What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-02 · 74 added, 91 removed, 73 unchanged (69% of the section changed)

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Forward-looking statements are statements other than historical facts and often address future events or our future performance.

Words such as "anticipate,"

"estimate,"

"expect,"

"project,"

"intend,"

"may,"

“will,” “might,” "plan,"

"predict,"

"believe,"

"should,"

“could” and similar words or expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “will,” “might,” “plan,” “predict,” “believe,” “should,” “could” and similar words or expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Forward-looking statements contained in this MD&A include statements about, among other things:

● specific and overall impacts of the COVID-19 pandemic on our financial condition and results of operations;

● our beliefs regarding the market and demand for our products or the component products we resell;

● our ability to collect the damages awarded to us by jury verdict in our trial with Samsung;

● our ability to develop and launch new products that are attractive to the market and stimulate customer demand for these products;

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● our expectations and strategies regarding outstanding legal proceedings and patent reexaminations relating to our intellectual property portfolio;

● specific and overall impacts of the coronavirus disease (“COVID-19”) pandemic on our financial condition and results of operations;

● our expectations with respect to any strategic partnerships or other similar relationships we may pursue;

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● our expectations regarding our future operations and financial position, including revenues, costs and prospects, and our liquidity and capital resources, including cash flows, sufficiency of cash resources, efforts to reduce expenses and the potential for future financings;

● our ability to remediate any material weakness, maintain effective internal control over financial reporting and satisfy the accelerated and enhanced disclosure obligations that will apply to us as we transition from a “smaller reporting company” to a “large accelerated filer” in 2022;

● our ability to remediate any material weakness, maintain effective internal control over financial reporting;

● the impact of the above factors and other future events on the market price and trading volume of our common stock.

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In light of these risks and uncertainties, our forward-looking statements should not be relied on as predictions of future events.

Additionally, many of these risks and uncertainties are currently elevated by and may or will continue to be elevated by the COVID-19 pandemic.

Additionally, many of these risks and uncertainties are currently elevated by and may or will continue to be elevated by and may or will continue to be elevated by the COVID-19 pandemic.

All forward-looking statements reflect our assumptions, expectations and beliefs only as of the date they are made, and except as required by law, we undertake no obligation to revise or update any forward-looking statements for any reason.

The following MD&A should be read in conjunction with our condensed consolidated financial statements and the related notes included in Part I, Item 1 of this report, as well as our Annual Report on Form 10-K for our fiscal year ended January 1, 2022 (the “2021 Annual Report”) filed with the SEC.

All information presented herein is based on our fiscal calendar, and references to particular years, quarters, months or periods refer to our fiscal years ended in January or December and the associated quarters, months and periods of those fiscal years.

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and its consolidated subsidiaries, unless otherwise stated.

Netlist provides high-performance solid-state drives and modular memory solutions to enterprise customers in diverse industries.

Our 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.

During the third quarter of 2022, we recorded net sales of $34.4 million, gross profit of $2.2 million and net loss of $9.6 million.

Netlist provides high-performance memory solutions to enterprise customers in diverse industries.

Our products in various capacities and form factors and our line of custom and specialty memory products bring leading performance to customers in a variety of industries globally and cloud service providers.

Netlist licenses its portfolio of intellectual property, including solutions relating to improvements for volatile memory, non-volatile memory, computer storage, hybrid memory, and related subsystems.

During the first quarter of 2023, we recorded net sales of $9.0 million, gross profit of $0.6 million and net loss of $15.8 million.

We have historically financed our operations primarily with proceeds from issuances of equity and debt securities and cash receipts from revenues.

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Recent Developments

SK hynix Agreements

On April 5, 2021, we entered into a Strategic Product Supply and License Agreement (the “Strategic Agreement”) and Product Purchase and Supply Agreement (“Supply Agreement”) with SK hynix, Inc., a South Korean memory semiconductor supplier (“SK hynix”).

Both agreements have a term of 5 years.

Under the Strategic Agreement, (a) we have granted to SK hynix worldwide, non-exclusive, non-assignable licenses to certain of our patents covering memory technologies and (b) SK hynix has granted to us worldwide, non-exclusive, non-assignable licenses to its patent portfolio.

In addition, the Strategic Agreement provided for the settlement of all intellectual property proceedings between us and SK hynix and a fee of $40 million paid to us by SK hynix.

In addition, the parties have agreed to collaborate on certain technology development activities.

Amendment to SVB Credit Agreement

On October 31, 2009, we entered into the SVB Credit Agreement, which provides for a revolving line of credit of 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 Prime Rate or 4.25%.

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

Damages Award Against Samsung

On April 21, 2023, we won a $303 million damages award against Samsung Electronics Co., Ltd., Samsung Semiconductor, Inc., and Samsung Electronics America, Inc.

(together “Samsung”) in the United States District Court for the Eastern District of Texas.

The award resulted from a jury trial that lasted six days, and involved five Netlist patents:

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

The products found to infringe these patents were Samsung DDR4 LRDIMMs, DDR5 UDIMMs, DDR5 SODIMMs, and DDR5 RDIMMs, and HBM 2, 2E, and 3 components.

As of the reporting date, post-trial proceedings are being adjudicated and a Judgement has not yet been entered.

Upon entry of a Judgment, an appeal may be filed before the U.S.

Court of Appeals for the Federal Circuit.

Should any party file an appeal, that could cause a lengthy delay in our ability to collect a damages award from Samsung, lead to a reduction of the damages award, or lead to a remand or reversal of the jury’s verdict.

Termination of SVB Credit Agreement

On October 31, 2009, we entered into the SVB Credit Agreement, which provided for a revolving line of credit of 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 Prime Rate or 4.25%.

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

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 in full and all liens securing such obligations were released.

September 2021 Lincoln Park Purchase Agreement

On September 28, 2021, we entered into the September 2021 Purchase Agreement with Lincoln Park, pursuant to which we have the right to sell to Lincoln Park up to an aggregate of $75 million in shares of our common stock over the 36-month term of the September 2021 Purchase Agreement subject to the conditions and limitations set forth in the September 2021 Purchase Agreement.

During 2021, Lincoln Park purchased an aggregate of 1,550,000 shares of our common stock for a net purchase price of $10.9 million under the September 2021 Purchase Agreement.

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 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.

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.

Economic Conditions, Challenges and Risks

Our performance, financial condition and prospects are affected by a number of factors and are exposed to a number of risks and uncertainties.

We operate in a competitive and rapidly evolving industry in which new risks emerge

from time to time, and it is not possible for us to predict all of the risks we may face, nor can we assess the impact of all factors on our business or the extent to which any factor or combination of factors could cause actual results to differ from our expectations.

We operate in a competitive and rapidly evolving industry in which new risks emerge from time to time, and it is not possible for us to predict all of the risks we may face, nor can we assess the impact of all factors on our business or the extent to which any factor or combination of factors could cause actual results to differ from our expectations.

See the discussion of certain risks that we face under “Risk Factors” in Part II, Item 1A of this report.

Impact of COVID-19 on our Business

The impact of the coronavirus disease (“COVID-19”) pandemic will have on our consolidated results of operations is uncertain.

Although we initially observed demand increases in our products, we anticipate that the global health crisis caused by COVID-19 may negatively impact business activity across the globe.

In recent periods, there has been a significant increase in worldwide supply of semiconductor memory and storage that has led to declines in demand and average selling prices for our products, which could materially and adversely affect our business, results of operations, or financial condition.

Our suppliers generally seek to increase wafer output, improve yields, and reduce die size, which could result in further increases in worldwide supply and downward pressure on prices.

The continuing impact of the COVID-19 pandemic will have on our consolidated results of operations is uncertain.

We will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities.

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Net Sales and Gross Profit

Net sales and gross profit for the three and nine months ended October 1, 2022, and October 2, 2021 were as follows (dollars in thousands):

Net sales and gross profit for the three months ended April 1, 2023, and April 2, 2022 were as follows (dollars in thousands):

Three Months Ended

Nine Months Ended

Net product sales

Gross profit - product sales

Gross margin percentage - product sales

Cost of sales

Gross margin percentage

Net sales include (i) resales of component products including DIMMs, SSDs, and dynamic random-access memory (“DRAM ICS” or DRAM) products, and sales of our high-performance memory subsystems and (ii) an upfront non-refundable fee pursuant to the Strategic Agreement with SK hynix entered into on April 5, 2021.

Net product sales increased by approximately $7.7 million during the third quarter of 2022 compared to the same quarter of 2021, primarily as a result of a $12.4 million increase in re-sale of SK hynix products and a $4.9 million increase in sale of Netlist’s flash and SSD products, offset by a $9.6 million decrease in sales of low-profile memory subsystem products.

Net product sales increased by approximately $74.0 million during the first nine months of 2022 compared to the same period in 2021, primarily as a result of a $84.0 million increase in re-sale of SK hynix products and a $8.1 million increase in sale of Netlist’s flash and SSD products, offset by a $18.0 million decrease in sales of low-profile memory subsystem products.

Net sales include resales of certain components, modules, and other products, which include dual in-line memory module (“DIMMs”) and solid-state drives (“SSDs”).

Net sales also include sales of Netlist’s own products.

Net sales decreased by approximately $41.2 million during the first quarter of 2023 compared to the same period of 2022, primarily as a result of a $29.9 million decrease in the sale of registered DIMM (“RDIMM”) and discrete memory component products, a $1.8 million decrease in sale of Netlist’s flash and SSD products, and a $9.5 million decrease in sales of low-profile memory subsystem products.

Gross Profit and Gross Margin

Product gross profit decreased by $0.3 million during the third quarter of 2022 compared to the same quarter of 2021 primarily as a result of softer pricing environment and product sales mix.

Product gross profit increased during the first nine months of 2022 compared to the same period of 2021 due primarily to higher sales across all product groups.

Product gross margin percentage decreased between the periods as a result of the change in our product mix and increased component product resales as a percentage of revenue.

Product gross profit and product gross margin percentage decreased during the first quarter of 2023 compared to the same period of 2022, primarily as a result of lower sales across all product group and softer pricing environment.

Operating Expenses

Operating expenses for the three and nine months ended October 1, 2022, and October 2, 2021, were as follows (dollars in thousands):

Operating expenses for the three months ended April 1, 2023, and April 2, 2022, were as follows (dollars in thousands):

Three Months Ended

Nine Months Ended

Research and development

Percentage of net product sales

Percentage of net sales

Intellectual property legal fees

Percentage of net product sales

Percentage of net sales

Selling, general and administrative

Percentage of net product sales

Percentage of net sales

Research and Development

Research and development expenses increased during the third quarter and the first nine months of 2022 compared to the same periods of 2021 due primarily to an increase in employee headcount, related overhead and new product research.

Research and development expenses decreased during the first quarter of 2023 compared to the same period of 2022 due primarily to a decrease in employee headcount and related overhead.

Intellectual Property Legal Fees

Intellectual property legal fees consist of legal fees incurred for patent filings, protection and enforcement.

Although we expect intellectual property legal fees to generally increase over time as we continue to protect, defend and enforce and seek to expand our patent portfolio, these increases may not be linear but may occur in lump sums depending on the due dates of patent filings and their associated fees and the arrangements we may make with our legal advisors in connection with enforcement proceedings, which may include fee arrangements or contingent fee arrangements in which we would pay these legal advisors on a scaled percentage of any negotiated fees, settlements or judgments awarded to us based on if, how and when the fees, settlements or judgments are obtained.

Intellectual property legal fees consist of fees incurred for, patent drafting and prosecution, opposition to third-party post-grant patent proceedings, and patent enforcement and licensing.

Although we expect intellectual property legal fees to generally increase over time as we continue to expand, protect and enforce our patent portfolio, these increases may not be linear but may occur in lump sums depending on the due dates of filings and their associated fees, and the arrangements we may make with our legal advisors in connection with enforcement proceedings, which may include fee arrangements or contingent fee arrangements in which we would pay these legal advisors on a scaled percentage of any negotiated fees, settlements or judgments awarded to us based on if, how and when the fees, settlements or judgments are obtained.

See Note 7 to the condensed consolidated financial statements included in Part I, Item 1 of this report for further discussion.

Intellectual property legal fees decreased during the third quarter and the first nine months of 2022 compared to the same periods of 2021 due primarily to lower legal expenses incurred to defend our patent portfolio internationally.

Intellectual property legal fees increased during the first quarter of 2023 compared to the same period of 2022 due primarily to higher legal expenses incurred to protect and enforce our patent portfolio.

Selling, General and Administrative

Selling, general and administrative expenses increased during the third quarter and the first nine months of 2022 compared to the same periods of 2021 due primarily to an increase in employee headcount and overhead and outside services.

As a result of the significant increase in the value of our non-affiliate public float in recent periods, we are a “large accelerated filer” as of the end of fiscal year ended January 2, 2022 which means that we need to file our quarterly and annual reports on an accelerated basis and that we are required to have our independent registered public accounting firm audit and attest to our internal control over financial reporting.

Complying with these requirements requires us to invest a material amount in enhancing our financial reporting infrastructure that will cause our selling, general and administrative expenses to increase in future periods.

Selling, general and administrative expenses decreased during the first quarter of 2023 compared to the same period of 2022 due primarily to a decrease in employee headcount and overhead and outside services.

Other Income (Expense), Net

Other income (expense), net for the three and nine months ended October 1, 2022, and October 2, 2021 was as follows (dollars in thousands):

Other income (expense), net for the three months ended April 1, 2023, and April 2, 2022 was as follows (dollars in thousands):

Three Months Ended

Nine Months Ended

Interest income (expense), net

Other income (expense), net

Other expense, net

Total other income (expense), net

Interest expense, net, in 2021 consisted primarily of interest expense on the $15 million secured convertible note issued to Samsung Venture Investment Co.

(“SVIC Note”) in November 2015 and a revolving line of credit under the SVB Credit Agreement, along with the accretion of debt discounts and amortization of debt issuance costs on the SVIC Note.

The SVIC Note was paid off in the fourth quarter of 2021 resulting in a decrease in interest expense for the third quarter and the first nine months of 2022 compared to the same periods of 2021.

Other income, net increased during the third quarter of 2022 compared to the same quarter of 2021 primarily as a result of a one-time gain from a sanction judgment.

During the first nine months of 2021, other income, net included the gain on forgiveness of the Paycheck Protection Program Loan of $0.6 million.

This gain was recognized during the second quarter of 2021 resulting in a decrease in other income for the first nine months of 2022 compared to the same period of 2021.

Interest income, net increased during the first quarter of 2023 compared to the same period of 2022, primarily as a result of a higher interest rate earned on cash balances.

During the first quarter of 2023, other expense was consistent compared with the same period of 2022.

Liquidity and Capital Resources

Our primary sources of cash are historically proceeds from issuances of equity and debt securities and receipts from revenues.

In addition, we have received proceeds from non-recurring engineering and licensing of our patent portfolio, including as a result of our entry into the SK hynix Strategic Agreement, which we use to support our operations.

In addition, we have received proceeds from our entry into a Strategic Product Supply and License Agreement with SK hynix, Inc., a South Korean memory semiconductor supplier (“SK hynix”), on April 5, 2021 (the “Strategic Agreement”), which we use to support our operations.

We have also funded our operations with a revolving line of credit under a bank credit facility, and to a lesser extent, equipment leasing arrangements.

The following tables present selected financial information as of October 1, 2022, and January 1, 2022 and for the first nine months of 2022 and 2021 (in thousands):

We are currently seeking to obtain a new bank credit facility to replace the terminated facility we had with SVB.

The following tables present selected financial information as of April 1, 2023, and December 31, 2022 and for the first three months of 2023 and 2022 (in thousands):

Cash, cash equivalents and restricted cash

Convertible promissory note and accrued interest, net

Long-term debt due within one year

Working capital

Nine Months Ended

Three Months Ended

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by financing activities

During the nine months ended October 1, 2022, net cash used in operating activities was primarily a result of net loss of $20.4 million, non-cash adjustments to net loss of $3.1 million, and net cash outflows from changes in operating assets and liabilities of $0.4 million driven predominantly by an increase in inventories due to higher purchases to support increased sales and a decrease in accounts payable, partially offset by a decrease in accounts receivable and an increase in accrued expenses and other liabilities.

Net cash provided by financing activities during the nine months ended October 1, 2022 primarily consisted of $1.0 million in net borrowings under the SVB Credit Agreement, $3.7 million in

net proceeds from issuance of common stock under the September 2021 Lincoln Park Purchase Agreement, $0.3 million in proceeds from exercise of stock options, offset by $0.6 million in payments of note payable to finance insurance policies and $1.3 million in payments for taxes related to net share settlement of equity awards.

During the nine months ended October 2, 2021, net cash provided by operating activities was primarily a result of net income of $13.1 million, non-cash adjustments to net income of $1.3 million, and net cash inflows from changes in operating assets and liabilities of $5.7 million driven predominantly by an increase in accounts payable due to higher inventory purchases to support increase in sales and higher legal fees to defend our patent portfolio, partially offset by an increase in inventories.

Net cash provided by financing activities during the nine months ended October 2, 2021 primarily consisted of $26.3 million in net proceeds from issuance of common stock under the 2019 Purchase Agreement with Lincoln Park, 2020 Purchase Agreement with Lincoln Park and First 2021 Lincoln Park Purchase Agreement, $11.1 million in proceeds from exercise of stock options and warrants and $0.8 million in net borrowings under the SVB Credit Agreement, partially offset by $1.0 million in payments for taxes related to net share settlement of equity awards.

Net cash provided by (used in) financing activities

During the three months ended April 1, 2023, net cash used in operating activities was primarily a result of net loss of $15.8 million, non-cash adjustments to net loss of $1.3 million, and net cash inflows from changes in operating assets and liabilities of $1.7 million driven predominantly by a decrease in accounts receivable and inventories, partially offset by a decrease in accounts payable due to lower inventory purchases.

Net cash provided by financing activities during the three months ended April 1, 2023 primarily consisted of $10.5 million in net proceeds from issuance of common stock under the September 2021 Purchase Agreement, $0.3 million in proceeds from exercise of stock options, offset by $4.9 million in net repayments under the SVB Credit Agreement and $0.1 million in payments of note payable to finance insurance policies.

During the three months ended April 2, 2022, net cash provided by operating activities was primarily a result of net loss of $5.9 million, non-cash adjustments to net loss of $0.9 million, and net cash inflows from changes in operating assets and liabilities of $6.2 million driven predominantly by an increase in accounts payable due to higher inventory purchases to support increase in sales and higher legal fees to defend our patent portfolio, and a decrease in accounts

Net cash used in financing activities during the three months ended April 2, 2022 primarily consisted of $1.8 million in net proceeds from issuance of common stock under the September 2021 Purchase Agreement, $0.1 million in proceeds from exercise of stock options, offset by $2.3 million in net repayments under the SVB Credit Agreement and $0.6 million in payments for taxes related to net share settlement of equity awards.

Capital Resources

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On September 28, 2021, we entered into the September 2021 Purchase Agreement with Lincoln Park, pursuant to which we have the right to sell to Lincoln Park up to an aggregate of $75.0 million in shares of our common stock over the 36-month term of the September 2021 Purchase Agreement subject to the conditions and limitations set forth in the September 2021 Purchase Agreement.

As of October 1, 2022, $60.4 million remains available under the September 2021 Purchase Agreement with Lincoln Park.

As of April 1, 2023, $49.2 million remains available under the September 2021 Purchase Agreement with Lincoln Park.

SVB Credit Agreement

On October 31, 2009, we entered into the SVB Credit Agreement, which provides for a revolving line of credit of up to $10.0 million, as amended.

Borrowings accrue interest on advance at a per annum rate equal to the greater of 0.75% above the Prime Rate or 4.25%.

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

As of October 1, 2022, the outstanding borrowings under the SVB Credit Agreement were $8.0 million with additional borrowing availability of $0.2 million.

During the nine months ended October 1, 2022, we made net borrowings of $1.0 million under the SVB Credit Agreement.

On October 31, 2009, we entered into the SVB Credit Agreement, which provided for a revolving line of credit of up to $10.0 million, as amended.

Borrowings accrued interest on advance at a per annum rate equal to the greater of 0.75% above the Prime Rate or 4.25%.

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

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.

Sufficiency of Cash Balances and Potential Sources of Additional Capital

We believe our existing balance of cash and cash equivalents together with cash receipts from revenues, borrowing availability under the SVB Credit Agreement, the equity financing available under September 2021 Purchase Agreement, funds raised through other future debt and equity offerings and taking into account cash expected to be used in our operations, will be sufficient to meet our anticipated cash needs for at least the next 12 months.

We believe our existing balance of cash and cash equivalents together with cash receipts from revenues, the equity financing available under September 2021 Purchase Agreement, funds raised through other future debt and equity offerings and taking into account cash expected to be used in our operations, will be sufficient to meet our anticipated cash needs for at least the next 12 months.

Off-Balance Sheet Arrangements

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The preparation of our condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported

amounts of net sales and expenses during the reporting period.

By their nature, these estimates and assumptions are subject to an inherent degree of uncertainty.

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Actual results may differ from our estimates, which may result in material adverse effects on our consolidated operating results and financial position.

Our critical accounting policies and estimates are discussed in Note 2 to the condensed consolidated financial statements in this report and in the notes to consolidated financial statements in Part II, Item 8 of our 2021 Annual Report and in the MD&A in our 2021 Annual Report.

Report and in the MD&A in our 2022 Annual Report.

There have been no significant changes to our critical accounting policies since our 2022 Annual Report.

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 2. Management’s Discussion and Analysis