What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-10 compared with 2022-11-02 · 183 added, 213 removed, 273 unchanged (59% of the section changed)

41 unchanged sentences

Three Months Ended

Nine Months Ended

Net product sales

5 unchanged sentences

Total operating expenses

Operating (loss) income

Operating loss

Other income (expense), net:

Interest income (expense), net

Other income (expense), net

Other expense, net

Total other income (expense), net

(Loss) income before provision for income taxes

Loss before provision for income taxes

Provision for income taxes

Net (loss) income

(Loss) earnings per share:

Loss per share:

Basic and diluted

Weighted-average common shares outstanding:

Basic and diluted

See accompanying Notes to the Condensed Consolidated Statements.

4 unchanged sentences

Stockholders'

Balance, January 1, 2022

Balance, December 31, 2022

Issuance of common stock, net

2 unchanged sentences

Restricted stock units vested and distributed

Tax withholdings related to net share settlements of equity awards

Balance, April 1, 2023

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

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'

2 unchanged sentences

Exercise of stock options

Exercise of warrants

Stock-based compensation

2 unchanged sentences

Balance, April 2, 2022

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

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)

Nine Months Ended

Three Months Ended

Cash flows from operating activities:

Net income (loss)

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

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

Depreciation and amortization

Interest accrued on convertible promissory notes

Amortization of debt discounts

Non-cash lease expense

Gain on extinguishment of debt

Stock-based compensation

10 unchanged sentences

Cash flows from financing activities:

Net borrowings under line of credit

Net repayments under line of credit

Principal repayments under finance lease

Payments on note payable

Payments on notes payable

Proceeds from issuance of common stock, net

Proceeds from exercise of stock options and warrants

Proceeds from exercise of stock options

Payments for taxes related to net share settlement of equity awards

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Net change in cash, cash equivalents and restricted cash

11 unchanged sentences

Netlist, Inc.

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 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.

and its wholly owned subsidiaries (collectively the “Company”, “Netlist”, “we”, “us”, or “our”) provides high-performance computer storage and memory solutions to enterprise customers in diverse industries.

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

We license our portfolio of intellectual property, including patents relating to storage memory systems and subsystems, to companies that implement our technology.

Note 2—Summary of Significant Accounting Policies

3 unchanged sentences

GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

These condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements and notes thereto as of and for the year ended January 1, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2022 (the “2021 Annual Report”).

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2023 (the “2022 Annual Report”).

In the opinion of management, all adjustments for the fair presentation of the Company’s condensed consolidated financial statements have been made.

1 unchanged sentence

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 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.

The Company has evaluated events occurring subsequent to April 1, 2023 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

11 unchanged sentences

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):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

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 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.

Currently, there are no Accounting Standards Updates that the Company is required to adopt that are likely to have a material effect on its financial statements that have not been previously discussed in the Company's 2022 Annual Report.

Note 3—Supplemental Financial Information

3 unchanged sentences

Finished goods

(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):

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):

Three Months Ended

Nine 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 restricted stock awards (“RSAs”) and restricted stock units (“RSUs”).

Weighted-average basic shares outstanding - basic and diluted

Net loss per share - basic and diluted

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

Nine Months Ended

Weighted average common share equivalents

2 unchanged sentences

Three Months Ended

Nine Months Ended

Resales of third-party products

5 unchanged sentences

Three Months Ended

Nine Months Ended

Less than 10% of net sales during the period.

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.

As of April 1, 2023, two customers represented approximately 55 % and 15 % of aggregated gross accounts receivables, respectively.

As of December 31, 2022, one customer represented approximately 69 % of aggregate gross accounts receivables.

The loss of a major customer or a reduction in sales to or difficulties collecting payments from these customers could significantly reduce the Company’s net sales and adversely affect its operating results.

1 unchanged sentence

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 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.

For the three months ended April 1, 2023 and April 2, 2022, resales of these products represented approximately 77 % and 91 % 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 $ 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 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.

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 $ 10.0 million, as amended.

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

Borrowings accrued 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 was April 28, 2023, as amended.

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

As of April 1, 2023 and December 31, 2022, (i) outstanding letters of credit were $ 2.1 million and $ 18.6 million, respectively, (ii) outstanding borrowings were $0 and $ 4.9 million, respectively, and (iii) availability under the revolving line of credit was $ 3.3 million and $ 0 , respectively.

On April 28, 2023, the SVB Credit Agreement terminated in accordance with its terms.

In connection with the termination of the SVB Credit Agreement, on April 28, 2023, all outstanding obligations for principal, interest, and fees under the SVB Credit Agreement were paid off in full and all liens securing such obligations were released.

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

2 unchanged sentences

Long-term debt

Insurance Policy Finance Agreement

As of April 1, 2023 and December 31, 2022, we had $ 0.3 million and $ 0.4 million, respectively, in short-term notes payable for the financing of insurance policies.

On January 4, 2023, we entered into a short-term note payable for $ 0.4 million bearing interest at 7.2 % to finance insurance policies.

Principal and interest payments on this note began January 15, 2023 and are made evenly based on a straight line amortization over a 9-month period.

Note 6—Leases

3 unchanged sentences

Three Months Ended

Nine Months Ended

Operating lease cost

3 unchanged sentences

Operating leases

Finance leases

Lease modification to increase operating lease assets

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.

For the three months ended April 1, 2023, and April 2, 2022, 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):

13 unchanged sentences

Weighted Average Remaining Lease Term (in years)

Operating lease

Finance lease

Operating leases

Finance leases

Weighted Average Discount Rate

Operating lease

Finance lease

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

Operating leases

Finance leases

Maturities of lease liabilities as of April 1, 2023, were as follows (in thousands):

2023 (remainder of the year)

9 unchanged sentences

We dedicate substantial resources to protecting and enforcing our intellectual property rights, including with patent infringement proceedings we file against third parties and defense of our patents against challenges made by way of reexamination and review proceedings at the U.S.

Patent and Trademark Office (“USPTO”) Patent Trial and Appeal Board (“PTAB”).

Patent and Trademark Office (“USPTO”) and Patent Trial and Appeal Board (“PTAB” or the “Board”).

We expect these activities to continue for the foreseeable future, with no guarantee that any ongoing or future patent protection or litigation activities will be successful, or that we will be able to monetize our intellectual property portfolio.

We are also subject to litigation based on claims that we have infringed on the intellectual property rights of others.

Any litigation, regardless of its outcome, is inherently uncertain, involves a significant dedication of resources, including time and capital, and diverts management’s attention from our other activities.

As a result, any current or future infringement claims or patent challenges by or against third parties, whether eventually decided in our favor or settled, could materially adversely affect our business, financial condition and results of operations.

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.

As a result, any current or future claims, allegations, or challenges by or against third parties, whether eventually decided in our favor or settled, could materially adversely affect our business, financial condition and results of operations.

Additionally, the outcome of pending or future litigation and/or 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 Litigations

2 unchanged sentences

District Court for the Northern District of California (the “NDCA”), seeking damages and injunctive relief based on Google’s alleged infringement of our U.S.

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 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.

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’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.

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 load reduced dual in line memory modules (“LRDIMM”) technologies.

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.

7,619,912 (the “‘912 Patent”).

The current judge assigned to the case, Chief Judge Seeborg, entered an order via stipulation on October 17, 2022 staying the NDCA Google case until the resolution of a pending case filed by Netlist, Inc.

against Samsung Electronics Co., Ltd.

in the United States District Court for the Eastern District of Texas (“EDTX”) ( Netlist, Inc.

Samsung Elecs.

2:22-cv-00293-JRG).

On July 26, 2022, Netlist filed patent infringement claims against Google Cloud EMEA Limited, Google Germany GmbH, Redtec Computing GmbH, and Google, 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 load reduced dual in line memory modules (“LRDIMM”) technologies.

As of the reporting date, Google has submitted its statements of defense.

The date for oral hearings are currently scheduled for November 2023.

On October 15, 2021, Samsung initiated a declaratory judgement action against Netlist in the U.S.

District Court for the District of Delaware (“DDE”) ( Samsung Elecs.

Co., Ltd., et.

Netlist, Inc.

1:21-cv-01453-RGA).

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

On November 15, 2022, Google, LLC and Alphabet, Inc.

responded to Netlist’s Counterclaims by filing a Motion to Dismiss or alternatively to sever and stay the counterclaims.

As of the reporting date, the Court has set the oral argument date for Google’s Motion to Dismiss or alternatively, Sever and Stay and Dismiss Willfulness and Indirect Infringement Allegations as May 22, 2023 at 2:00 P.M.

ET before Judge Jennifer L.

Further, the Court set the Claim Construction hearing for October 20, 2023, and the beginning of the Jury Trial on February 3, 2025.

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 (“WDTX”) (Case No.

(“Micron”) in the U.S.

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

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.

10,489,314 (the “‘314 Patent”), 9,824,035 (the “‘035 Patent”), 10,268,608 (the “‘608 Patent”), and 8,301,833 (the “‘833 Patent”).

The case has been assigned to Hon.

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

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).

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 and the ‘833 Patent, but denied its request for the ‘608 Patent.

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 (the ‘833, ‘035, ‘608, and ‘314 Patents).

As of the reporting date, the matter remains stayed pending the outcome of the related IPR proceedings.

As noted above, Micron filed requests to bring IPR proceedings against Netlist’s ‘314, ‘035, ‘608, and ‘833 Patents.

As of the reporting date, the PTAB granted Micron’s request for the ‘035, ‘833, and ‘314 Patents, 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.

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.

As of the reporting date, the IPR trials under the ‘035, ‘833, and ‘314 Patents are proceeding following Netlist’s timely submissions of its related Patent Owner Responses.

Oral arguments were presented for the ‘035 Patent IPR on April 19, 2023.

Oral arguments for the ‘833 and ‘314 Patents are set for June and August 2023, respectively.

On March 31, 2022, Netlist filed patent infringement claims against Micron in Germany (“Micron Dusseldorf Case”), seeking damages based on their infringement of EP735 and EP660.

On June 24, 2022, Netlist requested injunctive relief.

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

As of the reporting date, primary briefing in the Micron Dusseldorf Case has concluded, while the German Federal Patent Court has entered a preliminary opinion on the EP735 and EP660 invalidity proceedings.

Given the entry of the preliminary opinions, the Judge in the Micron Dusseldorf infringement actions has reset the oral hearing in those cases to 2024.

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 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.

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.

These proceedings are based on the alleged infringement by Micron for the sale of its LRDIMMs, its memory modules utilizing on-board power management modules (“PMIC”), and its high bandwidth memory (“HBM”) components, under six U.S.

Netlist patents:

the ‘060, ‘160, ‘506, ‘339, ‘918, and ‘054 Patents.

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.

2:22-cv-00294) under the ‘912 Patent, for Micron’s alleged infringement by the sale of its LRDIMMs and RDIMMs.

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

On October 21, 2022, Chief Judge Gilstrap ordered that this Micron action and a parallel action by Netlist against Samsung on the same patents (Case No.

2:22-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.

As of the reporting date, the consolidated case stands ready to proceed with a claim construction hearing set for October 5, 2023, and trial beginning on April 15, 2024.

On November 18, 2022, Micron filed IPR requests contesting the validity of the ‘912, ‘339, and ‘506 Patents, along with motions requesting joinder to the pending Samsung IPRs related to the same patents (see below).

As of the reporting date, the ‘912 and ‘339 matters have not been joined with the corresponding Samsung IPRs, while the ‘506 proceeding has been joined with the analogous prior-filed Samsung IPR proceeding on the same patent.

The Board’s deadline to institute trials on the ‘912 and ‘339 Micron IPRs is June 9, 2023.

On January 6, 2023, Micron filed IPR requests contesting the validity of the ‘918 and ‘054 Patents, along with motions requesting joinder to the pending Samsung IPRs related to the same patents (see below).

As of the reporting date, the matters have not been joined with the corresponding Samsung IPRs.

The Board’s deadline to institute trials on these Micron IPRs is July 20, 2023.

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’ 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 May 28, 2020, Netlist filed a complaint against Samsung in the U.S.

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.

On February 15, 2022, the Court entered a Final Judgment in favor of Netlist on each of its three claims and confirmed conclusively that all licenses granted under the JDLA were terminated.

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.

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.

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 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 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.

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

On February 15, 2022, the Court entered a final judgment in favor of

Netlist on each of its three claims and confirmed conclusively that the licenses granted by Netlist under the JDLA were terminated.

On February 25, 2022, Samsung filed a Notice of Appeal, and the Federal Court of Appeals for the Ninth Circuit Court of Appeals issued a Time Schedule Order on February 28, 2022.

On August 4, 2022, Netlist filed a cross-appeal seeking the Appeal Court’s reconsideration of the District Court’s finding that the fees Netlist paid to PwC were consequential damages, rather than recoverable general damages.

The parties have completed briefing on the appeal and cross-appeal.

As of the reporting date, the Ninth Circuit Court of Appeals set a date for oral argument on June 9, 2023 at 9:30 A.M.

PT, in Courtroom 1 of the Court’s Pasadena, CA Courthouse.

On October 15, 2021, Samsung initiated a declaratory judgement action against Netlist in the DDE ( Samsung Elecs.

Co., Ltd., et.

Netlist, Inc.

1:21-cv-01453-RGA), where it requested in relevant part that the DDE declare that Samsung does not infringe Netlist’s U.S.

9,858,218 (the “‘218 Patent”), 10,217,523 (the “‘523 Patent”), 10,474,595 (the “‘595 Patent”), and the ‘506, ‘339, ‘912 and ‘918 Patents, while later seeking leave to add the ‘054 Patent (issued Jan.

25, 2022) to its action.

On August 1, 2022, Hon.

Judge Andrews dismissed all of Samsung’s counts related to Netlist’s ‘912, ‘506, ‘339, and ‘918 Patents, and denied Samsung’s request to bring its ‘054 claims in Delaware.

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 15, 2022, Google, LLC and Alphabet, Inc.

responded to Netlist’s Counterclaims by filing a Motion to Dismiss or alternatively to Sever and Stay the counterclaims.

ET before Judge Jennifer L.

Further, the Court set the Claim Construction hearing for October 20, 2023, and the beginning of the Jury Trial on February 3, 2025.

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

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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 granted Samsung’s IPR requests related to the ‘218, ‘523, and ‘595 patents.

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.

As of the reporting date, oral arguments were heard for the ‘523 IPR (February 1, 2023), and the ‘218 Patent and ‘595 Patent IPRs (February 15, 2023).

As of the reporting date, the PTAB has issued a final written decision finding all of the claims of the ‘523 Patent valid and patentable, while finding all of the claims of the ‘218 Patent unpatentable.

The PTAB has not yet entered its final written decision regarding the ‘595 Patent, which is due May 15, 2023.

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

in the EDTX (Case No.

2:21-cv-00463-JRG) under the ‘506, ‘339, and ‘918 Patents.

Samsung responded to Netlist’s complaint on April 12, 2022, and Chief 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 April 14, 2023, the trial began with jury selection and opening statements, and concluded on April 21, 2023 with the entry of the jury’s verdict into the public record.

The jury unanimously found that Samsung had willfully infringed Netlist’s ‘339, ‘918, ‘054, ‘060, and ‘160 patents through the sale of their DDR4 LRDIMMs, DDR5 DIMMS, and HBM components, and that none of the patent claims assessed at trial were invalid.

Given the infringement, the jury awarded Netlist, Inc.

a total of $303 million for Samsung’s infringement.

As of the reporting date, post-trial proceedings are being briefed and adjudicated.

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

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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.

On January 19, 2023, 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.

On October 19, 2022, the PTAB instituted IPR trials on the ‘912 Patent and ‘339 Patent, while two days later it instituted an IPR trial on the ’506 Patent.

On January 5, 2023, USPTO Director Katherine K.

Vidal entered an Order in the ‘912 proceeding mandating a sua sponte Director review of the Board’s decision granting institution of the ‘912 Patent, and staying the underlying proceedings in lieu of a supplemental briefing schedule set by the Director herself.

On February 3, 2023, Director Vidal entered a decision requiring the assigned Board to reevaluate Netlist’s request for discovery on the admitted relationship between Samsung and Google and ordered that if the Board determines Google is a “Real Party in Interest,” the Board must vacate its institution decision and deny Samsung’s Petition.

The Board has collected the mandated follow-on discovery from

Samsung and set a supplemental briefing schedule that terminates on May 3, 2023.

As of the reporting date, Netlist has timely filed its Patent Owner Responses for the ‘339 and ‘506 Patent IPR proceedings.

Substantive briefing is ongoing in these IPRs.

On May 17, 2022, Samsung filed two IPR petitions contesting the validity of Netlist’s ‘918 and ‘054 Patents.

On December 6, 2022, the Board instituted an IPR trial for the ‘054 Patent, and then instituted an IPR trial for the ‘918 Patent the next day.

On December 9, 2022, the Board set a joint schedule for both IPRs.

As of the reporting date, Netlist filed its Patent Owner Response.

Substantive briefing is ongoing in these IPRs.

On June 3, 2022, Netlist filed patent infringement lawsuits 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.

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.

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.

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

in the EDTX (Case No.

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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.

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 therefore all pretrial matters.

As of the reporting date, the consolidated case stands ready to proceed with a claim construction hearing set for October 5, 2023, and trial beginning on April 15, 2024.

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

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

On January 19, 2023, Netlist filed its Patent Owner Preliminary Responses in those proceedings.

As of the reporting date, the Board instituted trials for both IPRs, setting Netlist’s deadline to files its Patent Owner’s Response on July 5, 2023.

On January 10, 2023, Samsung filed two IPR petitions contesting the validity of the ‘215 and ‘417 Patents.

As of the reporting date, the Board has accorded these IPR a filing date of January 10, 2023.

As of the reporting date, Netlist filed its Patent Owner Preliminary Responses by the May 9, 2023 deadline.

On April 27, 2023, Samsung filed an IPR petition contesting the validity of the ‘608 Patent.

As of the reporting date, the Board has not yet accorded this IPR a filing date.

Other Contingent Obligations

In the ordinary course of our business, we have made certain indemnities, commitments and guarantees pursuant to which we may be required to make payments in relation to certain transactions.

These include, among others:

These may include, among others:

(i) intellectual property indemnities to our customers and licensees in connection with the use, sale and/or license of our products;

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(iv) indemnities to our directors and officers to the maximum extent permitted under the laws of the State of Delaware;

(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;

(v) indemnities pertaining to all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with transactions contemplated by 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.

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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 October 1, 2022 or January 2, 2022.

No shares of preferred stock were outstanding as of April 1, 2023 or December 31, 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.

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).

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).

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.

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September 2021 Lincoln Park Purchase Agreement

On September 28, 2021, the Company entered into a purchase agreement (the “September 2021 Purchase Agreement”) with Lincoln Park, pursuant to which the Company has the right to sell to Lincoln Park up to an aggregate of $ 75 million in shares of its common stock subject to the conditions and limitations set forth in the September 2021 Purchase Agreement.

On September 28, 2021, the Company entered into a purchase agreement (the “September 2021 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company has the right to sell to Lincoln Park up to an aggregate of $ 75 million in shares of its common stock subject to the conditions and limitations set forth in the September 2021 Purchase Agreement.

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.

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

Pursuant to the September 2021 Purchase Agreement, on any business day and as often as every other business day over the 36-month term of the September 2021 Purchase Agreement, the Company has the right, from time to time, at its sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 750,000 shares of its common stock, provided Lincoln Park’s obligation under any single such purchase will not exceed $ 4.0 million, unless the Company and Lincoln Park mutually agree to increase the maximum amount of such single regular purchase.

the Company and Lincoln Park mutually agree to increase the maximum amount of such single regular purchase.

If the Company directs Lincoln Park to purchase the maximum number of shares of common stock, it then may sell in a regular purchase, then in addition to such regular purchase, and subject to certain conditions and limitations in the September 2021 Purchase Agreement, the Company may direct Lincoln Park to purchase an additional amount of common stock that may not exceed the lesser of (i) 300 % of the number of shares purchased pursuant to the corresponding regular purchase or (ii) 30 % of the total number of shares of its common stock traded during a specified period on the applicable purchase date as set forth in the September 2021 Purchase Agreement.

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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.

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In connection with the purchases, we issued to Lincoln Park an aggregate of 8,502 shares of our common stock as additional commitment shares in noncash transactions.

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.

During the three months ended April 1, 2023, Lincoln Park purchased an aggregate of 4,900,000 shares of our common stock for a net purchase price of $ 10.5 million under the September 2021 Purchase Agreement.

In connection with the purchases, we issued to Lincoln Park an aggregate of 20,209 shares of our common stock as additional commitment shares in noncash transactions.

Subsequently, from April 2, 2023 through May 4, 2023, Lincoln Park purchased an aggregate of 1,950,000 shares of our common stock for a net purchase price of $ 9.2 million under the September 2021 Purchase Agreement.

In connection with the purchase, we issued to Lincoln Park an aggregate of 17,562 shares of our common stock as additional commitment shares in noncash transactions.

Note 9—Stock-Based Awards

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”).

As of April 1, 2023, the Company had 960,086 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.

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Stock Options

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

The following table summarizes the activity related to stock options during the three months ended April 1, 2023:

(in thousands)

Outstanding as of January 1, 2022

Outstanding as of December 31, 2022

Expired or forfeited

Outstanding as of October 1, 2022

Outstanding as of April 1, 2023

Restricted Stock Units

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

The following table summarizes the activity related to RSUs during the three months ended April 1, 2023:

(in thousands)

Outstanding as of January 1, 2022

Outstanding as of October 1, 2022

Balance nonvested as of December 31, 2022

Balance nonvested as of April 1, 2023

Stock-Based Compensation

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Three Months Ended

Nine Months Ended

Cost of sales

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Selling, general and administrative

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.

As of April 1, 2023, the Company had approximately $ 9.9 million, net of estimated forfeitures, of unearned stock-based compensation, which it expects to recognize over a weighted-average period of approximately 2.9 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