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Note 6 - Leases

6 Months Ended

Jul. 02, 2023

Lessee, Operating and Finance Leases [Text Block]

Note 6 — Leases

The Company's principal research and development and corporate facilities are leased office buildings located in the United States. These lease facilities are classified as operating leases and have lease terms of one to five years. The Company maintains sales offices out of which it conducts sales and marketing activities in various countries outside of the United States which are rented under short-term leases. The Company has elected the practical expedient to apply to recognition requirements to short-term leases and recognizes rent payments on short-term leases on a straight-line basis over the lease term. Finance leases are primarily for engineering design software and have leases terms of generally two to three years. Total rent expenses were $0.1 million and $0.2 million for the three and six months ended July 2, 2023 and $0.1 million and $0.2 million for the three and six months ended July 3, 2022, respectively.

Right-of-use assets were approximately $1.3 million and $1.4 million as of July 2, 2023 and January 1, 2023, respectively. Lease liabilities were approximately $1.4 million and $1.4 million as of July 2, 2023 and January 1, 2023, respectively.

The following table provides the expenses related to operating and finance leases (in thousands):

	*Three Months Ended*				*Six Months Ended*
	*July 2, 2023*		*July 3, 2022*		*July 2, 2023*		*July 3, 2022*
Operating lease costs:
Fixed	$	100	$	100	$	200	$	199
Short term		5		6		9		13
Total	$	105	$	106	$	209	$	212
Finance lease costs:
Amortization of ROU asset	$	163	$	109	$	323	$	219
Interest		20		6		42		13
Total	$	183	$	115	$	365	$	232

Right-of-use assets obtained in exchange for new finance and operating lease liabilities represent the new operating and finance leases entered into during the six months ended July 2, 2023 and July 3, 2022 was $445 thousand and $0, respectively.

The following table provides the details of supplemental cash flow information (in thousands):

	*Six Months Ended*
	*July 2, 2023*		*July 3, 2022*
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	209	$	203
Operating cash flows used for finance leases		42		13
Financing cash flows used for finance leases		288		198
Total	$	539	$	414

Non-cash ROU assets related to operating leases included in the operating cash flows for the three months ended July 2, 2023 and July 3, 2022 were $91 thousand and $86 thousand, respectively. Non-cash ROU assets related to finance leases included in the financing cash flows for the three months ended July 2, 2023 and July 3, 2022 were $163 thousand and $109 thousand, respectively.

The following table provides the details of right-of-use assets and lease liabilities as of July 2, 2023 and January 1, 2023 (in thousands):

	*July 2, 2023*		*January 1, 2023*
Right-of-use assets:
Operating leases	$	283	$	464
Finance leases		1,055		933
Total right-of-use assets	$	1,338	$	1,397
Lease liabilities:
Operating leases	$	310	$	507
Finance leases		1,045		887
Total lease liabilities	$	1,355	$	1,394

The following table provided the details of future lease payments for operating and finance leases as of July 2, 2023 (in thousands):

	*Operating Leases*			*Finance Leases*
2023 (remaining period)	$	212		$	330
2024		106			624
2025		—			168
Total lease payments		318			1,122
Less: Interest		(8	)		(77	)
Present value of lease liabilities	$	310		$	1,045

The following table provides the details of lease terms and discount rates as of July 2, 2023 and January 1, 2023:

	*July 2, 2023*			*January 1, 2023*
Right-of-use assets:
Weighted-average remaining lease term (years)
Operating leases ⁽¹⁾		0.75			1.25
Finance leases		2.04			1.91
Weighted-average discount rates:
Operating leases		6.00	%		6.00	%
Finance leases		6.71	%		5.95	%

⁽¹⁾ The operating lease relates to the Company's headquarters in San Jose, CA. The Company fully intends to renew its lease upon its expiration in Q1'24 and continue at its current location.