Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Apr. 01, 2017 | Apr. 29, 2017 | |
Document Information [Line Items] | ||
Entity Registrant Name | Cartesian, Inc. | |
Entity Central Index Key | 1,094,814 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | CRTN | |
Entity Common Stock, Shares Outstanding | 9,045,925 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 1, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 3,166 | $ 4,131 |
Accounts receivable (net of allowance for doubtful accounts of $281 and $398, respectively) | 15,589 | 13,680 |
Inventory, net | 362 | 362 |
Prepaid and other current assets | 1,681 | 1,591 |
Total current assets | 20,798 | 19,764 |
NONCURRENT ASSETS: | ||
Property and equipment, net | 2,011 | 2,056 |
Intangible assets, net | 499 | 557 |
Deferred income tax assets | 0 | 0 |
Other noncurrent assets | 464 | 324 |
Total Assets | 23,772 | 22,701 |
CURRENT LIABILITIES: | ||
Trade accounts payable | 2,528 | 1,704 |
Current borrowings | 3,269 | 3,269 |
Liability for derivatives | 897 | 970 |
Accrued payroll, bonuses and related expenses | 3,002 | 3,752 |
Contingent consideration liability | 2,188 | 1,903 |
Deferred revenue | 1,287 | 1,327 |
Secured borrowing | 3,146 | 768 |
Other accrued liabilities | 1,642 | 2,117 |
Total current liabilities | 17,959 | 15,810 |
NONCURRENT LIABILITIES: | ||
Deferred income tax liabilities | 0 | 0 |
Deferred revenue | 675 | 471 |
Other noncurrent liabilities | 628 | 588 |
Total noncurrent liabilities | 1,303 | 1,059 |
Commitments and Contingencies | ||
Retained earnings | (169,271) | (167,781) |
Other stockholders' equity | 173,781 | 173,613 |
Total Stockholders' Equity | 4,510 | 5,832 |
Total Liabilities and Stockholders' Equity | $ 23,772 | $ 22,701 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 281 | $ 398 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 14,266 | $ 20,317 |
Cost of services | 9,801 | 13,295 |
Gross Profit | 4,465 | 7,022 |
Selling, general and administrative expenses (includes non-cash share-based compensation expense of $119 and $133 for the thirteen weeks ended April 1, 2017 and April 2, 2016, respectively) | 5,991 | 7,766 |
Loss from operations | (1,526) | (744) |
Other income (expense): | ||
Interest expense, net | (69) | (60) |
Change in fair value of warrants and derivative liabilities | 73 | 73 |
Incentive warrants expense | (6) | (7) |
Other income | 9 | 0 |
Total other income | 7 | 6 |
Loss before income taxes | (1,519) | (738) |
Income tax benefit (provision) | 29 | (142) |
Net Loss | (1,490) | (880) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | 43 | (497) |
Comprehensive loss | $ (1,447) | $ (1,377) |
Net loss per common share: | ||
Basic and Diluted (in dollars per share) | $ (0.17) | $ (0.10) |
Weighted average shares used in calculation of net loss per common share: | ||
Basic and diluted (shares) | 8,641 | 8,643 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Selling, General and Administrative Expenses [Member] | ||
Non-cash share-based compensation expense | $ 119 | $ 133 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,490) | $ (880) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 283 | 245 |
Amortization of intangible assets | 66 | 89 |
Share-based compensation | 119 | 133 |
Deferred tax benefit | 0 | (17) |
Change in fair value of warrants and derivative liabilities | (73) | (73) |
Fair value adjustment to contingent consideration | 285 | (248) |
Incentive warrants expense | 6 | 7 |
Other changes in operating assets and liabilities: | ||
Accounts receivable, net | (1,740) | (2,280) |
Prepaid and other assets | (222) | (45) |
Trade accounts payable | 802 | 360 |
Deferred revenue | 154 | (484) |
Accrued liabilities | (1,060) | 140 |
Net cash used in operating activities | (2,870) | (3,053) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Business acquisition, net of cash acquired | 0 | (270) |
Acquisition of property and equipment | (418) | (288) |
Net cash used in investing activities | (418) | (558) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Secured borrowing | 2,378 | 0 |
Net cash provided by financing activities | 2,378 | 0 |
Effect of exchange rate on cash and cash equivalents | (55) | (194) |
Net decrease in cash and cash equivalents | (965) | (3,805) |
Cash and cash equivalents, beginning of period | 4,131 | 6,879 |
Cash and cash equivalents, end of period | 3,166 | 3,074 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 132 | 64 |
Cash paid during period for taxes | 0 | 0 |
Non-cash investing and financing transactions: | ||
Accrued property and equipment additions | 183 | 275 |
Change in fair value of warrants and derivative liabilities | $ (73) | $ (73) |
Basis of Reporting
Basis of Reporting | 3 Months Ended |
Apr. 01, 2017 | |
Accounting Policies [Abstract] | |
Basis of Reporting | Basis of Reporting The condensed consolidated financial statements and accompanying notes of Cartesian, Inc. and its subsidiaries ("Cartesian," "we," "us," "our" or the "Company") as of April 1, 2017 , and for the thirteen weeks ended April 1, 2017 and April 2, 2016 , are unaudited and reflect all normal recurring adjustments which are, in the opinion of management, necessary for the fair presentation of the Company’s condensed consolidated financial position, results of operations, and cash flows as of these dates and for the periods presented. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Consequently, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements nor those normally made in the Company’s Annual Report on Form 10-K. Accordingly, reference should be made to the Company’s annual consolidated financial statements and notes thereto for the fiscal year ended December 31, 2016 , included in the 2016 Annual Report on Form 10-K (“2016 Form 10-K”) for additional disclosures, including a summary of the Company’s accounting policies. The Condensed Consolidated Balance Sheet as of December 31, 2016 included in this report has been derived from the audited Consolidated Balance Sheet at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The Company has evaluated subsequent events for recognition or disclosure through the date these unaudited condensed consolidated financial statements were issued. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The results of operations for the thirteen weeks ended April 1, 2017 are not necessarily indicative of the results to be expected for the full year ending December 30, 2017. 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 issuance 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, no later than July 31, 2017, Cartesian is obligated to pay the full amount of the earn-out consideration that is payable in connection with the acquisition of the Farncombe Entities in 2015 which equals £719,483 pounds sterling (approximately US $0.9 million based on an exchange rate of £1.000 = US $1.255 as of April 1, 2017) and 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 $1.255 as of April 1, 2017). 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. 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 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. 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 software. 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 thirteen weeks ended April 1, 2017 , $133,000 of implementation costs related to managed service contracts were deferred. During the thirteen weeks ended April 2, 2016 , no implementation costs related to managed service contracts were deferred. Unamortized deferred implementation costs were $396,500 and $318,000 as of April 1, 2017 and December 31, 2016 , respectively. Research and Development and Software Development Costs - During the thirteen weeks ended April 1, 2017 and April 2, 2016 , internal use software development costs of $102,000 and $122,000 , respectively, were expensed as incurred. During the thirteen weeks ended April 1, 2017 and April 2, 2016 , $ 100,000 and $147,000 , respectively, of internal use software development costs were capitalized. Foreign Currency Transactions and Translation - Cartesian Limited, 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 other comprehensive loss in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Accumulated other comprehensive loss resulting from foreign currency translation adjustments totaled $6.7 million and $6.8 million as of April 1, 2017 and December 31, 2016 , respectively, and is included in Total Stockholders’ Equity in the Condensed 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. During the thirteen weeks ended April 1, 2017 realized and unrealized exchange gains of $58,000 were included in our results of operations and for the thirteen weeks ended April 2, 2016 realized and unrealized exchange losses of $74,000 were included in our results of operations. 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 the thirteen weeks ended April 1, 2017 and April 2, 2016 , approximately 25,000 shares and 7,000 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 our 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. These agreements give the Company optionality to convert outstanding accounts receivable to cash. For any transfer of accounts receivable under these agreements that qualifies as a sale, the Company applies the guidance in FASB ASC 860, “Transfers and Servicing – Sales of Financial Assets”, which requires the derecognition of the carrying value of those accounts receivable on the Condensed Consolidated Balance Sheets and recognition of a loss on the sale of an asset in operating expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss. The loss is determined at the date of transfer based upon the amount at which the accounts receivable are transferred less any fees, discounts and other charges provided under the agreements. During the thirteen weeks ended April 1, 2017 and April 2, 2016 , $3.5 million and $4.4 million , respectively, in accounts receivable were transferred pursuant to these agreements which qualified as sales of receivables and the related carrying amounts were derecognized. The loss on the sale of these accounts receivable recorded in the Condensed Consolidated Statements of Operations and Comprehensive Loss was immaterial for each of the thirteen weeks ended April 1, 2017 and April 2, 2016 . 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 Condensed Consolidated Statements of Operations and Comprehensive Loss in the period the fee becomes payable. During the thirteen weeks ended April 1, 2017 , the Company factored $434,000 of accounts receivable under the Factoring Agreement and as of April 1, 2017 and December 31, 2016 recognized a liability of $434,000 and $768,000 , respectively, which is recorded as Secured borrowing on the Condensed Consolidated Balance Sheets. No amounts were factored under the Factoring Agreement during the thirteen weeks ended April 2, 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 Condensed Consolidated Balance Sheets. As of April 1, 2017 and December 31, 2016 the amount recorded as a receivable for the reserve withheld by RTS was $87,000 and $154,000 , respectively. The amount of fees recorded as interest expense were immaterial for the thirteen weeks ended April 1, 2017 . 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 Condensed 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. During the thirteen weeks ended April 1, 2017 , Cartesian Limited factored $2.7 million under the Agreement and as of April 1, 2017 recognized a liability of $2.7 million which is recorded as Secured borrowing on the Condensed Consolidated Balance Sheets. No amounts were factored under the Agreement during fiscal 2016. 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 April 1, 2017 , the Company had $0.4 million in inventory, 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. See Note 3, Strategic Alliance and Investment by Elutions, Inc. Long-lived Assets - 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 ”. There was no impairment of long-lived assets during the thirteen weeks ended April 1, 2017 . 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 condensed 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 adopted this guidance beginning in fiscal year 2017 and its adoption did not have a material impact 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 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 adoption of this standard did not have a material effect on the Company's 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
Acquisition | 3 Months Ended |
Apr. 01, 2017 | |
Business Combinations [Abstract] | |
Acquisition | 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. On April 17, 2017, the Company entered into a letter agreement (the “Letter Agreement”) with the former shareholders of the Farncombe Entities (the “Sellers”). In the Letter Agreement, the parties agreed to a final determination of the Earn-Out and the consideration payable related to net working capital as adjusted, pursuant to which the Company agreed to pay to Sellers an additional amount equal to any amount received by the Company following the date of the Letter Agreement in respect of repayment of a loan of €50,000 (approximately US$53,000 based on an exchange rate of €1.000 = US$1.065 as of April 1, 2017) made to a third party by Farncombe Technology Limited prior to the closing under the Purchase Agreement. The parties also agreed that the Earn-Out target was expected to be achieved, and that the Company would pay 100% of the Earn-Out consideration described above to the Sellers no later than July 31, 2017. The Company also agreed in separate agreements that performance-based awards granted to two of the Sellers as employees of the Company based upon achievement of the Earn-Out would be paid in full. The aggregate amount 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$1.255 as of April 1, 2017 ) 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$1.255 as of April 1, 2017 ) and based upon the value of the shares as described below. Amounts 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 fiscal 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, the Company made payments of £20,000 (approximately US$25,000 ) and £48,000 (approximately US$59,000 ), respectively, to the former shareholders of the Farncombe Entities with respect to net working capital as adjusted. Up until the effective date of the Letter Agreement, the Company had classified the Earn-Out liability as a Level 3 liability and the fair value of the Earn-Out liability was evaluated each reporting period with changes in its fair value included in the Company’s results of operations. During the thirteen weeks ended April 1, 2017 , the change in the fair value of the Earn-Out liability was an increase of $285,000 which is included in Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss. The balance of the Earn-Out liability as of April 1, 2017 and December 31, 2016 was $2,188,000 and $1,903,000 , respectively, which is recorded as a current liability on the Condensed Consolidated Balance Sheets. See Note 9, Fair Value Measurements, for discussion of the determination of fair value of the Earn-Out liability. |
Strategic Alliance and Investme
Strategic Alliance and Investment by Elutions, Inc. | 3 Months Ended |
Apr. 01, 2017 | |
Investments, All Other Investments [Abstract] | |
Strategic Alliance and Investment by Elutions, Inc. | 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 a promissory note (the "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 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 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 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 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 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 may be prepaid by Cartesian Limited at any time after 30 months. The obligations of Cartesian Limited under the 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 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 Note would bear interest at 9.825% per year and could be declared immediately due and payable. Interest expense was approximately $63,000 for each of the thirteen weeks ended April 1, 2017 and April 2, 2016 , 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 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 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 become exercisable during each year in the five-year period under the vesting provisions is determined by dividing four percent of such revenues and cash recognized or received by the Company in such year by the warrant exercise price per share for that year. 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 April 1, 2017 , 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, Basis of Reporting 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 thirteen weeks ended April 2, 2016 , expense related to these dedicated employees was approximately $98,500 . 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. As of April 1, 2017 , the Company 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, are approximately $1.1 million over the term of the subcontract, with additional amounts potentially payable to Elutions based upon energy savings achieved by the customer. Annual license payments under the subcontract are recorded as managed services implementation costs which are included in Other current assets on the Condensed Consolidated Balance Sheet. See Note 1, Basis of Reporting. 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. Annual payments to Elutions are paid during the third fiscal quarter of each fiscal year. As of both April 1, 2017 and December 31, 2016 , the balance remaining for the advance to Elutions was $200,000 , respectively, of which $100,000 was included in Other current assets for both periods and $100,000 was included in Other noncurrent assets on the Condensed Consolidated Balance Sheets, respectively. 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 Note that permits Cartesian Limited to prepay the 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 April 1, 2017 and December 31, 2016 , the fair value of the Issuer Call Option was determined to be immaterial. The carrying value of the Note as of April 1, 2017 and December 31, 2016 was $3,269,000 and as of April 1, 2017 and December 31, 2016, the fair value of the Note was $2,371,000 and $2,703,000 , respectively. The Incentive Warrant and Tracking Warrant are accounted for as equity instruments. See Note 9, 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 the thirteen weeks ended April 1, 2017 and April 2, 2016 , Elutions earned 2,414 and 4,086 vested shares, respectively, under the Incentive Warrant and the Company recognized $6,000 and $7,000 of expense related to these vested shares, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Apr. 01, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table summarizes the changes in the major classes of intangible assets as of April 1, 2017 and December 31, 2016 (in thousands): Tradename Non-Compete Agreements Customer Relationships Total Gross Carrying Amount: Balance as of December 31, 2016 $ 71 $ 48 $ 881 $ 1,000 Changes in foreign currency exchange rates 2 — 14 16 Balance as of April 1, 2017 $ 73 $ 48 $ 895 $ 1,016 Accumulated Amortization: Balance as of December 31, 2016 $ (71 ) $ (15 ) $ (357 ) $ (443 ) Changes in foreign currency exchange rates (2 ) — (6 ) (8 ) Amortization expense — (3 ) (63 ) (66 ) Balance as of April 1, 2017 $ (73 ) $ (18 ) $ (426 ) $ (517 ) The identifiable intangible assets in the table above resulted from the July 2015 acquisition of the Farncombe Entities and include the effects of foreign currency translation. 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 $66,000 and $89,000 for the thirteen weeks ended April 1, 2017 and April 2, 2016 , respectively. The following table outlines the estimated future amortization expense related to amortizing intangible assets as of April 1, 2017 (in thousands): 2017 (April 2, 2017 – December 30, 2017) $ 200 2018 266 2019 32 2020 1 $ 499 |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Apr. 01, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation The Company issues stock option awards and non-vested share awards under its share-based compensation plans. The key provisions of the Company’s share-based compensation plans are described in Note 5, Share-Based Compensation, in the Notes to the Consolidated Financial Statements included in Item 8, Consolidated Financial Statements of the 2016 Form 10-K. The Company recognized income tax benefits of $7,000 related to share-based compensation arrangements during the thirteen weeks ended April 2, 2016 . No income tax benefit was recognized in the first quarter of fiscal 2017 due to the full valuation allowance on the Company's deferred tax assets. Equity Incentive Plan In April 2015, our Board of Directors approved an amendment and restatement of the Company’s Equity Incentive Plan (the “Equity Plan”), which was approved by our stockholders at the 2015 annual meeting of stockholders which was held on June 16, 2015. There are 2,805,659 shares of common stock that are available for issuance (inclusive of shares previously issued) under the Equity Plan. The Equity Plan expires on June 16, 2025. Stock Options Service-Based Stock Option Awards – A summary of the service-based stock option activity under the Equity Plan, as of April 1, 2017 and changes during the thirteen weeks then ended is presented below: Shares Weighted Average Exercise Price Outstanding at December 31, 2016 212,762 $ 6.91 Granted — $ — Forfeited/cancelled (25,001 ) $ 8.10 Outstanding at April 1, 2017 187,761 $ 6.75 Options vested and expected to vest at April 1, 2017 178,386 $ 7.01 Options exercisable at April 1, 2017 137,760 $ 8.54 The Company did not grant any service-based stock option awards during the thirteen weeks ended April 1, 2017 or April 2, 2016 . The Company recorded share-based compensation expense in connection with service-based stock option awards of $6,000 and $5,000 during the thirteen weeks ended April 1, 2017 and April 2, 2016 , respectively. As of April 1, 2017 , there was approximately $20,000 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 19 months . 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. Market Condition Stock Option Awards – A summary of the market condition stock option activity under the Equity Plan, as of April 1, 2017 and changes during the thirteen weeks then ended is presented below: Shares Weighted Average Exercise Price Outstanding at December 31, 2016 325,000 $ 2.54 Granted — $ — Outstanding at April 1, 2017 325,000 $ 2.54 Options vested and expected to vest at April 1, 2017 325,000 $ 2.54 Options exercisable at April 1, 2017 — $ — On September 28, 2016, the Company granted non-qualified stock options 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. Except with respect to the non-qualified stock option awards for 125,000 shares which also vest upon a change of control of the Company, these stock options will vest only if the price of the Company’s common stock reaches certain price targets, as follows: • the stock options 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 options 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 options 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 by vesting tranche for the market condition stock option award 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 The fair value and derived service periods calculated 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 During the thirteen weeks ended April 1, 2017 and April 2, 2016 the Company recorded $2,000 and $65,000 , respectively, of share-based compensation expense in connection with market condition stock option awards. As of April 1, 2017 , there was $36,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to the market condition stock option awards, and this unrecognized expense is expected to be recognized over a weighted average period of 23 months . As of December 31, 2016, there was $37,000 of unrecognized expense related to the market condition stock option awards. 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 April 1, 2017 is presented below: Shares Weighted Average Grant Date Fair Value per share Outstanding at December 31, 2016 172,422 $ 0.71 Granted 60,000 $ 1.18 Vested (132,422 ) $ 0.71 Outstanding at April 1, 2017 100,000 $ 0.99 On March 13, 2017, the Company granted 60,000 shares of service-based non-vested stock that vest two years from the date of grant. 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 the thirteen weeks ended April 1, 2017 , the Company recorded $9,000 of stock-based compensation expense in connection with these service-based non-vested share awards. There was no stock-based compensation expense in connection with service-based non-vested share awards for the thirteen weeks ended April 2, 2016. As of April 1, 2017 and December 31, 2016, there was an estimated $69,000 and $16,000 , respectively, 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 17 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 had 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 was 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 were recognized in the Condensed Consolidated Statements of Operations. Effective March 31, 2017, the consulting agreements were terminated and in accordance with the consulting agreements, all unvested shares of non-vested stock granted under those agreements vested as of March 31, 2017. During the thirteen weeks ended April 1, 2017 , the Company recorded $85,000 of stock-based compensation expense in connection with these service-based non-vested share awards. 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 April 1, 2017 is presented below: Shares Weighted Average Grant Date Fair Value per share Outstanding at December 31, 2016 172,657 $ 3.14 Forfeited/cancelled — $ — Outstanding at April 1, 2017 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 2017. Shares not vested as of the release date for the first quarter of fiscal 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. During the thirteen weeks ended April 1, 2017 and April 2, 2016 , the Company recorded $10,000 and $56,000 , respectively, of share-based compensation expense in connection with performance-based non-vested share awards. As of April 1, 2017 , based on management’s assessment of the probability of achievement of the performance conditions, there was an estimated $12,000 of unrecognized share-based compensation expense, net of estimated forfeitures, related to performance-based non-vested share awards. Unrecognized compensation cost at April 1, 2017 related to performance-based non-vested share awards is expected to be recognized over a period of 4 months . 2000 Supplemental Stock Plan A summary of the option activity under the Company’s 2000 Supplemental Stock Plan (the “Supplemental Stock Plan”) as of April 1, 2017 and changes during the thirteen weeks then ended is presented below: Shares Weighted Average Exercise Price Outstanding at December 31, 2016 30,100 $ 11.06 Forfeited/cancelled (6,000 ) $ — Outstanding at April 1, 2017 24,100 $ 11.01 Options vested and exercisable at April 1, 2017 24,100 $ 11.01 No awards have been granted under the Supplemental Stock Plan since it expired on May 23, 2010. There is no remaining unrecognized compensation cost related to stock options issued under the Supplemental Stock Plan. |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information | 3 Months Ended |
Apr. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Balance Sheet Disclosures | Supplemental Balance Sheet Information Accrued payroll, bonuses and related expenses and Other accrued liabilities consist of the following (amounts in thousands): April 1, 2017 December 31, 2016 Accrued payroll, bonuses and related expenses Accrued payroll $ 598 $ 313 Accrued bonuses 530 2,060 Accrued payroll taxes 870 515 Accrued vacation 731 494 Accrued severance 9 117 Other 264 253 $ 3,002 $ 3,752 Other accrued liabilities Sales and value-added taxes payable $ 798 $ 911 Lease termination liability 135 103 Accrued income taxes 174 152 Accrued acquisition consideration — 32 Other 535 919 $ 1,642 $ 2,117 |
Business Segments and Major Cus
Business Segments and Major Customers | 3 Months Ended |
Apr. 01, 2017 | |
Segment Reporting [Abstract] | |
Business Segments and Major Customers | Business Segments and Major Customers 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. Management evaluates segment performance based upon income (loss) from operations, excluding share-based compensation (benefits) and depreciation. There were no inter-segment revenues during the thirteen weeks ended April 1, 2017 or April 2, 2016 . 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, share-based compensation expense, depreciation expense, and certain research and development 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 thirteen weeks ended April 1, 2017: Revenues $ 5,078 $ 9,040 $ 148 $ — $ 14,266 Income (loss) from operations 728 1,110 27 (3,391 ) (1,526 ) Total assets $ 3,726 $ 11,903 $ 418 $ 7,725 $ 23,772 As of the fiscal year ended December 31, 2016: Total assets $ 3,378 $ 10,113 $ 550 $ 8,660 $ 22,701 As of and for the thirteen weeks ended April 2, 2016: Revenues $ 8,513 $ 11,702 $ 102 $ — $ 20,317 Income (loss) from operations 1,754 1,477 (76 ) (3,899 ) (744 ) Total assets $ 6,993 $ 11,627 $ 625 $ 20,092 $ 39,337 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, 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): For the Thirteen Weeks Ended April 1, April 2, United States $ 5,294 $ 8,715 International: United Kingdom 8,154 10,960 Other 818 642 Total $ 14,266 $ 20,317 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 April 1, December 31, United States $ 2,271 $ 2,154 United Kingdom 193 217 France 10 10 Total $ 2,474 $ 2,381 Major customers in terms of significance to Cartesian’s revenues (i.e. in excess of 10% of revenues) and accounts receivable were as follows (amounts in thousands): Revenues For the thirteen weeks For the thirteen weeks North America EMEA North America EMEA Customer A — $ 3,951 — $ 4,426 Customer B $ 2,509 — $ 3,273 — Customer C — 1,754 — $ 3,005 Accounts Receivable As of As of Customer A $ 4,744 $ 3,812 Customer B $ 951 $ 2,255 Customer C $ 1,862 $ 2,544 Revenues from the Company’s ten most significant customers accounted for approximately 82.7% and 83.2% of revenues during the thirteen weeks ended April 1, 2017 and April 2, 2016 , respectively. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 01, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the thirteen weeks ended April 1, 2017 the Company recorded an income tax benefit of $29,000 and during the thirteen weeks ended April 2, 2016 , the Company recorded an income tax provision of $142,000 . The income tax benefit for the thirteen weeks ended April 1, 2017 is primarily related to larger than expected refunds from UK tax returns. The income tax provision for the thirteen weeks ended April 2, 2016 is 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 in fiscal 2016. The Company has reserved all of its domestic and international net deferred tax assets as of April 1, 2017 and December 31, 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. As of April 1, 2017 and December 31, 2016 , the Company has recorded $37.1 million and $36.6 million , respectively, of valuation allowances attributable to its 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 Company analyzes its uncertain tax positions pursuant to the provisions of FASB ASC 740 “ Income Taxes ”. There was no material activity related to the liability for uncertain tax positions during the thirteen weeks ended April 1, 2017 and April 2, 2016 , and the Company has determined it does not have any material uncertain tax positions requiring reserves at April 1, 2017 or December 31, 2016 . The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and in various states 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 April 1, 2017 , the Company has no income tax examinations in process. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 01, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 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 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 Note as Level 3 liabilities. Changes in the fair value of the Holder Redemption Option are recognized in the Condensed 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 decreases of $73,000 in the fair value of this liability during each of the thirteen weeks ended April 1, 2017 and April 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 Note and the Holder Redemption Option: April 1, 2017 December 31, 2016 Common stock price $ 0.83 $ 0.91 Dividend yield — % — % Credit spread 24.6 % 16.0 % Risk-free interest rate 1.3 % 1.3 % Estimated stock volatility 88.2 % 77.3 % In addition, the Company determined that the provision of the Note that permits Cartesian Limited to prepay the 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 April 1, 2017 and December 31, 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. In connection with the acquisition of the Farncombe Entities, the Company recorded a liability related to the Earn-Out portion of the purchase consideration. As of December 31, 2016, the Company had classified the Earn-Out liability as a Level 3 liability and the fair value of the Earn-Out liability is evaluated each reporting period and changes in its fair value are included in the Company’s results of operations. As of December 31, 2016, 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 evaluated assumptions that required significant judgment. On April 17, 2017, the Company entered into a Letter Agreement with the former shareholders of the Farncombe Entities whereby the parties agreed to a final determination of the Earn-Out, that the Earn-Out target was expected to be achieved, and that the Company would pay 100% of the Earn-Out consideration described above to the Sellers no later than July 31, 2017. As of April 1, 2017, the Earn-Out liability is recorded in the amount payable as described in the Letter Agreement. See Note 2, Acquisition, for further discussion of the Earn-Out liability. Because the Company measured 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 thirteen weeks ended April 1, 2017 or during the fiscal year ended December 31, 2016 . As of April 1, 2017 and December 31, 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 April 1, 2017: Holder Redemption Option $ 897 $ — $ — $ 897 December 31, 2016: Holder Redemption Option $ 970 $ — $ — $ 970 Earn-Out Liability $ 1,903 $ — $ — $ 1,903 The following table summarizes the year-to-date changes to the fair value of the Holder Redemption Option which is a Level 3 liability (in thousands): Holder Redemption Option Fair value at December 31, 2016 $ 970 Decrease in fair value (73 ) Fair value at April 1, 2017 $ 897 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. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 01, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is not subject to any material litigation as of April 1, 2017 . 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 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. These amounts were paid during the first quarter of fiscal 2017. 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 $2,188,000 related to 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 | 3 Months Ended |
Apr. 01, 2017 | |
Equity [Abstract] | |
Common Stock Repurchase Program | Common Stock Repurchase Program On June 7, 2016, the Board of Directors of the Company (the “Board”) 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 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 future repurchases, if any, through cash on hand, future cash flow from operations and future borrowings. The Company did not repurchase any shares under the stock repurchase program during the thirteen weeks ended April 1, 2017 or April 2, 2016 . Through April 1, 2017 , approximately $1,838,000 remained outstanding under the share repurchase program for future repurchases of Company common stock. |
Exit and Disposal Activities
Exit and Disposal Activities | 3 Months Ended |
Apr. 01, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Exit and Disposal Activities | Exit and Disposal Activities In fiscal 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. It 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. In March 2017, the Company entered into a sublease for this facility. The sublease does not relieve the Company of its primary obligations under the original lease. 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 during fiscal year 2015. As of April 1, 2017 , a liability of $225,000 is recorded of which $135,000 is recorded in Other accrued liabilities and $90,000 is recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheets. As of December 31, 2016, a liability of $185,000 was recorded of which $103,000 was included in Other accrued liabilities and $82,000 was included in Other noncurrent liabilities in the Condensed Consolidated Balance Sheets. The amount recorded as of December 31, 2016, was calculated using probability-weighted cash flow analysis and represents the present value, calculated using a credit-adjusted risk free rate, of our remaining costs under the remaining term of the lease, net of sublease payments. |
Basis of Reporting (Policies)
Basis of Reporting (Policies) | 3 Months Ended |
Apr. 01, 2017 | |
Accounting Policies [Abstract] | |
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 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. |
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 software. 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. |
Research and Development and software Development Costs | Research and Development and Software Development Costs - During the thirteen weeks ended April 1, 2017 and April 2, 2016 , internal use software development costs of $102,000 and $122,000 , respectively, were expensed as incurred. During the thirteen weeks ended April 1, 2017 and April 2, 2016 , $ 100,000 and $147,000 , respectively, of internal use software development costs were capitalized. |
Foreign Currency Transactions and Translation | Foreign Currency Transactions and Translation - Cartesian Limited, 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 other comprehensive loss in the Condensed Consolidated Statements of Operations and Comprehensive Loss. |
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 the thirteen weeks ended April 1, 2017 and April 2, 2016 , approximately 25,000 shares and 7,000 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 our 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. These agreements give the Company optionality to convert outstanding accounts receivable to cash. For any transfer of accounts receivable under these agreements that qualifies as a sale, the Company applies the guidance in FASB ASC 860, “Transfers and Servicing – Sales of Financial Assets”, which requires the derecognition of the carrying value of those accounts receivable on the Condensed Consolidated Balance Sheets and recognition of a loss on the sale of an asset in operating expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss. The loss is determined at the date of transfer based upon the amount at which the accounts receivable are transferred less any fees, discounts and other charges provided under the agreements. During the thirteen weeks ended April 1, 2017 and April 2, 2016 , $3.5 million and $4.4 million , respectively, in accounts receivable were transferred pursuant to these agreements which qualified as sales of receivables and the related carrying amounts were derecognized. The loss on the sale of these accounts receivable recorded in the Condensed Consolidated Statements of Operations and Comprehensive Loss was immaterial for each of the thirteen weeks ended April 1, 2017 and April 2, 2016 . 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 Condensed Consolidated Statements of Operations and Comprehensive Loss in the period the fee becomes payable. During the thirteen weeks ended April 1, 2017 , the Company factored $434,000 of accounts receivable under the Factoring Agreement and as of April 1, 2017 and December 31, 2016 recognized a liability of $434,000 and $768,000 , respectively, which is recorded as Secured borrowing on the Condensed Consolidated Balance Sheets. No amounts were factored under the Factoring Agreement during the thirteen weeks ended April 2, 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 Condensed Consolidated Balance Sheets. As of April 1, 2017 and December 31, 2016 the amount recorded as a receivable for the reserve withheld by RTS was $87,000 and $154,000 , respectively. The amount of fees recorded as interest expense were immaterial for the thirteen weeks ended April 1, 2017 . 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 Condensed 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. During the thirteen weeks ended April 1, 2017 , Cartesian Limited factored $2.7 million under the Agreement and as of April 1, 2017 recognized a liability of $2.7 million which is recorded as Secured borrowing on the Condensed Consolidated Balance Sheets. No amounts were factored under the Agreement during fiscal 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 April 1, 2017 , the Company had $0.4 million in inventory, 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. See Note 3, Strategic Alliance and Investment by Elutions, Inc. |
Long-lived Assets | Long-lived Assets - 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 ” |
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 condensed 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 adopted this guidance beginning in fiscal year 2017 and its adoption did not have a material impact 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 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 adoption of this standard did not have a material effect on the Company's 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. |
Goodwill and Intangible Asset (
Goodwill and Intangible Asset (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | The following table summarizes the changes in the major classes of intangible assets as of April 1, 2017 and December 31, 2016 (in thousands): Tradename Non-Compete Agreements Customer Relationships Total Gross Carrying Amount: Balance as of December 31, 2016 $ 71 $ 48 $ 881 $ 1,000 Changes in foreign currency exchange rates 2 — 14 16 Balance as of April 1, 2017 $ 73 $ 48 $ 895 $ 1,016 Accumulated Amortization: Balance as of December 31, 2016 $ (71 ) $ (15 ) $ (357 ) $ (443 ) Changes in foreign currency exchange rates (2 ) — (6 ) (8 ) Amortization expense — (3 ) (63 ) (66 ) Balance as of April 1, 2017 $ (73 ) $ (18 ) $ (426 ) $ (517 ) |
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 April 1, 2017 (in thousands): 2017 (April 2, 2017 – December 30, 2017) $ 200 2018 266 2019 32 2020 1 $ 499 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
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 by vesting tranche for the market condition stock option award 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 The fair value and derived service periods calculated 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 |
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 2000 Supplemental Stock Plan (the “Supplemental Stock Plan”) as of April 1, 2017 and changes during the thirteen weeks then ended is presented below: Shares Weighted Average Exercise Price Outstanding at December 31, 2016 30,100 $ 11.06 Forfeited/cancelled (6,000 ) $ — Outstanding at April 1, 2017 24,100 $ 11.01 Options vested and exercisable at April 1, 2017 24,100 $ 11.01 |
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 under the Equity Plan, as of April 1, 2017 and changes during the thirteen weeks then ended is presented below: Shares Weighted Average Exercise Price Outstanding at December 31, 2016 212,762 $ 6.91 Granted — $ — Forfeited/cancelled (25,001 ) $ 8.10 Outstanding at April 1, 2017 187,761 $ 6.75 Options vested and expected to vest at April 1, 2017 178,386 $ 7.01 Options exercisable at April 1, 2017 137,760 $ 8.54 |
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 April 1, 2017 and changes during the thirteen weeks then ended is presented below: Shares Weighted Average Exercise Price Outstanding at December 31, 2016 325,000 $ 2.54 Granted — $ — Outstanding at April 1, 2017 325,000 $ 2.54 Options vested and expected to vest at April 1, 2017 325,000 $ 2.54 Options exercisable at April 1, 2017 — $ — |
Service Based Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Share Activity | 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 April 1, 2017 is presented below: Shares Weighted Average Grant Date Fair Value per share Outstanding at December 31, 2016 172,422 $ 0.71 Granted 60,000 $ 1.18 Vested (132,422 ) $ 0.71 Outstanding at April 1, 2017 100,000 $ 0.99 |
Performance Based Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Share Activity | A summary of the status of performance-based non-vested share awards issued under the Equity Plan, as of April 1, 2017 is presented below: Shares Weighted Average Grant Date Fair Value per share Outstanding at December 31, 2016 172,657 $ 3.14 Forfeited/cancelled — $ — Outstanding at April 1, 2017 172,657 $ 3.14 |
Supplemental Balance Sheet In22
Supplemental Balance Sheet Information (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
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): April 1, 2017 December 31, 2016 Accrued payroll, bonuses and related expenses Accrued payroll $ 598 $ 313 Accrued bonuses 530 2,060 Accrued payroll taxes 870 515 Accrued vacation 731 494 Accrued severance 9 117 Other 264 253 $ 3,002 $ 3,752 Other accrued liabilities Sales and value-added taxes payable $ 798 $ 911 Lease termination liability 135 103 Accrued income taxes 174 152 Accrued acquisition consideration — 32 Other 535 919 $ 1,642 $ 2,117 |
Business Segments and Major C23
Business Segments and Major Customers (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
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 thirteen weeks ended April 1, 2017: Revenues $ 5,078 $ 9,040 $ 148 $ — $ 14,266 Income (loss) from operations 728 1,110 27 (3,391 ) (1,526 ) Total assets $ 3,726 $ 11,903 $ 418 $ 7,725 $ 23,772 As of the fiscal year ended December 31, 2016: Total assets $ 3,378 $ 10,113 $ 550 $ 8,660 $ 22,701 As of and for the thirteen weeks ended April 2, 2016: Revenues $ 8,513 $ 11,702 $ 102 $ — $ 20,317 Income (loss) from operations 1,754 1,477 (76 ) (3,899 ) (744 ) Total assets $ 6,993 $ 11,627 $ 625 $ 20,092 $ 39,337 |
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): For the Thirteen Weeks Ended April 1, April 2, United States $ 5,294 $ 8,715 International: United Kingdom 8,154 10,960 Other 818 642 Total $ 14,266 $ 20,317 |
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 April 1, December 31, United States $ 2,271 $ 2,154 United Kingdom 193 217 France 10 10 Total $ 2,474 $ 2,381 |
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) and accounts receivable were as follows (amounts in thousands): Revenues For the thirteen weeks For the thirteen weeks North America EMEA North America EMEA Customer A — $ 3,951 — $ 4,426 Customer B $ 2,509 — $ 3,273 — Customer C — 1,754 — $ 3,005 Accounts Receivable As of As of Customer A $ 4,744 $ 3,812 Customer B $ 951 $ 2,255 Customer C $ 1,862 $ 2,544 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
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 Note and the Holder Redemption Option: April 1, 2017 December 31, 2016 Common stock price $ 0.83 $ 0.91 Dividend yield — % — % Credit spread 24.6 % 16.0 % Risk-free interest rate 1.3 % 1.3 % Estimated stock volatility 88.2 % 77.3 % |
Fair Value, Liabilities Measured on Recurring Basis | As of April 1, 2017 and December 31, 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 April 1, 2017: Holder Redemption Option $ 897 $ — $ — $ 897 December 31, 2016: Holder Redemption Option $ 970 $ — $ — $ 970 Earn-Out Liability $ 1,903 $ — $ — $ 1,903 |
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 which is a Level 3 liability (in thousands): Holder Redemption Option Fair value at December 31, 2016 $ 970 Decrease in fair value (73 ) Fair value at April 1, 2017 $ 897 |
Basis of Reporting - Going Conc
Basis of Reporting - Going Concern (Details) | Mar. 18, 2014$ / shares | Apr. 01, 2017GBP (£)dayshares | Apr. 01, 2017USD ($)day$ / sharesshares | Jan. 02, 2016GBP (£) | Apr. 01, 2017USD ($)shares |
Business Acquisition [Line Items] | |||||
Aggregate original principal amount | $ | $ 3,300,000 | ||||
Payment period for Elutions Note after call by holder for redemption | 30 days | 30 days | |||
Number of trading days included to determine stock repurchase price | day | 15 | 15 | |||
Earn Out Consideration [Member] | |||||
Business Acquisition [Line Items] | |||||
Maximum earn-out consideration | £ 719,483 | $ 900,000 | |||
Maximum earn-out consideration (shares) | 461,055 | 461,055 | |||
Equity issued | £ 1,024,765 | $ 1,300,000 | £ 654,093 | ||
Elutions, Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Aggregate original principal amount | $ | $ 3,268,664 | ||||
Elutions, Inc [Member] | Tracking Warrant [Member] | |||||
Business Acquisition [Line Items] | |||||
Warrants issued to purchase common stock (shares) | 996,544 | 996,544 | |||
Warrant exercise price (in dollars per share) | $ / shares | $ 3.28 | $ 3.28 | |||
Strategic Alliance and Investment [Member] | Elutions, Inc [Member] | Tracking Warrant [Member] | |||||
Business Acquisition [Line Items] | |||||
Warrants issued to purchase common stock (shares) | 996,544 | 996,544 | |||
Warrant exercise price (in dollars per share) | $ / shares | $ 3.28 | ||||
United Kingdom, Pounds | |||||
Business Acquisition [Line Items] | |||||
Exchange rate of USD per foreign currency | 1.255 | 1.255 | |||
United Kingdom, Pounds | Earn Out Consideration [Member] | |||||
Business Acquisition [Line Items] | |||||
Exchange rate of USD per foreign currency | 1.255 | 1.255 |
Basis of Reporting (Details Tex
Basis of Reporting (Details Textual) shares in Thousands | Jul. 29, 2016GBP (£) | Apr. 22, 2016 | Apr. 01, 2017USD ($)shares | Apr. 02, 2016USD ($)shares | Dec. 31, 2016USD ($) |
Accounting Policies [Line Items] | |||||
Implementation costs deferred during the period | $ 133,000 | $ 0 | |||
Unamortized deferred implementation costs | 396,500 | $ 318,000 | |||
Internal use software development costs expensed | 102,000 | 122,000 | |||
Internal use software development costs capitalized | 100,000 | 147,000 | |||
Foreign currency translation adjustment | 6,700,000 | 6,800,000 | |||
Foreign currency transaction gain (loss) | $ 58,000 | $ (74,000) | |||
Antidilutive securities excluded from computation of earnings per share (shares) | shares | 25 | 7 | |||
Accounts receivable transferred under agreement | $ 3,500,000 | $ 4,400,000 | |||
Factoring liability | 3,146,000 | 768,000 | |||
Termination notice period of security agreement | 6 months | ||||
Inventory, net | 362,000 | 362,000 | |||
Impairment of long-lived assets held-for-use | 0 | ||||
RTS Financial Service, Inc. [Member] | |||||
Accounting Policies [Line Items] | |||||
Reserve amount on factored accounts (percent) | 20.00% | ||||
Receivables factored during the period | 434,000 | $ 0 | |||
Factoring liability | 434,000 | 768,000 | |||
Factoring reserve receivable | 87,000 | 154,000 | |||
RTS Financial Service, Inc. [Member] | Prime Rate [Member] | |||||
Accounting Policies [Line Items] | |||||
Factor fee, basis spread on variable rate (percent) | 6.49% | ||||
RBS Invoice Finance Limited [Member] | |||||
Accounting Policies [Line Items] | |||||
Receivables factored during the period | 2,700,000 | $ 0 | |||
Factoring liability | $ 2,700,000 | ||||
Security agreement, maximum funding level | £ | £ 3,000,000 | ||||
Advance amount as a 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 | ||||
RBS Invoice Finance Limited [Member] | Base Rate [Member] | |||||
Accounting Policies [Line Items] | |||||
Basis spread on variable rate (percent) | 1.75% |
Acquisition (Details Textual)
Acquisition (Details Textual) £ / shares in Units, $ / shares in Units, € in Thousands, $ in Thousands | Apr. 17, 2017EUR (€) | Apr. 17, 2017USD ($) | Oct. 01, 2016USD ($) | Jul. 22, 2015GBP (£)£ / sharesshares | Jul. 22, 2015USD ($)shares | Mar. 31, 2016GBP (£) | Mar. 31, 2016EUR (€) | Mar. 31, 2016USD ($) | Apr. 01, 2017GBP (£)shares | Apr. 01, 2017USD ($) | Dec. 31, 2016GBP (£) | Dec. 31, 2016USD ($) | Apr. 02, 2016USD ($) | Jan. 02, 2016GBP (£) | Jan. 02, 2016USD ($) | Apr. 01, 2017USD ($)shares | Jul. 22, 2015$ / shares | Jul. 21, 2015 |
Business Acquisition [Line Items] | ||||||||||||||||||
Percentage of business acquisition purchase price (percent) | 30.00% | 30.00% | ||||||||||||||||
Equity issued at closing (shares) | shares | 588,567 | 588,567 | ||||||||||||||||
Purchase price related to working capital adjustment | $ 1,000 | |||||||||||||||||
Change in fair value of earn-out liability | $ 285 | $ (248) | ||||||||||||||||
Earn-Out Liability | $ 1,903 | |||||||||||||||||
Earn Out Consideration [Member] | ||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||
Cash paid at closing | $ 900 | |||||||||||||||||
Percentage of business acquisition purchase price (percent) | 40.00% | 40.00% | ||||||||||||||||
Equity issued at closing | £ 1,024,765 | 1,300 | £ 654,093 | |||||||||||||||
Maximum earn-out consideration | £ 719,483 | $ 900 | ||||||||||||||||
Maximum earn-out consideration (shares) | shares | 461,055 | 461,055 | ||||||||||||||||
Cash [Member] | ||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||
Percentage of business acquisition purchase price (percent) | 15.00% | 15.00% | ||||||||||||||||
Purchase Agreement [Member] | ||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||
Total purchase price | £ 4,360,620 | $ 6,800 | ||||||||||||||||
Cash paid at closing | £ 654,093 | 1,000 | ||||||||||||||||
Percentage of business acquisition purchase price (percent) | 15.00% | 15.00% | ||||||||||||||||
Equity issued at closing | £ 1,308,186 | 2,000 | 2,100 | |||||||||||||||
Share price (in dollars or pounds per share) | (per share) | £ 2.22 | $ 3.46 | ||||||||||||||||
Purchase price related to working capital adjustment | £ 48,000 | 59 | £ 20,000 | 25 | ||||||||||||||
Purchase Agreement [Member] | Earn Out Consideration [Member] | ||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||
Cash paid at closing | £ 654,093 | $ 1,000 | ||||||||||||||||
Equity issued at closing | £ 184,000 | € 12 | $ 300 | £ 1,024,765 | ||||||||||||||
Business Combination, Contingent Consideration Arrangements, Basis for Amount | Amounts 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 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 | ||||||||||||||||
Purchase price related to working capital adjustment | £ 743,753 | $ 1,100 | ||||||||||||||||
Change in fair value of earn-out liability | $ 285 | |||||||||||||||||
Earn-Out Liability | $ 1,903 | $ 2,188 | ||||||||||||||||
Euro Member Countries, Euro | Letter Agreement [Member] | Earn Out Consideration [Member] | ||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||
Exchange rate of USD per foreign currency | 1.065 | 1.065 | ||||||||||||||||
United Kingdom, Pounds | ||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||
Exchange rate of USD per foreign currency | 1.255 | 1.255 | ||||||||||||||||
United Kingdom, Pounds | Earn Out Consideration [Member] | ||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||
Exchange rate of USD per foreign currency | 1.255 | 1.255 | ||||||||||||||||
United Kingdom, Pounds | Purchase Agreement [Member] | Earn Out Consideration [Member] | ||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||
Exchange rate of USD per foreign currency | 1.556 | |||||||||||||||||
Subsequent Event [Member] | Letter Agreement [Member] | Earn Out Consideration [Member] | ||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||
Repayments of loan | € 50 | $ 53 | ||||||||||||||||
Earn-out consideration expected to be paid (percent) | 100.00% | 100.00% |
Strategic Alliance and Invest28
Strategic Alliance and Investment by Elutions, Inc. (Details Textual) - USD ($) | Mar. 18, 2014 | Feb. 25, 2014 | Apr. 01, 2017 | Apr. 02, 2016 | Oct. 04, 2014 | Dec. 31, 2016 |
Investment [Line Items] | ||||||
Original principal amount of promissory note | $ 3,300,000 | |||||
Outstanding shares percentage (percent) | 6.50% | |||||
Open market outstanding shares percentage (percent) | 38.50% | |||||
Price per share of stock on tracking warrant (in dollars per share) | $ 5.50 | |||||
Market development agreement, inventory required to be sold within one year of agreement to avoid discount (percent) | 75.00% | |||||
Market development agreement, inventory discount against original purchase price, percent | 10.00% | |||||
Monthly labor expense | $ 36,750 | |||||
Labor and related expense | $ 98,500 | |||||
Estimated remaining license payments under amendment to subcontract | 400,000 | |||||
Estimated remaining license payments under original contract, as amended | 1,100,000 | |||||
Advance to Elutions | $ 400,000 | |||||
Interest rate on advance to Elutions (percent) | 5.50% | |||||
Carrying value of the note | $ 3,269,000 | $ 3,269,000 | ||||
Non-Convertible Promissory Note [Member] | ||||||
Investment [Line Items] | ||||||
Fair value of the note | $ 2,371,000 | 2,703,000 | ||||
Incentive Warrant [Member] | ||||||
Investment [Line Items] | ||||||
Warrants issued to purchase common stock (shares) | 3,400,000 | |||||
Shares vested under the Incentive Warrant (shares) | 2,414 | 4,086 | ||||
Expense recognized on Incentive Warrant | $ 6,000 | $ 7,000 | ||||
Incentive Warrant [Member] | Non-Convertible Promissory Note [Member] | ||||||
Investment [Line Items] | ||||||
Debt instrument, maturity date | Mar. 18, 2019 | |||||
Warrant vesting period | 5 years | |||||
Elutions, Inc [Member] | ||||||
Investment [Line Items] | ||||||
Original principal amount of promissory note | $ 3,268,664 | |||||
Advance to Elutions | 200,000 | 200,000 | ||||
Elutions, Inc [Member] | Inventories [Member] | ||||||
Investment [Line Items] | ||||||
Inventory purchase obligation | $ 3,000,000 | |||||
Payment to acquire inventory | $ 3,000,000 | |||||
Elutions, Inc [Member] | Non-Convertible Promissory Note [Member] | ||||||
Investment [Line Items] | ||||||
Stated interest rate (percent) | 7.825% | |||||
Debt instrument, maturity date | Mar. 18, 2019 | |||||
Debt instrument default interest rate (percent) | 9.825% | |||||
Interest expense, debt | $ 63,000 | $ 63,000 | ||||
Carrying value of the note | 3,269,000 | 3,269,000 | ||||
Elutions, Inc [Member] | Non-Convertible Promissory Note [Member] | Strategic Alliance and Investment [Member] | ||||||
Investment [Line Items] | ||||||
Original principal amount of promissory note | $ 3,268,664 | |||||
Period after which note may be prepaid if minimum stock price met | 18 months | |||||
Price per share of stock on tracking warrant (in dollars per share) | $ 5.50 | |||||
Period after which note may be prepaid | 30 months | |||||
Elutions, Inc [Member] | Common Stock [Member] | ||||||
Investment [Line Items] | ||||||
Shares issued and sold (shares) | 609,756 | |||||
Shares sold, price per share (in dollars per share) | $ 3.28 | |||||
Proceeds from shares sold | $ 2,000,000 | |||||
Elutions, Inc [Member] | Tracking Warrant [Member] | ||||||
Investment [Line Items] | ||||||
Warrants issued to purchase common stock (shares) | 996,544 | |||||
Warrant exercise price (in dollars per share) | $ 3.28 | $ 3.28 | ||||
Price per share of stock on tracking warrant (in dollars per share) | $ 5.50 | |||||
Period after which Company may require Elutions to exercise or forfeit warrant if working capital thresholds are met | 30 months | |||||
Period after which Company may require Elutions to exercise or forfeit warrant if thresholds are met | 18 months | |||||
Elutions, Inc [Member] | Tracking Warrant [Member] | Strategic Alliance and Investment [Member] | ||||||
Investment [Line Items] | ||||||
Warrants issued to purchase common stock (shares) | 996,544 | |||||
Warrant 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 | |||||
Expiration date of warrants issued in period | 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] | ||||||
Warrant exercise price for warrants issued to Elutions (in dollars per share) | 3.85 | |||||
Elutions, Inc [Member] | Incentive Warrant [Member] | Maximum [Member] | ||||||
Investment [Line Items] | ||||||
Warrant exercise price for warrants issued to Elutions (in dollars per share) | $ 4.85 | |||||
Other Current Assets [Member] | Elutions, Inc [Member] | ||||||
Investment [Line Items] | ||||||
Advance to Elutions | $ 100,000 | 100,000 | ||||
Other Noncurrent Assets [Member] | Elutions, Inc [Member] | ||||||
Investment [Line Items] | ||||||
Advance to Elutions | $ 100,000 | $ 100,000 | ||||
Elutions, Inc [Member] | ||||||
Investment [Line Items] | ||||||
Commercial relationship, term of agreement | 5 years | |||||
Commercial relationship, renewal period | 2 years | |||||
Commercial relationship, period restrictions apply, after initial term | 2 years |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Finite-lived Intangible Assets [Roll Forward] | ||
Balance, beginning of period | $ 1,000 | |
Changes in foreign currency exchange rates | 16 | |
Balance, end of period | 1,016 | |
Accumulated Amortization of Intangible Assets [Roll Forward] | ||
Balance, beginning of period | (443) | |
Changes in foreign currency exchange rates | (8) | |
Amortization expense | (66) | $ (89) |
Balance, end of period | $ (517) | |
Noncompete Agreements [Member] | ||
Finite Lived Intangible Assets By Major Class Including Accumulated Amortization [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 4 years 6 months | |
Finite-lived Intangible Assets [Roll Forward] | ||
Balance, beginning of period | $ 48 | |
Changes in foreign currency exchange rates | 0 | |
Balance, end of period | 48 | |
Accumulated Amortization of Intangible Assets [Roll Forward] | ||
Balance, beginning of period | (15) | |
Changes in foreign currency exchange rates | 0 | |
Amortization expense | (3) | |
Balance, end of period | $ (18) | |
Customer Relationships [Member] | ||
Finite Lived Intangible Assets By Major Class Including Accumulated Amortization [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 3 years 6 months | |
Finite-lived Intangible Assets [Roll Forward] | ||
Balance, beginning of period | $ 881 | |
Changes in foreign currency exchange rates | 14 | |
Balance, end of period | 895 | |
Accumulated Amortization of Intangible Assets [Roll Forward] | ||
Balance, beginning of period | (357) | |
Changes in foreign currency exchange rates | (6) | |
Amortization expense | (63) | |
Balance, end of period | $ (426) | |
Trade Names [Member] | ||
Finite Lived Intangible Assets By Major Class Including Accumulated Amortization [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 6 months | |
Finite-lived Intangible Assets [Roll Forward] | ||
Balance, beginning of period | $ 71 | |
Changes in foreign currency exchange rates | 2 | |
Balance, end of period | 73 | |
Accumulated Amortization of Intangible Assets [Roll Forward] | ||
Balance, beginning of period | (71) | |
Changes in foreign currency exchange rates | (2) | |
Amortization expense | 0 | |
Balance, end of period | $ (73) |
Goodwill and Intangible Asset30
Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 66 | $ 89 |
Goodwill and Intangible Asset31
Goodwill and Intangible Assets (Details 2) $ in Thousands | Apr. 01, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2017 (April 2, 2017 – December 30, 2017) | $ 200 |
2,018 | 266 |
2,019 | 32 |
2,020 | 1 |
Finite-Lived Intangible Assets, Net, Total | $ 499 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - $ / shares | Sep. 28, 2016 | Jun. 16, 2015 | Apr. 01, 2017 |
Supplemental Stock Plan 2000 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Shares, Outstanding (in shares) | 30,100 | ||
Shares, Forfeited/cancelled (in shares) | (6,000) | ||
Shares, Outstanding (in shares) | 24,100 | ||
Shares, Options vested and expected to vest (in shares) | 24,100 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 11.06 | ||
Weighted Average Exercise Price, Forfeited/cancelled (in dollars per share) | 0 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | 11.01 | ||
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share) | $ 11.01 | ||
Service-Based Stock Option Awards [Member] | Equity Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Shares, Outstanding (in shares) | 212,762 | ||
Shares, Granted (in shares) | 0 | ||
Shares, Forfeited/cancelled (in shares) | (25,001) | ||
Shares, Outstanding (in shares) | 187,761 | ||
Shares, Options vested and expected to vest (in shares) | 178,386 | ||
Shares, Options exercisable (in shares) | 137,760 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 6.91 | ||
Weighted Average Exercise Price, Granted (in dollars per share) | 0 | ||
Weighted Average Exercise Price, Forfeited/cancelled (in dollars per share) | 8.10 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | 6.75 | ||
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share) | 7.01 | ||
Weighted Average Exercise Price, Options exercisable (in dollars per share) | $ 8.54 | ||
Market Condition Stock Option Awards [Member] | Equity Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Shares, Outstanding (in shares) | 325,000 | ||
Shares, Granted (in shares) | 125,000 | 200,000 | 0 |
Shares, Outstanding (in shares) | 325,000 | ||
Shares, Options vested and expected to vest (in shares) | 325,000 | ||
Shares, Options exercisable (in shares) | 0 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 2.54 | ||
Weighted Average Exercise Price, Granted (in dollars per share) | $ 1.25 | $ 3.34 | 0 |
Weighted Average Exercise Price, Outstanding (in dollars per share) | 2.54 | ||
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 (Det33
Share-Based Compensation (Details 1) - $ / shares | 1 Months Ended | |
Sep. 30, 2016 | Jun. 30, 2015 | |
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 dollars per share) | $ 1.95 | |
Derived Service Period | 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 dollars per share) | $ 1.95 | |
Derived Service Period | 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 dollars per share) | $ 1.99 | |
Derived Service Period | 362 days | |
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 dollars per share) | $ 0.32 | |
Derived Service Period | 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 dollars per share) | $ 0.31 | |
Derived Service Period | 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 dollars per share) | $ 0.30 | |
Derived Service Period | 5 years 10 months 24 days |
Share-Based Compensation (Det34
Share-Based Compensation (Details 2) - $ / shares | Mar. 13, 2017 | Jul. 22, 2016 | Apr. 08, 2013 | Apr. 01, 2017 |
Service Based Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Shares, Granted (in shares) | 60,000 | 40,000 | ||
Service Based Restricted Stock [Member] | Equity Incentive Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Shares, Outstanding (in shares) | 172,422 | |||
Shares, Granted (in shares) | 60,000 | |||
Shares, Vested (in shares) | (132,422) | |||
Shares, Outstanding (in shares) | 100,000 | |||
Weighted Average Grant Date Fair Value, Outstanding (in dollars per share) | $ 0.71 | |||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | 1.18 | |||
Weighted Average Grant Date Fair Value, Vested (in dollars per share) | 0.71 | |||
Weighted Average Grant Date Fair Value, Outstanding (in dollars per share) | $ 0.99 | |||
Performance Based Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
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, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Shares, Outstanding (in shares) | 172,657 | |||
Shares, Forfeited (in shares) | 0 | |||
Shares, Outstanding (in shares) | 172,657 | |||
Weighted Average Grant Date Fair Value, Outstanding (in dollars per share) | $ 3.14 | |||
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | 0 | |||
Weighted Average Grant Date Fair Value, Outstanding (in dollars per share) | $ 3.14 |
Share-Based Compensation (Det35
Share-Based Compensation (Details Textual) - USD ($) | Mar. 13, 2017 | Oct. 03, 2016 | Sep. 28, 2016 | Jul. 22, 2016 | Jul. 22, 2015 | Jun. 16, 2015 | Apr. 08, 2013 | Apr. 01, 2017 | Apr. 02, 2016 | Dec. 31, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Income tax benefits related to share-based compensation arrangements | $ 0 | $ 7,000 | ||||||||
Share-based compensation | $ 119,000 | 133,000 | ||||||||
Share-based Compensation Arrangement by 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. | |||||||||
$4.00 market condition tranche [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Options vesting when price target is reached (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 when price target is reached (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 when price target is reached (shares) | 91,667 | |||||||||
Share price target (in dollars per share) | $ 6 | |||||||||
Executive Officers and Employees [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Non-vested stock grants in period (shares) | 800,000 | |||||||||
Two Employees [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Non-vested stock grants in period (shares) | 58,940 | |||||||||
Equity Incentive Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Cumulative number of shares of common stock available for issuance after amendment (shares) | 2,805,659 | |||||||||
Service-Based Stock Option Awards [Member] | Equity Incentive Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based compensation | $ 6,000 | 5,000 | ||||||||
Unrecognized share-based compensation | $ 20,000 | $ 26,000 | ||||||||
Unrecognized share-based compensation, period for recognition | 19 months | |||||||||
Option grant in period (shares) | 0 | |||||||||
Option exercise price (in dollars per share) | $ 0 | |||||||||
Performance Based Non vested Share Awards [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Unrecognized share-based compensation, period for recognition | 4 months | |||||||||
Share-based compensation expense | $ 10,000 | 56,000 | ||||||||
Unrecognized compensation expense | $ 12,000 | |||||||||
Performance period for vesting of shares | 4 years | |||||||||
Cumulative Net Non-GAAP EBITDA goal | $ 14,000,000 | |||||||||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ 3.14 | |||||||||
Performance Based Non vested Share Awards [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) | $ 3.14 | $ 3.14 | ||||||||
Market Condition Stock Option Awards [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Unrecognized share-based compensation | $ 36,000 | $ 37,000 | ||||||||
Unrecognized share-based compensation, period for recognition | 23 months | |||||||||
Share-based compensation expense | $ 2,000 | 65,000 | ||||||||
Market Condition Stock Option Awards [Member] | Equity Incentive Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Option grant in period (shares) | 125,000 | 200,000 | 0 | |||||||
Option exercise price (in dollars per share) | $ 1.25 | $ 3.34 | $ 0 | |||||||
Market Condition Stock Option Awards [Member] | Equity Incentive Plan [Member] | Vest upon Change in Control of Company [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Option grant in period (shares) | 125,000 | |||||||||
Service Based Restricted Stock [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Unrecognized share-based compensation, period for recognition | 17 months | |||||||||
Non-vested stock grants in period (shares) | 60,000 | 40,000 | ||||||||
Award vesting period | 2 years | 1 year | ||||||||
Share-based compensation expense | $ 9,000 | $ 0 | ||||||||
Unrecognized compensation expense | $ 69,000 | $ 16,000 | ||||||||
Service Based Restricted Stock [Member] | Equity Incentive Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Non-vested stock grants in period (shares) | 60,000 | |||||||||
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ 0.99 | $ 0.71 | ||||||||
Non-employee Service Based Restricted Stock [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Non-vested stock grants in period (shares) | 72,500 | 59,922 | ||||||||
Award vesting period | 3 years | 3 years | ||||||||
Share-based compensation expense | $ 85,000 |
Supplemental Balance Sheet In36
Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Accrued payroll, bonuses and related expenses | ||
Accrued payroll | $ 598 | $ 313 |
Accrued bonuses | 530 | 2,060 |
Accrued payroll taxes | 870 | 515 |
Accrued vacation | 731 | 494 |
Accrued severance | 9 | 117 |
Other | 264 | 253 |
Employee-related Liabilities, Current | 3,002 | 3,752 |
Other accrued liabilities | ||
Sales and value-added taxes payable | 798 | 911 |
Lease termination liability | 135 | 103 |
Accrued income taxes | 174 | 152 |
Accrued acquisition consideration | 0 | 32 |
Other | 535 | 919 |
Other Accrued Liabilities, Current | $ 1,642 | $ 2,117 |
Business Segments and Major C37
Business Segments and Major Customers (Details Textual) | 3 Months Ended | |
Apr. 01, 2017USD ($)segment | Apr. 02, 2016USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | segment | 3 | |
Revenues | $ 14,266,000 | $ 20,317,000 |
Revenue from 10 most significant customers as percentage of total revenue (percent) | 82.70% | 83.20% |
Segment Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 0 | $ 0 |
Business Segments and Major C38
Business Segments and Major Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2017 | Apr. 02, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 14,266 | $ 20,317 | |
Income (loss) from operations | (1,526) | (744) | |
Total assets | 23,772 | 39,337 | $ 22,701 |
Operating Segments [Member] | North America [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 5,078 | 8,513 | |
Income (loss) from operations | 728 | 1,754 | |
Total assets | 3,726 | 6,993 | 3,378 |
Operating Segments [Member] | EMEA [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 9,040 | 11,702 | |
Income (loss) from operations | 1,110 | 1,477 | |
Total assets | 11,903 | 11,627 | 10,113 |
Operating Segments [Member] | Strategic Alliances [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 148 | 102 | |
Income (loss) from operations | 27 | (76) | |
Total assets | 418 | 625 | 550 |
Corporate, Non-Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 0 | 0 | |
Income (loss) from operations | (3,391) | (3,899) | |
Total assets | $ 7,725 | $ 20,092 | $ 8,660 |
Business Segments and Major C39
Business Segments and Major Customers (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 14,266 | $ 20,317 |
United States [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 5,294 | 8,715 |
United Kingdom [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 8,154 | 10,960 |
Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 818 | $ 642 |
Business Segments and Major C40
Business Segments and Major Customers (Details 2) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Segment Reporting Information [Line Items] | ||
Long-Lived Assets | $ 2,474 | $ 2,381 |
United States [Member] | ||
Segment Reporting Information [Line Items] | ||
Long-Lived Assets | 2,271 | 2,154 |
United Kingdom [Member] | ||
Segment Reporting Information [Line Items] | ||
Long-Lived Assets | 193 | 217 |
France [Member] | ||
Segment Reporting Information [Line Items] | ||
Long-Lived Assets | $ 10 | $ 10 |
Business Segments and Major C41
Business Segments and Major Customers (Details 3) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2017 | Apr. 02, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 14,266 | $ 20,317 | |
Accounts Receivable | 15,589 | $ 13,680 | |
Customer A [Member] | |||
Segment Reporting Information [Line Items] | |||
Accounts Receivable | 4,744 | 3,812 | |
Customer B [Member] | |||
Segment Reporting Information [Line Items] | |||
Accounts Receivable | 951 | 2,255 | |
Customer C [Member] | |||
Segment Reporting Information [Line Items] | |||
Accounts Receivable | 1,862 | 2,544 | |
North America [Member] | Customer A [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 0 | 0 | |
North America [Member] | Customer B [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 2,509 | 3,273 | |
North America [Member] | Customer C [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 0 | 0 | |
EMEA [Member] | Customer A [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 3,951 | 4,426 | |
EMEA [Member] | Customer B [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 0 | 0 | |
EMEA [Member] | Customer C [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 1,754 | $ 3,005 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2017 | Apr. 02, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Income tax provision (benefit) | $ (29) | $ 142 | |
Deferred tax assets, valuation allowance | $ 37,100 | $ 36,600 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Common stock exceed (in dollars per share) | $ 5.50 | |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Decrease in fair value liability | $ (73) | $ (73) |
Fair Value Measurements (Deta44
Fair Value Measurements (Details) - Fair Value, Inputs, Level 3 [Member] - $ / shares | 3 Months Ended | 12 Months Ended |
Apr. 01, 2017 | Dec. 31, 2016 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Common stock price (in dollars per share) | $ 0.83 | $ 0.91 |
Dividend yield | 0.00% | 0.00% |
Credit spread | 24.60% | 16.00% |
Risk-free interest rate | 1.30% | 1.30% |
Estimated stock volatility | 88.20% | 77.30% |
Fair Value Measurements (Deta45
Fair Value Measurements (Detail 1) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Holder Redemption Option | $ 897 | $ 970 |
Earn-Out Liability | 1,903 | |
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 | 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 | 0 | |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Holder Redemption Option | $ 897 | 970 |
Earn-Out Liability | $ 1,903 |
Fair Value Measurements (Deta46
Fair Value Measurements (Detail 2) - Holder Redemption Option [Member] $ in Thousands | 3 Months Ended |
Apr. 01, 2017USD ($) | |
Year to date changes to the fair value of Holder Redemption Option and Earn-out Liability | |
Fair value, beginning of period | $ 970 |
Decrease in fair value | (73) |
Fair value, end of period | $ 897 |
Commitments and Contingencies (
Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | ||||
Apr. 02, 2016 | Apr. 04, 2015 | Apr. 01, 2017 | Dec. 31, 2016 | Jul. 22, 2015 | |
Purchase Commitment [Line Items] | |||||
Potential earn-out consideration payable | $ 2,188 | $ 1,903 | $ 2,188 | ||
Computer Software [Member] | |||||
Purchase Commitment [Line Items] | |||||
Long-term purchase commitment | $ 412 | ||||
Term of long-term purchase agreement | 3 years | ||||
Amended long-term purchase commitment | $ 95 | ||||
Additional term under Amended long-term purchase commitment | 2 years | ||||
Remaining purchase obligation | $ 181 |
Common Stock Repurchase Progr48
Common Stock Repurchase Program (Details Textual) - USD ($) | 3 Months Ended | ||
Apr. 01, 2017 | Apr. 02, 2016 | Jun. 07, 2016 | |
Equity [Abstract] | |||
Stock Share repurchase amount authorized under plan | $ 2,000,000 | ||
Shares repurchased during period | $ 0 | $ 0 | |
Remaining amount authorized for repurchases under program | $ 1,838,000 |
Exit and Disposal Activities (D
Exit and Disposal Activities (Details Textual) $ in Thousands | Apr. 01, 2017USD ($)ft² | Dec. 31, 2016USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Lease termination obligation, Current | $ 135 | $ 103 |
Property Subject to Operating Lease [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Area of Land | ft² | 4,823 | |
Lease termination obligation | $ 225 | 185 |
Lease termination obligation, Current | 135 | 103 |
Lease termination obligation, Noncurrent | $ 90 | $ 82 |