Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 24, 2017 | Jul. 02, 2016 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Cartesian, Inc. | ||
Entity Central Index Key | 1,094,814 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 4,819,324 | ||
Trading Symbol | CRTN | ||
Entity Common Stock, Shares Outstanding | 8,985,925 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Jan. 02, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 4,131,000 | $ 6,879,000 |
Receivables: | ||
Accounts receivable – billed and unbilled | 14,078,000 | 16,805,000 |
Less: Allowance for doubtful accounts | (398,000) | (249,000) |
Net receivables | 13,680,000 | 16,556,000 |
Inventory, net | 362,000 | 625,000 |
Prepaid and other current assets | 1,591,000 | 1,754,000 |
Total current assets | 19,764,000 | 25,814,000 |
NONCURRENT ASSETS: | ||
Property and equipment, net | 2,056,000 | 2,511,000 |
Goodwill | 0 | 11,071,000 |
Intangible assets, net | 557,000 | 996,000 |
Deferred income tax assets | 0 | 509,000 |
Other noncurrent assets | 324,000 | 458,000 |
Total Assets | 22,701,000 | 41,359,000 |
CURRENT LIABILITIES: | ||
Trade accounts payable | 1,704,000 | 3,253,000 |
Current borrowings | 3,269,000 | 3,269,000 |
Liability for derivatives | 970,000 | 952,000 |
Accrued payroll, bonuses and related expenses | 3,752,000 | 5,125,000 |
Contingent consideration liability | 1,903,000 | 0 |
Deferred revenue | 1,327,000 | 1,551,000 |
Secured borrowing | 768,000 | 0 |
Other accrued liabilities | 2,117,000 | 2,251,000 |
Total current liabilities | 15,810,000 | 16,401,000 |
NONCURRENT LIABILITIES: | ||
Deferred income tax liabilities | 0 | 780,000 |
Deferred revenue | 471,000 | 407,000 |
Contingent consideration liability | 0 | 2,176,000 |
Other noncurrent liabilities | 588,000 | 952,000 |
Total noncurrent liabilities | 1,059,000 | 4,315,000 |
COMMITMENTS AND CONTINGENCIES (Note 13) | ||
STOCKHOLDERS' EQUITY: | ||
Voting — $.005 par value, 20,000,000 shares authorized; 9,659,628 (including 673,703 treasury shares) and 9,547,672 (including 654,766 treasury shares) shares issued as of December 31, 2016 and January 2, 2016, respectively; 8,985,925 and 8,892,906 shares outstanding as of December 31, 2016 and January 2, 2016, respectively | 50,000 | 49,000 |
Additional paid-in capital | 184,754,000 | 184,277,000 |
Accumulated deficit | (167,781,000) | (153,898,000) |
Treasury stock, at cost | (4,409,000) | (4,324,000) |
Accumulated other comprehensive income — | ||
Foreign currency translation adjustment | (6,782,000) | (5,461,000) |
Total stockholders’ equity | 5,832,000 | 20,643,000 |
Total stockholders’ equity | $ 22,701,000 | $ 41,359,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Jan. 02, 2016 |
Common Stock Par Or Stated Value Per Share (in dollars per share) | $ 0.005 | $ 0.005 |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Shares, Issued | 9,659,628 | 9,547,672 |
Common Stock, Shares, Outstanding | 8,985,925 | 8,892,906 |
Preferred Stock, Par Or Stated Value Per Share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 2,000,000 | 2,000,000 |
Treasury Stock, Shares | 673,703 | 654,766 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 71,739 | $ 78,344 |
Cost of services | 46,842 | 50,252 |
Inventory impairment | 264 | 2,375 |
Gross Profit | 24,633 | 25,717 |
Selling, general and administrative expenses (includes non-cash share-based compensation expense of $302 and $372, respectively) | 27,629 | 31,923 |
Goodwill impairment | 10,830 | 0 |
Loss from operations | (13,826) | (6,206) |
Other (expense) income: | ||
Interest (expense) income, net | (264) | (228) |
Change in fair value of warrants and derivative liabilities | (18) | (615) |
Incentive warrants expense | (53) | (63) |
Other income | 30 | 7 |
Total other (expense) income | (305) | (899) |
Income tax benefit (provision) | (14,131) | (7,105) |
Income tax benefit (provision) | 248 | (586) |
Net loss | (13,883) | (7,691) |
Other comprehensive loss: | ||
Foreign currency translation adjustment | (1,321) | (866) |
Comprehensive loss | $ (15,204) | $ (8,557) |
Net loss per common share | ||
Basic and diluted (in USD per share) | $ (1.61) | $ (0.91) |
Weighted average shares used in calculation of net loss per common share | ||
Basic and diluted (shares) | 8,639 | 8,413 |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Selling, General and Administrative Expenses [Member] | ||
Allocated share-based compensation expense | $ 302 | $ 372 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (13,883) | $ (7,691) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 994 | 952 |
Amortization of intangible assets | 301 | 208 |
Share-based compensation expense | 302 | 372 |
Deferred tax expense (benefit) | (285) | 324 |
Goodwill impairment | 10,830 | 0 |
Inventory impairment | 264 | 2,375 |
Change in fair value of warrants and derivative liabilities | 18 | 615 |
Fair value adjustment to contingent consideration | (273) | 255 |
Bad debt expense | 327 | 140 |
Incentive warrants expense | 53 | 63 |
Other | 0 | (64) |
Other changes in operating assets and liabilities (net of effects of acquisition): | ||
Accounts receivable | 727 | 943 |
Prepaid and other assets | 122 | (204) |
Trade accounts payable | (1,163) | (328) |
Deferred revenue | 57 | 295 |
Inventory | 0 | 0 |
Accrued severance liability and related costs | 117 | (1,694) |
Accrued liabilities | (863) | 781 |
Net cash used in operating activities | (2,355) | (2,658) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Business acquisition, net of cash acquired | (295) | (1,747) |
Acquisition of property and equipment | (716) | (1,006) |
Net cash used in investing activities | (1,011) | (2,753) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Secured borrowing | 768 | 0 |
Repurchase of common stock | 0 | (263) |
Put option exercise | (85) | (405) |
Issuance of common stock | 21 | 82 |
Net cash provided by (used in) financing activities | 704 | (586) |
Effect of exchange rate on cash and cash equivalents | (86) | (123) |
Net decrease in cash and cash equivalents | (2,748) | (6,120) |
Cash and cash equivalents, beginning of period | 6,879 | 12,999 |
Cash and cash equivalents, end of period | 4,131 | 6,879 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 278 | 256 |
Cash paid during the period for taxes | 273 | 48 |
Non-cash investing and financing transactions: | ||
Change in fair value of warrants and derivative liabilities | 18 | 615 |
Accrued property and equipment additions | 136 | 320 |
Contingent consideration liability | 0 | 2,176 |
Accrued acquisition consideration | 0 | 327 |
Shares issued for business acquisition | $ 0 | $ 2,036 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Balance at Jan. 03, 2015 | $ 27,417 | $ 46 | $ 181,829 | $ (146,207) | $ (3,656) | $ (4,595) |
Balance (in shares) at Jan. 03, 2015 | 9,259,562 | |||||
Stock option exercises (in shares) | 2,467 | |||||
Shares issued for employee stock purchase plan | 82 | 82 | ||||
Shares issued for employee stock purchase plan (in shares) | 36,765 | |||||
Non-vested stock grants | 0 | |||||
Non-vested stock grants (in shares) | 58,940 | |||||
Non-vested stock forfeitures | 0 | |||||
Non-vested stock forfeitures (in shares) | (398,629) | |||||
Purchases of treasury stock | (263) | (263) | ||||
Share-based compensation expense | 372 | 372 | ||||
Shares issued in connection with business acquisition | 2,036 | $ 3 | 2,033 | |||
Shares issued in connection with business acquisition (in Shares) | 588,567 | |||||
Incentive warrants vested | 63 | 63 | ||||
Put option (issued) forfeited | (507) | (507) | ||||
Put option exercised | 0 | 405 | (405) | |||
Other comprehensive income - Foreign currency translation adjustment | (866) | (866) | ||||
Net loss | (7,691) | (7,691) | ||||
Balance at Jan. 02, 2016 | 20,643 | $ 49 | 184,277 | (153,898) | (4,324) | (5,461) |
Balance (in shares) at Jan. 02, 2016 | 9,547,672 | |||||
Shares issued for employee stock purchase plan | 21 | 21 | ||||
Shares issued for employee stock purchase plan (in shares) | 17,092 | |||||
Non-vested stock grants | 0 | $ 1 | (1) | |||
Non-vested stock grants (in shares) | 172,422 | |||||
Non-vested stock forfeitures | 0 | |||||
Non-vested stock forfeitures (in shares) | (77,558) | |||||
Purchases of treasury stock | 0 | |||||
Share-based compensation expense | 302 | 302 | ||||
Incentive warrants vested | 53 | 53 | ||||
Put option (issued) forfeited | 17 | 17 | ||||
Put option exercised | 0 | 85 | (85) | |||
Other comprehensive income - Foreign currency translation adjustment | (1,321) | (1,321) | ||||
Net loss | (13,883) | (13,883) | ||||
Balance at Dec. 31, 2016 | $ 5,832 | $ 50 | $ 184,754 | $ (167,781) | $ (4,409) | $ (6,782) |
Balance (in shares) at Dec. 31, 2016 | 9,659,628 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations – Cartesian, Inc. (“Cartesian” or the “Company”), formerly known as The Management Network Group, Inc., was founded in 1990 as a management consulting firm specializing in providing consulting services to the converging communications industry and the financial services firms that support it. A majority of the Company's revenues are from customers in the United States, United Kingdom, and Western Europe. Cartesian's corporate offices are located in Overland Park, Kansas. Going Concern - The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. The Company's cash resources and cash flows from operations have been sufficient to pay its obligations and debts as they become due. However, the Company's current capital resources may not be sufficient to repay a promissory note payable to Elutions Capital Ventures S.à r.l, a subsidiary of Elutions, in an aggregate original principal amount of $3.3 million ("Elutions Note"), if it were to be called for redemption, and to fund the Company's operations going forward. The Elutions Note matures on March 18, 2019, but may be called for redemption by the holder at any time and is payable 30 days after it is called for redemption. In addition, Cartesian is obligated to pay the earn-out consideration that is potentially payable in connection with the acquisition of the Farncombe Entities in 2015. The earn-out consideration that is potentially payable represents 40% of the notional purchase price of the Farncombe Entities and may be up to £719,483 pounds sterling (approximately US$0.9 million based on an exchange rate of £1.000 = US$1.234 as of December 31, 2016) and up to 461,055 shares of Company common stock (approximately £1,024,765 pounds sterling or US$1.3 million based on an exchange rate of £1.000= US$1.234 as of December 31, 2016). The Company is not in default under the Elutions Note and does not have any reason to currently expect that the Elutions Note will be called for redemption, given that the Company is paying its debts as they become due (including making timely payments of interest on the Elutions Note), and a call by the holder of the Elutions Note would cause Elutions to no longer have the right to purchase shares of stock pursuant to the Tracking Warrant if the Elutions Note is called for redemption. Under the Tracking Warrant, Elutions has the right to purchase up to 996,544 shares of common stock of the Company for $3.28 per share. The Tracking Warrant expires March 18, 2020. See Note 2, Acquisition and Note 3, Strategic Alliance and Investment by Elutions, Inc., for additional discussion related to the Earn-out and the Elutions Note, respectively. The Company has entered into receivable financing and factoring arrangements with respect to certain accounts receivable, provided that the ability to finance receivables is subject to limitations, including in certain arrangements the willingness of the purchaser to purchase individual accounts receivable that are offered by the Company. If the Elutions Note is called for redemption by the holder or if the Company realizes significant negative cash flows from operations, it will be required to seek additional debt or equity financing. Elutions has certain rights of first offer in connection with debt financings by us, subject to certain exceptions. In addition, if we obtain debt financing from other lenders, subject to certain exceptions, Elutions may require us to redeem the Elutions Note and to repurchase the shares of our common stock originally acquired by Elutions at a price based upon market prices over 15 trading days prior to the repurchase. In addition, Elutions has certain preemptive rights in connection with equity issuances by the Company, subject to certain exceptions, and Cartesian and its subsidiaries may not, without the prior written consent of Elutions, issue options, warrants or similar rights or convertible securities, other than with respect to certain excluded issuances. The Company is exploring alternatives to address its liquidity needs in the event the Elutions Note is called for redemption. However, there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all. The Company's ability to secure new financing may be impacted by economic and financial market conditions. If financing is obtained through the sale of additional equity securities or debt securities with equity features, it could result in dilution to the Company's stockholders. If adequate funds were not available on acceptable terms, our business, results of operations, cash flows, and financial condition could be materially adversely affected. The consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In the fourth quarter of 2016, the Company adopted Accounting Standards Update 2014-15, Presentation of Financial Statements - Going Concern that requires management to assess conditions or events that raise substantial doubt about an entity's ability to continue as a going concern within one year after the financial statements are issued. Management has concluded under ASU 2014-15 that there is substantial doubt about the Company's ability to continue as a going concern if the Company is unable to arrange financing sufficient to pay off the Elutions Note upon a call for redemption. However, the Company currently expects that such financing can be obtained if necessary, subject to market conditions and the Company's financial condition at the time the Company seeks such financing. If the Company becomes unable to continue as a going concern, it may have to (i) initiate litigation or seek protection under bankruptcy reorganization laws, or (ii) liquidate its assets and the values it receives for its assets in liquidation or dissolution could be significantly lower than the values reflected in the consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, including any adjustments to reflect the possible future effects of the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Principles of Consolidation - The consolidated financial statements include the accounts of Cartesian and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. Name of Subsidiary Date Formed/Acquired TMNG Europe Ltd. March 19, 1997 TMNG Canada Ltd. May 14, 1998 TMNG.com, Inc. June 18, 1999 TMNG Marketing, LLC September 5, 2000 TMNG Technologies, Inc. August 27, 2001 Cambridge Strategic Management Group, Inc. ("CSMG") March 6, 2002 Cambridge Adventis Ltd. March 17, 2006 Cartesian Ltd. ("Cartesian Limited") January 2, 2007 RVA Consulting, LLC August 3, 2007 TWG Consulting, Inc. October 5, 2007 Farncombe Technology Limited July 22, 2015 Farncombe Engineering Services Limited July 22, 2015 Farncombe France SARL July 22, 2015 Fiscal Year - The Company reports its operating results on a 52/53-week fiscal year basis. The fiscal year end is determined as the Saturday ending nearest December 31. The fiscal years ended December 31, 2016 and January 2, 2016 were each 52-week fiscal years and were comprised of four 13-week quarters. The fiscal years ended December 31, 2016 and January 2, 2016 are referred to herein as fiscal years 2016 and 2015 , respectively. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As described in further detail below, significant estimates include the estimates of costs to complete used to recognize revenues on fixed fee contracts, estimates utilized in measuring the fair value of the Company’s reporting units which had recorded goodwill, estimates for fair value of Elutions, Inc. (“Elutions”) instruments, estimates used to determine the fair value of the contingent consideration liability and identifiable intangible assets, estimates used to determine the ultimate realization of deferred tax assets and estimates used to determine the recoverability of deferred contract costs. Revenue Recognition - The Company recognizes revenue from time and materials consulting contracts in the period in which its services are performed. In addition to time and materials contracts, the Company also has fixed fee contracts. The Company recognizes revenues on milestone or deliverables-based fixed fee contracts and time and materials contracts not to exceed contract price using the percentage of completion-like method described by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605-35," Revenue Recognition - Construction-Type and Production-Type Contracts. " For fixed fee contracts where services are not based on providing deliverables or achieving milestones, the Company recognizes revenue on a straight-line basis over the period during which such services are expected to be performed. In connection with some fixed fee contracts, the Company may receive payments from customers that exceed revenues up to that point in time. The Company records the excess of receipts from customers over recognized revenue as deferred revenue. Deferred revenue is classified as a current liability to the extent it is expected to be earned within twelve months from the date of the balance sheet. The FASB ASC 605-35 percentage-of-completion-like methodology involves recognizing revenue using the percentage of services completed, on a current cumulative cost to total cost basis, using a reasonably consistent profit margin over the period. Due to the longer term nature of these projects, developing the estimates of costs often requires significant judgment. Factors that must be considered in estimating the progress of work completed and ultimate cost of the projects include, but are not limited to, the availability of labor and labor productivity, the nature and complexity of the work to be performed, and the impact of delayed performance. If changes occur in delivery, productivity or other factors used in developing the estimates of costs or revenues, the Company revises its cost and revenue estimates, which may result in increases or decreases in revenues and costs, and such revisions are reflected in income in the period in which the facts that give rise to that revision become known. Although there was no revenue recognized related to sales of software for fiscal years 2016 or 2015 , the Company provides post-contract support ("PCS") services on historical software sales, including technical support and maintenance services as well as other professional services not essential to the functionality of the software. For those contracts that include PCS service arrangements which are not essential to the functionality of the software solution, the Company separates the FASB ASC 605-35 software services and PCS services utilizing the multiple-element arrangement model prescribed by FASB ASC 605-25, "Revenue Recognition - Multiple-Element Arrangements ". The Company separated the PCS service elements and allocated total contract consideration to the contract elements based on the relative fair value of those elements utilizing PCS renewal terms as evidence of fair value. Revenues from PCS services are recognized ratably on a straight-line basis over the term of the support and maintenance agreement. Cash and Cash Equivalents - Cash and cash equivalents include cash on hand, money market investments and short-term investments with original maturities of three months or less when purchased. The carrying amounts of cash and cash equivalents approximates its fair value because of their relatively short-term maturities. Property and Equipment - Property and equipment are stated at cost or acquisition date fair value less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. Depreciation is based on the estimated useful lives of the assets and is computed using the straight-line method, and capital leases, if any, are amortized on a straight-line basis over the life of the lease. Asset lives range from three to seven years for furniture and fixtures, software and computer equipment. Leasehold improvements are capitalized and amortized over the life of the lease or useful life of the asset, whichever is shorter. The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets might not be recoverable in accordance with the provisions of FASB ASC 360, " Property, Plant and Equipment.” No impairments were identified in any period presented. Managed Services Implementation Revenues and Costs - Managed service arrangements provide for the delivery of a software or technology-based solution to clients over a period of time without the transfer of a license or a software sale to the customer. For long-term managed service agreements, implementation efforts are often necessary to develop the software utilized to deliver the managed service. Costs of such implementation efforts may include internal and external costs for coding or customizing systems and costs for conversion of client data. The Company may invoice its clients for implementation fees at the go-live date of the underlying solution. Lump sum implementation fees received from clients are initially deferred and recognized on a pro-rata basis as services are provided. Specific, incremental and direct costs of implementation incurred prior to the services going live are deferred pursuant to FASB ASC 605-35-25 and amortized over the period that the related ongoing services revenue is recognized to the extent that the Company believes the recoverability of the costs from the contract is probable. If a client terminates a managed services arrangement prior to the end of the contract, a loss on the contract may be recorded, if applicable, and any remaining deferred implementation revenues and costs would then be recognized into earnings generally over the remaining service period through the termination date. During the fiscal years ended December 31, 2016 and January 2, 2016 , deferred implementation costs related to managed service contracts were $432,000 and $443,000 , respectively. Unamortized deferred implementation costs were $318,000 and $229,000 as of December 31, 2016 and January 2, 2016 , respectively, of which $266,000 and $229,000 were included in Other current assets on the Consolidated Balance Sheets as of December 31, 2016 and January 2, 2016 , respectively. As of December 31, 2016 , $52,000 was included in Other long-term assets on the Consolidated Balance Sheets. Research and Development and Software Development Costs - Software development costs are accounted for in accordance with FASB ASC 985-20, " Software - Costs of Software to Be Sold, Leased, or Marketed " and FASB ASC 350-40, “ Intangibles - Goodwill and Other - Internal-Use Software. ” Capitalization of software development costs for products to be sold to third parties begins upon the establishment of technological feasibility and ceases when the product is available for general release. The Company capitalizes development costs incurred during the period between the establishment of technological feasibility and the release of the final product to customers if such costs are material. In addition, the Company capitalizes software development costs for internal use software that it does not intend to market to third parties but uses to deliver services. The establishment of technological feasibility and the ongoing assessment of recoverability of capitalized software development costs require considerable judgment by management concerning certain external factors including, but not limited to, the date technological feasibility is reached, anticipated future gross revenue, estimated economic life and changes in software and hardware technologies. During fiscal years 2016 and 2015 , $467,000 and $771,000 , respectively, of these costs were expensed as incurred. During fiscal years 2016 and 2015 , $436,000 and $643,000 , respectively, of internal use software development costs were capitalized. Goodwill - The Company accounts for goodwill in accordance with the provisions of FASB ASC 350, " Intangibles-Goodwill and Other. " Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations accounted for as purchases. The Company evaluates goodwill for impairment on an annual basis on the last day of the first fiscal month of the fourth fiscal quarter and whenever events or circumstances indicate that these assets may be impaired. The goodwill impairment test involves a two-step process. The Company determines impairment by comparing the net assets of each reporting unit to its respective fair value. In the event a reporting unit's carrying value exceeds its fair value, an indication exists that the reporting unit goodwill may be impaired. In this situation, the Company must determine the implied fair value of goodwill by assigning the reporting unit's fair value to each asset and liability of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is measured by the difference between the goodwill carrying value and the implied fair value. Due to a significant decrease in the Company’s stock price during the second quarter of fiscal 2016, the Company performed the first step of the goodwill impairment test. Based on the results of the first step of the goodwill impairment test, the estimated fair value of the reporting units did not exceed their carrying value and therefore step two of the test was required. Based on the results of the second step of the goodwill impairment test (i.e., applying the income approach and market approach described below, the Company determined, as of July 2, 2016, that the implied fair value of goodwill was less than the carrying value, which resulted in goodwill impairment of $10.8 million , representing all of that goodwill. See Note 4, Goodwill and Intangible Assets, for additional discussion related to goodwill. Fair value of the Company’s reporting units is determined using a combination of the income approach and the market approach. The income approach uses a reporting unit's projection of estimated cash flows discounted using a weighted-average cost of capital analysis that reflects current market conditions. The Company also considers the market approach to valuing its reporting units utilizing revenue and EBITDA multiples. The Company compares the results of its overall enterprise valuation as determined by the combination of the two approaches to the Company’s market capitalization. Significant management judgments related to these approaches include: • Anticipated future cash flows and terminal value for each reporting unit - The income approach to determining fair value relies on the timing and estimates of future cash flows, including an estimate of terminal value. The projections use management's estimates of economic and market conditions over the projected period including growth rates in revenues and estimates of expected changes in operating margins. The Company’s projections of future cash flows are subject to change as actual results are achieved that differ from those anticipated. Because management frequently updates its projections, the Company would expect to identify on a timely basis any significant differences between actual results and recent estimates. • Selection of an appropriate discount rate - The income approach requires the selection of an appropriate discount rate, which is based on a weighted average cost of capital analysis. The discount rate is affected by changes in short-term interest rates and long-term yields as well as variances in the typical capital structure of marketplace participants. The discount rate is determined based on assumptions that would be used by marketplace participants, and for that reason, the capital structure of selected marketplace participants was used in the weighted average cost of capital analysis. It is possible that the discount rate can fluctuate from period to period. • Selection of an appropriate multiple - The market approach requires the selection of an appropriate multiple to apply to revenues or EBITDA based on comparable guideline companies or transaction multiples. It is often difficult to identify companies or transactions with a similar profile in regards to revenue, geographic operations, risk profile and other factors. Intangible Assets - Identifiable intangible assets, resulting from the acquisition of the Farncombe Entities, consist of customer relationships, agreements not to compete, and a trade name. The Company amortizes the identifiable intangible assets over their estimated economic benefit period, from six months to four and one-half years. In accordance with FASB ASC 360, “Property, Plant and Equipment,” the Company uses its best estimates based upon reasonable and supportable assumptions and projections to review for impairment of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of its assets might not be recoverable. If the Company was to determine that events and circumstances warrant a change to the estimate of an identifiable intangible asset's remaining useful life, then the remaining carrying amount of the identifiable intangible asset would be amortized prospectively over that revised remaining useful life. Additionally, information resulting from other events and circumstances may indicate that the carrying value of one or more identifiable intangible assets is not recoverable which would result in recognition of an impairment charge. Income Taxes - The Company recognizes a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company records the financial statement effects of an income tax position when it is more likely than not that the position will be sustained on the basis of the technical merits. The Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The measurement of any unrecognized tax benefit is based on management’s best judgment. The Company reviews these estimates and makes changes to recorded amounts of uncertain tax positions as facts and circumstances warrant. Foreign Currency Transactions and Translation - Cartesian Ltd., the international operations of Cambridge Strategic Management Group, Inc., Farncombe France SARL, Farncombe Technology Limited, and Farncombe Engineering Services Limited conduct business primarily denominated in their respective local currency, which is their functional currency. Assets and liabilities have been translated to U.S. dollars at the period-end exchange rates. Revenues and expenses have been translated at exchange rates which approximate the average of the rates prevailing during each period. Translation adjustments are reported as a separate component of accumulated other comprehensive loss in the Consolidated Statements of Stockholders' Equity. Accumulated other comprehensive loss resulting from foreign currency translation adjustments totaled $6.8 million and $5.5 million , respectively as of December 31, 2016 and January 2, 2016 , and is included in Total Stockholders’ Equity in the Consolidated Balance Sheets. Assets and liabilities denominated in other than the functional currency of a subsidiary are re-measured at rates of exchange on the balance sheet date. Resulting gains and losses on foreign currency transactions are included in the Company’s results of operations. Realized and unrealized exchange losses included in the results of operations during fiscal 2016 and 2015 were $535,000 and $316,000 , respectively. Derivative Financial Instruments FASB ASC 820, Fair Value Measurements requires bifurcation of certain embedded derivative instruments in certain debt or equity instruments, and measurement at their fair value for accounting purposes. A holder redemption feature embedded in the Company’s note payable requires bifurcation from its host instrument and is accounted for as a freestanding derivative. See Note 3, Strategic Alliance and Investment by Elutions, Inc. and Note 10, Fair Value Measurements, for discussion of this embedded derivative. Share-Based Compensation - The Company accounts for share-based payment awards using the provisions of FASB ASC 718, " Compensation-Stock Compensation ". The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of service-based stock option grants is estimated on the grant date using a Black-Scholes option-pricing model and compensation expense related to stock option grants is recognized on a graded vesting schedule over the vesting period. For stock options containing a market condition, the market conditions are required to be considered when calculating the grant date fair value. FASB ASC 718 requires selection of a valuation technique that best fits the circumstances of an award. In order to reflect the substantive characteristics of the market condition option award, a Monte Carlo simulation valuation model was used to calculate the grant date fair value of such stock options. Expense for the market condition stock options is recognized over the derived service period as determined through the Monte Carlo simulation model. For non-vested, performance-based stock awards, compensation expense is recognized based on management’s expectations with regard to achievement of certain performance and service conditions. The fair value of the awards is determined based on the market value of the underlying stock at the grant date. Expense for the awards ultimately expected to vest is recognized on a straight-line basis over the implied service period of the award. In the event the Company determines it is no longer probable that the minimum performance criteria specified in the restricted stock award agreement will be achieved, previously recognized compensation expense would be reversed in the period such a determination is made. For non-vested, service-based stock awards, compensation is recognized based on achievement of service conditions alone. The fair value of the awards is determined based on the market value of the underlying stock at the grant date. Expense for the awards ultimately expected to vest is recognized on a graded vesting schedule over the vesting period. See Note 5, Share-Based Compensation. Loss Per Share - The Company calculates and presents earnings (loss) per share using a dual presentation of basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. The weighted average number of common shares outstanding excludes treasury shares held by the Company. Diluted earnings (loss) per share is computed in the same manner except that the weighted average number of shares is increased for dilutive securities. In accordance with the provisions of FASB ASC 260, " Earnings per Share, " the Company uses the treasury stock method for calculating the dilutive effect of employee stock options, non-vested shares and warrants. The employee stock options, non-vested shares and warrants will have a dilutive effect under the treasury stock method only when average market value of the underlying Company common stock during the respective period exceeds the assumed proceeds. For share-based payment awards with a performance condition, the Company must first use the guidance on contingently issuable shares in FASB ASC 260-10 to determine whether the awards should be included in the computation of diluted earnings per share for the reporting period. For all non-vested performance-based awards, the Company determines the number of shares, if any, that would be issuable at the end of the reporting period if the end of the reporting period were the end of the contingency period. In applying the treasury stock method, assumed proceeds include the amount, if any, the employee must pay upon exercise, the amount of compensation cost for future services that the Company has not yet recognized, and the amount of tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of the options and the vesting of non-vested shares. For fiscal years 2016 and 2015 , approximately 43,000 and 50,000 shares, respectively, related to outstanding stock options, non-vested shares and warrants that otherwise would have been included in the diluted earnings per share calculation were not included because they would have been anti-dilutive due to the net loss for those periods. Accounts Receivable - The Company has entered into agreements with third-party financial institutions under which it can selectively elect to transfer to the financial institutions accounts receivable with certain of the Company’s largest, international customers on a non-recourse basis. This agreement gives the Company optionality to convert outstanding accounts receivable to cash. For transfers of accounts receivable under these agreements that qualify as sales, the Company applies the guidance in ASC 860, “Transfers and Servicing – Sales of Financial Assets”, which requires the derecognition of the carrying value of those accounts receivable on the Consolidated Balance Sheets and recognition of a loss on the sale of an asset in operating expenses on the Consolidated Statements of Operation. During the fiscal years ended December 31, 2016 and January 2, 2016 , $19.6 million and $26.8 million , respectively, of accounts receivable transferred pursuant to these agreements qualified as sales of receivables and the carrying amounts were derecognized. The loss on the sale of these accounts receivable recorded in the Consolidated Statements of Operations was approximately $75,000 and $161,000 for fiscal years 2016 and 2015 , respectively. On April 22, 2016, the Company entered into a Factoring Agreement ("Factoring Agreement") with RTS Financial Service, Inc. ("RTS"). Pursuant to the terms of the Factoring Agreement, the Company may offer for sale, and RTS may purchase, certain accounts receivable of the Company on an account by account basis (such purchased accounts, the "Purchased Accounts"). Under the Factoring Agreement, upon purchase RTS becomes the absolute owner of the Purchased Accounts, which are payable directly to RTS, subject to certain repurchase obligations of the Company. Proceeds from transfers under the Factoring Agreement reflect the face value of the account receivable less a factor’s fee. The factor’s fee is computed on a daily basis until the amount of the Purchased Account is paid to RTS, and equals the amount of the Purchased Account multiplied by the sum of the prime rate then in effect plus 6.49% divided by 360. Upon purchase of a Purchased Account, RTS will pay to the Company the amount of the Purchased Account, less a reserve of 20% of that amount, which reserv |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisition | 2. ACQUISITION On July 22, 2015, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) and completed the acquisition of all of the outstanding shares of capital stock of Farncombe France SARL, an entity formed under the laws of France, and Farncombe Technology Limited, a company incorporated and registered in England and Wales (collectively, the “Farncombe Entities”). The Farncombe Entities operate primarily in the U.K. and Europe and are in the business of providing strategic consultancy, content security, testing and implementation services for broadcast and broadband internet digital television. Farncombe’s experience in these areas along with Cartesian’s strategic, operational and technical capabilities in serving global service providers strengthens the Company’s ability to support convergence and quad play offerings in this growing market. The total purchase price, subject to adjustment in accordance with the terms of the Purchase Agreement, was £4,360,620 pounds sterling (approximately US$6.8 million based on an exchange rate of £1.000 = US$1.556 as of July 21, 2015) comprised of: • Cash paid at the closing in the amount of £654,093 pounds sterling (approximately US$1.0 million based on an exchange rate of £1.000 = US$1.556 as of July 21, 2015) which was funded from our available cash on hand and represents 15% of the purchase price. • £1,308,186 pounds sterling (approximately US$2.0 million based on an exchange rate of £1.000 = US$1.556 as of July 21, 2015) settled by the issuance of 588,567 shares of Company common stock at the closing which equals 30% of the purchase price. The number of shares issued at the closing was calculated using a volume-weighted average share price for Company common stock on the Nasdaq Stock Market for the 30 days ending on the day before the date of the signing of the Purchase Agreement and based upon the average pounds sterling to dollar exchange rate recorded by the Financial Times for the 30 days ending on the day before the date of signing of the Purchase Agreement. The share price resulting from this calculation was £2.22 pounds sterling per share ( US$3.46 per share). • Additional consideration in the amount of £654,093 pounds sterling (approximately US$1.0 million based on an exchange rate of £1.000 = US$1.556 as of July 21, 2015) which represents 15% of the purchase price, payable after the closing in accordance with the Purchase Agreement upon determination of the net working capital of the Farncombe Entities as prescribed in the Purchase Agreement, and as adjusted based upon the relative amounts of the net working capital of the Farncombe Entities as of May 31, 2015 and the closing and as compared to the target amount of net working capital as provided in the Purchase Agreement. • Earn-out consideration (the “Earn-Out”) which is potentially payable in cash and/or shares of Company common stock as elected by each Seller in the Purchase Agreement and represents 40% of the purchase price as described below. The aggregate amount potentially payable pursuant to the Earn-Out consists of cash in an amount up to £719,483 pounds sterling (approximately US$0.9 million based on an exchange rate of £1.000= US$1.234 as of December 31, 2016 ) and up to 461,055 shares of Company common stock (approximately £1,024,765 pounds sterling or US$1.3 million based on an exchange rate of £1.000= US$1.234 as of December 31, 2016 ) and based upon the value of the shares as described below. Amounts, if any, payable under the Earn-Out are based upon the amounts of specified revenues attributable to the Farncombe Entities after June 1, 2015 through July 22, 2017 , as defined in the Purchase Agreement. Pursuant to the Purchase Agreement, the number of shares of Company common stock payable under the Purchase Agreement at the closing and pursuant to the Earn-Out was determined based on the volume weighted average share price for Company common stock on the Nasdaq Stock Market for the 30 days ending on the day before the date of signing of the Purchase Agreement and based upon the average pounds sterling to dollar exchange rate recorded by the Financial Times for the 30 days ending on the day before the date of signing of the Purchase Agreement. In October 2015 the Company paid approximately $2.1 million to the former shareholders of the Farncombe Entities with respect to the consideration payable related to net working capital as adjusted pursuant to the Purchase Agreement. This represented payment of a portion of the purchase price in the amount of £654,093 pounds sterling (approximately US$1.0 million ) payable in accordance with the Purchase Agreement along with an additional £743,753 pounds sterling (approximately US$1.1 million ) related to the working capital adjustment for excess working capital under the Purchase Agreement. In March 2016, the Company paid additional amounts of approximately £184,000 and €12,000 (approximately US$0.3 million ) to the former shareholders of the Farncombe Entities with respect to net working capital as adjusted. In the fourth quarter of fiscal 2016 and the first quarter of fiscal 2017, payments of £20,000 (approximately US$25,000 ) and £48,000 (approximately US$59,000 ), respectively, were paid to the former shareholders of the Farncombe Entities with respect to net working capital as adjusted. The Purchase Agreement contains non-compete and non-solicitation agreements of the individual former shareholders of the Farncombe Entities. The Purchase Agreement also contains customary warranties, covenants and indemnification provisions. The results of operations of the Farncombe Entities have been included in the Company’s Consolidated Statements of Operations and Comprehensive Loss subsequent to the July 22, 2015 acquisition date. The Farncombe Entities revenue and net income included in the Company’s results of operations for the fiscal year ended January 2, 2016, were $6.3 million and $0.5 million , respectively. Acquisition-related expense recognized during fiscal year 2015 was approximately $697,000 which is recorded in Selling, general and administrative expenses on the Consolidated Statements of Operations and Comprehensive Loss. The Company accounted for the acquisition of the Farncombe Entities using the acquisition method as required in FASB ASC 805, “Business Combinations.” Based on the acquisition method of accounting, the consideration was allocated to the assets and liabilities acquired based on their fair values as of the acquisition date. Any remaining amount of the purchase price allocation was recorded as goodwill. The Farncombe Entities are included in the Company’s EMEA segment. Purchase Price The total purchase price transferred to effect the acquisition of the Farncombe Entities is as follows: (in thousands) Cash paid at closing $ 1,015 Equity issued at closing 2,036 Fair value of contingent consideration 1,921 Working capital adjustment 2,485 Total purchase price $ 7,457 Purchase Price Allocation Total purchase consideration has been allocated to the tangible and intangible assets and to liabilities assumed based on their respective acquisition-date fair values. The purchase price allocation is summarized in the following table: (in thousands) Tangible assets and liabilities Cash $ 1,378 Accounts receivable, net 4,627 Other current assets 191 Other non-current assets 137 Accounts payable (1,874 ) Accrued payroll and related expenses (796 ) Other current liabilities (636 ) Non-current deferred tax liability (264 ) Intangible assets 1,260 Goodwill 3,434 Net assets acquired $ 7,457 Based on the results of the acquisition valuation, the Company allocated approximately $1.3 million of the purchase price to identifiable intangible assets. The following table summarizes the major classes of intangible assets, as well as the respective weighted-average amortization periods: Amount (in thousands) Weighted-Average Amortization Period (Years) Identifiable Intangible Assets Tradename $ 90 0.5 Non-compete agreements 60 4.5 Customer relationships 1,110 3.5 Total identifiable intangible assets $ 1,260 The excess of purchase consideration over net assets assumed was recorded as goodwill, which represents the strategic value assigned to the Farncombe Entities, including the expected benefit from synergies resulting from the transaction, as well as the knowledge and experience of the workforce in place. In accordance with applicable accounting standards, goodwill will not be amortized but instead will be tested for impairment at least annually, or more frequently, if certain indicators are present. In the event that management determines that the value of goodwill becomes impaired, the combined company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. The goodwill and intangible assets related to this acquisition are not deductible for foreign tax purposes. The fair values of assets acquired and liabilities assumed are based on estimates of fair values as of the acquisition date. Management believes the fair values recognized for the assets acquired and liabilities assumed are based on reasonable estimates and assumptions. The Company has classified the Earn-Out liability as a Level 3 liability and the fair value of the Earn-Out liability will be evaluated each reporting period and changes in its fair value will be included in the Company’s results of operations. During fiscal year 2016, the change in the fair value of the Earn-Out liability was a decrease of $273,000 and during the period from July 22, 2015 to January 2, 2016, the change in the fair value of the Earn-Out liability was an increase of $255,000 . The change in the fair value of the Earn-Out liability is included in Selling, general and administrative expenses on the Consolidated Statements of Operations and Comprehensive Loss for fiscal years 2016 and 2015. The balance of the Earn-Out liability as of December 31, 2016 and January 2, 2016 was $ 1,903,000 and $2,176,000 , respectively, which is recorded as a current liability on the Consolidated Balance Sheet as of December 31, 2016 and as a non-current liability on the Consolidated Balance Sheet as of January 2, 2016. See Note 10, Fair Value Measurements, for discussion of the determination of fair value of the Earn-Out liability. If the Earn-Out were to be achieved prior to the end of the Earn-Out period, the former shareholders of the Farncombe Entities could request payment prior to the end of the Earn-Out period. Pro Forma Financial Information The following unaudited pro forma financial information presents the results of operations as if the acquisition had taken place on the first day of fiscal 2014. These amounts were prepared in accordance with the acquisition method of accounting under existing standards and are not necessarily indicative of the results of operations that would have occurred if our acquisition of the Farncombe Entities had been completed on the first day of fiscal 2014, nor are they indicative of our future operating results. These unaudited pro forma amounts include a reclassification of non-recurring acquisition expenses in the amount of $697,000 related to the acquisition of Farncombe to fiscal year 2014 whereas they were actually incurred during fiscal year 2015. Pro forma adjustment also consist of an adjustment to record additional intangible amortization expense of $330,000 for fiscal year 2015. The basic and diluted shares outstanding used to calculate the pro forma net loss per share amount presented below were adjusted to assume shares issued at the closing of the acquisition of the Farncombe Entities were outstanding since the beginning of fiscal 2014. Fiscal Year Ended Dollars in thousands except per share data January 2, 2016 Revenue $ 88,007 Net loss $ (5,932 ) Net loss per share $ (0.68 ) Weighted-average basic and diluted shares used in calculation of pro forma net loss per share (in thousands) 8,734 |
STRATEGIC ALLIANCE AND INVESTME
STRATEGIC ALLIANCE AND INVESTMENT BY ELUTIONS, INC. | 12 Months Ended |
Dec. 31, 2016 | |
Investments, All Other Investments [Abstract] | |
Strategic Alliance And Investment by Elutions, Inc. | 3. STRATEGIC ALLIANCE AND INVESTMENT BY ELUTIONS, INC. Strategic Alliance and Investment by Elutions, Inc. On February 25, 2014, the Company entered into an investment agreement (the “Investment Agreement”) with Elutions, a provider of operational business intelligence solutions. Under the Investment Agreement, the Company agreed to issue and sell shares of common stock to Elutions and to issue stock purchase warrants to Elutions, and the parties agreed that a subsidiary of Elutions would loan funds to a subsidiary of the Company. On March 18, 2014, the Company and Elutions completed the closing (the "Closing") of the transactions contemplated under the Investment Agreement. At the Closing, (a) the Company issued and sold 609,756 shares of common stock to Elutions at a price of $3.28 per share, for an aggregate purchase price of $2,000,000 , (b) the Company's subsidiary, Cartesian Limited, issued the Elutions Note, a promissory note payable to Elutions Capital Ventures S.à r.l, a subsidiary of Elutions, in an aggregate original principal amount of $3,268,664 , payable in equivalent Great Britain Pounds Sterling, and the Company issued to Elutions a Common Stock Purchase Warrant (Tracking) related to the Elutions Note to purchase 996,544 shares of common stock of the Company for $3.28 per share (the "Tracking Warrant"), and (c) the Company issued to Elutions a Common Stock Purchase Warrant (Commercial Incentive) pursuant to which Elutions can earn the right to purchase up to 3,400,000 shares of common stock of the Company at prices ranging from $3.85 per share to $4.85 per share based on the Company's financial results related to certain customer contracts obtained jointly by the Company and Elutions (the "Incentive Warrant"). The Incentive Warrant and the Tracking Warrant are referred to collectively below as the "Warrants". The Investment Agreement contains a number of agreements and covenants, including (i) certain affirmative and negative covenants relating to the Elutions Note applicable to the Company and its subsidiaries, (ii) an agreement of the Company to assign to Elutions certain customer contracts obtained jointly with Elutions if a competitor acquires control of the Company, (iii) confidentiality restrictions applicable to both parties, (iv) a standstill agreement of Elutions, (v) an agreement of the parties to negotiate in good faith for the purchase by Elutions of additional shares of Common Stock equal to 6.5% of outstanding shares from the Company or in open market purchases if Elutions then owns or is vested with the right to acquire 38.5% of the shares of Common Stock then outstanding, subject to any applicable stockholder approval requirements, (vi) the grant of a right of first offer to Elutions to loan funds to the Company in the future if the Company intends to incur or assume indebtedness, subject to certain exceptions, (vii) a grant of pre-emptive rights to Elutions with respect to future issuances and sales of equity securities by the Company, subject to certain exceptions, (viii) the right of Elutions to designate one member of the Board of Directors of the Company if it meets certain ownership thresholds, and (ix) restrictions on the issuance by the Company of options, warrants or similar rights or convertible securities, other than with respect to certain excluded issuances. Promissory Note The Elutions Note issued at Closing by the Company's subsidiary, Cartesian Limited, in the aggregate original principal amount of $3,268,664 , bears interest at the rate of 7.825% per year, payable monthly, and matures on March 18, 2019 . The Elutions Note must be redeemed by Cartesian Limited upon notification by the holder at any time (the “Holder Redemption Option”) and may be prepaid by Cartesian Limited at any time after September 18, 2016 . The obligations of Cartesian Limited under the Elutions Note are guaranteed by the Company pursuant to a Guaranty entered into by the Company at Closing and are secured by certain assets relating to client contracts involving Elutions pursuant to a Security Agreement entered into by the Company and Elutions at Closing. Amounts outstanding under the Elutions Note may be applied to the exercise price of the Company's common stock under the Tracking Warrant. Upon occurrence of an event of default, the Elutions Note would bear interest at 9.825% per year and could be declared immediately due and payable. Interest expense for the fiscal years ended December 31, 2016 and January 2, 2016 was approximately $259,000 and $256,000 , respectively. Tracking Warrant Under the Tracking Warrant, Elutions may acquire 996,544 shares of common stock of the Company for $3.28 per share at any time and from time to time through March 18, 2020 . The Company may require Elutions to exercise or forfeit the Tracking Warrant at any time (i) after 18 months if the trading price of the Company's common stock exceeds $5.50 per share for a specified period of time and the Company meets certain cash and working capital thresholds and (ii) after 30 months if the Company meets certain cash and working capital thresholds. To the extent amounts are outstanding under the Elutions Note, Elutions and the Company (if the Company is requiring exercise of the Tracking Warrant by Elutions as described above) may offset such amounts against the exercise price for shares of common stock acquired under the Tracking Warrant. The Tracking Warrant expires if the Elutions Note is redeemed upon exercise of the Holder Redemption Option. Incentive Warrant Under the Incentive Warrant, Elutions can earn the right to purchase up to 3,400,000 shares of common stock of the Company at prices ranging from $3.85 per share to $4.85 per share based on the Company's financial results as described below. The Incentive Warrant expires on March 18, 2020 . The right to exercise the Incentive Warrant to acquire shares is subject to satisfaction of certain performance conditions based on revenues or cash received by the Company under customer contracts acquired jointly with Elutions through a five-year period from March 18, 2014 until March 18, 2019 . The Incentive Warrant may vest upon satisfaction of the performance conditions during the five-year period. The number of shares of common stock for which the Incentive Warrant may vest during each fiscal quarter in the five -year period under the vesting provisions shall equal, without duplication, four percent of revenues recognized for such fiscal quarter or four percent of cash recognized or received by the Company during such quarter, for which revenues will be recognized in the future. In addition, the right to acquire shares may vest at the end of the five-year period for contracts that have been signed and with respect to which revenues are expected to be earned or cash is expected to be received after the end of the five-year period. The exercise price increases $0.25 per year for shares earned in each year of the five-year period and is payable in cash, provided that Elutions has the right to utilize a cashless exercise procedure to acquire shares of common stock under the Incentive Warrant for a limited period of time each year after the right to acquire such shares vests. Any shares utilized to exercise such cashless exercise right will not reduce the maximum number of shares that may be earned and acquired under the Incentive Warrant. Additional Warrant Provisions Each of the Warrants has economic anti-dilution protection provisions which provide for adjustments to the exercise price and the number of shares of common stock which may be acquired pursuant to the Warrants in the event of issuances of shares of common stock by the Company at a price less than the 30-day volume weighted average trading price at the time of issuance, subject to a number of exceptions. Each of the Warrants also permits Elutions (subject to certain exceptions) to purchase shares in future equity offerings made by the Company on a pro rata basis to all stockholders, with such participation right based upon the maximum number of shares that may be purchased under the Warrant. Registration Rights At Closing, the Company and Elutions entered into a Registration Rights Agreement (the "Registration Rights Agreement"), pursuant to which the Company has obligations to register for resale the shares of common stock issued under the Investment Agreement and the Warrants. Under the Registration Rights Agreement, the Company granted certain piggyback registration rights to Elutions and agreed to file and maintain a resale shelf registration statement for the benefit of Elutions. The resale shelf registration was filed with the SEC on August 12, 2014 and was declared effective on August 26, 2014. Commercial Relationship The Investment Agreement and the agreements and instruments described above are part of a strategic relationship between the Company and Elutions. As part of the strategic relationship, the parties entered into certain commercial framework documents, including a Market Development Agreement and related Inventory Agreement, on February 25, 2014, and enter into client agreements and bilateral agreements from time to time in the ordinary course of business outlining the terms of the parties' commercial relationship with respect to business development and providing products, solutions and services to clients. The parties have agreed to a term of five years, with automatic two -year renewals unless notice is given, and subject to termination rights in certain events. The Company has agreed to restrictions during the term and for two years thereafter in regard to solutions or services that are substantially similar to or competitive with certain solutions or services of Elutions, and each party has agreed not to hire the other party's employees during the same period. The parties have agreed on a general framework for pursuing, entering into and implementing customer contracts, which includes providing for joint and separate client pursuits and marketing on an initial and ongoing basis, procedures for contracting with clients, procedures for interface between the parties, limited exclusivity requirements of Elutions relating to identified prospects and clients of the Company, intellectual property rights of Elutions to its products and related restrictions, restrictions regarding use of confidential information, limitations on liability of the parties, independent contractor status of the parties, limitations on publicity by the parties, and dispute resolution, including arbitration. The parties intend that specific pricing and allocation provisions and other specific commercial terms will be included in individual client statements of work, subject to mutually agreed gross margin requirements for the benefit of the Company. The parties also agreed to a framework for certain initial inventory orders and reorders by the Company from Elutions, and related commitments, timing and pricing procedures, when the Company is the prime contracting party under certain client statements of work. With respect to the required initial inventory order, the Company was required to purchase $3.0 million of inventory from Elutions upon receiving a booked order for Smart Building Services of a certain size from a customer. As a result of a customer agreement entered into by the Company, during the third quarter of fiscal 2014, the Company acquired $3.0 million in inventory from Elutions to fulfill its initial inventory commitment. As of December 31, 2016, the Company has not sold or licensed any of the initial inventory acquired from Elutions and has not acquired any additional inventory from Elutions. Under the Market Development Agreement, if the Company had not sold 75% of such inventory acquired from Elutions within one year after acquisition, Elutions is required upon request of the Company to source its requirements for future projects in the U.S. or U.K. from such inventory subject to a 10% discount against the Company’s purchase price until the Company has exhausted such inventory. In fiscal 2015, the Company requested that Elutions source its requirements for future projects from the inventory that was acquired by the Company from Elutions in July 2014. Management continues to work with Elutions to utilize the inventory and changes in management’s expectations in future periods could impact the net realizable value of the inventory. See Note 1, Organization and summary of significant accounting policies for a discussion of the inventory recorded with respect to our agreements with Elutions. Also under the Market Development Agreement, Elutions agreed to dedicate three full-time equivalent employees for the purpose of various functions related to the furtherance of the strategic alliance, and the Company agreed to fund the cost of the three full-time equivalent employees at a rate of $36,750 per month. Pursuant to the Market Development Agreement, the Company terminated the provision of the three full-time equivalent employees effective in March 2016. For the fiscal years ended December 31, 2016 and January 2, 2016 , expense related to these dedicated employees was $98,500 and $441,000 , respectively. In connection with the customer agreement entered into by the Company in 2014, the Company entered into a subcontract with Elutions. Under the subcontract, Elutions agreed to provide all services in accordance with the customer agreement except for project management services, to be provided by the Company. In January 2017, the Company entered into an amendment of the customer agreement and an amendment to the subcontract with Elutions. The amendments increase the number of customer sites deployed and extend the term of the original agreement. The Company currently estimates total additional license payments to Elutions under the amendment to the subcontract are approximately $0.4 million and that the total remaining license payments to Elutions under the original subcontract, as amended by the amendment, are approximately $1.2 million over the term of the subcontract, with additional amounts potentially payable to Elutions based upon energy savings achieved by the customer. Such amounts are recorded as managed services implementation costs which are included in Other current assets on the Consolidated Balance Sheet. See Note 1, Organization and Summary of Significant Accounting Policies. Elutions also agreed in the subcontract to provide all equipment required under the customer agreement, and the Company agreed to advance to Elutions $400,000 of the equipment deployment cost. The advance amount was paid to Elutions during fiscal 2014. Elutions is required to repay the advanced amount plus interest at the rate of 5.5% per annum. The funds are netted directly from the customer’s annual payments. During each of the fiscal years ended December 31, 2016 and January 2, 2016 , the Company paid $291,000 to Elutions related to annual payments under the subcontract. Each of these payments was net of $112,000 related to the advanced amount in each fiscal year 2016 and 2015. As of December 31, 2016 the balance remaining for the advance to Elutions was $200,000 of which $100,000 was included in Other current assets and $100,000 was included in Other noncurrent assets on the Consolidated Balance Sheets. As of January 2, 2016 , the balance remaining for the advance to Elutions was $300,000 of which $100,000 was included in Other current assets and $200,000 was included in Other noncurrent assets on the Consolidated Balance Sheets. Accounting Treatment The Holder Redemption Option was determined to be an embedded derivative liability that was required to be bifurcated and recorded as a liability. In addition, the Company determined that the provision of the Elutions Note that permits Cartesian Limited to prepay the Elutions Note after 18 months if the trading price of the Company’s common stock exceeds $5.50 per share for a specified period of time and to prepay the Elutions Note after 30 months are each an embedded derivative asset that requires bifurcation (the “Issuer Call Option”). As of December 31, 2016 and January 2, 2016 , the fair value of the Issuer Call Option was determined to be immaterial. The carrying value of the Elutions Note as of December 31, 2016 and January 2, 2016 was $3,269,000 and as of December 31, 2016 and January 2, 2016 the fair value of the Elutions Note was $2,703,000 and $3,004,000 , respectively. The Incentive Warrant and Tracking Warrant are accounted for as equity instruments. See Note 10, Fair Value Measurements for discussion of the determination of fair values. The vesting of the Incentive Warrant is contingent on services to be provided by Elutions and the achievement of performance conditions by Elutions. During fiscal years 2016 and 2015 , Elutions earned 27,194 and 34,248 vested shares under the Incentive Warrant and the Company recognized $53,000 and $63,000 of expense related to these vested shares, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 4. GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill for the fiscal year ended December 31, 2016 are as follows (in thousands): North America EMEA Total Balance as of January 2, 2016 $ 3,947 $ 7,124 $ 11,071 Goodwill impairment (3,947 ) (6,883 ) (10,830 ) Changes in foreign currency exchange rates — (241 ) (241 ) Balance as of December 31, 2016 $ — $ — $ — The Company performs its impairment testing for goodwill in accordance with FASB ASC 350, “ Intangibles-Goodwill and Other. ” The goodwill impairment test involves a two-step process. The first step is a comparison of the reporting unit’s fair value to its carrying value. If the reporting unit’s fair value is less than its carrying value, the Company would be required to progress to the second step. In the second step, the Company calculates the implied fair value of goodwill and compares the implied fair value of goodwill to the carrying amount of goodwill on the Company’s balance sheet. If the carrying amount of the goodwill is greater than the implied fair value of that goodwill, an impairment loss would be required to be recognized in an amount equal to that excess. The Company evaluates goodwill for impairment on an annual basis on the last day of the first fiscal month of the fourth quarter and whenever events or circumstances indicate that these assets may be impaired. Due to a significant decrease in the Company’s stock price during the second quarter of fiscal 2016, the Company performed the first step of the goodwill impairment test. Based on the results of the first step of the goodwill impairment test, the estimated fair value of the reporting units did not exceed their carrying value and therefore step two of the test was required. Based on the results of the second step of the goodwill impairment test (i.e., applying the income approach and market approach described under Note 1, Organization and Summary of Significant Accounting Polices - Goodwill ), the Company determined, as of July 2, 2016, that the implied fair value of goodwill was less than the carrying value, which resulted in goodwill impairment of $10.8 million , representing all of that goodwill. The facts and circumstances that led to the impairment of goodwill were primarily a result of the decreased market value of the Company based upon the market price of the Company's common stock. The following table summarizes the changes in the major classes of intangible assets for the fiscal year ended December 31, 2016 (in thousands). Non-Compete Customer Gross Carrying Amount: Tradename Agreements Relationships Total Balance as of January 2, 2016 $ 86 $ 57 $ 1,055 $ 1,198 Changes in foreign currency exchange rates (15 ) (9 ) (174 ) (198 ) Balance as of December 31, 2016 $ 71 $ 48 $ 881 $ 1,000 Accumulated Amortization: Balance as of January 2, 2016 $ (71 ) $ (5 ) $ (126 ) $ (202 ) Changes in foreign currency exchange rates 9 2 49 60 Amortization expense (9 ) (12 ) (280 ) (301 ) Balance as of December 31, 2016 $ (71 ) $ (15 ) $ (357 ) $ (443 ) The identifiable intangible assets in the table above resulted from the July 2015 acquisition of the Farncombe Entities and their balances include the effects of foreign currency translation. This acquisition is discussed further in Note 2, Acquisition. Tradename, non-compete agreements and customer relationships carry amortization periods of six months, four and one-half years and three and one-half years, respectively. The amortization periods are based on the period of expected cash flows used to measure the fair value of the intangible assets. Aggregate amortization expense related to intangible assets was $301,000 and $208,000 for fiscal years 2016 and 2015 , respectively. The following table outlines the estimated future amortization expense related to amortizing intangible assets as of December 31, 2016 . (in thousands) 2017 $ 262 2018 262 2019 32 2020 1 $ 557 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation | 5. SHARE-BASED COMPENSATION The Company estimates the fair value of its stock options and stock issued under the Employee Stock Purchase Plan using the Black-Scholes option pricing model. Groups of employees or non-employee directors that have similar historical and expected exercise behavior are considered separately for valuation purposes. Assumptions used in estimating the fair value of stock options granted include risk-free interest rate, expected life, expected volatility factor, and expected dividend rate. The risk-free interest rate is based on the U.S. Treasury yield at the time of grant for a term equal to the expected life of the stock option; the expected life is determined using the simplified method of estimating the life as allowed under Staff Accounting Bulletin No. 110; and the expected volatility is based on the historical volatility of the Company's stock price for a period of time equal to the expected life of the stock option. With the exception of the service-based non-vested share awards and the performance-based non-vested share awards discussed below, nearly all of the Company's share-based compensation arrangements utilize graded vesting schedules where a portion of the grant vests annually over a period of two to four years. The Company has a policy of recognizing compensation expense for awards with graded vesting over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. This policy has the effect of accelerating the recognition of expense when compared to a straight-line amortization methodology. As of December 31, 2016 , the Company has two share-based compensation plans under which awards are outstanding, which are described below. The Company recognized an income tax benefit of $40,000 related to share-based compensation arrangements during fiscal year 2015 . No income tax benefit was recognized in fiscal 2016 due to the full valuation allowance on the Company's deferred tax assets. In addition, no compensation costs related to these arrangements were capitalized in either year. The Company has historically issued and expects to continue to issue new shares to satisfy stock option exercises, vesting of non-vested shares or purchases of shares under the Employee Stock Purchase Plan. EQUITY INCENTIVE PLAN The Company's Equity Incentive Plan, as amended and restated, (the "Equity Plan"), is a stockholder approved plan, which provides for the granting of incentive stock options and nonqualified stock options to employees, and nonqualified stock options, nonvested stock, and restricted stock units to employees, directors and consultants. The Equity Plan is scheduled to expire in June 2025. As of December 31, 2016 , the Company has 1,499,442 shares of the Company's common stock available for issuance upon exercise of outstanding options or for future awards under the Equity Plan. Stock Options Service-Based Stock Option Awards – Stock options are granted at an exercise price of not less than market value per share of the common stock on the date of grant as determined by the Board of Directors. Vesting and exercise provisions are determined by the Board of Directors. As of December 31, 2016 , all options granted under the Equity Plan were non-qualified stock options. Service-based options generally become exercisable over a one to four year period beginning on the date of grant and have a maximum term of ten years. A summary of the service-based stock option activity of the Company's Equity Plan as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 2, 2016 244,553 $ 8.06 Granted 37,500 $ 1.10 Forfeited/cancelled (69,291 ) $ 7.82 Outstanding at December 31, 2016 212,762 $ 6.91 4.3 years $ — Options vested and expected to vest at December 31, 2016 201,512 $ 7.18 4.0 years $ — Options exercisable at December 31, 2016 150,261 $ 8.85 2.4 years $ — The Company granted a service-based stock option award for 37,500 shares of the Company's common stock having an exercise price of $1.10 per share during fiscal year 2016. The stock option vests solely based on employee service over a three year period. No other service-based stock option awards were granted during fiscal years 2016 or 2015. The Company recorded share-based compensation expense in connection with service-based stock option awards of $16,000 and $56,000 during fiscal years 2016 and 2015, respectively. As of December 31, 2016 , there was $26,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to service-based stock option awards, and this unrecognized expense is expected to be recognized over a weighted average period of 23 months . As of January 2, 2016, there was $20,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to service-based stock option awards. Market Condition Stock Option Awards – A summary of the market condition stock option activity under the Equity Plan, as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Exercise Price Outstanding at January 2, 2016 200,000 $ 3.34 Granted 125,000 $ 1.25 Outstanding at December 31, 2016 325,000 $ 2.54 Options vested and expected to vest at December 31, 2016 325,000 $ 2.54 Options exercisable at December 31, 2016 — $ — On September 28, 2016, the Company granted non-qualified stock option awards for 125,000 shares of the Company’s common stock having an exercise price of $1.25 per share. On June 16, 2015 the Company granted a non-qualified stock option award for 200,000 shares of the Company’s common stock having an exercise price of $3.34 per share. These stock options will vest only if the price of the Company’s common stock reaches certain price targets, as follows: • the stock option will vest with respect to 116,666 shares if at any time the closing market price of the Company’s common stock on each day during a 30 consecutive trading day period equals or exceeds $4.00 per share; • the stock option will vest with respect to an additional 116,667 shares if at any time the closing market price of the Company’s common stock on each day during a 30 consecutive trading day period equals or exceeds $5.00 per share; and • the stock option will vest with respect to an additional 91,667 shares if at any time the closing market price of the Company’s common stock on each day during a 30 consecutive trading day period equals or exceeds $6.00 per share. For stock options which contain market conditions, the market conditions are required to be considered when calculating the grant date fair value. FASB ASC 718 – “Compensation – Stock Compensation,” requires us to select a valuation technique that best fits the circumstances of an award. In order to reflect the substantive characteristics of the market condition option award, a Monte Carlo simulation valuation model was used to calculate the grant date fair value of such stock options. Monte Carlo approaches are a class of computational algorithms that rely on repeated random sampling to compute their results. This approach allows the calculation of the value of such stock options based on a large number of possible stock price path scenarios. Expense for the market condition stock options is recognized over the derived service period as determined through the Monte Carlo simulation model. The fair value and derived service periods calculated for this market condition stock option award by vesting tranche for the market condition stock option awards granted in September 2016 were as follows: Grant Date Fair Value Per Share Derived Service Period (in Years) $4.00 market condition tranche $ 0.32 5.1 $5.00 market condition tranche $ 0.31 5.5 $6.00 market condition tranche $ 0.30 5.9 The fair value and derived service periods calculated for this market condition stock option award by vesting tranche for the market condition stock option awards granted in June 2015 were as follows: Grant Date Fair Value Per Share Derived Service Period (in Trading Days) $4.00 market condition tranche $ 1.95 151 $5.00 market condition tranche $ 1.95 262 $6.00 market condition tranche $ 1.99 362 During fiscal years 2016 and 2015 the Company recorded $144,000 and $250,000 of share-based compensation expense in connection with this market condition stock option award. As of December 31, 2016 and January 2, 2016 , there was $37,000 and $142,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to the market condition stock option awards, respectively, As of December 31, 2016 , the unrecognized expense is expected to be recognized over a weighted average period of 24 months . Non-vested Shares Service-Based Non-vested Share Awards - A summary of the status of service-based non-vested share awards issued under the Equity Plan as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Grant Date Fair Value per share Outstanding at January 2, 2016 — $ — Granted 172,422 $ 0.71 Outstanding at December 31, 2016 172,422 $ 0.71 On July 22, 2016, the Company granted 40,000 shares of service-based non-vested stock that vest one year from the date of grant. These service-based non-vested share awards are valued at the date of grant based on the closing market price of the Company’s common stock, and are expensed using the straight-line method over the requisite service period (which is the vesting period of the award). During fiscal year 2016, the Company recorded $13,000 of stock-based compensation expense in connection with these service-based non-vested share awards. As of December 31, 2016, there is an estimated $16,000 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to these service-based non-vested share awards, and this unrecognized expense is expected to be recognized over a period of 7 months . On July 22, 2016 and October 3, 2016, the Company also granted 59,922 and 72,500 shares, respectively, of service-based non-vested stock to non-employees for services provided under consulting agreements which have three -year terms. In accordance with ASC 718, the fair value measurement date for these non-vested stock awards is the performance completion date. The fair value of the awards granted to the non-employee consultants will be remeasured each reporting period based on their fair value at that time up to the performance completion date. The changes in fair value each reporting period will be recognized in the Consolidated Statements of Operations. During fiscal year 2016, the Company recorded $25,000 of stock-based compensation expense in connection with these service-based non-vested share awards. As of December 31, 2016 , there is an estimated $96,000 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to these service-based non-vested share awards, and this unrecognized expense is expected to be recognized over a period of 32 months . Performance-Based Non-vested Share Awards - A summary of the status of performance-based non-vested share awards issued under the Equity Plan as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Grant Date Fair Value per share Outstanding at January 2, 2016 250,215 $ 3.15 Forfeited (77,558 ) $ 3.14 Outstanding at December 31, 2016 172,657 $ 3.14 On July 22, 2015, the Company granted 58,940 shares of non-vested stock to two employees that vests on July 1, 2017 in proportion to the earn-out consideration paid pursuant to the Purchase Agreement for the acquisition of the Farncombe Entities described in Note 2, Acquisition. Except for termination of employment in certain circumstances following a change of control, the unvested portion of an award is forfeited upon any termination of employment. Under the terms of the awards, vesting is accelerated upon a change of control of the Company. If the vesting percentage is less than 100% on the vesting date, that percentage of the non-vested stock that does not vest as of the vesting date shall be forfeited. On April 8, 2013, the Company granted performance-based non-vested share awards for a total of 800,000 shares of Common Stock to various executive officers and employees of the Company that vest in proportion to the ratio that the Company's "Cumulative Net Non-GAAP EBITDA" achieved over a four -year performance period compares to the Cumulative Net Non-GAAP EBITDA goal of $14 million . All 800,000 non-vested shares had a grant date fair value of $3.14 per share. The first potential vesting date was the Company's earnings release date for its 2014 first fiscal quarter and each subsequent potential vesting date is each of the Company's quarterly earnings release dates thereafter through the release date for the first quarter of fiscal year 2017. Shares not vested as of the release date for the first quarter of fiscal year 2017 are forfeited. Except for termination of employment in certain circumstances following a change of control, the unvested portion of an award is forfeited upon any termination of employment. Under the terms of an award, vesting is partially accelerated and the award is converted to a time-vested award upon a change of control of the Company. Share-based compensation cost for performance-based non-vested share awards is measured at the grant date based on the fair value of shares expected to be earned at the end of the performance period, based on the closing market price of the Company’s common stock on the date of grant, and is recognized as expense using the straight-line method over the performance period based upon the probable number of shares expected to vest. The Company estimates and excludes compensation cost related to awards not expected to vest based upon estimated forfeitures. The Company does not believe it is probable that one-hundred percent of the performance conditions related to its outstanding performance-based non-vested share awards will be achieved. Based on this assumption, the Company recorded a reduction to expense of approximately $250,000 during the fourth quarter of fiscal 2015 to reflect revised estimates related to the ultimate number of shares expected to vest. During fiscal years 2016 and 2015, the Company recorded $88,000 of expense and $170,000 of income, respectively, in connection with performance-based non-vested share awards. As of December 31, 2016 , there was an estimated $46,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to performance-based non-vested share awards. Unrecognized compensation cost as of December 31, 2016 related to performance-based non-vested share awards is expected to be recognized over a period of 3 months . 2000 SUPPLEMENTAL STOCK PLAN The Supplemental Stock Plan expired May 23, 2010. The outstanding awards issued pursuant to the Supplemental Stock Plan will remain subject to the terms of the Supplemental Stock Plan following expiration of the plan. The Supplemental Stock Plan provided the Company's common stock for the granting of nonqualified stock options to employees and was not subject to stockholder approval. Vesting and exercise provisions were determined by the Board of Directors. Options granted under the plan generally become exercisable over a period of up to four years beginning on the date of grant and have a maximum term of ten years. A summary of the option activity under the Company's Supplemental Stock Plan as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 2, 2016 36,900 $ 11.11 Forfeited/cancelled (6,800 ) $ 11.36 Outstanding at December 31, 2016 30,100 $ 11.06 0.5 years $ — Options vested and exercisable at December 31, 2016 30,100 $ 11.06 0.5 years $ — No awards have been granted under the Supplemental Stock Plan since it expired on May 23, 2010. There were no options exercised during fiscal year 2016 or fiscal year 2015. As of December 31, 2016 there was no remaining unrecognized compensation cost related to the unvested portion of stock options issued under the Supplemental Stock Plan. PUT OPTION In connection with the Company’s approval of the separation from service of the Company’s Chief Executive Officer on June 3, 2015, the Company issued a put option to the former executive which granted him the option and right to sell to the Company up to 112,692 of his shares of the Company’s common stock owned on June 3, 2015 at $4.50 per share (the “Put Option”). This transaction was accounted for under FASB ASC 718 under the tandem award approach with both liability and equity components. The liability component relates to the holder’s right to sell the shares to the Company and the equity component relates to a call option feature related to the holder’s right not to exercise the Put Option. The fair value of the components of the Put Option was calculated using the Black-Scholes model using the following assumptions. Issuance Date Common stock price $ 3.30 Dividend yield 0.0 % Exercise price of put option $ 4.50 Expected term 0.78 years Risk-free interest rate 0.20 % Estimated stock volatility 55 % Approximately $33,000 , or $0.29 per share, related to the call option component was recorded as an increase to Additional paid in capital on the Consolidated Statements of Stockholders’ Equity for fiscal year 2015. For fiscal year 2015, approximately $168,000 , or $1.49 fair value per share of the put feature, was recorded as share-based compensation expense in Selling, general and administrative expense on the Consolidated Statements of Operations and Comprehensive Loss. Approximately $372,000 , or $3.30 per share, related to the market value of the shares subject to the Put Option as of the issue date was recorded as a reduction of Additional paid in capital on the Consolidated Statements of Stockholders’ Equity for fiscal year 2015. In November 2015 the holder of the Put Option exercised the Put Option and the Company purchased approximately 90,000 shares at $4.50 for a total of approximately $405,000 . As of January 2, 2016, the balance related to the liability component of the Put Option was approximately $102,000 and was included in Other accrued liabilities in the Consolidated Balance Sheets. In March 2016, the holder of the Put Option exercised the Put Option and in April 2016, the Company purchased approximately 19,000 shares at $4.50 for a total of approximately $85,000 . The Put Option expired on March 15, 2016 . EMPLOYEE STOCK PURCHASE PLAN Under the Employee Stock Purchase Plan (ESPP), shares of the Company's common stock may be purchased at six-month intervals at 85% of the lower of the fair market value on the first day of the enrollment period or on the last day of each six-month period over the subsequent two years. Employees may purchase shares through a payroll deduction program having a value not exceeding 15% of their gross compensation during an offering period. During fiscal years 2016 and 2015, the Company recognized net expense of $17,000 and $17,000 , respectively, in accordance with FASB ASC 718 associated with the ESPP. |
SUPPLEMENTAL BALANCE SHEET INFO
SUPPLEMENTAL BALANCE SHEET INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Balance Sheet Information | 6. SUPPLEMENTAL BALANCE SHEET INFORMATION Accrued payroll, bonuses and related expenses and Other accrued liabilities consist of the following (amounts in thousands): December 31, 2016 January 2, 2016 Accrued payroll, bonuses and related expenses Accrued payroll $ 313 $ 448 Accrued bonuses 2,060 3,205 Accrued payroll taxes 515 636 Accrued vacation 494 539 Accrued severance 117 — Other 253 297 $ 3,752 $ 5,125 Other accrued liabilities Sales and value-added taxes payable $ 911 $ 478 Lease termination liability 103 135 Put option liability — 102 Accrued income taxes 152 376 Accrued acquisition consideration 32 327 Accrued professional fees 182 604 Other 737 229 $ 2,117 $ 2,251 |
BUSINESS SEGMENTS, MAJOR CUSTOM
BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Business Segments, Major Customers and Significant Group Concentrations of Credit Risk | 7. BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK The Company identifies its segments based on the way management organizes the Company to assess performance and make operating decisions regarding the allocation of resources. In accordance with the criteria in FASB ASC 280 " Segment Reporting ," the Company has concluded it has three reportable segments: the North America segment, the EMEA segment and the Strategic Alliances segment. The North America and EMEA segments are both single reportable, operating segments that encompass the Company’s operational, technology and software consulting services inside of North America and outside of North America, respectively. Both reportable segments offer management consulting, custom developed software, and technical services. The Strategic Alliances reportable segment is a single, reportable segment that includes the Company’s world-wide commercial activities undertaken with third-party service or solutions providers. The Farncombe Entities, acquired on July 22, 2015 are included in the EMEA segment. Management evaluates segment performance based upon income (loss) from operations, excluding share-based compensation (benefits) and depreciation. There were no inter-segment revenues during fiscal years 2016 and 2015. In addition, in its administrative division, entitled "Not Allocated to Segments," the Company accounts for non-operating activity and the costs of providing corporate and other administrative services to all the segments, including, but not limited to, goodwill impairment, share-based compensation expense, depreciation expense, certain research and development costs, and costs related to the arbitration with the Company’s former Chief Executive Officer. See Note 13, Commitments and Contingencies, for additional discussion of the arbitration costs. Summarized financial information concerning the Company's reportable segments is shown in the following table (amounts in thousands): North America EMEA Strategic Alliances Not Allocated to Segments Total As of and for the fiscal year ended December 31, 2016: Revenues $ 28,065 $ 42,894 $ 780 $ — $ 71,739 Income (loss) from operations 6,255 6,837 (181 ) (26,737 ) (13,826 ) Total other expense — — — (305 ) (305 ) Income (loss) before income tax provision (benefit) 6,255 6,837 (181 ) (27,042 ) (14,131 ) Depreciation and amortization — — — 1,295 1,295 Total assets $ 3,378 $ 10,113 $ 550 $ 8,660 $ 22,701 As of and for the fiscal year ended January 2, 2016: Revenues $ 34,025 $ 43,844 $ 475 $ — $ 78,344 Income (loss) from operations 8,222 5,884 (2,982 ) (17,330 ) (6,206 ) Total other expense — — — (899 ) (899 ) Income (loss) before income tax provision (benefit) 8,222 5,884 (2,982 ) (18,229 ) (7,105 ) Depreciation and amortization — — — 952 952 Total assets $ 6,831 $ 9,725 $ 626 $ 24,177 $ 41,359 Segment assets, regularly reviewed by management as part of its overall assessment of the segments' performance, include both billed and unbilled trade accounts receivable, net of allowances, inventory, and certain other assets, if applicable. Assets not assigned to segments include cash and cash equivalents, current and non-current investments, property and equipment, goodwill and intangible assets and deferred tax assets, excluding deferred tax assets recognized on accounts receivable reserves, which are assigned to their segments. In accordance with the provisions of FASB ASC 280-10, revenues earned in the United States and internationally based on the location where the services are performed are shown in the following table (amounts in thousands): Revenues Fiscal Year Fiscal Year United States $ 29,348 $ 34,511 International: United Kingdom 38,123 41,399 Other 4,268 2,434 Total $ 71,739 $ 78,344 In accordance with the provisions of FASB ASC 280-10, long-lived assets, excluding intangible assets, by geographic area are shown in the following table (amounts in thousands): Long-Lived Assets December 31, January 2, United States $ 2,154 $ 2,611 United Kingdom 217 346 France 10 12 Total $ 2,381 $ 2,969 Major customers in terms of significance to Cartesian's revenues (i.e. in excess of 10% of revenues) for fiscal years 2016 and 2015 and accounts receivable as of December 31, 2016 and January 2, 2016 were as follows (amounts in thousands): Revenues Fiscal Year 2016 Fiscal Year 2015 North America EMEA North America EMEA Customer A $ 16,022 $ 16,243 Customer B $ 11,933 $ 13,377 Customer C $ 8,345 $ 18,906 Accounts Receivable December 31, 2016 January 2, 2016 Customer A $ 3,317 $ 3,577 Customer B $ 1,100 $ 1,423 Customer C $ 779 $ 1,510 Revenues from the Company's ten most significant customers accounted for approximately 77% and 87% of revenues in fiscal years 2016 and 2015 , respectively. Substantially all of Cartesian's receivables are obligations of companies in the communications, media and entertainment industries. The Company generally does not require collateral or other security on its accounts receivable. The credit risk on these accounts is controlled through credit approvals, limits and monitoring procedures. The Company records bad debt expense based on judgment about the anticipated default rate on receivables owed to Cartesian at the end of the reporting period. That judgment is based on the Company's uncollected account experience in prior years and the ongoing evaluation of the credit status of Cartesian's customers and the communications industry in general. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 8. PROPERTY AND EQUIPMENT December 31, January 2, (In thousands) Furniture and fixtures $ 1,708 $ 1,748 Software and computer equipment 4,953 8,006 Leasehold improvements 1,098 1,500 7,759 11,254 Less: Accumulated depreciation 5,703 8,743 $ 2,056 $ 2,511 Depreciation expense on property and equipment was $994,000 and $952,000 for fiscal years 2016 and 2015 , respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. INCOME TAXES For fiscal years 2016 and 2015 , income (loss) before income taxes consisted of the following (amounts in thousands): Fiscal Fiscal United States $ (7,358 ) $ (9,321 ) Foreign (6,773 ) 2,216 Total income (loss) before income taxes $ (14,131 ) $ (7,105 ) For fiscal years 2016 and 2015 , the income tax benefit (provision) consists of the following (amounts in thousands): Fiscal Fiscal Federal deferred tax expense, net $ 655 $ (99 ) State deferred tax benefit (expense), net 125 42 Foreign current tax expense (48 ) (263 ) Foreign deferred tax (expense) benefit, net (484 ) (266 ) Total income tax (expense) benefit $ 248 $ (586 ) During fiscal years 2016 and 2015 , the Company recorded an income tax benefit of $0.2 million and an income tax provision of $0.6 million , respectively. The income tax benefit for fiscal 2016 was primarily related to a $0.8 million domestic benefit recognized in connection with adjustments to domestic deferred taxes related to the impairment of goodwill amortized for income tax purposes but not for financial reporting purposes netted with a $0.6 million international expense recognized in connection with the international valuation allowance in fiscal 2016. The income tax provision for fiscal year 2015 was primarily related to the generation of pre-tax book income within the Company’s U.K. operations in addition to deferred taxes recognized on goodwill amortized for income tax purposes but not for financial reporting purposes. The Company recorded a current tax expense of $0.3 million during fiscal 2015 related to the generation of positive pre-tax book income within newly acquired U.K. entities which did not have net operating loss carryforwards to utilize. The Company has reserved all of its domestic and international net deferred tax assets as of December 31, 2016 and had reserved all of its domestic deferred tax assets as of January 2, 2016 with a valuation allowance in accordance with the provisions of FASB ASC 740, “Income Taxes,” which requires an estimation of the recoverability of the recorded income tax asset balances. Related to the going concern assertion, the Company reserved all of its international net deferred tax assets as of December 31, 2016 with a valuation allowance. As of December 31, 2016 and January 2, 2016 , the Company had recorded $36.6 million and $34.1 million , respectively, of valuation allowances attributable to its domestic and international net deferred tax assets. The determination of recording and releasing valuation allowances against deferred tax assets is made, in part, pursuant to the Company’s assessment as to whether it is more likely than not that the Company will generate sufficient future taxable income against which benefits of the deferred tax assets may or may not be realized. Significant judgment is required in making estimates regarding the Company’s ability to generate income in future periods. Realization of deferred tax assets is dependent on generating sufficient income in future periods. In evaluating the ability to use its deferred tax assets, the Company considers all positive and negative evidence including the Company's past operating results, the existence of cumulative losses in the most recent three fiscal years and the Company's forecast of future income. In determining future income, the Company is responsible for assumptions utilized including the amount of state, federal and international operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future income and are consistent with the plans and estimates the Company is using to manage the underlying business. The following is a reconciliation between the benefit (provision) for income taxes and the amounts computed based on loss before income taxes at the statutory federal income tax rate (amounts in thousands): Fiscal Year 2016 Fiscal Year 2015 Amount % Amount % Computed expected federal income tax benefit $ 4,805 34.0 $ 2,413 34.0 State income tax benefit, net of federal benefit 68 0.5 514 7.2 Rate differential on foreign operations (1,002 ) (7.1 ) 296 4.2 Forfeited vested stock options (281 ) (2.0 ) (267 ) (3.8 ) Tax benefits associated with share-based awards 179 1.3 12 0.2 Adjustment to estimated tax loss carryforward (418 ) (3.0 ) (226 ) (3.2 ) Change in statutory and applicable tax rates 505 3.6 (518 ) (7.3 ) Non-deductible expenses (25 ) (0.2 ) (753 ) (10.6 ) Goodwill impairment (1,257 ) (8.9 ) — — Other 113 0.8 (26 ) (0.4 ) Change in valuation allowance (2,439 ) (17.3 ) (2,031 ) (28.6 ) Total income tax benefit (expense) $ 248 1.7 $ (586 ) (8.3 ) The significant components of deferred income tax assets and the related balance sheet classifications, as of December 31, 2016 and January 2, 2016 , are as follows (amounts in thousands): December 31, 2016 January 2, 2016 Deferred tax assets: Accounts receivable $ 119 $ 67 Accrued expenses 845 1,040 Goodwill and intangible assets 1,492 1,143 Share-based compensation expense 664 551 Net operating loss carryforward 31,031 29,894 Inventories 1,068 — Foreign tax credit carryforward 1,006 1,006 Deferred revenue 357 — Other (24 ) 224 Total deferred tax assets 36,558 33,925 Valuation allowance (36,558 ) (34,116 ) Net deferred tax asset $ — $ (191 ) As of December 31, 2016 , the Company has U.S. Federal net operating loss carryforwards of $81.9 million which begin expiring in 2020. As of December 31, 2016 , the Company has state net operating loss carryforwards of $46.1 million . These net operating losses expire at various times between 2017 and 2036 . In addition, as of December 31, 2016 , the Company has foreign net operating loss carryforwards of $2.7 million all of which primarily have no expiration date. As of December 31, 2016 , the Company has net foreign tax credits of $1.0 million . If unutilized, the expiration of these foreign tax credits is $317,000 and $689,000 in fiscal years 2018 and 2019, respectively. U.S. income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested outside the United States. This amount becomes taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. Determination of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable because of the complexities of the hypothetical calculation. The Company analyzes its uncertain tax positions pursuant to the provisions of FASB ASC 740 "Income Taxes" that prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained based on its technical merit. If the tax position is deemed "more-likely-than-not" to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the taxing authority. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. As of December 31, 2016 and January 2, 2016 , the Company had no recorded liability for uncertain tax positions. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2000. As of December 31, 2016 , the Company has no income tax examinations in process. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 10. FAIR VALUE MEASUREMENTS The Company utilizes the methods of fair value measurement as described in FASB ASC 820, “Fair Value Measurements” to value its financial assets and liabilities, including the financial instruments issued in the transaction described in Note 3, Strategic Alliance and Investment by Elutions, Inc. and the contingent consideration liability described in Note 2, Acquisition. As defined in FASB ASC 820, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, FASB ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. Recurring Fair Value Measurements The fair value of the Company’s Elutions Note and the Holder Redemption Option were determined using a binomial lattice model. (See Note 3, Strategic Alliance and Investment by Elutions, Inc., for further discussion of the Elutions Note and Holder Redemption Option.) The Holder Redemption Option was determined to be an embedded derivative liability that was required to be bifurcated and recorded as a liability. The Company has classified the Holder Redemption Option and Elutions Note as Level 3 liabilities. Changes in the fair value of the Holder Redemption Option are recognized in the Consolidated Statements of Operations and Comprehensive Loss. The Company reassesses the fair value of this liability on a quarterly basis. Based on that assessment, the Company recognized increases of $18,000 and $615,000 in the fair value of this liability during the fiscal years ended December 31, 2016 and January 2, 2016 , respectively. To determine the fair value of the Holder Redemption Option, management evaluates assumptions that require significant judgment. Changes in certain inputs to the valuation model, including the Company’s period end stock price and stock volatility, can have a significant impact on the estimated fair value. The fair value recorded for the Holder Redemption Option may vary significantly from period to period. This variability may result in the actual liability for a period either above or below the estimates recorded in the Company’s consolidated financial statements, resulting in significant fluctuations in other income (expense) as a result of the corresponding non-cash gain or loss recorded. The model requires the following inputs: (i) price of the Company’s common stock; (ii) the expected life of the instrument or derivative; (iii) risk-free interest rate; (iv) estimated dividend yield, and (v) estimated stock volatility. Assumptions used in the calculation require significant management judgment. The following table sets forth the Level 3 inputs to the binomial lattice model that were used to determine the fair value of the Elutions Note and the Holder Redemption Option: December 31, 2016 January 2, 2016 Common stock price $ 0.91 $ 2.22 Dividend yield 0.0 % 0.0 % Credit spread 16.0 % 11.4 % Risk-free interest rate 1.3 % 1.3 % Estimated stock volatility 77.3 % 45.0 % In addition, the Company determined that the provision of the Elutions Note that permits Cartesian Limited to prepay the Elutions Note after 18 months if the trading price of the Company’s common stock exceeds $5.50 per share for a specified period of time is an embedded derivative asset that requires bifurcation (the “Issuer Call Option”). As of December 31, 2016 and January 2, 2016 , the fair value of the Issuer Call Option was determined to be immaterial. Because the Company measures the Holder Redemption Option at fair value on a recurring basis, transfers, if any, between the levels of the fair value hierarchy are recognized at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred. There were no transfers between Level 1, 2 or 3 liabilities during fiscal years 2016 or 2015 . In connection with the acquisition of the Farncombe Entities, the Company recorded a liability related to the Earn-Out portion of the purchase consideration. See Note 2, Acquisition, for further discussion of the Earn-Out liability. The Company has classified the Earn-Out liability as a Level 3 liability and the fair value of the Earn-Out liability will be evaluated each reporting period and changes in its fair value will be included in the Company’s results of operations. The fair value of the Earn-Out liability was calculated using a Monte Carlo simulation using a risk-adjusted discount rate applied to management’s estimate of forecasted revenues that are eligible under the Earn-Out as described in the Purchase Agreement. To determine the fair value of the Earn-Out liability, management evaluates assumptions that require significant judgment. Changes in certain inputs to the valuation model, including the Company’s estimate of future revenues, can have a significant impact on the estimated fair value. The fair value recorded for the Earn-Out liability may vary significantly from period to period. This variability may result in the actual liability for a period either above or below the estimates recorded in the Company’s Consolidated Financial Statements, resulting in significant fluctuations in results of operations as a result of the corresponding non-cash gain or loss recorded. Because the Company measures the Earn-Out liability at fair value on a recurring basis transfers, if any, between the levels of the fair value hierarchy are recognized at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred. There were no transfers between Level 1, 2 or 3 liabilities during the fiscal years ended December 31, 2016 or January 2, 2016 . As of December 31, 2016 and January 2, 2016 , liabilities recorded at fair value on a recurring basis consist of the following (in thousands): Total Quoted prices in active markets Level 1 Significant other observable inputs Level 2 Significant other unobservable inputs Level 3 December 31, 2016: Holder Redemption Option $ 970 $ — $ — $ 970 Earn-Out Liability $ 1,903 $ — — $ 1,903 January 2, 2016: Holder Redemption Option $ 952 $ — $ — $ 952 Earn-Out Liability $ 2,176 $ — $ — $ 2,176 The following table summarizes the year-to-date changes to the fair value of the Holder Redemption Option and Earn-Out liability, which are Level 3 liabilities (in thousands): Holder Redemption Option Earn-Out Liability Fair value at January 2, 2016 $ 952 $ 2,176 Increase (decrease) in fair value 18 (273 ) Fair value at December 31, 2016 $ 970 $ 1,903 Other Fair Value Disclosures The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair values because of the relatively short-term maturities of these financial instruments. |
LEASE COMMITMENTS
LEASE COMMITMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Leases [Abstract] | |
Lease Commitments | 11. LEASE COMMITMENTS The Company leases office facilities, computer equipment and office furniture under various operating leases expiring at various dates through May 2022 . Following is a summary of future minimum payments under operating leases that have initial or remaining non-cancellable lease terms at December 31, 2016 (amounts in thousands): Fiscal Year Operating Leases 2017 $ 1,509 2018 1,742 2019 1,475 2020 1,361 2021 717 Thereafter 15 Minimum lease payments $ 6,819 Total rental expense, net of subtenant rents received, was approximately $1,872,000 and $1,808,000 for fiscal years 2016 and 2015, respectively. For fiscal years 2016 and 2015, $61,000 and $13,000 was recorded in cost of services, respectively, and $1,811,000 and $1,795,000 was recorded in selling, general and administrative expenses, respectively. The Company recorded $171,000 in rental income from subtenants during fiscal year 2015 . There was no rental income from subtenants recognized in fiscal 2016. Rents received from subtenants were recorded as an offset to rental expense. In 2015, the Company took steps to discontinue use of its leased facilities in McLean, Virginia. The space is leased under an operating lease with a term expiring in July 2019 and is comprised of 4,823 square feet. Although the Company has clients in this geographic market, projects are performed from either client sites or other Company locations, and thus the space is not required or used by Company employees, and specifically not used for revenue-generating activities. The property is vacant and currently being marketed as a sublease. We accounted for the discontinuation of use of this property in accordance with FASB ASC 420, “ Exit or Disposal Cost Obligations” and as such recorded a liability of approximately $256,000 during the second fiscal quarter of fiscal 2015. Based on updated probability-weighted cash flow analyses performed as of December 31, 2016 and January 2, 2016 , a $39,000 reduction of the accrual was recorded for fiscal 2016 and an additional accrual of $72,000 was recorded for fiscal 2015. As of December 31, 2016 , a liability of $185,000 is recorded of which $103,000 is recorded in Other accrued liabilities and $82,000 is recorded in Other noncurrent liabilities in the Consolidated Balance Sheets. The expense related to this liability is recorded in Selling, general and administrative expense on the Consolidated Statements of Operations and Comprehensive Loss. The amounts recorded were calculated using probability-weighted cash flow analysis and represent the present value, calculated using a credit-adjusted risk free rate, of our remaining costs under the remaining term of the lease, net of estimated subleases we are likely to obtain. |
LETTERS OF CREDIT
LETTERS OF CREDIT | 12 Months Ended |
Dec. 31, 2016 | |
Letter Of Credit [Abstract] | |
Letters of Credit | 12. LETTERS OF CREDIT In connection with the leasing of office space, the Company provides security deposits in the form of two irrevocable letters of credit with financial institutions for the benefit of the respective landlords. As of December 31, 2016 and January 2, 2016 , the required, total collateral amount was $103,000 and $102,000 , respectively. The collateral deposited for these letters of credit is included in "Other Noncurrent Assets" on the Company's Consolidated Balance Sheets as of December 31, 2016 and January 2, 2016 . No obligation has been recorded in connection with the letters of credit on the Company's Consolidated Balance Sheets as of December 31, 2016 and January 2, 2016 . |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 13. COMMITMENTS AND CONTINGENCIES The Company is not subject to any material litigation, individually and in the aggregate, as of December 31, 2016 . However, the Company may become involved in various legal and administrative actions arising in the normal course of business. These could include actions brought by taxing authorities challenging the employment status of consultants utilized by the Company. In addition, future customer bankruptcies could result in additional claims on collected balances for professional services near the bankruptcy filing date. When management has determined that it is probable that an asset has been impaired or a liability had been incurred related to an action, claim or assessment and the amount of loss can be reasonably estimated, the Company will record a liability for such estimated loss in the appropriate accounting period. The resolution of any of such actions, claims, or the matters described above may have an impact on the financial results for the period in which they occur. During fiscal years 2013 and 2014, the Company recorded liabilities relating to a series of awards made by the arbitrator in a claim by a former executive officer of the Company for severance, attorneys’ fees and costs and pre-judgment interest. The final award amount was $1.7 million which was paid in the first quarter of fiscal 2015. All amounts awarded under the action have been paid by the Company and the matter is fully resolved. During the first quarter of fiscal 2015, the Company renewed an agreement under which it had a commitment to purchase a minimum of $412,000 in computer software over a three -year period. During the first quarter of fiscal 2016, the Company amended the agreement to include an additional commitment of $95,000 over a two -year period. As of December 31, 2016 , the Company had an obligation of $181,000 remaining under this commitment. In conjunction with the acquisition of the Farncombe Entities on July 22, 2015, the Company has recognized a liability of $1.9 million related to potential earn-out consideration payable to the former shareholders of the Farncombe Entities. See Note 2, Acquisition for a discussion of the earn-out consideration. |
COMMON STOCK REPURCHASE PROGRAM
COMMON STOCK REPURCHASE PROGRAM | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Common Stock Repurchase Program | 14. COMMON STOCK REPURCHASE PROGRAM On June 7, 2016, the Company’s Board of Directors authorized an amendment to the Company’s previously announced stock repurchase program to extend the program through June 30, 2017. The program was initially authorized in February 2014 and was previously extended in June 2015. The program authorizes the Company to repurchase up to $2 million of Company common stock. Under the program, repurchases may be made by the Company from time to time in the open market or through privately negotiated transactions depending on market conditions, share price and other factors. The stock repurchase program may be modified or discontinued at any time by the Board of Directors. The Company expects to fund repurchases, if any, through cash on hand, future cash flow from operations and future borrowings. In order to facilitate repurchases, the Company entered into a Rule 10b5-1 plan, which permits stock repurchases when the Company might otherwise be precluded from doing so under insider trading laws or because of self-imposed trading blackout periods. There were no share repurchases under the share repurchase program during fiscal year 2016. During the fiscal year ended January 2, 2016, the Company purchased 64,923 shares under the stock repurchase program at an average cost of $2.44 per share. Through December 31, 2016 , approximately $1,838,000 remained outstanding under the share repurchase program for future repurchases of Company common stock. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | 15. EMPLOYEE BENEFIT PLANS The Company offers defined contribution plans to eligible employees. Such employees may contribute a percentage of their annual compensation in accordance with the plans’ guidelines. The plans provide for Company contributions that are subject to maximum limitations as defined by the plans. Company contributions to its defined contribution plans totaled $1.4 million and $1.5 million in the fiscal years ended December 31, 2016 and January 2, 2016 , respectively. |
ORGANIZATION AND SUMMARY OF S23
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the accounts of Cartesian and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. Name of Subsidiary Date Formed/Acquired TMNG Europe Ltd. March 19, 1997 TMNG Canada Ltd. May 14, 1998 TMNG.com, Inc. June 18, 1999 TMNG Marketing, LLC September 5, 2000 TMNG Technologies, Inc. August 27, 2001 Cambridge Strategic Management Group, Inc. ("CSMG") March 6, 2002 Cambridge Adventis Ltd. March 17, 2006 Cartesian Ltd. ("Cartesian Limited") January 2, 2007 RVA Consulting, LLC August 3, 2007 TWG Consulting, Inc. October 5, 2007 Farncombe Technology Limited July 22, 2015 Farncombe Engineering Services Limited July 22, 2015 Farncombe France SARL July 22, 2015 |
Fiscal Year | Fiscal Year - The Company reports its operating results on a 52/53-week fiscal year basis. The fiscal year end is determined as the Saturday ending nearest December 31. The fiscal years ended December 31, 2016 and January 2, 2016 were each 52-week fiscal years and were comprised of four 13-week quarters. The fiscal years ended December 31, 2016 and January 2, 2016 are referred to herein as fiscal years 2016 and 2015 , respectively. |
Use of Estimates | Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As described in further detail below, significant estimates include the estimates of costs to complete used to recognize revenues on fixed fee contracts, estimates utilized in measuring the fair value of the Company’s reporting units which had recorded goodwill, estimates for fair value of Elutions, Inc. (“Elutions”) instruments, estimates used to determine the fair value of the contingent consideration liability and identifiable intangible assets, estimates used to determine the ultimate realization of deferred tax assets and estimates used to determine the recoverability of deferred contract costs. |
Revenue Recognition | Revenue Recognition - The Company recognizes revenue from time and materials consulting contracts in the period in which its services are performed. In addition to time and materials contracts, the Company also has fixed fee contracts. The Company recognizes revenues on milestone or deliverables-based fixed fee contracts and time and materials contracts not to exceed contract price using the percentage of completion-like method described by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605-35," Revenue Recognition - Construction-Type and Production-Type Contracts. " For fixed fee contracts where services are not based on providing deliverables or achieving milestones, the Company recognizes revenue on a straight-line basis over the period during which such services are expected to be performed. In connection with some fixed fee contracts, the Company may receive payments from customers that exceed revenues up to that point in time. The Company records the excess of receipts from customers over recognized revenue as deferred revenue. Deferred revenue is classified as a current liability to the extent it is expected to be earned within twelve months from the date of the balance sheet. The FASB ASC 605-35 percentage-of-completion-like methodology involves recognizing revenue using the percentage of services completed, on a current cumulative cost to total cost basis, using a reasonably consistent profit margin over the period. Due to the longer term nature of these projects, developing the estimates of costs often requires significant judgment. Factors that must be considered in estimating the progress of work completed and ultimate cost of the projects include, but are not limited to, the availability of labor and labor productivity, the nature and complexity of the work to be performed, and the impact of delayed performance. If changes occur in delivery, productivity or other factors used in developing the estimates of costs or revenues, the Company revises its cost and revenue estimates, which may result in increases or decreases in revenues and costs, and such revisions are reflected in income in the period in which the facts that give rise to that revision become known. Although there was no revenue recognized related to sales of software for fiscal years 2016 or 2015 , the Company provides post-contract support ("PCS") services on historical software sales, including technical support and maintenance services as well as other professional services not essential to the functionality of the software. For those contracts that include PCS service arrangements which are not essential to the functionality of the software solution, the Company separates the FASB ASC 605-35 software services and PCS services utilizing the multiple-element arrangement model prescribed by FASB ASC 605-25, "Revenue Recognition - Multiple-Element Arrangements ". The Company separated the PCS service elements and allocated total contract consideration to the contract elements based on the relative fair value of those elements utilizing PCS renewal terms as evidence of fair value. Revenues from PCS services are recognized ratably on a straight-line basis over the term of the support and maintenance agreement. |
Cash and Cash Equivalents | Cash and Cash Equivalents - Cash and cash equivalents include cash on hand, money market investments and short-term investments with original maturities of three months or less when purchased. The carrying amounts of cash and cash equivalents approximates its fair value because of their relatively short-term maturities. |
Property and Equipment | Property and Equipment - Property and equipment are stated at cost or acquisition date fair value less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. Depreciation is based on the estimated useful lives of the assets and is computed using the straight-line method, and capital leases, if any, are amortized on a straight-line basis over the life of the lease. Asset lives range from three to seven years for furniture and fixtures, software and computer equipment. Leasehold improvements are capitalized and amortized over the life of the lease or useful life of the asset, whichever is shorter. The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets might not be recoverable in accordance with the provisions of FASB ASC 360, " Property, Plant and Equipment.” No impairments were identified in any period presented. |
Managed Services Implementation Revenues and Costs | Managed Services Implementation Revenues and Costs - Managed service arrangements provide for the delivery of a software or technology-based solution to clients over a period of time without the transfer of a license or a software sale to the customer. For long-term managed service agreements, implementation efforts are often necessary to develop the software utilized to deliver the managed service. Costs of such implementation efforts may include internal and external costs for coding or customizing systems and costs for conversion of client data. The Company may invoice its clients for implementation fees at the go-live date of the underlying solution. Lump sum implementation fees received from clients are initially deferred and recognized on a pro-rata basis as services are provided. Specific, incremental and direct costs of implementation incurred prior to the services going live are deferred pursuant to FASB ASC 605-35-25 and amortized over the period that the related ongoing services revenue is recognized to the extent that the Company believes the recoverability of the costs from the contract is probable. If a client terminates a managed services arrangement prior to the end of the contract, a loss on the contract may be recorded, if applicable, and any remaining deferred implementation revenues and costs would then be recognized into earnings generally over the remaining service period through the termination date. During the fiscal years ended December 31, 2016 and January 2, 2016 , deferred implementation costs related to managed service contracts were $432,000 and $443,000 , respectively. Unamortized deferred implementation costs were $318,000 and $229,000 as of December 31, 2016 and January 2, 2016 , respectively, of which $266,000 and $229,000 were included in Other current assets on the Consolidated Balance Sheets as of December 31, 2016 and January 2, 2016 , respectively. |
Research and Development and Software Development Costs | Research and Development and Software Development Costs - Software development costs are accounted for in accordance with FASB ASC 985-20, " Software - Costs of Software to Be Sold, Leased, or Marketed " and FASB ASC 350-40, “ Intangibles - Goodwill and Other - Internal-Use Software. ” Capitalization of software development costs for products to be sold to third parties begins upon the establishment of technological feasibility and ceases when the product is available for general release. The Company capitalizes development costs incurred during the period between the establishment of technological feasibility and the release of the final product to customers if such costs are material. In addition, the Company capitalizes software development costs for internal use software that it does not intend to market to third parties but uses to deliver services. The establishment of technological feasibility and the ongoing assessment of recoverability of capitalized software development costs require considerable judgment by management concerning certain external factors including, but not limited to, the date technological feasibility is reached, anticipated future gross revenue, estimated economic life and changes in software and hardware technologies. During fiscal years 2016 and 2015 , $467,000 and $771,000 , respectively, of these costs were expensed as incurred. During fiscal years 2016 and 2015 , $436,000 and $643,000 , respectively, of internal use software development costs were capitalized. |
Goodwill | Goodwill - The Company accounts for goodwill in accordance with the provisions of FASB ASC 350, " Intangibles-Goodwill and Other. " Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations accounted for as purchases. The Company evaluates goodwill for impairment on an annual basis on the last day of the first fiscal month of the fourth fiscal quarter and whenever events or circumstances indicate that these assets may be impaired. The goodwill impairment test involves a two-step process. The Company determines impairment by comparing the net assets of each reporting unit to its respective fair value. In the event a reporting unit's carrying value exceeds its fair value, an indication exists that the reporting unit goodwill may be impaired. In this situation, the Company must determine the implied fair value of goodwill by assigning the reporting unit's fair value to each asset and liability of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is measured by the difference between the goodwill carrying value and the implied fair value. Due to a significant decrease in the Company’s stock price during the second quarter of fiscal 2016, the Company performed the first step of the goodwill impairment test. Based on the results of the first step of the goodwill impairment test, the estimated fair value of the reporting units did not exceed their carrying value and therefore step two of the test was required. Based on the results of the second step of the goodwill impairment test (i.e., applying the income approach and market approach described below, the Company determined, as of July 2, 2016, that the implied fair value of goodwill was less than the carrying value, which resulted in goodwill impairment of $10.8 million , representing all of that goodwill. See Note 4, Goodwill and Intangible Assets, for additional discussion related to goodwill. Fair value of the Company’s reporting units is determined using a combination of the income approach and the market approach. The income approach uses a reporting unit's projection of estimated cash flows discounted using a weighted-average cost of capital analysis that reflects current market conditions. The Company also considers the market approach to valuing its reporting units utilizing revenue and EBITDA multiples. The Company compares the results of its overall enterprise valuation as determined by the combination of the two approaches to the Company’s market capitalization. Significant management judgments related to these approaches include: • Anticipated future cash flows and terminal value for each reporting unit - The income approach to determining fair value relies on the timing and estimates of future cash flows, including an estimate of terminal value. The projections use management's estimates of economic and market conditions over the projected period including growth rates in revenues and estimates of expected changes in operating margins. The Company’s projections of future cash flows are subject to change as actual results are achieved that differ from those anticipated. Because management frequently updates its projections, the Company would expect to identify on a timely basis any significant differences between actual results and recent estimates. • Selection of an appropriate discount rate - The income approach requires the selection of an appropriate discount rate, which is based on a weighted average cost of capital analysis. The discount rate is affected by changes in short-term interest rates and long-term yields as well as variances in the typical capital structure of marketplace participants. The discount rate is determined based on assumptions that would be used by marketplace participants, and for that reason, the capital structure of selected marketplace participants was used in the weighted average cost of capital analysis. It is possible that the discount rate can fluctuate from period to period. • Selection of an appropriate multiple - The market approach requires the selection of an appropriate multiple to apply to revenues or EBITDA based on comparable guideline companies or transaction multiples. It is often difficult to identify companies or transactions with a similar profile in regards to revenue, geographic operations, risk profile and other factors. |
Intangible Assets | Intangible Assets - Identifiable intangible assets, resulting from the acquisition of the Farncombe Entities, consist of customer relationships, agreements not to compete, and a trade name. The Company amortizes the identifiable intangible assets over their estimated economic benefit period, from six months to four and one-half years. In accordance with FASB ASC 360, “Property, Plant and Equipment,” the Company uses its best estimates based upon reasonable and supportable assumptions and projections to review for impairment of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of its assets might not be recoverable. If the Company was to determine that events and circumstances warrant a change to the estimate of an identifiable intangible asset's remaining useful life, then the remaining carrying amount of the identifiable intangible asset would be amortized prospectively over that revised remaining useful life. Additionally, information resulting from other events and circumstances may indicate that the carrying value of one or more identifiable intangible assets is not recoverable which would result in recognition of an impairment charge. |
Income Taxes | Income Taxes - The Company recognizes a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company records the financial statement effects of an income tax position when it is more likely than not that the position will be sustained on the basis of the technical merits. The Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The measurement of any unrecognized tax benefit is based on management’s best judgment. The Company reviews these estimates and makes changes to recorded amounts of uncertain tax positions as facts and circumstances warrant. |
Foreign Currency Transactions and Translation | Foreign Currency Transactions and Translation - Cartesian Ltd., the international operations of Cambridge Strategic Management Group, Inc., Farncombe France SARL, Farncombe Technology Limited, and Farncombe Engineering Services Limited conduct business primarily denominated in their respective local currency, which is their functional currency. Assets and liabilities have been translated to U.S. dollars at the period-end exchange rates. Revenues and expenses have been translated at exchange rates which approximate the average of the rates prevailing during each period. Translation adjustments are reported as a separate component of accumulated other comprehensive loss in the Consolidated Statements of Stockholders' Equity. Accumulated other comprehensive loss resulting from foreign currency translation adjustments totaled $6.8 million and $5.5 million , respectively as of December 31, 2016 and January 2, 2016 , and is included in Total Stockholders’ Equity in the Consolidated Balance Sheets. Assets and liabilities denominated in other than the functional currency of a subsidiary are re-measured at rates of exchange on the balance sheet date. Resulting gains and losses on foreign currency transactions are included in the Company’s results of operations. Realized and unrealized exchange losses included in the results of operations during fiscal 2016 and 2015 were $535,000 and $316,000 , respectively. |
Derivative Financial Instruments | Derivative Financial Instruments FASB ASC 820, Fair Value Measurements requires bifurcation of certain embedded derivative instruments in certain debt or equity instruments, and measurement at their fair value for accounting purposes. A holder redemption feature embedded in the Company’s note payable requires bifurcation from its host instrument and is accounted for as a freestanding derivative. See Note 3, Strategic Alliance and Investment by Elutions, Inc. and Note 10, Fair Value Measurements, for discussion of this embedded derivative. |
Share-based Compensation | Share-Based Compensation - The Company accounts for share-based payment awards using the provisions of FASB ASC 718, " Compensation-Stock Compensation ". The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of service-based stock option grants is estimated on the grant date using a Black-Scholes option-pricing model and compensation expense related to stock option grants is recognized on a graded vesting schedule over the vesting period. For stock options containing a market condition, the market conditions are required to be considered when calculating the grant date fair value. FASB ASC 718 requires selection of a valuation technique that best fits the circumstances of an award. In order to reflect the substantive characteristics of the market condition option award, a Monte Carlo simulation valuation model was used to calculate the grant date fair value of such stock options. Expense for the market condition stock options is recognized over the derived service period as determined through the Monte Carlo simulation model. For non-vested, performance-based stock awards, compensation expense is recognized based on management’s expectations with regard to achievement of certain performance and service conditions. The fair value of the awards is determined based on the market value of the underlying stock at the grant date. Expense for the awards ultimately expected to vest is recognized on a straight-line basis over the implied service period of the award. In the event the Company determines it is no longer probable that the minimum performance criteria specified in the restricted stock award agreement will be achieved, previously recognized compensation expense would be reversed in the period such a determination is made. For non-vested, service-based stock awards, compensation is recognized based on achievement of service conditions alone. The fair value of the awards is determined based on the market value of the underlying stock at the grant date. Expense for the awards ultimately expected to vest is recognized on a graded vesting schedule over the vesting period. See Note 5, Share-Based Compensation. |
Loss Per Share | Loss Per Share - The Company calculates and presents earnings (loss) per share using a dual presentation of basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. The weighted average number of common shares outstanding excludes treasury shares held by the Company. Diluted earnings (loss) per share is computed in the same manner except that the weighted average number of shares is increased for dilutive securities. In accordance with the provisions of FASB ASC 260, " Earnings per Share, " the Company uses the treasury stock method for calculating the dilutive effect of employee stock options, non-vested shares and warrants. The employee stock options, non-vested shares and warrants will have a dilutive effect under the treasury stock method only when average market value of the underlying Company common stock during the respective period exceeds the assumed proceeds. For share-based payment awards with a performance condition, the Company must first use the guidance on contingently issuable shares in FASB ASC 260-10 to determine whether the awards should be included in the computation of diluted earnings per share for the reporting period. For all non-vested performance-based awards, the Company determines the number of shares, if any, that would be issuable at the end of the reporting period if the end of the reporting period were the end of the contingency period. In applying the treasury stock method, assumed proceeds include the amount, if any, the employee must pay upon exercise, the amount of compensation cost for future services that the Company has not yet recognized, and the amount of tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of the options and the vesting of non-vested shares. For fiscal years 2016 and 2015 , approximately 43,000 and 50,000 shares, respectively, related to outstanding stock options, non-vested shares and warrants that otherwise would have been included in the diluted earnings per share calculation were not included because they would have been anti-dilutive due to the net loss for those periods. |
Accounts Receivable | Accounts Receivable - The Company has entered into agreements with third-party financial institutions under which it can selectively elect to transfer to the financial institutions accounts receivable with certain of the Company’s largest, international customers on a non-recourse basis. This agreement gives the Company optionality to convert outstanding accounts receivable to cash. For transfers of accounts receivable under these agreements that qualify as sales, the Company applies the guidance in ASC 860, “Transfers and Servicing – Sales of Financial Assets”, which requires the derecognition of the carrying value of those accounts receivable on the Consolidated Balance Sheets and recognition of a loss on the sale of an asset in operating expenses on the Consolidated Statements of Operation. During the fiscal years ended December 31, 2016 and January 2, 2016 , $19.6 million and $26.8 million , respectively, of accounts receivable transferred pursuant to these agreements qualified as sales of receivables and the carrying amounts were derecognized. The loss on the sale of these accounts receivable recorded in the Consolidated Statements of Operations was approximately $75,000 and $161,000 for fiscal years 2016 and 2015 , respectively. On April 22, 2016, the Company entered into a Factoring Agreement ("Factoring Agreement") with RTS Financial Service, Inc. ("RTS"). Pursuant to the terms of the Factoring Agreement, the Company may offer for sale, and RTS may purchase, certain accounts receivable of the Company on an account by account basis (such purchased accounts, the "Purchased Accounts"). Under the Factoring Agreement, upon purchase RTS becomes the absolute owner of the Purchased Accounts, which are payable directly to RTS, subject to certain repurchase obligations of the Company. Proceeds from transfers under the Factoring Agreement reflect the face value of the account receivable less a factor’s fee. The factor’s fee is computed on a daily basis until the amount of the Purchased Account is paid to RTS, and equals the amount of the Purchased Account multiplied by the sum of the prime rate then in effect plus 6.49% divided by 360. Upon purchase of a Purchased Account, RTS will pay to the Company the amount of the Purchased Account, less a reserve of 20% of that amount, which reserve (less the total fee calculated) is payable to the Company upon collection of the Purchased Account by RTS. The fee is recorded as interest expense within the Consolidated Statements of Operations and Comprehensive Loss in the period the fee becomes payable. During the fiscal year ended December 31, 2016 , the Company factored $3,000,000 of accounts receivable under the Factoring Agreement and recognized a liability of $768,000 which is recorded as Secured borrowing on the Consolidated Balance Sheet as of December 31, 2016 . Until received, the reserve amount withheld at the time of transfer is recorded as a receivable and is included in Other current assets on the Consolidated Balance Sheets. As of December 31, 2016 the amount recorded as a receivable for the reserve withheld by RTS was $154,000 . The amount of fees recorded as interest expense were immaterial for the fiscal year ended December 31, 2016 . On July 29, 2016, Cartesian Limited, a U.K. subsidiary of Cartesian, Inc., entered into an Invoice Discounting Agreement, a Debenture (security agreement) and certain related agreements (collectively, the "Agreement") with RBS Invoice Finance Limited ("RBS"). Pursuant to the terms of the Agreement, Cartesian Limited may assign to RBS certain eligible accounts receivable of Cartesian Limited (such purchased accounts, the "U.K. Purchased Accounts"). The Agreement has a maximum funding level of £3,000,000 . At the time of the purchase of a U.K. Purchased Account, RBS will make an initial payment to Cartesian Limited of no more than 50% of the U.K. Purchased Account. Upon collection of a U.K. Purchased Account, RBS will pay to Cartesian Limited the amount of the U.K. Purchased Account, less the initial payment and a discounting charge. The discounting charge is computed on a daily basis until the amount of the U.K. Purchased Account is paid to RBS, and equals the amount of the U.K. Purchased Account multiplied by the sum of the National Westminster Bank Plc base rate then in effect plus 1.75% divided by 365. The Agreement also includes a fixed fee service charge of £833 per month. The Agreement has a loan concentration limit regarding the obligors on U.K. Purchased Accounts. The discounting charges are recorded as interest expense within the Consolidated Statements of Operations and Comprehensive Loss in the period the fee becomes payable. Cartesian Limited's obligations under the Agreement are secured by certain assets of Cartesian Limited, including all equipment and intellectual property of Cartesian Limited, all stock of subsidiaries held by Cartesian Limited and certain accounts receivable of Cartesian Limited. Under the Agreement, Cartesian Limited's net worth, as measured by issued share capital and retained earnings, less all intangible assets, may not fall below £7,500,000 in any 12 month period. RBS may require Cartesian Limited to repurchase U.K. Purchased Accounts upon a number of specified events, including if Cartesian Limited breaches or defaults on any of its obligations under the Agreement or if Cartesian Limited fails to meet the net worth requirement. Cartesian Limited is in compliance with those obligations and meets the net worth requirement. The Agreement has an initial term of 12 months and continues after the initial term until terminated by either Cartesian Limited or RBS. Cartesian Limited may terminate the Agreement at any time during the initial term upon approval of RBS or upon six months' notice of intent to terminate. RBS may terminate the Agreement upon certain other events or conditions included in the Agreement. No amounts were factored under the Agreement during the fiscal year ended December 31, 2016 . |
Inventory | Inventory – In accordance with the provisions of FASB ASC 330, “ Inventory ,” the Company’s inventory is stated at the lower of cost, using the first-in, first-out (FIFO) method, or fair value. As of December 31, 2016 and January 2, 2016 , the Company had $0.4 million and $0.6 million in inventory, respectively, all of which was finished goods. All of the inventory was purchased in July 2014 from Elutions, Inc. (“Elutions”), which owns more than five percent of the outstanding shares of common stock of the Company. ASC 330 requires inventory to be recorded at the lower of cost basis or market. The fair value of the inventory was determined using the indirect cost approach. As a result of the evaluation of lower of cost or market, the Company recorded impairments of its inventory value of $0.3 million and $2.1 million during fiscal 2016 and 2015, respectively. Also, during the second quarter of fiscal 2015 the Company recorded an inventory adjustment of $0.3 million in Cost of Services related to a provision in the general framework agreement between the Company and Elutions (see Note 3, Strategic Alliance and Investment by Elutions, Inc.), that states if the Company had not sold 75% of such inventory acquired from Elutions within one year after acquisition, Elutions is required upon request of the Company to source its requirements for future projects in the U.S. or U.K. from such inventory subject to a 10% discount against the Company’s purchase price until the Company has exhausted such inventory. In fiscal 2015, the Company requested that Elutions source its requirements for future projects from the inventory that was acquired by the Company from Elutions in July 2014. Management continues to work with Elutions to utilize the inventory and changes in management’s expectations in future periods could further impact the net realizable value of the inventory. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In August 2016, the FASB issued Accounting Standards Update ("ASU") 2016-15, "Classification of Certain Cash Receipts and Cash Payments", which will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those years, and the ASU requires adoption on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact the application of ASU 2016-15 will have on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-9, “Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The ASU is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective approach is required on the balance sheet by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. A retrospective or prospective approach can be used for the cash flow statement and a prospective approach is required for the statement of operations. The Company does not expect the adoption of ASU 2016-9 will have a material effect on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-2, “Leases” which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The ASU is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective approach is required for all leases existing or entered into after the beginning of the earliest comparative period in the consolidated financial statements. The Company is currently evaluating the effects that the adoption of ASU 2016-2 will have on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” which requires deferred tax liabilities and assets to be classified as noncurrent in entities’ balance sheets. Under current U.S. GAAP, an entity is required to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments. The amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company early adopted ASU 2015-17 prospectively during the fourth quarter of fiscal 2016, classifying its deferred income tax assets and deferred income tax liabilities as noncurrent. The adoption did not have a material effect on the Company’s consolidated financial statements. Prior periods were not retrospectively adjusted. In July 2015, the FASB issued ASU 2015-11 which requires entities to measure most inventory at the lower of cost and net realizable value thereby simplifying the existing guidance which required entities to measure inventory at the lower of cost or market. Under the current guidance, market is defined as replacement cost, net realizable value or net realizable value less a normal profit margin. The newly issued guidance eliminates the requirement to determine replacement cost and defines net realizable value as the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. This new guidance is effective for the Company beginning in fiscal 2017. The Company does not expect the adoption of this standard update will have a material effect on its consolidated financial statements. In April 2015, the FASB issued ASU 2015-5, which provides guidance on a customer’s accounting for cloud computing costs. Under the ASU, a customer must determine whether a cloud computing arrangement contains a software license. If so, the customer would account for the fees related to the software license element in a manner consistent with how the acquisition of other software licenses is accounted for under current U.S. GAAP. If the arrangement does not contain a software license, the customer would account for the arrangement as a service contract. The ASU does not prescribe how to account for cloud computing arrangements deemed to be service contracts. An arrangement would contain a software license element if both of the following criteria are met: the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty; and it is feasible for the customer to either run the software on its own hardware or contract with another party unrelated to the vendor to host the software. The ASU is effective for annual periods (and interim periods therein) beginning after December 15, 2015. Entities may adopt the guidance retrospectively or prospectively to arrangements entered into, or materially modified, after the effective date. The Company prospectively adopted this guidance in its first quarter of fiscal 2016 and the adoption did not have a material impact on its consolidated financial statements. In August 2014, the FASB released ASU 2014-15, Presentation of Financial Statements – Going Concern, which requires a company to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within the one year period subsequent to the date that the financial statements are issued or within the one year period subsequent the date that the financial statements are available to be issued. This guidance is effective for fiscal years ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption was permitted. The Company adopted this guidance in the fourth quarter of 2016. The adoption did not have an impact on its consolidated financial statements. In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The standard update resolves the diverse accounting treatment for these share-based payments by requiring that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The provisions of FASB ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company adopted this guidance in its first quarter of fiscal 2016 and the adoption did not have a material impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-9, Revenue from Contracts with Customers. This standard update clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The standard update intends to provide a more robust framework for addressing revenue issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; and provide more useful information to users of financial statements through improved disclosure requirements. Upon adoption of this standard update, we expect that the allocation and timing of revenue recognition will be impacted. In July 2015, the FASB voted to defer the effective date of this new standard by one year and to permit early adoption beginning as of the original effective date of the new standard. The provisions of FASB ASU 2014-9 will now be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and are to be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact that this standard update will have on its consolidated financial statements. |
ACQUISITION (Tables)
ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Schedule Of Purchase Price Transferred To Acquire | The total purchase price transferred to effect the acquisition of the Farncombe Entities is as follows: (in thousands) Cash paid at closing $ 1,015 Equity issued at closing 2,036 Fair value of contingent consideration 1,921 Working capital adjustment 2,485 Total purchase price $ 7,457 |
Schedule Of Purchase Price Allocation Assets Acquired Liabilities Assumed | The purchase price allocation is summarized in the following table: (in thousands) Tangible assets and liabilities Cash $ 1,378 Accounts receivable, net 4,627 Other current assets 191 Other non-current assets 137 Accounts payable (1,874 ) Accrued payroll and related expenses (796 ) Other current liabilities (636 ) Non-current deferred tax liability (264 ) Intangible assets 1,260 Goodwill 3,434 Net assets acquired $ 7,457 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | The following table summarizes the major classes of intangible assets, as well as the respective weighted-average amortization periods: Amount (in thousands) Weighted-Average Amortization Period (Years) Identifiable Intangible Assets Tradename $ 90 0.5 Non-compete agreements 60 4.5 Customer relationships 1,110 3.5 Total identifiable intangible assets $ 1,260 |
Business Acquisition, Pro Forma Information | The basic and diluted shares outstanding used to calculate the pro forma net loss per share amount presented below were adjusted to assume shares issued at the closing of the acquisition of the Farncombe Entities were outstanding since the beginning of fiscal 2014. Fiscal Year Ended Dollars in thousands except per share data January 2, 2016 Revenue $ 88,007 Net loss $ (5,932 ) Net loss per share $ (0.68 ) Weighted-average basic and diluted shares used in calculation of pro forma net loss per share (in thousands) 8,734 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill for the fiscal year ended December 31, 2016 are as follows (in thousands): North America EMEA Total Balance as of January 2, 2016 $ 3,947 $ 7,124 $ 11,071 Goodwill impairment (3,947 ) (6,883 ) (10,830 ) Changes in foreign currency exchange rates — (241 ) (241 ) Balance as of December 31, 2016 $ — $ — $ — |
Schedule of Finite-Lived Intangible Assets | The following table summarizes the changes in the major classes of intangible assets for the fiscal year ended December 31, 2016 (in thousands). Non-Compete Customer Gross Carrying Amount: Tradename Agreements Relationships Total Balance as of January 2, 2016 $ 86 $ 57 $ 1,055 $ 1,198 Changes in foreign currency exchange rates (15 ) (9 ) (174 ) (198 ) Balance as of December 31, 2016 $ 71 $ 48 $ 881 $ 1,000 Accumulated Amortization: Balance as of January 2, 2016 $ (71 ) $ (5 ) $ (126 ) $ (202 ) Changes in foreign currency exchange rates 9 2 49 60 Amortization expense (9 ) (12 ) (280 ) (301 ) Balance as of December 31, 2016 $ (71 ) $ (15 ) $ (357 ) $ (443 ) |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table outlines the estimated future amortization expense related to amortizing intangible assets as of December 31, 2016 . (in thousands) 2017 $ 262 2018 262 2019 32 2020 1 $ 557 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule Of Valuation Techniques For Market Condition Stock Option Award By Vesting Tranche | The fair value and derived service periods calculated for this market condition stock option award by vesting tranche for the market condition stock option awards granted in September 2016 were as follows: Grant Date Fair Value Per Share Derived Service Period (in Years) $4.00 market condition tranche $ 0.32 5.1 $5.00 market condition tranche $ 0.31 5.5 $6.00 market condition tranche $ 0.30 5.9 The fair value and derived service periods calculated for this market condition stock option award by vesting tranche for the market condition stock option awards granted in June 2015 were as follows: Grant Date Fair Value Per Share Derived Service Period (in Trading Days) $4.00 market condition tranche $ 1.95 151 $5.00 market condition tranche $ 1.95 262 $6.00 market condition tranche $ 1.99 362 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of the components of the Put Option was calculated using the Black-Scholes model using the following assumptions. Issuance Date Common stock price $ 3.30 Dividend yield 0.0 % Exercise price of put option $ 4.50 Expected term 0.78 years Risk-free interest rate 0.20 % Estimated stock volatility 55 % |
Service-Based Stock Option Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of the service-based stock option activity of the Company's Equity Plan as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 2, 2016 244,553 $ 8.06 Granted 37,500 $ 1.10 Forfeited/cancelled (69,291 ) $ 7.82 Outstanding at December 31, 2016 212,762 $ 6.91 4.3 years $ — Options vested and expected to vest at December 31, 2016 201,512 $ 7.18 4.0 years $ — Options exercisable at December 31, 2016 150,261 $ 8.85 2.4 years $ — |
Schedule of Nonvested Share Activity | A summary of the status of service-based non-vested share awards issued under the Equity Plan as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Grant Date Fair Value per share Outstanding at January 2, 2016 — $ — Granted 172,422 $ 0.71 Outstanding at December 31, 2016 172,422 $ 0.71 |
Market Condition Stock Option Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of the market condition stock option activity under the Equity Plan, as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Exercise Price Outstanding at January 2, 2016 200,000 $ 3.34 Granted 125,000 $ 1.25 Outstanding at December 31, 2016 325,000 $ 2.54 Options vested and expected to vest at December 31, 2016 325,000 $ 2.54 Options exercisable at December 31, 2016 — $ — |
Performance Based Non vested Share Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Share Activity | Performance-Based Non-vested Share Awards - A summary of the status of performance-based non-vested share awards issued under the Equity Plan as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Grant Date Fair Value per share Outstanding at January 2, 2016 250,215 $ 3.15 Forfeited (77,558 ) $ 3.14 Outstanding at December 31, 2016 172,657 $ 3.14 |
Supplemental Stock Plan 2000 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of the option activity under the Company's Supplemental Stock Plan as of December 31, 2016 and changes during the fiscal year then ended is presented below: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 2, 2016 36,900 $ 11.11 Forfeited/cancelled (6,800 ) $ 11.36 Outstanding at December 31, 2016 30,100 $ 11.06 0.5 years $ — Options vested and exercisable at December 31, 2016 30,100 $ 11.06 0.5 years $ — |
SUPPLEMENTAL BALANCE SHEET IN27
SUPPLEMENTAL BALANCE SHEET INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accrued Liabilities | Accrued payroll, bonuses and related expenses and Other accrued liabilities consist of the following (amounts in thousands): December 31, 2016 January 2, 2016 Accrued payroll, bonuses and related expenses Accrued payroll $ 313 $ 448 Accrued bonuses 2,060 3,205 Accrued payroll taxes 515 636 Accrued vacation 494 539 Accrued severance 117 — Other 253 297 $ 3,752 $ 5,125 Other accrued liabilities Sales and value-added taxes payable $ 911 $ 478 Lease termination liability 103 135 Put option liability — 102 Accrued income taxes 152 376 Accrued acquisition consideration 32 327 Accrued professional fees 182 604 Other 737 229 $ 2,117 $ 2,251 |
BUSINESS SEGMENTS, MAJOR CUST28
BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Summarized financial information concerning the Company's reportable segments is shown in the following table (amounts in thousands): North America EMEA Strategic Alliances Not Allocated to Segments Total As of and for the fiscal year ended December 31, 2016: Revenues $ 28,065 $ 42,894 $ 780 $ — $ 71,739 Income (loss) from operations 6,255 6,837 (181 ) (26,737 ) (13,826 ) Total other expense — — — (305 ) (305 ) Income (loss) before income tax provision (benefit) 6,255 6,837 (181 ) (27,042 ) (14,131 ) Depreciation and amortization — — — 1,295 1,295 Total assets $ 3,378 $ 10,113 $ 550 $ 8,660 $ 22,701 As of and for the fiscal year ended January 2, 2016: Revenues $ 34,025 $ 43,844 $ 475 $ — $ 78,344 Income (loss) from operations 8,222 5,884 (2,982 ) (17,330 ) (6,206 ) Total other expense — — — (899 ) (899 ) Income (loss) before income tax provision (benefit) 8,222 5,884 (2,982 ) (18,229 ) (7,105 ) Depreciation and amortization — — — 952 952 Total assets $ 6,831 $ 9,725 $ 626 $ 24,177 $ 41,359 |
Schedule of Revenue from External Customers by Geographical Areas | In accordance with the provisions of FASB ASC 280-10, revenues earned in the United States and internationally based on the location where the services are performed are shown in the following table (amounts in thousands): Revenues Fiscal Year Fiscal Year United States $ 29,348 $ 34,511 International: United Kingdom 38,123 41,399 Other 4,268 2,434 Total $ 71,739 $ 78,344 |
Long-lived Assets by Geographic Areas | In accordance with the provisions of FASB ASC 280-10, long-lived assets, excluding intangible assets, by geographic area are shown in the following table (amounts in thousands): Long-Lived Assets December 31, January 2, United States $ 2,154 $ 2,611 United Kingdom 217 346 France 10 12 Total $ 2,381 $ 2,969 |
Schedule of Revenue and Accounts Receivable by Major Customers by Reporting Segments | Major customers in terms of significance to Cartesian's revenues (i.e. in excess of 10% of revenues) for fiscal years 2016 and 2015 and accounts receivable as of December 31, 2016 and January 2, 2016 were as follows (amounts in thousands): Revenues Fiscal Year 2016 Fiscal Year 2015 North America EMEA North America EMEA Customer A $ 16,022 $ 16,243 Customer B $ 11,933 $ 13,377 Customer C $ 8,345 $ 18,906 Accounts Receivable December 31, 2016 January 2, 2016 Customer A $ 3,317 $ 3,577 Customer B $ 1,100 $ 1,423 Customer C $ 779 $ 1,510 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | December 31, January 2, (In thousands) Furniture and fixtures $ 1,708 $ 1,748 Software and computer equipment 4,953 8,006 Leasehold improvements 1,098 1,500 7,759 11,254 Less: Accumulated depreciation 5,703 8,743 $ 2,056 $ 2,511 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | For fiscal years 2016 and 2015 , income (loss) before income taxes consisted of the following (amounts in thousands): Fiscal Fiscal United States $ (7,358 ) $ (9,321 ) Foreign (6,773 ) 2,216 Total income (loss) before income taxes $ (14,131 ) $ (7,105 ) |
Schedule of Components of Income Tax Expense (Benefit) | For fiscal years 2016 and 2015 , the income tax benefit (provision) consists of the following (amounts in thousands): Fiscal Fiscal Federal deferred tax expense, net $ 655 $ (99 ) State deferred tax benefit (expense), net 125 42 Foreign current tax expense (48 ) (263 ) Foreign deferred tax (expense) benefit, net (484 ) (266 ) Total income tax (expense) benefit $ 248 $ (586 ) |
Schedule of Effective Income Tax Rate Reconciliation | The following is a reconciliation between the benefit (provision) for income taxes and the amounts computed based on loss before income taxes at the statutory federal income tax rate (amounts in thousands): Fiscal Year 2016 Fiscal Year 2015 Amount % Amount % Computed expected federal income tax benefit $ 4,805 34.0 $ 2,413 34.0 State income tax benefit, net of federal benefit 68 0.5 514 7.2 Rate differential on foreign operations (1,002 ) (7.1 ) 296 4.2 Forfeited vested stock options (281 ) (2.0 ) (267 ) (3.8 ) Tax benefits associated with share-based awards 179 1.3 12 0.2 Adjustment to estimated tax loss carryforward (418 ) (3.0 ) (226 ) (3.2 ) Change in statutory and applicable tax rates 505 3.6 (518 ) (7.3 ) Non-deductible expenses (25 ) (0.2 ) (753 ) (10.6 ) Goodwill impairment (1,257 ) (8.9 ) — — Other 113 0.8 (26 ) (0.4 ) Change in valuation allowance (2,439 ) (17.3 ) (2,031 ) (28.6 ) Total income tax benefit (expense) $ 248 1.7 $ (586 ) (8.3 ) |
Schedule of Deferred Tax Assets and Liabilities | The significant components of deferred income tax assets and the related balance sheet classifications, as of December 31, 2016 and January 2, 2016 , are as follows (amounts in thousands): December 31, 2016 January 2, 2016 Deferred tax assets: Accounts receivable $ 119 $ 67 Accrued expenses 845 1,040 Goodwill and intangible assets 1,492 1,143 Share-based compensation expense 664 551 Net operating loss carryforward 31,031 29,894 Inventories 1,068 — Foreign tax credit carryforward 1,006 1,006 Deferred revenue 357 — Other (24 ) 224 Total deferred tax assets 36,558 33,925 Valuation allowance (36,558 ) (34,116 ) Net deferred tax asset $ — $ (191 ) |
Summary of Operating Loss Carryforwards |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Assumptions and Methodology | The following table sets forth the Level 3 inputs to the binomial lattice model that were used to determine the fair value of the Elutions Note and the Holder Redemption Option: December 31, 2016 January 2, 2016 Common stock price $ 0.91 $ 2.22 Dividend yield 0.0 % 0.0 % Credit spread 16.0 % 11.4 % Risk-free interest rate 1.3 % 1.3 % Estimated stock volatility 77.3 % 45.0 % |
Fair Value, Liabilities Measured on Recurring Basis | As of December 31, 2016 and January 2, 2016 , liabilities recorded at fair value on a recurring basis consist of the following (in thousands): Total Quoted prices in active markets Level 1 Significant other observable inputs Level 2 Significant other unobservable inputs Level 3 December 31, 2016: Holder Redemption Option $ 970 $ — $ — $ 970 Earn-Out Liability $ 1,903 $ — — $ 1,903 January 2, 2016: Holder Redemption Option $ 952 $ — $ — $ 952 Earn-Out Liability $ 2,176 $ — $ — $ 2,176 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table summarizes the year-to-date changes to the fair value of the Holder Redemption Option and Earn-Out liability, which are Level 3 liabilities (in thousands): Holder Redemption Option Earn-Out Liability Fair value at January 2, 2016 $ 952 $ 2,176 Increase (decrease) in fair value 18 (273 ) Fair value at December 31, 2016 $ 970 $ 1,903 |
LEASE COMMITMENTS (Tables)
LEASE COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Following is a summary of future minimum payments under operating leases that have initial or remaining non-cancellable lease terms at December 31, 2016 (amounts in thousands): Fiscal Year Operating Leases 2017 $ 1,509 2018 1,742 2019 1,475 2020 1,361 2021 717 Thereafter 15 Minimum lease payments $ 6,819 |
ORGANIZATION AND SUMMARY OF S33
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) shares in Thousands | Jul. 29, 2016GBP (£) | Apr. 22, 2016 | Feb. 25, 2014 | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($) | Jul. 04, 2015USD ($) | Oct. 01, 2016USD ($) | Dec. 31, 2016USD ($)shares | Jan. 02, 2016USD ($)shares | Jan. 03, 2015USD ($) |
Accounting Policies [Line Items] | ||||||||||
Impairment of property and equipment | $ 0 | $ 0 | $ 0 | |||||||
Implementation costs deferred during the period | 432,000 | 443,000 | ||||||||
Unamortized deferred implementation costs | $ 318,000 | $ 229,000 | 318,000 | 229,000 | ||||||
Internal use software development costs expensed | 467,000 | 771,000 | ||||||||
Internal use software development costs capitalized | 436,000 | 643,000 | ||||||||
Goodwill impairment | $ 10,800,000 | 10,830,000 | 0 | |||||||
Foreign currency translation adjustment | 6,782,000 | 5,461,000 | 6,782,000 | 5,461,000 | ||||||
Foreign currency transaction loss | $ 535,000 | $ 316,000 | ||||||||
Antidilutive securities excluded from computation of loss per share (shares) | shares | 43 | 50 | ||||||||
Accounts receivable transferred under agreement | $ 19,600,000 | $ 26,800,000 | ||||||||
Loss on sale of receivables | 75,000 | 161,000 | ||||||||
Factoring liability | 768,000 | 0 | 768,000 | 0 | ||||||
Inventory, net | 362,000 | 625,000 | 362,000 | 625,000 | ||||||
Inventory write-down | 300,000 | 2,100,000 | $ 300,000 | $ 264,000 | 2,375,000 | |||||
Investment agreement, inventory required to be sold within one year of agreement to avoid discount (percent) | 75.00% | |||||||||
Investment agreement, inventory discount against original purchase price (percent) | 10.00% | |||||||||
Furniture and Fixtures [Member] | Maximum [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Estimated useful life of assets | 7 years | |||||||||
Furniture and Fixtures [Member] | Minimum [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Estimated useful life of assets | 3 years | |||||||||
Software And Computer Equipment [Member] | Maximum [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Estimated useful life of assets | 7 years | |||||||||
Software And Computer Equipment [Member] | Minimum [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Estimated useful life of assets | 3 years | |||||||||
RTS Financial Service, Inc. [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Reserve amount on factored accounts (percent) | 20.00% | |||||||||
Receivables factored during the period | $ 3,000,000 | |||||||||
Factoring liability | 768,000 | 768,000 | ||||||||
Factoring reserve receivable | 154,000 | 154,000 | ||||||||
RBS Invoice Finance Limited [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Receivables factored during the period | 0 | |||||||||
Security agreement, maximum funding level | £ | £ 3,000,000 | |||||||||
Advance amount as percentage of financed receivables (percent) | 50.00% | |||||||||
Monthly fixed fee service charge | £ | £ 833 | |||||||||
Minimum net worth required for compliance | £ | £ 7,500,000 | |||||||||
Initial term of security agreement | 12 months | |||||||||
Prime Rate [Member] | RTS Financial Service, Inc. [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Factor fee, basis spread on variable rate (percent) | 6.49% | |||||||||
Base Rate [Member] | RBS Invoice Finance Limited [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Basis spread on variable rate (percent) | 1.75% | |||||||||
Other Current Assets [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Unamortized deferred implementation costs | 266,000 | $ 229,000 | 266,000 | $ 229,000 | ||||||
Other Long-term Assets [Member] | ||||||||||
Accounting Policies [Line Items] | ||||||||||
Unamortized deferred implementation costs | $ 52,000 | $ 52,000 |
ORGANIZATION AND SUMMARY OF S34
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - GOING CONCERN (Details) | Dec. 31, 2016GBP (£)shares | Dec. 31, 2016USD ($) | Jul. 22, 2015GBP (£) | Jul. 22, 2015USD ($) | Dec. 31, 2016GBP (£)day$ / sharesshares | Jan. 02, 2016$ / shares | Dec. 31, 2016USD ($)shares | Jul. 21, 2015 | Mar. 18, 2014USD ($) |
Business Acquisition [Line Items] | |||||||||
Aggregate original principal amount | $ | $ 3,300,000 | $ 3,268,664 | |||||||
Payment period for Elutions Note after call by holder for redemption | 30 days | ||||||||
Earn-out consideration as percent of notional purchase price (percent) | 30.00% | 30.00% | |||||||
Exchange rate utilized | 1.234 | 1.234 | 1.234 | ||||||
Number of trading days Included to determine stock repurchase price | day | 15 | ||||||||
Earn Out Consideration [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Earn-out consideration as percent of notional purchase price (percent) | 40.00% | 40.00% | |||||||
Potential maximum earn-out payable | £ 719,483 | £ 719,483 | $ 900,000 | ||||||
Business acquisition shares issuable (shares) | 461,055 | 461,055 | 461,055 | ||||||
Equity issued | $ | $ 1,300,000 | ||||||||
Purchase Agreement [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Earn-out consideration as percent of notional purchase price (percent) | 15.00% | 15.00% | |||||||
Equity issued | £ 1,308,186 | $ 2,000,000 | |||||||
Purchase Agreement [Member] | Earn Out Consideration [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Exchange rate utilized | 1,234 | 1,234 | 1,234 | 1,556 | |||||
Equity issued | £ | £ 1,024,765 | ||||||||
Elutions, Inc [Member] | Tracking Warrant [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Warrants issued to purchase common stock (shares) | 996,544 | ||||||||
Warrants issued during period, exercise price (in dollars per share) | $ / shares | £ 3.28 | ||||||||
Elutions, Inc [Member] | Tracking Warrant [Member] | Strategic Alliance and Investment [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Warrants issued to purchase common stock (shares) | 996,544 | ||||||||
Warrants issued during period, exercise price (in dollars per share) | $ / shares | $ 3.28 |
ACQUISITION (Details)
ACQUISITION (Details) - Farncombe Entities [Member] $ in Thousands | Jul. 22, 2015USD ($) |
Business Acquisition [Line Items] | |
Cash paid at closing | $ 1,015 |
Equity issued at closing | 2,036 |
Fair value of contingent consideration | 1,921 |
Working capital adjustment | 2,485 |
Total purchase price | $ 7,457 |
ACQUISITION (Details 1)
ACQUISITION (Details 1) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 | Jul. 22, 2015 |
Business Acquisition [Line Items] | |||
Goodwill | $ 0 | $ 11,071 | |
Farncombe Entities [Member] | |||
Business Acquisition [Line Items] | |||
Cash | $ 1,378 | ||
Accounts receivable, net | 4,627 | ||
Other current assets | 191 | ||
Other non-current assets | 137 | ||
Accounts payable | (1,874) | ||
Accrued payroll and related expenses | (796) | ||
Other current liabilities | (636) | ||
Non-current deferred tax liability | (264) | ||
Intangible assets | 1,260 | ||
Goodwill | 3,434 | ||
Net assets acquired | $ 7,457 |
ACQUISITION (Details 2)
ACQUISITION (Details 2) - USD ($) $ in Thousands | Jul. 22, 2016 | Jul. 22, 2015 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets acquired | $ 1,260 | $ 1,300 |
Noncompete Agreements [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets acquired | $ 60 | |
Acquired finite-lived intangible assets, weighted average useful life | 4 years 6 months | |
Customer Relationships [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets acquired | $ 1,110 | |
Acquired finite-lived intangible assets, weighted average useful life | 3 years 6 months | |
Trade Name [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets acquired | $ 90 | |
Acquired finite-lived intangible assets, weighted average useful life | 6 months |
ACQUISITION (Details 3)
ACQUISITION (Details 3) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Jan. 02, 2016USD ($)$ / sharesshares | |
Business Combinations [Abstract] | |
Revenue | $ 88,007 |
Net loss | $ (5,932) |
Net loss per share | $ / shares | $ (0.68) |
Weighted-average basic and diluted shares used in calculation of pro forma net loss per share (in thousands) | shares | 8,734 |
ACQUISITION (Details Textual)
ACQUISITION (Details Textual) £ / shares in Units, $ / shares in Units, € in Thousands | Dec. 31, 2016GBP (£)shares | Dec. 31, 2016USD ($) | Jul. 22, 2015GBP (£)£ / sharesshares | Jul. 22, 2015USD ($)shares | Mar. 31, 2016GBP (£) | Mar. 31, 2016EUR (€) | Mar. 31, 2016USD ($) | Oct. 31, 2015GBP (£) | Oct. 31, 2015USD ($) | Mar. 17, 2017GBP (£) | Mar. 17, 2017USD ($) | Dec. 31, 2016GBP (£)shares | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($) | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($) | Jan. 03, 2015USD ($) | Dec. 31, 2016USD ($)shares | Jul. 22, 2015$ / shares | Jul. 21, 2015 |
Business Acquisition [Line Items] | ||||||||||||||||||||
Exchange rate utilized | 1.234 | 1.234 | 1.234 | |||||||||||||||||
Business acquisition purchase price (percent) | 30.00% | 30.00% | ||||||||||||||||||
Number of shares issued in the acquisition (shares) | shares | 588,567 | 588,567 | ||||||||||||||||||
Purchase price related to working capital adjustment | $ 2,100,000 | |||||||||||||||||||
Net Income | $ (13,883,000) | $ (7,691,000) | ||||||||||||||||||
Acquisition costs expensed | 697,000 | |||||||||||||||||||
Adjustment to earn-out liability | (273,000) | 255,000 | ||||||||||||||||||
Pro forma reclassification of non-recurring acquisition expenses | $ 697,000 | |||||||||||||||||||
Pro forma adjustment for intangible asset amortization expense | 330,000 | |||||||||||||||||||
Cash [Member] | ||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||
Business acquisition purchase price (percent) | 15.00% | 15.00% | ||||||||||||||||||
Earn Out Consideration [Member] | ||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||
Payments to acquire business | $ 900,000 | |||||||||||||||||||
Business acquisition purchase price (percent) | 40.00% | 40.00% | ||||||||||||||||||
Equity issued | $ 1,300,000 | |||||||||||||||||||
Potential maximum earn-out payable | £ 719,483 | £ 719,483 | $ 900,000 | |||||||||||||||||
Business acquisition shares issuable (shares) | shares | 461,055 | 461,055 | 461,055 | |||||||||||||||||
Purchase Agreement [Member] | ||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||
Total purchase price | £ 4,360,620 | $ 6,800,000 | ||||||||||||||||||
Payments to acquire business | £ 654,093 | 1,000,000 | ||||||||||||||||||
Business acquisition purchase price (percent) | 15.00% | 15.00% | ||||||||||||||||||
Equity issued | £ 1,308,186 | 2,000,000 | ||||||||||||||||||
Share price (in dollars per share) | (per share) | £ 2.22 | $ 3.46 | ||||||||||||||||||
Purchase price related to working capital adjustment | £ 12,000 | € 184 | $ 300,000 | £ 654,093 | 1,000,000 | £ 20,000 | $ 25,000 | |||||||||||||
Purchase Agreement [Member] | Earn Out Consideration [Member] | ||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||
Exchange rate utilized | 1,234 | 1,234 | 1,234 | 1,556 | ||||||||||||||||
Payments to acquire business | £ 654,093 | $ 1,000,000 | ||||||||||||||||||
Equity issued | £ | £ 1,024,765 | |||||||||||||||||||
Purchase price related to working capital adjustment | £ 743,753 | $ 1,100,000 | ||||||||||||||||||
Contingent consideration arrangements, basis for amount | Amounts, if any, payable under the Earn-Out are based upon the amounts of specified revenues attributable to the Farncombe Entities after June 1, 2015 through July 22, 2017 | Amounts, if any, payable under the Earn-Out are based upon the amounts of specified revenues attributable to the Farncombe Entities after June 1, 2015 through July 22, 2017 | ||||||||||||||||||
Adjustment to earn-out liability | $ (273,000) | 255,000 | ||||||||||||||||||
Earn-out liability | $ 2,176,000 | $ 2,176,000 | $ 1,903,000 | |||||||||||||||||
Farncombe Entities [Member] | ||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||
Total purchase price | $ 7,457,000 | |||||||||||||||||||
Payments to acquire business | 1,015,000 | |||||||||||||||||||
Equity issued | $ 2,036,000 | |||||||||||||||||||
Revenue | 6,300,000 | |||||||||||||||||||
Net Income | $ 500,000 | |||||||||||||||||||
Subsequent Event [Member] | Purchase Agreement [Member] | ||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||
Purchase price related to working capital adjustment | £ 48,000 | $ 59,000 |
STRATEGIC ALLIANCE AND INVEST40
STRATEGIC ALLIANCE AND INVESTMENT BY ELUTIONS, INC. (Details Textual) - USD ($) | Mar. 18, 2014 | Feb. 25, 2014 | Jan. 31, 2017 | Oct. 04, 2014 | Dec. 31, 2016 | Jan. 02, 2016 |
Investment [Line Items] | ||||||
Aggregate original principal amount | $ 3,268,664 | $ 3,300,000 | ||||
Outstanding shares (percent) | 6.50% | |||||
Ownership (percent) | 38.50% | |||||
Price per share of stock on tracking warrant (in dollars per share) | $ 5.50 | |||||
Investment agreement, inventory required to be sold within one year of agreement to avoid discount (percent) | 75.00% | |||||
Investment agreement, inventory discount against original purchase price (percent) | 10.00% | |||||
Due to employees, per month | $ 36,750 | |||||
Cost of dedicated employees | 98,500 | $ 441,000 | ||||
Estimated license payments | 1,200,000 | |||||
Due from Elutions, Inc. | $ 400,000 | |||||
Interest on advance payments (percent) | 5.50% | |||||
Payments under subcontract | $ 291,000 | 291,000 | ||||
Amount deducted at time of payment | 112,000 | 112,000 | ||||
Carrying value of note | $ 3,269,000 | 3,269,000 | ||||
Non Convertible Promissory Note [Member] | ||||||
Investment [Line Items] | ||||||
Stated interest rate (percent) | 7.825% | |||||
Fair value of note | $ 2,703,000 | $ 3,004,000 | ||||
Non Convertible Promissory Note [Member] | Strategic Alliance and Investment [Member] | ||||||
Investment [Line Items] | ||||||
Aggregate original principal amount | $ 3,268,664 | |||||
Common Stock [Member] | ||||||
Investment [Line Items] | ||||||
Shares issued, price per share (in dollars per share) | $ 3.28 | |||||
Incentive Warrant [Member] | ||||||
Investment [Line Items] | ||||||
Warrants issued to purchase common stock (shares) | 3,400,000 | |||||
Number of shares vested under the Incentive Warrant | 27,194 | 34,248 | ||||
Expense related to shares vested under Incentive Warrant | $ 53,000 | $ 63,000 | ||||
Incentive Warrant [Member] | Non Convertible Promissory Note [Member] | ||||||
Investment [Line Items] | ||||||
Debt instrument maturity date | Mar. 18, 2019 | |||||
Warrant vesting period | 5 years | |||||
Revenues recognized for vesting of warrants (percent) | 4.00% | |||||
Cash recognized or received in period for warrant vesting (percent) | 4.00% | |||||
Elutions, Inc [Member] | ||||||
Investment [Line Items] | ||||||
Due from Elutions, Inc. | $ 200,000 | 300,000 | ||||
Elutions, Inc [Member] | Inventories [Member] | ||||||
Investment [Line Items] | ||||||
Purchase obligation | $ 3,000,000 | |||||
Payment to acquire inventory | $ 3,000,000 | |||||
Elutions, Inc [Member] | Minimum [Member] | ||||||
Investment [Line Items] | ||||||
Exercise price of warrants (in dollars per share) | $ 3.85 | |||||
Elutions, Inc [Member] | Maximum [Member] | ||||||
Investment [Line Items] | ||||||
Exercise price of warrants (in dollars per share) | $ 4.85 | |||||
Elutions, Inc [Member] | Non Convertible Promissory Note [Member] | ||||||
Investment [Line Items] | ||||||
Debt instrument maturity date | Mar. 18, 2019 | |||||
Debt default interest rate (percent) | 9.825% | |||||
Interest expense | $ 259,000 | $ 256,000 | ||||
Carrying value of note | $ 3,269,000 | |||||
Elutions, Inc [Member] | Common Stock [Member] | ||||||
Investment [Line Items] | ||||||
Shares issued and sold (share) | 609,756 | |||||
Aggregate purchase price of shares issued | $ 2,000,000 | |||||
Elutions, Inc [Member] | Tracking Warrant [Member] | ||||||
Investment [Line Items] | ||||||
Warrants issued to purchase common stock (shares) | 996,544 | |||||
Warrants issued during period, exercise price (in dollars per share) | $ 3.28 | |||||
Warrants Issued During Period Expiration Date | Mar. 18, 2020 | |||||
Price per share of stock on tracking warrant (in dollars per share) | $ 5.50 | |||||
Period after which issuer may require holder to exercise or forfeit warrant if working capital thresholds are met | 30 months | |||||
Elutions, Inc [Member] | Tracking Warrant [Member] | Strategic Alliance and Investment [Member] | ||||||
Investment [Line Items] | ||||||
Warrants issued to purchase common stock (shares) | 996,544 | |||||
Warrants issued during period, exercise price (in dollars per share) | $ 3.28 | |||||
Elutions, Inc [Member] | Incentive Warrant [Member] | ||||||
Investment [Line Items] | ||||||
Warrants issued to purchase common stock (shares) | 3,400,000 | |||||
Warrants Issued During Period Expiration Date | Mar. 18, 2020 | |||||
Warrants issued during period, exercise price increases per year (in dollars per share) | $ 0.25 | |||||
Elutions, Inc [Member] | Incentive Warrant [Member] | Minimum [Member] | ||||||
Investment [Line Items] | ||||||
Exercise price of warrants (in dollars per share) | 3.85 | |||||
Elutions, Inc [Member] | Incentive Warrant [Member] | Maximum [Member] | ||||||
Investment [Line Items] | ||||||
Exercise price of warrants (in dollars per share) | $ 4.85 | |||||
Elutions, Inc [Member] | ||||||
Investment [Line Items] | ||||||
Contract, term of agreement | 5 years | |||||
Contract, renewal period | 2 years | |||||
Other Current Assets [Member] | Elutions, Inc [Member] | ||||||
Investment [Line Items] | ||||||
Due from Elutions, Inc. | $ 100,000 | $ 100,000 | ||||
Other Noncurrent Assets [Member] | Elutions, Inc [Member] | ||||||
Investment [Line Items] | ||||||
Due from Elutions, Inc. | $ 100,000 | $ 200,000 | ||||
Subsequent Event [Member] | ||||||
Investment [Line Items] | ||||||
Estimated license payments | $ 400,000 |
GOODWILL AND INTANGIBLE ASSET41
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Oct. 01, 2016 | Dec. 31, 2016 | Jan. 02, 2016 | |
Goodwill [Line Items] | |||
Balance as of January 2, 2016 | $ 11,071 | $ 11,071 | |
Goodwill impairment | (10,800) | (10,830) | $ 0 |
Changes in foreign currency exchange rates | (241) | ||
Balance as of December 31, 2016 | 0 | 11,071 | |
North America [Member] | |||
Goodwill [Line Items] | |||
Balance as of January 2, 2016 | 3,947 | 3,947 | |
Goodwill impairment | (3,947) | ||
Changes in foreign currency exchange rates | 0 | ||
Balance as of December 31, 2016 | 0 | 3,947 | |
EMEA [Member] | |||
Goodwill [Line Items] | |||
Balance as of January 2, 2016 | $ 7,124 | 7,124 | |
Goodwill impairment | (6,883) | ||
Changes in foreign currency exchange rates | (241) | ||
Balance as of December 31, 2016 | $ 0 | $ 7,124 |
GOODWILL AND INTANGIBLE ASSET42
GOODWILL AND INTANGIBLE ASSETS (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Gross Carrying Amount: | ||
Balance as of January 2, 2016 | $ 1,198 | |
Changes in foreign currency exchange rates | (198) | |
Balance as of December 31, 2016 | 1,000 | $ 1,198 |
Accumulated Amortization: | ||
Balance as of January 2, 2016 | (202) | |
Changes in foreign currency exchange rates | 60 | |
Amortization expense | (301) | (208) |
Balance as of December 31, 2016 | $ (443) | (202) |
Noncompete Agreements [Member] | ||
Finite Lived Intangible Assets By Major Class Including Accumulated Amortization [Line Items] | ||
Useful lives of intangible assets | 4 years 6 months | |
Gross Carrying Amount: | ||
Balance as of January 2, 2016 | $ 57 | |
Changes in foreign currency exchange rates | (9) | |
Balance as of December 31, 2016 | 48 | 57 |
Accumulated Amortization: | ||
Balance as of January 2, 2016 | (5) | |
Changes in foreign currency exchange rates | 2 | |
Amortization expense | (12) | |
Balance as of December 31, 2016 | $ (15) | (5) |
Customer Relationships [Member] | ||
Finite Lived Intangible Assets By Major Class Including Accumulated Amortization [Line Items] | ||
Useful lives of intangible assets | 3 years 6 months | |
Gross Carrying Amount: | ||
Balance as of January 2, 2016 | $ 1,055 | |
Changes in foreign currency exchange rates | (174) | |
Balance as of December 31, 2016 | 881 | 1,055 |
Accumulated Amortization: | ||
Balance as of January 2, 2016 | (126) | |
Changes in foreign currency exchange rates | 49 | |
Amortization expense | (280) | |
Balance as of December 31, 2016 | $ (357) | (126) |
Trade Name [Member] | ||
Finite Lived Intangible Assets By Major Class Including Accumulated Amortization [Line Items] | ||
Useful lives of intangible assets | 6 months | |
Gross Carrying Amount: | ||
Balance as of January 2, 2016 | $ 86 | |
Changes in foreign currency exchange rates | (15) | |
Balance as of December 31, 2016 | 71 | 86 |
Accumulated Amortization: | ||
Balance as of January 2, 2016 | (71) | |
Changes in foreign currency exchange rates | 9 | |
Amortization expense | (9) | |
Balance as of December 31, 2016 | $ (71) | $ (71) |
GOODWILL AND INTANGIBLE ASSET43
GOODWILL AND INTANGIBLE ASSETS (Details 2) $ in Thousands | Dec. 31, 2016USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,017 | $ 262 |
2,018 | 262 |
2,019 | 32 |
2,020 | 1 |
Finite-Lived Intangible Assets, Net, Total | $ 557 |
GOODWILL AND INTANGIBLE ASSET44
GOODWILL AND INTANGIBLE ASSETS (Details Textual) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Oct. 01, 2016 | Dec. 31, 2016 | Jan. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill impairment | $ 10,800 | $ 10,830 | $ 0 |
Amortization of intangible assets | $ 301 | $ 208 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 28, 2016 | Jun. 16, 2015 | Dec. 31, 2016 |
Supplemental Stock Plan 2000 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding, beginning (in shares) | 36,900 | ||
Forfeited/cancelled (in shares) | (6,800) | ||
Outstanding, ending (in shares) | 30,100 | ||
Options vested and expected to vest (in shares) | 30,100 | ||
Weighted Average Exercise Price, Outstanding, ending (in dollars per share) | $ 11.06 | ||
Weighted Average Exercise Price, Forfeited/cancelled (in dollars per share)ighted Average Exercise Price | 11.36 | ||
Weighted Average Exercise Price, Outstanding, beginning (in dollars per share) | 11.11 | ||
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share) | $ 11.06 | ||
Weighted Average Remaining Contractual Term, Outstanding | 6 months | ||
Weighted Average Remaining Contractual Term, Options vested and expected to vest | 6 months | ||
Aggregate Instrinsic Value, Outstanding | $ 0 | ||
Aggregate Instrinsic Value, Options vested and expected to vest | $ 0 | ||
Service-Based Stock Option Awards [Member] | Equity Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding, beginning (in shares) | 244,553 | ||
Granted (in shares) | 37,500 | ||
Forfeited/cancelled (in shares) | (69,291) | ||
Outstanding, ending (in shares) | 212,762 | ||
Options vested and expected to vest (in shares) | 201,512 | ||
Options exercisable (in shares) | 150,261 | ||
Weighted Average Exercise Price, Outstanding, ending (in dollars per share) | $ 6.91 | ||
Weighted Average Exercise Price, Granted (in dollars per share) | 1.10 | ||
Weighted Average Exercise Price, Forfeited/cancelled (in dollars per share)ighted Average Exercise Price | 7.82 | ||
Weighted Average Exercise Price, Outstanding, beginning (in dollars per share) | 8.06 | ||
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share) | 7.18 | ||
Weighted Average Exercise Price, Options exercisable (in dollars per share) | $ 8.85 | ||
Weighted Average Remaining Contractual Term, Outstanding | 4 years 3 months | ||
Weighted Average Remaining Contractual Term, Options vested and expected to vest | 4 years 10 days | ||
Weighted Average Remaining Contractual Term, Options exercisable | 2 years 5 months | ||
Aggregate Instrinsic Value, Outstanding | $ 0 | ||
Aggregate Instrinsic Value, Options vested and expected to vest | 0 | ||
Aggregate Instrinsic Value, Options exercisable | $ 0 | ||
Market Condition Stock Option Awards [Member] | Equity Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding, beginning (in shares) | 200,000 | ||
Granted (in shares) | 125,000 | 200,000 | 125,000 |
Outstanding, ending (in shares) | 325,000 | ||
Options vested and expected to vest (in shares) | 325,000 | ||
Options exercisable (in shares) | 0 | ||
Weighted Average Exercise Price, Outstanding, ending (in dollars per share) | $ 2.54 | ||
Weighted Average Exercise Price, Granted (in dollars per share) | $ 1.25 | $ 3.34 | 1.25 |
Weighted Average Exercise Price, Outstanding, beginning (in dollars per share) | 3.34 | ||
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share) | 2.54 | ||
Weighted Average Exercise Price, Options exercisable (in dollars per share) | $ 0 |
SHARE-BASED COMPENSATION (Det46
SHARE-BASED COMPENSATION (Details 1) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2015 | |
September 2016 [Member] | $4.00 market condition tranche [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant date fair value per share (in USD per share) | $ 0.32 | ||
Derived service period (in trading days) | 5 years 1 month 6 days | ||
September 2016 [Member] | $5.00 market condition tranche [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant date fair value per share (in USD per share) | 0.31 | ||
Derived service period (in trading days) | 5 years 6 months | ||
September 2016 [Member] | $6.00 market condition tranche [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant date fair value per share (in USD per share) | $ 0.30 | ||
Derived service period (in trading days) | 5 years 10 months 24 days | ||
June 2015 [Member] | $4.00 market condition tranche [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant date fair value per share (in USD per share) | $ 1.95 | ||
Derived service period (in trading days) | 151 days | ||
June 2015 [Member] | $5.00 market condition tranche [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant date fair value per share (in USD per share) | 1.95 | ||
Derived service period (in trading days) | 262 days | ||
June 2015 [Member] | $6.00 market condition tranche [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant date fair value per share (in USD per share) | $ 1.99 | ||
Derived service period (in trading days) | 362 days |
SHARE-BASED COMPENSATION (Det47
SHARE-BASED COMPENSATION (Details 2) - $ / shares | Jul. 22, 2016 | Apr. 08, 2013 | Dec. 31, 2016 |
Service Based Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 40,000 | ||
Service Based Restricted Stock [Member] | Equity Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding, beginning (in shares) | 0 | ||
Granted (in shares) | 172,422 | ||
Outstanding, ending (in shares) | 172,422 | ||
Weighted Average Grant Date Fair Value, Outstanding (in dollars per share) | $ 0 | ||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | 0.71 | ||
Weighted Average Grant Date Fair Value, Outstanding (in dollars per share) | $ 0.71 | ||
Performance Based Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted Average Grant Date Fair Value, Outstanding (in dollars per share) | $ 3.14 | ||
Performance Based Restricted Stock [Member] | Equity Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding, beginning (in shares) | 250,215 | ||
Shares, Forfeited (in shares) | (77,558) | ||
Outstanding, ending (in shares) | 172,657 | ||
Weighted Average Grant Date Fair Value, Outstanding (in dollars per share) | $ 3.15 | ||
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | 3.14 | ||
Weighted Average Grant Date Fair Value, Outstanding (in dollars per share) | $ 3.14 |
SHARE-BASED COMPENSATION (Det48
SHARE-BASED COMPENSATION (Details 3) - Put Option [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Apr. 30, 2016 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Common stock price | $ 4.50 | |
Chief Executive Officer [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Common stock price | $ 3.30 | |
Dividend yield | 0.00% | |
Exercise price of put option | $ 4.50 | |
Expected term | 9 months 11 days | |
Risk-free interest rate | 0.20% | |
Estimated stock volatility | 55.00% |
SHARE-BASED COMPENSATION (Det49
SHARE-BASED COMPENSATION (Details Textual) - USD ($) | Oct. 03, 2016 | Sep. 28, 2016 | Jul. 22, 2016 | Jun. 16, 2015 | Jun. 03, 2015 | Apr. 08, 2013 | Apr. 30, 2016 | Mar. 31, 2016 | Nov. 30, 2015 | Jun. 16, 2015 | Jan. 02, 2016 | Dec. 31, 2016 | Jan. 02, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Tax benefit from share-based compensation | $ 0 | $ 40,000 | |||||||||||
Share-based compensation expense | 302,000 | 372,000 | |||||||||||
Share-based payment award, description | If the vesting percentage is less than 100% on the vesting date, that percentage of the non-vested stock that does not vest as of the vesting date shall be forfeited. | ||||||||||||
Liability component of put option | $ 2,251,000 | $ 2,117,000 | 2,251,000 | ||||||||||
Employee stock purchase plan percentage of market value (percent) | 85.00% | ||||||||||||
Employee stock purchase plan (ESPP) compensation expense | $ 17,000 | 17,000 | |||||||||||
$4.00 market condition tranche [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Options vesting upon attaining price target (shares) | 116,666 | ||||||||||||
Share price target (in dollars per share) | $ 4 | ||||||||||||
$5.00 market condition tranche [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Options vesting upon attaining price target (shares) | 116,667 | ||||||||||||
Share price target (in dollars per share) | $ 5 | ||||||||||||
$6.00 market condition tranche [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Options vesting upon attaining price target (shares) | 91,667 | ||||||||||||
Share price target (in dollars per share) | $ 6 | ||||||||||||
Put Option [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Share-based compensation expense | $ 168,000 | ||||||||||||
Put option issued (shares) | 112,692 | ||||||||||||
Put option issued, strike price (in dollars per share) | $ 4.50 | $ 4.50 | $ 1.49 | ||||||||||
Reduction of APIC related to market value of shares subject to the put option | $ 372,000 | ||||||||||||
Reduction of APIC related to market value of shares subject to the put option, per share (in dollars per share) | $ 3.30 | ||||||||||||
Number of options exercised (shares) | 19,000 | 90,000 | |||||||||||
Put option exercise amount | $ 85,000 | $ 405,000 | |||||||||||
Liability component of put option | $ 102,000 | ||||||||||||
Share price (in dollars per share) | $ 4.50 | ||||||||||||
Put option maturity date | Mar. 15, 2016 | ||||||||||||
Call Option [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Call option value | $ 33,000 | ||||||||||||
Call option par value (in dollars per share) | $ 0.29 | ||||||||||||
Executive Officers And Employees [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted, other than options (in shares) | 800,000 | ||||||||||||
Two Employees [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted, other than options (in shares) | 58,940 | ||||||||||||
Equity Incentive Plan [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Shares authorized for issuance under the Plan (shares) | 1,499,442 | ||||||||||||
Performance Based Restricted Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Share-based compensation expense | $ 88,000 | $ 170,000 | |||||||||||
Unrecognized share-based compensation expense, period for recognition | 3 months | ||||||||||||
Unrecognized compensation expense on awards other than options | $ 46,000 | ||||||||||||
Award performance period for vesting | 4 years | ||||||||||||
Earnings before income tax and dividends | $ 14,000,000 | ||||||||||||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ 3.14 | ||||||||||||
Reduction to expense as result of revised estimates | $ 250,000 | ||||||||||||
Performance Based Restricted Stock [Member] | Equity Incentive Plan [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ 3.15 | $ 3.14 | $ 3.15 | ||||||||||
Market Condition Stock Option Awards [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Unrecognized share-based compensation expense | $ 142,000 | $ 37,000 | $ 142,000 | ||||||||||
Unrecognized share-based compensation expense, period for recognition | 24 months | ||||||||||||
Allocated share-based compensation expense | $ 144,000 | 250,000 | |||||||||||
Market Condition Stock Option Awards [Member] | Equity Incentive Plan [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted (in shares) | 125,000 | 200,000 | 125,000 | ||||||||||
Weighted Average Exercise Price, Granted (in dollars per share) | $ 1.25 | $ 3.34 | $ 1.25 | ||||||||||
Service-Based Stock Option Awards [Member] | Equity Incentive Plan [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted (in shares) | 37,500 | ||||||||||||
Weighted Average Exercise Price, Granted (in dollars per share) | $ 1.10 | ||||||||||||
Award vesting period | 3 years | ||||||||||||
Share-based compensation expense | $ 16,000 | 56,000 | |||||||||||
Unrecognized share-based compensation expense | $ 20,000 | $ 26,000 | $ 20,000 | ||||||||||
Unrecognized share-based compensation expense, period for recognition | 23 months | ||||||||||||
Non-employee Service Based Restricted Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Award vesting period | 3 years | ||||||||||||
Unrecognized share-based compensation expense, period for recognition | 32 months | ||||||||||||
Granted, other than options (in shares) | 72,500 | 59,922 | |||||||||||
Unrecognized compensation expense on awards other than options | $ 96,000 | ||||||||||||
Allocated share-based compensation expense | $ 25,000 | ||||||||||||
Employee [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Employee stock purchase plan maximum allocation of base compensation (percent) | 15.00% | ||||||||||||
Service Based Restricted Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Award vesting period | 1 year | ||||||||||||
Unrecognized share-based compensation expense, period for recognition | 7 months | ||||||||||||
Granted, other than options (in shares) | 40,000 | ||||||||||||
Unrecognized compensation expense on awards other than options | $ 16,000 | ||||||||||||
Allocated share-based compensation expense | $ 13,000 | ||||||||||||
Service Based Restricted Stock [Member] | Equity Incentive Plan [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted, other than options (in shares) | 172,422 | ||||||||||||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ 0 | $ 0.71 | $ 0 |
SUPPLEMENTAL BALANCE SHEET IN50
SUPPLEMENTAL BALANCE SHEET INFORMATION (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Accrued payroll, bonuses and related expenses | ||
Accrued payroll | $ 313 | $ 448 |
Accrued bonuses | 2,060 | 3,205 |
Accrued payroll taxes | 515 | 636 |
Accrued vacation | 494 | 539 |
Accrued severance | 117 | 0 |
Other | 253 | 297 |
Employee-related Liabilities, Current | 3,752 | 5,125 |
Other accrued liabilities | ||
Sales and value-added taxes payable | 911 | 478 |
Lease termination liability | 103 | 135 |
Put option liability | 0 | 102 |
Accrued income taxes | 152 | 376 |
Accrued acquisition consideration | 32 | 327 |
Accrued professional fees | 182 | 604 |
Other | 737 | 229 |
Other Accrued Liabilities, Current | $ 2,117 | $ 2,251 |
BUSINESS SEGMENTS, MAJOR CUST51
BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 71,739 | $ 78,344 |
Income (loss) from operations | (13,826) | (6,206) |
Total other expense | (305) | (899) |
Income (loss) before income tax provision (benefit) | (14,131) | (7,105) |
Depreciation and amortization | 1,295 | 952 |
Total assets | 22,701 | 41,359 |
Operating Segments [Member] | North America [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 28,065 | 34,025 |
Income (loss) from operations | 6,255 | 8,222 |
Total other expense | 0 | 0 |
Income (loss) before income tax provision (benefit) | 6,255 | 8,222 |
Depreciation and amortization | 0 | 0 |
Total assets | 3,378 | 6,831 |
Operating Segments [Member] | EMEA [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 42,894 | 43,844 |
Income (loss) from operations | 6,837 | 5,884 |
Total other expense | 0 | 0 |
Income (loss) before income tax provision (benefit) | 6,837 | 5,884 |
Depreciation and amortization | 0 | 0 |
Total assets | 10,113 | 9,725 |
Operating Segments [Member] | Strategic Alliances [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 780 | 475 |
Income (loss) from operations | (181) | (2,982) |
Total other expense | 0 | 0 |
Income (loss) before income tax provision (benefit) | (181) | (2,982) |
Depreciation and amortization | 0 | 0 |
Total assets | 550 | 626 |
Corporate, Non-Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Income (loss) from operations | (26,737) | (17,330) |
Total other expense | (305) | (899) |
Income (loss) before income tax provision (benefit) | (27,042) | (18,229) |
Depreciation and amortization | 1,295 | 952 |
Total assets | $ 8,660 | $ 24,177 |
BUSINESS SEGMENTS, MAJOR CUST52
BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 71,739 | $ 78,344 |
United States [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 29,348 | 34,511 |
United Kingdom [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 38,123 | 41,399 |
Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 4,268 | $ 2,434 |
BUSINESS SEGMENTS, MAJOR CUST53
BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK (Details 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Segment Reporting Information [Line Items] | ||
Long-Lived Assets | $ 2,381 | $ 2,969 |
France [Member] | ||
Segment Reporting Information [Line Items] | ||
Long-Lived Assets | 10 | 12 |
United States [Member] | ||
Segment Reporting Information [Line Items] | ||
Long-Lived Assets | 2,154 | 2,611 |
United Kingdom [Member] | ||
Segment Reporting Information [Line Items] | ||
Long-Lived Assets | $ 217 | $ 346 |
BUSINESS SEGMENTS, MAJOR CUST54
BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 71,739 | $ 78,344 |
Accounts receivable | 13,680 | 16,556 |
Customer A [Member] | ||
Segment Reporting Information [Line Items] | ||
Accounts receivable | 3,317 | 3,577 |
Customer B [Member] | ||
Segment Reporting Information [Line Items] | ||
Accounts receivable | 1,100 | 1,423 |
Customer C [Member] | ||
Segment Reporting Information [Line Items] | ||
Accounts receivable | 779 | 1,510 |
North America [Member] | Customer B [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 11,933 | 13,377 |
EMEA [Member] | Customer A [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 16,022 | 16,243 |
EMEA [Member] | Customer C [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 8,345 | $ 18,906 |
BUSINESS SEGMENTS, MAJOR CUST55
BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK (Details Textual) - segment | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 3 | |
Revenue contribution of top ten customers (percent) | 77.00% | 87.00% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 7,759 | $ 11,254 |
Less: Accumulated depreciation | 5,703 | 8,743 |
Property and equipment, net | 2,056 | 2,511 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,708 | 1,748 |
Software and computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4,953 | 8,006 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,098 | $ 1,500 |
PROPERTY AND EQUIPMENT (Detai57
PROPERTY AND EQUIPMENT (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 994 | $ 952 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Total income (loss) before income taxes | $ (14,131) | $ (7,105) |
United States [Member] | ||
Total income (loss) before income taxes | (7,358) | (9,321) |
Foreign [Member] | ||
Total income (loss) before income taxes | $ (6,773) | $ 2,216 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Income Tax Disclosure [Abstract] | ||
Federal deferred tax expense, net | $ 655 | $ (99) |
State deferred tax benefit (expense), net | 125 | 42 |
Foreign current tax expense | (48) | (263) |
Foreign deferred tax (expense) benefit, net | (484) | (266) |
Total income tax (expense) benefit | $ 248 | $ (586) |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Income Tax Disclosure [Abstract] | ||
Computed expected federal income tax benefit, Amount | $ 4,805 | $ 2,413 |
State income tax benefit, net of federal benefit, Amount | 68 | 514 |
Rate differential on foreign operations, Amount | (1,002) | 296 |
Forfeited vested stock options, Amount | (281) | (267) |
Tax benefits associated with share-based awards, Amount | 179 | 12 |
Adjustment to estimated tax loss carryforward, Amount | (418) | (226) |
Change in statutory and applicable tax rates, Amount | 505 | (518) |
Non-deductible expenses, Amount | (25) | (753) |
Goodwill impairment | (1,257) | 0 |
Other, Amount | 113 | (26) |
Change in valuation allowance, Amount | (2,439) | (2,031) |
Total income tax (expense) benefit | $ 248 | $ (586) |
Computed expected federal income tax benefit, Percentage | 34.00% | 34.00% |
State income tax benefit, net of federal benefit, Percentage | 0.50% | 7.20% |
Rate differential on foreign operations, Percentage | (7.10%) | 4.20% |
Forfeited vested stock options, Percentage | (2.00%) | (3.80%) |
Tax benefits associated with share-based awards, Percentage | 1.30% | 0.20% |
Adjustment to estimated tax loss carryforward, Percentage | (3.00%) | (3.20%) |
Change in statutory and applicable tax rates, Percentage | 3.60% | (7.30%) |
Non-deductible expenses, Percentage | (0.20%) | (10.60%) |
Goodwill impairment, Percentage | (8.90%) | 0.00% |
Other, Percentage | 0.80% | (0.40%) |
Change in valuation allowance, Percentage | (17.30%) | (28.60%) |
Total, Percentage | 1.70% | (8.30%) |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Income Tax Disclosure [Abstract] | ||
Accounts receivable | $ 119 | $ 67 |
Accrued expenses | 845 | 1,040 |
Goodwill and intangible assets | 1,492 | 1,143 |
Share-based compensation expense | 664 | 551 |
Net operating loss carryforward | 31,031 | 29,894 |
Inventories | 1,068 | 0 |
Foreign tax credit carryforward | 1,006 | 1,006 |
Deferred revenue | 357 | 0 |
Other | (24) | 224 |
Total deferred tax assets | 36,558 | 33,925 |
Valuation allowance | (36,558) | (34,116) |
Net deferred tax asset | $ 0 | $ (191) |
INCOME TAXES (Details Textual)
INCOME TAXES (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Tax Credit Carryforward [Line Items] | ||
Income tax expense (benefit) | $ 248,000 | $ (586,000) |
Domestic income tax benefit related to deferred tax adjustments from impairment of goodwill | (800,000) | |
International income tax expense recognized in connection with an international valuation allowance | 600,000 | |
Foreign current tax expense | 48,000 | 263,000 |
Deferred tax assets, valuation allowance | 36,600,000 | 34,100,000 |
Net operating loss carryforwards, Federal | 81,900,000 | |
Net operating loss carryforwards, state | $ 46,100,000 | |
Net operating losses expiration period | 2017 and 2036 | |
Deferred tax assets, foreign operating loss carryforwards | $ 2,700,000 | |
Foreign tax credit carryforward | $ 1,006,000 | 1,006,000 |
Minimum percentage of income tax examination likelihood of tax benefits being realized upon settlement | 50.00% | |
Liability for uncertain tax positions | $ 0 | $ 0 |
Expiration Year 2018 [Member] | ||
Tax Credit Carryforward [Line Items] | ||
Foreign tax credit carryforward | 317,000 | |
Expiration Year 2019 [Member] | ||
Tax Credit Carryforward [Line Items] | ||
Foreign tax credit carryforward | $ 689,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Fair Value, Inputs, Level 3 [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Fair Value Assumptions And Methodology [Line Items] | ||
Common stock price | $ 0.91 | $ 2.22 |
Dividend yield | 0.00% | 0.00% |
Credit spread | 16.00% | 11.40% |
Risk-free interest rate | 1.30% | 1.30% |
Estimated stock volatility | 77.30% | 45.00% |
FAIR VALUE MEASUREMENTS (Deta64
FAIR VALUE MEASUREMENTS (Detail 1) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Holder Redemption Option | $ 970 | $ 952 |
Earn-Out Liability, current | 1,903 | 0 |
Earn-Out Liability, noncurrent | 0 | 2,176 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Holder Redemption Option | 0 | 0 |
Earn-Out Liability, current | 0 | |
Earn-Out Liability, noncurrent | 0 | |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Holder Redemption Option | 0 | 0 |
Earn-Out Liability, current | 0 | |
Earn-Out Liability, noncurrent | 0 | |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Holder Redemption Option | 970 | 952 |
Earn-Out Liability, current | $ 1,903 | |
Earn-Out Liability, noncurrent | $ 2,176 |
FAIR VALUE MEASUREMENTS (Deta65
FAIR VALUE MEASUREMENTS (Detail 2) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Holder Redemption Option [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value at January 2, 2016 | $ 952 |
Increase (decrease) in fair value | 18 |
Fair value at December 31, 2016 | 970 |
Earn Out Liability [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value at January 2, 2016 | 2,176 |
Increase (decrease) in fair value | (273) |
Fair value at December 31, 2016 | $ 1,903 |
FAIR VALUE MEASUREMENTS (Deta66
FAIR VALUE MEASUREMENTS (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Fair Value Disclosures [Abstract] | ||
Increases fair value liability | $ 18 | $ 615 |
Common stock exceed (in dollars per share) | $ 5.50 |
LEASE COMMITMENTS (Details)
LEASE COMMITMENTS (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Leases [Abstract] | |
2,017 | $ 1,509 |
2,018 | 1,742 |
2,019 | 1,475 |
2,020 | 1,361 |
2,021 | 717 |
Thereafter | 15 |
Minimum lease payments net of amounts to be received under subleases | $ 6,819 |
LEASE COMMITMENTS (Details Text
LEASE COMMITMENTS (Details Textual) | 12 Months Ended | ||
Dec. 31, 2016USD ($)ft² | Jan. 02, 2016USD ($) | Jul. 04, 2015USD ($) | |
Operating Leased Assets [Line Items] | |||
Lease expiration date | May 14, 2022 | ||
Rent expense, net | $ 1,872,000 | $ 1,808,000 | |
Subtenant rent | $ 0 | 171,000 | |
Area under operating lease | ft² | 4,823 | ||
Disposal obligation | $ 185,000 | $ 256,000 | |
Disposal obligation, reduction to accrual | 39,000 | ||
Disposal obligation, additional accrual | 72,000 | ||
Other accrued liabilities | 103,000 | ||
Other noncurrent liabilities | 82,000 | ||
Cost of Services [Member] | |||
Operating Leased Assets [Line Items] | |||
Rent expense, net | 61,000 | 13,000 | |
Selling, General and Administrative Expenses [Member] | |||
Operating Leased Assets [Line Items] | |||
Rent expense, net | $ 1,811,000 | $ 1,795,000 |
LETTERS OF CREDIT (Details Text
LETTERS OF CREDIT (Details Textual) - USD ($) | Dec. 31, 2016 | Jan. 02, 2016 |
Letter Of Credit [Abstract] | ||
Collateral amount, net | $ 103,000 | $ 102,000 |
Letters of credit outstanding amount | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |||
Apr. 02, 2016 | Apr. 04, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | |
Purchase Commitment [Line Items] | ||||
Litigation liability | $ 1,700 | |||
Earn-Out Liability | $ 1,903 | $ 0 | ||
Software [Member] | ||||
Purchase Commitment [Line Items] | ||||
Purchase commitment amount | $ 412 | |||
Purchase commitment period | 3 years | |||
Additional purchase commitment amount | $ 95 | |||
Purchase commitment, additional period | 2 years | |||
Purchase obligation remaining | $ 181 |
COMMON STOCK REPURCHASE PROGR71
COMMON STOCK REPURCHASE PROGRAM (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Feb. 28, 2014 | |
Equity [Abstract] | ||
Stock repurchase program, authorized amount | $ 2,000,000 | |
Stock repurchased during period (shares) | 64,923 | |
Stock repurchased during period, average price per share (USD per share) | $ 2.44 | |
Remaining authorized repurchase amount | $ 1,838,000 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details Textual) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Compensation and Retirement Disclosure [Abstract] | ||
Company contributions | $ 1.4 | $ 1.5 |