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 managements discussion and analysis of the Companys financial condition and results of operations, contained in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019, which was filed with the Securities and Exchange Commission (SEC) on March 13, 2020. The results of operations for the three months ended March 28, 2020 and March 30, 2019 are not necessarily indicative of the results for the fiscal year ending January 2, 2021 or any future interim period. The three months ended March 28, 2020 and March 30, 2019, each had 13 weeks. For purposes of reporting the financial results, the Companys 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. Liquidity. We have historically funded our operations primarily through sales of our products to customers, and through common stock and borrowing arrangements. As of March 28, 2020, our principal sources of liquidity consisted of cash and cash equivalents of $11.1 million. We have incurred net losses over the last several years, and as of March 28, 2020 have an accumulated deficit of approximately $52.3 million. We expect to continue to incur operating losses and negative cash flows from operations through March 31, 2021. We believe our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs over the next 12 months. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, the introduction of new and enhanced products and our costs to implement new manufacturing technologies. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. Any debt financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. Additionally, if we raise additional funds through further issuances of equity, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.