What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-06 · 146 added, 86 removed, 483 unchanged (32% of the section changed)

4 unchanged sentences

(In thousands, except par value) (Unaudited)

September 28,

Current assets:

35 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Cost of sales

7 unchanged sentences

Interest income, net

Other income (expense), net

Other income, net

Total other income, net

5 unchanged sentences

Basic and diluted

See accompanying Notes to the Condensed Consolidated Statements.

See accompanying Notes to the Condensed Consolidated Financial Statements.

NETLIST, INC.

16 unchanged sentences

Balance, June 29, 2024

Exercise of stock options

Stock-based compensation

Restricted stock units vested and distributed

Balance, September 28, 2024

See accompanying Notes to the Condensed Consolidated Financial Statements.

NETLIST, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands) (Unaudited) (Continued)

Stockholders'

2 unchanged sentences

Exercise of stock options

Exercise of warrants

Stock-based compensation

6 unchanged sentences

Balance, July 1, 2023

See accompanying Notes to the Condensed Consolidated Statements.

Issuance of common stock, net

Exercise of stock options

Stock-based compensation

Restricted stock units vested and distributed

Balance, September 30, 2023

See accompanying Notes to the Condensed Consolidated Financial Statements.

NETLIST, INC.

2 unchanged sentences

(In thousands) (Unaudited)

Six Months Ended

Nine Months Ended

September 28,

September 30,

Cash flows from operating activities:

15 unchanged sentences

Cash flows from financing activities:

Net borrowings (repayments) under line of credit

Net repayments under line of credit

Principal repayments under finance lease

4 unchanged sentences

Net cash provided by financing activities

Effect of foreign exchange rates on cash, cash equivalents and restricted cash

Net change in cash, cash equivalents and restricted cash

5 unchanged sentences

Cash, cash equivalents and restricted cash at end of period

See accompanying Notes to the Condensed Consolidated Statements .

See accompanying Notes to the Condensed Consolidated Financial Statements .

NETLIST, INC.

10 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.

We have evaluated events occurring subsequent to June 29, 2024 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.

We have evaluated events occurring subsequent to September 28, 2024 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

13 unchanged sentences

Inventories consisted of the following (in thousands):

September 28,

Raw materials

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Weighted-average basic shares outstanding - basic and diluted

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Weighted average common share equivalents

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Resales of third-party products

1 unchanged sentence

Total net sales

Total net sales include $ 17.6 million of revenue recognized in the three months ended September 28, 2024

that was included in deferred revenue as of June 29, 2024.

No deferred revenue was recorded prior to June 29, 2024.

As of September 28, 2024, we had deferred revenue of $ 5.9 million.

These deferred revenues relate to advance payments received during the quarter on orders shipped subsequent to the end of quarter.

Major Customers and Products

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Less than 10% of net sales during the period.

As of June 29, 2024, one customer represented approximately 69 % of aggregated gross accounts receivables.

As of September 28, 2024, two customers represented approximately 33 % and 14 % of aggregated gross accounts receivables, respectively.

As of December 30, 2023, two customers represented approximately 60 % and 10 % , respectively, of aggregate gross accounts receivables.

2 unchanged sentences

We resell 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 June 29, 2024, resales of these products represented approximately 90 % and 89 % of net product sales, respectively.

For the three and six months ended July 1, 2023, resales of these products represented approximately 86 % and 81 % of net product sales, respectively.

For the three and nine months ended September 28, 2024, resales of these products represented approximately 94 % and 91 % of net sales, respectively.

For both the three and nine months ended September 30, 2023, resales of these products each represented approximately 82 % of net sales.

Note 3—Financing Arrangements

On November 7, 2023, we entered into a loan and security agreement (the “2023 SVB Credit Agreement”) with Silicon Valley Bank (“SVB”), which provides for a revolving line of credit up to $ 10.0 million.

On November 7, 2023, we entered into a loan and security agreement (the “2023 SVB Credit Agreement”) with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (“SVB”), which provides for a revolving line of credit up to $ 10.0 million.

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

1 unchanged sentence

The maturity date is November 7, 2025.

As of June 29, 2024, all obligations under the 2023 SVB Credit Agreement were secured by a first priority security interest in our tangible and intangible assets.

As of September 28, 2024, all obligations under the 2023 SVB Credit Agreement were secured by a first priority security interest in our tangible and intangible assets.

The 2023 SVB Credit Agreement subjects us to certain affirmative and negative covenants, including financial covenants with respect to our liquidity and restrictions on the payment of dividends.

As of June 29, 2024, we were in compliance with our covenants under the 2023 SVB Credit Agreement.

As of September 28, 2024, we were in compliance with our covenants under the 2023 SVB Credit Agreement.

We have letters of credit issued by SVB under the 2023 SVB Credit Agreement and Citibank, N.A., which are secured by cash and are classified as restricted cash in the condensed consolidated balance sheets.

As of June 29, 2024 and December 30, 2023, (i) outstanding letters of credit were $ 12.4 million and $ 12.4 million, respectively, (ii) outstanding borrowings were $ 4.6 million and $ 3.8 million, respectively, and (iii) availability under the revolving line of credit was $ 0 and $ 0 , respectively.

As of September 28, 2024 and December 30, 2023, (i) outstanding letters of credit were $ 12.4 million and $ 12.4 million, respectively, (ii) outstanding borrowings were $ 1.6 million and $ 3.8 million, respectively, and (iii) availability under the revolving line of credit was $ 0 and $ 0 , respectively.

Note 4—Leases

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Operating lease cost

1 unchanged sentence

Operating cash flows from operating leases

For the six months ended June 29, 2024 and July 1, 2023, finance lease costs and cash flows from finance leases were immaterial.

For the nine months ended September 28, 2024 and September 30, 2023, 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):

September 28,

Operating Leases

11 unchanged sentences

The following table includes supplemental information:

September 28,

Weighted Average Remaining Lease Term (in years)

4 unchanged sentences

Finance leases

Maturities of lease liabilities as of June 29, 2024, were as follows (in thousands):

Maturities of lease liabilities as of September 28, 2024, were as follows (in thousands):

2024 (remainder of the year)

65 unchanged sentences

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

The PTAB granted Micron’s request for the ‘035, ‘833, and ‘314 Patents, but denied its request for instituting an IPR trial for the ‘608 Patent.

The PTAB granted Micron’s request for the ‘035, ‘833, and ‘314 Patents, but denied its request for instituting an IPR of the ‘608 Patent.

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

Oral arguments were presented for the ‘035 Patent IPR on April 19, 2023, with the PTAB finding claims 2 and 6 of the ‘035 Patent patentable.

Oral arguments were presented for the ‘035 Patent IPR on April 19, 2023, with the PTAB finding claims 2, 6, and 22 of the ‘035 Patent not unpatentable.

On August 28, 2023, the PTAB determined that all challenged claims of the ‘833 Patent were unpatentable.

On October 30, 2023, the PTAB determined that all challenged claims of the ‘314 Patent were patentable.

On December 29, 2023, Micron filed a Notice of Appeal

for the ‘314 Patent IPR decisions, indicating its intent to challenge the PTAB’s validity findings at the United States Court of Appeals for the Federal Circuit.

On October 30, 2023, the PTAB determined that all challenged claims of the ‘314 Patent were not unpatentable.

On December 29, 2023,

Micron filed a Notice of Appeal for the ‘314 Patent IPR decisions, indicating its intent to challenge the PTAB’s findings at the United States Court of Appeals for the Federal Circuit.

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

24 unchanged sentences

This case went to trial in May 2024 and the jury awarded Netlist $445 million for Micron’s infringement.

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, Micron’s ‘912, ‘339, and ‘506 Patent IPRs have been joined with the corresponding Samsung IPR proceedings for the same respective patents.

On November 18, 2022, Micron filed IPR requests contesting the patentability 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, Micron’s ‘912, ‘339, and ‘506 Patent IPRs have been joined with the respective Samsung IPR proceedings for the same three patents.

Oral hearings for the joined Samsung ‘339 and ‘506 Patents IPRs were held on July 19, 2023 and July 20, 2023, respectively.

3 unchanged sentences

On December 20, 2023, the Board denied Netlist’s Request for Rehearing on the ‘506 Patent IPR result.

Netlist filed a Notice of Appeal challenging the Board’s final written decision for the ‘506 Patent, thus instituting an appeal before the Federal Court of Appeals for the Federal Circuit (“CAFC”) of the ‘506 Patent IPR result (CAFC Case No.

24-1521), and as of the reporting date has not filed its Opening Appeal Brief.

Netlist filed a Notice of Appeal to challenge the Board’s final written decision on the ‘506 Patent before the Federal Court of Appeals for the Federal Circuit (“CAFC”), Case No.

On February 9, 2024, the PTAB denied Netlist’s Request for Rehearing on the ‘339 Patent IPR result.

Netlist filed its Notice of Appeal challenging the Board’s final written decision for the ‘339 Patent, thus instituting an appeal before the CAFC of the ‘339 Patent IPR result (CAFC Case No.

24-1707, the “‘339 Appeal”), and as of the reporting date has not filed its Opening Appeal Brief.

On January 31,

2024, an oral hearing was conducted for the Samsung ‘912 Patent IPR proceeding joined by Micron.

Netlist filed its Notice of Appeal to challenge the Board’s final written decision on the ‘339 Patent before the CAFC, Case No.

On January 31, 2024, an oral hearing was conducted for the Samsung ‘912 Patent IPR proceeding joined by Micron.

On April 17, 2024, the PTAB entered its final written decision for the ‘912 Patent IPR, finding the challenged claim 16 unpatentable.

As of the reporting date, Netlist has not filed a notice of appeal challenging the Board’s final written decision for the ‘912 Patent IPR.

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).

On September 11, 2024,

Netlist filed a Notice of Appeal to challenge the Board’s final written decision on the ’912 Patent before the CAFC, Case No.

As of the reporting date, all three appeals challenging the Board’s respective decisions on the ’912, ’339, and ’506 Patents are pending.

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

On June 23, 2023, the matters were joined with the corresponding Samsung IPRs on the same patents.

3 unchanged sentences

On March 18, 2024, the USPTO denied Netlist’s request for Director Review of the ‘918 and ‘054 Patent IPRs.

Netlist has filed a notice of appeal challenging the Board’s final written decision for the ‘918 or ‘054 Patent IPRs on May 24, 2024.

On May 8, 2023, Micron filed IPR requests contesting the validity of the ‘060 and ‘160 Patents, along with motions requesting joinder to the pending Samsung IPRs related to the same patents (see below).

On May 24, 2024, Netlist filed a notice of appeal challenging the Board’s final written decision for the ‘918 and ‘054 Patent IPRs, CAFC case no.

On May 8, 2023, Micron filed IPR requests contesting the patentability of the ‘060 and ‘160 Patents, along with motions requesting joinder to the pending Samsung IPRs related to the same patents (see below).

On October 26, 2023, the PTAB instituted the Micron ‘060 and ‘160 Patent IPRs and joined them with the earlier-filed ‘060 and ‘160 Patent IPRs.

2 unchanged sentences

The Director Review was denied on June 17, 2024.

On July 28, 2023, Micron filed two IPR petitions contesting the validity of the ‘215 and ‘417 Patents.

On August 20, 2024, Netlist a Notice of Appeal to challenge the Board’s final written decision on the ’060 and ’160 Patents before the CAFC, Case No.

On July 28, 2023, Micron filed two IPR petitions contesting the patentability of the ‘215 and ‘417 Patents.

On January 3, 2024, the PTAB granted institution and joinder to Samsung’s earlier-filed IPRs for the same two patents.

1 unchanged sentence

The PTAB issued its final written decision on July 30, 2024, determining all challenged claims unpatentable.

On August 29, 2024, Netlist filed Requests for Director Review of the Board’s final written decisions on the ’215 and ’417 Patents.

On December 11, 2023, Micron filed a complaint in the District Court for the Fourth Judicial District of the State of Idaho alleging Netlist violated Idaho Code § 48-1703 through its assertion of the ‘833 Patent in the WDTX (the “First Idaho Complaint”).

Netlist removed the matter from State Court to the Federal District Court for the District of Idaho on January 2, 2024.

Netlist removed the matter to the Federal District Court for the District of Idaho on January 2, 2024.

On January 18, 2024, the matter was assigned to Judge David C.

Nye for all proceedings, and Micron filed a Motion to remand the case back to Idaho state court.

Nye for all proceedings, and Micron filed a Motion to remand the case to the Idaho state court.

On February 7, 2024, Netlist moved to dismiss Micron’s First Idaho Complaint or alternatively transfer the case, and on February 8, 2024, responded to Micron’s Motion to Remand.

2 unchanged sentences

On March 13, 2024, Netlist filed its reply in support of its Motion to Dismiss or Transfer the case.

As of the reporting date, the Court has not yet ruled on these motions.

On August 16, 2024, the case was remanded to the Idaho state court.

On September 17-18, 2024, Netlist filed a motion to dismiss the case for lack of personal jurisdiction and failure to state a claim.

On December 22, 2023, Netlist filed a Declaratory Judgment action in the Federal District Court for the EDTX, Marshall Division, seeking confirmation from the Court that Netlist has not made a bad-faith assertion of patent infringement against Micron.

2 unchanged sentences

On April 23, 2024, the Court held a scheduling conference, and on April 24, 2024, the Court entered its docket control order setting the matter for a jury trial on July 7, 2025.

On January 10, 2024, Micron filed an IPR petition, again contesting the validity of the ‘608 Patent, along with a motion to join Samsung’s instituted parallel IPR proceeding.

On January 10, 2024, Micron filed an IPR petition, again contesting the patentability of the ‘608 Patent, along with a motion to join Samsung’s instituted parallel IPR proceeding.

On July 23, 2024, the PTAB denied institution of Micron’s petition.

On January 16, 2024, Micron filed a second complaint in the District Court for the Fourth Judicial District of the State of Idaho alleging Netlist violated Idaho Code § 48-1703, this time for Netlist’s assertion of the ‘918

and ‘054 Patents in the EDTX.

On February 9, 2024, Netlist removed the matter from State Court to the Federal District Court for the District of Idaho.

32 unchanged sentences

On December 1, 2023, the Court entered an Oral Order staying the matter entirely until the development of any action by any other court pertaining to Samsung’s and Netlist’s rights under the JDLA that may merit lifting the stay.

While such a determination has been made by the District Court for the Contral District of California, the case remains stayed.

While such a determination has been made by the District Court for the Central District of California, the case remains stayed.

On November 19, 2021, Samsung filed IPR requests contesting the validity of the ‘218, ‘595, and ‘523 Patents.

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

On May 3, 2023, the PTAB issued a final written decision

finding all of the claims of the ‘523 Patent valid and patentable, while on May 8, 2023 and May 9, 2023, it found all of the claims of the ‘218 and ‘595 Patents, respectively, unpatentable.

On July 10, 2023, Samsung filed a Notice of Appeal challenging the Board’s decision upholding the patentability of the ‘523 Patent, thus instituting an appeal before the CAFC of the ‘523 Patent IPR result (CAFC Case No.

As of the reporting date, the parties have completed briefing on the appeal, and the Federal Circuit has not yet set a date for oral arguments.

On May 3, 2023, the PTAB issued a final written decision finding all of the claims of the ‘523 Patent not unpatentable, while on May 8, 2023 and May 9, 2023, it found all of the claims of the ‘218 and ‘595 Patents, respectively, unpatentable.

On July 10, 2023, Samsung filed a Notice of Appeal challenging the Board’s decision on the ‘523 Patent, thus instituting an appeal before the CAFC of the ‘523 Patent IPR result (CAFC Case No.

As of the reporting date, the parties have completed briefing on the appeal, and the CAFC has not yet set a date for oral argument.

On December 20, 2021, Netlist filed a complaint for patent infringement against Samsung in the EDTX (Case No.

26 unchanged sentences

On December 20, 2023, the Board denied Netlist’s Request for Rehearing on the ‘506 Patent IPR result.

Netlist filed a Notice of Appeal challenging the Board’s final written decision for the ‘506 Patent, thus instituting an appeal before the CAFC of the ‘506 Patent IPR result (CAFC Case No.

24-1521), and as of the reporting date has not filed its Opening Appeal Brief.

On February 9, 2024, the PTAB denied Netlist’s Request for Rehearing on the ‘339 Patent IPR result.

Netlist filed its Notice of Appeal challenging the Board’s final written decision for the ‘339 Patent, thus instituting an appeal before the CAFC of the ‘339 Patent IPR

result (CAFC Case No.

24-1707), and as of the reporting date has not filed its Opening Appeal Brief.

On January 31, 2024, an oral hearing was conducted for the Samsung ‘912 Patent IPR proceeding joined by Micron.

On April 17, 2024, the PTAB entered its final written decision for the ‘912 Patent IPR, finding the challenged claim 16 unpatentable.

Netlist then filed a request for director review, which was denied on July 10, 2024.

As of the reporting date, Netlist has not filed a notice of appeal challenging the Board’s final written decision for the ‘912 Patent IPR.

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

4 unchanged sentences

On March 18, 2024, the USPTO denied Netlist’s request for Director Review of the ‘918 and ‘054 Patent IPRs.

Netlist filed a notice of appeal challenging the Board’s final written decision for the ‘918 or ‘054 Patent IPRs on May 24, 2024.

Netlist filed a notice of appeal challenging the Board’s final written decision for the ‘918 and ‘054 Patent IPRs on May 24, 2024.

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 (“Samsung Dusseldorf Action”).

13 unchanged sentences

On November 21, 2023, the Court entered its Claim Construction Order.

Trial is scheduled to begin on September 9, 2024.On August 26, 2022, Samsung filed two IPR petitions contesting the validity of Netlist’s ‘060 and ‘160 Patents.

Trial is scheduled to begin on November 12, 2024.

On August 26, 2022, Samsung filed two IPR petitions contesting the validity of Netlist’s ‘060 and ‘160 Patents.

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

2 unchanged sentences

Director review was denied on June 17, 2024.

On August 20, 2024, Netlist a Notice of Appeal to challenge the Board’s final written decision on the ’060 and ’160 Patents before the CAFC, Case No.

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

5 unchanged sentences

The PTAB issued its final written decisions on July 30, 2024, finding all challenged claims unpatentable.

On August 29, 2024, Netlist filed Requests for Director Review of the Board’s final written decisions on the ’215 and ’417 Patents.

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

The Board accorded Samsung’s IPR petition a filing date on June 14, 2023.

On December 12, 2023, the PTAB instituted an IPR trial for the ‘608 Patent, despite having previously denied institution from Micron’s earlier-filed IPR petition of the same Patent.

On December 12, 2023, the PTAB instituted

an IPR trial for the ‘608 Patent, despite having previously denied institution from Micron’s earlier-filed IPR petition of the same Patent.

On December 26, 2023, Netlist filed a request for review of the institution decision by the Director of the USPTO.

As of the reporting date, the PTAB and USPTO Director have denied Netlist’s requests.

An oral hearing is scheduled for September 5, 2024.

An oral hearing was held on September 5, 2024.

On October 9, 2023, Samsung initiated a second declaratory judgement action against Netlist in the DDE ( Samsung Elecs.

20 unchanged sentences

Our 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 June 29, 2024 or December 30, 2023.

No shares of preferred stock were outstanding as of September 28, 2024 or December 30, 2023.

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

3 unchanged sentences

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

Subject to the provisions of the Rights Agreement, including certain exceptions specified therein, a distribution date for the Rights (the “Distribution Date”) will occur upon the earlier of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired or otherwise obtained beneficial ownership of 15 % or more of the then-outstanding shares of our common stock, and (ii) 10 business days (or such later date as may be determined by our board of directors) following the commencement of a tender offer or exchange offer that would result in a person or group becoming an Acquiring Person.

The Rights are not exercisable until the Distribution Date and, unless earlier redeemed or exchanged by us pursuant to the terms of the Rights Agreement (as amended on April 16, 2018, April 16, 2019, August 14, 2020, and April 17, 2024) will expire on the close of business on April 17, 2027.

Subject to the provisions of the Rights Agreement, including certain exceptions specified therein,

a distribution date for the Rights (the “Distribution Date”) will occur upon the earlier of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired or otherwise obtained beneficial ownership of 15 % or more of the then-outstanding shares of our common stock, and (ii) 10 business days (or such later date as may be determined by our board of directors) following the commencement of a tender offer or exchange offer that would result in a person or group becoming an Acquiring Person.

The Rights are not exercisable until the Distribution Date and, unless earlier redeemed or exchanged by us pursuant to the terms of the Rights Agreement, as amended, will expire on the close of business on April 17, 2027.

In connection with the adoption of the Rights Agreement, our board of directors approved a Certificate of Designation of the Series A Preferred Stock (the “Certificate of Designation”) designating 1,000,000 shares of our serial preferred stock as Series A Preferred Stock and setting forth the rights, preferences and limitations of the Preferred Stock.

1 unchanged sentence

September 2021 Lincoln Park Purchase Agreement

On September 28, 2021, we entered into a purchase agreement (the “September 2021 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“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 subject to the conditions and limitations set forth in the September 2021 Purchase Agreement.

As consideration for entering into the September 2021 Purchase Agreement, we issued to Lincoln Park 218,750 shares of our common stock as initial commitment shares in a noncash transaction on September 28, 2021 and will issue up to 143,750 additional shares of our common stock as additional commitment shares on a pro rata basis in connection with any additional purchases.

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

We control the timing and amount of any sales of our common stock to Lincoln Park.

There is no upper limit on the price per share that Lincoln Park must pay for our 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, we may not sell shares of our 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 our common stock.

The September 2021 Purchase Agreement does not limit our ability to raise capital from other sources at our sole discretion, except that, subject to certain exceptions, we may not enter into any Variable Rate Transaction (as defined in the September 2021 Purchase Agreement, including the issuance of any floating conversion rate or variable priced equity-like securities) during the 36 months after the date of the September 2021 Purchase Agreement.

We have the right to terminate the September 2021 Purchase Agreement at any time, at no cost to us.

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

As consideration for entering into the September 2021 Purchase Agreement, we previously issued to Lincoln Park 218,750 shares of our common stock as initial commitment shares in a noncash transaction on September 28, 2021 and would issue up to 143,750 additional shares of our common stock as additional commitment shares on a pro rata basis in connection with any additional purchases.

We would not receive any cash proceeds from the issuance of these additional commitment shares.

On October 1, 2024, the September 2021 Purchase Agreement terminated on its terms.

We controlled the timing and amount of any sales of our common stock to Lincoln Park over the 36-month term of the September 2021 Purchase Agreement.

There was no upper limit on the price per share that Lincoln Park was required to pay for our common stock under the September 2021 Purchase Agreement, but in no event would shares be sold to Lincoln Park on a day the closing price was less than the floor price specified in the September 2021 Purchase Agreement.

In all instances, we could not sell shares of our 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 our common stock.

The September 2021 Purchase Agreement did not limit our ability to raise capital from other sources at our sole discretion, except that, subject to certain exceptions, we could not enter into any Variable Rate Transaction (as defined in the September 2021 Purchase Agreement, including the issuance of any floating conversion rate or variable priced equity-like securities) during the 36 months after the date of the September 2021 Purchase Agreement.

We had the right to terminate the September 2021 Purchase Agreement at any time, at no cost to us.

During 2023, Lincoln Park purchased an aggregate of 7,865,000 shares of our common stock for a net purchase price of $ 23.4 million under the September 2021 Purchase Agreement.

In connection with the purchases, we issued to Lincoln Park an aggregate of 44,939 shares of our common stock as additional commitment shares in noncash transactions.

During the six months ended June 29, 2024, Lincoln Park purchased an aggregate of 3,195,889 shares of our common stock for a net purchase price of $ 5.2 million under the September 2021 Purchase Agreement.

In connection with the purchases, we issued to Lincoln Park

an aggregate of 10,046 shares of our common stock as additional commitment shares in noncash transactions.

During the nine months ended September 28, 2024, Lincoln Park purchased an aggregate of 3,195,889 shares of our common stock for a net purchase price of $ 5.2 million under the September 2021 Purchase Agreement.

In connection with the purchases, we issued to Lincoln Park an aggregate of 10,046 shares of our common stock as additional commitment shares in noncash transactions.

The September 2021 Purchase Agreement terminated on its terms on October 1, 2024 and no shares of our common stock were sold subsequent to the quarter ended September 28, 2024.

2024 Offering

On October 11, 2024, we entered into a Securities Purchase Agreement (the “2024 Purchase Agreement”) with certain investors, pursuant to which we agreed to issue and sell to the investors in a registered offering (the “2024 Offering”) an aggregate of (i) 13,636,364 shares of our common stock, (ii) Series A Common Stock Purchase Warrants (the “Series A Warrants”) to purchase up to an aggregate of 13,636,364 shares of our common stock, and (iii) Series B Common Stock Purchase Warrants (the “Series B Warrants,” collectively, the “Warrants”) to purchase up to 13,636,364 shares of our common stock, at a per share purchase price of $ 1.10 per share and accompanying warrants.

The 2024 Offering closed on October 15, 2024.

The net proceeds to us from the 2024 Offering were approximately $ 14.2 million, after deducting placement agent fees and offering costs paid by us.

The Warrants are exercisable at any time on or after the issuance date and contain provisions with the beneficial ownership limited to 4.99 % of the number of shares of our common stock outstanding immediately after giving effect to the issuance of share of our common stock issuable upon the exercise of the Warrants, which percentage may be increased up to 9.99 % upon the notice to us.

The Series A Warrants have a term of five years from the issuance date and have an exercise price of $ 1.30 per share.

The Series B Warrants have a term of 100 days and have an exercise price of $ 1.10 per share.

Pursuant to the 2024 Purchase Agreement, our director and executive officers entered into lock-up agreements with us, pursuant to which they agreed not to offer for sale, contract to sell, or sell any shares of our common stock or any securities convertible into, or exercisable or exchangeable for, shares of our common stock, for a period of 100 days from the closing of the 2024 Offering, subject to certain customary exceptions.

The 2024 Purchase Agreement also provides that we may not, subject to the exceptions described in the 2024 Purchase Agreement, effect or enter into any Variable Rate Transactions (as defined in the 2024 Purchase Agreement) until the one-year anniversary of the closing date of the 2024 Offering.

Note 7—Stock-Based Awards

As of June 29, 2024, we had 547,986 shares of our common stock reserved for future issuance under our Amended and Restated 2006 Incentive Plan (“Amended 2006 Plan”).

As of September 28, 2024, we had 577,936 shares of our common stock reserved for future issuance under our 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 six months ended June 29, 2024:

The following table summarizes the activity related to stock options during the nine months ended September 28, 2024:

(in thousands)

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Expired or forfeited

Outstanding as of June 29, 2024

Outstanding as of September 28, 2024

Restricted Stock Units

The following table summarizes the activity related to RSUs during the six months ended June 29, 2024:

The following table summarizes the activity related to RSUs during the nine months ended September 28, 2024:

(in thousands)

Balance nonvested as of December 30, 2023

Balance nonvested as of June 29, 2024

Balance nonvested as of September 28, 2024

Stock-Based Compensation

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Three Months Ended

Six Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

Cost of sales

1 unchanged sentence

Selling, general and administrative

As of June 29, 2024, we had approximately $ 8.7 million, net of estimated forfeitures, of unearned stock-based compensation, which we expect to recognize over a weighted-average period of approximately 2.4 years.

As of September 28, 2024, we had approximately $ 7.8 million, net of estimated forfeitures, of unearned stock-based compensation, which we expect to recognize over a weighted-average period of approximately 2.3 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