IRIDEX (IRIX) 10-K 31 Mar 16 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Jan. 02, 2016	Mar. 09, 2016	Jul. 02, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	IRIDEX CORP
Entity Central Index Key	1,006,045
Document Type	10-K
Document Period End Date	Jan. 2, 2016
Amendment Flag	false
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--01-02
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 47,500,865
Entity Common Stock, Shares Outstanding		10,052,423

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jan. 02, 2016	Jan. 03, 2015
Current assets:
Cash and cash equivalents	$ 9,995	$ 13,303
Accounts receivable, net of allowance for doubtful accounts of $140 in 2015 and $223 in 2014	9,282	8,337
Inventories	11,106	9,119
Prepaid expenses and other current assets	386	510
Deferred income taxes - current		1,625
Total current assets	30,769	32,894
Property and equipment, net	1,104	735
Other intangible assets, net	268	284
Goodwill	533	533
Deferred income taxes - long term	8,985	7,151
Other long-term assets	164	221
Total assets	41,823	41,818
Current liabilities:
Accounts payable	2,223	1,758
Accrued compensation	1,572	1,863
Accrued expenses	1,722	1,770
Accrued warranty	603	469
Deferred revenue	1,311	1,179
Total current liabilities	7,431	7,039
Long-term liabilities:
Other long-term liabilities	704	1,043
Total liabilities	$ 8,135	$ 8,082
Commitments and contingencies (Note 9)
Stockholders’ equity:
Convertible preferred stock, $0.01 par value; 2,000,000 shares authorized; none issued
Common stock, $0.01 par value: Authorized: 30,000,000 shares; Issued and outstanding: 10,009,408 shares in 2015 and 9,786,695 shares in 2014	$ 111	$ 108
Additional paid-in capital	37,986	38,511
Accumulated deficit	(4,409)	(4,883)
Total stockholders’ equity	33,688	33,736
Total liabilities and stockholders’ equity	$ 41,823	$ 41,818

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jan. 02, 2016	Jan. 03, 2015
Statement Of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 140	$ 223
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized	2,000,000	2,000,000
Convertible preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	10,009,408	9,786,695
Common stock, shares outstanding	10,009,408	9,786,695

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Income Statement [Abstract]
Total revenues	$ 41,757	$ 42,814	$ 38,273
Cost of revenues	21,804	21,409	19,686
Gross profit	19,953	21,405	18,587
Operating expenses:
Research and development	5,214	4,629	3,684
Sales and marketing	8,901	8,155	7,720
General and administrative	5,550	6,034	5,023
Proceeds from demutualization of insurance carrier			(473)
Total operating expenses	19,665	18,818	15,954
Income from operations	288	2,587	2,633
Other income (expense), net	3	(1,255)	(371)
Income before (benefit from) provision for income taxes	291	1,332	2,262
(Benefit from) provision for income taxes	(183)	(8,706)	31
Net income	$ 474	$ 10,038	$ 2,231
Net income per share:
Basic	$ 0.05	$ 1.01	$ 0.24
Diluted	$ 0.05	$ 0.97	$ 0.22
Weighted average shares used in computing net income per common share:
Basic	9,962	9,892	9,245
Diluted	10,128	10,357	10,104

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 474	$ 10,038	$ 2,231
Comprehensive income	$ 474	$ 10,038	$ 2,231

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Convertible Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Beginning Balance, value at Dec. 29, 2012	$ 21,905	$ 5	$ 94	$ 38,958	$ (17,152)
Beginning Balance, shares at Dec. 29, 2012		500,000	8,452,971
Issuance of common stock under stock option plan	$ 1,495		$ 5	1,490
Issuance of common stock under stock option plan, shares	493,622		493,622
Employee stock-based compensation expense	$ 689			689
Release of restricted stock, shares			27,915
Stock repurchase	(426)			(426)
Stock repurchase, shares			(75,025)
Stock repurchased from tender offer	(40)			(40)
Preferred stock conversion to common stock		$ (5)	$ 5
Preferred stock conversion to common stock, share		(500,000)	1,000,000
Net income	2,231				2,231
Ending Balance, value at Dec. 28, 2013	25,854		$ 104	40,671	(14,921)
Ending Balance, shares at Dec. 28, 2013			9,899,483
Issuance of common stock under stock option plan	$ 1,501		$ 4	1,497
Issuance of common stock under stock option plan, shares	399,390		399,390
Employee stock-based compensation expense	$ 972			972
Excess tax benefits from stock-based awards	36			36
Release of restricted stock, shares			50,262
Stock repurchase	(4,665)			(4,665)
Stock repurchase, shares			(562,440)
Net income	10,038				10,038
Ending Balance, value at Jan. 03, 2015	33,736		$ 108	38,511	(4,883)
Ending Balance, shares at Jan. 03, 2015			9,786,695
Issuance of common stock under stock option plan	$ 1,027		$ 3	1,024
Issuance of common stock under stock option plan, shares	277,733		277,733
Employee stock-based compensation expense	$ 895			895
Release of restricted stock, value	(606)			(606)
Release of restricted stock, shares			144,756
Repurchase of employee share awards	(275)			(275)
Stock repurchase	$ (1,563)			(1,563)
Stock repurchase, shares	(199,776)		(199,776)
Net income	$ 474				474
Ending Balance, value at Jan. 02, 2016	$ 33,688		$ 111	$ 37,986	$ (4,409)
Ending Balance, shares at Jan. 02, 2016			10,009,408

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Operating activities:
Net income	$ 474	$ 10,038	$ 2,231
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	522	420	490
Change in fair value of earn-out liability	5	1,258	355
Stock-based compensation cost recognized	895	972	689
Deferred income taxes	(209)	(8,776)
Excess tax benefits from stock-based awards		(36)
Provision for doubtful accounts	62	86	61
Changes in operating assets and liabilities:
Accounts receivable	(1,007)	(1,078)	(1,926)
Inventories	(1,987)	1,486	(2,514)
Prepaid expenses and other current assets	124	66	553
Other long-term assets	57	82	(16)
Accounts payable	465	(520)	173
Accrued compensation	(291)	(28)	328
Accrued expenses	(36)	17	171
Accrued warranty	134	1	15
Deferred revenue	132	46	129
Other long-term liabilities	67	(20)	28
Net cash (used in) provided by operating activities	(593)	4,014	767
Investing activities:
Acquisition of property and equipment	(875)	(568)	(380)
Payment on earn-out liability	(423)	(459)	(383)
Net cash used in investing activities	(1,298)	(1,027)	(763)
Cash flows from financing activities:
Proceeds from stock option exercises	1,027	1,501	1,495
Excess tax benefits from stock-based awards	0	36	0
Taxes paid related to net share settlements of equity awards	(606)
Repurchase of employee share awards	(275)
Repurchase of common stock	(1,563)	(4,665)	(426)
Payment of legal costs in connection with tender offer			(40)
Net cash (used in) provided by financing activities	(1,417)	(3,128)	1,029
Net cash provided by investing activities from discontinued operations			510
Net cash provided by discontinued operations			510
Net (decrease) increase in cash and cash equivalents	(3,308)	(141)	1,543
Cash and cash equivalents, beginning of year	13,303	13,444	11,901
Cash and cash equivalents, end of year	9,995	13,303	13,444
Cash paid (received) during the year for:
Income taxes	$ 27	$ 35	(536)
Supplemental disclosure of non-cash activities:
Conversion of preferred stock to common stock			$ 5

Organization

Organization	12 Months Ended
	Jan. 02, 2016
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Organization	1. Organization Description of Business. IRIDEX Corporation (“IRIDEX”, the “Company”, “we”, “us”, or “our”) is a leading worldwide provider of therapeutic based laser systems, delivery devices and consumable instrumentation used to treat sight-threatening eye diseases in ophthalmology. Our ophthalmology products are sold in the United States predominantly through a direct sales force, and an independent sales force, and internationally through independent distributors.

Summary of Significant Accounti

Summary of Significant Accounting Policies	12 Months Ended
	Jan. 02, 2016
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Financial Statement Presentation. The consolidated financial statements include the accounts of IRIDEX and our wholly owned non-operating subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Our fiscal year always ends on the Saturday closest to December 31. Fiscal 2015 ended on January 2, 2016 (“FY 2015”), fiscal 2014 ended on January 3, 2015 (“FY 2014”), and fiscal 2013 ended on December 28, 2013 (“FY 2013”). Consequently, fiscal years 2015 and 2013 included only 52 weeks of operations while fiscal year 2014 included 53 weeks. Use of Estimates . The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“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. Discontinued Operations. Discontinued operations are accounted for and presented in accordance with ASC 360, “ Impairment or Disposal of Long-Lived Assets” On December 30, 2011, we entered into an agreement to sell our aesthetics business to Cutera, Inc. The operating results of our aesthetics business were therefore classified as discontinued operations, and the associated assets and liabilities were classified as discontinued operations for all periods presented under the requirements of ASC 360. The sale of the aesthetics business was completed on February 2, 2012. Current assets of discontinued operations as of December 29, 2012 comprised of restricted cash in the amount of $510 thousand. In accordance with the terms of the sale of the aesthetics segment to Cutera, Inc., 10% of the total purchase price was deposited and held in an escrow account for a period of twelve months from the date of closing and was available to resolve certain claims by Cutera, Inc., if any, against which we had indemnified Cutera, Inc. There had been no claims made by Cutera, Inc. and in May 2013, the cash held in the escrow account was released to us. Cash and Cash Equivalents . We consider all highly liquid debt instruments with insignificant interest rate risk and an original maturity of three months or less when purchased to be cash equivalents. Cash equivalents consist primarily of cash deposits in money market funds that are available for withdrawal without restriction. Sales Returns Allowance and Allowance for Doubtful Accounts. We estimate future product returns related to current period product revenue. We analyze historical returns, and changes in customer demand and acceptance of our products when evaluating the adequacy of the sales returns allowance. Significant management judgment and estimates must be made and used in connection with establishing the sales returns allowance in any accounting period. Material differences may result in the amount and timing of our revenue for any period if management made different judgments or utilized different estimates. Our provision for sales returns is recorded net of the associated costs. The balance for the provision of sales returns was $60 thousand and $47 thousand as of January 2, 2016 and January 3, 2015, respectively, and is recorded within the deferred revenue accounts in the consolidated balance sheets. Similarly management must make estimates regarding the uncollectibility of accounts receivable. We are exposed to credit risk in the event of non-payment by customers to the extent of amounts recorded on the consolidated balance sheets. As sales levels change, the level of accounts receivable would likely also change. In addition, in the event that customers were to delay their payments to us, the levels of accounts receivable would likely increase. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is based on past payment history with the customer, analysis of the customer’s current financial condition, the aging of the accounts receivable balance, customer concentration and other known factors. Inventories. Inventories are stated at the lower of cost or market and include on-hand inventory physically held at our facility, sales demo inventory and service loaner inventory. Cost is determined on a standard cost basis which approximates actual cost on a first-in, first-out (“FIFO”) method. Lower of cost or market is evaluated by considering obsolescence, excessive levels of inventory, deterioration and other factors. Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolescence or impaired inventory and are charged to cost of revenues. Once the cost of the inventory is reduced, a new lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Factors influencing these adjustments include changes in demand, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues. Revisions to these adjustments would be required if these factors differ from our estimates. As part of our normal business, we generally utilize various finished goods inventory as either sales demos to facilitate the sale of our products to prospective customers, or as loaners that we allow our existing customers to use while we repair their products. We are amortizing these demos and loaners over an estimated useful life of four years. The amortization of the demos is charged to sales expense while the amortization on the loaners is charged to cost of revenues. The gross value of demos and loaners was $1.6 million and $1.4 million and the accumulated amortization was $575 thousand and $524 thousand as of January 2, 2016 and January 3, 2015, respectively. The net book value of demos and loaners is charged to cost of revenues when such demos or loaners are sold. Property and Equipment. Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated on a straight–line basis over the estimated useful lives of the assets, which is generally three years. Leasehold improvements are amortized over the lesser of their estimated useful lives or the lease term. Repairs and maintenance costs are expensed as incurred. Valuation of Goodwill and Intangible Assets. 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. We review goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step quantitative goodwill impairment test. If, after assessing the totality of circumstances, an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform the two-step impairment test. It does not require an entity to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying value. However, an entity also has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. We have determined that it has a single reporting unit for purposes of performing our goodwill impairment test. As we use the market approach to assess impairment, our common stock price is an important component of the fair value calculation. If our 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. We performed our annual impairment test during the second quarter of 2015 and determined that our goodwill was not impaired. As of January 2, 2016, we had not identified any factors that indicated there was an impairment of our goodwill and determined that no additional impairment analysis was then required. Intangible assets with definite lives are amortized over the useful life of the asset. We review our amortizing intangible assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future non-discounted net cash flow the asset is expected to generate. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. In such circumstances, we conduct an impairment analysis in accordance with ASC 350, “ Intangibles – Goodwill and Other” Revenue Recognition. Our revenues arise from the sale of laser consoles, delivery devices, consumables and service and support activities. Revenue from product sales is recognized upon receipt of a purchase order and product shipment provided that no significant obligations remain and collection of the receivables is reasonably assured. Shipments are generally made with Free-On-Board (“FOB”) shipping point terms, whereby title passes upon shipment from our dock. Any shipments with FOB receiving point terms are recorded as revenue when the shipment arrives at the receiving point. Cost is recognized as product sales revenue is recognized. Our sales may include post-sales obligations for training or other deliverables. For revenue arrangements such as these, we recognize revenue in accordance with ASC 605, “Revenue Recognition, Multiple-Element Arrangements”. We allocate revenue among deliverables in multiple-element arrangements using the relative selling price method. Revenue allocated to each element is recognized when the basic revenue recognition criteria is met for each element. We are required to apply a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of selling price (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of the selling price (“ESP”). In general, we are unable to establish VSOE or TPE for all of the elements in the arrangement; therefore, revenue is allocated to these elements based on our ESP, which we determine after considering multiple factors such as management approved pricing guidelines, geographic differences, market conditions, competitor pricing strategies, internal costs and gross margin objectives. These factors may vary over time depending upon the unique facts and circumstances related to each deliverable. As a result, our ESP for products and services could change. Revenues for post-sales obligations are recognized as the obligations are fulfilled. In international regions, we utilize distributors to market and sell our products. We recognize revenue upon shipment for sales to these independent, third-party distributors as we have no continuing obligations subsequent to shipment. Generally our distributors are responsible for all marketing, sales, installation, training and warranty labor coverage for our products. Our standard terms and conditions do not provide price protection or stock return rights to any of our distributors. Royalty revenues are typically based on licensees’ net sales of products that utilize our technology and are recognized as earned in accordance with the contract terms when royalties from licensees can be reliably measured and collectibility is reasonably assured, such as upon the earlier of the receipt of a royalty statement from the licensee or upon payment by the licensee. 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 consolidated statements of operations as well as accrued expenses to the degree which is appropriate. Deferred Revenue. Revenue related to service contracts is deferred and recognized on a straight line basis over the period of the applicable service period. Costs associated with these service arrangements are recognized as incurred. A reconciliation of the changes in our deferred revenue balances for the years ended January 2, 2016 and January 3, 2015 are as follows (in thousands): FY 2013: Balance as of December 28, 2013 $ 1,133 Additions to deferral 1,514 Revenue recognized (1,468 ) FY 2014: Balance as of January 3, 2015 1,179 Additions to deferral 1,495 Revenue recognized (1,363 ) FY 2015: Balance as of January 2, 2016 $ 1,311 Warranty . We provide reserves for the estimated cost of product warranties at the time revenue is recognized based on historical experience of known product failure rates and expected material and labor costs to provide warranty services. We generally provide a two-year warranty on our products. Additionally, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. Alternatively, if estimates are determined to be greater than the actual amounts necessary, we may reverse a portion of such provisions in future periods. Warranty costs are reflected in the consolidated statements of operations as costs of revenues. A reconciliation of the changes in our warranty liability for the years ended January 2, 2016 and January 3, 2015 are as follows (in thousands): FY 2013: Balance as of December 28, 2013 $ 468 Accruals for product warranties 313 Cost of warranty claims (312 ) FY 2014: Balance as of January 3, 2015 469 Accruals for product warranties 401 Cost of warranty claims (267 ) FY 2015: Balance as of January 2, 2016 $ 603 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. Shipping and handling costs amounted to $0.3 million for each of the fiscal years 2015, 2014 and 2013. Research and Development . Research and development expenditures are charged to operations as incurred. Advertising. Advertising and promotion costs are expensed as they are incurred; such costs were approximately $0.1 million in 2015, $0.2 million in 2014, and $0.1 million in 2013 and are included in sales and marketing expenses in the accompanying consolidated statements of operations. Income Taxes. We account for income taxes in accordance with 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. Under ASC 740, the liability method is used in accounting for income taxes. Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. 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 asset will not be realized. We annually evaluate the realizability of our deferred tax assets by assessing our valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization include our forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. In 2014, we released valuation allowance against most of our deferred tax assets except that we retained a valuation allowance for certain deferred tax assets associated with our California R&D credit. We do not believe there is any significant change in market demand for our products in 2015 that would impact our future profitability. We expect to continue to generate CA R&D credits greater than their California tax before applying the CA R&D credit. Therefore, based on our history of profits and expected continued profitability, we will continue to have a valuation allowance only for the CA R&D credit. Accounting for Uncertainty in Income Taxes . We account for uncertain tax positions in accordance with ASC 740. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax provision that an entity takes or expects to take in a tax return. Additionally, ASC 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. Under ASC 740, an entity may only recognize or continue to recognize tax positions that meet a "more-likely-than-not" threshold. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. There were no accrued interest and penalties during the year ended January 2, 2016. Accounting for Stock-Based Compensation. We account for stock-based compensation granted to employees and directors, including employees stock option awards, restricted stock and restricted stock units at grant date, based on the fair value of the award. Stock-based compensation is recognized as expense on a ratable basis over the requisite service period of the award. We value options using the Black-Scholes option pricing model. Restricted stock and time-based restricted stock units are valued at the grant date fair value of the underlying common shares. Performance-based restricted stock units 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 share-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. Concentration of Credit Risk and Other Risks and Uncertainties . 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 years ended January 2, 2016, January 3, 2015, and December 28, 2013, no single customer accounted for greater than 10% of total revenues. As of January 2, 2016, no customer accounted for more than 10% of accounts receivable balance. One customer accounted for approximately 13% of our accounts receivable balance as of January 3, 2015. Our products require approvals from the Food and Drug Administration and international regulatory agencies prior to commercialized sales. Our future products may not receive required approvals. If we were denied such approvals, or if such approvals were delayed, it would have a materially adverse impact on our business, results of operations and financial condition. Reliance on Certain Suppliers. Certain components and services used to manufacture and develop our products are presently available from only one or a limited number of suppliers or vendors. The loss of any of these suppliers or vendors would potentially require a significant level of hardware and/or software development efforts to incorporate the products or services into our products. Net Income per Share. Basic net income per share is based upon the weighted average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted average number of common shares outstanding and dilutive common stock equivalents outstanding during the period. Common stock equivalents consist of incremental common shares issuable upon the exercise of stock options, release (vesting) of restricted stock units and awards, and the conversion of Series A Preferred Stock into common stock and are calculated under the treasury stock method. Common stock equivalent shares from unexercised stock options, unvested restricted stock units and awards and the conversion of Series A Preferred Stock 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. See Note 14 - Computation of Basic and Diluted Net Income Per Common Share. Recently Issued and Adopted Accounting Standards. In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” “Revenue from Contracts with Customers, Deferral of the Effective Date” In June 2014, the FASB issued ASU 2014-12, “ Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force)” In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”)

Fair Value Measurement

Fair Value Measurement	12 Months Ended
	Jan. 02, 2016
Fair Value Disclosures [Abstract]
Fair Value Measurement	3. Fair Value Measurement 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, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in our assessment of fair value. The carrying amounts of our financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses as of January 2, 2016 and January 3, 2015, approximate fair value because of the short maturity of these instruments. As of January 2, 2016 and January 3, 2015, financial assets and liabilities measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above was as follows (in thousands): As of January 2, 2016 As of January 3, 2015 Fair Value Measurements Fair Value Measurements Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds $ 9,212 $ 9,212 $ 11,846 $ 11,846 Liabilities: Earn-out liability $ 1,005 $ 1,005 $ 1,423 $ 1,423 Our Level 1 financial assets are money market funds whose fair values are based on quoted market prices. We do not have any Level 2 financial assets or liabilities. The fair value of the earn-out liability arising from the acquisitions of RetinaLabs and Ocunetics is classified within Level 3 of the fair value hierarchy since it is based on significant unobservable inputs. The significant unobservable inputs include projected royalties and discount rates to present value the payments. A significant increase (decrease) in the projected royalty payments in isolation could result in a significantly higher (lower) fair value measurement and a significant increase (decrease) in the discount rate in isolation could result in a significantly lower (higher) fair value measurement. The fair value of the earn-out liability is calculated on a quarterly basis based on a collaborative effort of our operations, finance and accounting groups based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the consolidated statement of operations of that period. The decrease in re-measurement of the contingent earn-out was due to a decrease in expected future revenues to be generated from these acquisitions. Both of these deals were structured with an earn-out component. The earn-out liability is included in accrued expenses and other long-term liabilities in the consolidated balance sheets. Any change in the fair value adjustment is recorded in the consolidated statements of operations. Charges related to fair value adjustments were $5 thousand, $1,258 thousand and $355 thousand for the fiscal years 2015, 2014 and 2013, respectively The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of January 2, 2016 and January 3, 2015. As of January 2, 2016 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 1,005 Discounted cash Projected $ 2,949 flow (in thousands) ($134 – $3,153) Discount rate 11.36% (10.23% - 27.00%) As of January 3, 2015 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 1,423 Discounted cash Projected $ 3,048 flow (in thousands) ($669 – $3,613) Discount rate 13.54% (10.34% - 27.00%) The following table provides a reconciliation of the beginning and ending balances of the contingent consideration – cash (Level 3 liabilities) (in thousands): Balance as of December 28, 2013 $ 624 Payments against earn-out (459 ) Change in fair value of earn-out liability 1,258 Balance as of January 3, 2015 1,423 Payments against earn-out (423 ) Change in fair value of earn-out liability 5 Balance as of January 2, 2016 $ 1,005

Inventories

Inventories	12 Months Ended
	Jan. 02, 2016
Inventory Disclosure [Abstract]
Inventories	4. Inventories The components of our inventories are as follows (in thousands): FY 2015 January 2, 2016 FY 2014 January 3, 2015 Raw materials $ 4,578 $ 3,966 Work in process 1,791 1,609 Finished goods 4,737 3,544 Total inventories $ 11,106 $ 9,119

Property and Equipment

Property and Equipment	12 Months Ended
	Jan. 02, 2016
Property Plant And Equipment [Abstract]
Property and Equipment	5. Property and Equipment The components of our property and equipment are as follows (in thousands): FY 2015 January 2, 2016 FY 2014 January 3, 2015 Equipment $ 8,498 $ 7,623 Leasehold improvements 2,309 2,309 Less: accumulated depreciation and amortization (9,703 ) (9,197 ) Property and equipment, net $ 1,104 $ 735 Depreciation expense related to property and equipment was $506 thousand, $376 thousand and $264 thousand for the fiscal years 2015, 2014 and 2013, respectively.

Goodwill

Goodwill	12 Months Ended
	Jan. 02, 2016
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill	6. Goodwill The carrying value of goodwill was $0.5 million as of January 2, 2016 and January 3, 2015. Goodwill is tested for impairment at least annually or whenever there is a change in circumstances that indicates the carrying value of these assets may be impaired. The determination of whether any potential impairment of goodwill exists is based upon a two-step impairment test performed in accordance with ASC 350. There was no impairment of goodwill recognized during fiscal years 2015, 2014 or 2013.

Intangible Assets

Intangible Assets	12 Months Ended
	Jan. 02, 2016
Goodwill And Intangible Assets Disclosure [Abstract]
Intangible Assets	7. Intangible Assets The components of our purchased intangible assets as of January 2, 2016 are as follows (in thousands): Useful Lives FY 2015 Annual Amortization Gross Carrying Value Accumulated Amortization Net Carrying Value Useful Lives Remaining Customer relations 15 Years $ 16 $ 240 $ 92 $ 148 9.25 Patents Varies - 720 600 120 Varies $ 16 $ 960 $ 692 $ 268 The components of our purchased intangible assets as of January 3, 2015 are as follows (in thousands): Useful Lives FY 2014 Annual Amortization Gross Carrying Value Accumulated Amortization Net Carrying Value Useful Lives Remaining Customer relations 15 Years $ 16 $ 240 $ 76 $ 164 10.25 Patents Varies 28 720 600 120 Varies $ 44 $ 960 $ 676 $ 284 Aggregate amortization expense for the fiscal years 2015, 2014 and 2013 were $16 thousand, $44 thousand and $226 thousand, respectively. The amortization of customer relations was charged to sales and marketing expense and the amortization of patents was charged to cost of revenues. Estimated future amortization expense for purchased intangible assets is as follows (in thousands): Fiscal Year: 2016 $ 16 2017 78 2018 74 2019 16 2020 16 Thereafter 68 Total $ 268

Accrued Expenses

Accrued Expenses	12 Months Ended
	Jan. 02, 2016
Payables And Accruals [Abstract]
Accrued Expenses	8. Accrued Expenses The components of our accrued expenses are as follows (in thousands): FY 2015 January 2, 2016 FY 2014 January 3, 2015 Customer deposits $ 336 $ 500 Earn-out – short term 370 382 Distributor commission 234 300 Sales and use tax payable 105 107 Royalties payable 52 36 Other accrued expenses 625 445 Total accrued expenses $ 1,722 $ 1,770

Commitments and Contingencies

Commitments and Contingencies	12 Months Ended
	Jan. 02, 2016
Commitments And Contingencies Disclosure [Abstract]
Commitments and Contingencies	9. Commitments and Contingencies Lease Agreements. We lease our operating facilities in Mountain View, California, under a non-cancelable operating lease that was initially scheduled to expire in February 28, 2017. In February 2016, we executed an agreement to extend the term of the lease through February 28, 2019. See Note 15 – Subsequent Events. There are no remaining options to extend or renew the terms of this lease. Rent expense for fiscal years 2015, 2014 and 2013 were $0.8 million, $0.6 million and $0.6 million, respectively. Future minimum lease payments under current operating leases as of January 2, 2016 are summarized as follows (in thousands): Fiscal Year Operating Lease Payments 2016 $ 989 2017 1,033 2018 1,019 2019 169 Total future minimum lease payments $ 3,210 Manufacture and Supply Agreement. In January 2014, the Company and Peregrine Surgical Ltd. amended the manufacture, supply and distributor agreement that was originally entered into in April 2013. The amendment modified the term and termination period from April 1, 2013 through April 1, 2017 to January 1, 2014 through January 1, 2018. All other terms under the original agreement remained in force. Under the agreement, we have a minimum commitment to purchase annually $750 thousand of certain components and ophthalmic instrumentation. Future minimum payments for manufacture and supply commitments as of January 2, 2016 are summarized as follows (in thousands): Fiscal Year Contract Manufacturing and Supply Commitments 2016 $ 10,306 2017 4,575 Total contract manufacturing and supply commitments $ 14,881 License Agreements. We are obligated to pay royalties equivalent to 5% of sales on certain products under certain license agreements with termination dates as early as the end of 2018 and as late as the end of 2021. Royalty expense, charged to cost of revenues, was approximately $0.1 million, $0.2 million, and $0.1 million for the fiscal years 2015, 2014 and 2013, respectively. Indemnification Arrangements . We enter into standard indemnification arrangements in our 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 party, 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 anytime after the execution of the agreement. The maximum potential amount of future payments 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; 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. In general, management believes that claims which are pending or known to be threatened, will not have a material adverse effect on our financial position or results of operations and are adequately covered by our liability insurance. However, it is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one of more of these contingencies or because of the diversion of management’s attention and the incurrence of significant expenses.

Stockholders' Equity

Stockholders' Equity	12 Months Ended
	Jan. 02, 2016
Equity [Abstract]
Stockholders' Equity	10. Stockholders’ Equity Convertible Preferred Stock We are authorized to issue up to 2,000,000 shares of undesignated preferred stock from time to time in one or more series. During August 2007, we filed a Certificate of Designation authorizing us to issue up to 500,000 of the 2,000,000 shares of authorized undesignated preferred stock as shares of Series A Preferred Stock, par value $0.01 per share and we issued 500,000 shares of Series A Preferred Stock, convertible into 1 million shares of common stock, and warrants to purchase an aggregate of 600,000 shares of common stock at an exercise price of $0.01 per share. The warrants were to expire December 31, 2007 but were exercised prior to that date. The purchase price for a unit of 1 share of Series A Preferred Stock and a warrant to purchase 1.2 shares of common stock was $10.00, resulting in net proceeds of approximately $4.9 million. Of the total $4.9 million proceeds received, approximately $2.3 million was allocated to the common stock warrants based on their estimated fair value at the time of issuance. On June 11, 2013, all outstanding shares of our Series A Preferred Stock automatically converted into 1,000,000 shares of common stock. 1998 Stock Plan. The 1998 Stock Plan (the “1998 Plan”), as amended, provides for the granting to employees (including officers and non-employee directors) of incentive stock options and for the granting to employees (including officers and non-employee directors) and consultants of nonstatutory stock options, stock purchase rights (“SPRs”), restricted stock, restricted stock units (“RSUs”), performance shares, performance units and stock appreciation rights. The exercise price of incentive stock options and stock appreciation rights granted under the 1998 Plan must be at least equal to the fair market value of the shares at the time of grant. With respect to any recipient who owns stock possessing more than 10% of the voting power of our outstanding capital stock, the exercise price of any option or SPR granted must be at least equal to 110% of the fair market value at the time of grant. Options granted under the 1998 Plan are exercisable at such times and under such conditions as determined by the administrator; generally over a four year period. The maximum term of incentive stock options granted to any recipient must not exceed ten years; provided, however, that the maximum term of an incentive stock option granted to any recipient possessing more than 10% of the voting power of our outstanding capital stock must not exceed five years. In the case of SPRs, unless the administrator determines otherwise, we have a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s employment with us for any reason (including death or disability). Such repurchase option lapses at a rate determined by the administrator. The purchase price for shares repurchased is the original price paid by the purchaser. As of January 2, 2016 and January 3, 2015, no shares were subject to repurchase. The form of consideration for exercising an option or stock purchase right, including the method of payment, is determined by the administrator. The 1998 Plan expired in February 2008. 2008 Equity Incentive Plan. On June 11, 2008, the shareholders approved the adoption of the 2008 Equity Incentive Plan, (the “Incentive Plan”). There are no material changes in the Incentive Plan from the 1998 Plan. In 2014, the stockholders approved an amendment to the Incentive Plan for purposes of complying with Section 162(m) of the Internal Revenue Code of 1986, as amended, to increase the share reserve under the Incentive Plan, and to make certain other amendments to the terms of the Incentive Plan. The maximum aggregate number of shares that may be awarded and sold under the Incentive Plan is 300,000 shares plus any shares subject to stock options or similar awards granted under the 1998 Plan that expire or otherwise terminate without having been exercised in full and shares issued pursuant to awards granted under the 1998 Plan that are forfeited to us on or after February 23, 2008, which was the date the 1998 Plan expired. The following table summarizes information regarding activity in our stock option plans during the fiscal years ended 2015, 2014 and 2013 (in thousands except share and per share data): Outstanding Options Shares Available for Grant Number of Shares Weighted Average Exercise Price Balances as of December 29, 2012 741,978 1,570,543 $ 3.63 Additional shares reserved 52,128 — — Options granted (149,600 ) 149,600 5.69 Restricted stock granted (234,012 ) — — Options exercised — (493,622 ) 3.03 Options cancelled 123,679 (123,679 ) 5.64 Options expired (57,628 ) — — Balances as of December 28, 2013 476,545 1,102,842 3.97 Additional shares reserved 503,306 — — Options granted (158,300 ) 158,300 8.61 Restricted stock granted (62,225 ) — — Options exercised — (399,390 ) 3.76 Options cancelled 27,957 (27,957 ) 6.13 Awards cancelled 79,890 — — Options expired (13,056 ) — — Balances as of January 3, 2015 854,117 833,795 4.88 Additional shares reserved 1,000 — — Options granted (170,300 ) 170,300 9.38 Restricted stock granted (227,905 ) — — Options exercised — (277,733 ) 3.70 Options cancelled 174,870 (174,870 ) 4.71 Awards cancelled 146,000 — — Options expired (7,000 ) — — Balances as of January 2, 2016 770,782 551,492 $ 6.92 There were 1,322,274 shares reserved for future issuance under the stock option plans as of January 2, 2016. The following table summarizes information with respect to stock options outstanding and exercisable as of January 2, 2016: Options Outstanding Options Vested and Exercisable Range of Exercise Prices Number of Shares Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $2.27 - $3.86 84,585 2.67 $ 3.45 63,856 $ 3.32 $3.89 - $4.31 70,533 2.18 $ 4.11 63,133 $ 4.13 $4.74 - $5.92 78,265 4.53 $ 5.47 40,774 $ 5.42 $6.00 - $8.16 104,637 6.25 $ 7.50 14,896 $ 6.68 $8.29 - $8.58 73,925 5.15 $ 8.46 32,751 $ 8.46 $8.60 - $9.34 51,813 5.32 $ 9.01 21,584 $ 9.04 $10.14 - $10.14 17,400 6.32 $ 10.14 — $ — $10.19 - $10.19 3,000 4.92 $ 10.19 1,563 $ 10.19 $10.45 - $10.45 800 6.16 $ 10.45 100 $ 10.45 $10.73 - $10.73 66,534 6.07 $ 10.73 14,552 $ 10.73 $2.27 - $10.73 551,492 4.68 $ 6.92 253,209 $ 5.68 The determination of the fair value of options granted is computed using the Black-Scholes option pricing model with the following weighted average assumptions: Employee Stock Option Plan FY 2015 FY 2014 FY 2013 Average risk free interest rate 1.38 % 1.49 % 1.12 % Expected life (in years) 4.55 years 4.50 years 4.50 years Dividend yield — — — Average volatility 49.3 % 56.2 % 71.5 % The weighted average grant date fair value of options granted as calculated using Black-Scholes option pricing was $3.95, $4.02, and $3.16 per share for the fiscal years 2015, 2014 and 2013, respectively. 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 our stock price history over a period commensurate with the expected term of the options, trading volume of our 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, 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 we have not issued any dividends and does not anticipate issuing any dividends in the future. The following table shows stock-based compensation expense by functional line item in the consolidated statements of operations for 2015, 2014 and 2013 (in thousands): FY 2015 Year Ended FY 2014 Year Ended FY 2013 Year Ended January 2, 2016 January 3, 2015 December 28, 2013 Cost of revenues $ 223 $ 149 $ 108 Research and development 176 105 71 Sales and marketing 185 118 113 General and administrative 311 600 397 Total stock-based compensation expense $ 895 $ 972 $ 689 Stock-based compensation expense capitalized to inventory was immaterial for 2015, 2014, and 2013. Information regarding stock options outstanding, exercisable and expected to vest as of January 2, 2016 is summarized below: Number of Weighted Average Weighted Average Remaining Contractual Aggregate Intrinsic Value Shares Exercise Price Life (years) (thousands) Options outstanding 551,492 $ 6.92 4.68 $ 1,422 Options vested and expected to vest 511,414 $ 6.82 4.58 $ 1,366 Options exercisable 253,209 $ 5.68 3.56 $ 937 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on the last trading day of fiscal 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on January 2, 2016. This amount is subject to change due to changes to the fair market value of our common stock. The total intrinsic value of options exercised for fiscal years 2015, 2014 and 2013 was approximately $1.5 million, $1.9 million, and $1.5 million, respectively. As of January 2, 2016, there was $1.8 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements under both of the plans. The cost is expected to be recognized over a weighted average period of 2.62 years. Cash flows resulting from excess tax benefits are classified as a part of cash flows from financing activities. Excess tax benefits are realized tax benefits from tax deductions for exercised stock options and vested restricted stock units and awards in excess of the deferred tax asset attributable to stock-based compensation expense for such stock-based awards. Excess tax benefits are considered realized when the tax deductions reduce taxes that otherwise would be payable. Excess tax benefits classified as a financing cash inflow for fiscal 2015, 2014 and 2013 were $0, $36 thousand and $0, respectively. Restricted Stock Awards/Restricted Stock Units Effective for the 2011 fiscal year and thereafter, each non-employee member of the Board received an annual equity award of either restricted stock or RSU, at the election of such Board member, in each case equal to $20 thousand worth of our common stock (determined at the fair market value of the shares at the time such award is granted) under our Incentive Plan. Each equity award or RSU vests in full on the one-year anniversary of the date of grant provided that the non-employee member continues to serve on the Board through such date. Summary of Restricted Stock Units and Awards We recognize the estimated compensation expense of restricted stock units and awards, net of estimated forfeitures, over the vesting term. The estimated compensation expense is based on the fair value of our common stock on the date of grant. Information regarding the restricted stock units outstanding, vested and expected to vest as of January 2, 2016 is summarized below: Number of Shares Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value (thousands) Restricted stock units outstanding 147,589 2.69 $ 1,371 Restricted stock units vested and expected to vest 109,852 2.57 $ 1,021 The intrinsic value of the restricted stock units is calculated based on the closing price of IRIDEX shares as quoted on the NASDAQ Global Market on the last trading day of the year, December 31, 2015, of $9.29. On January 9, 2015, the Company granted restricted stock unit awards for 56,000 shares of our common stock (the “Retention Award”) under the terms of the Company’s 2008 Equity Incentive Plan, as amended, to six executives of the Company. The Retention Award will vest over 4 years, with 20% of the Retention Award vesting on grant date and the remaining 80% vesting annually. The fair value at grant date of the restricted stock units was $485 thousand. Compensation expense is recognized ratably over the vesting period. On January 9, 2015, the Company also granted restricted stock unit awards for up to 110,000 shares of our common stock (the “Performance Award”) under the terms of the Company’s 2008 Equity Incentive Plan, as amended, to these same six executives of the Company. The number of shares issuable pursuant to the Market Performance Award will be based upon the average closing price of our common stock during the 60 day period following the date the service condition is met. The Performance Award is expected to vest on January 9, 2019, given that no other vesting triggers occur prior to that date. To the extent that the market condition is not met, the Market Performance Award will not vest and will be cancelled. Utilizing the Monte Carlo simulation technique, which incorporated assumptions for the expected holding period, risk-free interest rate, stock price volatility and dividend yield, the fair value at grant date of these restricted stock units was $486 thousand. Compensation expense is recognized ratably until such time as the market condition is satisfied. On January 9, 2015, the Company granted a restricted stock unit award for up to 50,000 shares of our common stock (the “Market Performance Award”) under the terms of our Incentive Plan to our President and Chief Executive Officer. The number of shares issuable pursuant to the Market Performance Award will be based upon the average closing price of our common stock during the 60 day period following the date the service condition is met. The Market Performance Award is expected to vest on January 9, 2019, given that no other vesting triggers occur prior to that date. To the extent that the market condition is not met, the Market Performance Award will not vest and will be cancelled. Utilizing the Monte Carlo simulation technique, which incorporated assumptions for the expected holding period, risk-free interest rate, stock price volatility and dividend yield, the fair value at grant date of these restricted stock units was $234 thousand. Compensation expense is recognized ratably until such time as the market condition is satisfied. The majority of the restricted stock units that were released in fiscal year 2015 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were based on the value of the restricted stock units on their release date as determined by our closing stock price. These net-share settlements had the effect of share repurchases as they reduced and retired the number of shares that would have otherwise been issued as a result of the release and did not represent an expense to us. For the fiscal year ended January 2, 2016, 209,193 shares of restricted stock units were released with an intrinsic value of approximately $2.5 million. We withheld 66,882 shares to satisfy approximately $606 thousand of employees’ minimum tax obligation on the released restricted stock units. Information regarding the RSU activity during the years ended January 2, 2016, January 3, 2015 and December 28, 2013 is summarized below: Number of Shares Weighted Average Grant Date Fair Value Outstanding as of December 29, 2012 55,999 $ 3.85 Restricted stock units granted 230,509 $ 4.51 Restricted stock units released (17,249 ) $ 3.77 Outstanding as of December 28, 2013 269,259 $ 4.42 Restricted stock units granted 59,780 $ 9.76 Restricted stock units released (46,759 ) $ 9.29 Restricted stock units forfeited (4,890 ) $ 8.18 Outstanding as of January 3, 2015 277,390 $ 4.68 Restricted stock units granted 225,392 $ 8.66 Restricted stock units released (209,193 ) $ 8.73 Restricted stock units forfeited (146,000 ) $ 8.67 Outstanding as of January 2, 2016 147,589 $ 1.05 Information regarding the restricted stock awards activity during the year ended January 2, 2016, January 3, 2015 and December 28, 2013 is summarized below: Number of Shares Weighted Average Grant Date Fair Value Outstanding as of December 29, 2012 10,666 $ 3.75 Restricted stock awards granted 3,503 $ 5.71 Restricted stock awards released (10,666 ) $ 3.75 Outstanding as of December 28, 2013 3,503 $ 5.71 Restricted stock awards granted 2,445 $ 8.18 Restricted stock awards released (3,503 ) $ 5.71 Outstanding as of January 3, 2015 2,445 $ 8.18 Restricted stock awards granted 2,513 $ 7.96 Restricted stock awards released (2,445 ) $ 7.96 Outstanding as of January 2, 2016 2,513 $ 7.96 Stock Repurchase Program. In February 2013, the Board of Directors approved a one year $3.0 million stock repurchase program that replaced the prior two year $4.0 million stock repurchase program. In February 2014, the Board of Directors approved the extension of the plan for an additional year. In July 2014, the Board of Directors approved an extension of the plan for an additional year and authorized an additional $3.0 million of stock repurchases. In August 2015, the Board of Directors approved a further extension of the plan for another year and authorized an additional $2.0 million of stock repurchases. We have purchased 199,776 shares at an average price of $7.82 per share during the fiscal year ended January 2, 2016. As of January 2, 2016, we have repurchased 837,241 shares for approximately $6.6 million under this current program and the Company still has the authorization to purchase up to $1.1 million in common shares under the stock repurchase program. On September 9, 2015, the Company made a payment to James H. Mackaness, our former Chief Financial Officer and Chief Operating Officer, of approximately $275 thousand in cash in exchange for Mr. Mackaness’ agreement to cancel vested stock options exercisable for an aggregate of 92,656 shares of our common stock. This payment to Mr. Mackaness was made using funds authorized and available under the stock repurchase program discussed above, and resulted in a reduction of the approximate dollar value of shares that may yet be purchased under this program.

Employee Benefit Plan

Employee Benefit Plan	12 Months Ended
	Jan. 02, 2016
Employee Benefits And Share Based Compensation [Abstract]
Employee Benefit Plan	11. Employee Benefit Plan We have a plan known as the IRIS Medical Instruments 401(k) Trust to provide retirement benefits through the deferred salary deductions for substantially all U.S. employees. Employees may contribute up to 15% of their annual compensation to the plan, limited to a maximum amount set by the Internal Revenue Service. The plan also provides for Company contributions at the discretion of the Board of Directors. Prior to the start of fiscal 2009, we suspended the matching contributions. Subsequent to December 28, 2013, we reinstated a Company match in the amount of 50% of employee contributions up to a maximum of $3 thousand. In 2015, total matching contributions made by the Company were $218 thousand. In 2014, total matching contributions made by the Company were $186 thousand.

Income Taxes

Income Taxes	12 Months Ended
	Jan. 02, 2016
Income Tax Disclosure [Abstract]
Income Taxes	12. Income Taxes Income before (benefit from) provision for income taxes was comprised of the following: FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 United States $ 291 $ 1,332 $ 2,262 Foreign — — — Total $ 291 $ 1,332 $ 2,262 The (benefit from) provision for income taxes includes: FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 Current: Federal $ (4 ) $ 54 $ 11 State 30 16 20 26 70 31 Deferred: Federal (12 ) (7,862 ) — State (197 ) (914 ) — (209 ) (8,776 ) — (Benefit from) provision for income taxes $ (183 ) $ (8,706 ) $ 31 Our effective tax rate differs from the statutory federal income tax rate as shown in the following schedule: FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 Income tax provision at statutory rate 34.0 % 34.0 % 34.0 % State income taxes, net of federal benefit (70.8 )% (68.0 )% (13.3 )% Permanent differences 12.0 % (1.1 )% (17.0 )% Research and development credits (34.8 )% (2.6 )% 0.0 % Change in valuation allowance — (613.5 )% (2.3 )% Other (3.3 )% (2.4 )% 0.0 % Effective tax rate (62.9 )% (653.6 )% 1.4 % The tax effect of temporary differences and carryforwards that give rise to significant portions of the net deferred tax assets are presented below (in thousands): FY 2015 January 2, 2016 FY 2014 January 3, 2015 Net operating losses $ 4,135 $ 4,278 Research and development credits 1,820 1,575 Accruals and reserves $ 1,823 $ 1,681 Deferred revenue 120 113 Property and equipment 399 439 Intangible assets 792 825 Stock compensation 613 676 Other tax credits 89 94 Net deferred tax asset $ 9,791 $ 9,681 Valuation allowance (806 ) (905 ) Net deferred tax assets $ 8,985 $ 8,776 Our accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of our deferred tax assets. Assessing the realizability of deferred tax assets is dependent upon several factors, including the likelihood and amount, if any, of future taxable income in relevant jurisdictions during the periods in which those temporary differences become deductible. Our management forecasts taxable income by considering all available positive and negative evidence including our history of operating income or losses and our financial plans and estimates which are used to manage the business. These assumptions require significant judgment about future taxable income. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced. As of January 2, 2016, our management determined, based on our recent history of earnings coupled with our forecasted profitability that it is more-likely-than-not that all of our federal and the majority of our state deferred tax assets will be realized in the foreseeable future. As of January 2, 2016, we had federal and state net operating loss (“NOL”) carryforwards of $12.7 million and $14.5 million, respectively. Of the total NOL carryforwards, $2.6 million for federal and $2.3 million for states, relate to windfall stock option deductions which, when realized, will be credited to equity. The federal NOL will begin to expire in 2032 and the state NOL will begin to expire in 2020, in each case if not used. In December 2015, Congress passed a tax extenders package, Protecting Americans from Tax Hikes (PATH) Act of 2015, and permanently extended the federal R&D credit. As of January 2, 2016, we had federal and state R&D credit carryforwards of approximately $1.4 million and $2.1 million, respectively, available to offset future tax liabilities. The federal credits will begin expiring in 2026 if not used. The state R&D credits do not expire. The above NOL and research and development credits are subject to IRC sections 382 and 383. In the event of a change in ownership as defined by these code sections, the usage of the above mentioned NOL’s and credits may be limited. In November 2015, the FASB issued ASU 2015-17 to simplify the presentation of deferred income taxes. This standard requires that deferred tax liabilities and assets be classified as noncurrent on the consolidated balance sheet. It is effective for interim and annual periods beginning after December 15, 2016, but early adoption is permitted. Management elected to prospectively adopt this standard in the beginning of the fourth quarter of fiscal 2015. Prior periods in our consolidated financial statements were not retrospectively adjusted. The adoption of this guidance had no impact on our consolidated statements of operations. We account for uncertain tax positions in accordance with ASC 740. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax provision that an entity takes or expects to take in a tax return. Additionally, ASC 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. Under ASC 740, an entity may only recognize or continue to recognize tax positions that meet a "more likely than not" threshold. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. There were no accrued interest and penalties during the year ended January 2, 2016. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 Balance at the beginning of the year $ 861 $ 1,027 $ 954 Additions based upon tax positions related to the current year 73 53 48 Additions based upon tax positions related to the prior year — 51 25 Reductions based upon tax positions related to the prior year 3 (270 ) — Balance at the end of the year $ 937 $ 861 $ 1,027 Recognition of the unrecognized tax benefits of $937 thousand as of January 2, 2016 would affect our effective tax rate. We do not anticipate any material change in our unrecognized tax benefits of $937 thousand over the next twelve months. The unrecognized tax benefits may change during the next year for items that arise in the ordinary course of business. We file U.S. federal and state returns. The tax years 2009 to 2015 remain open in several jurisdictions, none of which have individual significance.

Business Segments and Geographi

Business Segments and Geographical Information	12 Months Ended
	Jan. 02, 2016
Segment Reporting [Abstract]
Business Segments and Geographical Information	13. Business Segments and Geographical Information We operate in one segment, ophthalmology. We develop, manufacture and market medical devices. Our revenues arise from the sale of consoles, delivery devices, consumables, service and support activities. Revenue information shown by geographic region is as follows (in thousands): FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 United States $ 23,952 $ 22,590 $ 21,043 Europe 7,968 9,096 7,345 Rest of Americas 2,676 3,199 3,309 Asia/Pacific Rim 7,161 7,929 6,576 $ 41,757 $ 42,814 $ 38,273 Revenues are attributed to countries based on location of end customers. For fiscal years 2015, 2014 and 2013 no individual country accounted for more than 10% of our sales, except for the United States, which accounted for 57.4%, 52.8%, and 55.0% of revenues in 2015, 2014, and 2013 respectively. As of January 2, 2016 and January 3, 2015, we had no long-lived assets in any country other than in the United States.

Computation of Basic and Dilute

Computation of Basic and Diluted Net Income Per Common Share	12 Months Ended
	Jan. 02, 2016
Earnings Per Share [Abstract]
Computation of Basic and Diluted Net Income Per Common Share	14. Computation of Basic and Diluted Net Income Per Common Share A reconciliation of the numerator and denominator of basic and diluted net income per common share is provided as follows (in thousands, except per share amounts): FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 Numerator: Net income $ 474 $ 10,038 $ 2,231 Denominator: Weighted average shares of common stock (basic) 9,962 9,892 9,245 Effect of dilutive preferred shares — — 448 Effect of dilutive stock options 154 291 291 Effect of dilutive contingent shares 12 174 120 Weighted average shares of common stock (diluted) 10,128 10,357 10,104 Per share data: Basic net income per share $ 0.05 $ 1.01 $ 0.24 Diluted net income per share $ 0.05 $ 0.97 $ 0.22 As of January 2, 2016 and January 3, 2015, stock options to purchase 249,064 and 116,320 shares, respectively, were excluded from the computation of diluted weighted average shares outstanding because to do so would have been anti-dilutive.

Subsequent Events

Subsequent Events	12 Months Ended
	Jan. 02, 2016
Subsequent Events [Abstract]
Subsequent Events	15. Subsequent Events In February 2016, we entered into an agreement (Fourth Amendment to Lease) to modify the lease on our facility that extends the term through the end of February 2019.

Summary of Significant Accoun23

Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Jan. 02, 2016
Accounting Policies [Abstract]
Financial Statement Presentation	Financial Statement Presentation. The consolidated financial statements include the accounts of IRIDEX and our wholly owned non-operating subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Our fiscal year always ends on the Saturday closest to December 31. Fiscal 2015 ended on January 2, 2016 (“FY 2015”), fiscal 2014 ended on January 3, 2015 (“FY 2014”), and fiscal 2013 ended on December 28, 2013 (“FY 2013”). Consequently, fiscal years 2015 and 2013 included only 52 weeks of operations while fiscal year 2014 included 53 weeks.
Use of Estimates	Use of Estimates . The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“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.
Discontinued Operations	Discontinued Operations. Discontinued operations are accounted for and presented in accordance with ASC 360, “ Impairment or Disposal of Long-Lived Assets” On December 30, 2011, we entered into an agreement to sell our aesthetics business to Cutera, Inc. The operating results of our aesthetics business were therefore classified as discontinued operations, and the associated assets and liabilities were classified as discontinued operations for all periods presented under the requirements of ASC 360. The sale of the aesthetics business was completed on February 2, 2012. Current assets of discontinued operations as of December 29, 2012 comprised of restricted cash in the amount of $510 thousand. In accordance with the terms of the sale of the aesthetics segment to Cutera, Inc., 10% of the total purchase price was deposited and held in an escrow account for a period of twelve months from the date of closing and was available to resolve certain claims by Cutera, Inc., if any, against which we had indemnified Cutera, Inc. There had been no claims made by Cutera, Inc. and in May 2013, the cash held in the escrow account was released to us.
Cash and Cash Equivalents	Cash and Cash Equivalents . We consider all highly liquid debt instruments with insignificant interest rate risk and an original maturity of three months or less when purchased to be cash equivalents. Cash equivalents consist primarily of cash deposits in money market funds that are available for withdrawal without restriction.
Sales Returns Allowance and Allowance for Doubtful Accounts	Sales Returns Allowance and Allowance for Doubtful Accounts. We estimate future product returns related to current period product revenue. We analyze historical returns, and changes in customer demand and acceptance of our products when evaluating the adequacy of the sales returns allowance. Significant management judgment and estimates must be made and used in connection with establishing the sales returns allowance in any accounting period. Material differences may result in the amount and timing of our revenue for any period if management made different judgments or utilized different estimates. Our provision for sales returns is recorded net of the associated costs. The balance for the provision of sales returns was $60 thousand and $47 thousand as of January 2, 2016 and January 3, 2015, respectively, and is recorded within the deferred revenue accounts in the consolidated balance sheets. Similarly management must make estimates regarding the uncollectibility of accounts receivable. We are exposed to credit risk in the event of non-payment by customers to the extent of amounts recorded on the consolidated balance sheets. As sales levels change, the level of accounts receivable would likely also change. In addition, in the event that customers were to delay their payments to us, the levels of accounts receivable would likely increase. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is based on past payment history with the customer, analysis of the customer’s current financial condition, the aging of the accounts receivable balance, customer concentration and other known factors.
Inventories	Inventories. Inventories are stated at the lower of cost or market and include on-hand inventory physically held at our facility, sales demo inventory and service loaner inventory. Cost is determined on a standard cost basis which approximates actual cost on a first-in, first-out (“FIFO”) method. Lower of cost or market is evaluated by considering obsolescence, excessive levels of inventory, deterioration and other factors. Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolescence or impaired inventory and are charged to cost of revenues. Once the cost of the inventory is reduced, a new lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Factors influencing these adjustments include changes in demand, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues. Revisions to these adjustments would be required if these factors differ from our estimates. As part of our normal business, we generally utilize various finished goods inventory as either sales demos to facilitate the sale of our products to prospective customers, or as loaners that we allow our existing customers to use while we repair their products. We are amortizing these demos and loaners over an estimated useful life of four years. The amortization of the demos is charged to sales expense while the amortization on the loaners is charged to cost of revenues. The gross value of demos and loaners was $1.6 million and $1.4 million and the accumulated amortization was $575 thousand and $524 thousand as of January 2, 2016 and January 3, 2015, respectively. The net book value of demos and loaners is charged to cost of revenues when such demos or loaners are sold.
Property and Equipment	Property and Equipment. Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated on a straight–line basis over the estimated useful lives of the assets, which is generally three years. Leasehold improvements are amortized over the lesser of their estimated useful lives or the lease term. Repairs and maintenance costs are expensed as incurred.
Valuation of Goodwill and Intangible Assets	Valuation of Goodwill and Intangible Assets. 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. We review goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step quantitative goodwill impairment test. If, after assessing the totality of circumstances, an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform the two-step impairment test. It does not require an entity to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying value. However, an entity also has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. We have determined that it has a single reporting unit for purposes of performing our goodwill impairment test. As we use the market approach to assess impairment, our common stock price is an important component of the fair value calculation. If our 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. We performed our annual impairment test during the second quarter of 2015 and determined that our goodwill was not impaired. As of January 2, 2016, we had not identified any factors that indicated there was an impairment of our goodwill and determined that no additional impairment analysis was then required. Intangible assets with definite lives are amortized over the useful life of the asset. We review our amortizing intangible assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future non-discounted net cash flow the asset is expected to generate. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. In such circumstances, we conduct an impairment analysis in accordance with ASC 350, “ Intangibles – Goodwill and Other”
Revenue Recognition	Revenue Recognition. Our revenues arise from the sale of laser consoles, delivery devices, consumables and service and support activities. Revenue from product sales is recognized upon receipt of a purchase order and product shipment provided that no significant obligations remain and collection of the receivables is reasonably assured. Shipments are generally made with Free-On-Board (“FOB”) shipping point terms, whereby title passes upon shipment from our dock. Any shipments with FOB receiving point terms are recorded as revenue when the shipment arrives at the receiving point. Cost is recognized as product sales revenue is recognized. Our sales may include post-sales obligations for training or other deliverables. For revenue arrangements such as these, we recognize revenue in accordance with ASC 605, “Revenue Recognition, Multiple-Element Arrangements”. We allocate revenue among deliverables in multiple-element arrangements using the relative selling price method. Revenue allocated to each element is recognized when the basic revenue recognition criteria is met for each element. We are required to apply a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of selling price (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of the selling price (“ESP”). In general, we are unable to establish VSOE or TPE for all of the elements in the arrangement; therefore, revenue is allocated to these elements based on our ESP, which we determine after considering multiple factors such as management approved pricing guidelines, geographic differences, market conditions, competitor pricing strategies, internal costs and gross margin objectives. These factors may vary over time depending upon the unique facts and circumstances related to each deliverable. As a result, our ESP for products and services could change. Revenues for post-sales obligations are recognized as the obligations are fulfilled. In international regions, we utilize distributors to market and sell our products. We recognize revenue upon shipment for sales to these independent, third-party distributors as we have no continuing obligations subsequent to shipment. Generally our distributors are responsible for all marketing, sales, installation, training and warranty labor coverage for our products. Our standard terms and conditions do not provide price protection or stock return rights to any of our distributors. Royalty revenues are typically based on licensees’ net sales of products that utilize our technology and are recognized as earned in accordance with the contract terms when royalties from licensees can be reliably measured and collectibility is reasonably assured, such as upon the earlier of the receipt of a royalty statement from the licensee or upon payment by the licensee.
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 consolidated statements of operations as well as accrued expenses to the degree which is appropriate.
Deferred Revenue	Deferred Revenue. Revenue related to service contracts is deferred and recognized on a straight line basis over the period of the applicable service period. Costs associated with these service arrangements are recognized as incurred. A reconciliation of the changes in our deferred revenue balances for the years ended January 2, 2016 and January 3, 2015 are as follows (in thousands): FY 2013: Balance as of December 28, 2013 $ 1,133 Additions to deferral 1,514 Revenue recognized (1,468 ) FY 2014: Balance as of January 3, 2015 1,179 Additions to deferral 1,495 Revenue recognized (1,363 ) FY 2015: Balance as of January 2, 2016 $ 1,311
Warranty	Warranty . We provide reserves for the estimated cost of product warranties at the time revenue is recognized based on historical experience of known product failure rates and expected material and labor costs to provide warranty services. We generally provide a two-year warranty on our products. Additionally, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. Alternatively, if estimates are determined to be greater than the actual amounts necessary, we may reverse a portion of such provisions in future periods. Warranty costs are reflected in the consolidated statements of operations as costs of revenues. A reconciliation of the changes in our warranty liability for the years ended January 2, 2016 and January 3, 2015 are as follows (in thousands): FY 2013: Balance as of December 28, 2013 $ 468 Accruals for product warranties 313 Cost of warranty claims (312 ) FY 2014: Balance as of January 3, 2015 469 Accruals for product warranties 401 Cost of warranty claims (267 ) FY 2015: Balance as of January 2, 2016 $ 603
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. Shipping and handling costs amounted to $0.3 million for each of the fiscal years 2015, 2014 and 2013.
Research and Development	Research and Development . Research and development expenditures are charged to operations as incurred.
Advertising	Advertising. Advertising and promotion costs are expensed as they are incurred; such costs were approximately $0.1 million in 2015, $0.2 million in 2014, and $0.1 million in 2013 and are included in sales and marketing expenses in the accompanying consolidated statements of operations.
Income Taxes	Income Taxes. We account for income taxes in accordance with 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. Under ASC 740, the liability method is used in accounting for income taxes. Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. 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 asset will not be realized. We annually evaluate the realizability of our deferred tax assets by assessing our valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization include our forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. In 2014, we released valuation allowance against most of our deferred tax assets except that we retained a valuation allowance for certain deferred tax assets associated with our California R&D credit. We do not believe there is any significant change in market demand for our products in 2015 that would impact our future profitability. We expect to continue to generate CA R&D credits greater than their California tax before applying the CA R&D credit. Therefore, based on our history of profits and expected continued profitability, we will continue to have a valuation allowance only for the CA R&D credit.
Accounting for Uncertainty in Income Taxes	Accounting for Uncertainty in Income Taxes . We account for uncertain tax positions in accordance with ASC 740. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax provision that an entity takes or expects to take in a tax return. Additionally, ASC 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. Under ASC 740, an entity may only recognize or continue to recognize tax positions that meet a "more-likely-than-not" threshold. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. There were no accrued interest and penalties during the year ended January 2, 2016.
Accounting for Stock-Based Compensation	Accounting for Stock-Based Compensation. We account for stock-based compensation granted to employees and directors, including employees stock option awards, restricted stock and restricted stock units at grant date, based on the fair value of the award. Stock-based compensation is recognized as expense on a ratable basis over the requisite service period of the award. We value options using the Black-Scholes option pricing model. Restricted stock and time-based restricted stock units are valued at the grant date fair value of the underlying common shares. Performance-based restricted stock units 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 share-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.
Concentration of Credit Risk and Other Risks and Uncertainties	Concentration of Credit Risk and Other Risks and Uncertainties . 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 years ended January 2, 2016, January 3, 2015, and December 28, 2013, no single customer accounted for greater than 10% of total revenues. As of January 2, 2016, no customer accounted for more than 10% of accounts receivable balance. One customer accounted for approximately 13% of our accounts receivable balance as of January 3, 2015. Our products require approvals from the Food and Drug Administration and international regulatory agencies prior to commercialized sales. Our future products may not receive required approvals. If we were denied such approvals, or if such approvals were delayed, it would have a materially adverse impact on our business, results of operations and financial condition.
Reliance on Certain Suppliers	Reliance on Certain Suppliers. Certain components and services used to manufacture and develop our products are presently available from only one or a limited number of suppliers or vendors. The loss of any of these suppliers or vendors would potentially require a significant level of hardware and/or software development efforts to incorporate the products or services into our products.
Net Income per Share	Net Income per Share. Basic net income per share is based upon the weighted average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted average number of common shares outstanding and dilutive common stock equivalents outstanding during the period. Common stock equivalents consist of incremental common shares issuable upon the exercise of stock options, release (vesting) of restricted stock units and awards, and the conversion of Series A Preferred Stock into common stock and are calculated under the treasury stock method. Common stock equivalent shares from unexercised stock options, unvested restricted stock units and awards and the conversion of Series A Preferred Stock 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. See Note 14 - Computation of Basic and Diluted Net Income Per Common Share.
Recently Issued and Adopted Accounting Standards	Recently Issued and Adopted Accounting Standards. In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” “Revenue from Contracts with Customers, Deferral of the Effective Date” In June 2014, the FASB issued ASU 2014-12, “ Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force)” In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”)

Summary of Significant Accoun24

Summary of Significant Accounting Policies (Tables)	12 Months Ended
	Jan. 02, 2016
Accounting Policies [Abstract]
Reconciliation of Changes in Deferred Revenue	A reconciliation of the changes in our deferred revenue balances for the years ended January 2, 2016 and January 3, 2015 are as follows (in thousands): FY 2013: Balance as of December 28, 2013 $ 1,133 Additions to deferral 1,514 Revenue recognized (1,468 ) FY 2014: Balance as of January 3, 2015 1,179 Additions to deferral 1,495 Revenue recognized (1,363 ) FY 2015: Balance as of January 2, 2016 $ 1,311
Reconciliation of Changes in Warranty Liability	A reconciliation of the changes in our warranty liability for the years ended January 2, 2016 and January 3, 2015 are as follows (in thousands): FY 2013: Balance as of December 28, 2013 $ 468 Accruals for product warranties 313 Cost of warranty claims (312 ) FY 2014: Balance as of January 3, 2015 469 Accruals for product warranties 401 Cost of warranty claims (267 ) FY 2015: Balance as of January 2, 2016 $ 603

Fair Value Measurement (Tables)

Fair Value Measurement (Tables)	12 Months Ended
	Jan. 02, 2016
Fair Value Disclosures [Abstract]
Financial Assets and Liabilities Measured and Recognized at Fair Value on a Recurring Basis	As of January 2, 2016 and January 3, 2015, financial assets and liabilities measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above was as follows (in thousands): As of January 2, 2016 As of January 3, 2015 Fair Value Measurements Fair Value Measurements Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds $ 9,212 $ 9,212 $ 11,846 $ 11,846 Liabilities: Earn-out liability $ 1,005 $ 1,005 $ 1,423 $ 1,423
Quantitative Information about the Inputs and Valuation Methodologies Used for Fair Value Measurements	Charges related to fair value adjustments were $5 thousand, $1,258 thousand and $355 thousand for the fiscal years 2015, 2014 and 2013, respectively The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of January 2, 2016 and January 3, 2015. As of January 2, 2016 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 1,005 Discounted cash Projected $ 2,949 flow (in thousands) ($134 – $3,153) Discount rate 11.36% (10.23% - 27.00%) As of January 3, 2015 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 1,423 Discounted cash Projected $ 3,048 flow (in thousands) ($669 – $3,613) Discount rate 13.54% (10.34% - 27.00%)
Reconciliation of the Changes in the Company's Earn-Out - Cash (Level 3 Liabilities) Balance	The following table provides a reconciliation of the beginning and ending balances of the contingent consideration – cash (Level 3 liabilities) (in thousands): Balance as of December 28, 2013 $ 624 Payments against earn-out (459 ) Change in fair value of earn-out liability 1,258 Balance as of January 3, 2015 1,423 Payments against earn-out (423 ) Change in fair value of earn-out liability 5 Balance as of January 2, 2016 $ 1,005

Inventories (Tables)

Inventories (Tables)	12 Months Ended
	Jan. 02, 2016
Inventory Disclosure [Abstract]
Components of Inventories	The components of our inventories are as follows (in thousands): FY 2015 January 2, 2016 FY 2014 January 3, 2015 Raw materials $ 4,578 $ 3,966 Work in process 1,791 1,609 Finished goods 4,737 3,544 Total inventories $ 11,106 $ 9,119

Property and Equipment (Tables)

Property and Equipment (Tables)	12 Months Ended
	Jan. 02, 2016
Property Plant And Equipment [Abstract]
Component of Property and Equipment	The components of our property and equipment are as follows (in thousands): FY 2015 January 2, 2016 FY 2014 January 3, 2015 Equipment $ 8,498 $ 7,623 Leasehold improvements 2,309 2,309 Less: accumulated depreciation and amortization (9,703 ) (9,197 ) Property and equipment, net $ 1,104 $ 735

Intangible Assets (Tables)

Intangible Assets (Tables)	12 Months Ended
	Jan. 02, 2016
Goodwill And Intangible Assets Disclosure [Abstract]
Components of Purchased Intangible Assets	The components of our purchased intangible assets as of January 2, 2016 are as follows (in thousands): Useful Lives FY 2015 Annual Amortization Gross Carrying Value Accumulated Amortization Net Carrying Value Useful Lives Remaining Customer relations 15 Years $ 16 $ 240 $ 92 $ 148 9.25 Patents Varies - 720 600 120 Varies $ 16 $ 960 $ 692 $ 268 The components of our purchased intangible assets as of January 3, 2015 are as follows (in thousands): Useful Lives FY 2014 Annual Amortization Gross Carrying Value Accumulated Amortization Net Carrying Value Useful Lives Remaining Customer relations 15 Years $ 16 $ 240 $ 76 $ 164 10.25 Patents Varies 28 720 600 120 Varies $ 44 $ 960 $ 676 $ 284
Estimated Future Amortization Expense for Purchased Intangible Assets	Estimated future amortization expense for purchased intangible assets is as follows (in thousands): Fiscal Year: 2016 $ 16 2017 78 2018 74 2019 16 2020 16 Thereafter 68 Total $ 268

Accrued Expenses (Tables)

Accrued Expenses (Tables)	12 Months Ended
	Jan. 02, 2016
Payables And Accruals [Abstract]
Components of Accrued Expenses	The components of our accrued expenses are as follows (in thousands): FY 2015 January 2, 2016 FY 2014 January 3, 2015 Customer deposits $ 336 $ 500 Earn-out – short term 370 382 Distributor commission 234 300 Sales and use tax payable 105 107 Royalties payable 52 36 Other accrued expenses 625 445 Total accrued expenses $ 1,722 $ 1,770

Commitments and Contingencies (

Commitments and Contingencies (Tables)	12 Months Ended
	Jan. 02, 2016
Commitments And Contingencies Disclosure [Abstract]
Future Minimum Lease Payments under Current Operating Leases	Future minimum lease payments under current operating leases as of January 2, 2016 are summarized as follows (in thousands): Fiscal Year Operating Lease Payments 2016 $ 989 2017 1,033 2018 1,019 2019 169 Total future minimum lease payments $ 3,210
Future Minimum Payments for Manufacture and Supply Commitments	Future minimum payments for manufacture and supply commitments as of January 2, 2016 are summarized as follows (in thousands): Fiscal Year Contract Manufacturing and Supply Commitments 2016 $ 10,306 2017 4,575 Total contract manufacturing and supply commitments $ 14,881

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	12 Months Ended
	Jan. 02, 2016
Equity [Abstract]
Summary of Activity in Stock Option Plan	The following table summarizes information regarding activity in our stock option plans during the fiscal years ended 2015, 2014 and 2013 (in thousands except share and per share data): Outstanding Options Shares Available for Grant Number of Shares Weighted Average Exercise Price Balances as of December 29, 2012 741,978 1,570,543 $ 3.63 Additional shares reserved 52,128 — — Options granted (149,600 ) 149,600 5.69 Restricted stock granted (234,012 ) — — Options exercised — (493,622 ) 3.03 Options cancelled 123,679 (123,679 ) 5.64 Options expired (57,628 ) — — Balances as of December 28, 2013 476,545 1,102,842 3.97 Additional shares reserved 503,306 — — Options granted (158,300 ) 158,300 8.61 Restricted stock granted (62,225 ) — — Options exercised — (399,390 ) 3.76 Options cancelled 27,957 (27,957 ) 6.13 Awards cancelled 79,890 — — Options expired (13,056 ) — — Balances as of January 3, 2015 854,117 833,795 4.88 Additional shares reserved 1,000 — — Options granted (170,300 ) 170,300 9.38 Restricted stock granted (227,905 ) — — Options exercised — (277,733 ) 3.70 Options cancelled 174,870 (174,870 ) 4.71 Awards cancelled 146,000 — — Options expired (7,000 ) — — Balances as of January 2, 2016 770,782 551,492 $ 6.92
Stock Options Outstanding and Exercisable	The following table summarizes information with respect to stock options outstanding and exercisable as of January 2, 2016: Options Outstanding Options Vested and Exercisable Range of Exercise Prices Number of Shares Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $2.27 - $3.86 84,585 2.67 $ 3.45 63,856 $ 3.32 $3.89 - $4.31 70,533 2.18 $ 4.11 63,133 $ 4.13 $4.74 - $5.92 78,265 4.53 $ 5.47 40,774 $ 5.42 $6.00 - $8.16 104,637 6.25 $ 7.50 14,896 $ 6.68 $8.29 - $8.58 73,925 5.15 $ 8.46 32,751 $ 8.46 $8.60 - $9.34 51,813 5.32 $ 9.01 21,584 $ 9.04 $10.14 - $10.14 17,400 6.32 $ 10.14 — $ — $10.19 - $10.19 3,000 4.92 $ 10.19 1,563 $ 10.19 $10.45 - $10.45 800 6.16 $ 10.45 100 $ 10.45 $10.73 - $10.73 66,534 6.07 $ 10.73 14,552 $ 10.73 $2.27 - $10.73 551,492 4.68 $ 6.92 253,209 $ 5.68
Weighted Average Assumptions for Fair Value of Options Granted	The determination of the fair value of options granted is computed using the Black-Scholes option pricing model with the following weighted average assumptions: Employee Stock Option Plan FY 2015 FY 2014 FY 2013 Average risk free interest rate 1.38 % 1.49 % 1.12 % Expected life (in years) 4.55 years 4.50 years 4.50 years Dividend yield — — — Average volatility 49.3 % 56.2 % 71.5 %
Stock-Based Compensation Expense	The following table shows stock-based compensation expense by functional line item in the consolidated statements of operations for 2015, 2014 and 2013 (in thousands): FY 2015 Year Ended FY 2014 Year Ended FY 2013 Year Ended January 2, 2016 January 3, 2015 December 28, 2013 Cost of revenues $ 223 $ 149 $ 108 Research and development 176 105 71 Sales and marketing 185 118 113 General and administrative 311 600 397 Total stock-based compensation expense $ 895 $ 972 $ 689
Stock Options Outstanding, Exercisable and Expected to Vest	Information regarding stock options outstanding, exercisable and expected to vest as of January 2, 2016 is summarized below: Number of Weighted Average Weighted Average Remaining Contractual Aggregate Intrinsic Value Shares Exercise Price Life (years) (thousands) Options outstanding 551,492 $ 6.92 4.68 $ 1,422 Options vested and expected to vest 511,414 $ 6.82 4.58 $ 1,366 Options exercisable 253,209 $ 5.68 3.56 $ 937
Restricted Stock Units Outstanding, Vested and Expected to Vest	Information regarding the restricted stock units outstanding, vested and expected to vest as of January 2, 2016 is summarized below: Number of Shares Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value (thousands) Restricted stock units outstanding 147,589 2.69 $ 1,371 Restricted stock units vested and expected to vest 109,852 2.57 $ 1,021
Restricted Stock Units and Awards	Information regarding the RSU activity during the years ended January 2, 2016, January 3, 2015 and December 28, 2013 is summarized below: Number of Shares Weighted Average Grant Date Fair Value Outstanding as of December 29, 2012 55,999 $ 3.85 Restricted stock units granted 230,509 $ 4.51 Restricted stock units released (17,249 ) $ 3.77 Outstanding as of December 28, 2013 269,259 $ 4.42 Restricted stock units granted 59,780 $ 9.76 Restricted stock units released (46,759 ) $ 9.29 Restricted stock units forfeited (4,890 ) $ 8.18 Outstanding as of January 3, 2015 277,390 $ 4.68 Restricted stock units granted 225,392 $ 8.66 Restricted stock units released (209,193 ) $ 8.73 Restricted stock units forfeited (146,000 ) $ 8.67 Outstanding as of January 2, 2016 147,589 $ 1.05 Information regarding the restricted stock awards activity during the year ended January 2, 2016, January 3, 2015 and December 28, 2013 is summarized below: Number of Shares Weighted Average Grant Date Fair Value Outstanding as of December 29, 2012 10,666 $ 3.75 Restricted stock awards granted 3,503 $ 5.71 Restricted stock awards released (10,666 ) $ 3.75 Outstanding as of December 28, 2013 3,503 $ 5.71 Restricted stock awards granted 2,445 $ 8.18 Restricted stock awards released (3,503 ) $ 5.71 Outstanding as of January 3, 2015 2,445 $ 8.18 Restricted stock awards granted 2,513 $ 7.96 Restricted stock awards released (2,445 ) $ 7.96 Outstanding as of January 2, 2016 2,513 $ 7.96

Income Taxes (Tables)

Income Taxes (Tables)	12 Months Ended
	Jan. 02, 2016
Income Tax Disclosure [Abstract]
Income Before (Benefit from) Provision for Income Taxes	Income before (benefit from) provision for income taxes was comprised of the following: FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 United States $ 291 $ 1,332 $ 2,262 Foreign — — — Total $ 291 $ 1,332 $ 2,262
(Benefit from) Provision for Income Taxes	The (benefit from) provision for income taxes includes: FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 Current: Federal $ (4 ) $ 54 $ 11 State 30 16 20 26 70 31 Deferred: Federal (12 ) (7,862 ) — State (197 ) (914 ) — (209 ) (8,776 ) — (Benefit from) provision for income taxes $ (183 ) $ (8,706 ) $ 31
Effective Tax Rate Differs from the Statutory Federal Income Tax Rate	Our effective tax rate differs from the statutory federal income tax rate as shown in the following schedule: FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 Income tax provision at statutory rate 34.0 % 34.0 % 34.0 % State income taxes, net of federal benefit (70.8 )% (68.0 )% (13.3 )% Permanent differences 12.0 % (1.1 )% (17.0 )% Research and development credits (34.8 )% (2.6 )% 0.0 % Change in valuation allowance — (613.5 )% (2.3 )% Other (3.3 )% (2.4 )% 0.0 % Effective tax rate (62.9 )% (653.6 )% 1.4 %
Tax Effect of Temporary Differences and Carryforwards that Give Rise to Significant Portions of the Net Deferred Tax Assets	The tax effect of temporary differences and carryforwards that give rise to significant portions of the net deferred tax assets are presented below (in thousands): FY 2015 January 2, 2016 FY 2014 January 3, 2015 Net operating losses $ 4,135 $ 4,278 Research and development credits 1,820 1,575 Accruals and reserves $ 1,823 $ 1,681 Deferred revenue 120 113 Property and equipment 399 439 Intangible assets 792 825 Stock compensation 613 676 Other tax credits 89 94 Net deferred tax asset $ 9,791 $ 9,681 Valuation allowance (806 ) (905 ) Net deferred tax assets $ 8,985 $ 8,776
A Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits	A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 Balance at the beginning of the year $ 861 $ 1,027 $ 954 Additions based upon tax positions related to the current year 73 53 48 Additions based upon tax positions related to the prior year — 51 25 Reductions based upon tax positions related to the prior year 3 (270 ) — Balance at the end of the year $ 937 $ 861 $ 1,027

Business Segments and Geograp33

Business Segments and Geographical Information (Tables)	12 Months Ended
	Jan. 02, 2016
Segment Reporting [Abstract]
Revenue Information by Geographic Region	Revenue information shown by geographic region is as follows (in thousands): FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 United States $ 23,952 $ 22,590 $ 21,043 Europe 7,968 9,096 7,345 Rest of Americas 2,676 3,199 3,309 Asia/Pacific Rim 7,161 7,929 6,576 $ 41,757 $ 42,814 $ 38,273

Computation of Basic and Dilu34

Computation of Basic and Diluted Net Income Per Common Share (Tables)	12 Months Ended
	Jan. 02, 2016
Earnings Per Share [Abstract]
Reconciliation of Numerator and Denominator of Basic and Diluted Net Income Per Common Share	A reconciliation of the numerator and denominator of basic and diluted net income per common share is provided as follows (in thousands, except per share amounts): FY 2015 Year Ended January 2, 2016 FY 2014 Year Ended January 3, 2015 FY 2013 Year Ended December 28, 2013 Numerator: Net income $ 474 $ 10,038 $ 2,231 Denominator: Weighted average shares of common stock (basic) 9,962 9,892 9,245 Effect of dilutive preferred shares — — 448 Effect of dilutive stock options 154 291 291 Effect of dilutive contingent shares 12 174 120 Weighted average shares of common stock (diluted) 10,128 10,357 10,104 Per share data: Basic net income per share $ 0.05 $ 1.01 $ 0.24 Diluted net income per share $ 0.05 $ 0.97 $ 0.22

Summary of Significant Accoun35

Summary of Significant Accounting Policies - Additional Information (Details)	12 Months Ended
	Jan. 02, 2016USD ($)Customer	Jan. 03, 2015USD ($)Customer	Dec. 28, 2013USD ($)Customer	Dec. 29, 2012USD ($)
Disclosure Summary Of Significant Accounting Policies [Line Items]
Restricted cash				$ 510,000
Percentage of purchase price to be deposited in escrow account				10.00%
Provision of sales returns	$ 60,000	$ 47,000
Gross value of demos and loaners	1,600,000	1,400,000
Accumulated amortization on inventory demos and loaners	$ 575,000	524,000
Estimated useful life of demos and loaners	4 years
Estimated useful lives of the assets			3 years
Products warranty period	2 years
Shipping and handling costs	$ 300,000	300,000	$ 300,000
Advertising and promotion costs	100,000	$ 200,000	$ 100,000
Accrued interest and penalty incurred	$ 0
Customer accounted percentage of net accounts receivable balance	10.00%	13.00%	10.00%
Revenue, Total | Customer Concentration Risk
Disclosure Summary Of Significant Accounting Policies [Line Items]
Number of customer accounted for total revenues and net accounts receivable | Customer	0	0	0
Customer accounted percentage of total revenues	10.00%	10.00%	10.00%
Accounts Receivable | Credit Concentration Risk
Disclosure Summary Of Significant Accounting Policies [Line Items]
Number of customer accounted for total revenues and net accounts receivable | Customer	0	1

Summary of Significant Accoun36

Summary of Significant Accounting Policies - Reconciliation of Changes in Deferred Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015
Reconciliation of the changes in the Company's deferred revenue balance
Balance, beginning of period	$ 1,179	$ 1,133
Additions to deferral	1,495	1,514
Revenue recognized	(1,363)	(1,468)
Balance, end of period	$ 1,311	$ 1,179

Summary of Significant Accoun37

Summary of Significant Accounting Policies - Reconciliation of Changes in Warranty Liability (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015
Reconciliation of the changes in the Company's warranty liability
Balance, beginning of period	$ 469	$ 468
Accruals for product warranties	401	313
Cost of warranty claims	(267)	(312)
Balance, end of period	$ 603	$ 469

Fair Value Measurement - Financ

Fair Value Measurement - Financial Assets and Liabilities Measured and Recognized at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Jan. 03, 2015
Money Market Funds
Assets:
Assets, Fair Value Measurements	$ 9,212	$ 11,846
Level 1 | Money Market Funds
Assets:
Assets, Fair Value Measurements	9,212	11,846
Earn Out Liability
Liabilities:
Liabilities, Fair Value Measurements	1,005	1,423
Earn Out Liability | Level 3
Liabilities:
Liabilities, Fair Value Measurements	$ 1,005	$ 1,423

Fair Value Measurement - Additi

Fair Value Measurement - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Fair Value Disclosures [Abstract]
Charges related to fair value adjustments	$ 5	$ 1,258	$ 355

Fair Value Measurement - Quanti

Fair Value Measurement - Quantitative Information about the Inputs and Valuation Methodologies Used for Fair Value Measurements (Details) - Earn Out Liability - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Liabilities, Fair Value Measurements	$ 1,005	$ 1,423
Level 3
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Liabilities, Fair Value Measurements	1,005	1,423
Level 3 | Discounted Cash Flow
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Liabilities, Fair Value Measurements	$ 1,005	$ 1,423
Valuation Technique, Earn-out liability	Discounted cash flow	Discounted cash flow
Level 3 | Discounted Cash Flow | Weighted Average
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Weighted Average, Projected royalties	$ 2,949	$ 3,048
Weighted Average, Discount rate	11.36%	13.54%
Level 3 | Discounted Cash Flow | Minimum
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Weighted Average, Projected royalties	$ 134	$ 669
Weighted Average, Discount rate	10.23%	10.34%
Level 3 | Discounted Cash Flow | Maximum
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Weighted Average, Projected royalties	$ 3,153	$ 3,613
Weighted Average, Discount rate	27.00%	27.00%

Fair Value Measurement - Reconc

Fair Value Measurement - Reconciliation of the Changes in the Company's Earn-Out - Cash (Level 3 Liabilities) Balance (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Reconciliation of the changes in the Company's earn-out - cash (Level 3 liabilities) balance
Balance as of beginning of the period	$ 1,423	$ 624
Payments against earn-out	(423)	(459)
Change in fair value of earn-out liability	5	1,258	$ 355
Balance as of the end of the period	$ 1,005	$ 1,423	$ 624

Inventories - Components of Inv

Inventories - Components of Inventories (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Jan. 03, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 4,578	$ 3,966
Work in process	1,791	1,609
Finished goods	4,737	3,544
Total inventories	$ 11,106	$ 9,119

Property and Equipment - Compon

Property and Equipment - Component of Property and Equipment (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Jan. 03, 2015
Component of property and equipment
Less: accumulated depreciation and amortization	$ (9,703)	$ (9,197)
Property and equipment, net	1,104	735
Equipment
Component of property and equipment
Property and equipment, gross	8,498	7,623
Leasehold Improvements
Component of property and equipment
Property and equipment, gross	$ 2,309	$ 2,309

Property and Equipment - Additi

Property and Equipment - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Property Plant And Equipment [Abstract]
Depreciation expense	$ 506	$ 376	$ 264

Goodwill - Additional Informati

Goodwill - Additional Information (Details) - USD ($)	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Goodwill And Intangible Assets Disclosure [Abstract]
Carrying value of goodwill	$ 533,000	$ 533,000
Impairment of goodwill	$ 0	$ 0	$ 0

Intangible Assets - Components

Intangible Assets - Components of Purchased Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Components of purchased intangible assets
Annual Amortization	$ 16	$ 44	$ 226
Gross Carrying Value	960	960
Accumulated Amortization	692	676
Net Carrying Value	$ 268	$ 284
Customer Relations
Components of purchased intangible assets
Useful Lives	15 years	15 years
Useful Lives Remaining	9 years 3 months	10 years 3 months
Annual Amortization	$ 16	$ 16
Gross Carrying Value	240	240
Accumulated Amortization	92	76
Net Carrying Value	148	164
Patents
Components of purchased intangible assets
Annual Amortization		28
Gross Carrying Value	720	720
Accumulated Amortization	600	600
Net Carrying Value	$ 120	$ 120

Intangible Assets - Additional

Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense	$ 16	$ 44	$ 226

Intangible Assets - Estimated F

Intangible Assets - Estimated Future Amortization Expense for Purchased Intangible Assets (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Jan. 03, 2015
Estimated future amortization expense for purchased intangible assets
2,016	$ 16
2,017	78
2,018	74
2,019	16
2,020	16
Thereafter	68
Net Carrying Value	$ 268	$ 284

Accrued Expenses - Components o

Accrued Expenses - Components of Accrued Expenses (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Jan. 03, 2015
Components of accrued expenses
Customer deposits	$ 336	$ 500
Earn-out – short term	370	382
Distributor commission	234	300
Sales and use tax payable	105	107
Royalties payable	52	36
Other accrued expenses	625	445
Total accrued expenses	$ 1,722	$ 1,770

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Feb. 29, 2016	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Commitments and Contingencies [Line Items]
Rent expense		$ 800	$ 600	$ 600
Lease expiration date		Feb. 28, 2017
Annual minimum purchase commitment		$ 750
Royalties pay equivalent to Percentage of sales		5.00%
Royalty expense		$ 100	$ 200	$ 100
Early termination date of certain license agreement		2,018
Late termination date of certain license agreement		2,021
Fourth Amendment to Lease | Subsequent Event
Commitments and Contingencies [Line Items]
Lease expiration date	Feb. 28, 2019

Commitments and Contingencies51

Commitments and Contingencies - Future Minimum Lease Payments under Current Operating Leases (Details) $ in Thousands	Jan. 02, 2016USD ($)
Future minimum lease payments under current operating leases
2,016	$ 989
2,017	1,033
2,018	1,019
2,019	169
Total future minimum lease payments	$ 3,210

Commitments and Contingencies52

Commitments and Contingencies - Future Minimum Payments for Manufacture and Supply Commitments (Details) $ in Thousands	Jan. 02, 2016USD ($)
Future minimum payments for manufacturing and supply commitments
2,016	$ 10,306
2,017	4,575
Total contract manufacturing and supply commitments	$ 14,881

Stockholders' Equity - Addition

Stockholders' Equity - Additional Information (Details)	Sep. 09, 2015USD ($)shares	Jan. 09, 2015USD ($)Executivesshares	Jun. 11, 2013shares	Aug. 31, 2007USD ($)$ / sharesshares	Jan. 02, 2016USD ($)$ / sharesshares	Jan. 03, 2015USD ($)$ / sharesshares	Dec. 28, 2013USD ($)$ / sharesshares	Dec. 31, 2011USD ($)	Dec. 31, 2015$ / shares	Aug. 31, 2015USD ($)	Jul. 31, 2014USD ($)	Feb. 28, 2013USD ($)	Feb. 28, 2012USD ($)
Undesignated Preferred stock authorized					2,000,000	2,000,000
Preferred stock Par value | $ / shares					$ 0.01	$ 0.01
Convertible preferred stock, shares issued					0	0
Warrants to purchase common stock				600,000
Exercise price of warrants | $ / shares				$ 0.01
Warrants expiration date				Dec. 31, 2007
Warrants to purchase number of common stock				1.2
Purchase price of preferred stock and warrants | $ / shares				$ 10
Proceeds allocated to common stock warrants | $				$ 2,300,000
Common stock converted from Series A Preferred Stock, shares			1,000,000
Exercisable period					3 years 6 months 22 days
Repurchase of shares					837,241
Shares reserved					1,322,274
Weighted-average grant date fair value of the options granted | $ / shares					$ 3.95	$ 4.02	$ 3.16
Total intrinsic value of options exercised | $					$ 1,500,000	$ 1,900,000	$ 1,500,000
Total unrecognized compensation cost related to non-vested share-based compensation arrangements | $					$ 1,800,000
Cost is expected to be recognized over a weighted average period					2 years 7 months 13 days
Excess tax benefits from stock-based awards | $					$ 0	$ 36,000	$ 0
Restricted stock units granted					227,905	62,225	234,012
Stock repurchase program authorized amount | $					$ 6,600,000						$ 3,000,000	$ 3,000,000	$ 4,000,000
Stock repurchase, shares					199,776
Shares repurchased price, per share | $ / shares					$ 7.82
Remaining common stock value authorized to purchase under stock repurchase program | $					$ 1,100,000
Stock repurchase program additional amount authorized | $										$ 2,000,000
Cash paid to former chief financial officer and chief operating officer to cancel agreement of vested stock option | $	$ 275,000
Number of shares, options canceled					174,870	27,957	123,679
James H. Mackaness
Number of shares, options canceled	92,656
Restricted Stock Units (RSUs)
Grant of non-qualified stock option | $								$ 20,000
The intrinsic value of the restricted stock units | $ / shares									$ 9.29
Restricted stock units granted					225,392	59,780	230,509
Number of Shares, Restricted stock units released					209,193	46,759	17,249
Restricted stock units released, intrinsic value | $					$ 2,500,000
Restricted stock units released, Shares withheld					66,882
Restricted stock units released, value withheld | $					$ 606,000
1998 Stock Plan
Voting rights on outstanding capital stock					10.00%
Exercise price of option					110.00%
Term of incentive stock options for major stock holders					5 years
Exercisable period					4 years
Maximum term of incentive stock options granted					10 years
Repurchase of shares					0	0
Expiration date of option Plan					2008-02
2008 Equity Incentive Plan
Grant of non-qualified stock option					300,000
Retention Award | Restricted Stock Units (RSUs)
Restricted stock units granted		56,000
Number of executives | Executives		6
Award investing period					4 years
Weighted grant date fair value of restricted stock units granted | $		$ 485,000
Retention Award | Restricted Stock Units (RSUs) | Vesting on Grant Date
Percentage of retention award vesting		20.00%
Retention Award | Restricted Stock Units (RSUs) | Vesting Annually
Percentage of retention award vesting					80.00%
Performance Award | Restricted Stock Units (RSUs)
Restricted stock units granted		110,000
Number of executives | Executives		6
Award investing period					4 years
Weighted grant date fair value of restricted stock units granted | $		$ 486,000
Period consider for calculation of average stock price performance after awards vesting					60 days
Market Performance Award | Restricted Stock Units (RSUs)
Restricted stock units granted		50,000
Award investing period					4 years
Weighted grant date fair value of restricted stock units granted | $		$ 234,000
Period consider for calculation of average stock price performance after awards vesting					60 days
Common Stock
Preferred stock conversion to common stock, share				1,000,000			1,000,000
Stock repurchase, shares					199,776	562,440	75,025
Series A Preferred Stock
Undesignated Preferred stock authorized				500,000
Preferred stock Par value | $ / shares				$ 0.01
Convertible preferred stock, shares issued				500,000
Unit preferred stock				1
Proceeds from common stock | $				$ 4,900,000

Stockholders' Equity - Summary

Stockholders' Equity - Summary of Activity in Stock Option Plan (Details) - $ / shares	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract]
Shares Available for Grant, Beginning Balance	854,117	476,545	741,978
Shares Available for Grant, Additional shares reserved	1,000	503,306	52,128
Shares Available for Grant, Options granted	(170,300)	(158,300)	(149,600)
Shares Available for Grant, Restricted stock granted	(227,905)	(62,225)	(234,012)
Shares Available for Grant, Options cancelled	174,870	27,957	123,679
Shares Available for Grant, Awards cancelled	146,000	79,890
Shares Available for Grant, Options expired	(7,000)	(13,056)	(57,628)
Shares Available for Grant, Ending Balance	770,782	854,117	476,545
Outstanding, Number of Shares, Beginning Balance	833,795	1,102,842	1,570,543
Number of Shares, Options granted	170,300	158,300	149,600
Number of Shares, Options exercised	(277,733)	(399,390)	(493,622)
Number of Shares, Options cancelled	(174,870)	(27,957)	(123,679)
Number of Shares, Ending Balance	551,492	833,795	1,102,842
Weighted Average Exercise Price, Beginning Balance	$ 4.88	$ 3.97	$ 3.63
Weighted Average Exercise Price, Options granted	9.38	8.61	5.69
Weighted Average Exercise Price, Options exercised	3.70	3.76	3.03
Weighted Average Exercise Price, Options cancelled	4.71	6.13	5.64
Weighted Average Exercise Price, Ending Balance	$ 6.92	$ 4.88	$ 3.97

Stockholders' Equity - Stock Op

Stockholders' Equity - Stock Options Outstanding and Exercisable (Details)	12 Months Ended
	Jan. 02, 2016$ / sharesshares
Range One
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	$ 2.27
Range of Exercise Prices, Upper Range Limit	$ 3.86
Options Outstanding, Number of Shares | shares	84,585
Options Outstanding, Weighted Average Remaining Contractual Life (years)	2 years 8 months 1 day
Options Outstanding, Weighted Average Exercise Price	$ 3.45
Options Vested and Exercisable, Number of Shares Exercisable | shares	63,856
Options Vested and Exercisable, Weighted Average Exercise Price	$ 3.32
Range Two
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	3.89
Range of Exercise Prices, Upper Range Limit	$ 4.31
Options Outstanding, Number of Shares | shares	70,533
Options Outstanding, Weighted Average Remaining Contractual Life (years)	2 years 2 months 5 days
Options Outstanding, Weighted Average Exercise Price	$ 4.11
Options Vested and Exercisable, Number of Shares Exercisable | shares	63,133
Options Vested and Exercisable, Weighted Average Exercise Price	$ 4.13
Range Three
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	4.74
Range of Exercise Prices, Upper Range Limit	$ 5.92
Options Outstanding, Number of Shares | shares	78,265
Options Outstanding, Weighted Average Remaining Contractual Life (years)	4 years 6 months 11 days
Options Outstanding, Weighted Average Exercise Price	$ 5.47
Options Vested and Exercisable, Number of Shares Exercisable | shares	40,774
Options Vested and Exercisable, Weighted Average Exercise Price	$ 5.42
Range Four
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	6
Range of Exercise Prices, Upper Range Limit	$ 8.16
Options Outstanding, Number of Shares | shares	104,637
Options Outstanding, Weighted Average Remaining Contractual Life (years)	6 years 3 months
Options Outstanding, Weighted Average Exercise Price	$ 7.50
Options Vested and Exercisable, Number of Shares Exercisable | shares	14,896
Options Vested and Exercisable, Weighted Average Exercise Price	$ 6.68
Range Five
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	8.29
Range of Exercise Prices, Upper Range Limit	$ 8.58
Options Outstanding, Number of Shares | shares	73,925
Options Outstanding, Weighted Average Remaining Contractual Life (years)	5 years 1 month 24 days
Options Outstanding, Weighted Average Exercise Price	$ 8.46
Options Vested and Exercisable, Number of Shares Exercisable | shares	32,751
Options Vested and Exercisable, Weighted Average Exercise Price	$ 8.46
Range Six
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	8.60
Range of Exercise Prices, Upper Range Limit	$ 9.34
Options Outstanding, Number of Shares | shares	51,813
Options Outstanding, Weighted Average Remaining Contractual Life (years)	5 years 3 months 26 days
Options Outstanding, Weighted Average Exercise Price	$ 9.01
Options Vested and Exercisable, Number of Shares Exercisable | shares	21,584
Options Vested and Exercisable, Weighted Average Exercise Price	$ 9.04
Range Seven
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	10.14
Range of Exercise Prices, Upper Range Limit	$ 10.14
Options Outstanding, Number of Shares | shares	17,400
Options Outstanding, Weighted Average Remaining Contractual Life (years)	6 years 3 months 26 days
Options Outstanding, Weighted Average Exercise Price	$ 10.14
Range Eight
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	10.19
Range of Exercise Prices, Upper Range Limit	$ 10.19
Options Outstanding, Number of Shares | shares	3,000
Options Outstanding, Weighted Average Remaining Contractual Life (years)	4 years 11 months 1 day
Options Outstanding, Weighted Average Exercise Price	$ 10.19
Options Vested and Exercisable, Number of Shares Exercisable | shares	1,563
Options Vested and Exercisable, Weighted Average Exercise Price	$ 10.19
Range Nine
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	10.45
Range of Exercise Prices, Upper Range Limit	$ 10.45
Options Outstanding, Number of Shares | shares	800
Options Outstanding, Weighted Average Remaining Contractual Life (years)	6 years 1 month 28 days
Options Outstanding, Weighted Average Exercise Price	$ 10.45
Options Vested and Exercisable, Number of Shares Exercisable | shares	100
Options Vested and Exercisable, Weighted Average Exercise Price	$ 10.45
Range Ten
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	10.73
Range of Exercise Prices, Upper Range Limit	$ 10.73
Options Outstanding, Number of Shares | shares	66,534
Options Outstanding, Weighted Average Remaining Contractual Life (years)	6 years 26 days
Options Outstanding, Weighted Average Exercise Price	$ 10.73
Options Vested and Exercisable, Number of Shares Exercisable | shares	14,552
Options Vested and Exercisable, Weighted Average Exercise Price	$ 10.73
Range Eleven
Stock options outstanding and exercisable
Range of Exercise Prices, Lower Range Limit	2.27
Range of Exercise Prices, Upper Range Limit	$ 10.73
Options Outstanding, Number of Shares | shares	551,492
Options Outstanding, Weighted Average Remaining Contractual Life (years)	4 years 8 months 5 days
Options Outstanding, Weighted Average Exercise Price	$ 6.92
Options Vested and Exercisable, Number of Shares Exercisable | shares	253,209
Options Vested and Exercisable, Weighted Average Exercise Price	$ 5.68

Stockholders' Equity - Weighted

Stockholders' Equity - Weighted Average Assumptions for Fair Value of Options Granted (Details)	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Weighted average assumptions for fair value of options granted
Average risk free interest rate	1.38%	1.49%	1.12%
Expected life (in years)	4 years 6 months 18 days	4 years 6 months	4 years 6 months
Average volatility	49.30%	56.20%	71.50%

Stockholders' Equity - Stock-Ba

Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 895	$ 972	$ 689
Cost of revenues
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	223	149	108
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	176	105	71
Sales and marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	185	118	113
General and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 311	$ 600	$ 397

Stockholders' Equity - Stock 58

Stockholders' Equity - Stock Options Outstanding, Exercisable and Expected to Vest (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Stock options outstanding, exercisable and expected to vest
Options outstanding, Number of Shares	551,492	833,795	1,102,842	1,570,543
Options outstanding, Weighted Average Exercise Price	$ 6.92	$ 4.88	$ 3.97	$ 3.63
Options outstanding, Weighted Average Remaining Contractual Life (years)	4 years 8 months 5 days
Options outstanding, Aggregate Intrinsic Value	$ 1,422
Options vested and expected to vest, Number of Shares	511,414
Options vested and expected to vest, Weighted Average Exercise Price	$ 6.82
Options vested and expected to vest, Weighted Average Remaining Contractual Life (years)	4 years 6 months 29 days
Options vested and expected to vest, Aggregate Intrinsic Value	$ 1,366
Options exercisable, Number of Shares	253,209
Options exercisable, Weighted Average Exercise Price	$ 5.68
Options exercisable, Weighted Average Remaining Contractual Life (years)	3 years 6 months 22 days
Options exercisable, Aggregate Intrinsic Value	$ 937

Stockholders' Equity - Restrict

Stockholders' Equity - Restricted Stock Units Outstanding, Vested and Expected to Vest (Details) - Restricted Stock Units (RSUs) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Restricted stock units outstanding, vested and expected to vest
Restricted stock units outstanding, Number of Shares	147,589	277,390	269,259	55,999
Restricted stock units outstanding, Weighted Average Remaining Contractual Life (years)	2 years 8 months 9 days
Restricted stock units outstanding, Aggregate Intrinsic Value	$ 1,371
Restricted stock units vested and expected to vest, Number of Shares	109,852
Restricted stock units vested and expected to vest, Weighted Average Remaining Contractual Life (years)	2 years 6 months 26 days
Restricted stock units vested and expected to vest, Aggregate Intrinsic Value	$ 1,021

Stockholders' Equity - Restri60

Stockholders' Equity - Restricted Stock Units and Awards (Details) - $ / shares	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Restricted stock units and awards
Number of Shares, Restricted stock granted	227,905	62,225	234,012
Restricted Stock Units (RSUs)
Restricted stock units and awards
Number of Shares, Beginning Balance	277,390	269,259	55,999
Number of Shares, Restricted stock granted	225,392	59,780	230,509
Number of Shares, Restricted stock released	(209,193)	(46,759)	(17,249)
Number of Shares, Restricted stock forfeited	(146,000)	(4,890)
Number of Shares, Ending Balance	147,589	277,390	269,259
Outstanding, Weighted Average Grant Date Fair Value, Beginning Balance	$ 4.68	$ 4.42	$ 3.85
Weighted Average Grant Date Fair Value, Restricted stock granted	8.66	9.76	4.51
Weighted Average Grant Date Fair Value, Restricted stock released	8.73	9.29	3.77
Weighted Average Grant Date Fair Value, Restricted stock forfeited	8.67	8.18
Outstanding, Weighted Average Grant Date Fair Value, Ending Balance	$ 1.05	$ 4.68	$ 4.42
Restricted Stock Awards
Restricted stock units and awards
Number of Shares, Beginning Balance	2,445	3,503	10,666
Number of Shares, Restricted stock granted	2,513	2,445	3,503
Number of Shares, Restricted stock released	(2,445)	(3,503)	(10,666)
Number of Shares, Ending Balance	2,513	2,445	3,503
Outstanding, Weighted Average Grant Date Fair Value, Beginning Balance	$ 8.18	$ 5.71	$ 3.75
Weighted Average Grant Date Fair Value, Restricted stock granted	7.96	8.18	5.71
Weighted Average Grant Date Fair Value, Restricted stock released	7.96	5.71	3.75
Outstanding, Weighted Average Grant Date Fair Value, Ending Balance	$ 7.96	$ 8.18	$ 5.71

Employee Benefit Plan - Additio

Employee Benefit Plan - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan Employee Contribution Percentage	15.00%
Employee contributions to plan in percentage			50.00%
Total matching contributions made by the company	$ 218	$ 186
Maximum
Defined Benefit Plan Disclosure [Line Items]
Employee contributions to plan			$ 3

Income Taxes - Income Before (B

Income Taxes - Income Before (Benefit from) Provision for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Income before (benefit from) provision for income taxes
United States	$ 291	$ 1,332	$ 2,262
Income before (benefit from) provision for income taxes	$ 291	$ 1,332	$ 2,262

Income Taxes - (Benefit from) P

Income Taxes - (Benefit from) Provision for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Current:
Federal	$ (4)	$ 54	$ 11
State	30	16	20
Total	26	70	31
Deferred:
Federal	(12)	(7,862)
State	(197)	(914)
Total	(209)	(8,776)
(Benefit from) provision for income taxes	$ (183)	$ (8,706)	$ 31

Income Taxes - Effective Tax Ra

Income Taxes - Effective Tax Rate Differs from the Statutory Federal Income Tax Rate (Details)	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Company's effective tax rate differs from the statutory federal income tax rate
Income tax provision at statutory rate	34.00%	34.00%	34.00%
State income taxes, net of federal benefit	(70.80%)	(68.00%)	(13.30%)
Permanent differences	12.00%	(1.10%)	(17.00%)
Research and development credits	(34.80%)	(2.60%)	(0.00%)
Change in valuation allowance		(613.50%)	(2.30%)
Other	(3.30%)	(2.40%)	0.00%
Effective tax rate	(62.90%)	(653.60%)	1.40%

Income Taxes - Tax Effect of Te

Income Taxes - Tax Effect of Temporary Differences and Carryforwards that Give Rise to Significant Portions of the Net Deferred Tax Assets (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Jan. 03, 2015
Tax effect of temporary differences and carryforwards that give rise to significant portions of the net deferred tax assets
Net operating losses	$ 4,135	$ 4,278
Research and development credits	1,820	1,575
Accruals and reserves	1,823	1,681
Deferred revenue	120	113
Property and equipment	399	439
Intangible assets	792	825
Stock compensation	613	676
Other tax credits	89	94
Net deferred tax asset	9,791	9,681
Valuation allowance	(806)	(905)
Net deferred tax assets	$ 8,985	$ 8,776

Income Taxes - Additional Infor

Income Taxes - Additional Information (Details) - USD ($)	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013	Dec. 29, 2012
Income Taxes [Line Items]
Accrued interest and penalties	$ 0
Ending balance of unrecognized tax benefits	937,000	$ 861,000	$ 1,027,000	$ 954,000
Unrecognized tax benefits recognition impact on income tax rate	$ 937,000
Earliest Tax Year
Income Taxes [Line Items]
Open Tax Year	2,009
Latest Tax Year
Income Taxes [Line Items]
Open Tax Year	2,015
Federal
Income Taxes [Line Items]
Net operating loss	$ 12,700,000
Stock option deduction	$ 2,600,000
Net operating loss expiration year	2,032
Research & development credit	$ 1,400,000
Tax credit carryforward expiration year	2,026
State
Income Taxes [Line Items]
Net operating loss	$ 14,500,000
Stock option deduction	$ 2,300,000
Net operating loss expiration year	2,020
Research & development credit	$ 2,100,000

Income Taxes - A Reconciliation

Income Taxes - A Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
A reconciliation of the beginning and ending amount of unrecognized tax benefits
Balance at the beginning of the year	$ 861	$ 1,027	$ 954
Additions based upon tax positions related to the current year	73	53	48
Additions based upon tax positions related to the prior year		51	25
Reductions based upon tax positions related to the prior year	3	(270)
Balance at the end of the year	$ 937	$ 861	$ 1,027

Business Segments and Geograp68

Business Segments and Geographical Information - Additional Information (Details)	12 Months Ended
	Jan. 02, 2016USD ($)Segment	Jan. 03, 2015USD ($)	Dec. 28, 2013
Segment Reporting Information [Line Items]
Number of operating segments | Segment	1
Long-lived assets | $	$ 0	$ 0
Customer Concentration Risk | Revenue, Total
Segment Reporting Information [Line Items]
Percentage of concentration risk	10.00%	10.00%	10.00%
United States | Customer Concentration Risk | Revenue, Total
Segment Reporting Information [Line Items]
Percentage of concentration risk	57.40%	52.80%	55.00%

Business Segments and Geograp69

Business Segments and Geographical Information - Revenue Information by Geographic Region (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	$ 41,757	$ 42,814	$ 38,273
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	23,952	22,590	21,043
Europe
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	7,968	9,096	7,345
Rest of Americas
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	2,676	3,199	3,309
Asia/Pacific Rim
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	$ 7,161	$ 7,929	$ 6,576

Computation of Basic and Dilu70

Computation of Basic and Diluted Net Income Per Common Share - Reconciliation of Numerator and Denominator of Basic and Diluted Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015	Dec. 28, 2013
Numerator:
Net income	$ 474	$ 10,038	$ 2,231
Denominator:
Weighted average shares of common stock (basic)	9,962	9,892	9,245
Effect of dilutive preferred shares			448
Effect of dilutive stock options	154	291	291
Effect of dilutive contingent shares	12	174	120
Weighted average shares of common stock (diluted)	10,128	10,357	10,104
Per share data:
Basic net income per share	$ 0.05	$ 1.01	$ 0.24
Diluted net income per share	$ 0.05	$ 0.97	$ 0.22

Computation of Basic and Dilu71

Computation of Basic and Diluted Net Income Per Common Share - Additional Information (Details) - shares	12 Months Ended
	Jan. 02, 2016	Jan. 03, 2015
Stock option
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares that were excluded from the computation of diluted weighted average shares outstanding	249,064	116,320

Subsequent Events - Additional

Subsequent Events - Additional Information (Details)	1 Months Ended	12 Months Ended
	Feb. 29, 2016	Jan. 02, 2016
Subsequent Event [Line Items]
Lease expiration date		Feb. 28, 2017
Fourth Amendment to Lease | Subsequent Event
Subsequent Event [Line Items]
Lease expiration date	Feb. 28, 2019