Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 02, 2022 | Aug. 11, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | IRIDEX CORP | |
Entity Central Index Key | 0001006045 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 02, 2022 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Trading Symbol | IRIX | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity File Number | 0-27598 | |
Entity Tax Identification Number | 77-0210467 | |
Entity Address, Address Line One | 1212 Terra Bella Avenue | |
Entity Address, City or Town | Mountain View | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94043-1824 | |
City Area Code | 650 | |
Local Phone Number | 940-4700 | |
Entity Common Stock, Shares Outstanding | 15,985,622 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Security Exchange Name | NASDAQ | |
Entity Incorporation, State or Country Code | DE | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 | |
Current assets: | |||
Cash and cash equivalents | $ 17,966 | $ 23,852 | [1] |
Accounts receivable, net of allowance for doubtful accounts of $264 as of July 2, 2022 and $268 as of January 1, 2022 | 6,808 | 6,610 | [1] |
Receivable from related party | 2,429 | 3,106 | [1] |
Inventories | 10,176 | 7,614 | [1] |
Prepaid expenses and other current assets | 2,065 | 1,071 | [1] |
Total current assets | 39,444 | 42,253 | [1] |
Property and equipment, net | 431 | 428 | [1] |
Intangible assets, net | 2,109 | 2,205 | [1] |
Goodwill | 965 | 965 | [1] |
Operating lease right-of-use assets, net | 2,098 | 2,565 | [1] |
Other long-term assets | 599 | 271 | [1] |
Total assets | 45,646 | 48,687 | [1] |
Current liabilities: | |||
Accounts payable | 3,812 | 2,772 | [1] |
Payable to related party | 180 | 627 | [1] |
Accrued compensation | 2,303 | 3,192 | [1] |
Accrued expenses | 1,697 | 1,575 | [1] |
Other current liabilities | 868 | 1,098 | [1] |
Accrued warranty | 131 | 100 | [1] |
Deferred revenue | 2,367 | 2,355 | [1] |
Operating lease liabilities | 994 | 927 | [1] |
Total current liabilities | 12,352 | 12,646 | [1] |
Long-term liabilities: | |||
Accrued warranty | 76 | 58 | [1] |
Deferred revenue | 12,540 | 10,930 | [1] |
Operating lease liabilities | 1,222 | 1,729 | [1] |
Other long-term liabilities | 24 | 25 | [1] |
Total liabilities | 26,214 | 25,388 | [1] |
Commitments and contingencies (Note 7) | |||
Stockholders’ equity: | |||
Preferred stock, $0.01 par value, 2,000,000 shares authorized, no shares issued and outstanding | 0 | 0 | [1] |
Issued and outstanding 15,890,778 and 15,876,171 shares as of July 2, 2022 and January 1, 2022, respectively | 169 | 168 | [1] |
Additional paid-in capital | 85,935 | 85,255 | [1] |
Accumulated other comprehensive income (loss) | 129 | 45 | [1] |
Accumulated deficit | (66,801) | (62,169) | [1] |
Total stockholders’ equity | 19,432 | 23,299 | [1] |
Total liabilities and stockholders’ equity | $ 45,646 | $ 48,687 | [1] |
[1] Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 1, 2022. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 264 | $ 268 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 15,955,536 | 15,876,171 |
Common stock, shares outstanding | 15,955,536 | 15,876,171 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Income Statement [Abstract] | ||||
Total revenues | $ 13,755 | $ 13,426 | $ 27,142 | $ 25,385 |
Cost of revenues | 7,488 | 7,318 | 14,898 | 14,338 |
Gross profit | 6,267 | 6,108 | 12,244 | 11,047 |
Operating expenses: | ||||
Research and development | 1,922 | 1,672 | 4,038 | 2,837 |
Sales and marketing | 4,607 | 3,646 | 8,907 | 6,628 |
General and administrative | 1,898 | 1,928 | 3,736 | 4,561 |
Total operating expenses | 8,427 | 7,246 | 16,681 | 14,026 |
Loss from operations | (2,160) | (1,138) | (4,437) | (2,979) |
Other (expense) income, net | (64) | 2,539 | (158) | 2,378 |
(Loss) income from operations before provision for income taxes | (2,224) | 1,401 | (4,595) | (601) |
Provision for income taxes | 17 | 8 | 37 | 16 |
Net (loss) income | $ (2,241) | $ 1,393 | $ (4,632) | $ (617) |
Net (loss) income per share: | ||||
Basic | $ (0.14) | $ 0.09 | $ (0.29) | $ (0.04) |
Diluted | $ (0.14) | $ 0.09 | $ (0.29) | $ (0.04) |
Weighted average shares used in computing net (loss) income per common share: | ||||
Basic | 15,894 | 15,647 | 15,888 | 14,996 |
Diluted | 15,894 | 16,307 | 15,888 | 14,996 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (2,241) | $ 1,393 | $ (4,632) | $ (617) |
Foreign currency translation adjustments | 56 | (10) | 84 | 28 |
Comprehensive (loss) income | $ (2,185) | $ (1,383) | $ (4,548) | $ (589) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | |
Beginning Balance, value at Jan. 02, 2021 | $ 17,366 | $ 148 | $ 74,181 | $ (19) | $ (56,944) | |
Beginning Balance, shares at Jan. 02, 2021 | 13,899,683 | |||||
Stock-based compensation expense | 646 | 646 | ||||
Issuance of common stock, net of issuance costs | 9,878 | $ 16 | 9,862 | |||
Issuance of common stock, net of issuance costs, shares | 1,618,122 | |||||
Issuance of common stock under stock option plan | 97 | $ 1 | 96 | |||
Issuance of common stock under stock option plan, shares | 23,304 | |||||
Release of restricted stock, net of taxes paid | (518) | $ 2 | (520) | |||
Release of restricted stock, net of taxes paid, shares | 242,595 | |||||
Other comprehensive income (loss) | 28 | 28 | ||||
Net income (loss) | (617) | (617) | ||||
Ending Balance, value at Jul. 03, 2021 | 26,880 | $ 167 | 84,265 | 9 | (57,561) | |
Ending Balance, shares at Jul. 03, 2021 | 15,783,704 | |||||
Beginning Balance, value at Apr. 03, 2021 | 25,649 | $ 165 | 84,419 | 19 | (58,954) | |
Beginning Balance, shares at Apr. 03, 2021 | 15,522,809 | |||||
Stock-based compensation expense | 280 | 280 | ||||
Issuance of common stock under stock option plan | 80 | $ 0 | 80 | |||
Issuance of common stock under stock option plan, shares | 20,222 | |||||
Release of restricted stock, net of taxes paid | (512) | $ 2 | (514) | |||
Release of restricted stock, net of taxes paid, shares | 240,673 | |||||
Other comprehensive income (loss) | (10) | (10) | ||||
Net income (loss) | 1,393 | 1,393 | ||||
Ending Balance, value at Jul. 03, 2021 | 26,880 | $ 167 | 84,265 | 9 | (57,561) | |
Ending Balance, shares at Jul. 03, 2021 | 15,783,704 | |||||
Beginning Balance, value at Jan. 01, 2022 | $ 23,299 | [1] | $ 168 | 85,255 | 45 | (62,169) |
Beginning Balance, shares at Jan. 01, 2022 | 15,876,171 | 15,876,171 | ||||
Stock-based compensation expense | $ 728 | 728 | ||||
Issuance of common stock under stock option plan | 14 | $ 0 | 14 | |||
Issuance of common stock under stock option plan, shares | 6,063 | |||||
Release of restricted stock, net of taxes paid | (61) | $ 1 | (62) | |||
Release of restricted stock, net of taxes paid, shares | 73,302 | |||||
Other comprehensive income (loss) | 84 | 84 | ||||
Net income (loss) | (4,632) | (4,632) | ||||
Ending Balance, value at Jul. 02, 2022 | $ 19,432 | $ 169 | 85,935 | 129 | (66,801) | |
Ending Balance, shares at Jul. 02, 2022 | 15,955,536 | 15,955,536 | ||||
Beginning Balance, value at Apr. 02, 2022 | $ 21,326 | $ 168 | 85,645 | 73 | (64,560) | |
Beginning Balance, shares at Apr. 02, 2022 | 15,885,307 | |||||
Stock-based compensation expense | 344 | 344 | ||||
Release of restricted stock, net of taxes paid | (53) | $ 1 | (54) | |||
Release of restricted stock, net of taxes paid, shares | 70,229 | |||||
Other comprehensive income (loss) | 56 | 56 | ||||
Net income (loss) | (2,241) | (2,241) | ||||
Ending Balance, value at Jul. 02, 2022 | $ 19,432 | $ 169 | $ 85,935 | $ 129 | $ (66,801) | |
Ending Balance, shares at Jul. 02, 2022 | 15,955,536 | 15,955,536 | ||||
[1] Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 1, 2022. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Operating activities: | ||
Net loss | $ (4,632) | $ (617) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Gain on PPP loan forgiveness | 0 | (2,497) |
Depreciation and amortization | 228 | 365 |
Stock-based compensation | 728 | 646 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (211) | 66 |
Receivable from related party | 677 | (1,378) |
Inventories | (2,590) | (22) |
Prepaid expenses and other current assets | (994) | (181) |
Operating lease right-of-use assets | 467 | 431 |
Other long-term assets | (329) | 75 |
Accounts payable | 1,042 | 1,062 |
Payable to related party | (447) | 39 |
Accrued compensation | (889) | 103 |
Accrued expenses | 127 | 464 |
Accrued warranty | 49 | (67) |
Deferred revenue | 1,622 | 11,257 |
Operating lease liabilities | (440) | (524) |
Other liabilities | (231) | 1,377 |
Net cash (used in) provided by operating activities | (5,823) | 10,599 |
Investing activities: | ||
Acquisition of property and equipment | (146) | (125) |
Cash paid for business combination, net | 0 | (5,343) |
Net cash used in investing activities | (146) | (5,468) |
Financing activities: | ||
Proceeds from issuance of common stock, net of issuance costs | 0 | 9,878 |
Proceeds from stock option exercise | 14 | 97 |
Taxes paid related to net share settlements of equity awards | (61) | (518) |
Net cash (used in) provided by financing activities | (47) | 9,457 |
Effect of foreign exchange rate changes | 130 | 45 |
Net (decrease) increase in cash and cash equivalents | (5,886) | 14,633 |
Cash and cash equivalents, beginning of period | 23,852 | 11,626 |
Cash and cash equivalents, end of period | 17,966 | 26,259 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for income taxes | 77 | 23 |
Supplemental disclosure of non-cash activities: | ||
Transfer of inventory (from) to property and equipment | (10) | 78 |
ROU assets obtained with the modification of operating lease | $ 0 | $ 1,824 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jul. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of IRIDEX Corporation (“IRIDEX”, the “Company”, “we”, “our”, or “us”) have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial statements have been included. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, together with management’s discussion and analysis of the Company’s financial condition and results of operations, contained in our Annual Report on Form 10-K for the fiscal year ended January 1, 2022, which was filed with the Securities and Exchange Commission (“SEC”) on March 15, 2022. The results of operations for the three and six months ended July 2, 2022 and July 3, 2021 are not necessarily indicative of the results for the fiscal year ending December 31, 2022 or any future interim period. The three and six months ended July 2, 2022 and July 3, 2021 each had 13 weeks. For purposes of reporting the financial results, the Company’s fiscal years end on the Saturday closest to the end of December. Periodically, the Company includes a 53rd week to a year in order to end that year on the Saturday closest to the end of December. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 02, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The Company’s significant accounting policies are disclosed in our Annual Report on Form 10-K for the year ended January 1, 2022, which was filed with the SEC on March 15, 2022. Financial Statement Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on our operating results. Revenue Recognition. Our revenues arise from the sale of laser consoles, delivery devices, consumables, service, and support activities. We also derive revenue from royalties from third parties which are typically based on the licensees’ net sales of products that utilize our technology. Our revenue is recognized in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.” The Company recognizes revenue using the five-step model: (1) identifying the contract with the customer, (2) identifying the performance obligations in the contract, (3) determining expected transaction price, (4) allocating the transaction price to the distinct performance obligations in the contract, and (5) recognizing revenue when (or as) the performance obligations are satisfied. The Company has the following revenue transaction types: (1) Product Sale Only, (2) Service Contracts, (3) System Repairs (outside of warranty), (4) Royalty Revenue and (5) Exclusive Distribution Rights. (1) Product Sale Only: The Company’s products consist of laser consoles, delivery devices and consumable instrumentation, including laser probes. The Company’s products are currently sold for use by ophthalmologists specializing in the treatment of glaucoma and retinal diseases. Inside the United States and Germany the products are sold directly to the end users. In other countries outside of the United States and Germany, the Company utilizes independent, third-party distributors to market and sell the Company’s products. There is no continuing obligation after shipment is made to these distributors. The Company recognizes revenue from product sale at a point in time subject to the allocation of transaction price to additional performance obligations, if any. (2) Service Contracts: The Company offers a standard two-year warranty on all system sales. The Company also offers a service contract which is sold to customers in incremental, one-year periods which begin subsequent to the expiration of the standard two-year warranty. The customer can opt to purchase the service contract at the time of the system sale or after the initial system sale. The Company recognizes revenue from service contracts ratably over the service period. Revenue recognition for the sale of a service contract is largely dependent on the timing of the sale as follows: a. Service Contract Sale in Conjunction with System Sale: If the customer opts to purchase a service contract at the time of the system sale, the Company allocates the transaction price of the distinct performance obligations in the contract by determining stand-alone selling price using historical pricing net of any variable consideration or discounts to specifically allocate to a particular performance obligation. b. Service Contract Sale Subsequent to System Sale: If the customer opts to purchase a service contract after the initial system sale, the Company determines the amount of time that has elapsed since the initial system sale. If the service contract is purchased within 60 days of the initial sale, the Company considers this sale to be an additional element of the original sale and allocates the transaction price of the distinct performance obligations in the contract by determining stand-alone selling price using historical pricing net of any variable consideration or discounts to specifically allocate to a particular performance obligation. If the service contract is purchased subsequent to 60 days after the initial sale, the sale of the service contract is deemed a separate contract and is deferred at the selling price and recognized ratably over the extended warranty period as the performance obligation is satisfied. (3) System Repairs (outside of warranty): Customers will occasionally request repairs from the Company subsequent to the expiration of the standard warranty and outside of a service contract. The Company recognizes revenue from system repairs (outside of warranty) at a point in time. When the customer requests repairs from the Company subsequent to the expiration of the standard warranty and outside of a service contract, these repair contracts are considered separate from the initial sale, and as such, revenue is recognized as the repair services are rendered and the performance obligation satisfied. (4) Royalty Revenue: The Company has royalty agreements with four customers related to sale of the Company’s intellectual property. Under the terms of these agreements, the customer is to remit a percentage of its sales to the Company. Since these arrangements are for sales-based licenses of intellectual property, for which the guidance in paragraph ASC 606-10-55-65 applies, the Company recognizes revenue only as the subsequent sale occurs. However, the Company notes that such sales being reported by the licensee with a quarter in arrear, such revenue is recognized at the time it is reported and paid by the licensee given that any estimated variable consideration would have to be fully constrained due to the unpredictability of such estimate and the unavoidable risk that it may lead to significant revenue reversals. (5) Exclusive Distribution Rights: On March 2, 2021, the Company and Topcon Corporation (“Topcon”) entered into a distribution agreement ("Distribution Agreement"), pursuant to which the Company granted Topcon the exclusive right to distribute the Company’s retina and glaucoma products in certain geographies outside the United States. The exclusivity arrangement with Topcon obligates the Company to provide training, customer support, and exclusive territorial rights to Topcon for certain international regions, for a period of 10 years, commencing upon regulatory approval to transfer existing (non-exclusive) distribution rights from the current distributors in those regions to Topcon. The Company has the right to terminate the exclusive distribution rights granted to Topcon for any of the regions at any point in time during the 10-year exclusivity term for a termination fee that is based on a multiple of 1.2 times the revenue generated by the Company in 2019 for the respective region. Management has determined that the exclusivity rights, training, and customer support represents a single combined performance obligation for each region, to be recognized as exclusivity fee revenue on a straight-line basis over the 10-year period for each region, commencing on the date that regulatory approval is obtained for each region, based on the Standalone Selling Price (“SSP”) for such combined performance obligation for each region. The estimated fair value of the exclusive distribution rights for all regions combined totaled approximately $ 14.8 million. Of this amount, management has fully-constrained and returned to Topcon the arrangement fee allocated to Belarus (approximately $ 0.2 million) because obtaining the necessary regulatory approvals and termination of existing distributor relationships was not feasible. For the three and six months ended July 2, 2 022, $ 0.3 million and $ 0.6 million in r evenue related to the exclusive distribution rights was recorded. The Company elected the practical expedient allowing it to not recognize as a contract asset the commission paid to its salesforce on the sale of its products as an incremental cost of obtaining a contract with a customer but rather recognize such commission as expense when incurred as the amortization period of the asset that the Company would have otherwise recognized is one year or less. The Company recognized an asset from the costs incurred to fulfill a contract. These costs relate directly and must be incurred to satisfy performance obligations on certain specific contact with a customer. These costs are expected to be recovered over time and will be amortized on a systematic basis that is consistent with the recognition of revenue to which it relates. As of July 2, 2022, recognized deferred costs incurred to fulfill a contract with a customer amo unted to $ 0.6 million, incl uded in Prepaid expenses and other current assets and Other long-term assets in the Company’s condensed consolidated balance sheets. Amortization was $ 21 thousand for both the three and six months ended July 2, 2022. Leases. We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use (“ROU”) assets, net and Operating lease liabilities in our condensed consolidated balance sheets. As of July 2, 2022 and January 1, 2022, the Company was not a party to finance lease arrangements. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Under the available practical expedient, we account for the lease and non-lease components as a single lease component. Concentration of Credit Risk. Our cash and cash equivalents are deposited in demand and money market accounts. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. We market our products to distributors and end-users throughout the world. Sales to international distributors are generally made on open credit terms and letters of credit. Management performs ongoing credit evaluations of our customers and maintains an allowance for potential credit losses. Historically, we have not experienced any significant losses related to individual customers or a group of customers in any particular geographic area. For the three and six months ended July 2, 2022 , one customer, Topcon, accounted for more than 10 % of total revenues, representing 26 % and 28 %, respe ctively. For the three and six months ended July 3, 2021 , one customer, Topcon, accounted for more than 10 % of total revenues, representing 15 % and 12 % , respectively. As of July 2, 2022 , one customer, Topcon, accounted for over 10 % of our accounts receivable, representing 26 %. As of January 1, 2022, two customers, including Topcon, accounted for more than 10 % of our accounts receivable, representing 31 % and 11 %, respectively. Taxes Collected from Customers and Remitted to Governmental Authorities. Taxes collected from customers and remitted to governmental authorities are recognized on a net basis in the accompanying condensed consolidated statements of operations. Shipping and Handling Costs. Our shipping and handling costs billed to customers are included in revenues and the associated expense is recorded in cost of revenues for all periods presented. Deferred Revenue. Deferred revenue represents contract liabilities and exclusivity fees. Revenue related to service contracts is deferred and recognized on a straight-line basis over the period of the applicable service contract. Costs associated with these service arrangements are recognized as incurred. Revenue related to exclusivity fees is deferred and recognized over the related exclusivity period. A reconciliation of the changes in the Company’s deferred revenue balance for the six months ended July 2, 2022 and July 3, 2021 is as follows: Six Months Ended July 2, 2022 July 3, 2021 Balance, beginning of period $ 13,285 $ 1,227 Additions to deferral 3,235 12,279 Revenue recognized ( 1,613 ) ( 1,022 ) Balance, end of period 14,907 12,484 Non-current portion of deferred revenue 12,540 10,479 Current portion of deferred revenue $ 2,367 $ 2,005 During the six months ended July 2, 2022 and July 3, 2021, approximately $ 0.7 million a nd $ 0.7 million were recognized pertaining to amounts deferred as of January 1, 2022 and January 2, 2021, respectively. As of July 2, 2022, approximately $ 11.9 million of the non-current portion of deferred revenue and $ 1.5 million of the current portion of deferred revenue pertain to exclusivity fee deferred revenue. Warranty. The Company currently provides a two-year full warranty on its products. The associated costs of these warranties are accrued for upon shipment of the products. The Company’s warranty policy is applicable to products which are considered defective in their performance or fail to meet the product specifications. Warranty costs are reflected in the condensed consolidated statements of operations as cost of revenues. A reconciliation of the changes in the Company’s warranty liability for the six months ended July 2, 2022 and July 3, 2021 is as follows: Six Months Ended July 2, 2022 July 3, 2021 Balance, beginning of period $ 158 $ 247 Accruals for product warranties 54 45 Cost of warranty claims ( 102 ) ( 41 ) Adjustment to pre-existing warranties 97 ( 71 ) Balance, end of period $ 207 $ 180 Reclassifications. Certain reclassifications have been made to the prior year financial statements included in these condensed consolidated financial statements to conform to the current year presentation. The reclassifications had no impact on previously reported total assets, total liabilities and net loss or accumulated deficit. |
Related Party - Topcon
Related Party - Topcon | 6 Months Ended |
Jul. 02, 2022 | |
Related Party Transactions [Abstract] | |
Related Party - Topcon | 3. Related Party - Topcon Topcon holds a 10.2 % voting interest in the Company, which qualifies it to be a principal owner considered a related party, even though it currently does not have significant influence over the Company’s operations. Topcon resells certain of our products as our exclusive distributor in certain international regions. At the same time, the Company also purchases certain raw materials from Topcon. During the three months ended July 2, 2022 , the Company’s revenues related to Topcon amounted to approximately $ 3.6 million, including $ 0.3 million recognized exclusive distribution rights revenue. During the six months ended July 2, 2022, the Company's revenues related to Topcon amounted to approximatel y $ 7.6 million, including $ 0.6 million recognized exclusive distribution rights revenue. During the three and six months ended July 3, 2021, the Company’s revenues related to Topcon amounted to approximatel y $ 2.2 million and $ 3.3 million , respectively, including $ 0.1 million recognized exclusive distribution fees for both the for the three and six months ended July 3, 2021. The Company’s purchases from Topcon during the three and six months ended July 2, 2022 amounted to approximate ly $ 0.2 million and $ 0.6 million, respectively . As of July 2, 2022, the amounts receivable from and payable to Topcon were $ 2.4 million a nd $ 0.2 million, respectively. As of January 1, 2022, the amounts receivable from and payable to Topcon were $ 3.1 million and $ 0.6 million, respectively. |
Inventories
Inventories | 6 Months Ended |
Jul. 02, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories The components of the Company’s inventories as of July 2, 2022 and January 1, 2022 are as follows: July 2, 2022 January 1, 2022 Raw materials $ 5,022 $ 3,937 Work in process 312 201 Finished goods 4,842 3,476 Total inventories $ 10,176 $ 7,614 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jul. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 5. Goodwill and Intangible Assets Goodwill. The carrying value of goodwill w as $ 1.0 million as o f both July 2, 2022 and January 1, 2022. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company reviews goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company performs an annual impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceed the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax-deductible goodwill carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test. As the Company uses the market approach to assess impairment, its common stock price is an important component of the fair value calculation. If the Company’s stock price continues to experience significant price and volume fluctuations, this will impact the fair value of the reporting unit and can lead to potential impairment in future periods. The Company performed its annual impairment test during the second quarter of fiscal year 2022 and determined that its goodwill was not impaired. As of July 2, 2022 , the Company had not identified any factors that indicated there was an impairment of its goodwill and determined that no additional impairment analysis was then required. Intangible Assets. The following table summarizes the components of gross and net of intangible assets carrying amounts (in thousands): July 2, 2022 January 1, 2022 Gross Accumulated Net Remaining Gross Accumulated Net Customer relationships $ 340 $ 215 $ 125 4.64 Years $ 340 $ 200 $ 140 Developed technology 900 171 729 5.67 Years 900 107 793 Trade names 300 45 255 7.67 Years 300 28 272 In-process R&D 1,000 — 1,000 Not applicable 1,000 - 1,000 Patents 600 600 - None 600 600 - $ 3,140 $ 1,031 $ 2,109 $ 3,140 $ 935 $ 2,205 For the six months ended July 2, 2022 and July 3, 2021, amortization expense total ed $ 96 thousand a nd $ 67 thousand, respectively. The amortizations of customer relationships and trade names were charged to sales and marketing expense. The amortization for developed technology was charged to research and development expense. Future estimated amortization expense excluding in-process R&D (in thousands): Fiscal Year: 2022 (six months) $ 96 2023 192 2024 192 2025 180 2026 176 Thereafter 273 Total $ 1,109 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 02, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 6. Fair Value Measurements Fair value is defined as 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. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: • Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. • Level 2: Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. • Level 3: Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. 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 and considers counterparty credit risk in its assessment of fair value. The carrying amounts of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses as of July 2, 2022 and January 1, 2022, approximate fair value because of the short maturity of these instruments. As of July 2, 2022 and January 1, 2022, financial assets measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above were as follows: As of July 2, 2022 As of January 1, 2022 Fair Value Measurements Fair Value Measurements (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds $ 16,910 $ — $ — $ 16,910 $ 23,359 $ — $ — $ 23,359 The Company’s Level 1 financial assets are money market funds whose fair values are based on quoted market prices. The Company does not have any Level 2 and Level 3 financial assets or liabilities. |
Leases and Commitments and Cont
Leases and Commitments and Contingencies | 6 Months Ended |
Jul. 02, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Leases and Commitments and Contingencies | 7. Leases and Commitments and Contingencies Operating Leases Our operating leases consist of facility and office equipment leases. Operating lease expenses for the six months ended July 2, 2022 and July 3, 2021 were approximately $ 0.5 million and $ 0.6 million, respectively. The weighted average discount rate used in calculating the present value of lease payments was 4.8 %. As of July 2, 2022, the weighted average remaining lease term for our operating leases was 2.1 years. The following represents maturities of operating lease liabilities as of July 2, 2022 (in thousands): Fiscal Year Operating Remainder of 2022 (6 months) $ 533 2023 1,084 2024 711 2025 — Total lease payments 2,328 Less: Imputed interest ( 112 ) Total lease liabilities $ 2,216 Purchase Commitments. Our purchase commitments consist primarily of non-cancellable purchase commitments with vendors to manufacture certain components and ophthalmic instrumentation. As of July 2, 2022, our future minimum payments through fiscal year 2024 for our purchase commitments were approximatel y $ 22.7 million, with $ 15.2 million committed for the next 12 months. Indemnities. We enter into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, we indemnify, hold harmless, and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified parties (generally our business partners or customers) in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to our products. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments that we could be required to make under these agreements is not determinable. We have never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the estimated fair value of these agreements is minimal. We have entered into indemnification agreements with our directors and officers that may require us to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature. These agreements also require us to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified and to make good faith determination whether or not it is practicable for us to obtain directors and officers insurance. We currently have directors and officers liability insurance. Legal Proceedings . From time to time, we may be involved in legal proceedings arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. |
Stockholders' Equity and Stock-
Stockholders' Equity and Stock-Based Compensation | 6 Months Ended |
Jul. 02, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stockholder' Equity and Stock Based Compensation | 8. Stockholders’ Equity and Stock-Based Compensation Stock-Based Compensation The Company accounts for stock-based compensation granted to employees and directors, including employees stock option awards, restricted stock and restricted stock units (“RSUs”) in accordance with ASC 718 , “Compensation – Stock Compensation” (“ASC 718”). Accordingly, stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized as expense over the employee’s service period. The Company recognizes compensation expense on a ratable basis over the requisite service period of the award. The Company values options using the Black-Scholes option pricing model. Time-based RSUs are valued at the grant date fair value of the underlying common shares. Performance-based RSUs without market conditions are valued at grant date fair value of the underlying common shares. Performance-based RSUs granted with market conditions and performance-based stock options with market conditions are valued using the Monte Carlo simulation model. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock. The Monte Carlo simulation model incorporates assumptions for the holding period, risk-free interest rate, stock price volatility and dividend yield. 2008 Equity Incentive Plan. The terms of awards granted during the six months ended July 2, 2022 were consistent with those described in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 1, 2022. The following table shows stock-based compensation expense included in the condensed consolidated statements of operations for the three and six months ended July 2, 2022 and July 3, 2021: Three Months Ended Six Months Ended (in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Cost of revenues $ 60 $ 46 $ 120 $ 93 Research and development 32 14 61 50 Sales and marketing 59 41 181 139 General and administrative 193 179 366 364 $ 344 $ 280 $ 728 $ 646 Stock-based compensation expense capitalized to inventory was immaterial for the six months ended July 2, 2022 and July 3, 2021. As of July 2, 2022, there was $ 2.4 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock-based compensation arrangements. The cost is expected to be recognized over a weighted average perio d of 1.74 years. Summary of Stock Options. The following table summarizes stock options information during the six months ended July 2, 2022: Number of Weighted Aggregate Outstanding as of January 2, 2022 1,772,621 $ 5.07 Granted 54,000 4.44 Exercised ( 6,063 ) 2.25 Canceled or forfeited ( 83,346 ) 8.50 Outstanding as of July 2, 2022 1,737,212 $ 4.90 $ 146 The weighted average grant date fair value of the options granted w as $ 2.68 and $ 3.86 per share for the six months ended July 2, 2022 and July 3, 2021, respectively. The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock-based awards (options) with the following weighted average assumptions: Three Months Ended Six Months Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Average risk free interest rate 3.16 % 0.79 % 2.59 % 0.77 % Expected life (in years) 4.5 4.45 4.5 4.45 Dividend yield — % — % — % — % Average volatility 76 % 73 % 76 % 73 % Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history over a period commensurate with the expected term of the options, trading volume of the Company’s stock, look-back volatilities and Company-specific events that affected volatility in a prior period. The expected term of employee stock options represents the weighted average period the stock options are expected to remain outstanding and is based on the history of exercises and cancellations on all past option grants made by the Company, the contractual term, the vesting period and the expected remaining term of the outstanding options. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future. Information regarding stock options outstanding, vested, expected to vest, and exercisable as of July 2, 2022 is summarized below: Number of Weighted Weighted Aggregate Value Options outstanding 1,737,212 $ 4.90 5.19 $ 146 Options vested and expected to vest 1,652,151 $ 4.89 5.14 $ 142 Options exercisable 833,881 $ 4.75 4.28 $ 95 The aggregate intrinsic value in the table above represents the pre-tax intrinsic value, based on the Company’s closing price as of July 2, 2022, that would have been received by option holders had all option holders exercised their stock options as of that date. This amount changes based on the fair market value of the Company’s common stock. The total intrinsic value of options exercised for the six months ended July 2, 2022 and July 3, 2021 was approxima tely $ 19 thousand an d $ 70 thousand, respectively. Summary of RSUs and Awards Information regarding RSUs activity for the six months ended July 2, 2022 is summarized below: Number Outstanding as of January 1, 2022 253,761 RSUs granted 137,360 RSUs released ( 95,242 ) RSUs forfeited ( 6,638 ) Outstanding as of July 2, 2022 289,241 |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 02, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | . Income Taxes Provision for Income Tax. The Company calculates its interim tax provision in accordance with the provisions of ASC 740-270, Income Taxes; Interim Reporting . For interim periods, the Company estimates its annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. The Company also computes the tax provision or benefit related to items reported separately and recognizes the items net of their related tax effect in the interim periods in which they occur. The Company also recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur. The Company recorded a provision for income ta x of $ 37 thousand an d $ 16 thousand for the six months ended July 2, 2022 and July 3, 2021, respectively. Deferred Income Taxes. The Company accounts for income taxes in accordance with ASC topic 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. As of the second quarter of fiscal year 2022, based on the Company’s recent history of losses and its forecasted losses, management believes on the more likely than not basis that a full valuation allowance is required. Accordingly, the Company continues to provide a full valuation allowance on its federal and states deferred tax assets. Uncertain Tax Positions. The Company accounts for its uncertain tax positions in accordance with ASC 740. As of January 1, 2022, the Company had $ 1.3 million o f unrecognized tax benefits, none of the unrecognized tax benefits would result in a change in the Company’s effective tax rate if recognized in future years. The Company is not aware of any other uncertain tax positions that could result in significant additional payments, accruals, or other material deviation in this estimate during the fiscal year. The Company is subject to United States federal income tax as well as to income taxes in state jurisdictions. The Company’s federal and state income tax returns are open to examination by tax authorities for three years and three -to- five years , respectively. |
Computation of Basic and Dilute
Computation of Basic and Diluted Net (Loss) Income Per Common Share | 6 Months Ended |
Jul. 02, 2022 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net (Loss) Income Per Common Share | 10. Computation of Basic and Diluted Net (Loss) Income Per Common Share Basic and diluted net (loss) income per share is based upon the weighted average number of common shares outstanding during the period. Common stock equivalents consist of incremental common shares issuable upon the exercise of stock options, and the release (vesting) of RSUs and awards and are calculated under the treasury stock method. Common stock equivalent shares from unexercised stock options, and unvested RSUs and awards are excluded from the computation for periods in which we incur a net loss or if the exercise price of such options is greater than the average market price of our common stock for the period as their effect would be anti-dilutive. For the three months ended July 2, 2022 and July 3, 2021, potential shares from stock options and RSUs tota ling 1,698,584 a nd 211,788 shares, respectively, were excluded from the computation of diluted weighted average shares outstanding. For the six months ended July 2, 2022 and July 3, 2021, potential shares from stock options and RSUs tota ling 1,700,686 an d 1,586,374 shares, respectively, were excluded from the computation of diluted weighted average shares outstanding. A reconciliation of the numerator and denominator of basic and diluted net loss per common share is provided as follows: Three Months Ended Six Months Ended (in thousands except per share data) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Numerator: Net (loss) income $ ( 2,241 ) $ 1,393 $ ( 4,632 ) $ ( 617 ) Denominator: Weighted average shares of common stock (basic) 15,894 15,647 15,888 14,996 Effect of dilutive stock options — 427 — — Effect of dilutive RSUs — 233 — — Weighted average shares of common stock (diluted) 15,894 16,307 15,888 14,996 Per share data: Basic net (loss) income per share $ ( 0.14 ) $ 0.09 $ ( 0.29 ) $ ( 0.04 ) Diluted net (loss) income per share $ ( 0.14 ) $ 0.09 $ ( 0.29 ) $ ( 0.04 ) |
Business Segments
Business Segments | 6 Months Ended |
Jul. 02, 2022 | |
Segment Reporting [Abstract] | |
Business Segments | 11. Business Segments The Company operates in one segment, ophthalmology. The Company develops, manufactures and markets medical devices. Our revenues arise from the sale of consoles, delivery devices, consumables, service, and support activities. Revenue information shown by product group is as follows: Three Months Ended Six Months Ended (in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Cyclo G6 $ 3,477 $ 3,599 $ 7,017 $ 6,948 Retina 7,529 7,575 14,830 14,235 Other(1) 2,749 2,252 5,295 4,202 Total revenues $ 13,755 $ 13,426 $ 27,142 $ 25,385 (1) Includes service contract revenues of $ 402 and $ 375 and $ 764 and $ 674 recognized during the three and six months ended July 2, 2022 and July 3, 2021 , respectively. Includes $ 357 and $ 634 and $ 0 and $ 111 recognized revenue related to the exclusive distribution rights during the three and six months ended July 2, 2022 and July 3, 2021 , respectively. Other also includes revenues from paid service, royalty, freight and legacy G probes. Revenue information shown by geographic region, based on the sales destination, is as follows: Three Months Ended Six Months Ended (in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 United States $ 6,849 $ 6,396 $ 13,391 $ 11,960 Europe 2,821 3,293 6,252 5,710 Asia/Pacific Rim 3,185 3,342 6,039 6,516 Rest of Americas 900 395 1,460 1,199 Total revenues $ 13,755 $ 13,426 $ 27,142 $ 25,385 Revenues are attributed to countries based on the location of end customers. Other than the United States, no individu al country accounted for at least 10 % of the Company’s revenues during the three and six months ended July 2, 2022. Other than the United States, Japan a ccounted for more than 10 % of the Company’s revenues during the three and six months ended July 3, 2021, representin g 12 % and 14 %, respectively. The United States accounted for 49.8 % and 47.6 % of revenues for the three months ended July 2, 2022 and July 3, 2021, respectively, an d for 49.3 % and 47.1 % of revenues for the six months ended July 2, 2022 and July 3, 2021 , respectively. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 02, 2022 | |
Accounting Policies [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on our operating results. |
Revenue Recognition | Revenue Recognition. Our revenues arise from the sale of laser consoles, delivery devices, consumables, service, and support activities. We also derive revenue from royalties from third parties which are typically based on the licensees’ net sales of products that utilize our technology. Our revenue is recognized in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.” The Company recognizes revenue using the five-step model: (1) identifying the contract with the customer, (2) identifying the performance obligations in the contract, (3) determining expected transaction price, (4) allocating the transaction price to the distinct performance obligations in the contract, and (5) recognizing revenue when (or as) the performance obligations are satisfied. The Company has the following revenue transaction types: (1) Product Sale Only, (2) Service Contracts, (3) System Repairs (outside of warranty), (4) Royalty Revenue and (5) Exclusive Distribution Rights. (1) Product Sale Only: The Company’s products consist of laser consoles, delivery devices and consumable instrumentation, including laser probes. The Company’s products are currently sold for use by ophthalmologists specializing in the treatment of glaucoma and retinal diseases. Inside the United States and Germany the products are sold directly to the end users. In other countries outside of the United States and Germany, the Company utilizes independent, third-party distributors to market and sell the Company’s products. There is no continuing obligation after shipment is made to these distributors. The Company recognizes revenue from product sale at a point in time subject to the allocation of transaction price to additional performance obligations, if any. (2) Service Contracts: The Company offers a standard two-year warranty on all system sales. The Company also offers a service contract which is sold to customers in incremental, one-year periods which begin subsequent to the expiration of the standard two-year warranty. The customer can opt to purchase the service contract at the time of the system sale or after the initial system sale. The Company recognizes revenue from service contracts ratably over the service period. Revenue recognition for the sale of a service contract is largely dependent on the timing of the sale as follows: a. Service Contract Sale in Conjunction with System Sale: If the customer opts to purchase a service contract at the time of the system sale, the Company allocates the transaction price of the distinct performance obligations in the contract by determining stand-alone selling price using historical pricing net of any variable consideration or discounts to specifically allocate to a particular performance obligation. b. Service Contract Sale Subsequent to System Sale: If the customer opts to purchase a service contract after the initial system sale, the Company determines the amount of time that has elapsed since the initial system sale. If the service contract is purchased within 60 days of the initial sale, the Company considers this sale to be an additional element of the original sale and allocates the transaction price of the distinct performance obligations in the contract by determining stand-alone selling price using historical pricing net of any variable consideration or discounts to specifically allocate to a particular performance obligation. If the service contract is purchased subsequent to 60 days after the initial sale, the sale of the service contract is deemed a separate contract and is deferred at the selling price and recognized ratably over the extended warranty period as the performance obligation is satisfied. (3) System Repairs (outside of warranty): Customers will occasionally request repairs from the Company subsequent to the expiration of the standard warranty and outside of a service contract. The Company recognizes revenue from system repairs (outside of warranty) at a point in time. When the customer requests repairs from the Company subsequent to the expiration of the standard warranty and outside of a service contract, these repair contracts are considered separate from the initial sale, and as such, revenue is recognized as the repair services are rendered and the performance obligation satisfied. (4) Royalty Revenue: The Company has royalty agreements with four customers related to sale of the Company’s intellectual property. Under the terms of these agreements, the customer is to remit a percentage of its sales to the Company. Since these arrangements are for sales-based licenses of intellectual property, for which the guidance in paragraph ASC 606-10-55-65 applies, the Company recognizes revenue only as the subsequent sale occurs. However, the Company notes that such sales being reported by the licensee with a quarter in arrear, such revenue is recognized at the time it is reported and paid by the licensee given that any estimated variable consideration would have to be fully constrained due to the unpredictability of such estimate and the unavoidable risk that it may lead to significant revenue reversals. (5) Exclusive Distribution Rights: On March 2, 2021, the Company and Topcon Corporation (“Topcon”) entered into a distribution agreement ("Distribution Agreement"), pursuant to which the Company granted Topcon the exclusive right to distribute the Company’s retina and glaucoma products in certain geographies outside the United States. The exclusivity arrangement with Topcon obligates the Company to provide training, customer support, and exclusive territorial rights to Topcon for certain international regions, for a period of 10 years, commencing upon regulatory approval to transfer existing (non-exclusive) distribution rights from the current distributors in those regions to Topcon. The Company has the right to terminate the exclusive distribution rights granted to Topcon for any of the regions at any point in time during the 10-year exclusivity term for a termination fee that is based on a multiple of 1.2 times the revenue generated by the Company in 2019 for the respective region. Management has determined that the exclusivity rights, training, and customer support represents a single combined performance obligation for each region, to be recognized as exclusivity fee revenue on a straight-line basis over the 10-year period for each region, commencing on the date that regulatory approval is obtained for each region, based on the Standalone Selling Price (“SSP”) for such combined performance obligation for each region. The estimated fair value of the exclusive distribution rights for all regions combined totaled approximately $ 14.8 million. Of this amount, management has fully-constrained and returned to Topcon the arrangement fee allocated to Belarus (approximately $ 0.2 million) because obtaining the necessary regulatory approvals and termination of existing distributor relationships was not feasible. For the three and six months ended July 2, 2 022, $ 0.3 million and $ 0.6 million in r evenue related to the exclusive distribution rights was recorded. The Company elected the practical expedient allowing it to not recognize as a contract asset the commission paid to its salesforce on the sale of its products as an incremental cost of obtaining a contract with a customer but rather recognize such commission as expense when incurred as the amortization period of the asset that the Company would have otherwise recognized is one year or less. The Company recognized an asset from the costs incurred to fulfill a contract. These costs relate directly and must be incurred to satisfy performance obligations on certain specific contact with a customer. These costs are expected to be recovered over time and will be amortized on a systematic basis that is consistent with the recognition of revenue to which it relates. As of July 2, 2022, recognized deferred costs incurred to fulfill a contract with a customer amo unted to $ 0.6 million, incl uded in Prepaid expenses and other current assets and Other long-term assets in the Company’s condensed consolidated balance sheets. Amortization was $ 21 thousand for both the three and six months ended July 2, 2022. |
Leases | Leases. We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use (“ROU”) assets, net and Operating lease liabilities in our condensed consolidated balance sheets. As of July 2, 2022 and January 1, 2022, the Company was not a party to finance lease arrangements. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Under the available practical expedient, we account for the lease and non-lease components as a single lease component. |
Concentration of Credit Risk | Concentration of Credit Risk. Our cash and cash equivalents are deposited in demand and money market accounts. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. We market our products to distributors and end-users throughout the world. Sales to international distributors are generally made on open credit terms and letters of credit. Management performs ongoing credit evaluations of our customers and maintains an allowance for potential credit losses. Historically, we have not experienced any significant losses related to individual customers or a group of customers in any particular geographic area. For the three and six months ended July 2, 2022 , one customer, Topcon, accounted for more than 10 % of total revenues, representing 26 % and 28 %, respe ctively. For the three and six months ended July 3, 2021 , one customer, Topcon, accounted for more than 10 % of total revenues, representing 15 % and 12 % , respectively. As of July 2, 2022 , one customer, Topcon, accounted for over 10 % of our accounts receivable, representing 26 %. As of January 1, 2022, two customers, including Topcon, accounted for more than 10 % of our accounts receivable, representing 31 % and 11 %, respectively. |
Taxes Collected from Customers and Remitted to Governmental Authorities | Taxes Collected from Customers and Remitted to Governmental Authorities. Taxes collected from customers and remitted to governmental authorities are recognized on a net basis in the accompanying condensed consolidated statements of operations. |
Shipping and Handling Costs | Shipping and Handling Costs. Our shipping and handling costs billed to customers are included in revenues and the associated expense is recorded in cost of revenues for all periods presented. |
Deferred Revenue | Deferred Revenue. Deferred revenue represents contract liabilities and exclusivity fees. Revenue related to service contracts is deferred and recognized on a straight-line basis over the period of the applicable service contract. Costs associated with these service arrangements are recognized as incurred. Revenue related to exclusivity fees is deferred and recognized over the related exclusivity period. A reconciliation of the changes in the Company’s deferred revenue balance for the six months ended July 2, 2022 and July 3, 2021 is as follows: Six Months Ended July 2, 2022 July 3, 2021 Balance, beginning of period $ 13,285 $ 1,227 Additions to deferral 3,235 12,279 Revenue recognized ( 1,613 ) ( 1,022 ) Balance, end of period 14,907 12,484 Non-current portion of deferred revenue 12,540 10,479 Current portion of deferred revenue $ 2,367 $ 2,005 During the six months ended July 2, 2022 and July 3, 2021, approximately $ 0.7 million a nd $ 0.7 million were recognized pertaining to amounts deferred as of January 1, 2022 and January 2, 2021, respectively. As of July 2, 2022, approximately $ 11.9 million of the non-current portion of deferred revenue and $ 1.5 million of the current portion of deferred revenue pertain to exclusivity fee deferred revenue. |
Warranty | Warranty. The Company currently provides a two-year full warranty on its products. The associated costs of these warranties are accrued for upon shipment of the products. The Company’s warranty policy is applicable to products which are considered defective in their performance or fail to meet the product specifications. Warranty costs are reflected in the condensed consolidated statements of operations as cost of revenues. A reconciliation of the changes in the Company’s warranty liability for the six months ended July 2, 2022 and July 3, 2021 is as follows: Six Months Ended July 2, 2022 July 3, 2021 Balance, beginning of period $ 158 $ 247 Accruals for product warranties 54 45 Cost of warranty claims ( 102 ) ( 41 ) Adjustment to pre-existing warranties 97 ( 71 ) Balance, end of period $ 207 $ 180 |
Reclassifications | Reclassifications. Certain reclassifications have been made to the prior year financial statements included in these condensed consolidated financial statements to conform to the current year presentation. The reclassifications had no impact on previously reported total assets, total liabilities and net loss or accumulated deficit. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Accounting Policies [Abstract] | |
Reconciliation of Changes in Deferred Revenue | A reconciliation of the changes in the Company’s deferred revenue balance for the six months ended July 2, 2022 and July 3, 2021 is as follows: Six Months Ended July 2, 2022 July 3, 2021 Balance, beginning of period $ 13,285 $ 1,227 Additions to deferral 3,235 12,279 Revenue recognized ( 1,613 ) ( 1,022 ) Balance, end of period 14,907 12,484 Non-current portion of deferred revenue 12,540 10,479 Current portion of deferred revenue $ 2,367 $ 2,005 |
Reconciliation of Changes in Warranty Liability | A reconciliation of the changes in the Company’s warranty liability for the six months ended July 2, 2022 and July 3, 2021 is as follows: Six Months Ended July 2, 2022 July 3, 2021 Balance, beginning of period $ 158 $ 247 Accruals for product warranties 54 45 Cost of warranty claims ( 102 ) ( 41 ) Adjustment to pre-existing warranties 97 ( 71 ) Balance, end of period $ 207 $ 180 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | The components of the Company’s inventories as of July 2, 2022 and January 1, 2022 are as follows: July 2, 2022 January 1, 2022 Raw materials $ 5,022 $ 3,937 Work in process 312 201 Finished goods 4,842 3,476 Total inventories $ 10,176 $ 7,614 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Components of Gross and Net Intangible Asset | The following table summarizes the components of gross and net of intangible assets carrying amounts (in thousands): July 2, 2022 January 1, 2022 Gross Accumulated Net Remaining Gross Accumulated Net Customer relationships $ 340 $ 215 $ 125 4.64 Years $ 340 $ 200 $ 140 Developed technology 900 171 729 5.67 Years 900 107 793 Trade names 300 45 255 7.67 Years 300 28 272 In-process R&D 1,000 — 1,000 Not applicable 1,000 - 1,000 Patents 600 600 - None 600 600 - $ 3,140 $ 1,031 $ 2,109 $ 3,140 $ 935 $ 2,205 |
Future Estimated Amortization Expense | Future estimated amortization expense excluding in-process R&D (in thousands): Fiscal Year: 2022 (six months) $ 96 2023 192 2024 192 2025 180 2026 176 Thereafter 273 Total $ 1,109 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Fair Value Disclosures [Abstract] | |
Financial Assets Measured and Recognized at Fair Value on a Recurring Basis | As of July 2, 2022 and January 1, 2022, financial assets measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above were as follows: As of July 2, 2022 As of January 1, 2022 Fair Value Measurements Fair Value Measurements (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds $ 16,910 $ — $ — $ 16,910 $ 23,359 $ — $ — $ 23,359 |
Leases and Commitments and Co_2
Leases and Commitments and Contingencies (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Maturities of Operating Lease Liabilities | The following represents maturities of operating lease liabilities as of July 2, 2022 (in thousands): Fiscal Year Operating Remainder of 2022 (6 months) $ 533 2023 1,084 2024 711 2025 — Total lease payments 2,328 Less: Imputed interest ( 112 ) Total lease liabilities $ 2,216 |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock-Based Compensation (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation Expenses | The following table shows stock-based compensation expense included in the condensed consolidated statements of operations for the three and six months ended July 2, 2022 and July 3, 2021: Three Months Ended Six Months Ended (in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Cost of revenues $ 60 $ 46 $ 120 $ 93 Research and development 32 14 61 50 Sales and marketing 59 41 181 139 General and administrative 193 179 366 364 $ 344 $ 280 $ 728 $ 646 |
Summary of Stock Options | The following table summarizes stock options information during the six months ended July 2, 2022: Number of Weighted Aggregate Outstanding as of January 2, 2022 1,772,621 $ 5.07 Granted 54,000 4.44 Exercised ( 6,063 ) 2.25 Canceled or forfeited ( 83,346 ) 8.50 Outstanding as of July 2, 2022 1,737,212 $ 4.90 $ 146 |
Weighted Average Assumptions for Fair Value Estimate of Stock-Based Awards (Options) | The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock-based awards (options) with the following weighted average assumptions: Three Months Ended Six Months Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Average risk free interest rate 3.16 % 0.79 % 2.59 % 0.77 % Expected life (in years) 4.5 4.45 4.5 4.45 Dividend yield — % — % — % — % Average volatility 76 % 73 % 76 % 73 % |
Summary of Stock Options Outstanding, Vested, Expected to Vest and Exercisable | Information regarding stock options outstanding, vested, expected to vest, and exercisable as of July 2, 2022 is summarized below: Number of Weighted Weighted Aggregate Value Options outstanding 1,737,212 $ 4.90 5.19 $ 146 Options vested and expected to vest 1,652,151 $ 4.89 5.14 $ 142 Options exercisable 833,881 $ 4.75 4.28 $ 95 |
Restricted Stock Units | Information regarding RSUs activity for the six months ended July 2, 2022 is summarized below: Number Outstanding as of January 1, 2022 253,761 RSUs granted 137,360 RSUs released ( 95,242 ) RSUs forfeited ( 6,638 ) Outstanding as of July 2, 2022 289,241 |
Computation of Basic and Dilu_2
Computation of Basic and Diluted Net (Loss) Income Per Common Share (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerator and Denominator of Basic and Diluted Net Loss Per Common Share | A reconciliation of the numerator and denominator of basic and diluted net loss per common share is provided as follows: Three Months Ended Six Months Ended (in thousands except per share data) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Numerator: Net (loss) income $ ( 2,241 ) $ 1,393 $ ( 4,632 ) $ ( 617 ) Denominator: Weighted average shares of common stock (basic) 15,894 15,647 15,888 14,996 Effect of dilutive stock options — 427 — — Effect of dilutive RSUs — 233 — — Weighted average shares of common stock (diluted) 15,894 16,307 15,888 14,996 Per share data: Basic net (loss) income per share $ ( 0.14 ) $ 0.09 $ ( 0.29 ) $ ( 0.04 ) Diluted net (loss) income per share $ ( 0.14 ) $ 0.09 $ ( 0.29 ) $ ( 0.04 ) |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Revenue Information by Product | Revenue information shown by product group is as follows: Three Months Ended Six Months Ended (in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Cyclo G6 $ 3,477 $ 3,599 $ 7,017 $ 6,948 Retina 7,529 7,575 14,830 14,235 Other(1) 2,749 2,252 5,295 4,202 Total revenues $ 13,755 $ 13,426 $ 27,142 $ 25,385 (1) Includes service contract revenues of $ 402 and $ 375 and $ 764 and $ 674 recognized during the three and six months ended July 2, 2022 and July 3, 2021 , respectively. Includes $ 357 and $ 634 and $ 0 and $ 111 recognized revenue related to the exclusive distribution rights during the three and six months ended July 2, 2022 and July 3, 2021 , respectively. Other also includes revenues from paid service, royalty, freight and legacy G probes. |
Revenue Information by Geographic Region | Revenue information shown by geographic region, based on the sales destination, is as follows: Three Months Ended Six Months Ended (in thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 United States $ 6,849 $ 6,396 $ 13,391 $ 11,960 Europe 2,821 3,293 6,252 5,710 Asia/Pacific Rim 3,185 3,342 6,039 6,516 Rest of Americas 900 395 1,460 1,199 Total revenues $ 13,755 $ 13,426 $ 27,142 $ 25,385 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 02, 2022 USD ($) Customer | Jul. 03, 2021 Customer | Jul. 02, 2022 USD ($) Customer | Jul. 03, 2021 USD ($) Customer | Jan. 01, 2022 Customer | |
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Service contract warranty period | 1 year | ||||
Service contract, period to determine nature of sale | 60 days | ||||
Arrangement fee | $ 200 | ||||
Fair value of distribution right | 14,800 | ||||
Amortization costs | $ 21 | 21 | |||
Deferred revenue recognized | 700 | $ 700 | |||
Non-current portion of deferred revenue pertains to exclusivity fee deferred revenue | 11,900 | 11,900 | |||
Current portion of deferred revenue pertains to exclusivity fee deferred revenue | 1,500 | $ 1,500 | |||
Products warranty period | 2 years | ||||
Prepaid Expenses and Other Current Assets and Other Long Term Assets | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Deferred costs, incurred | $ 600 | $ 600 | |||
Revenue, Total | Topcon [Member] | Customer Concentration Risk | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Number of customers | Customer | 1 | 1 | 1 | 1 | |
Accounts Receivable | Topcon [Member] | Customer Concentration Risk | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Number of customers | Customer | 1 | ||||
Percentage of accounts receivable accounted | 26% | ||||
Accounts Receivable | Topcon [Member] | Customer Concentration Risk | One Customer | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of accounts receivable accounted | 31% | ||||
Accounts Receivable | Topcon [Member] | Customer Concentration Risk | One Customer | Minimum | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Customer and supplier accounted percentage of total revenues, accounts receivable and purchases | 10% | 10% | |||
Accounts Receivable | Topcon [Member] | Customer Concentration Risk | Customer Two | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of accounts receivable accounted | 11% | ||||
Accounts Receivable | Topcon [Member] | Credit Concentration Risk | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Number of customers | Customer | 2 | ||||
Revenue, Total | Customer Concentration Risk | No Customer | Minimum | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Customer and supplier accounted percentage of total revenues, accounts receivable and purchases | 10% | 10% | |||
Revenue, Total | Topcon [Member] | Customer Concentration Risk | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of accounts receivable accounted | 26% | 15% | 28% | 12% | |
Revenue, Total | Topcon [Member] | Customer Concentration Risk | One Customer | Minimum | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Customer and supplier accounted percentage of total revenues, accounts receivable and purchases | 10% | 10% | |||
Distribution Rights [Member] | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Revenue Recognized | $ 300 | $ 600 | |||
Royalty Agreements | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Number of customers | Customer | 4 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Reconciliation of Changes in Deferred Revenue (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | [1] | |
Reconciliation of the changes in the Company's deferred revenue balance | ||||
Balance, beginning of period | $ 13,285 | $ 1,227 | ||
Additions to deferral | 3,235 | 12,279 | ||
Revenue recognized | 1,613 | 1,022 | ||
Balance, end of period | 14,907 | 12,484 | ||
Non-current portion of deferred revenue | 12,540 | 10,479 | $ 10,930 | |
Current portion of deferred revenue | $ 2,367 | $ 2,005 | $ 2,355 | |
[1] Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 1, 2022. |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Reconciliation of Changes in Warranty Liability (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Reconciliation of the changes in the Company's warranty liability | ||
Balance, beginning of period | $ 158 | $ 247 |
Accruals for product warranties | 54 | 45 |
Cost of warranty claims | (102) | (41) |
Adjustment to pre-existing warranties | 97 | (71) |
Balance, end of period | $ 207 | $ 180 |
Related Party - Topcon - Additi
Related Party - Topcon - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | ||
Related Party Transaction [Line Items] | |||||||
Total revenues | $ 13,755 | $ 13,426 | $ 13,426 | $ 27,142 | $ 25,385 | ||
Receivable from related party | 2,429 | 2,429 | $ 3,106 | [1] | |||
Payable to related party | $ 180 | $ 180 | 627 | [1] | |||
Topcon America Corporation [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Ownership percentage | 10.20% | 10.20% | |||||
Total revenues | $ 3,600 | 2,200 | $ 7,600 | 3,300 | |||
Purchases from related party | 200 | 600 | |||||
Receivable from related party | 2,400 | 2,400 | 3,100 | ||||
Payable to related party | 200 | 200 | $ 600 | ||||
Distribution Rights [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue Recognized | 300 | 600 | |||||
Distribution Rights [Member] | Topcon America Corporation [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue Recognized | $ 300 | $ 600 | |||||
Distribution Fees [Member] | Topcon America Corporation [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue Recognized | $ 100 | $ 100 | |||||
[1] Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 1, 2022. |
Inventories - Components of Inv
Inventories - Components of Inventories (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 | |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 5,022 | $ 3,937 | |
Work in process | 312 | 201 | |
Finished goods | 4,842 | 3,476 | |
Total inventories | $ 10,176 | $ 7,614 | [1] |
[1] Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 1, 2022. |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | [1] | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Carrying value of goodwill | $ 965,000 | $ 965,000 | ||
Impairment of goodwill | 0 | |||
Amortization expense | $ 96,000 | $ 67,000 | ||
[1] Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 1, 2022. |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Summary of Components of Gross and Net Intangible Asset (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jul. 02, 2022 | Jan. 01, 2022 | ||
Schedule of Intangible Assets | |||
Gross Carrying Amount | $ 3,140 | $ 3,140 | |
Accumulated Amortization | 1,031 | 935 | |
Net Carrying Amount | 2,109 | 2,205 | [1] |
Customer relationships | |||
Schedule of Intangible Assets | |||
Gross Carrying Amount | 340 | 340 | |
Accumulated Amortization | 215 | 200 | |
Net Carrying Amount | $ 125 | 140 | |
Remaining Amortization Life | 4 years 7 months 20 days | ||
Developed technology | |||
Schedule of Intangible Assets | |||
Gross Carrying Amount | $ 900 | 900 | |
Accumulated Amortization | 171 | 107 | |
Net Carrying Amount | $ 729 | 793 | |
Remaining Amortization Life | 5 years 8 months 1 day | ||
Trade names | |||
Schedule of Intangible Assets | |||
Gross Carrying Amount | $ 300 | 300 | |
Accumulated Amortization | 45 | 28 | |
Net Carrying Amount | $ 255 | 272 | |
Remaining Amortization Life | 7 years 8 months 1 day | ||
In-process R&D | |||
Schedule of Intangible Assets | |||
Gross Carrying Amount | $ 1,000 | 1,000 | |
Accumulated Amortization | 0 | 0 | |
Net Carrying Amount | 1,000 | 1,000 | |
Patents [Member] | |||
Schedule of Intangible Assets | |||
Gross Carrying Amount | 600 | 600 | |
Accumulated Amortization | 600 | 600 | |
Net Carrying Amount | $ 0 | $ 0 | |
[1] Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 1, 2022. |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Future Estimated Amortization Expense (Details) $ in Thousands | Jul. 02, 2022 USD ($) |
Future estimated amortization expense | |
2022 (six months) | $ 96 |
2023 | 192 |
2024 | 192 |
2025 | 180 |
2026 | 176 |
Thereafter | 273 |
Net Carrying Amount | $ 1,109 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets Measured and Recognized at Fair Value on a Recurring Basis (Details) - Fair Value Measurements Recurring - Money Market Funds - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 |
Assets: | ||
Assets, Fair Value Measurements | $ 16,910 | $ 23,359 |
Level 1 | ||
Assets: | ||
Assets, Fair Value Measurements | 16,910 | 23,359 |
Level 2 | ||
Assets: | ||
Assets, Fair Value Measurements | 0 | 0 |
Level 3 | ||
Assets: | ||
Assets, Fair Value Measurements | $ 0 | $ 0 |
Leases and Commitments and Co_3
Leases and Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2022 | Jul. 02, 2021 | |
Commitments And Contingencies [Line Items] | ||
Operating lease, expenses | $ 0.5 | $ 0.6 |
Operating lease, weighted average discount rate | 4.80% | |
Operating lease, weighted average remaining lease term | 2 years 1 month 6 days | |
Future minimum purchase commitment payments | $ 15.2 | |
Future minimum purchase commitment payments | $ 22.7 |
Leases and Commitments and Co_4
Leases and Commitments and Contingencies - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands | Jul. 02, 2022 USD ($) |
Lessee, Operating Lease, Liability, to be Paid [Abstract] | |
Remainder of 2022 (6 months) | $ 533 |
2023 | 1,084 |
2024 | 711 |
2025 | 0 |
Total lease payments | 2,328 |
Less: Imputed interest | (112) |
Total lease liabilities | $ 2,216 |
Stockholders' Equity and Stoc_3
Stockholders' Equity and Stock-Based Compensation - Stock-Based Compensation Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 344 | $ 280 | $ 728 | $ 646 |
Cost of revenues | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 60 | 46 | 120 | 93 |
Research and development | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 32 | 14 | 61 | 50 |
Sales and marketing | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 59 | 41 | 181 | 139 |
General and administrative | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 193 | $ 179 | $ 366 | $ 364 |
Stockholders' Equity and Stoc_4
Stockholders' Equity and Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 02, 2022 | Jul. 03, 2021 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total unrecognized compensation cost related to non-vested share-based compensation arrangements | $ 2,400 | $ 2,400 | |
Cost is expected to be recognized over a weighted average period | 1 year 8 months 26 days | ||
Weighted-average grant date fair value of the options granted | $ 2.68 | $ 3.86 | |
Total intrinsic value of options exercised | $ 19 | $ 70 |
Stockholders' Equity and Stoc_5
Stockholders' Equity and Stock-Based Compensation - Summary of Stock Options (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jul. 02, 2022 USD ($) $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |
Outstanding, Number of Shares, Beginning Balance | shares | 1,772,621 |
Number of Shares, Options Granted | shares | 54,000 |
Number of Shares, Options Exercised | shares | (6,063) |
Number of Shares, Options Cancelled or forfeited | shares | (83,346) |
Outstanding, Number of Shares, Ending Balance | shares | 1,737,212 |
Outstanding, Weighted Average Exercise Price Per Share, Beginning Balance | $ / shares | $ 5.07 |
Weighted Average Exercise Price Per Share, Options Granted | $ / shares | 4.44 |
Weighted Average Exercise Price Per Share, Options Exercised | $ / shares | 2.25 |
Weighted Average Exercise Price Per Share, Options Cancelled or forfeited | $ / shares | 8.50 |
Outstanding, Weighted Average Exercise Price Per Share, Ending Balance | $ / shares | $ 4.90 |
Aggregate Intrinsic Value, Ending Balance | $ | $ 146 |
Stockholders' Equity and Stoc_6
Stockholders' Equity and Stock-Based Compensation - Weighted Average Assumptions for Fair Value Stock-Based Awards (Options) (Details) | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Weighted average assumptions for fair value estimate of stock-based awards (options) | ||||
Average risk free interest rate | 3.16% | 0.79% | 2.59% | 0.77% |
Expected life (in years) | 4 years 6 months | 4 years 5 months 12 days | 4 years 6 months | 4 years 5 months 12 days |
Dividend yield | 0% | 0% | 0% | 0% |
Average volatility | 76% | 73% | 76% | 73% |
Stockholders' Equity and Stoc_7
Stockholders' Equity and Stock-Based Compensation - Summary of Stock Options Outstanding, Vested, Expected to Vest and Exercisable (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||
Jul. 02, 2022 | Jan. 02, 2022 | Jul. 02, 2021 | |
Stock options outstanding, exercisable and expected to vest | |||
Options outstanding, Number of Shares | 1,737,212 | 1,772,621 | 1,737,212 |
Options vested and expected to vest, Number of Shares | 1,652,151 | ||
Options exercisable, Number of Shares | 833,881 | ||
Options outstanding, Weighted Average Exercise Price | $ 4.90 | $ 5.07 | |
Options vested and expected to vest, Weighted Average Exercise Price | 4.89 | ||
Options exercisable, Weighted Average Exercise Price | $ 4.75 | ||
Options outstanding, Weighted Average Remaining Contractual Life (Years) | 5 years 2 months 8 days | ||
Options vested and expected to vest, Weighted Average Remaining Contractual Life (Years) | 5 years 1 month 20 days | ||
Options exercisable, Weighted Average Remaining Contractual Life (Years) | 4 years 3 months 10 days | ||
Options outstanding, Aggregate Intrinsic Value | $ 146 | ||
Options vested and expected to vest, Aggregate Intrinsic Value | 142 | ||
Options exercisable, Aggregate Intrinsic Value | $ 95 |
Stockholders' Equity and Stoc_8
Stockholders' Equity and Stock-Based Compensation - Restricted Stock Units (Details) - Restricted Stock Units (RSUs) | 6 Months Ended |
Jul. 02, 2022 shares | |
Restricted stock units | |
Outstanding, Number of Shares, Beginning Balance | 253,761 |
Number of Shares, RSUs granted | 137,360 |
Number of Shares, RSUs released | (95,242) |
Number of Shares, RSUs forfeited | (6,638) |
Outstanding, Number of Shares, Ending Balance | 289,241 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | |
Income Taxes [Line Items] | |||||
Provision for income taxes | $ 17,000 | $ 8,000 | $ 37,000 | $ 16,000 | |
Unrecognized tax benefits | $ 1,300,000 | ||||
Unrecognized tax benefits recognition impact on income tax rate | $ 0 | ||||
Federal | |||||
Income Taxes [Line Items] | |||||
Income tax returns examination period | 3 years | ||||
Minimum | |||||
Income Taxes [Line Items] | |||||
Income tax returns examination period | 3 years | ||||
Maximum | State Jurisdictions | |||||
Income Taxes [Line Items] | |||||
Income tax returns examination period | 5 years |
Computation of Basic and Dilu_3
Computation of Basic and Diluted Net (Loss) Income Per Common Share - Additional Information (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Stock options and RSUs | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Shares that were excluded from the computation of diluted weighted average shares outstanding | 1,698,584 | 211,788 | 1,700,686 | 1,586,374 |
Computation of Basic and Dilu_4
Computation of Basic and Diluted Net (Loss) Income Per Common Share - Reconciliation of Numerator and Denominator of Basic and Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 02, 2022 | Jul. 03, 2021 | |
Numerator: | ||||||
Net (loss) income | $ (2,241) | $ 1,393 | $ 1,393 | $ (4,632) | $ (4,632) | $ (617) |
Denominator: | ||||||
Weighted average shares of common stock (basic) | 15,894 | 15,647 | 15,888 | 14,996 | ||
Weighted average shares of common stock (diluted) | 15,894 | 16,307 | 15,888 | 14,996 | ||
Per share data: | ||||||
Basic net (loss) income per share | $ (0.14) | $ 0.09 | $ (0.29) | $ (0.04) | ||
Diluted net (loss) income per share | $ (0.14) | $ 0.09 | $ (0.29) | $ (0.04) | ||
Restricted Stock Units (RSUs) | ||||||
Denominator: | ||||||
Dilutive Effect of Share-Based Payment Arrangements | 0 | 233 | 0 | 0 | ||
Stock Options | ||||||
Denominator: | ||||||
Dilutive Effect of Share-Based Payment Arrangements | 0 | 427 | 0 | 0 |
Business Segments - Additional
Business Segments - Additional Information (Details) - Segment | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Segment Reporting Information [Line Items] | ||||
Number of operating segments | 1 | |||
Geographic Concentration Risk | Revenue, Total | Minimum | ||||
Segment Reporting Information [Line Items] | ||||
Customer and supplier accounted percentage of total revenues, accounts receivable and purchases | 10% | 10% | ||
JAPAN | Geographic Concentration Risk | Revenue, Total | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of accounts receivable accounted | 12% | 14% | ||
JAPAN | Geographic Concentration Risk | Revenue, Total | Minimum | ||||
Segment Reporting Information [Line Items] | ||||
Customer and supplier accounted percentage of total revenues, accounts receivable and purchases | 10% | 10% | ||
United States | Geographic Concentration Risk | Revenue, Total | ||||
Segment Reporting Information [Line Items] | ||||
Customer and supplier accounted percentage of total revenues, accounts receivable and purchases | 49.80% | 47.60% | 49.30% | 47.10% |
Business Segments - Schedule of
Business Segments - Schedule of Revenue Information by Product (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | ||
Entity Wide Information Revenue From External Customer [Line Items] | ||||||
Total revenues | $ 13,755 | $ 13,426 | $ 13,426 | $ 27,142 | $ 25,385 | |
Cyclo G6 | ||||||
Entity Wide Information Revenue From External Customer [Line Items] | ||||||
Total revenues | 3,477 | 3,599 | 7,017 | 6,948 | ||
Retina | ||||||
Entity Wide Information Revenue From External Customer [Line Items] | ||||||
Total revenues | 7,529 | 7,575 | 14,830 | 14,235 | ||
Other | ||||||
Entity Wide Information Revenue From External Customer [Line Items] | ||||||
Total revenues | [1] | $ 2,749 | $ 2,252 | $ 5,295 | $ 4,202 | |
[1] (1) Includes service contract revenues of $ 402 and $ 375 and $ 764 and $ 674 recognized during the three and six months ended July 2, 2022 and July 3, 2021 , respectively. Includes $ 357 and $ 634 and $ 0 and $ 111 recognized revenue related to the exclusive distribution rights during the three and six months ended July 2, 2022 and July 3, 2021 , respectively. Other also includes revenues from paid service, royalty, freight and legacy G probes. |
Business Segments - Schedule _2
Business Segments - Schedule of Revenue Information by Product (Parenthetical) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Entity Wide Information Revenue From External Customer [Line Items] | |||||
Total revenues | $ 13,755 | $ 13,426 | $ 13,426 | $ 27,142 | $ 25,385 |
Distribution Rights [Member] | |||||
Entity Wide Information Revenue From External Customer [Line Items] | |||||
Revenue Recognized | 300 | 600 | |||
Service Contract Revenues | |||||
Entity Wide Information Revenue From External Customer [Line Items] | |||||
Total revenues | 402 | 764 | 375 | 674 | |
Service Contract Revenues | Distribution Rights [Member] | |||||
Entity Wide Information Revenue From External Customer [Line Items] | |||||
Revenue Recognized | $ 357 | $ 0 | $ 634 | $ 111 |
Business Segments - Revenue Inf
Business Segments - Revenue Information by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Revenues From External Customers And Long Lived Assets [Line Items] | |||||
Total revenues | $ 13,755 | $ 13,426 | $ 13,426 | $ 27,142 | $ 25,385 |
United States | |||||
Revenues From External Customers And Long Lived Assets [Line Items] | |||||
Total revenues | 6,849 | 6,396 | 13,391 | 11,960 | |
Europe | |||||
Revenues From External Customers And Long Lived Assets [Line Items] | |||||
Total revenues | 2,821 | 3,293 | 6,252 | 5,710 | |
Asia/Pacific Rim | |||||
Revenues From External Customers And Long Lived Assets [Line Items] | |||||
Total revenues | 3,185 | 3,342 | 6,039 | 6,516 | |
Rest of Americas | |||||
Revenues From External Customers And Long Lived Assets [Line Items] | |||||
Total revenues | $ 900 | $ 395 | $ 1,460 | $ 1,199 |