December 31, 2017

4.9%.

Subject to the Twelfth Amendment, advances made under the PNC Revolving Credit Facility bear interest at the U.S. base rate plus The applicable interest rate for the PNC Long-Term Debt Facility is U.S. base rate plus The base commercial lending rate should approximate prime rate. At the interest rates on the PNC Revolving Credit Facility and the PNC Long-Term Debt Facility were and respectively.

10%

not

’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.

10%

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.

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 31, 2017

$37

January 1, 2017

January 3, 2016)

December 31, 2017

( as at as at which reflected the fair market value of the unsettled forward foreign exchange contracts.

was recognized for the period ended gain of gain of ).

may

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 million 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.

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

Liquidity Risk

may

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. Principal payments for the PNC Long-Term Debt Facility are made on a quarterly basis. 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 and PNC Long-Term Debt Facility of are sufficient to fund our financial obligations. 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.