JanOne Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Borrowings

Borrowings

12 Months Ended

Jan. 02, 2016

Long-term debt, capital lease and other financing obligations as of January 2, 2016 and January 3, 2015 consist of the following:



	January 2, 2016		January 3, 2015
PNC term loan	$	1,275	$	1,530
Susquehanna term loans	3,242		3,316
2.75% note, due in monthly installments of $3, including interest, due October 2024, collateralized by equipment	319		348
Capital leases and other financing obligations	988		1,062
	5,824		6,256
Less current maturities	1,251		1,138
	$	4,573	$	5,118

On January 24, 2011, we entered into a $2,550 term loan (“Term Loan”) with PNC Bank to finance the mortgage on our California facility. The Term Loan is payable as follows, subject to acceleration upon the occurrence of an event of default or termination of the Revolving Credit Agreement: 119 consecutive monthly principal payments of $21 plus interest commencing on February 1, 2011, and continuing on the first day of each month thereafter followed by a 120th payment of all unpaid principal, interest and fees on February 1, 2021. If the Revolving Credit Agreement is not renewed a balloon payment of $1,020 in principal plus interest and additional fees will be due on January 31, 2017. The Term Loan is collateralized with our California facility located in Compton, California. The Term Loan interest rate is PNC Base Rate plus 2.25% to 3.75%, or 1-, 2- or 3-month PNC LIBOR Rate plus 3.25% to 4.75%. with the rate being dependent on our level of fixed charge coverage. The interest rate will be fixed for the first half of 2016 at PNC Base Rate plus 3.75%, or 1-, 2- or 3-month PNC LIBOR Rate plus 4.75%. As of January 2, 2016, the weighted average interest rate was 7.75%, which was the PNC Base Rate plus a default rate premium. As of January 3, 2015, the weighted average interest rate was 3.45%, which included both PNC LIBOR Rate and PNC Base Rate loans.

On March 10, 2011, AAP entered into three separate commercial term loans (“Term Loans”) with Susquehanna Bank, pursuant to the guidelines of the U.S. Small Business Administration 7(a) Loan Program. The total amount of the Term Loans is $4,750, split into three separate loans for $2,100, $1,400 and $1,250. The Term Loans mature in ten years and bear an interest rate of Prime plus 2.75%. As of both January 2, 2016, and January 3, 2015, the interest rate was 6.00%. The total monthly interest and principal payments are $54 and began on July 1, 2011. Borrowings under the Term Loans are secured by substantially all of the assets of AAP along with liens on the business assets and certain personal assets of the owners of 4301 Operations, LLC. We are a guarantor of the Term Loans along with 4301 Operations, LLC and its owners. In connection with these Term Loans, Susquehanna Bank also has a security interest in the assets of the Company.

In March of 2015, an entity controlled by the noncontrolling interest holders of AAP loaned AAP $325 through the issuance of promissory notes. The notes bear interest at an annual rate of 8%. In May of 2015, one of the March 2015 notes totaling $125 was repaid in full by AAP. The remaining note totaling $200 is expected to be repaid with the revenues expected during the second quarter of 2016 from the disposal of refrigerants through carbon offset programs.

The future annual maturities of borrowings are as follows:



	ARCA		AAP		Total
Fiscal year 2016	$	305	$	946	$	1,251
Fiscal year 2017	280		685		965
Fiscal year 2018	274		708		982
Fiscal year 2019	266		661		927
Fiscal year 2020	255		621		876
Thereafter	—		823		823
	$	1,380	$	4,444	$	5,824

Capital leases and other financing obligations: We acquire certain equipment under capital leases and other financing obligations. The cost of such equipment was approximately $2,606 and $2,667 as of January 2, 2016, and January 3, 2015. Accumulated amortization as of January 2, 2016, and January 3, 2015, was approximately $1,635 and $1,588, respectively. Depreciation and amortization expense for equipment under capital leases and other financing obligations is included in cost of revenues and selling, general and administrative expenses.

The following schedule by fiscal year is the approximate remaining minimum payments required under the capital leases and other financing obligations, together with the present value as of January 2, 2016:



	ARCA		AAP		Total
Fiscal year 2016	$	54	$	511	$	565
Fiscal year 2017	28		176		204
Fiscal year 2018	20		161		181
Fiscal year 2019	11		76		87
Total minimum lease and other financing obligation payments	113		924		1,037
Less amount representing interest	8		41		49
Present value of minimum payments	105		883		988
Less current portion	50		492		542
Capital lease and other financing obligations, net of current portion	$	55	$	391	$	446