IRIDEX (IRIX) 10-Q 7 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Oct. 01, 2016	Oct. 24, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	IRIDEX CORP
Entity Central Index Key	1,006,045
Document Type	10-Q
Document Period End Date	Oct. 1, 2016
Amendment Flag	false
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Trading Symbol	IRIX
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		10,148,110

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Oct. 01, 2016	Jan. 02, 2016	[1]
Current assets:
Cash and cash equivalents	$ 9,577	$ 9,995
Accounts receivable, net of allowance for doubtful accounts of $174 as of October 1, 2016 and $140 as of January 2, 2016	7,926	9,282
Inventories	12,678	11,106
Prepaid expenses and other current assets	1,225	386
Total current assets	31,406	30,769
Property and equipment, net	1,447	1,104
Intangible assets, net	256	268
Goodwill	533	533
Deferred income taxes	8,985	8,985
Other long-term assets	87	164
Total assets	42,714	41,823
Current liabilities:
Accounts payable	2,472	2,223
Accrued compensation	1,574	1,572
Accrued expenses	1,622	1,722
Accrued warranty	570	603
Deferred revenue	1,305	1,311
Total current liabilities	7,543	7,431
Long-term liabilities:
Other long-term liabilities	619	704
Total liabilities	8,162	8,135
Stockholders’ equity:
Common stock, $0.01 par value: Authorized: 30,000,000 shares; Issued and outstanding 10,146,235 and 10,009,408 shares as of October 1, 2016 and January 2, 2016, respectively	112	111
Additional paid-in capital	39,747	37,986
Accumulated deficit	(5,307)	(4,409)
Total stockholders’ equity	34,552	33,688
Total liabilities and stockholders’ equity	$ 42,714	$ 41,823
[1]	Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016.

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Oct. 01, 2016	Jan. 02, 2016
Statement Of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 174	$ 140
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	10,146,235	10,009,408
Common stock, shares outstanding	10,146,235	10,009,408

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015
Income Statement [Abstract]
Total revenues	$ 9,789	$ 9,815	$ 33,628	$ 29,644
Cost of revenues	5,544	4,974	18,352	15,176
Gross profit	4,245	4,841	15,276	14,468
Operating expenses:
Research and development	1,256	1,237	4,007	4,000
Sales and marketing	2,378	2,234	7,212	6,463
General and administrative	1,858	1,227	5,546	4,206
Total operating expenses	5,492	4,698	16,765	14,669
(Loss) income from operations	(1,247)	143	(1,489)	(201)
Other (expense) income, net	(51)	164	(83)	134
(Loss) income from operations before benefit from income taxes	(1,298)	307	(1,572)	(67)
Benefit from income taxes	(627)	(135)	(674)	(103)
Net (loss) income	$ (671)	$ 442	$ (898)	$ 36
Net (loss) income per share:
Basic	$ (0.07)	$ 0.04	$ (0.09)	$ 0
Diluted	$ (0.07)	$ 0.04	$ (0.09)	$ 0
Weighted average shares used in computing net (loss) income per common share:
Basic	10,129	9,972	10,083	9,956
Diluted	10,129	10,094	10,083	10,142

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net (loss) income	$ (671)	$ 442	$ (898)	$ 36
Comprehensive (loss) income	$ (671)	$ 442	$ (898)	$ 36

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Oct. 01, 2016		Oct. 03, 2015
Operating activities:
Net (loss) income	$ (898)		$ 36
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	461		389
Change in fair value of earn-out liability	86		(129)
Stock-based compensation	1,270		725
Provision for doubtful accounts	66		36
Deferred income taxes			2
Changes in operating assets and liabilities:
Accounts receivable	1,290		565
Inventories	(1,572)		(2,065)
Prepaid expenses and other current assets	(839)		(156)
Other long-term assets	77		37
Accounts payable	249		801
Accrued compensation	2		(552)
Accrued expenses	16		(180)
Accrued warranty	(33)		59
Deferred revenue	(6)		32
Other long-term liabilities	26		46
Net cash provided by (used in) operating activities	195		(354)
Investing activities:
Acquisition of property and equipment	(792)		(731)
Payment on earn-out liability	(313)		(328)
Net cash used in investing activities	(1,105)		(1,059)
Financing activities:
Proceeds from stock option exercises	650		747
Repurchase of common stock	(59)		(1,543)
Repurchase of vested stock options			(275)
Taxes paid related to net share settlements of equity awards	(99)		(606)
Net cash provided by (used in) financing activities	492		(1,677)
Net decrease in cash and cash equivalents	(418)		(3,090)
Cash and cash equivalents, beginning of period	9,995	[1]	13,303
Cash and cash equivalents, end of period	9,577		10,213
Cash paid during the period for:
Income taxes	$ 37		$ 33
[1]	Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016.

Basis of Presentation

Basis of Presentation	9 Months Ended
	Oct. 01, 2016
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Basis of Presentation	1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of IRIDEX Corporation (“IRIDEX”, the “Company”, “we”, “our”, or “us”) have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial statements have been included. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, together with management’s discussion and analysis of the Company’s financial condition and results of operations, contained in our Annual Report on Form 10-K for the fiscal year ended January 2, 2016, which was filed with the Securities and Exchange Commission (“SEC”) on March 31, 2016. The results of operations for the three and nine months ended October 1, 2016 and October 3, 2015 are not necessarily indicative of the results for the fiscal year ending December 31, 2016 or any future interim period. The three and nine month periods ended October 1, 2016 and October 3, 2015, each had 13 weeks. For purposes of reporting the financial results, the Company’s fiscal years end on the Saturday closest to the end of December. Periodically, the Company includes a 53rd week to a year in order to end that year on the Saturday closest to the end of December.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Oct. 01, 2016
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies The Company’s significant accounting policies are disclosed in our Annual Report on Form 10-K for the year ended January 2, 2016, which was filed with the SEC on March 31, 2016. Financial Statement Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates. The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on our operating results. Revenue Recognition. Our revenues arise from the sale of laser consoles, delivery devices, consumables 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 collectibility 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. The Company’s sales may include post-sales obligations for training or other deliverables. For revenue arrangements such as these, we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 605, “Revenue Recognition, Multiple-Element Arrangements” 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 retention 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. Concentration of Credit Risk. Our cash and cash equivalents are deposited in demand and money market accounts. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally these deposits may be redeemed upon demand and therefore, bear minimal risk. We market our products to distributors and end-users throughout the world. Sales to international distributors are generally made on open credit terms and letters of credit. Management performs ongoing credit evaluations of our customers and maintains an allowance for potential credit losses. Historically, we have not experienced any significant losses related to individual customers or a group of customers in any particular geographic area. For the three and nine month periods ended October 1, 2016 and October 3, 2015, no single customer accounted for 10% of total revenues. As of October 1, 2016, no customer accounted for approximately 10% of our accounts receivable and as of January 2, 2016, no customer accounted for more than 10% of our accounts receivable. Taxes Collected from Customers and Remitted to Governmental Authorities. Taxes collected from customers and remitted to governmental authorities are recognized on a net basis in the accompanying condensed consolidated statements of operations. Shipping and Handling Costs. Our shipping and handling costs billed to customers are included in revenues and the associated expense is recorded in cost of revenues for all periods presented. Deferred Revenue. Revenue related to extended service contracts is deferred and recognized on a straight line basis over the period of the applicable service contract. Costs associated with these service arrangements are recognized as incurred. A reconciliation of the changes in the Company’s deferred revenue balance for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 1,311 $ 1,179 Additions to deferral 1,025 1,068 Revenue recognized (1,031 ) (1,036 ) Balance, end of period $ 1,305 $ 1,211 Warranty. The Company generally provides a one to two year warranty on its products, which is accrued for upon shipment of products. Actual warranty costs incurred have not materially differed from those accrued. The Company’s warranty policy is applicable to products which are considered defective in their performance or fail to meet the product specifications. Warranty costs are reflected in the statement of operations as cost of revenues. A reconciliation of the changes in the Company’s warranty liability for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 603 $ 469 Accruals for product warranties 318 267 Cost of warranty claims and adjustments (351 ) (208 ) Balance, end of period $ 570 $ 528 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 February 2016, the FASB issued ASU 2016-02, "Leases," In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." In April 2016, the FASB issued ASU No. 2016-10, “ Revenue from Contracts with Customers (Topic 606) In May 2016, the FASB issued ASU No. 2016-12 which amended the revenue recognition guidance regarding collectibility, noncash consideration, presentation of sales tax and transition. This ASU is effective during the same period as ASU 2014-09. We are currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15 " Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments".

Inventories

Inventories	9 Months Ended
	Oct. 01, 2016
Inventory Disclosure [Abstract]
Inventories	3. Inventories The components of the Company’s inventories as of October 1, 2016 and January 2, 2016 are as follows: (in thousands) October 1, 2016 January 2, 2016 Raw materials $ 5,499 $ 4,578 Work in process 2,715 1,791 Finished goods 4,464 4,737 Total inventories $ 12,678 $ 11,106

Goodwill and Intangible Assets

Goodwill and Intangible Assets	9 Months Ended
	Oct. 01, 2016
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill and Intangible Assets	4. Goodwill and Intangible Assets Goodwill. The carrying value of goodwill was $0.5 million as of October 1, 2016 and January 2, 2016. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company reviews goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company first assesses 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. An entity is not required 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. The Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test. As the Company uses the market approach to assess impairment, its common stock price is an important component of the fair value calculation. If the Company’s stock price continues to experience significant price and volume fluctuations, this will impact the fair value of the reporting unit and can lead to potential impairment in future periods. The Company performed its annual impairment test during the second quarter of fiscal 2016 and determined that its goodwill was not impaired. As of October 1, 2016, the Company had not identified any factors that indicated there was an impairment of its goodwill and determined that no additional impairment analysis was then required. Intangible Assets. The following table summarizes the components of gross and net intangible asset balances: October 1, 2016 January 2, 2016 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Remaining Amortization Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Patents $ 720 $ 600 $ 120 Varies $ 720 $ 600 $ 120 Customer relations 240 104 136 8.50 Years 240 92 148 Total $ 960 $ 704 $ 256 $ 960 $ 692 $ 268 For the nine months ended October 1, 2016 and October 3, 2015, amortization expense totaled $12 thousand for each period. The amortization of customer relations was charged to sales and marketing expense and the amortization of patents was charged to cost of revenues. Future estimated amortization expense (in thousands): 2016 (three months) $ 4 2017 78 2018 74 2019 16 2020 16 Thereafter 68 Total $ 256

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Oct. 01, 2016
Fair Value Disclosures [Abstract]
Fair Value Measurements	5. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: • Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. • Level 2: Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. • Level 3: Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value. The carrying amounts of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses as of October 1, 2016 and January 2, 2016, approximate fair value because of the short maturity of these instruments. As of October 1, 2016 and January 2, 2016, 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 were as follows: October 1, 2016 January 2, 2016 Fair Value Measurements Fair Value Measurements (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds $ 9,577 — — $ 9,577 $ 9,212 — — $ 9,212 Liabilities: Earn-out liability $ — — $ 778 $ 778 $ — — $ 1,005 $ 1,005 The Company’s Level 1 financial assets are money market funds whose fair values are based on quoted market prices. The Company does not have any Level 2 financial assets or liabilities. The fair value of the earn-out liability arising from the acquisitions of RetinaLabs, Inc. and Ocunetics, Inc. 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 by the Company based on a collaborative effort of the Company’s operations, finance and accounting groups as additional information becomes available. Any change in the fair value adjustment is recorded in the statement of operations of that period. 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 October 1, 2016. As of October 1, 2016 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 778 Discounted cash flow Projected royalties (in thousands) $2,096 ($134 - $2,284) Discount rate 11.83% (10.37% - 27.00%) A reconciliation of the changes in the Company’s earn-out liability (Level 3 liability) for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance as of beginning of the period $ 1,005 $ 1,423 Payments against earn-out (313 ) (328 ) Change in fair value of earn-out liability 86 (129 ) Balance as of the end of the period $ 778 $ 966 The earn-out liability is included in accrued expenses and other long-term liabilities in the condensed consolidated balance sheets. Any change in the fair value adjustment is recorded to other expense in the condensed consolidated statements of operations.

Stock Based Compensation

Stock Based Compensation	9 Months Ended
	Oct. 01, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock Based Compensation	6. Stock Based Compensation The Company accounts for stock-based compensation granted to employees and directors, including employees stock option awards, restricted stock and restricted stock units in accordance with ASC 718 , “Compensation – Stock Compensation” The Company values 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 with market conditions are valued using the Monte Carlo simulation model. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock. The Monte Carlo simulation model incorporates assumptions for the holding period, risk-free interest rate, stock price volatility and dividend yield. 2008 Equity Incentive Plan. For the nine months ended October 1, 2016, the only active stock-based compensation plan was the 2008 Equity Incentive Plan (the “Incentive Plan”). The terms of awards granted during the nine months ended October 1, 2016 were consistent with those described in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 2, 2016. Summary of Stock Options The following table summarizes information regarding activity under the Incentive Plan during the nine months ended October 1, 2016: Number of Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value (thousands) Outstanding as of January 2, 2016 551,492 $ 6.92 Granted 79,777 $ 13.30 Exercised (117,576 ) $ 5.53 Canceled or forfeited (51,307 ) $ 8.56 Outstanding as of October 1, 2016 462,386 $ 8.19 $ 2,980 The weighted average grant date fair value of the options granted under the Incentive Plan as calculated using the Black-Scholes option-pricing model was $6.37 and $2.77 per share for the three months ended October 1, 2016 and October 3, 2015, respectively. The weighted average grant date fair value of the options granted under the Incentive Plan as calculated using the Black-Scholes option-pricing model was $5.23 and $4.23 per share for the nine months ended October 1, 2016 and October 3, 2015, respectively. The Company uses the Black-Scholes option-pricing model to estimate fair value of stock-based awards (options) with the following weighted average assumptions: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Average risk free interest rate 1.03 % 1.30 % 1.10 % 1.27 % Expected life (in years) 4.55 years 4.55 years 4.55 years 4.55 years Dividend yield —% —% —% —% Average volatility 46 % 47 % 46 % 50 % Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history over a period commensurate with the expected term of the options, trading volume of the Company’s stock, look-back volatilities and Company specific events that affected volatility in a prior period. The expected term of employee stock options represents the weighted average period the stock options are expected to remain outstanding and is based on the history of exercises and cancellations on all past option grants made by the Company, the contractual term, the vesting period and the expected remaining term of the outstanding options. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future. The following table shows stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine months ended October 1, 2016 and October 3, 2015: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Cost of revenues $ 3 $ 49 $ 84 $ 172 Research and development 39 21 90 153 Sales and marketing 38 42 119 146 General and administrative 390 51 977 254 $ 470 $ 163 $ 1,270 $ 725 Stock-based compensation expense capitalized to inventory was immaterial for the nine months ended October 1, 2016 and October 3, 2015. Occasionally, the Company will grant stock-based instruments to non-employees. During the nine months ended October 1, 2016 and October 3, 2015, the amount of stock-based compensation related to non-employee options was not material. Information regarding stock options outstanding, vested and expected to vest and exercisable as of October 1, 2016 is summarized below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic (thousands) Options outstanding 462,386 $ 8.19 4.54 $ 2,980 Options vested and expected to vest 428,659 $ 7.98 4.44 $ 2,844 Options exercisable 225,703 $ 6.35 3.52 $ 1,837 The aggregate intrinsic value in the table above represents the pre-tax intrinsic value, based on the Company’s closing price as of September 30, 2016, that would have been received by option holders had all option holders exercised their stock options as of that date. This amount changes based on the fair market value of the Company’s stock. The total intrinsic value of options exercised for the three months ended October 1, 2016 and October 3, 2015 was approximately $187 thousand and $144 thousand, respectively. As of October 1, 2016, there was $3.5 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock-based compensation arrangements under the Incentive Plan. The cost is expected to be recognized over a weighted average period of 2.47 years. Summary of Restricted Stock Units and Awards Information regarding the restricted stock units (“RSUs”) activity for the nine months ended October 1, 2016 is summarized below: Number of Shares Outstanding as of January 2, 2016 147,589 Restricted stock units granted 285,005 Restricted stock units released (30,789 ) Restricted stock units cancelled (66,000 ) Outstanding as of October 1, 2016 335,805 During the nine months ended October 1, 2016, the Company awarded 285,005 restricted stock units at a weighted-average grant date fair value of $11.89 per share. Of this amount, 256,138 stock units represent performance based shares that are subject to service, performance and market vesting conditions with a weighted-average grant date fair value of $11.40 per share. RSUs granted with market conditions are valued using the Monte Carlo simulation model and compensation expense is recognized ratably during the service period even if the market condition is not satisfied. To the extent that the market condition is not met, the RSUs will not vest and will be cancelled. RSUs granted with performance conditions are valued at the grant date fair value of the underlying common shares. The Company makes a determination regarding the probability of the performance criteria being achieved and compensation expense is recognized ratably over the vesting period, if it is expected that the performance criteria will be met. During the nine months ended October 1, 2016, the Company accelerated the vesting of 6,400 of restricted stock units and 10,000 performance-based restricted stock units in connection with an early termination. In connection with the acceleration, the Company recorded a $220,000 charge to general and administrative expenses. Information regarding the restricted stock awards activity for the nine months ended October 1, 2016 is summarized below: Number of Shares Outstanding as of January 2, 2016 2,513 Restricted stock awards granted 1,289 Restricted stock awards released (2,513 ) Outstanding as of October 1, 2016 1,289 During the nine months ended October 1, 2016, the Company awarded 1,289 unvested restricted stock awards at an average grant date fair value of $15.51 per share. 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. During the nine months ended October 1, 2016, the Company repurchased 6,544 shares at an average price of $9.00 per share. As of October 1, 2016, we have repurchased 843,785 shares for approximately $6.7 million under this current program. The remaining balance of approximately $1.0 million approved under the plan was not used when the plan lapsed in August 2016.

Income Taxes

Income Taxes	9 Months Ended
	Oct. 01, 2016
Income Tax Disclosure [Abstract]
Income Taxes	7. Income Taxes Provision for Income Tax. The Company calculates its interim tax provision in accordance with the provisions of ASC 740-270, Income Taxes; Interim Reporting Deferred Income Taxes. The Company accounts for income taxes in accordance with ASC topic 740, Income Taxes (“ASC 740”) Uncertain Tax Positions. The Company accounts for its uncertain tax positions in accordance with ASC 740. As of January 2, 2016, the Company had $0.9 million of unrecognized tax benefits of which $0.4 million of unrecognized tax benefits would result in a change in the Company’s effective tax rate if recognized in future years. The Company is not aware of any other uncertain tax positions that could result in significant additional payments, accruals, or other material deviation in this estimate during the fiscal year. The Company files U.S. federal and state returns. The tax years 2008 to 2015 remain open in several jurisdictions, none of which have individual significance.

Computation of Basic and Dilute

Computation of Basic and Diluted Net Loss Per Common Share	9 Months Ended
	Oct. 01, 2016
Earnings Per Share [Abstract]
Computation of Basic and Diluted Net Loss Per Common Share	8. Computation of Basic and Diluted Net Loss Per Common Share Basic and diluted net loss per share is based upon the weighted average number of common shares outstanding during the period. Common stock equivalents consist of incremental common shares issuable upon the exercise of stock options, and the release (vesting) of restricted stock units and awards and are calculated under the treasury stock method. Common stock equivalent shares from unexercised stock options, and unvested restricted stock units and awards are excluded from the computation for periods in which we incur a net loss or if the exercise price of such options is greater than the average market price of our common stock for the period as their effect would be anti-dilutive. For the three and nine months ended October 1, 2016, stock options to purchase 462,386 shares of common stock, 335,805 RSUs and 1,289 restricted stock awards were excluded from the computation of diluted weighted average shares outstanding because the effect of such would be anti-dilutive. For the three and nine months ended October 3, 2015, stock options to purchase 234,958 shares of common stock, 147,589 RSUs and 2,513 restricted stock awards were excluded from the computation of diluted weighted average shares outstanding because the effect of such would be anti-dilutive. A reconciliation of the numerator and denominator of basic and diluted net loss per common share is provided as follows: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Numerator: Net (loss) income $ (671 ) $ 442 $ (898 ) $ 36 Denominator: Weighted average shares of common stock (basic) 10,129 9,972 10,083 9,956 Effect of dilutive stock options — 117 — 174 Effect of dilutive contingent shares — 5 — 12 Weighted average shares of common stock (diluted) 10,129 10,094 10,083 10,142 Per share data: Basic net (loss) income per share $ (0.07 ) $ 0.04 $ (0.09 ) $ — Diluted net (loss) income per share $ (0.07 ) $ 0.04 $ (0.09 ) $ —

Business Segments

Business Segments	9 Months Ended
	Oct. 01, 2016
Segment Reporting [Abstract]
Business Segments	9. Business Segments The Company operates in one segment, ophthalmology. The Company develops, manufactures and markets medical devices. Our revenues arise from the sale of consoles, delivery devices, consumables, service and support activities. Revenue information shown by geographic region, based on the location at which each sale originates, is as follows: Three Months Ended Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 United States $ 5,871 $ 5,791 $ 18,642 $ 16,763 Europe 2,191 2,083 6,779 5,763 Rest of Americas 476 506 1,858 2,041 Asia/Pacific Rim 1,251 1,435 6,349 5,077 $ 9,789 $ 9,815 $ 33,628 $ 29,644 Revenues are attributed to countries based on location of end customers. No individual country accounted for more than 10% of the Company’s revenues, other than the United States, which accounted for 60.0% and 59.0% of revenues for the three month periods ended October 1, 2016 and October 3, 2015, respectively. For the nine month periods ended October 1, 2016 and October 3, 2015, the United States accounted for 55.4% and 56.5% of sales, respectively.

Subsequent Events

Subsequent Events	9 Months Ended
	Oct. 01, 2016
Subsequent Events [Abstract]
Subsequent Events	10. Subsequent Events On November 2, 2016, the Company entered into a Loan and Security Agreement (“Loan Agreement”) with Silicon Valley Bank providing for a $15.0 million secured revolving loan facility (“Revolving Loan Facility”), with availability subject to an accounts receivable borrowing base formula. Borrowings under the Revolving Loan Facility accrue interest at a per annum rate equal to the Wall Street Journal Prime Rate as in effect from time to time, plus 1.5%. The Loan Agreement does not include any financial covenants. The Company may borrow, repay and reborrow funds under the Revolving Loan Facility until November 2, 2019, at which time the Revolving Loan Facility matures and all outstanding amounts must be repaid.

Summary of Significant Accoun17

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Oct. 01, 2016
Accounting Policies [Abstract]
Financial Statement Presentation	Financial Statement Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates. The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on our operating results.
Revenue Recognition	Revenue Recognition. Our revenues arise from the sale of laser consoles, delivery devices, consumables 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 collectibility 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. The Company’s sales may include post-sales obligations for training or other deliverables. For revenue arrangements such as these, we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 605, “Revenue Recognition, Multiple-Element Arrangements” 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 retention 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.
Concentration of Credit Risk	Concentration of Credit Risk. Our cash and cash equivalents are deposited in demand and money market accounts. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally these deposits may be redeemed upon demand and therefore, bear minimal risk. We market our products to distributors and end-users throughout the world. Sales to international distributors are generally made on open credit terms and letters of credit. Management performs ongoing credit evaluations of our customers and maintains an allowance for potential credit losses. Historically, we have not experienced any significant losses related to individual customers or a group of customers in any particular geographic area. For the three and nine month periods ended October 1, 2016 and October 3, 2015, no single customer accounted for 10% of total revenues. As of October 1, 2016, no customer accounted for approximately 10% of our accounts receivable and as of January 2, 2016, no customer accounted for more than 10% of our accounts receivable.
Taxes Collected from Customers and Remitted to Governmental Authorities	Taxes Collected from Customers and Remitted to Governmental Authorities. Taxes collected from customers and remitted to governmental authorities are recognized on a net basis in the accompanying condensed consolidated statements of operations.
Shipping and Handling Costs	Shipping and Handling Costs. Our shipping and handling costs billed to customers are included in revenues and the associated expense is recorded in cost of revenues for all periods presented.
Deferred Revenue	Deferred Revenue. Revenue related to extended service contracts is deferred and recognized on a straight line basis over the period of the applicable service contract. Costs associated with these service arrangements are recognized as incurred. A reconciliation of the changes in the Company’s deferred revenue balance for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 1,311 $ 1,179 Additions to deferral 1,025 1,068 Revenue recognized (1,031 ) (1,036 ) Balance, end of period $ 1,305 $ 1,211
Warranty	Warranty. The Company generally provides a one to two year warranty on its products, which is accrued for upon shipment of products. Actual warranty costs incurred have not materially differed from those accrued. The Company’s warranty policy is applicable to products which are considered defective in their performance or fail to meet the product specifications. Warranty costs are reflected in the statement of operations as cost of revenues. A reconciliation of the changes in the Company’s warranty liability for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 603 $ 469 Accruals for product warranties 318 267 Cost of warranty claims and adjustments (351 ) (208 ) Balance, end of period $ 570 $ 528
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 February 2016, the FASB issued ASU 2016-02, "Leases," In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." In April 2016, the FASB issued ASU No. 2016-10, “ Revenue from Contracts with Customers (Topic 606) In May 2016, the FASB issued ASU No. 2016-12 which amended the revenue recognition guidance regarding collectibility, noncash consideration, presentation of sales tax and transition. This ASU is effective during the same period as ASU 2014-09. We are currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15 " Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments".

Summary of Significant Accoun18

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Oct. 01, 2016
Accounting Policies [Abstract]
Reconciliation of Changes in Deferred Revenue	A reconciliation of the changes in the Company’s deferred revenue balance for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 1,311 $ 1,179 Additions to deferral 1,025 1,068 Revenue recognized (1,031 ) (1,036 ) Balance, end of period $ 1,305 $ 1,211
Reconciliation of Changes in Warranty Liability	A reconciliation of the changes in the Company’s warranty liability for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 603 $ 469 Accruals for product warranties 318 267 Cost of warranty claims and adjustments (351 ) (208 ) Balance, end of period $ 570 $ 528

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Oct. 01, 2016
Inventory Disclosure [Abstract]
Components of Inventories	The components of the Company’s inventories as of October 1, 2016 and January 2, 2016 are as follows: (in thousands) October 1, 2016 January 2, 2016 Raw materials $ 5,499 $ 4,578 Work in process 2,715 1,791 Finished goods 4,464 4,737 Total inventories $ 12,678 $ 11,106

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	9 Months Ended
	Oct. 01, 2016
Goodwill And Intangible Assets Disclosure [Abstract]
Summary of Components of Gross and Net Intangible Asset	The following table summarizes the components of gross and net intangible asset balances: October 1, 2016 January 2, 2016 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Remaining Amortization Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Patents $ 720 $ 600 $ 120 Varies $ 720 $ 600 $ 120 Customer relations 240 104 136 8.50 Years 240 92 148 Total $ 960 $ 704 $ 256 $ 960 $ 692 $ 268
Future Estimated Amortization Expense	Future estimated amortization expense (in thousands): 2016 (three months) $ 4 2017 78 2018 74 2019 16 2020 16 Thereafter 68 Total $ 256

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Oct. 01, 2016
Fair Value Disclosures [Abstract]
Financial Assets and Liabilities Measured and Recognized at Fair Value on a Recurring Basis	As of October 1, 2016 and January 2, 2016, 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 were as follows: October 1, 2016 January 2, 2016 Fair Value Measurements Fair Value Measurements (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds $ 9,577 — — $ 9,577 $ 9,212 — — $ 9,212 Liabilities: Earn-out liability $ — — $ 778 $ 778 $ — — $ 1,005 $ 1,005
Quantitative Information about the Inputs and Valuation Methodologies Used for Fair Value Measurements	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 October 1, 2016. As of October 1, 2016 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 778 Discounted cash flow Projected royalties (in thousands) $2,096 ($134 - $2,284) Discount rate 11.83% (10.37% - 27.00%)
Reconciliation of the Changes in the Company's Earn-Out - Cash (Level 3 Liabilities) Balance	A reconciliation of the changes in the Company’s earn-out liability (Level 3 liability) for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance as of beginning of the period $ 1,005 $ 1,423 Payments against earn-out (313 ) (328 ) Change in fair value of earn-out liability 86 (129 ) Balance as of the end of the period $ 778 $ 966

Stock Based Compensation (Table

Stock Based Compensation (Tables)	9 Months Ended
	Oct. 01, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Summary of Activity under Incentive Plan	The following table summarizes information regarding activity under the Incentive Plan during the nine months ended October 1, 2016: Number of Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value (thousands) Outstanding as of January 2, 2016 551,492 $ 6.92 Granted 79,777 $ 13.30 Exercised (117,576 ) $ 5.53 Canceled or forfeited (51,307 ) $ 8.56 Outstanding as of October 1, 2016 462,386 $ 8.19 $ 2,980
Weighted Average Assumptions for Fair Value Estimate of Stock-Based Awards (Options)	The Company uses the Black-Scholes option-pricing model to estimate fair value of stock-based awards (options) with the following weighted average assumptions: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Average risk free interest rate 1.03 % 1.30 % 1.10 % 1.27 % Expected life (in years) 4.55 years 4.55 years 4.55 years 4.55 years Dividend yield —% —% —% —% Average volatility 46 % 47 % 46 % 50 %
Stock-Based Compensation Expense	The following table shows stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine months ended October 1, 2016 and October 3, 2015: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Cost of revenues $ 3 $ 49 $ 84 $ 172 Research and development 39 21 90 153 Sales and marketing 38 42 119 146 General and administrative 390 51 977 254 $ 470 $ 163 $ 1,270 $ 725
Summary of Stock Options Outstanding, Vested and Expected to Vest and Exercisable	Information regarding stock options outstanding, vested and expected to vest and exercisable as of October 1, 2016 is summarized below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic (thousands) Options outstanding 462,386 $ 8.19 4.54 $ 2,980 Options vested and expected to vest 428,659 $ 7.98 4.44 $ 2,844 Options exercisable 225,703 $ 6.35 3.52 $ 1,837
Restricted Stock Units and Awards	Information regarding the restricted stock units (“RSUs”) activity for the nine months ended October 1, 2016 is summarized below: Number of Shares Outstanding as of January 2, 2016 147,589 Restricted stock units granted 285,005 Restricted stock units released (30,789 ) Restricted stock units cancelled (66,000 ) Outstanding as of October 1, 2016 335,805 Information regarding the restricted stock awards activity for the nine months ended October 1, 2016 is summarized below: Number of Shares Outstanding as of January 2, 2016 2,513 Restricted stock awards granted 1,289 Restricted stock awards released (2,513 ) Outstanding as of October 1, 2016 1,289

Computation of Basic and Dilu23

Computation of Basic and Diluted Net Loss Per Common Share (Tables)	9 Months Ended
	Oct. 01, 2016
Earnings Per Share [Abstract]
Reconciliation of Numerator and Denominator of Basic and Diluted Net Loss Per Common Share	A reconciliation of the numerator and denominator of basic and diluted net loss per common share is provided as follows: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Numerator: Net (loss) income $ (671 ) $ 442 $ (898 ) $ 36 Denominator: Weighted average shares of common stock (basic) 10,129 9,972 10,083 9,956 Effect of dilutive stock options — 117 — 174 Effect of dilutive contingent shares — 5 — 12 Weighted average shares of common stock (diluted) 10,129 10,094 10,083 10,142 Per share data: Basic net (loss) income per share $ (0.07 ) $ 0.04 $ (0.09 ) $ — Diluted net (loss) income per share $ (0.07 ) $ 0.04 $ (0.09 ) $ —

Business Segments (Tables)

Business Segments (Tables)	9 Months Ended
	Oct. 01, 2016
Segment Reporting [Abstract]
Revenue Information by Geographic Region	Revenue information shown by geographic region, based on the location at which each sale originates, is as follows: Three Months Ended Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 United States $ 5,871 $ 5,791 $ 18,642 $ 16,763 Europe 2,191 2,083 6,779 5,763 Rest of Americas 476 506 1,858 2,041 Asia/Pacific Rim 1,251 1,435 6,349 5,077 $ 9,789 $ 9,815 $ 33,628 $ 29,644

Summary of Significant Accoun25

Summary of Significant Accounting Policies - Additional Information (Details) - Customer	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015	Jan. 02, 2016
Disclosure Summary Of Significant Accounting Policies [Line Items]
Customer accounted percentage of net accounts receivable balance			10.00%		10.00%
Minimum
Disclosure Summary Of Significant Accounting Policies [Line Items]
Products warranty period			1 year
Maximum
Disclosure Summary Of Significant Accounting Policies [Line Items]
Products warranty period			2 years
Revenue, Total | Customer Concentration Risk
Disclosure Summary Of Significant Accounting Policies [Line Items]
Number of customer accounted for total revenues and net accounts receivable	0	0	0	0
Customer accounted percentage of total revenues	10.00%	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	0		0		0

Summary of Significant Accoun26

Summary of Significant Accounting Policies - Reconciliation of Changes in Deferred Revenue (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 01, 2016		Oct. 03, 2015
Reconciliation of the changes in the Company's deferred revenue balance
Balance, beginning of period	$ 1,311	[1]	$ 1,179
Additions to deferral	1,025		1,068
Revenue recognized	(1,031)		(1,036)
Balance, end of period	$ 1,305		$ 1,211
[1]	Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016.

Summary of Significant Accoun27

Summary of Significant Accounting Policies - Reconciliation of Changes in Warranty Liability (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 01, 2016		Oct. 03, 2015
Reconciliation of the changes in the Company's warranty liability
Balance, beginning of period	$ 603	[1]	$ 469
Accruals for product warranties	318		267
Cost of warranty claims and adjustments	(351)		(208)
Balance, end of period	$ 570		$ 528
[1]	Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016.

Inventories - Components of Inv

Inventories - Components of Inventories (Details) - USD ($) $ in Thousands	Oct. 01, 2016	Jan. 02, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 5,499	$ 4,578
Work in process	2,715	1,791
Finished goods	4,464	4,737
Total inventories	$ 12,678	$ 11,106	[1]
[1]	Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016.

Goodwill and Intangible Asset29

Goodwill and Intangible Assets - Additional Information (Details) - USD ($)	9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Jan. 02, 2016	[1]
Goodwill And Intangible Assets Disclosure [Abstract]
Carrying value of goodwill	$ 533,000		$ 533,000
Impairment of goodwill	0
Amortization expense	$ 12,000	$ 12,000
[1]	Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016.

Goodwill and Intangible Asset30

Goodwill and Intangible Assets - Summary of Components of Gross and Net Intangible Asset (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 01, 2016	Jan. 02, 2016
Schedule of Intangible Assets
Gross Carrying Amount	$ 960	$ 960
Accumulated Amortization	704	692
Net Carrying Amount	256	268	[1]
Patents
Schedule of Intangible Assets
Gross Carrying Amount	720	720
Accumulated Amortization	600	600
Net Carrying Amount	120	120
Customer relations
Schedule of Intangible Assets
Gross Carrying Amount	240	240
Accumulated Amortization	104	92
Net Carrying Amount	$ 136	$ 148
Remaining Amortization Life	8 years 6 months
[1]	Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016.

Goodwill and Intangible Asset31

Goodwill and Intangible Assets - Future Estimated Amortization Expense (Details) - USD ($) $ in Thousands	Oct. 01, 2016	Jan. 02, 2016	[1]
Future estimated amortization expense
2016 (three months)	$ 4
2,017	78
2,018	74
2,019	16
2,020	16
Thereafter	68
Net Carrying Amount	$ 256	$ 268
[1]	Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016.

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	Oct. 01, 2016	Jan. 02, 2016
Money Market Funds
Assets:
Assets, Fair Value Measurements	$ 9,577	$ 9,212
Money Market Funds | Level 1
Assets:
Assets, Fair Value Measurements	9,577	9,212
Earn Out Liability
Liabilities:
Liabilities, Fair Value Measurements	778	1,005
Earn Out Liability | Level 3
Liabilities:
Liabilities, Fair Value Measurements	$ 778	$ 1,005

Fair Value Measurements - Quant

Fair Value Measurements - Quantitative Information about the Inputs and Valuation Methodologies Used for Fair Value Measurements (Details) - Earn Out Liability - USD ($) $ in Thousands	9 Months Ended
	Oct. 01, 2016	Jan. 02, 2016
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Liabilities, Fair Value Measurements	$ 778	$ 1,005
Level 3
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Liabilities, Fair Value Measurements	778	$ 1,005
Level 3 | Discounted Cash Flow
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Liabilities, Fair Value Measurements	$ 778
Valuation Technique, Earn-out liability	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	$ 2,096
Weighted Average, Discount rate	11.83%
Level 3 | Discounted Cash Flow | Minimum
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Weighted Average, Projected royalties	$ 134
Weighted Average, Discount rate	10.37%
Level 3 | Discounted Cash Flow | Maximum
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Weighted Average, Projected royalties	$ 2,284
Weighted Average, Discount rate	27.00%

Fair Value Measurements - Recon

Fair Value Measurements - Reconciliation of the Changes in the Company's Earn-Out - Cash (Level 3 Liabilities) Balance (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015
Reconciliation of the changes in the Company's earn-out - cash (Level 3 liabilities) balance
Balance as of beginning of the period	$ 1,005	$ 1,423
Payments against earn-out	(313)	(328)
Change in fair value of earn-out liability	86	(129)
Balance as of the end of the period	$ 778	$ 966

Stock Based Compensation - Summ

Stock Based Compensation - Summary of Activity under Incentive Plan (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Oct. 01, 2016USD ($)$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract]
Outstanding, Number of Shares, Beginning Balance | shares	551,492
Number of Shares, Options Granted | shares	79,777
Number of Shares, Options Exercised | shares	(117,576)
Number of Shares, Options Cancelled or forfeited | shares	(51,307)
Outstanding, Number of Shares, Ending Balance | shares	462,386
Outstanding, Weighted Average Exercise Price Per Share, Beginning Balance | $ / shares	$ 6.92
Weighted Average Exercise Price Per Share, Options Granted | $ / shares	13.30
Weighted Average Exercise Price Per Share, Options Exercised | $ / shares	5.53
Weighted Average Exercise Price Per Share, Options Cancelled or forfeited | $ / shares	8.56
Outstanding, Weighted Average Exercise Price Per Share, Ending Balance | $ / shares	$ 8.19
Aggregate Intrinsic Value, Ending Balance | $	$ 2,980

Stock Based Compensation - Addi

Stock Based Compensation - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015	Aug. 31, 2016	Aug. 31, 2015	Jul. 31, 2014	Feb. 28, 2013	Feb. 28, 2012
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-average grant date fair value of the options granted	$ 6.37	$ 2.77	$ 5.23	$ 4.23
Total intrinsic value of options exercised	$ 187,000	$ 144,000
Total unrecognized compensation cost related to non-vested share-based compensation arrangements	3,500,000		$ 3,500,000
Cost is expected to be recognized over a weighted average period			2 years 5 months 19 days
Stock repurchase program authorized amount	$ 6,700,000		$ 6,700,000				$ 3,000,000	$ 3,000,000	$ 4,000,000
Repurchase of shares	843,785		843,785
Remaining common stock value authorized to purchase under stock repurchase program lapsed					$ 1,000,000
Stock repurchase program additional amount authorized						$ 2,000,000
Stock repurchase, shares			6,544
Shares repurchased price, per share			$ 9
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested restricted stock awarded			285,005
Weighted-average grant date fair value of restricted stock awarded			$ 11.89
Number of shares, vested			30,789
Restricted Stock Units (RSUs) | Accelerated Vesting
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares, vested			6,400
Restricted Stock Units (RSUs) | Performance Award
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested restricted stock awarded			256,138
Weighted-average grant date fair value of restricted stock awarded			$ 11.40
Restricted Stock Units (RSUs) | Performance Award | Accelerated Vesting
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares, vested			10,000
Restricted Stock Units (RSUs) | Performance Award | Accelerated Vesting | General and administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense			$ 220,000
Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested restricted stock awarded			1,289
Weighted-average grant date fair value of restricted stock awarded			$ 15.51
Number of shares, vested			2,513

Stock Based Compensation - Weig

Stock Based Compensation - Weighted Average Assumptions for Fair Value Stock-Based Awards (Options) (Details)	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015
Weighted average assumptions for fair value estimate of stock-based awards (options)
Average risk free interest rate	1.03%	1.30%	1.10%	1.27%
Expected life (in years)	4 years 6 months 18 days	4 years 6 months 18 days	4 years 6 months 18 days	4 years 6 months 18 days
Average volatility	46.00%	47.00%	46.00%	50.00%

Stock Based Compensation - Stoc

Stock Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 470	$ 163	$ 1,270	$ 725
Cost of revenues
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	3	49	84	172
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	39	21	90	153
Sales and marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	38	42	119	146
General and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 390	$ 51	$ 977	$ 254

Stock Based Compensation - Su39

Stock Based Compensation - Summary of Stock Options Outstanding, Vested and Expected to Vest and Exercisable (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Oct. 01, 2016	Jan. 02, 2016
Stock options outstanding, exercisable and expected to vest
Options outstanding, Number of Shares	462,386	551,492
Options vested and expected to vest, Number of Shares	428,659
Options exercisable, Number of Shares	225,703
Options outstanding, Weighted Average Exercise Price	$ 8.19	$ 6.92
Options vested and expected to vest, Weighted Average Exercise Price	7.98
Options exercisable, Weighted Average Exercise Price	$ 6.35
Options outstanding, Weighted Average Remaining Contractual Life (Years)	4 years 6 months 15 days
Options vested and expected to vest, Weighted Average Remaining Contractual Life (Years)	4 years 5 months 9 days
Options exercisable, Weighted Average Remaining Contractual Life (Years)	3 years 6 months 7 days
Options outstanding, Aggregate Intrinsic Value	$ 2,980
Options vested and expected to vest, Aggregate Intrinsic Value	2,844
Options exercisable, Aggregate Intrinsic Value	$ 1,837

Stock Based Compensation - Rest

Stock Based Compensation - Restricted Stock Units and Awards (Details)	9 Months Ended
	Oct. 01, 2016shares
Restricted Stock Units (RSUs)
Restricted stock units
Outstanding, Number of Shares, Beginning Balance	147,589
Number of Shares, Restricted stock granted	285,005
Number of Shares, Restricted stock released	(30,789)
Number of Shares, Restricted stock cancelled	(66,000)
Outstanding, Number of Shares, Ending Balance	335,805
Restricted Stock Awards
Restricted stock units
Outstanding, Number of Shares, Beginning Balance	2,513
Number of Shares, Restricted stock granted	1,289
Number of Shares, Restricted stock released	(2,513)
Outstanding, Number of Shares, Ending Balance	1,289

Income Taxes - Additional Infor

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015	Jan. 02, 2016
Income Taxes [Line Items]
Income tax benefit	$ 627	$ 135	$ 674	$ 103
Release of deferred tax assets valuation allowance			$ 9,200
Unrecognized tax benefits					$ 900
Unrecognized tax benefits recognition impact on income tax rate					$ 400
Earliest Tax Year
Income Taxes [Line Items]
Open Tax Year			2,008
Latest Tax Year
Income Taxes [Line Items]
Open Tax Year			2,015

Computation of Basic and Dilu42

Computation of Basic and Diluted Net Loss Per Common Share - Additional Information (Details) - shares	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 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	462,386	234,958	462,386	234,958
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares that were excluded from the computation of diluted weighted average shares outstanding	335,805	147,589	335,805	147,589
Restricted Stock Awards
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares that were excluded from the computation of diluted weighted average shares outstanding	1,289	2,513	1,289	2,513

Computation of Basic and Dilu43

Computation of Basic and Diluted Net Loss Per Common Share - Reconciliation of Numerator and Denominator of Basic and Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015
Numerator:
Net (loss) income	$ (671)	$ 442	$ (898)	$ 36
Denominator:
Weighted average shares of common stock (basic)	10,129	9,972	10,083	9,956
Effect of dilutive stock options		117		174
Effect of dilutive contingent shares		5		12
Weighted average shares of common stock (diluted)	10,129	10,094	10,083	10,142
Per share data:
Basic net (loss) income per share	$ (0.07)	$ 0.04	$ (0.09)	$ 0
Diluted net (loss) income per share	$ (0.07)	$ 0.04	$ (0.09)	$ 0

Business Segments - Additional

Business Segments - Additional Information (Details) - Segment	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015
Segment Reporting Information [Line Items]
Number of operating segments			1
Customer Concentration Risk | Revenue, Total
Segment Reporting Information [Line Items]
Percentage of concentration risk	10.00%	10.00%	10.00%	10.00%
Other than United States | Customer Concentration Risk | Revenue, Total
Segment Reporting Information [Line Items]
Percentage of concentration risk	60.00%	59.00%
United States | Customer Concentration Risk | Revenue, Total
Segment Reporting Information [Line Items]
Percentage of concentration risk			55.40%	56.50%

Business Segments - Revenue Inf

Business Segments - Revenue Information by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2016	Oct. 03, 2015	Oct. 01, 2016	Oct. 03, 2015
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	$ 9,789	$ 9,815	$ 33,628	$ 29,644
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	5,871	5,791	18,642	16,763
Europe
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	2,191	2,083	6,779	5,763
Rest of Americas
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	476	506	1,858	2,041
Asia/Pacific Rim
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	$ 1,251	$ 1,435	$ 6,349	$ 5,077

Subsequent Events - Additional

Subsequent Events - Additional Information (Details) - Subsequent Event - Loan Agreement - Silicon Valley Bank - Revolving Loan Facility	Nov. 02, 2016USD ($)
Subsequent Event [Line Items]
Borrowings available under secured revolving loan facility	$ 15,000,000
Loan facility, maturity date	Nov. 2, 2019
Wall Street Journal Prime Rate
Subsequent Event [Line Items]
Debt instrument, basis spread on variable interest rate	1.50%