What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-02 compared with 2022-08-04 · 138 added, 82 removed, 348 unchanged (39% of the section changed)

41 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net product sales

6 unchanged sentences

Operating (loss) income

Other (expense) income, net:

Other income (expense), net:

Interest income (expense), net

Other (expense) income, net

Total other (expense) income, net

Other income (expense), net

Total other income (expense), net

(Loss) income before provision for income taxes

22 unchanged sentences

Balance, July 2, 2022

Exercise of stock options

Stock-based compensation

Restricted stock units vested and distributed

Tax withholdings related to net share settlements of equity awards

Balance, October 1, 2022

See accompanying Notes to the Condensed Consolidated Statements.

NETLIST, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders Equity (Unaudited) (Continued)

(In thousands)

Stockholders'

13 unchanged sentences

Balance, July 3, 2021

Issuance of common stock, net

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, October 2, 2021

See accompanying Notes to the Condensed Consolidated Statements.

3 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

18 unchanged sentences

Cash flows from financing activities:

Net borrowings (repayments) under line of credit

Net borrowings under line of credit

Principal repayments under finance lease

18 unchanged sentences

and its wholly owned subsidiaries (collectively the “Company” or “Netlist”) provides high-performance solid-state drives and modular memory solutions to enterprise customers in diverse industries.

The Company's NVMe SSDs in various capacities and form factors and the line of custom and specialty memory products bring industry-leading performance to server and storage appliance customers and cloud service providers.

The Company's non-volatile memory express solid-state drives (“NVMe SSDs”) in various capacities and form factors and the line of custom and specialty memory products bring industry-leading performance to server and storage appliance customers and cloud service providers.

Netlist licenses its portfolio of intellectual property including patents, in server memory, hybrid memory and storage class memory, to companies that implement Netlist’s technology.

8 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 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.

The Company has evaluated events occurring subsequent to October 1, 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

24 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net (loss) income

4 unchanged sentences

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 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):

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):

Three Months Ended

Six Months Ended

Nine Months Ended

Weighted average common share equivalents

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Resales of third-party products

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Less than 10% of net sales during the period.

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

As of October 1, 2022, two customers represented 59 % and 14 % 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 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.

For the three and nine months ended October 1, 2022, resales of these products represented approximately 75 % and 86 % of net product sales, respectively.

For the three and nine months ended October 2, 2021, resales of these products represented approximately 75 % and 77 % 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 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.

In December 2021, after meeting the conditions set forth in the amendment, the amount available for borrowing was increased to $ 7.0 million and the maturity date was extended to April 29, 2022, upon our request.

On April 29, 2022, the Company entered into an amendment to the SVB Credit Agreement to accrue interest on advance at a per annum rate equal to the greater of 0.75 % above the Prime Rate or 4.25 % .

The borrowing base is limited

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 was extended to April 28, 2023.

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 $ 10.0 million, as amended.

The SVB Credit Agreement was most recently amended on April 29, 2022, and the borrowing base is limited to 85 % of eligible accounts receivable, subject to certain adjustments, and 50 % of eligible inventory.

Borrowings accrue interest on advance at a per annum rate equal to the greater of 0.75 % above the Wall Street Journal prime rate (“Prime Rate”) or 4.25 %.

The maturity date is April 28, 2023, as amended.

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 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.

As of October 1, 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 $ 0.2 million and none , respectively.

The SVB Credit Agreement subjects the Company to certain affirmative and negative covenants, including financial covenants with respect to the Company’s liquidity and restrictions on the payment of dividends.

As of October 1, 2022, the Company was in compliance with its covenants under the SVB Credit Agreement.

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

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Operating lease cost

5 unchanged sentences

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.

For the three and nine months ended October 1, 2022, and October 2, 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):

18 unchanged sentences

Finance lease

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

Maturities of lease liabilities as of October 1, 2022, were as follows (in thousands):

2022 (remainder of the year)

20 unchanged sentences

7,619,912 (the “‘912 Patent”) which relates generally to technologies to implement rank multiplication.

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

The NDCA case was stayed, pending challenges to the ‘912 Patent before the USPTO.

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.

1 unchanged sentence

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.

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.

On May 5, 2022, Chief Judge Seeborg entered an Order granting Netlist’s Motion for Summary Judgement that Claim 16 of the ‘912 Patent is not subject to Google’s pleaded defense of Intervening Rights.

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 pending the outcome of an action initiated by Samsung Electronic Co., Ltd.

(“Samsung”) in Delaware involving the ‘912 Patent.

Samsung’s Delaware cause of action for the ‘912 Patent was dismissed by Judge Andrews there, and Netlist shortly thereafter brought a lawsuit against Samsung for their infringement of at least the ‘912 Patent in the U.S.

District Court for the Eastern District of Texas (“EDTX”).

In light of the pendency of the ‘912 Patent matter Netlist brought against Samsung in EDTX, Chief Judge Seeborg entered an order via stipulation on October 17, 2022 staying the Google case until the resolution of that EDTX action.

As of the reporting date, the Dusseldorf Court has set Google’s deadline for a statement of defense as December 30, 2022, with the date for a final oral hearing on the issues scheduled for November 9, 2023.

Micron Litigations

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

(“Micron”) in the United States District Court for the Western District of Texas, Waco Division (Case No.

(“Micron”) in the United States District Court for the Western District of Texas, Waco Division (“WDTX”) (Case No.

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.

These proceedings are based on the alleged infringement by Micron’s

LRDIMM and Micron’s non-volatile dual in line memory modules (“NVDIMM”) enterprise memory modules under four U.S.

patents – U.S.

10,489,314, 9,824,035, 10,268,608, and 8,301,833.

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

2 unchanged sentences

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.

Following entry of that stay order on September 2, 2022, Micron moved the Court to “temporarily” lift the stay to add counterclaims for declaratory judgment of noninfringement of U.S.

7,619,912 (the “’912 Patent”), 9,858,215 (the “’215 Patent”), 10,860,506 (the “’506 Patent”), 10,949,339 (the “’339 Patent”), 11,016,918 (the “’918 Patent”), 11,232,054 (the “’054 Patent”), and 11,093,417 (the “’417 Patent”).

This addition would encompass four of the six patents asserted in Netlist’s initial EDTX filing against Micron (Case No.

2:22-cv-00203 – further details of this case below), and all three of the patents asserted in Netlist’s second EDTX filing against Micron (Case No.

2:22-cv-00294 – further details of this case below).

On October 5, 2022, Judge Yeakel denied Micron’s motion and returned the action to a stayed state, asking only that the parties submit status reports within 10-days of any activity in the relevant underlying IPR proceedings.

As noted above, 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.

As of the reporting date, the PTAB granted Micron’s request for the ‘035 Patent and the ‘833 Patent, but denied its request for the ‘608 Patent.

The PTAB further denied Micron’s request for rehearing on the ‘608 Patent’s institution denial.

Netlist’s Patent Owner Preliminary Response to Micron’s requests to IPR the ‘314 Patent were filed August 3, 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.

Micron filed its statement of defense, thus setting Netlist’s deadline for a response as December 1, 2022.

Further, Micron initiated a nullity proceeding against the asserted EP patents in this action, making Netlist’s response to the same as November 19, 2022.

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

As of the reporting date, that deadline remains unchanged.

On June 10, 2022, Netlist filed a complaint for patent infringement against Micron in the EDTX, 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.

These proceedings are based on the alleged infringement by Micron’s 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.

8,787,060, 9,318,160, 10,860,506, 10,949,339, 11,016,918, and 11,232,054.

On September 2, 2022, contemporaneously with its filing in the stayed WDTX action, Micron moved the Court to stay and sever aspects of this initial EDTX case.

Following the denial of its parallel motion in the WDTX, Micron moved to withdraw its stay motion in this case, which Chief Judge Gilstrap entered on October 15, 2022.

As of the reporting date, the case stands ready to proceed with a claim construction hearing set for July 19, 2023, and trial beginning on January 22, 2024.

On August 1, 2022, Netlist filed a complaint for patent infringement against Micron in the EDTX (Case No.

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

On August 15, 2022, Netlist filed its first amended complaint, further addressing Micron’s infringement of the ‘215 Patent and the ‘417 Patent.

On September 12, 2022, Micron moved to stay this second EDTX action in light of its parallel motions pending in both the WDTX and initial EDTX cases.

Given the denial of Micron’s motion in the WDTX on October 5, 2022, Micron moved to withdraw its motion to stay in this action, which Chief Judge Gilstrap entered on October 13, 2022.

On October 21, 2022, Chief Judge Gilstrap ordered that this Micron action and a parallel action by Netlist against Samsung on the same patents (22-cv-00293-JRG) be consolidated and set for a joint scheduling conference on November 17, 2022, further instructing that the Samsung action be considered the “LEAD CASE” and that any further filings from either action be submitted in that case for all pretrial matters.

Samsung Litigations

On May 28, 2020, Netlist filed a complaint against Samsung in the United States District Court for the Central District of California for Samsung’s breach of the parties’ JDLA.

On July 22, 2020, Netlist amended its complaint to seek a Declaratory Judgment that it properly terminated the JDLA in light of Samsung’s material breaches.

On May 28, 2020, Netlist filed a complaint against Samsung in the United States District Court for the Central District of California for Samsung’s breach of the parties’ Joint Development and License Agreement (“JDLA”).

On July 22, 2020, Netlist amended its complaint to seek a Declaratory Judgment that it properly terminated the JDLA in

light of Samsung’s material breaches.

On October 14, 2021, the Court entered summary judgment in Netlist’s favor and confirmed Netlist properly terminated the JDLA as of July 15, 2020.

3 unchanged sentences

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

Samsung responded as allowed on October 6, 2022 after seeking an extension of its deadline.

Netlist now has an opportunity to enter a Reply in support of its cross-appeal, which is due for filing November 28, 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.

7,619,912, 9,858,218, 10,217,523, 10,474,595, 10,860,506, 10,949,339, and 11,016,918.

As of the reporting date, Samsung seeks leave to add U.S.

11,232,054 (issued Jan.

As of the reporting date, Samsung seeks leave to add the ‘054 Patent (issued Jan.

25, 2022) to the action.

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

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.

Netlist filed a motion seeking dismissal of Samsung’s operative DDE complaint, and an opposition contesting the inclusion of the ‘054 Patent 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 the ‘054 Patent, 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.

Thus, on August 22, 2022, Netlist entered its Answer to Samsung’s remaining Counterclaims.

On September 12, 2022, Netlist amended its Counterclaims to include counterclaims tying Google, LLC and Alphabet, Inc.

to the action.

As of the reporting date, Google, LLC and Alphabet, Inc.’s responses to the claims are set for November 3, 2022.

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

2 unchanged sentences

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.

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

On February 17, 2022, Samsung filed an IPR request contesting the validity of only claim 16 within the ‘912 Patent.

Samsung then filed two additional IPR requests contesting the validity of the ‘506 and ‘339 Patents.

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

On August 26, 2022, Samsung filed two additional IPR petitions contesting the validity of Netlist’s U.S.

8,787,060 (the “’060 Patent”) and 9,318,160 (the “’106 Patent”).

On October 19, 2022, the PTAB set Netlist’s deadline to file its preliminary responses in those proceedings as January 19, 2023.

On the same day, the PTAB instituted IPR trials on both the ‘912 and ‘339 patents.

The following day, the PTAB instituted an IPR trial on the ‘506 patent.

Separately, Netlist has filed its Patent Owner Preliminary Responses to Samsung’s IPR petitions against the ‘918 and ‘054 Patents 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:

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

As of the reporting date, Netlist filed an extension of its Complaint requesting injunctive relief, which Samsung followed with a request for an extension of its deadline to provide a statement of defense and alternatively to stay the proceedings entirely.

Micron initiated a parallel nullity action on both patents asserted in the Dusseldorf Court, setting Netlist’s deadline to provide its initial arguments against nullity on November 19, 2022.

On December 20, 2021, Netlist filed a complaint for patent infringement against Samsung Electronics Co., Ltd., Samsung Semiconductor, Inc., and Samsung Electronics America, Inc.

in the EDTX (Case No.

2:21-cv-463) under the ‘506, ‘339, and ‘918 Patents.

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

On May 3, 2022, Netlist entered a First Amended Complaint pursuant to the Federal Rules of Civil Procedure (“FRCP”) Rule 15, adding claims for infringement under three additional patents:

the ‘060, ‘160, and

‘054 Patents.

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, 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.

On May 27, 2022, Samsung moved to stay this action and sever the patents it sought to add to its Declaratory Judgement action in Delaware.

On August 2, 2022, Samsung withdrew that first motion to stay in light of Judge Andrews’ order mandating dismissal of all Samsung’s claims related to the Texas Netlist patents the day before.

On August 30, 2022 Samsung moved to stay the action a second time, this time in light of its IPR petitions, and its appeal of the Central District California Judgment at the 9 th Circuit Court of Appeals.

The matter was fully briefed as of October 17, 2022.

In parallel, the parties completed substantive briefing on all claim construction issues and as of the reporting date have filed a joint claim construction statement for the Court’s consideration.

The Court assigned claim construction to Magistrate Judge Roy Payne, who scheduled the claim construction hearing for November 4, 2022 in his Court.

The Trial start remains set for May 1, 2023.

On August 1, 2022, Netlist filed a complaint for patent infringement against Samsung Electronics Co., Ltd., Samsung Semiconductor, Inc., and Samsung Electronics America, Inc.

in the EDTX (Case No.

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

On August 15, 2022, Netlist filed its first amended complaint here, further addressing Samsung’s infringement of the ‘215 Patent and ‘417 Patent.

On August 31, 2022, Samsung Semiconductor, Inc.

and Samsung Electronics America, Inc.

sought and received extensions of time to respond to Netlist’s first amended complaint until October 7, 2022.

Before answering on September 20, 2022, Samsung collectively moved the Court to sever and transfer the ‘912 Patent from the action and stay the remaining portions of this proceeding in light of Samsung’s appeal before 9 th Circuit Court of Appeals.

The matter is fully briefed, but Samsung Electronics Co., Ltd.’s response deadline remains currently set for November 29, 2022.

Apart from Samsung’s early motion practice and its remaining response deadline, on October 21, 2022, Chief Judge Gilstrap ordered that this action and a parallel action by Netlist against Micron on the same patents (22-cv-00294-JRG) be consolidated and set for a joint scheduling conference on November 17, 2022, further instructing that this Samsung action be considered the “LEAD CASE” and that any further filings from either action be submitted in therefor all pretrial matters.

Other Contingent Obligations

13 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 July 2, 2022 or January 2, 2022.

No shares of preferred stock were outstanding as of October 1, 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.

22 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 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.

During the nine months ended October 1, 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 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”).

As of October 1, 2022, the Company had 464,076 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 six months ended July 2, 2022:

The following table summarizes the activity related to stock options during the nine months ended October 1, 2022:

(in thousands)

1 unchanged sentence

Expired or forfeited

Outstanding as of July 2, 2022

Outstanding as of October 1, 2022

Restricted Stock Units

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

The following table summarizes the activity related to RSUs during the nine months ended October 1, 2022:

(in thousands)

Outstanding as of January 1, 2022

Outstanding as of July 2, 2022

Outstanding as of October 1, 2022

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of sales

1 unchanged sentence

Selling, general and administrative

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.

As of October 1, 2022, the Company had approximately $ 9.7 million, net of estimated forfeitures, of unearned stock-based compensation, which it expects to recognize over a weighted-average period of approximately 3.2 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