiting the payment of dividends. The amount of revolving borrowings available under the Credit Agreement was based on a formula using receivables and inventories. We did not have access to the full $12,000 revolving line of credit due to the formula using our receivables and inventories and the amount of any outstanding letters of credit issued by the Lender. The interest rate on the revolving line of credit was the one-month LIBOR rate plus four and one-half percent (4.50%). On December 30, 2017, our available borrowing capacity under the Credit Agreement was $1,031. We borrowed $21,470 and repaid $27,075 on the Credit Agreement during the period of December 31, 2017 through March 22, 2018, leaving an outstanding balance on the Credit Agreement of $0 and $5,605 at June 30, 2018 and December 30, 2017, respectively. On September 20, 2017, we received a written notice of default, dated September 20, 2017 (the “Notice of Default”), from MidCap Funding X Trust (the “Agent”), asserting that events of default had occurred with respect to the Credit Agreement. The Agent alleged in the Notice of Default that, as a result of the Company’s recent acquisition of GeoTraq, and the issuance of promissory notes to the stockholders of GeoTraq in connection with such acquisition, the Borrowers have failed to comply with certain terms of the Loan Agreement, and that such failure constitutes one or more Events of Default under the Loan Agreement. Specifically, the Notice of Default states that as a result of the acquisition and related issuance of promissory notes, the Borrowers have failed to comply with (i) a covenant not to incur additional indebtedness other than Permitted Debt (as defined in the Loan Agreement), without the Agent’s prior written consent, and a covenant not to make acquisitions or investments other than Permitted Acquisitions or Permitted Investments (as defined in the Credit Agreement). The Notice of Default also stated that the Borrowers’ failure to pledge the stock in GeoTraq as collateral under the Credit Agreement and to make GeoTraq a “Borrower “under the Credit Agreement will become an Event of Default if not cured within the applicable cure period. The Agent reserved the right to avail itself of any other rights and remedies available to it at law or by contract, including the right to (a) withhold funding, increase reserves and suspend making further advances under the Credit Agreement, (b) declare all principal, interest and other sums owing in connection with the Credit Agreement immediately due and payable in full, (c) charge the Default Rate on amounts outstanding under the Credit Agreement, and/or (d) exercise one or more rights and remedies with respect to any and all collateral securing the Credit Agreement. The Agent did not declare the amounts outstanding under the Credit Agreement to be immediately due and payable but imposed the default rate of interest, which is 5% in excess of the rates otherwise payable under the Loan Agreement), effective as of August 18, 2017 and continuing until the Agent notifies the Borrowers that the specified Events of Default have been waived and no other Events of Default exist. The Company strongly disagreed with the Lenders that any Event of Default had occurred. On March 22, 2018, the Company terminated the Credit and Security Agreement (the“Credit Agreement”) by and among the Company and the subsidiaries of the Company as borrowers (the “Borrowers”), on the one hand, and MidCap Financial Trust, as administrative agent and lender (the “Lender”), on the other hand, together with the related revolving loan note and pledge agreement. The Company did not incur any termination penalties as a result of the termination of the Credit Agreement. The Company is classifying the MidCap Revolver as a current liability until March 22, 2018, at which time the MidCap Revolver was terminated and paid in full. The security interests held by the Lender in substantially all Company assets were released following termination and payoff on March 22, 2018. The debt issuance costs of the MidCap Revolver were $546. The un-amortized debt issuance costs recorded as interest expense upon termination of the Credit Agreement on March 22, 2018 were $395. GE On August 14, 2017 as a part of the sale of the Company’s equity interest in AAP, Recleim LLC, a Delaware limited liability company (“Recleim”), agreed to undertake, pay or assume the Company’s GE obligations consisting of a promissory note (GE 8% loan agreement) and other payables of $336 which were incurred after the issuance of such promissory note. Recleim has agreed to indemnify, and hold ARCA harmless from any action to be taken by GE relating to such obligations. The Company has an offsetting receivable due from Recleim of $819. AFCO Finance On June 16, 2017, we entered into a financing agreement with AFCO Credit Corporation (“AFCO”) to fund the annual premiums due June 1, 2017 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’ insurance. 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 June 16, 2017 AFCO agreement has a zero balance as of June 30, 2018. On July 2, 2018, we entered into another financing agreement with AFCO to fund the annual premiums on insurance policies due June 1, 2018 purchased through Marsh Insurance. These policies related to workers’ compensation and various liability policies including, but not limited to, General, Auto, Umbrella, Property, and Directors’ and Officers’ insurance. The total amount of the premiums financed is $556 with an interest rate of 4.519%. An initial down payment of $56 is due before July 1, 2018 and additional 9 monthly payments of $57 will be made beginning July 1, 2018 and ending March 1, 2019. The outstanding principal due AFCO at the end of June 30, 2018 and December 30, 2017 was $556 and $367, respectively. Energy Efficiency Investments LLC On November 8, 2016, the Company entered into a securities purchase agreement with Energy Efficiency Investments, LLC, pursuant to which the Company agreed to issue up to $7,732 principal amount of 3% Original Issue Discount Senior Convertible Promissory Notes of the Company and related common stock purchase warrants. These notes will be issued from time to time, up to such aggregate principal amount, at the request of the Company, subject to certain conditions, or at the option of Energy Efficiency Investments, LLC. Interest accrues at the rate of eight percent per annum on the principal amount of the notes outstanding from time to time, and is payable at maturity or, if earlier, upon conversion of these notes. The principal amount of these notes outstanding at June 30, 2018 and December 30, 2017, was $103. The debt issuance costs of the EEI note are $740. The un-amortized debt issuance costs of the EEI note as of June 30, 2018 and December 30, 2017, are $493 and $568, respectively. |
18. Commitments and Contingenci
18. Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 18: Commitments and Contingencies Litigation On December 29, 2016, ARCA served a Minnesota state court complaint for breach of contract on Skybridge Americas, Inc. (“SA”), ARCA’s primary call center vendor throughout 2015 and most of 2016. ARCA seeks damages in the millions of dollars as a result of alleged overcharging by SA and lost client contracts. On January 25, 2017, SA served a counterclaim for unpaid invoices in the amount of approximately $460,000 plus interest and attorneys’ fees. On March 29, 2017, the Hennepin County district court dismissed ARCA’s breach of contract claim based on SA’s overuse of its Canadian call center but permitted ARCA’s remaining claims to proceed. On October 24, 2017, ARCA filed a motion for partial summary judgment; SA cross-motioned on November 6, 2017. On January 8, 2018, judgment was entered in SA’s favor, which was amended as of February 28, 2018 for a total amount of $613,566.32 including interest and attorneys’ fees. On March 2, 2018, ARCA appealed the judgment to the Minnesota Court of Appeals. The appeal is in progress. On November 15, 2016, ARCA served an arbitration demand on Haier US Appliance Solutions, Inc., dba GE Appliances (“GEA”), alleging breach of contract and interference with prospective business advantage. ARCA seeks over $2 million in damages. On April 18, 2017, GEA served a counterclaim for approximately $337,000 in alleged obligations under the parties’ recycling agreement. Simultaneously with serving its counterclaim in the arbitration, which is venued in Chicago, GEA filed a complaint in the United States District Court for the Western District of Kentucky seeking damages of approximately $530,000 plus interest and attorneys’ fees allegedly owed under a previous agreement between the parties. On December 12, 2017, the court stayed GEA’s complaint in favor of the arbitration. Under the terms of ARCA’s transaction with Recleim LLC, Recleim LLC is obligated to pay GEA on ARCA’s behalf the amounts claimed by GEA in the arbitration and in the lawsuit pending in Kentucky. Those amounts have been paid into escrow pending the outcome of the arbitration. The arbitration is currently scheduled for December 3-7, 2018. 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 agreement 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. |
19. Income Taxes
19. Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 19: Income Taxes Our overall effective tax rate was 26.8% for the 26 weeks ended June 30, 2018 and a positive tax provision of $854 against a pre-provision loss of $3,738 for the 26 weeks ended June 30, 2018, respectively. The effective tax rates and related provisional tax amounts vary from the U.S. federal statutory rate due to state taxes, foreign taxes, share-based compensation, non-controlling interest, valuation allowance, and certain non-deductible expenses. We regularly evaluate both positive and negative evidence related to retaining a valuation allowance against certain deferred tax assets. The realization of deferred tax assets is dependent upon sufficient future taxable income during the periods when deductible temporary differences and carryforwards are expected to be available to reduce taxable income. We have concluded based on the weight of evidence that a valuation allowance should be maintained against certain deferred tax assets that we do not expect to utilize in the near future. The Company continues to have a full valuation allowance against its Canadian operations. |
20. Series A Preferred Stock
20. Series A Preferred Stock | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Series A Preferred Stock | Note 20: Series A Preferred Stock On August 18, 2017, the Company acquired GeoTraq by way of merger. GeoTraq is a development stage company that is engaged in the development, manufacture, and, ultimately, we expect, 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 $200,000, 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 in the aggregate principal amount of $800,000. To accomplish the designation and issuance of the Series A Preferred Stock, we filed a Certificate of Designation with the Secretary of State of the State of Minnesota. On November 9, 2017, we filed a Certificate of Correction with the Minnesota Secretary of State. The following summary of the Series A Preferred Stock and Certificate of Designation does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to the Certificate of Designation and Certificate of Correction, which is filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q, as amended, for the quarterly period ended July 1, 2017, and Certificate of Correction, which is filed as Exhibit 3.2. hereto. Dividends We cannot declare, pay or set aside any dividends on shares of any other class or series of our capital stock unless (in addition to the obtaining of any consents required by our Articles of Incorporation) the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend in the aggregate amount of $1.00, regardless of the number of then-issued and outstanding shares of Series A Preferred Stock. Any remaining dividends allocated by the Board of Directors shall be distributed in an equal amount per share to the holders of outstanding common stock and Series A Preferred Stock (on an as-if-converted to common stock basis pursuant to the Conversion Ratio as defined below). Liquidation Rights Immediately prior to the occurrence of any liquidation, dissolution or winding up of the Company, whether voluntary of involuntary, all shares of Series A Convertible Preferred Stock automatically convert into shares of our common stock based upon the then-applicable “conversion ratio” (as defined below) and shall participate in the liquidation proceeds in the same manner as other shares of our common stock. Conversion The Series A Convertible Preferred Stock is not convertible into shares of our common stock except as described below. Subject to the third sentence of this paragraph, each holder of a share of Series A Preferred Stock has the right, exercisable at any time and from time to time (unless otherwise prohibited by law, rule or regulation, or as restricted below), to convert any or all of such holder’s shares of Series A Preferred Stock into shares of our common stock at the conversion ratio. The “conversation ratio” per share of the Series A Preferred Stock is a ratio of 1:100, meaning every one share of Series A Preferred Stock, if and when converted into shares of our common stock, converts into 100 shares of our common stock. Notwithstanding anything to the contrary in the Certificate of Designation, a holder of Series A Preferred Stock may not convert any of such holder’s shares and we may not issue any shares of our common stock in connection with a conversation that would trigger any Nasdaq requirement to obtain shareholder approval prior to such conversion or issuance in connection with such conversion that would be in excess of that number of shares of common stock equivalent to 19.9% of the number of shares of common stock as of August 18, 2017 ; provided however Redemption The shares of Series A Preferred Stock have no redemption rights. Preemptive Rights Holders of shares of Series A Preferred Stock are not entitled to any preemptive rights in respect to any securities of the Company, except as set forth in the Certificate of Designation or any other document agreed to by us. Voting Rights Each holder of a share of Series A Preferred Stock has a number of votes as is determined by multiplying (i) the number of shares of Series A Preferred Stock held by such holder, and (ii) 100. The holders of Series A Preferred Stock vote together with all other classes and series of common and preferred stock of the Company as a single class on all actions to be taken by the common stockholders of the Company, except to the extent that voting as a separate class or series is required by law. Notwithstanding anything to the contrary herein, the holders of the Series A Preferred Stock may not engage in any vote where the voting power would trigger any Nasdaq requirement to obtain shareholder approval; provided however the holders do have the right to vote that portion of their voting power that would not trigger such a requirement. The foregoing voting restriction lapses upon the requisite approval of the shareholders in compliance with Nasdaq’s shareholder voting requirements in effect at the time of such approval. Protective Provisions Without first obtaining the affirmative approval of a majority of the holders of the shares of Series A Preferred Stock, we may not directly or indirectly (i) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A Preferred Stock; (ii) effect an exchange, reclassification, or cancellation of all or a part of the Series A Preferred Stock, but excluding a stock split or reverse stock split or combination of the common stock or preferred stock; (iii) effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series A Preferred Stock; or (iii) alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares of such series, including the rights set forth in this Designation; provided, however, that we may, without any vote of the holders of shares of the Series A Preferred Stock, make technical, corrective, administrative or similar changes to the Certificate of Designation that do not, individually or in the aggregate, materially adversely affect the rights or preferences of the holders of shares of the Series A Preferred Stock. |
21. Share-based compensation
21. Share-based compensation | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Share-based compensation | Note 21: Share-based compensation We recognized share-based compensation expense of $0 and $9 for the 13 weeks ended June 30, 2018, and July 1, 2017 respectively. We recognized share-based compensation expense of $0 and $32 for the 26 weeks ended June 30, 2018, and July 1, 2017 respectively. There is no estimated future share-based compensation expense as of June 30, 2018. The weighted average fair value per option of options granted during fiscal year 2016 was $1.12. Based on the value of options outstanding as of June 30, 2018, we do not estimate any future share-based compensation expense for existing options issued. This estimate does not include any expense for additional options that may be granted and vest in subsequent years. |
22. Shareholders' Equity
22. Shareholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Note 22: 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 year 2016. No options were issued in the 26 weeks ended June 30, 2018 or fiscal year 2017. The expected dividend yield is zero. The expected stock price volatility is 85.44%. The risk-free interest rate is 2.16%. The expected life of options in years is ten. Additional information relating to all outstanding options is as follows (in thousands, except per share data): Weighted Average Options Weighted Average Aggregate Remaining Outstanding Exercise Price Intrinsic Value Contractual Life Balance at December 30, 2017 627 $ 2.56 $ – 4.22 Granted – Exercised – Cancelled/expired (123 ) 3.98 Forfeited – Balance at June 30, 2018 504 $ 2.21 $ – 4.84 The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $0.69 on June 29, 2018, which theoretically could have been received by the option holders had all option holders exercised their options as of that date. As of June 30, 2018, and December 30, 2017, there were no in-the-money options exercisable. Warrants: As of June 30, 2018, and December 30, 2017, 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 shares of common stock at a price of $0.68 per share. Preferred Stock |
23. Earnings per Share
23. Earnings per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings (loss) per share: | |
Earnings per Share | Note 23: 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 shareholders of the parent by the weighted average number of shares of common stock outstanding. Diluted per share amounts assume the conversion, exercise or issuance of all potential common stock instruments unless their effect is anti-dilutive, thereby reducing the loss or increasing the income per common share. In calculating diluted weighted average shares and per share amounts, we included stock options and warrants with exercise prices below average market prices, for the respective reporting periods in which they were dilutive, using the treasury stock method. We calculated the number of additional shares by assuming the outstanding stock options were exercised and that the proceeds from such exercises were used to acquire shares of common stock at the average market price during the quarter. For the 13 weeks and 26 weeks ended June 30, 2018 and July 1, 2017, we excluded options and warrants to purchase 695 and 734 shares, respectively, of common stock from the diluted weighted average shares outstanding calculation as the effect of these options were anti-dilutive. For the Thirteen Weeks Ended For the Twenty Six Weeks Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Basic Net income (loss) from continuing operations $ (1,409 ) $ 1,218 $ (2,884 ) $ 3,483 Net income (loss) from discontinued operations and loss on sale, net of tax – 845 – 788 Net income (loss) $ (1,409 ) $ 2,063 $ (2,884 ) $ 4,271 Basic earnings (loss) per share: Basic earnings (loss) per share from continued operations $ (0.20 ) $ 0.18 $ (0.42 ) $ 0.52 Basic earnings (loss) per share - discontinued operations and loss on sale, net of tax – 0.13 – 0.12 Basic earnings (loss) per share $ (0.20 ) $ 0.31 $ (0.42 ) $ 0.64 Weighted average common shares outstanding 6,875 6,655 6,875 6,655 Diluted Diluted earnings (loss) per share: Diluted earnings (loss) per share from continued operations $ (0.20 ) $ 0.18 $ (0.42 ) $ 0.52 Diluted earnings (loss) per share - discontinued operations and loss on sale, net of tax – 0.13 – 0.12 Diluted earnings (loss) per share $ (0.20 ) $ 0.31 $ (0.42 ) $ 0.64 Weighted average common shares outstanding 6,875 6,655 6,875 6,655 Add: Common Stock Warrants – 32 – 51 Assumed diluted weighted average common shares outstanding 6,875 6,687 6,875 6,706 |
24. Segment Information
24. Segment Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Note 24: Segment Information We operate within targeted markets through two reportable segments: recycling and technology. The recycling segment is composed of income generated by fees charged and costs incurred for collecting, recycling and installing appliances for utilities and other customers and includes byproduct revenue, which are primarily generated through the recycling of appliances. We have included the results from consolidating AAP in our recycling segment through August 15, 2017. The technology segment is composed of all revenue and costs incurred or associated with GeoTraq. At this time, GeoTraq is in the development stage and expects to go to market with products and services in the location-based services market. The nature of products, services and customers for each segment 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: Thirteen Weeks Ended Twenty Six Weeks Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Revenues Recycling $ 8,373 $ 10,744 $ 17,286 $ 18,194 Technology – – – – Total Revenues $ 8,373 $ 10,744 $ 17,286 $ 18,194 Gross profit Recycling $ 2,150 $ 3,989 $ 4,562 $ 5,805 Technology – – – – Total Gross profit $ 2,150 $ 3,989 $ 4,562 $ 5,805 Operating income (loss) Recycling $ (390 ) $ 1,577 $ (679 ) $ (54 ) Technology (1,212 ) – (2,485 ) – Total Operating income $ (1,602 ) $ 1,577 $ (3,164 ) $ (54 ) Depreciation and amortization Recycling $ 59 $ 247 $ 120 $ 504 Technology 933 – 1,866 – Total Depreciation and amortization $ 992 $ 247 $ 1,986 $ 504 Interest expense Recycling $ 38 $ 125 $ 629 $ 422 Technology – – – – Total Interest expense $ 38 $ 125 $ 629 $ 422 Net income (loss) before provision for income taxes Recycling $ (476 ) $ 1,276 $ (1,253 ) $ 4,516 Technology (1,212 ) – (2,485 ) – Total Net income (loss) before provision for income taxes $ (1,688 ) $ 1,276 $ (3,738 ) $ 4,516 As of As of June 30, December 30, 2018 2017 Assets Recycling $ 13,451 $ 21,745 Technology 22,988 25,146 Total Assets $ 36,439 $ 46,891 Goodwill and intangible assets Recycling $ 19 $ 19 Technology 22,833 24,699 Total Goodwill and intangible assets $ 22,852 $ 24,718 |
25. Defined Contribution Plan
25. Defined Contribution Plan | 6 Months Ended |
Jun. 30, 2018 | |
Benefit Contribution Plan [Abstract] | |
Defined Contribution Plan | Note 25: Defined Contribution Plan We have a defined contribution salary deferral plan covering substantially all employees under Section 401(k) of the Internal Revenue Code. We contribute an amount equal to 10 cents for each dollar contributed by each employee up to a maximum of 5% of each employee’s compensation. We recognized expense for contributions to the plans of $10 and $0 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. We recognized expense for contributions to the plans of $23 and $15 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. |
26. Related Party
26. Related Party | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party | Note 26: Related Parties Tony Isaac, the Company’s Chief Executive Officer, is the father of Jon Isaac, Chief Executive Officer of Live Ventures Incorporated and managing member of Isaac Capital Group LLC, a 9% shareholder of the Company. Tony Isaac, Chief Executive Officer, Virland Johnson, Chief Financial Officer, Richard Butler, Board of Directors member, and Dennis Gao, Board of Directors member of the Company, are Board of Directors, Chief Financial Officer, Board of Directors member, and Board of Directors members of, respectively, Live Ventures Incorporated. The Company also shares certain executive and legal services with Live Ventures Incorporated. The total services were $50 and $0 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. The total services were $116 and $0 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. Customer Connexx rents approximately 9,879 square feet of office space from Live Ventures Incorporated at its Las Vegas, NV office. The total rent and common area expense was $37 and $42 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. The total rent and common area expense was $82 and $93 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. The Company received a transition services fee of $68 and $136 from ApplianceSmart for the 13 weeks and 26 weeks ended June 30, 2018. On December 30, 2017, ApplianceSmart Holdings LLC (the “Purchaser”), a wholly owned subsidiary of Live Ventures Incorporated, entered into a Stock Purchase Agreement (the “Agreement”) with the Company and ApplianceSmart, Inc. (“ApplianceSmart”), a subsidiary of the Company. Pursuant to the Agreement, the Purchaser purchased from the Company all the issued and outstanding shares of capital stock (the “Stock”) of ApplianceSmart in exchange for $6,500 (the “Purchase Price”). Effective April 1, 2018, Purchaser issued the Company a promissory note with a three-year term in the original principal amount of $3,919,494 (exact amount) for the balance of the purchase price. ApplianceSmart is guaranteeing the repayment of this promissory note. See Note 7. |
27. Subsequent Event
27. Subsequent Event | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 27: Subsequent Events On August 10, 2018, the Company issued 1,315,000 shares of common stock to six different individuals in exchange for the provision of services. The shares were offered and issued in an offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) under Section 4(2) of the Securities Act. |
2. Summary of Significant Acc33
2. Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of consolidation The accompanying consolidated financial statements include the accounts of Appliance Recycling Centers of America, Inc. and our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. 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. 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. Customer Connexx, LLC, a Nevada Corporation, is a wholly owned subsidiary that was formed in formed in October 2016 to provide call center services for electric utility programs. On August 15, 2017, ARCA sold it’s 50% interest in AAP and is no longer consolidating the results of AAP in its consolidated financial statements as of that date. AAP was a joint venture formed in October 2009 between ARCA and 4301 Operations, LLC (“4301”). ARCA and 4301 owned a 50% interest in AAP through August 15, 2017. The financial position and results of operations of AAP were consolidated in our financial statements through August 15, 2017, based on our conclusion that AAP is a variable interest entity due to our contribution in excess of 50% of the total equity, subordinated debt and other forms of financial support. See Note 6 – Sale and deconsolidation of variable interest entity AAP to these consolidated financial statements. On August 18, 2017, we acquired GeoTraq. GeoTraq is a development stage company that is engaged in the development, design, and, ultimately, we expect, sale of cellular transceiver modules, also known as Cell-ID modules. GeoTraq has created a dedicated Cell-ID transceiver module that we believe can enable the design of extremely small, inexpensive products that can operate for years on a single charge, powered by standardly available batteries of diminutive size without the need of recharge. Accordingly, and utilizing Cell-ID technology exclusively, we believe that GeoTraq will provide an exclusive, low-cost solution and service life that will enable new global markets for location-based services (LBS). On December 30, 2017, we sold our 100% interest in ApplianceSmart, Inc., a Minnesota corporation. Appliancesmart Inc. 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. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumption that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in connection with the accompanying consolidated financial statements include the estimated reserve for doubtful current and long-term trade and other receivables, the estimated reserve for excess and obsolete inventory, estimated fair value and forfeiture rates for stock-based compensation, fair values in connection with the analysis of goodwill, other intangibles and long-lived assets for impairment, current portion of notes payable, valuation allowance against deferred tax assets and estimated useful lives for intangible assets and property and equipment. |
Financial Instruments | Financial Instruments Financial instruments consist primarily of cash equivalents, trade and other receivables, advances to affiliates and obligations under accounts payable, accrued expenses and notes payable. The carrying amounts of cash equivalents, trade receivables and other receivables, accounts payable, accrued expenses and short-term notes payable approximate fair value because of the short maturity of these instruments. The fair value of the long-term debt is calculated based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements, unless quoted market prices were available (Level 2 inputs). The carrying amounts of long-term debt at June 30, 2018 and December 30, 2017 approximate fair value. |
Cash and cash equivalents | Cash and Cash Equivalents Cash and Cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value. |
Trade Receivables and Allowance for Doubtful Accounts | Trade Receivables and Allowance for Doubtful Accounts We carry unsecured trade receivables at the original invoice amount less an estimate made for doubtful accounts based on a monthly review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. We write off trade receivables when we deem them uncollectible. We record recoveries of trade receivables previously written off when we receive them. We consider a trade receivable to be past due if any portion of the receivable balance is outstanding for more than ninety days. We do not charge interest on past due receivables. Our management considers the allowance for doubtful accounts of $61 and $61 to be adequate to cover any exposure to loss as of June 30, 2018, and December 30, 2017, respectively. |
Inventories | Inventories Inventories, consisting primarily of Appliances, are stated at the lower of cost, determined on a specific identification basis, or market. We provide estimated provisions for the obsolescence of our appliance inventories, including adjustment to market, based on various factors, including the age of such inventory and our management’s assessment of the need for such provisions. We look at historical inventory aging reports and margin analyses in determining our provision estimate. A revised cost basis is used once a provision for obsolescence is recorded. The Company does not have a reserve for obsolete inventory at June 30, 2018 and December 30, 2017. |
Property and equipment | Property and Equipment Property and Equipment are stated at cost less accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of assets are capitalized. Upon sale or other retirement of depreciable property, the cost and accumulated depreciation are removed from the related accounts and any gain or loss is reflected in operations. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful lives of building and improvements are three to thirty years, transportation equipment is three to fifteen years, machinery and equipment are five to ten years, furnishings and fixtures are three to five years and office and computer equipment are three to five years. Depreciation expense was $59 and $263 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. Depreciation expense was $120 and $263 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. We periodically review our property and equipment when events or changes in circumstances indicate that their carrying amounts may not be recoverable or their depreciation or amortization periods should be accelerated. We assess recoverability based on several factors, including our intention with respect to our stores and those stores projected undiscounted cash flows. An impairment loss would be recognized for the amount by which the carrying amount of the assets exceeds their fair value, as approximated by the present value of their projected discounted cash flows. |
Goodwill | Goodwill The Company accounts for purchased goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other We test goodwill at least annually on July 1 of each fiscal year or more frequently if events arise or circumstances change that indicate that goodwill may be impaired. The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed using a two-step approach required by ASC 350 to determine whether a goodwill impairment exists. The first step of the quantitative test is to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized. If the carrying amount exceeds the fair value, then the second step is required to be completed, which involves allocating the fair value of the reporting unit to each asset and liability using the guidance in ASC 805 (“ Business Combinations, A ccounting for Identifiable Intangible Assets in a Business Combination , with the excess being applied to goodwill. An impairment loss occurs if the amount of the recorded goodwill exceeds the implied goodwill. The determination of the fair value of our reporting units is based, among other things, on estimates of future operating performance of the reporting unit being valued. We are required to complete an impairment test for goodwill and record any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have an impact on these estimates and require interim impairment assessments. When performing the two-step quantitative impairment test, the Company's methodology includes the use of an income approach which discounts future net cash flows to their present value at a rate that reflects the Company's cost of capital, otherwise known as the discounted cash flow method ("DCF"). These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued market acceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the future cost structure of the businesses, and future technological changes. The Company also incorporates market multiples for comparable companies in determining the fair value of our reporting units. Any such impairment would be recognized in full in the reporting period in which it has been identified. |
Intangible Assets | Intangible Assets The Company’s intangible assets consist of customer relationship intangibles, trade names, licenses for the use of internet domain names, Universal Resource Locators, or URL’s, software, and marketing and technology related intangibles. Upon acquisition, critical estimates are made in valuing acquired intangible assets, which include but are not limited to: future expected cash flows from customer contracts, customer lists, and estimating cash flows from projects when completed; tradename and market position, as well as assumptions about the period of time that customer relationships will continue; and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from the assumptions used in determining the fair values. All intangible assets are capitalized at their original cost and amortized over their estimated useful lives as follows: domain name and marketing – 3 to 20 years; software – 3 to 5 years, customer relationships – 7 to 15 years. Intangible amortization expense is $932 and $0 for the 13 weeks ended June 30, 2018 and April 1, 2017, respectively. Intangible amortization expense is $1,864 and $0 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. |
Revenue Recognition | Revenue Recognition We record contract revenue with customers in the period when all of the following requirements have been met: (i) there is persuasive evidence of an arrangement, (ii) the sales transaction price is fixed or determinable, (iii) title, ownership and risk of loss have been transferred to the customer (iv) allocation of sales price to specific performance obligations, and (v) performance obligations are satisfied. We recognize revenue and a receivable per customer upon confirmed and accepted pickup of the to be recycled appliance for appliance recycling services when we collect and recycle the old appliance. No provision for bad debt is provided at the time of recording revenue given the credit of our customers. All direct costs are either paid and or accrued for in the period in which the appliance recycling service is provided. We recognize revenue and a receivable per customer upon confirmed and accepted delivery of the replacement appliance, and or pickup of the to be recycled appliance. The delivery of the replacement appliance is one performance obligation and the pickup of the to be recycled appliance is another performance obligation. Revenue is recorded for each performance obligation. No provision for bad debt is provided at the time of recording revenue given the credit of our customers. All direct costs are either paid and or accrued for in the period in which the replacement appliance(s)and program service(s) are provided. Customer’s do not typically have a right to return appliances sold. The manufacturer’s warranty is the only warranty provided to a customer. We do not have any contracts with third-party recycling customers that we sell recycling byproduct or carbon offsets. We recognize the revenue from the sale of carbon offsets and ozone-depleting refrigerants upon having in writing a mutually agreed upon price per pound, confirmed delivery, verification of volume and purity of the refrigerant by the buyer and collectability is reasonably assured. Other recycling byproduct revenue (the sale of copper, steel, plastic and other recoverable non-refrigerant byproducts) is recorded as revenue upon delivery to the third-party recycling customer for processing, having a mutually agreed upon price per pound and collection reasonably assured. Transfer of control occurs at the time the customer is in possession of the byproduct material. Funds are sent to the Company by the customer typically by check for the actual weight, type and in some cases volume of the byproduct delivered multiplied by the market rate as quoted. The Company has changed its accounting for revenue recognition for revenue derived from contracts with our customers and the related costs associated with those contracts effective December 31, 2017 due to the adoption of ASC 606 Revenue from contracts with Customers (“ASC 606”). The Company adopted the modified retrospective transition method, of making the transition effective December 31, 2017. The Company has applied ASC 606 and ASC 340-40 Contracts with Customers (“ASC 340”) to only those contracts that were not completed as of December 31, 2017. The effect of applying ASC 606 and ASC 340-40 as of December 31, 2017, requires the Company to (a) determine that amount of revenue and related costs it would have recognized in the period of adoption if it had continued to apply legacy GAAP in that period and (b) disclose the change for each financial statement item affected and explain the reasons for those changes that are significant. The Company has determined that the effect of applying ASC 606 and ASC 340-40 as of December 31, 2017 is immaterial. For the Quarter ended June 30, 2018 Revenue recognized for Company contracts - $7,396 and $8,609 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. Revenue recognized for Company contracts - $15,218 and $15,000 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. There was no impairment (or credit) losses on accounts receivable or contract assets related to Company contracts that were recognized in accordance with ASC 310 Receivables or ASC 326-30 Financial Instruments – Credit Losses. The Company provides replacement appliances and program services, mainly recycling of aged appliances to Utility customers. The Company operates in twenty-four states within the continental United States, and two provinces of Canada. The Company does not enter into contracts with for byproduct or carbon offset revenue. The Company uses a direct sales channel and typically enters into contracts for recycling program services and replacement appliances lasting a few months up to a couple of years in length. The Company has two reportable segments – Recycling and Technology. The Technology segment currently is a development segment with no revenue. Contract revenue for the recycling segment is recorded upon the confirmed delivery and or pickup of the aged appliance for both replacement appliance revenue and program services revenue. Byproduct revenue is record upon delivery of the byproduct to the customer of the Company’s choice, one price and terms are agreed too. The Company does not have any contract assets or liabilities as of June 30, 2018 and December 30, 2017, respectively. Performance obligations are typically satisfied upon confirmed delivery of replacement appliance(s) revenue, pickup of the aged appliance for program services revenue and delivery to a customer of choice for byproduct revenue. Revenue recorded in the 13 weeks and 26 weeks ended June 30, 2018 related to performance obligations satisfied in the same 13 weeks and 26 weeks ended June 30, 2018. The Company does not capitalize costs under ASC 340-40, or use any other method to amortize costs capitalized. There was no balance of capitalized costs at either June 30, 2018 or December 30, 2017, respectively. The Company has not incurred any impairment losses in the quarter ended June 30, 2018 related to costs capitalized in accordance with ASC 340-40. |
Shipping and Handling | Shipping and Handling The Company classifies shipping and handling charged to customers as revenues and classifies costs relating to shipping and handling as cost of revenues. |
Advertising expense | Advertising Expense Advertising expense is charged to operations as incurred. Advertising expense totaled $211 and $197 for the 13 weeks ended June 30, 2018 and July 1, 2017, respectively. Advertising expense totaled $367 and $472 for the 26 weeks ended June 30, 2018 and July 1, 2017, respectively. |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows: Level 1 - inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. Level 2 – to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company's assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not be realized. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its Consolidated Statements of Income. Significant management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Company uses a two-step process to evaluate tax positions. The first step requires an entity to determine whether it is more likely than not (greater than 50% chance) that the tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Company in future periods. |
Lease Accounting | Lease Accounting We lease warehouse facilities and office space. These assets and properties are generally leased under noncancelable agreements that expire at various dates through 2022 with various renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for minimum and, in some cases percentage rent and require us to pay all insurance, taxes and other maintenance costs. Leases with step rent provisions, escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term and includes “rent holidays” (periods in which we are not obligated to pay rent). Cash or lease incentives received upon entering into certain store leases (“tenant improvement allowances”) are recognized on a straight-line basis as a reduction to rent expense over the lease term. We record the unamortized portion of tenant improvement allowances as a part of deferred rent. We do not have leases with capital improvement funding. |
Stock-based compensation | Stock-Based Compensation. The Company from time to time grants restricted stock awards and options to employees, non-employees and Company executives and directors. Such awards are valued based on the grant date fair-value of the instruments, net of estimated forfeitures. The value of each award is amortized on a straight-line basis over the vesting period. |
Foreign Currency | Foreign Currency The financial statements of the Company’s non-U.S. subsidiary are translated into U.S. dollars in accordance with ASC 830, Foreign Currency Matters. Under ASC 830, if the assets and liabilities of the Company are recorded in certain non-U.S. functional currencies other than the U.S. dollar, they are translated at current rates of exchange. Revenue and expense items are translated at the average monthly exchange rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income (loss). |
Earnings Per Share | Earnings Per Share Earnings per share is calculated in accordance with ASC 260, “ Earnings Per share |
Segment Reporting | Segment Reporting ASC Topic 280, “ Segment Reporting |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains cash balances at several banks in several states including, Minnesota, California, and Nevada within the United States. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 per institution as of June 30, 2018. At times, balances may exceed federally insured limits. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements ASU 2016-02, Leases (Topic 842) ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products ASU 2016-09, Compensation- Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, ASU 2017-09, Compensation- Stock Compensation (Topic 718): Scope of Modification Accounting |
6. Sale and deconsolidation o34
6. Sale and deconsolidation of variable interest entity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Sale And Deconsolidation Of Variable Interest Entity - Aap | |
Assets and liabilities of VIE | July 1, 2017 Assets Current assets $ 293 Property and equipment, net 6,933 Other assets 93 Total assets $ 7,319 Liabilities Accounts payable $ 2,569 Accrued expenses 585 Current maturities of long-term debt obligations 728 Long-term debt obligations, net of current maturities 3,166 Other liabilities (a) 289 Total liabilities $ 7,337 |
Operating results of VIE | The following table summarizes the operating results of AAP consolidated in our financial results for the 13 weeks and 26 weeks ended June 30, 2018, and July 1, 2017, respectively: 13 Weeks Ended 26 Weeks Ended June 30, 2018 July 1, 2017 (b) June 30, 2018 July 1, 2017 (b) Revenues $ – $ 642 $ – $ 1,127 Gross profit – 100 – (14 ) Operating loss – (236 ) – (708 ) Net loss – (300 ) – (826 ) |
7. Note receivable - sale of 35
7. Note receivable - sale of discontinued operations (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note receivable - sale of discontinued operations | FINANCIAL INFORMATION FOR HELD FOR SALE AND DISCONTINUED OPERATIONS (In Thousands) 13 Weeks 13 Weeks 26 Weeks 26 Weeks Ended Ended Ended Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Revenue $ – $ 15,038 $ – $ 30,827 Cost of revenue – 10,308 – 21,890 Gross profit – 4,730 – 8,937 Selling, general and administrative expense – 3,722 – 8,007 Operating (loss) - discontinued operations – 1,008 – 930 Other income – 238 – 238 Other expense – – – – Net income - discontinued operations before income tax provision – 1,246 – 1,168 Income tax provision – 394 – 373 Net income - discontinued operations, net of tax $ – $ 852 $ – $ 795 |
8. Receivables (Tables)
8. Receivables (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Receivables | June 30, 2018 December 30, 2017 Trade receivables, net $ 5,430 $ 8,826 Factored accounts receivable (471 ) – Prestige Capital reserve receivable 92 – Due from Recleim 819 819 Other receivables 94 391 Trade and other receivables, net $ 5,964 $ 10,036 |
9. Inventories (Tables)
9. Inventories (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | June 30, 2018 December 30, 2017 Appliances held for resale $ 1,097 $ 762 |
10. Prepaids and other curren38
10. Prepaids and other current assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaids and other current assets | June 30, 2018 December 30, 2017 Prepaid insurance $ 510 $ 443 Prepaid rent 16 5 Prepaid services 400 – Prepaid vendor draft 295 – Prepaid other 124 58 $ 1,345 $ 506 |
11. Property and Equipment (Tab
11. Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment Table | Useful Life (Years) June 30, 2018 December 30, 2017 Land $ – $ – Buildings and improvements 18-30 156 156 Equipment (including computer software) 3-15 6,076 5,908 Projects under construction 29 29 Property and equipment 6,261 6,093 Less accumulated depreciation and amortization (5,667 ) (5,555 ) Property and equipment, net $ 594 $ 538 |
12. Intangible assets (Tables)
12. Intangible assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | June 30, 2018 December 30, 2017 Intangible assets GeoTraq, net $ 22,833 $ 24,699 Patent 19 19 $ 22,852 $ 24,718 |
13. Deposits and other assets (
13. Deposits and other assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of deposits and other assets | June 30, 2018 December 30, 2017 Prepaid insurance $ 510 $ 443 Prepaid rent 16 5 Prepaid services 400 – Prepaid vendor draft 295 – Prepaid other 124 58 $ 1,345 $ 506 |
14. Accrued liabilities (Tables
14. Accrued liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | June 30, 2018 December 30, 2017 Sales tax estimates, including interest $ 4,925 $ 4,563 Compensation and benefits 612 1,061 Deferred revenue – 300 Accrued incentive and rebate checks 53 285 Accrued rent – 77 Accrued interest – 115 Accrued payables – 129 Other 10 31 $ 5,600 $ 6,561 |
17. Short term debt (Tables)
17. Short term debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt, capital lease and other financing obligations | June 30, 2018 December 30, 2017 MidCap financial trust asset based revolving loan $ – $ 5,605 AFCO Finance 556 367 GE 8% loan agreement 482 482 EEI note 101 103 Capital leases and other financing obligations – 30 Debt issuance costs, net (493 ) (1,010 ) Total short term debt $ 646 $ 5,577 |
22. Shareholders' Equity (Table
22. Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule of all outstanding options, activity | Weighted Average Options Weighted Average Aggregate Remaining Outstanding Exercise Price Intrinsic Value Contractual Life Balance at December 30, 2017 627 $ 2.56 $ – 4.22 Granted – Exercised – Cancelled/expired (123 ) 3.98 Forfeited – Balance at June 30, 2018 504 $ 2.21 $ – 4.84 |
23. Earnings per Share (Tables)
23. Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings (loss) per share: | |
Earnings per Share | For the Thirteen Weeks Ended For the Twenty Six Weeks Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Basic Net income (loss) from continuing operations $ (1,409 ) $ 1,218 $ (2,884 ) $ 3,483 Net income (loss) from discontinued operations and loss on sale, net of tax – 845 – 788 Net income (loss) $ (1,409 ) $ 2,063 $ (2,884 ) $ 4,271 Basic earnings (loss) per share: Basic earnings (loss) per share from continued operations $ (0.20 ) $ 0.18 $ (0.42 ) $ 0.52 Basic earnings (loss) per share - discontinued operations and loss on sale, net of tax – 0.13 – 0.12 Basic earnings (loss) per share $ (0.20 ) $ 0.31 $ (0.42 ) $ 0.64 Weighted average common shares outstanding 6,875 6,655 6,875 6,655 Diluted Diluted earnings (loss) per share: Diluted earnings (loss) per share from continued operations $ (0.20 ) $ 0.18 $ (0.42 ) $ 0.52 Diluted earnings (loss) per share - discontinued operations and loss on sale, net of tax – 0.13 – 0.12 Diluted earnings (loss) per share $ (0.20 ) $ 0.31 $ (0.42 ) $ 0.64 Weighted average common shares outstanding 6,875 6,655 6,875 6,655 Add: Common Stock Warrants – 32 – 51 Assumed diluted weighted average common shares outstanding 6,875 6,687 6,875 6,706 |
24. Segment Information (Tables
24. Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of segment information | The following tables present our segment information for periods indicated: Thirteen Weeks Ended Twenty Six Weeks Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Revenues Recycling $ 8,373 $ 10,744 $ 17,286 $ 18,194 Technology – – – – Total Revenues $ 8,373 $ 10,744 $ 17,286 $ 18,194 Gross profit Recycling $ 2,150 $ 3,989 $ 4,562 $ 5,805 Technology – – – – Total Gross profit $ 2,150 $ 3,989 $ 4,562 $ 5,805 Operating income (loss) Recycling $ (390 ) $ 1,577 $ (679 ) $ (54 ) Technology (1,212 ) – (2,485 ) – Total Operating income $ (1,602 ) $ 1,577 $ (3,164 ) $ (54 ) Depreciation and amortization Recycling $ 59 $ 247 $ 120 $ 504 Technology 933 – 1,866 – Total Depreciation and amortization $ 992 $ 247 $ 1,986 $ 504 Interest expense Recycling $ 38 $ 125 $ 629 $ 422 Technology – – – – Total Interest expense $ 38 $ 125 $ 629 $ 422 Net income (loss) before provision for income taxes Recycling $ (476 ) $ 1,276 $ (1,253 ) $ 4,516 Technology (1,212 ) – (2,485 ) – Total Net income (loss) before provision for income taxes $ (1,688 ) $ 1,276 $ (3,738 ) $ 4,516 As of As of June 30, December 30, 2018 2017 Assets Recycling $ 13,451 $ 21,745 Technology 22,988 25,146 Total Assets $ 36,439 $ 46,891 Goodwill and intangible assets Recycling $ 19 $ 19 Technology 22,833 24,699 Total Goodwill and intangible assets $ 22,852 $ 24,718 |
1. Nature of Business and Bas47
1. Nature of Business and Basis of Presentation (Details Narrative) - W | 6 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
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. Summary of Significant Acc48
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 30, 2017 | |
Allowance for doubtful accounts | $ 61 | $ 61 | $ 61 | ||
Depreciation and amortization | 59 | $ 263 | 120 | $ 520 | |
Intangible amortization expense | 932 | 0 | 1,864 | 0 | |
Advertising expense | 211 | 197 | 367 | 472 | |
FDIC insured amount | 250 | 250 | |||
Revenue from contracts | $ 7,396 | $ 8,609 | $ 15,218 | $ 15,000 | |
Domain name and marketing [Member] | |||||
Estimated useful life | 3 to 20 years | ||||
Software [Member] | |||||
Estimated useful life | 3 to 5 years | ||||
Customer Relationships [Member] | |||||
Estimated useful life | 7 to 15 years |
3. Comprehensive Income (Detail
3. Comprehensive Income (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Comprehensive income (loss) | $ (1,420) | $ 2,086 | $ (2,917) | $ 4,307 |
5. Acquisition of GeoTraq, In50
5. Acquisition of GeoTraq, Inc. (Details Narrative) - GeoTraq [Member] $ in Thousands | 8 Months Ended |
Aug. 18, 2017USD ($)shares | |
Cash paid for acquisition | $ 200 |
Promissory notes issued | 800 |
Stock issued, value | 14,963 |
Total consideration transferred | $ 26,097 |
Stock issued, Shares | shares | 288,588 |
Offsetting deferred tax liability | $ 10,134 |
6. Sale and deconsolidation o51
6. Sale and deconsolidation of variable interest entity - AAP (Details - AAP Assets and Liabilities) - ARCA Advanced Processing, LLC [Member] $ in Thousands | Jul. 01, 2017USD ($) | |
Assets | ||
Current assets | $ 293 | |
Property and equipment, net | 6,933 | |
Other assets | 93 | |
Total Assets | 7,319 | |
Liabilities | ||
Accounts payable | 2,569 | |
Accrued expenses | 585 | |
Current maturities of long-term debt obligations | 728 | |
Long-term debt obligations, net of current maturities | 3,166 | |
Other liabilities | 289 | [1] |
Total Liabilities | $ 7,337 | |
[1] | Other liabilities represent loans and advances between ARCA and AAP that are eliminated in consolidation. |
6. Sale and deconsolidation o52
6. Sale and deconsolidation of variable interest entity - AAP (Details - AAP Operating Results) - ARCA Advanced Processing, LLC [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Operating results of AAP | ||||
Revenues | $ 0 | $ 642 | $ 0 | $ 1,127 |
Gross profit | 0 | 100 | 0 | (14) |
Operating income (loss) | 0 | (236) | 0 | (708) |
Net (loss) income | $ 0 | $ (300) | $ 0 | $ (826) |
6. Sale and deconsolidation o53
6. Sale and deconsolidation of variable Interest Entity - AAP (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Sale And Deconsolidation Of Variable Interest Entity - Aap | |
Gain on sale of deconsolidation | $ 81 |
Cash received from deconsolidation | 35 |
Cash received from sale of VIE | $ 800 |
7. Note receivable - sale of 54
7. Note receivable - sale of discontinued operations (Details - Operations) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Revenue | $ 8,373 | $ 10,744 | $ 17,286 | $ 18,194 |
Gross profit | 2,150 | 3,989 | 4,562 | 5,805 |
Selling, general and administrative expense | 3,752 | 2,412 | 7,726 | 5,859 |
Net (loss) from discontinued operations and loss on sale, net of tax | 0 | 845 | 0 | 788 |
Discontinued Operations [Member] | ||||
Revenue | 0 | 15,038 | 0 | 30,827 |
Cost of revenue | 0 | 10,308 | 0 | 21,890 |
Gross profit | 0 | 4,730 | 0 | 8,937 |
Selling, general and administrative expense | 0 | 3,722 | 0 | 8,007 |
Operating (loss) - discontinued operations | 0 | 1,008 | 0 | 930 |
Other income | 0 | 238 | 0 | 238 |
Other expense | 0 | 0 | 0 | 0 |
Net (loss) - discontinued operations before income tax benefit | 0 | 1,246 | 0 | 1,168 |
Income tax benefits | 0 | 394 | 0 | 373 |
Net (loss) from discontinued operations and loss on sale, net of tax | $ 0 | $ 852 | $ 0 | $ 795 |
7. Note receivable - sale of 55
7. Note receivable - sale of discontinued operations (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 30, 2017 | |
Current Assets | $ 8,819 | $ 21,117 |
Discontinued Operations [Member] | ||
Current Assets | 6,500 | |
Purchase price | 6,500 | |
Increase in new borrowings | 1,800 | |
Decrease in repayments | 2,581 | |
Debt assumed | 1,901 | |
Note receivable | $ 3,818 |
8. Receivables (Details)
8. Receivables (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Notes to Financial Statements | ||
Trade receivables, net | $ 5,430 | $ 8,826 |
Factored accounts receivable | (471) | 0 |
Prestige Capital reserve receivable | 92 | 0 |
Due from Recleim | 819 | 819 |
Other receivables | 94 | 391 |
Trade and other receivables, net | $ 5,964 | $ 10,036 |
8. Receivables (Details Narrati
8. Receivables (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 30, 2017 | |
Sales Revenue, Net [Member] | Two Customers [Member] | |||||
Concentration percentage | 10.00% | 10.00% | 25.00% | ||
Sales Revenue, Net [Member] | One Customer [Member] | |||||
Concentration percentage | 10.00% | 10.00% | |||
Trade Receivables [Member] | Two Customers [Member] | |||||
Concentration percentage | 32.00% |
9. Inventories (Details)
9. Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Appliances held for resale | $ 1,097 | $ 762 |
10. Prepaids and other curren59
10. Prepaids and other current assets (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Prepaid Expense and Other Assets, Current | $ 1,345 | $ 506 |
Prepaid Insurance [Member] | ||
Prepaid Expense and Other Assets, Current | 510 | 443 |
Prepaid Rent [Member] | ||
Prepaid Expense and Other Assets, Current | 16 | 5 |
Prepaid Services [Member] | ||
Prepaid Expense and Other Assets, Current | 400 | 0 |
Prepaid Vendor Draft [Member] | ||
Prepaid Expense and Other Assets, Current | 295 | 0 |
Prepaid Other [Member] | ||
Prepaid Expense and Other Assets, Current | $ 124 | $ 58 |
11. Property and Equipment (Det
11. Property and Equipment (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 30, 2017 | |
Property plant and equipment, gross | $ 6,261 | $ 6,093 |
Less accumulated depreciation and amortization | (5,667) | (5,555) |
Property plant and equipment, net | 594 | 538 |
Buildings and improvements [Member] | ||
Property plant and equipment, gross | $ 156 | 156 |
Estimated useful life | 18-30 years | |
Equipment (including computer software | ||
Property plant and equipment, gross | $ 6,076 | 5,908 |
Estimated useful life | 3-15 years | |
Land [Member] | ||
Property plant and equipment, gross | $ 0 | 0 |
Projects under construction [Member] | ||
Property plant and equipment, gross | $ 29 | $ 29 |
11. Property and Equipment (D61
11. Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 59 | $ 263 | $ 120 | $ 520 |
12. Intangible assets (Details)
12. Intangible assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Patent | $ 19 | $ 19 |
Intangible assets | 22,852 | 24,718 |
Intangible Asset, GeoTraq [Member] | ||
Intangible assets | $ 22,833 | $ 24,699 |
12. Intangible assets (Details
12. Intangible assets (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Amortization expense | $ 932 | $ 0 | $ 1,864 | $ 0 |
GeoTraq [Member] | ||||
Intangible useful life | 7 years |
13. Deposits and other assets64
13. Deposits and other assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Assets, Noncurrent [Abstract] | ||
Deposits | $ 247 | $ 411 |
Other | 114 | 107 |
Total other assets | $ 356 | $ 518 |
14. Accrued liabilities (Detail
14. Accrued liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Payables and Accruals [Abstract] | ||
Sales tax estimates, including interest | $ 4,925 | $ 4,563 |
Compensation and benefits | 612 | 1,061 |
Deferred revenue | 0 | 300 |
Accrued incentive and rebate checks | 53 | 285 |
Accrued rent | 0 | 77 |
Accrued interest | 0 | 115 |
Accrued payables | 0 | 129 |
Other | 10 | 31 |
Accrued liabilities, current | $ 5,600 | $ 6,561 |
15. Line of credit - PNC Bank (
15. Line of credit - PNC Bank (Details Narrative) - Revolving Credit Facility [Member] - PNC Bank National Association [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Mar. 31, 2017 | |
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 |
16. Notes payable - short term
16. Notes payable - short term (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 30, 2017 | |
Notes Payable - Short Term | ||
Debt stated interest rate | 1.29% | |
Debt maturity date | Aug. 18, 2018 | |
Note payable balance outstanding | $ 300 | $ 300 |
17. Short term debt (Details)
17. Short term debt (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Capital leases and other financing obligations | $ 0 | $ 30 |
Debt issuance costs, net | (493) | (1,010) |
Total debt and capital lease obligations | 646 | 5,577 |
MidCap financial trust asset based revolving loan [Member] | ||
Total debt and capital lease obligations | 0 | 5,605 |
AFCO Finance [Member] | ||
Total debt and capital lease obligations | 556 | 367 |
GE 8.00% notes [Member] | ||
Total debt and capital lease obligations | 482 | 482 |
EEI note [Member] | ||
Total debt and capital lease obligations | $ 101 | $ 103 |
17. Short term debt (Details Na
17. Short term debt (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Dec. 30, 2017 | |
Debt and capital lease obligations | $ 646 | $ 5,577 | |
Debt maturity date | Aug. 18, 2018 | ||
Repayments of line of credit | $ 0 | $ 10,333 | |
Debt issuance costs | 0 | 344 | |
GE 8.00% notes [Member] | |||
Debt and capital lease obligations | 482 | 482 | |
Energy Efficiency Investments [Member] | Term Loan [Member] | |||
Debt and capital lease obligations | $ 103 | 103 | |
Debt issuance date | Nov. 8, 2016 | ||
Debt face amount | 7,732 | ||
Debt issuance costs | $ 740 | ||
Unamortized debt issuance costs | 493 | 568 | |
AFCO Credit Corp [Member] | Term Loan [Member] | |||
Debt and capital lease obligations | $ 556 | 367 | |
Debt issuance date | Jun. 16, 2017 | ||
Debt face amount | 1,070 | ||
Debt interest rate description | 3.567% | ||
MidCap Financial Trust [Member] | Term Loan [Member] | |||
Debt and capital lease obligations | $ 0 | 3,616 | |
Debt issuance date | May 10, 2017 | ||
Debt interest rate description | one month LIBOR plus 4.50% | ||
Debt maturity date | Aug. 18, 2018 | ||
Maximum borrowing capacity | 12,000 | ||
Available borrowing capacity under the Credit Agreement | 1,031 | ||
Proceeds from line of credit | $ 21,470 | ||
Repayments of line of credit | 27,075 | ||
Debt issuance costs | 546 | ||
Unamortized debt issuance costs | $ 395 | ||
PNC Bank [Member] | Term Loan [Member] | |||
Debt and capital lease obligations | $ 1,020 | $ 0 |
19. Income Taxes (Details Narra
19. Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 26.80% | |||
Provision for income taxes | $ (279) | $ 208 | $ (854) | $ 1,446 |
Pre-provision loss | $ (3,738) |
20. Series A Preferred Stock (D
20. Series A Preferred Stock (Details Narrative) - GeoTraq [Member] $ in Thousands | 8 Months Ended |
Aug. 18, 2017USD ($)shares | |
Cash paid for acquisition | $ 200 |
Promissory notes issued | $ 800 |
Stock issued | shares | 288,588 |
21. Share-based compensation (D
21. Share-based compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 31, 2016 | |
Equity [Abstract] | |||||
Share-based compensation expense | $ 0 | $ 9 | $ 0 | $ 32 | |
Weighted average fair value of options granted | $ 1.12 |
22. Shareholders' Equity (Detai
22. Shareholders' Equity (Details - Option activity) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Options outstanding, beginning balance | 627,000 | |
Options granted | 0 | |
Options exercised | 0 | |
Options cancelled/expired | (123,000) | |
Options forfeited | 0 | |
Options outstanding, ending balance | 504,000 | 627,000 |
Weighted Average Exercise Price | ||
Weighted average exercise price, beginning | $ 2.56 | |
Weighted average exercise price, expired | 3.98 | |
Weighted average exercise price, ending | $ 2.21 | $ 2.56 |
Aggregate intrinsic value, options outstanding | $ 0 | $ 0 |
Weighted average remaining contractual life | 4 years 10 months 3 days | 4 years 2 months 19 days |
22. Shareholders' Equity (Det74
22. Shareholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2016 | Dec. 30, 2017 | |
Common Stock, issued shares (in shares) | 6,875,000 | 6,875,000 | |
Common Stock, outstanding shares (in shares) | 6,875,000 | 6,875,000 | |
Options outstanding | 504,000 | 627,000 | |
Expected dividend yield (as a percent) | 0.00% | ||
Expected stock price volatility (as a percent) | 85.44% | ||
Risk-free interest rate (as a percent) | 2.16% | ||
Expected life of options (in years) | 10 years | ||
Aggregate intrinsic value per share outstanding | $ 0.69 | ||
Warrants outstanding | 24,000 | ||
Warrant exercise price | $ 3.55 | ||
Warrant expiration date | May 31, 2020 | ||
2016 Plan [Member] | |||
Options authorized for issuance | 2,000,000 | ||
Options outstanding | 20,000 | ||
2011 Plan [Member] | |||
Options outstanding | 485,000 | ||
Energy Efficiency Investments [Member] | |||
Warrants issued | 167,000 | ||
Fair value of warrants issued | $ 106 |
23. Earnings per Share (Details
23. Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Basic | ||||
Net income (loss) from continuing operations | $ (1,409) | $ 1,218 | $ (2,884) | $ 3,483 |
Net (loss) from discontinued operations and loss on sale, net of tax | 0 | 845 | 0 | 788 |
Net income (loss) | $ (1,409) | $ 2,063 | $ (2,884) | $ 4,271 |
Basic income (loss) per share from continued operations | $ (0.20) | $ 0.18 | $ (0.42) | $ 0.52 |
Basic loss per share - discontinued operations and loss on sale, net of tax | .00 | 0.13 | .00 | 0.12 |
Basic earnings (loss) per share | $ (0.20) | $ 0.31 | $ (0.42) | $ 0.64 |
Weighted average common shares outstanding | 6,875 | 6,655 | 6,875 | 6,655 |
Diluted | ||||
Diluted income (loss) per share from continued operations | $ (0.20) | $ 0.18 | $ (0.42) | $ 0.52 |
Diluted loss per share - discontinued operations and loss on sale, net of tax | .00 | 0.13 | .00 | 0.12 |
Diluted income (loss) per share | $ (0.20) | $ 0.31 | $ (0.42) | $ 0.64 |
Weighted average common shares outstanding | 6,875 | 6,655 | 6,875 | 6,655 |
Add: common stock warrants | 0 | 32 | 0 | 51 |
Assumed diluted weighted average common shares outstanding | 6,875 | 6,687 | 6,875 | 6,706 |
23. Earnings per Share (Detai76
23. Earnings per Share (Details Narrative) - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Earnings (loss) per share: | ||
Potentially dilutive shares excluded from earnings per share calculation | 695 | 734 |
24. Segment Information (Detail
24. Segment Information (Details - Operations) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Revenues | $ 8,373 | $ 10,744 | $ 17,286 | $ 18,194 |
Gross profit | 2,150 | 3,989 | 4,562 | 5,805 |
Operating income (loss) | (1,602) | 1,577 | (3,164) | (54) |
Depreciation and amortization | 992 | 247 | 1,986 | 504 |
Interest expense | 38 | 125 | 629 | 422 |
Net income (loss) before provision for income taxes | (1,688) | 1,276 | (3,738) | 4,516 |
Recycling [Member] | ||||
Revenues | 8,373 | 10,744 | 17,286 | 18,194 |
Gross profit | 2,150 | 3,989 | 4,562 | 5,805 |
Operating income (loss) | (390) | 1,577 | (679) | (54) |
Depreciation and amortization | 59 | 247 | 120 | 504 |
Interest expense | 38 | 125 | 629 | 422 |
Net income (loss) before provision for income taxes | (476) | 1,276 | (1,253) | 4,516 |
Technology [Member] | ||||
Revenues | 0 | 0 | 0 | 0 |
Gross profit | 0 | 0 | 0 | 0 |
Operating income (loss) | (1,212) | 0 | (2,485) | 0 |
Depreciation and amortization | 933 | 0 | 1,866 | 0 |
Interest expense | 0 | 0 | 0 | 0 |
Net income (loss) before provision for income taxes | $ (1,212) | $ 0 | $ (2,485) | $ 0 |
24. Segment Information (Deta78
24. Segment Information (Details - Balance Sheet) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Assets | $ 36,439 | $ 46,891 |
Goodwill and intangible assets | 22,852 | 24,718 |
Recycling [Member] | ||
Assets | 13,451 | 21,745 |
Goodwill and intangible assets | 19 | 19 |
Technology [Member] | ||
Assets | 22,988 | 25,146 |
Goodwill and intangible assets | $ 22,833 | $ 24,699 |
25. Defined Contribution Plan (
25. Defined Contribution Plan (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Benefit Contribution Plan [Abstract] | ||||
Defined Contribution Plan, Employer Matching Contribution, Percent | 5.00% | |||
Recognized expenses for contributions | $ 10 | $ 0 | $ 23 | $ 15 |
26. Related Party (Details Narr
26. Related Party (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Related Party Transactions [Abstract] | ||||
Sublease rent | $ 50 | $ 40 | $ 116 | $ 0 |
Total rent and common area expense | 37 | $ 42 | 82 | $ 93 |
Transition services fee | $ 68 | $ 136 |