Note 18 - Commitments

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

18.   COMMITMENTS

Executive Severance Agreements

The Company is a party to an Executive Severance Agreement (the “Executive Severance Agreement”) with each of Bradley S. Vizi, the Company's Executive Chairman and President (dated as of June 1, 2018), and Kevin D. Miller, the Company’s Chief Financial Officer (dated as of February 28, 2014, as amended), which set forth the terms and conditions of certain payments to be made by the Company to the executive in the event, while employed by the Company, such executive experiences (a) a termination of employment unrelated to a “Change in Control” (as defined therein) or (b) there occurs a Change in Control and either (i) the executive’s employment is terminated for a reason related to the Change in Control or (ii) in the case of Mr. Miller, the executive remains continuously employed with the Company for a period of three months following the Change in Control. Each Executive Severance Agreement also provide for certain payments, if either (a) the executive is involuntarily terminated by the Company for any reason other than “Cause” (as defined therein), “Disability” (as defined therein) or death, or (b) the executive resigns for “Good Reason” (as defined therein), and, in each case, the termination is not a “Termination Related to a Change in Control” (as defined therein).

Leases

Leases are recorded in accordance with FASB ASC 842, Leases which requires lessees to recognize a right-of-use (“ROU”) asset and an operating right of use liability for all leases with terms greater than 12 months and requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases.

At January 1, 2021, in connection with the continuing developments from COVID-19, the Company reduced its leased office space as a result of its employees moving to a remote work environment. The Company does not believe there is an opportunity to sublet any of the vacant office space due to the current commercial rental marketplace. This decision and reduction in the use of the office spaces resulted in a right-of-use asset impairment of $1.9 million during the Company’s fiscal year 2020. This loss was determined by identifying the fair value of the impacted right-of-use assets as compared to the carrying value of the assets as of the measurement date, in accordance with Property, Plant and Equipment Topic of the FASB ASC. The fair value of the right-of-use assets was based on the remaining term of each lease. In addition, the Company wrote off a total of $0.3 million in other office lease costs and obsolete equipment during fiscal year 2020.

The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, right of use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The right of use asset also consists of any lease incentives received. The lease terms used to calculate the right of use asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition. The Company has lease agreements which require payments for lease and non-lease components. The Company has elected to account for these as a single lease component with the exception of its real estate leases.

The components of lease expense were as follows:

	Fiscal Years Ended
	December 31, 2022		January 1, 2022		January 2, 2021
Operating lease cost	$	1,598	$	1,891	$	2,524
Finance lease cost
Amortization of right of use assets	$	487	$	401	$	366
Interest on lease liabilities		7		9		10
Total finance lease cost	$	494	$	410	$	376

Supplemental Cash Flow information related to leases was as follows:

	December 31, 2022		January 1, 2022		January 2, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,633	$	1,957	$	2,589
Operating cash flows from finance leases	$	8	$	9	$	7
Financing cash flows from finance leases	$	508	$	415	$	402
Right of use assets obtained in exchange for lease obligations
Operating leases	$	2,790	$	830	$	1,257
Finance leases	$	257	$	1,002	$	258

Supplemental Balance Sheet information as of December 31, 2022, January 1, 2022 and January 2, 2021 related to leases was as follows:

	December 31, 2022			January 1, 2022			January 2, 2021
Operating leases
Operating lease right of use assets	$	3,665		$	1,877		$	2,409
Operating right of use liability - current	$	(1,349	)	$	(1,502	)	$	(1,886	)
Operating right of use liability - non-current		(2,932	)		(1,631	)		(2,641	)
Total operating lease liabilities	$	(4,281	)	$	(3,133	)	$	(4,527	)
Finance leases
Property and equipment - (right of use assets)	$	1,177		$	1,367		$	1,140
Accumulated depreciation		(461	)		(375	)		(746	)
Property and equipment, net	$	716		$	992		$	394
Finance lease liability - current	$	(462	)	$	(437	)	$	(247	)
Finance lease liability - non-current		(232	)		(502	)		(106	)
Total finance lease liabilities	$	(694	)	$	(939	)	$	(353	)
Weighted average remaining lease term in years
Operating leases		6.78			1.80			2.03
Finance leases		1.50			2.34			1.45
Weighted average discount rate
Operating leases		3.10	%		3.32	%		4.06	%
Finance leases		0.87	%		1.15	%		2.63	%

Maturities of lease liabilities are as follows:

Fiscal Year	Operating Leases			Finance Leases
2023	$	1,460		$	467
2024		754			233
2025		493			-
2026		409			-
2027		302			-
Thereafter		1,455			-
Total lease payments		4,873			700
Less: imputed interest		(592	)		(6	)
Total	$	4,281		$	694