The Company borrows money under an Amended and Restated Revolving Credit and Security Agreement with PNC Bank, National Association (“PNC”) which governs the PNC Revolving Credit Facility and a Long-Term Debt Facility (“PNC Facilities”). The PNC Facilities have a term ending on Advances made under the PNC Revolving Credit Facility bear interest at the U.S. base rate plus a grid ranging from to or or -month fully-absorbed PNC LIBOR plus a grid ranging from to The applicable interest rate for the Long-Term Debt Facility is U.S. base rate plus The base commercial lending rate should approximate U.S. prime rate. The weighted average interest rate incurred on the PNC Facilities for the year ended was  

 

The Company also borrows money under a Financing Agreement with TCW Asset Management Company, LLC, as collateral agent, and lenders from time to time party thereto (collectively, “TCW”), which governs a term loan A facility (“Term A Loan Facility”) and a term loan B facility (“Term Loan B Facility” and, together with the Term Loan A Facility, the “TCW Facilities” and, together with the PNC Facilities, the “Credit Facilities”). The TCW Facilities mature on the earlier of or the maturity of the PNC Facilities (the “Maturity Date”). The Term Loan A Facility bears interest, as selected by the Company at the time of borrowing, at the base rate plus or LIBOR plus The Term Loan B Facility bears interest, as selected by the Company at the time of borrowing, at the base rate plus or LIBOR plus The base rate should approximate U.S. prime rate. The weighted average interest rate incurred on the TCW Long-Term Debt Facility

 

The impact of a change in interest rates would have a significant impact on our reported earnings.

 

 

10% increase in interest rate (million)		$	0.9
10% decrease in interest rate (million)		$	(0.9	)

 

 

Given the Company’s global business operations, we are exposed to exchange rate fluctuations on expenditures denominated in foreign currencies. However, most of our sales and component purchases are denominated in U.S. dollars, which limits our foreign currency risk. Our foreign exchange risk relates primarily to our Canadian, Mexican and Asian payroll, Euro based component purchases and other operating expenses denominated in local currencies in our geographic locations. To mitigate this risk, the Company enters into forward foreign exchange contracts to reduce its exposure to foreign exchange currency rate fluctuations related to forecasted Canadian dollar and Mexican peso. The strengthening of the Canadian dollar and Mexican peso would result in an increase in costs to the organization and lead to a reduction in reported earnings.

 

The impact of a change in exchange rates would be estimated to have the following impact on cost of sales for the Company:

 

10% increase in both the CAD and PESO foreign exchange rates (million)		$	2.2
10% decrease in both the CAD and PESO foreign exchange rates (million)		$	(2.6	)

 

 

  

The Company enters into forward foreign exchange contracts to reduce its exposure to foreign exchange currency rate fluctuations related to a portion of forecasted Canadian dollar denominated payroll, rent and utility cash flows for the months of and Mexican peso denominated payroll, rent and utility cash flows for the months of These contracts were effective economic hedges, but did qualify for hedge accounting under ASC “Derivatives and Hedging”. Accordingly, changes in the fair value of these derivative contracts were recognized into net loss in the consolidated statement of operations and comprehensive loss. The Company does enter into forward foreign exchange contracts for trading or speculative purposes.

 

The following table presents a summary of the outstanding foreign currency forward contracts as at

 

Currency	Buy/Sell	Foreign Currency Amount		Notional Contract Value in USD
Mexican Peso	Buy	MXN 7,537		$	369

 

 

 

The unrealized gain recognized in earnings as a result of revaluing the outstanding instruments to fair value on was ( – unrealized gain of ) ( – unrealized gain of ) which was recorded in cost of sales in the consolidated statement of operations and comprehensive loss. The realized loss on settled contracts during was ( – realized loss ) ( – realized loss ), which was recorded in cost of sales in the consolidated statement of operations and comprehensive loss. Fair value was determined using the market approach with valuation based on market observables (Level quantitative inputs in the hierarchy set forth under ASC “Fair Value Measurements”).

 

		December 30, 2018				December 31, 2017
Average USD:CAD contract rate			N/A				1.29
Average USD:CAD mark-to-market rate			N/A				1.26
Average USD:PESO contract rate			20.43				18.69
Average USD:PESO mark-to-market rate			19.66				20.11

   

The derivative asset as at was ( as at and and derivative liability as at was ( as at as at which reflected the fair market value of the unsettled forward foreign exchange contracts.

 

Foreign exchange gains and losses are recorded in cost of sales in the consolidated statement of operations and comprehensive loss pertaining to translation of foreign denominated transactions during the period in addition to foreign denominated monetary assets and liabilities at the end of the reporting period. A total aggregate translated foreign exchange gain of was recognized for the year ended gain of gain of ).

  

 

     In the normal course of operations, there is a risk that a counterparty default on its contractual obligations to us which would result in a financial loss that could impact our reported earnings. In order to mitigate this risk, we complete credit approval procedures for new and existing customers and obtain credit insurance where it is financially viable to do so given anticipated revenue volumes, in addition to monitoring our customers’ financial performance. We believe our procedures in place to mitigate customer credit risk and the respective allowance for doubtful accounts are adequate. During the year ended the Company recorded an additional provision for bad debt expense of related to customer which experienced financial issues. The Company takes measures to reduce credit risk, these charges can have a material impact on our financial performance.

 

There is limited risk of financial loss or defaults on our outstanding forward currency contracts as the counterparty to the transactions had a Standard and Poor’s rating of A- or above as at

 

 

         There is a risk that we have sufficient cash available to satisfy our financial obligations as they come due. The financial liabilities we have recorded in the form of accounts payable, accrued liabilities and other current liabilities are primarily due within days with the exception of the current portion of capital lease obligations which could exceed days and our PNC Revolving Debt Facility which utilizes a lock-box to pay down the obligation effectively daily. As at the Company’s liquidity is comprised of in cash on hand and of funds available to borrow under the PNC Revolving Credit Facility. We believe that cash flow from operations, together with cash on hand and our PNC Revolving Credit Facility, which has a maximum credit limit of However, availability under the PNC Revolving Credit Facility is subject to certain conditions, including borrowing base conditions based on eligible inventory and accounts receivable, as determined by PNC.  

 

 

The carrying values of the Company’s cash, accounts receivable, accounts payable and accrued liabilities due within -year approximate fair values due to the short-term maturity of these instruments. The Company’s financial instruments at are comprised of the following:

 

		As at December 30, 2018								As at December 31, 2017
		Carrying Amount				Estimated Fair Value				Carrying Amount				Estimated Fair Value
Level 1
Cash		$	1,601			$	1,601			$	5,536			$	5,536
Level 2
Derivative assets			15				15				17				17
Derivative liability			—				—				375				375
Revolving credit facility			25,020				25,020				12,191				12,191
Current and long term debt			57,407				62,000				8,000				8,000
Warrant liability			2,009				2,009				—				—
Level 3
Contingent consideration			3,050				3,050				—				—