IRIDEX (IRIX) 10-Q 8 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jul. 01, 2017	Jul. 21, 2017
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	Jul. 1, 2017
Amendment Flag	false
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-30
Trading Symbol	IRIX
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		11,567,662

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016	[1]
Current assets:
Cash and cash equivalents	$ 24,594	$ 23,747
Accounts receivable, net of allowance for doubtful accounts of $240 as of July 1, 2017 and $230 as of December 31, 2016	7,049	10,025
Inventories	11,388	11,643
Prepaid expenses and other current assets	488	450
Total current assets	43,519	45,865
Property and equipment, net	1,561	1,534
Intangible assets, net	124	132
Goodwill	533	533
Other long-term assets	49	80
Total assets	45,786	48,144
Current liabilities:
Accounts payable	1,781	1,994
Accrued compensation	2,158	2,346
Accrued expenses	1,804	2,135
Accrued warranty	666	603
Deferred revenue	1,345	1,383
Total current liabilities	7,754	8,461
Long-term liabilities:
Other long-term liabilities	442	523
Total liabilities	8,196	8,984
Stockholders’ equity:
Preferred stock, $0.01 par value, 2,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.01 par value: Authorized: 30,000,000 shares; Issued and outstanding 11,559,444 and 11,304,736 shares as of July 1, 2017 and December 31, 2016, respectively	126	124
Additional paid-in capital	58,202	55,158
Accumulated deficit	(20,738)	(16,122)
Total stockholders’ equity	37,590	39,160
Total liabilities and stockholders’ equity	$ 45,786	$ 48,144
[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 December 31, 2016.

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 240	$ 230
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	11,559,444	11,304,736
Common stock, shares outstanding	11,559,444	11,304,736

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Income Statement [Abstract]
Total revenues	$ 10,002	$ 11,908	$ 20,485	$ 23,839
Cost of revenues	5,507	6,174	11,525	12,808
Gross profit	4,495	5,734	8,960	11,031
Operating expenses:
Research and development	1,528	1,392	3,024	2,751
Sales and marketing	3,654	2,405	6,577	4,834
General and administrative	2,054	2,331	3,958	3,688
Total operating expenses	7,236	6,128	13,559	11,273
Loss from operations	(2,741)	(394)	(4,599)	(242)
Other expense, net	(1)	(21)	(3)	(32)
Loss from operations before provision for (benefit from) income taxes	(2,742)	(415)	(4,602)	(274)
Provision for (benefit from) income taxes	8	(87)	14	(47)
Net loss	$ (2,750)	$ (328)	$ (4,616)	$ (227)
Net loss per share:
Basic	$ (0.24)	$ (0.03)	$ (0.40)	$ (0.02)
Diluted	$ (0.24)	$ (0.03)	$ (0.40)	$ (0.02)
Weighted average shares used in computing net loss per common share:
Basic	11,546	10,085	11,532	10,060
Diluted	11,546	10,085	11,532	10,060

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (2,750)	$ (328)	$ (4,616)	$ (227)
Comprehensive loss	$ (2,750)	$ (328)	$ (4,616)	$ (227)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017		Jul. 02, 2016
Operating activities:
Net loss	$ (4,616)		$ (227)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	417		291
Change in fair value of earn-out liability	61		33
Stock-based compensation	836		800
Provision for doubtful accounts	10		41
Changes in operating assets and liabilities:
Accounts receivable	2,966		791
Inventories	255		(1,035)
Prepaid expenses and other current assets	(38)		(174)
Other long-term assets	31		57
Accounts payable	(214)		971
Accrued compensation	(188)		178
Accrued expenses	(325)		121
Accrued warranty	63		7
Deferred revenue	(38)		(40)
Other long-term liabilities	31		14
Net cash (used in) provided by operating activities	(749)		1,828
Investing activities:
Acquisition of property and equipment	(436)		(367)
Payment on earn-out liability	(178)		(190)
Net cash used in investing activities	(614)		(557)
Financing activities:
Proceeds from issuance of common stock, net of issuance costs	2,263
Proceeds from stock option exercises	215		413
Taxes paid related to net share settlements of equity awards	(268)		(99)
Repurchase of common stock			(59)
Net cash provided by financing activities	2,210		255
Net increase in cash and cash equivalents	847		1,526
Cash and cash equivalents, beginning of period	23,747	[1]	9,995
Cash and cash equivalents, end of period	24,594		11,521
Cash paid during the period for:
Income taxes	$ 15		$ 35
[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 December 31, 2016.

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jul. 01, 2017
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 December 31, 2016, which was filed with the Securities and Exchange Commission (“SEC”) on March 15, 2017. The results of operations for the three and six months ended July 1, 2017 and July 2, 2016 are not necessarily indicative of the results for the fiscal year ending December 30, 2017 or any future interim period. The three months periods ended July 1, 2017 and July 2, 2016, each had 13 weeks. For purposes of reporting the financial results, the Company’s fiscal years end on the Saturday closest to the end of December. Periodically, the Company includes a 53rd week to a year in order to end that year on the Saturday closest to the end of December.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jul. 01, 2017
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 December 31, 2016, which was filed with the SEC on March 15, 2017. 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 six months periods ended July 1, 2017 and July 2, 2016 no single customer accounted for more than 10% of total revenues. As of July 1, 2017 and December 31, 2016, no customer accounted for over 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 six months ended July 1, 2017 and July 2, 2016 is as follows: Six Months Ended July 1, 2017 July 2, 2016 Balance, beginning of period $ 1,383 $ 1,311 Additions to deferral 590 640 Revenue recognized (628 ) (680 ) Balance, end of period $ 1,345 $ 1,271 Warranty. In March 2017, the Company began offering a 5 year warranty on the laser heads for its IQ 532/577 laser consoles. The Company has previously provided 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 six months ended July 1, 2017 and July 2, 2016 is as follows: Six Months Ended July 1, 2017 July 2, 2016 Balance, beginning of period $ 603 $ 603 Accruals for product warranties 203 232 Cost of warranty claims (140 ) (225 ) Balance, end of period $ 666 $ 610 Recently Issued and Adopted Accounting Standards. In May 2014, as part of its ongoing efforts to assist in the convergence of accounting principles generally accepted in the United States (“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 (Topic 606). Revenue from Contracts with Customers (Topic 606) Narrow-Scope Improvements and Practical Expedients 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 August 2016, the FASB issued ASU 2016-15 " Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments". In October 2016, the FASB issued ASU 2016-16 to ASC 740 " Income Taxes In November 2016, the FASB issued ASU No. 2016-18, “ Statement of Cash Flows, Restricted Cash (Topic 230)” In January 2017, the FASB has issued ASU 2017-04, “ Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting”. The amendments in ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. These amendments require the entity to account for the effects of a modification unless all of the following conditions are met: the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or value using an alternative measurement method) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. We are currently evaluating the effect of the adoption of this guidance on our consolidated financial statements.

Inventories

Inventories	6 Months Ended
	Jul. 01, 2017
Inventory Disclosure [Abstract]
Inventories	3. Inventories The components of the Company’s inventories as of July 1, 2017 and December 31, 2016 are as follows: July 1, 2017 December 31, 2016 Raw materials $ 5,104 $ 5,331 Work in process 2,065 2,337 Finished goods 4,219 3,975 Total inventories $ 11,388 $ 11,643

Goodwill and Intangible Assets

Goodwill and Intangible Assets	6 Months Ended
	Jul. 01, 2017
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 July 1, 2017 and December 31, 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 performs an annual impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceed the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test. As the Company uses the market approach to assess impairment, its common stock price is an important component of the fair value calculation. If the Company’s stock price continues to experience significant price and volume fluctuations, this will impact the fair value of the reporting unit and can lead to potential impairment in future periods. The Company performed its annual impairment test during the second quarter of fiscal 2017 and determined that its goodwill was not impaired. As of July 1, 2017, 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: July 1, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Remaining Amortization Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relations 240 116 124 7.75 Years 240 108 132 For the six months ended July 1, 2017 and July 2, 2016, amortization expense totaled $8 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): Fiscal Year: 2017 (six months) $ 8 2018 16 2019 16 2020 16 2021 16 Thereafter 52 Total $ 124

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jul. 01, 2017
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 July 1, 2017 and December 31, 2016, approximate fair value because of the short maturity of these instruments. As of July 1, 2017 and December 31, 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: As of July 1, 2017 As of December 31, 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 $ 22,826 $ — $ — $ 22,826 $ 8,270 $ — $ — $ 8,270 Liabilities: Earn-out liability $ — $ — $ 577 $ 577 $ — $ — $ 694 $ 694 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 acquisition of RetinaLabs, 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 tables present 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 July 1, 2017 and December 31, 2016. As of July 1, 2017 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 577 Discounted cash flow Projected royalties (in thousands) $1,974 Discount rate 11.19% (11.19% - 27.00%) As of December 31, 2016 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 694 Discounted cash flow Projected royalties (in thousands) $2,154 Discount rate 11.22% (11.22% - 27.00%) A reconciliation of the changes in the Company’s earn-out liability (Level 3 liability) for the six months ended July 1, 2017 and July 2, 2016 is as follows: Six Months Ended (in thousands) July 1, 2017 July 2, 2016 Balance as of beginning of the period $ 694 $ 1,005 Payments against earn-out (178 ) (190 ) Change in fair value of earn-out liability 61 33 Balance as of the end of the period $ 577 $ 848 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	6 Months Ended
	Jul. 01, 2017
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 six months ended July 1, 2017, the only active stock-based compensation plan was the 2008 Equity Incentive Plan (the “Incentive Plan”). The terms of awards granted during the six months ended July 1, 2017 were consistent with those described in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. Summary of Stock Options The following table summarizes information regarding activity under the Incentive Plan during the six months ended July 1, 2017: Number of Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value (thousands) Outstanding as of December 31, 2016 470,985 $ 8.69 Granted 65,900 $ 13.15 Exercised (40,371 ) $ 5.34 Canceled or forfeited (27,198 ) $ 10.40 Outstanding as of July 1, 2017 469,316 $ 9.51 $ 768 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 $4.22 and $4.33 per share for the three months ended July 1, 2017 and July 2, 2016, 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 $4.92 and $4.21 per share for the six months ended July 1, 2017 and July 2, 2016, 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 Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Average risk free interest rate 1.70 % 1.10 % 1.75 % 1.16 % Expected life (in years) 4.55 years 4.55 years 4.55 years 4.55 years Dividend yield —% —% —% —% Average volatility 43 % 46 % 42 % 47 % 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 six months ended July 1, 2017 and July 2, 2016: Three Months Ended Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Cost of revenues $ 56 $ 30 $ 92 $ 81 Research and development 67 19 111 51 Sales and marketing 106 41 179 81 General and administrative 215 488 454 587 $ 444 $ 578 $ 836 $ 800 Stock-based compensation expense capitalized to inventory was immaterial for the quarters ended July 1, 2017 and July 2, 2016. Occasionally, the Company will grant stock-based instruments to non-employees. During the six months ended July 1, 2017 and July 2, 2016, 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 July 1, 2017 is summarized below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic (thousands) Options outstanding 469,316 $ 9.51 4.49 $ 768 Options vested and expected to vest 469,316 $ 9.51 4.49 $ 768 Options exercisable 253,475 $ 7.51 3.47 $ 673 The aggregate intrinsic value in the table above represents the pre-tax intrinsic value, based on the Company’s closing price as of July 1, 2017, 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 July 1, 2017 and July 2, 2016 was approximately $71 thousand and $261 thousand, respectively. As of July 1, 2017, there was $3.1 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 2.65 years. Summary of Restricted Stock Units and Awards Information regarding the restricted stock units (“RSUs”) activity for the six months ended July 1, 2017 is summarized below: Number of Shares Outstanding as of December 31, 2016 335,805 Restricted stock units granted 55,891 Restricted stock units released (59,905 ) Restricted stock units forfeited (27,789 ) Outstanding as of July 1, 2017 304,002 During the six months ended July 1, 2017, the Company awarded 55,891 restricted stock units at a weighted-average grant date fair value of $13.04 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. Information regarding the RSUs granted with performance conditions activity for the six months ended July 1, 2017 is summarized below: Number of Shares Outstanding as of December 31, 2016 1,289 Restricted stock awards granted 4,301 Restricted stock awards released (1,289 ) Outstanding as of July 1, 2017 4,301 During the six months ended July 1, 2017, the Company awarded 4,301 RSUs granted with performance conditions at a weighted-average grant date fair value of $9.30 per share.

Income Taxes

Income Taxes	6 Months Ended
	Jul. 01, 2017
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 The Company recorded a provision for income tax of $14 thousand and an income tax benefit of $47 thousand for the six months ended July 1, 2017 and July 2, 2016, respectively. Deferred Income Taxes. The Company accounts for income taxes in accordance with ASC topic 740, Income Taxes As of the fourth quarter of fiscal year 2016, based on the Company’s recent history of earnings and its forecasted losses, management believes on the more likely than not basis that a full valuation allowance is required. Accordingly, in the fourth quarter of fiscal year 2016, the company provided a full valuation allowance on its federal and states deferred tax assets. Uncertain Tax Positions. The Company accounts for its uncertain tax positions in accordance with ASC 740. As of December 31, 2016, the Company had $1.0 million of unrecognized tax benefits none 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 2010 to 2016 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	6 Months Ended
	Jul. 01, 2017
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 six months ended July 1, 2017 and July 2, 2016, stock options and RSUs to purchase 773,318 and 719,647 shares, respectively, were excluded from the computation of diluted weighted average shares outstanding. A reconciliation of the numerator and denominator of basic and diluted net loss per common share is provided as follows: Three Months Ended Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Numerator: Net loss $ (2,750 ) $ (328 ) $ (4,616 ) $ (227 ) Denominator: Weighted average shares of common stock (basic) 11,546 10,085 11,532 10,060 Effect of dilutive preferred shares - - - - Weighted average shares of common stock (diluted) 11,546 10,085 11,532 10,060 Per share data: Basic net loss per share $ (0.24 ) $ (0.03 ) $ (0.40 ) $ (0.02 ) Diluted net loss per share $ (0.24 ) $ (0.03 ) $ (0.40 ) $ (0.02 )

Business Segments

Business Segments	6 Months Ended
	Jul. 01, 2017
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 sales destination, is as follows: Three Months Ended Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 United States $ 5,882 $ 6,923 $ 11,586 $ 12,771 Europe 1,840 2,297 3,775 4,588 Rest of Americas 555 762 1,164 1,382 Asia/Pacific Rim 1,725 1,926 3,960 5,098 $ 10,002 $ 11,908 $ 20,485 $ 23,839 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. United States accounted for 58.8% and 58.1% of revenues for the three month periods ended July 1, 2017 and July 2, 2016, respectively. For the six month period ended July 1, 2017 and July 2, 2016, the United States accounted for 56.6% and 53.6% of sales, respectively. International sales, other than the United States, accounted for 41.2% and 41.9% of revenues for the three month periods ended July 1, 2017 and July 2, 2016, respectively. For six month period ended July 1, 2017 and July 2, 2016, International sales, other than the United States, accounted for 43.4% and 46.4% of sales, respectively. No customer accounted for more than 10% of total revenues for the three month periods ended July 1, 2017 and July 2, 2016 No customer accounted for more than 10% of account receivable balance as of July 1, 2017 and July 2, 2016.

Subsequent Events

Subsequent Events	6 Months Ended
	Jul. 01, 2017
Subsequent Events [Abstract]
Subsequent Events	10. Subsequent Events The Company has evaluated subsequent events and has concluded that no subsequent events that require disclosure in the financial statements have occurred since the quarter ended July 1, 2017.

Summary of Significant Accoun17

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jul. 01, 2017
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 six months periods ended July 1, 2017 and July 2, 2016 no single customer accounted for more than 10% of total revenues. As of July 1, 2017 and December 31, 2016, no customer accounted for over 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 six months ended July 1, 2017 and July 2, 2016 is as follows: Six Months Ended July 1, 2017 July 2, 2016 Balance, beginning of period $ 1,383 $ 1,311 Additions to deferral 590 640 Revenue recognized (628 ) (680 ) Balance, end of period $ 1,345 $ 1,271
Warranty	Warranty. In March 2017, the Company began offering a 5 year warranty on the laser heads for its IQ 532/577 laser consoles. The Company has previously provided 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 six months ended July 1, 2017 and July 2, 2016 is as follows: Six Months Ended July 1, 2017 July 2, 2016 Balance, beginning of period $ 603 $ 603 Accruals for product warranties 203 232 Cost of warranty claims (140 ) (225 ) Balance, end of period $ 666 $ 610
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 accounting principles generally accepted in the United States (“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 (Topic 606). Revenue from Contracts with Customers (Topic 606) Narrow-Scope Improvements and Practical Expedients 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 August 2016, the FASB issued ASU 2016-15 " Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments". In October 2016, the FASB issued ASU 2016-16 to ASC 740 " Income Taxes In November 2016, the FASB issued ASU No. 2016-18, “ Statement of Cash Flows, Restricted Cash (Topic 230)” In January 2017, the FASB has issued ASU 2017-04, “ Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting”. The amendments in ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. These amendments require the entity to account for the effects of a modification unless all of the following conditions are met: the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or value using an alternative measurement method) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. We are currently evaluating the effect of the adoption of this guidance on our consolidated financial statements.

Summary of Significant Accoun18

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jul. 01, 2017
Accounting Policies [Abstract]
Reconciliation of Changes in Deferred Revenue	A reconciliation of the changes in the Company’s deferred revenue balance for the six months ended July 1, 2017 and July 2, 2016 is as follows: Six Months Ended July 1, 2017 July 2, 2016 Balance, beginning of period $ 1,383 $ 1,311 Additions to deferral 590 640 Revenue recognized (628 ) (680 ) Balance, end of period $ 1,345 $ 1,271
Reconciliation of Changes in Warranty Liability	A reconciliation of the changes in the Company’s warranty liability for the six months ended July 1, 2017 and July 2, 2016 is as follows: Six Months Ended July 1, 2017 July 2, 2016 Balance, beginning of period $ 603 $ 603 Accruals for product warranties 203 232 Cost of warranty claims (140 ) (225 ) Balance, end of period $ 666 $ 610

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jul. 01, 2017
Inventory Disclosure [Abstract]
Components of Inventories	The components of the Company’s inventories as of July 1, 2017 and December 31, 2016 are as follows: July 1, 2017 December 31, 2016 Raw materials $ 5,104 $ 5,331 Work in process 2,065 2,337 Finished goods 4,219 3,975 Total inventories $ 11,388 $ 11,643

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	6 Months Ended
	Jul. 01, 2017
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: July 1, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Remaining Amortization Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relations 240 116 124 7.75 Years 240 108 132
Future Estimated Amortization Expense	Future estimated amortization expense (in thousands): Fiscal Year: 2017 (six months) $ 8 2018 16 2019 16 2020 16 2021 16 Thereafter 52 Total $ 124

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jul. 01, 2017
Fair Value Disclosures [Abstract]
Financial Assets and Liabilities Measured and Recognized at Fair Value on a Recurring Basis	As of July 1, 2017 and December 31, 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: As of July 1, 2017 As of December 31, 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 $ 22,826 $ — $ — $ 22,826 $ 8,270 $ — $ — $ 8,270 Liabilities: Earn-out liability $ — $ — $ 577 $ 577 $ — $ — $ 694 $ 694
Quantitative Information about the Inputs and Valuation Methodologies Used for Fair Value Measurements	The following tables present 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 July 1, 2017 and December 31, 2016. As of July 1, 2017 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 577 Discounted cash flow Projected royalties (in thousands) $1,974 Discount rate 11.19% (11.19% - 27.00%) As of December 31, 2016 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 694 Discounted cash flow Projected royalties (in thousands) $2,154 Discount rate 11.22% (11.22% - 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 six months ended July 1, 2017 and July 2, 2016 is as follows: Six Months Ended (in thousands) July 1, 2017 July 2, 2016 Balance as of beginning of the period $ 694 $ 1,005 Payments against earn-out (178 ) (190 ) Change in fair value of earn-out liability 61 33 Balance as of the end of the period $ 577 $ 848

Stock Based Compensation (Table

Stock Based Compensation (Tables)	6 Months Ended
	Jul. 01, 2017
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 six months ended July 1, 2017: Number of Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value (thousands) Outstanding as of December 31, 2016 470,985 $ 8.69 Granted 65,900 $ 13.15 Exercised (40,371 ) $ 5.34 Canceled or forfeited (27,198 ) $ 10.40 Outstanding as of July 1, 2017 469,316 $ 9.51 $ 768
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 Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Average risk free interest rate 1.70 % 1.10 % 1.75 % 1.16 % Expected life (in years) 4.55 years 4.55 years 4.55 years 4.55 years Dividend yield —% —% —% —% Average volatility 43 % 46 % 42 % 47 %
Stock-Based Compensation Expense	The following table shows stock-based compensation expense included in the condensed consolidated statements of operations for the three and six months ended July 1, 2017 and July 2, 2016: Three Months Ended Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Cost of revenues $ 56 $ 30 $ 92 $ 81 Research and development 67 19 111 51 Sales and marketing 106 41 179 81 General and administrative 215 488 454 587 $ 444 $ 578 $ 836 $ 800
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 July 1, 2017 is summarized below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic (thousands) Options outstanding 469,316 $ 9.51 4.49 $ 768 Options vested and expected to vest 469,316 $ 9.51 4.49 $ 768 Options exercisable 253,475 $ 7.51 3.47 $ 673
Restricted Stock Units and Awards	Information regarding the restricted stock units (“RSUs”) activity for the six months ended July 1, 2017 is summarized below: Number of Shares Outstanding as of December 31, 2016 335,805 Restricted stock units granted 55,891 Restricted stock units released (59,905 ) Restricted stock units forfeited (27,789 ) Outstanding as of July 1, 2017 304,002 Information regarding the RSUs granted with performance conditions activity for the six months ended July 1, 2017 is summarized below: Number of Shares Outstanding as of December 31, 2016 1,289 Restricted stock awards granted 4,301 Restricted stock awards released (1,289 ) Outstanding as of July 1, 2017 4,301

Computation of Basic and Dilu23

Computation of Basic and Diluted Net Loss Per Common Share (Tables)	6 Months Ended
	Jul. 01, 2017
Earnings Per Share [Abstract]
Reconciliation of Numerator and Denominator of Basic and Diluted Net Loss Per Common Share	A reconciliation of the numerator and denominator of basic and diluted net loss per common share is provided as follows: Three Months Ended Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Numerator: Net loss $ (2,750 ) $ (328 ) $ (4,616 ) $ (227 ) Denominator: Weighted average shares of common stock (basic) 11,546 10,085 11,532 10,060 Effect of dilutive preferred shares - - - - Weighted average shares of common stock (diluted) 11,546 10,085 11,532 10,060 Per share data: Basic net loss per share $ (0.24 ) $ (0.03 ) $ (0.40 ) $ (0.02 ) Diluted net loss per share $ (0.24 ) $ (0.03 ) $ (0.40 ) $ (0.02 )

Business Segments (Tables)

Business Segments (Tables)	6 Months Ended
	Jul. 01, 2017
Segment Reporting [Abstract]
Revenue Information by Geographic Region	Revenue information shown by geographic region, based on the sales destination, is as follows: Three Months Ended Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 United States $ 5,882 $ 6,923 $ 11,586 $ 12,771 Europe 1,840 2,297 3,775 4,588 Rest of Americas 555 762 1,164 1,382 Asia/Pacific Rim 1,725 1,926 3,960 5,098 $ 10,002 $ 11,908 $ 20,485 $ 23,839

Summary of Significant Accoun25

Summary of Significant Accounting Policies - Additional Information (Details) - Customer	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2017	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016	Dec. 31, 2016
IQ 532/577 Laser Consoles
Disclosure Summary Of Significant Accounting Policies [Line Items]
Products warranty period	5 years
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 | 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	0
Customer accounted percentage of total revenues		10.00%	10.00%	10.00%		10.00%

Summary of Significant Accoun26

Summary of Significant Accounting Policies - Reconciliation of Changes in Deferred Revenue (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017		Jul. 02, 2016
Reconciliation of the changes in the Company's deferred revenue balance
Balance, beginning of period	$ 1,383	[1]	$ 1,311
Additions to deferral	590		640
Revenue recognized	(628)		(680)
Balance, end of period	$ 1,345		$ 1,271
[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 December 31, 2016.

Summary of Significant Accoun27

Summary of Significant Accounting Policies - Reconciliation of Changes in Warranty Liability (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017		Jul. 02, 2016
Reconciliation of the changes in the Company's warranty liability
Balance, beginning of period	$ 603	[1]	$ 603
Accruals for product warranties	203		232
Cost of warranty claims	(140)		(225)
Balance, end of period	$ 666		$ 610
[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 December 31, 2016.

Inventories - Components of Inv

Inventories - Components of Inventories (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 5,104	$ 5,331
Work in process	2,065	2,337
Finished goods	4,219	3,975
Total inventories	$ 11,388	$ 11,643	[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 December 31, 2016.

Goodwill and Intangible Asset29

Goodwill and Intangible Assets - Additional Information (Details) - USD ($)	6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Dec. 31, 2016	[1]
Goodwill And Intangible Assets Disclosure [Abstract]
Carrying value of goodwill	$ 533,000		$ 533,000
Impairment of goodwill	0
Amortization expense	$ 8,000	$ 8,000
[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 December 31, 2016.

Goodwill and Intangible Asset30

Goodwill and Intangible Assets - Summary of Components of Gross and Net Intangible Asset (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2017	Dec. 31, 2016
Schedule of Intangible Assets
Net Carrying Amount	$ 124	$ 132	[1]
Customer relations
Schedule of Intangible Assets
Gross Carrying Amount	240	240
Accumulated Amortization	116	108
Net Carrying Amount	$ 124	$ 132
Remaining Amortization Life	7 years 9 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 December 31, 2016.

Goodwill and Intangible Asset31

Goodwill and Intangible Assets - Future Estimated Amortization Expense (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016	[1]
Future estimated amortization expense
2017 (six months)	$ 8
2,018	16
2,019	16
2,020	16
2,021	16
Thereafter	52
Net Carrying Amount	$ 124	$ 132
[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 December 31, 2016.

Fair Value Measurements - Finan

Fair Value Measurements - Financial Assets and Liabilities Measured and Recognized at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jul. 01, 2017	Dec. 31, 2016
Money Market Funds
Assets:
Assets, Fair Value Measurements	$ 22,826	$ 8,270
Earn Out Liability
Liabilities:
Liabilities, Fair Value Measurements	577	694
Level 1 | Money Market Funds
Assets:
Assets, Fair Value Measurements	22,826	8,270
Level 3 | Earn Out Liability
Liabilities:
Liabilities, Fair Value Measurements	$ 577	$ 694

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	6 Months Ended	12 Months Ended
	Jul. 01, 2017	Dec. 31, 2016
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Liabilities, Fair Value Measurements	$ 577	$ 694
Level 3
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Liabilities, Fair Value Measurements	577	694
Level 3 | Discounted Cash Flow
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Liabilities, Fair Value Measurements	$ 577	$ 694
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	$ 1,974	$ 2,154
Weighted Average, Discount rate	11.19%	11.22%
Level 3 | Discounted Cash Flow | Minimum
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Weighted Average, Discount rate	11.19%	11.22%
Level 3 | Discounted Cash Flow | Maximum
Quantitative information about the inputs and valuation methodologies used for fair value measurements
Weighted Average, Discount rate	27.00%	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	6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016
Reconciliation of the changes in the Company's earn-out - cash (Level 3 liabilities) balance
Balance as of beginning of the period	$ 694	$ 1,005
Payments against earn-out	(178)	(190)
Change in fair value of earn-out liability	61	33
Balance as of the end of the period	$ 577	$ 848

Stock Based Compensation - Summ

Stock Based Compensation - Summary of Activity under Incentive Plan (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jul. 01, 2017USD ($)$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract]
Outstanding, Number of Shares, Beginning Balance | shares	470,985
Number of Shares, Options Granted | shares	65,900
Number of Shares, Options Exercised | shares	(40,371)
Number of Shares, Options Cancelled or forfeited | shares	(27,198)
Outstanding, Number of Shares, Ending Balance | shares	469,316
Outstanding, Weighted Average Exercise Price Per Share, Beginning Balance | $ / shares	$ 8.69
Weighted Average Exercise Price Per Share, Options Granted | $ / shares	13.15
Weighted Average Exercise Price Per Share, Options Exercised | $ / shares	5.34
Weighted Average Exercise Price Per Share, Options Cancelled or forfeited | $ / shares	10.40
Outstanding, Weighted Average Exercise Price Per Share, Ending Balance | $ / shares	$ 9.51
Aggregate Intrinsic Value, Ending Balance | $	$ 768

Stock Based Compensation - Addi

Stock Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-average grant date fair value of the options granted	$ 4.22	$ 4.33	$ 4.92	$ 4.21
Total intrinsic value of options exercised	$ 71			$ 261
Total unrecognized compensation cost related to non-vested share-based compensation arrangements	$ 3,100		$ 3,100
Cost is expected to be recognized over a weighted average period			2 years 7 months 24 days
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested restricted stock awarded			55,891
Weighted-average grant date fair value of restricted stock awarded			$ 13.04
Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested restricted stock awarded			4,301
Weighted-average grant date fair value of restricted stock awarded			$ 9.30

Stock Based Compensation - Weig

Stock Based Compensation - Weighted Average Assumptions for Fair Value Stock-Based Awards (Options) (Details)	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Weighted average assumptions for fair value estimate of stock-based awards (options)
Average risk free interest rate	1.70%	1.10%	1.75%	1.16%
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	43.00%	46.00%	42.00%	47.00%

Stock Based Compensation - Stoc

Stock Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 444	$ 578	$ 836	$ 800
Cost of revenues
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	56	30	92	81
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	67	19	111	51
Sales and marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	106	41	179	81
General and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 215	$ 488	$ 454	$ 587

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	6 Months Ended
	Jul. 01, 2017	Dec. 31, 2016
Stock options outstanding, exercisable and expected to vest
Options outstanding, Number of Shares	469,316	470,985
Options vested and expected to vest, Number of Shares	469,316
Options exercisable, Number of Shares	253,475
Options outstanding, Weighted Average Exercise Price	$ 9.51	$ 8.69
Options vested and expected to vest, Weighted Average Exercise Price	9.51
Options exercisable, Weighted Average Exercise Price	$ 7.51
Options outstanding, Weighted Average Remaining Contractual Life (Years)	4 years 5 months 27 days
Options vested and expected to vest, Weighted Average Remaining Contractual Life (Years)	4 years 5 months 27 days
Options exercisable, Weighted Average Remaining Contractual Life (Years)	3 years 5 months 20 days
Options outstanding, Aggregate Intrinsic Value	$ 768
Options vested and expected to vest, Aggregate Intrinsic Value	768
Options exercisable, Aggregate Intrinsic Value	$ 673

Stock Based Compensation - Rest

Stock Based Compensation - Restricted Stock Units and Awards (Details)	6 Months Ended
	Jul. 01, 2017shares
Restricted Stock Units (RSUs)
Restricted stock units
Outstanding, Number of Shares, Beginning Balance	335,805
Number of Shares, Restricted stock granted	55,891
Number of Shares, Restricted stock released	(59,905)
Number of Shares, Restricted stock forfeited	(27,789)
Outstanding, Number of Shares, Ending Balance	304,002
Restricted Stock Awards
Restricted stock units
Outstanding, Number of Shares, Beginning Balance	1,289
Number of Shares, Restricted stock granted	4,301
Number of Shares, Restricted stock released	(1,289)
Outstanding, Number of Shares, Ending Balance	4,301

Income Taxes - Additional Infor

Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016	Dec. 31, 2016
Income Taxes [Line Items]
Provision for (benefit from) income taxes	$ 8,000	$ (87,000)	$ 14,000	$ (47,000)
Unrecognized tax benefits					$ 1,000,000
Unrecognized tax benefits recognition impact on income tax rate					$ 0
Earliest Tax Year
Income Taxes [Line Items]
Open Tax Year			2,010
Latest Tax Year
Income Taxes [Line Items]
Open Tax Year			2,016

Computation of Basic and Dilu42

Computation of Basic and Diluted Net Loss Per Common Share - Additional Information (Details) - shares	6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016
Stock options and RSUs
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares that were excluded from the computation of diluted weighted average shares outstanding	773,318	719,647

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		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Numerator:
Net loss	$ (2,750)	$ (328)	$ (4,616)	$ (227)
Denominator:
Weighted average shares of common stock (basic)	11,546	10,085	11,532	10,060
Weighted average shares of common stock (diluted)	11,546	10,085	11,532	10,060
Per share data:
Basic net loss per share	$ (0.24)	$ (0.03)	$ (0.40)	$ (0.02)
Diluted net loss per share	$ (0.24)	$ (0.03)	$ (0.40)	$ (0.02)

Business Segments - Additional

Business Segments - Additional Information (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 01, 2017Customer	Jul. 02, 2016Customer	Jul. 01, 2017CustomerSegment	Jul. 02, 2016Customer	Dec. 31, 2016Customer
Segment Reporting Information [Line Items]
Number of operating segments | Segment			1
Customer Concentration Risk | Revenue, Total
Segment Reporting Information [Line Items]
Customer accounted percentage of total revenues	10.00%	10.00%	10.00%	10.00%
Number of customer accounted for total revenues and net accounts receivable	0	0	0	0
Customer Concentration Risk | Accounts Receivable
Segment Reporting Information [Line Items]
Customer accounted percentage of total revenues	10.00%	10.00%	10.00%		10.00%
Number of customer accounted for total revenues and net accounts receivable	0	0	0	0	0
United States | Customer Concentration Risk | Revenue, Total
Segment Reporting Information [Line Items]
Customer accounted percentage of total revenues	58.80%	58.10%	56.60%	53.60%
Other Than United States | Customer Concentration Risk | Revenue, Total
Segment Reporting Information [Line Items]
Customer accounted percentage of total revenues	41.20%	41.90%	43.40%	46.40%

Business Segments - Revenue Inf

Business Segments - Revenue Information by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2017	Jul. 02, 2016	Jul. 01, 2017	Jul. 02, 2016
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	$ 10,002	$ 11,908	$ 20,485	$ 23,839
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	5,882	6,923	11,586	12,771
Europe
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	1,840	2,297	3,775	4,588
Rest of Americas
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	555	762	1,164	1,382
Asia/Pacific Rim
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenues	$ 1,725	$ 1,926	$ 3,960	$ 5,098