Note 12 - Stock-based Compensation

12 Months Ended

Jan. 01, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

NOTE 12 — STOCK-BASED COMPENSATION

The Company provides stock-based incentive compensation awards to eligible employees and non-employee directors. Awards that may be granted under the program include non-qualified and incentive stock options, restricted stock awards, restricted stock units ("RSU"), and performance-based restricted stock units (PRSU") is based on the closing price of the Company’s common stock on the date of grant. To date, awards granted under the program consist of stock options, RSUs and PRSUs. The majority of stock-based awards granted under the program vest over four years. Stock options granted under the program have a maximum contractual term of ten years.

Stock-based compensation expense recognized in the Company’s consolidated statements of operations for the years ended January 1, 2023,  January 2, 2022 and January 3, 2021, respectively is as follows (in thousands):

	Fiscal Years
Stock-based compensation expense included in:		2022		2021		2020
Cost of revenue	$	272	$	282	$	162
Research and development		652		843		670
Selling, general and administrative		1,111		1,401		907
Total costs and expenses	$	2,035	$	2,526	$	1,739

	Fiscal Years
Stock-based compensation expense by type of award:	2022		2021		2020
Stock options	$	—	$	—	$	39
ESPP		70		110		39
RSU and PRSU		1,965		2,416		1,661
Total costs and expenses	$	2,035	$	2,526	$	1,739

 No stock-based compensation was capitalized or included in inventories for the years ended January 1, 2023,  January 2, 2022 and January 3, 2021.

Stock-Based Compensation Award Activity

A roll forward of shares available for grant under the 2019 Plan (in thousands) is as follows:

	Shares Available for Grant
Balance at January 3, 2021		320
Authorized		600
Options forfeited or expired		31
RSUs granted		(619	)
RSUs forfeited		262
Balance at January 2, 2022		594
Authorized		900
RSUs granted		(584	)
RSUs forfeited		50
Balance at January 1, 2023		960

No stock options were granted during any of the periods presented.

Stock Options

A roll forward of stock options under the 2019 Plan is as follows:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Term		Aggregate Intrinsic Value
	(in thousands)					(in years)		(in thousands)
Balance outstanding at December 29, 2019		186		$	32.09
Forfeited or expired		(65	)		38.83
Balance outstanding at January 3, 2021		121			28.46
Forfeited or expired		(28	)		31.68
Balance outstanding at January 2, 2022		93			27.49
Forfeited or expired		(18	)		39.72
Outstanding, exercisable, and vested at January 1, 2023		75		$	24.50		2.80	$	—

The intrinsic value for the stock options, based on the Company’s closing stock price of $5.14 per share at December 30, 2022, the last trading day of the Company’s current reporting period, was $0 which would have been received by the option holders had all option holders exercised their options as of that date.

The total intrinsic value of options exercised during the years ended January 1, 2023,  January 2, 2022 and January 3, 2021 was not significant. The Company did not receive cash related to options exercised and no stock options were granted during the years ended January 1, 2023,  January 2, 2022 and January 3, 2021. The Company settles employee stock option exercises with newly issued common shares. In connection with these exercises, there was no tax benefit realized by the Company due to the Company’s current net loss position. As of January 1, 2023, there were no unvested stock options.

Restricted Stock Units

The Company grants RSUs to employees with various vesting terms. RSUs entitle the holder to receive, at no cost, one common share for each restricted stock unit on the date vested. The Company withholds shares in settlement of employee tax withholding obligations on the vesting of restricted stock units.

As of January 1, 2023, there was approximately $2.7 million in unrecognized stock-based compensation expense related to RSUs. The remaining unrecognized stock-based compensation expense as of January 1, 2023 is expected to be recorded over a weighted average period of 1.65 years.  During the fiscal year 2022, the Company did not have any PRSU awards that were subject to vesting. Consequently, the Company did not have any unrecognized stock-based compensation related to PRSUs at January 1, 2023.

A roll forward summarizes RSU activity and related weighted average grant date fair values as follows:

	RSUs Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value
	(in thousands)
Nonvested at December 30, 2019		377		$	12.55
Granted		816			3.97
Vested		(144	)		10.41
Forfeited		(249	)		7.93
Nonvested at January 3, 2021		800			4.99
Granted		619			5.81
Vested		(586	)		4.99
Forfeited		(265	)		5.00
Nonvested at January 2, 2022		568			5.86
Granted		584			6.11
Vested		(490	)		5.56
Forfeited		(32	)		5.35
Nonvested at January 1, 2023		630		$	6.05

2009 ESPP Stock Plan

The Company issued 52 thousand shares of common stock at an average price of $4.82 per share, 84 thousand shares of common stock at an average price of $3.14 per share, and 20 thousand shares of common stock at an average price of $2.47 per share to employees in the years ended January 1, 2023,  January 2, 2022, and January 3, 2021, respectively.

The weighted average grant date fair value and the weight-average assumptions used to estimate the fair value of ESPP option rights granted is as follows:

	Fiscal Years
	2022			2021			2020
Expected life (months)		6.0			6.0			6.0
Risk-free interest rate		3.04	%		0.05	%		0.12	%
Volatility		57	%		74	%		82	%
Dividend yield		—			—			—
Weighted average fair value of ESPP options granted	$	2.04		$	2.18		$	1.09