What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-09 · 134 added, 78 removed, 296 unchanged (42% of the section changed)

41 unchanged sentences

Three Months Ended

Six Months Ended

Net product sales

5 unchanged sentences

Total operating expenses

Operating loss

Other expense, net:

Interest expense, net

Other expense, net

Total other expense, net

Loss before provision for income taxes

Operating (loss) income

Other (expense) income, net:

Interest income (expense), net

Other (expense) income, net

Total other (expense) income, net

(Loss) income before provision for income taxes

Provision for income taxes

Loss per share:

Basic and diluted

Net (loss) income

(Loss) earnings per share:

Weighted-average common shares outstanding:

Basic and diluted

See accompanying Notes to the Condensed Consolidated Statements.

11 unchanged sentences

Balance, April 2, 2022

Issuance of common stock, net

Exercise of stock options

Stock-based compensation

Restricted stock units vested and distributed

Tax withholdings related to net share settlements of equity awards

Balance, July 2, 2022

Stockholders'

Equity (Deficit)

Balance, January 2, 2021

6 unchanged sentences

Balance, April 3, 2021

Exercise of stock options

Exercise of warrants

Stock-based compensation

Restricted stock units vested and distributed

Tax withholdings related to net share settlements of equity awards

Balance, July 3, 2021

See accompanying Notes to the Condensed Consolidated Statements

3 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

2 unchanged sentences

Non-cash lease expense

Gain on extinguishment of debt

Stock-based compensation

10 unchanged sentences

Cash flows from financing activities:

Net (payments) borrowings under line of credit

Net borrowings (repayments) under line of credit

Principal repayments under finance lease

Repayments on notes payable

Payments on note payable

Proceeds from issuance of common stock, net

1 unchanged sentence

Payments for taxes related to net share settlement of equity awards

Net cash (used in) provided by financing activities

Net cash provided by financing activities

Net change in cash, cash equivalents and restricted cash

23 unchanged sentences

The results of operations for the interim periods are not necessarily indicative of the results to be expected for other periods or the full fiscal year.

The Company has evaluated events occurring subsequent to April 2, 2022 through the filing date of this Quarterly Report on Form 10-Q and concluded that there were no events that required recognition and disclosures other than those discussed elsewhere in the notes hereto.

The Company has evaluated events occurring subsequent to July 2, 2022 through the filing date of this Quarterly Report on Form 10-Q and concluded that there were no events that required recognition and disclosures other than those discussed elsewhere in the notes hereto.

Principles of Consolidation

10 unchanged sentences

Actual results may differ materially from those estimates.

Recently Issued Accounting Guidance

In August 2020, the FASB issued ASU No.

Recently Adopted Accounting Guidance

In the first quarter of 2022, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

1 unchanged sentence

This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity, and also improves and amends the related earnings per share guidance for both Subtopics.

The ASU was effective for the three months ended April 2, 2022.

The adoption of this ASU did not have an impact on the Company’s condensed consolidated financial statements as the Company paid off its convertible debt in December 2021.

4 unchanged sentences

Finished goods

Loss Per Share

The following table shows the computation of basic and diluted loss per share of common stock (in thousands, except per share data):

(Loss) Earnings Per Share

The following table shows the computation of basic and diluted (loss) earnings per share of common stock (in thousands, except per share data):

Three Months Ended

Weighted-average common shares outstanding—basic and diluted

Net loss per share—basic and diluted

Six Months Ended

Net (loss) income

Weighted-average basic shares outstanding

Effect of dilutive securities

Weighted-average diluted shares

Basic (loss) earnings per share

Diluted (loss) earnings per share

The table below shows potentially dilutive weighted average common share equivalents, consisting of shares issuable upon the exercise of outstanding stock options and warrants using the treasury stock method, shares issuable upon conversion feature of a convertible note using the “if-converted” method, and the shares vesting of issuable upon the RSAs and RSUs.

These potential weighted average common share equivalents have been excluded from the diluted net loss per share calculations above as their effect would be anti-dilutive (in thousands):

These potential weighted average common share equivalents for the three and six months ended July 2, 2022 have been excluded from the diluted net loss per share calculations above as their effect would be anti-dilutive (in thousands):

Three Months Ended

Six Months Ended

Weighted average common share equivalents

2 unchanged sentences

Three Months Ended

Six Months Ended

Resales of third-party products

5 unchanged sentences

Three Months Ended

Six Months Ended

Less than 10% of net sales during the period.

As of April 2, 2022, one customer represented 36 % of aggregated gross receivables.

As of July 2, 2022, three customers represented 21 %, 17 %, and 16 % of aggregated gross receivables, respectively.

As of January 1, 2022, four customers represented 26 %, 16 %, 13 %, and 13 % of aggregate gross receivables, respectively.

2 unchanged sentences

The Company resells certain component products to end-customers that are not reached in the distribution models of the component manufacturers, including storage customers, appliance customers, system builders and cloud and datacenter customers.

For the three months ended April 2, 2022 and April 3, 2021, resales of these products represented approximately 91 % and 76 % of net product sales, respectively.

For the three and six months ended July 2, 2022, resales of these products represented approximately 89 % and 90 % of net product sales, respectively.

For the three and six months ended July 3, 2021, resales of these products represented approximately 60 % and 66 % of net product sales, respectively.

Note 4—Credit Agreement

On October 31, 2009, the Company and Silicon Valley Bank (“SVB”) entered into a credit agreement (as the same may from time to time be amended, modified, supplemented or restated, (the “SVB Credit Agreement”), which provides for a revolving line of credit up to $ 5.0 million.

The borrowing base is limited to 85 % of the eligible accounts receivable, subject to certain adjustments.

On October 31, 2009, the Company and Silicon Valley Bank (“SVB”) entered into a credit agreement (as the same may from time to time be amended, modified , supplemented or restated, (the “SVB Credit Agreement”)), which provided for a revolving line of credit up to $ 5.0 million.

The borrowing base was limited to 85 % of the eligible accounts receivable, subject to certain adjustments.

On April 9, 2021, we entered into an amendment to the SVB Credit Agreement to accrue interest on borrowings at a per annum rate equal to the greater of 2.25 % above the Wall Street Journal prime rate (“Prime Rate”) or 5.50 % from the Prime Rate plus 2.75 % and to extend the maturity date to December 30, 2021.

3 unchanged sentences

to 85 % of eligible accounts receivable, subject to certain adjustments, and 50 % of eligible inventory.

The maximum amount available for borrowing was increased to $ 10.0 million and the maturity date to April 28, 2023.

The maximum amount available for borrowing was increased to $ 10.0 million and the maturity date was extended to April 28, 2023.

The SVB Credit Agreement requires letters of credit to be secured by cash, which is classified as restricted cash in the accompanying condensed consolidated balance sheets.

As of April 2, 2022 and January 1, 2022, (i) outstanding letters of credit were $ 20.8 million and $ 10.8 million, respectively, (ii) outstanding borrowings were $ 4.7 million and $ 7.0 million, respectively, and (iii) availability under the revolving line of credit was $ 0.1 million and none , respectively.

As of July 2, 2022 and January 1, 2022, (i) outstanding letters of credit were $ 20.1 million and $ 10.8 million, respectively, (ii) outstanding borrowings were $ 8.0 million and $ 7.0 million, respectively, and (iii) availability under the revolving line of credit was $ 2.0 million and none , respectively.

The Company’s debt consisted of the following (in thousands):

Notes payable

amounts due within one year

3 unchanged sentences

The determination of which discount rate to use when measuring the lease obligation was deemed a significant judgment.

Lease cost and supplemental cash flow information related to operating leases was as follows (in thousands):

Lease cost and supplemental condensed consolidated cash flow information related to operating and finance leases were as follows (in thousands):

Three Months Ended

Six Months Ended

Operating lease cost

3 unchanged sentences

Operating leases

For the three months ended April 2, 2022, and April 3, 2021, finance lease costs and cash flows from finance lease were immaterial.

Supplemental balance sheet information related to leases was as follows (in thousands):

Finance leases

Lease modification to increase operating lease assets

For the three and six months ended July 2, 2022, and July 3, 2021, finance lease costs and cash flows from finance leases were immaterial.

Supplemental condensed consolidated balance sheet information related to leases was as follows (in thousands):

Operating Leases

17 unchanged sentences

Finance lease

Maturities of lease liabilities as of April 2, 2022, were as follows (in thousands):

Maturities of lease liabilities as of July 2, 2022, were as follows (in thousands):

2022 (remainder of the year)

4 unchanged sentences

We may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with our licensing and enforcement activities.

These law firms may be retained on a contingent fee basis

whereby such law firms are paid on a scaled percentage of any negotiated fee, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained.

These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fee, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained.

Litigation and Patent Reexaminations

8 unchanged sentences

Additionally, the outcome of pending or future litigation and related patent reviews and reexaminations, as well as any delay in their resolution, could affect our ability to continue to sell our products, protect against competition in the current and expected markets for our products or license or otherwise monetize our intellectual property rights in the future.

Google Litigation

Google Litigations

On December 4, 2009, Netlist filed a patent infringement lawsuit against Google, Inc.

3 unchanged sentences

The NDCA case was stayed, pending challenges to the ‘912 patent before the United States Patent and Trademark Office.

Eventually, the United States Court of Appeals for the Federal Circuit confirmed the ‘912 patent’s validity on June 15, 2020, and the NDCA case stay was lifted.

the case proceeded before Senior Judge Armstrong, where the parties entered cross motions for summary judgment.

Eventually, the United States Court of Appeals for the Federal Circuit confirmed the ‘912 patent’s validity on June 15, 2020, and the NDCA case stay was lifted and the case proceeded before Senior Judge Armstrong, where the parties entered cross motions for summary judgment.

Of the issues in play, the parties contested the application of the defense of intervening rights to the claims at issue in the case.

Afterward, the NDCA case was re-assigned to Chief Judge Seeborg of the NDCA, and the hearing for the parties’ cross motions took place on March 3, 2022.

On May 5, 2022, Chief Judge Seeborg entered an Order granting Netlist, Inc.’s Motion for Summary Judgement that Claim 16 of the ‘912 patent is not subject to Google’s pleaded defense of Intervening Rights, while also entering orders on other issues, including setting a remote case management conference for June 23, 2022 at 10:00am pacific time.

Micron Litigation

On July 13, 2022, Chief Judge Seeborg ordered – shortly before the planned July 14, 2022 case management conference – that the case be stayed for a 90-day period, and that the case management conference be continued to October 27, 2022.

On July 26, 2022, Netlist filed a patent infringement lawsuit against Google Cloud EMEA Limited, Google Germany GmbH, Redtec Computing GmbH, and Google, Inc., seeking damages based on those defendants’ infringement of European Patents EP 2,454,735 (“EP735”) and EP 3,404,660 (“EP660”), which both generally relate to LRDIMM technologies.

As of the reporting date, the Dusseldorf Court has not set an oral hearing date.

Micron Litigations

On April 28, 2021, Netlist filed a complaint for patent infringement against Micron Technology, Inc.

1 unchanged sentence

6:21-cv00431 & Case No.

6:21-cv-00430) These proceedings are based on the alleged infringement by Micron’s load reduced dual in line memory modules (“LRDIMM”) and Micron’s non-volatile dual in line memory modules (“NVDIMM”) enterprise memory modules under four U.S.

patents – US Pat.

6:21-cv-00430).

These proceedings are based on the alleged infringement by Micron’s load reduced dual in line memory modules (“LRDIMM”) and Micron’s non-volatile dual in line memory modules (“NVDIMM”) enterprise memory modules under four U.S.

patents – U.S.

As of the reporting date, the case has been assigned to Hon.

Judge Lee Yeakel, and the parties completed briefing on their claim construction arguments.

The matter is set for a Claim Construction hearing on May 12, 2022.

In parallel, Micron filed requests to bring Inter Partes Review (“IPR”) proceedings against all four asserted patents:

Patents 8,301,833, 9,854,035, 10,268,608, and 10,489,314.

As of the reporting date, the PTAB has not made a decision with respect any of these IPR requests.

On May 11, 2022, Judge Yeakel entered a stay of the case pending the resolution of Micron’s requested Inter Partes Review (“IPR”) proceedings against the four patents asserted by Netlist in this case (U.S.

8,301,833, 9,854,035, 10,268,608, and 10,489,314).

Micron filed requests to bring IPR proceedings against

Netlist’s U.S.

8,301,833, 9,854,035, 10,268,608, and 10,489,314.

As of the reporting date, the PTAB granted Micron’s request for the ‘035 Patent, but denied its request for the ‘608 Patent.

Netlist’s Patent Owner Preliminary Response to Micron’s requests to IPR the ‘314 patent were filed August 3, 2022, and the PTAB’s deadline to make a decision on institution for the ‘833 Patent is September 9, 2022.

On March 31, 2022, Netlist filed a patent infringement lawsuit against Micron in Germany, seeking damages based on their infringement of EP735 and EP660.

On June 24, 2022, Netlist filed an extension of its Complaint requesting injunctive relief.

The Dusseldorf Court set an oral hearing for the case in Dusseldorf on May 4, 2023.

On June 10, 2022, Netlist filed a complaint for patent infringement against Micron in the United States District Court for the Eastern District of Texas, Marshall Division (Case No.

2:22-cv-00203-JRG-RSP).

These proceedings are based on the alleged infringement by Micron’s load reduced dual in line memory modules (“LRDIMM”), Micron’s memory modules utilizing on-board power management modules (“PMIC”), and Micron’s high bandwidth memory (“HBM”) components, under six U.S.

patents – U.S.

& 11,232,054.

As of the reporting date, the case has been assigned to Hon.

Chief Judge Rodney Gilstrap.

On August 1, 2022, Netlist filed a complaint for patent infringement against Micron in the United States Court for the Eastern District of Texas (Case No.

2:22-cv-00294) under the ‘912 Patent, which relates generally to technologies to implement rank multiplication.

Samsung Litigations

4 unchanged sentences

On February 25, 2022, Samsung filed a Notice of Appeal, and the Federal Court of Appeals for the Ninth Circuit issued a Time Schedule Order on February 28, 2022, setting Samsung’s deadline to file an opening appeal brief as June 6, 2022.

Netlist noticed its intention to file a cross-appeal and the Ninth Circuit confirmed a contemporaneous briefing deadline of June 6, 2022, for the same.

As of the reporting date, Samsung filed its opening brief seeking an appeal of the lower Court’s decisions.

Netlist filed its response to Samsung’s appeal and its own opening cross-appeal brief on August 4, 2022.

On October 15, 2021, Samsung filed a declaratory judgement action against Netlist in the United States District Court for the District of Delaware (“DDE”), requesting in relevant part that the Delaware District Court declare that Samsung does not infringe Netlist’s U.S.

4 unchanged sentences

Netlist believes Samsung’s claims levied in the DDE action meritless, and the relief Samsung requests unjustified.

As of the reporting date, Netlist filed a motion seeking dismissal of Samsung’s DDE complaint, and an opposition contesting the inclusion of U.S.

11,232,054 as part of a second amended complaint filing.

The matter is fully briefed, and Netlist awaits an order from the Court.

On November 19, 2021, Samsung filed IPR proceedings contesting the validity of U.S.

Patents 9,858,218 (the “’218 patent”), 10,474,595 (the “’595 patent”), and 10,217,523 (the “’523 patent”).

Netlist filed a motion seeking dismissal of Samsung’s operative DDE complaint, and an opposition contesting the inclusion of U.S.

11,232,054 as part of Samsung’s proposed second amended complaint filing.

On August 1, 2022, the Court entered an Order on the pending motions denying Samsung’s request to amend its operative complaint a second time to add a count against U.S.

11,232,054, and granting-in-part Netlist’s motion that various causes of action be dismissed.

Specifically, Judge Andrews dismissed all of Samsung’s counts related to Netlist’s U.S.

7,619,912, 10,860,506, 10,949,339, and 11,016,918.

As of the reporting date, the Court has not yet set a case schedule.

On November 19, 2021, Samsung filed IPR requests contesting the validity of U.S.

9,858,218 (the “’218 patent”), 10,474,595 (the “’595 patent”), and 10,217,523 (the “’523 patent”).

Netlist filed its initial responses to Samsung’s petitions on February 18, 2022, contesting the institution of any IPR on the grounds propounded.

As of the reporting date, the PTAB has not yet made decision with respect to the IPR requests related to the ‘218 or ‘595 patents, but did enter an order instituting IPR proceedings for the ‘523 patent on May 5, 2022.

On February 17, 2022, Samsung filed a separate IPR request contesting the validity of only claim 16 within Netlist’s U.S.

Patent 7,619,912.

The PTAB issued a filing date for this challenge of the ‘912 patent, making Netlist’s Patent Owner Preliminary Response due on July 21, 2022.

As of the reporting date, Samsung has filed two additional IPR proceedings contesting the validity of Netlist’s U.S.

Patents 10,860,506 and 10,949,339.

The PTAB issued filing dates for both, making Netlist’s deadline to file its Preliminary Responses to each on July 21, 2022 and July 28, 2022, respectively,

On December 20, 2021, Netlist filed for a complaint for patent infringement against Samsung in the United States Court for the Eastern District of Texas (Case No.

2:21-cv-463) under US Pat.

As of the reporting date, the PTAB has granted Samsung’s IPR requests related to the ‘218, ‘523, and ‘595 patents.

Netlist filed its Patent Owner’s Response for the ‘523 IPR on August 4, 2022, and has a deadline to file its Patent Owner Responses for the ‘218 and’595 IPRs on August 15, 2022.

On February 17, 2022, Samsung filed an IPR request contesting the validity of only claim 16 within Netlist’s U.S.

Samsung then filed two additional IPR requests contesting the validity of Netlist’s U.S.

10,860,506 and 10,949,339.

As of the reporting date, Netlist filed its Patent Owner’s Preliminary Response for the ‘912 and ‘339 IPRs on July 21, 2022, and for the ‘506 IPR on July 28, 2022.

As of the reporting date, Samsung filed two additional IPR requests contesting the validity of Netlist’s U.S.

11,016,918 and 11,232,054.

The PTAB issued filing dates for both, making Netlist’s deadline to file its Preliminary Responses to each on September 9, 2022 and September 8, 2022, respectively.

On June 3, 2022, Netlist filed a patent infringement lawsuit against Samsung in Dusseldorf, Germany, seeking damages for Samsung’s infringement of Netlist’s Patents EP735 and EP660.

The Dusseldorf Court set an Oral Hearing date for September 5, 2023.

On December 20, 2021, Netlist filed a complaint for patent infringement against Samsung in the United States Court for the Eastern District of Texas (Case No.

2:21-cv-463) under US Patent No.

US Patent No.

& US Patent No.

Samsung responded to Netlist’s complaint on April 12, 2022, and Judge Gilstrap ordered a scheduling conference be set for May 18, 2022.

On May 3, 2022, Netlist entered a First Amended Complaint pursuant to FRCP Rule 15, adding claims for infringement under three additional patents:

Patents 8,787,060, 9,318,160, and 11,232,054.

8,787,060, 9,318,160, and 11,232,054.

On May 4, 2022, Netlist complied with the EDTX local patent rules and served its preliminary infringement contentions on Samsung.

As of the reporting date, Netlist awaits its opportunity to appear in Judge Gilstrap’s ordered case management conference.

As of the reporting date, the Court set a schedule, with a claim construction hearing set for October 14, 2022 and Trial set for May 1, 2023.

On August 1, 2022, Netlist filed a complaint for patent infringement against Samsung in the United States Court for the Eastern District of Texas (Case No.

2:22-cv-00293) under the ‘912 Patent, which relates generally to technologies to implement rank multiplication.

Other Contingent Obligations

6 unchanged sentences

(v) indemnities to SVB pertaining to all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with transactions contemplated by the applicable investment or loan documents, as applicable;

and (vi) indemnities or other claims related to certain real estate leases, under which we may be required to indemnify property

owners for environmental and other liabilities or may face other claims arising from our use of the applicable premises.

and (vi) indemnities or other claims related to certain real estate leases, under which we may be required to indemnify property owners for environmental and other liabilities or may face other claims arising from our use of the applicable premises.

The duration of these indemnities, commitments and guarantees varies and, in certain cases, may be indefinite.

4 unchanged sentences

The Company’s authorized capital stock includes 10,000,000 shares of serial preferred stock, with a par value of $ 0.001 per share.

No shares of preferred stock were outstanding as of April 2, 2022 or January 2, 2022.

No shares of preferred stock were outstanding as of July 2, 2022 or January 2, 2022.

On April 17, 2017, the Company entered into a rights agreement (as amended from time to time, the “Rights Agreement”) with Computershare Trust Company, N.A., as rights agent.

In connection with the adoption of the Rights Agreement and pursuant to its terms, the Company’s board of directors authorized and declared a dividend of one right (each, a “Right”) for each outstanding share of the Company’s common stock to stockholders of record at the close of business on May 18, 2017 (the “Record Date”), and authorized the issuance of one Right for each share of the Company’s common stock issued by the Company (except as otherwise provided in the Rights Agreement) between the Record Date and the Distribution Date (as defined below).

business on May 18, 2017 (the “Record Date”), and authorized the issuance of one Right for each share of the Company’s common stock issued by the Company (except as otherwise provided in the Rights Agreement) between the Record Date and the Distribution Date (as defined below).

Each Right entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from the Company, when exercisable and subject to adjustment, one unit consisting of one one -thousandth of a share (a “Unit”) of Series A Preferred Stock of the Company (the “Preferred Stock”), at a purchase price of $ 6.56 per Unit, subject to adjustment.

6 unchanged sentences

Concurrent with the execution of the September 2021 Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park relating to the Company’s common stock to be sold to Lincoln Park.

As consideration for entering into the September 2021 Purchase Agreement, the Company issued to Lincoln Park 218,750 shares of its common stock as initial commitment shares in a noncash transaction on September 28, 2021 and will issue up to 143,750 additional shares of its common stock as additional commitment shares on a pro

rata basis in connection with any additional purchases.

The Company will not receive any cash proceeds from the issuance of these additional commitment shares.

3 unchanged sentences

The Company controls the timing and amount of any sales of its common stock to Lincoln Park.

There is no upper limit on the price per share that Lincoln Park must pay for the Company’s common stock under the September 2021 Purchase Agreement, but in no event will shares be sold to Lincoln Park on a day the closing price is less than the floor price specified in the September 2021 Purchase Agreement.

There is no upper limit on the price per share that Lincoln Park must pay for the Company’s common stock under the September

2021 Purchase Agreement, but in no event will shares be sold to Lincoln Park on a day the closing price is less than the floor price specified in the September 2021 Purchase Agreement.

In all instances, the Company may not sell shares of its common stock to Lincoln Park under the September 2021 Purchase Agreement if that would result in Lincoln Park beneficially owning more than 9.99 % of its common stock.

3 unchanged sentences

In connection with the purchases, we issued to Lincoln Park an aggregate of 20,809 shares of our common stock as additional commitment shares in noncash transactions.

During the first quarter of 2022, Lincoln Park purchased an aggregate of 300,000 shares of our common stock for a net purchase price of $ 1.8 million under the September 2021 Purchase Agreement.

During the six months ended July 2, 2022, Lincoln Park purchased an aggregate of 650,000 shares of our common stock for a net purchase price of $ 3.7 million under the September 2021 Purchase Agreement.

In connection with the purchases, we issued to Lincoln Park an aggregate of 7,168 shares of our common stock as additional commitment shares in noncash transactions.

Note 9—Stock-Based Awards

As of April 2, 2022, the Company had 487,512 shares of common stock reserved for future issuance under its Amended and Restated 2006 Incentive Plan (“Amended 2006 Plan”).

As of July 2, 2022, the Company had 127,406 shares of common stock reserved for future issuance under its Amended and Restated 2006 Incentive Plan (“Amended 2006 Plan”).

Stock options granted under the Amended 2006 Plan generally vest at a rate of at least 25 % per year over four years and expire 10 years from the grant date.

1 unchanged sentence

Stock Options

The following table summarizes the activity related to stock options during the three months ended April 2, 2022:

The following table summarizes the activity related to stock options during the six months ended July 2, 2022:

(in thousands)

1 unchanged sentence

Expired or forfeited

Outstanding as of April 2, 2022

Outstanding as of July 2, 2022

Restricted Stock Units

The following table summarizes the activity related to RSUs during the three months ended April 2, 2022:

The following table summarizes the activity related to RSUs during the six months ended July 2, 2022:

(in thousands)

Outstanding as of January 1, 2022

Outstanding as of April 2, 2022

Outstanding as of July 2, 2022

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

Cost of sales

1 unchanged sentence

Selling, general and administrative

As of April 2, 2022, the Company had approximately $ 8.0 million, net of estimated forfeitures, of unearned stock-based compensation, which it expects to recognize over a weighted-average period of approximately 3.4 years.

As of July 2, 2022, the Company had approximately $ 10.9 million, net of estimated forfeitures, of unearned stock-based compensation, which it expects to recognize over a weighted-average period of approximately 3.4 years.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements