Annual report pursuant to Section 13 and 15(d)

7. Borrowings

7. Borrowings
12 Months Ended
Dec. 31, 2016
Debt Disclosure [Abstract]  

Long-term debt, capital lease and other financing obligations as of December 31, 2016 and January 2, 2016 consist of the following:


    December 31,
    January 2,
PNC term loan   $ 1,020     $ 1,275  
Susquehanna term loans     3,242       3,242  
8.00% notes     582        
2.75% note, due in monthly installments of $3, including interest, due October 2024, collateralized by equipment     287       319  
Capital leases and other financing obligations     567       988  
Debt issuance costs, net     (779 )     (67 )
Total debt obligations     4,919       5,757  
Less current maturities     2,093       1,251  
Long-term debt obligations, net of current maturities   $ 2,826     $ 4,506  


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. The Term Loan is collateralized with our California facility located in Compton, California. As disclosed by the Company in Item 2.01 of its Current Report on Form 8-K filed on January 31, 2017, the Company sold and leased back its Compton building over an initial lease term of six months which can be terminated with a 30 day notice. The net proceeds from the sale were used to pay down our term loan with PNC Bank, National Association in full. 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 December 31, 2016, the weighted average interest rate was 9.50%, which was the PNC Base Rate plus a default rate premium. As of January 2, 2016, the weighted average interest rate was 7.75%, which was the PNC Base Rate plus a default rate premium.


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 December 31, 2016, and January 2, 2016, 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 was repaid with the revenues expected during the third quarter of 2016 from the disposal of refrigerants through carbon offset programs.


On November 8, 2016, the Company entered into a securities purchase agreement with Energy Efficiency Investments, LLC, pursuant to which the Company agreed to issue up to $7,732 principal amount of 3% Original Issue Discount Senior Convertible Promissory Notes of the Company and related common stock purchase warrants. The notes will be issued from time to time, up to such aggregate principal amount, at the request of the Company, subject to certain conditions, or at the option of the Investor. Interest accrues at the rate of eight percent per annum on the principal amount of the notes outstanding from time to time, and is payable at maturity or, if earlier, upon conversion of the notes. The principal amount of notes outstanding at December 31, 2016, was $100.


The future annual maturities of borrowings are as follows:


    ARCA     AAP     Total  
Fiscal year 2017   $ 748     $ 1,037     $ 1,785  
Fiscal year 2018     18       685       703  
Fiscal year 2019     9       708       717  
Fiscal year 2020           661       661  
Fiscal year 2021     103       503       606  
Total future maturities of borrowings   $ 878     $ 3,594     $ 4,472  


Capital leases and other financing obligations: We acquire certain equipment under capital leases and other financing obligations. The cost of such equipment was approximately $2,601 and $2,606 as of December 31, 2016, and January 2, 2016. Accumulated amortization as of December 31, 2016, and January 2, 2016, was approximately $1,771 and $1,635, 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 December 31, 2016:


    ARCA     AAP     Total  
Fiscal year 2017   $ 27     $ 176     $ 203  
Fiscal year 2018     20       161       181  
Fiscal year 2019     11       76       87  
Fiscal year 2020                  
Total minimum lease and other financing obligation payments     58       413       471  
Less amount representing interest     3       21       24  
Present value of minimum payments     55       392       447  
Less current portion     25       283       308  
Capital lease and other financing obligations, net of current portion   $ 30     $ 109     $ 139