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Item 9A. Controls and Procedures

2025-03-28 compared with 2024-02-23 · 124 added, 241 removed, 292 unchanged (56% of the section changed)

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Notwithstanding the material weakness in our internal control over financial reporting, we have concluded that the consolidated financial statements included in this Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S.

The effectiveness of our internal control over financial reporting as of December 30, 2023 has been audited by KMJ Corbin & Company LLP, an independent registered public accounting firm, as stated in their report, which is included in Part II, Item 8, of this Form 10-K.

Changes in Internal Control Over Financial Reporting

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Insider Trading Arrangements

During the fiscal quarter ended December 30, 2023, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 105b-1 trading arrangement" (as those terms are defined in Item 408 of Regulation S-K), except as follows:

On November 7, 2023 , Chun K.

Hong , the Company’s President, Chief Executive Officer and sole director , terminated a trading arrangement on behalf of Mr.

Hong and the Chun Ki Hong Won Kyung Cha Community Property Trust dated 8/16/2004 (the “Trust”) that was intended to satisfy the affirmative defense in Rule 10b5 - 1 (c) under the Exchange Act (the “Prior Hong 10b5-1 Sales Plan”), with respect to the sale of up to 936,270 shares of the Company’s common stock held by the Trust and the net shares of the Company’s common stock (not currently determinable) that will be received by Mr.

Hong after the withholding of shares to satisfy tax obligations upon the vesting of 124,750 RSUs.

The Prior Hong 10b5-1 Sales Plan was adopted on September 14, 2023 and had a term that expires on December 31, 2024 .

On the date of termination of the Prior Hong 10b5-1 Sales Plan, Mr.

Hong adopted a trading arrangement (the “Hong 10b5-1 Sales Plan”) that is intended to satisfy the affirmative defense in Rule 10b5 - 1 (c) under the Exchange Act.

The Hong 10b5-1 Sales Plan, which has a term that expires on December 31, 2024 , provides for the sale of up to 936,270 shares of the Company’s common stock held by Mr.

Hong and the net shares of the Company’s common stock (not currently determinable) that will be received by Mr.

Hong after the withholding of shares to satisfy tax obligations upon the vesting of 124,750 RSUs.

During the fiscal quarter ended December 28, 2024, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as those terms are defined in Item 408 of Regulation S-K).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Directors, Executive Officers and Corporate Governanc e

In order to proactively address the economic effects of the COVID-19 pandemic, our Board of Directors (referred to as our “Board” or “Board of Directors”) evaluated various cost-cutting measures, including review of the Board and committee structure, operations and compensation of the members thereof.

As a result of its evaluation and because we are no longer subject to Nasdaq rules, the Board determined it to be in the best interests of its stockholders to reduce the number of directors serving on the Board to one director and to dissolve all committees of the Board effective immediately after our 2020 Annual Meeting of Stockholders on August 7, 2020.

Each member of the Board is elected annually at a meeting of our stockholders and serves for a one-year term until the next annual meeting of our stockholders and until his or her successor is elected and qualified, or until an earlier resignation or removal.

Each of our executive officers is appointed by, and serves at the direction of, our Board, subject to the terms of our employment agreement with our President and Chief Executive Officer, which is described under “Employment Agreements” in Item 11 of this Form 10-K, and which establishes, among other things, such executive officer’s term of office.

Members of our Board of Directors (the “Board”) are elected annually at a meeting of our stockholders and serve for a one-year term until the next annual meeting of our stockholders and until his or her successor is elected and qualified, or until an earlier resignation or removal.

Each of our executive officers is appointed by, and serves at the direction of, our Board, subject to the terms of our employment agreement with our President and Chief Executive Officer, which is described under “Employment Agreements – CEO” in Item 11 of this Form 10-K, and which establishes, among other things, such executive officer’s term of office.

Our Board currently consists of one sitting director, our Chief Executive Officer, Chun K.

The table and narrative below provide, for our current director and executive officers, each such individual’s name;

age as of February 19, 2024;

age as of March 21, 2025;

current position(s) with our Company;

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Gail Sasaki is our Executive Vice President and Chief Financial Officer (“CFO”).

Sasaki has been our Secretary since August 2007.

Sasaki has been our Corporate Secretary since August 2007.

Sasaki joined us in 2006 as Vice President of Finance and subsequently assumed the role of CFO in January 2008.

Prior to her tenure at Netlist, Ms.

Sasaki served in various senior financial roles, including CFO of eMaiMai, Inc., a commercial technology company based in Hong Kong and mainland China;

Sasaki served in various senior financial roles, including CFO of eMaiMai, Inc., a commercial technology company based in Hong Kong and the PRC;

CFO, Senior Vice President of Finance, Secretary and Treasurer of eMotion, Inc.

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Sasaki earned a Bachelor’s degree from the University of California at Los Angeles, and also earned a Master of Business Administration degree from the University of Southern California.

Audit Committee

We do not have an audit committee and, as such, do not have an audit committee financial expert.

Code of Business Conduct and Ethics

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We intend to disclose on our website any amendments to or waivers from this code by posting the relevant material on our website ( www.netlist.com ) in accordance with SEC rules.

Insider Trading Policy and Procedures

We maintain an Insider Trading Policy that prohibits directors, officers, employees, consultants and their family members from trading in our stock when in possession of material, non-public information about the Company.

Our Insider Trading Policy also prohibits our officers, directors, employees, consultants and their family members from, among other things, engaging in speculative transactions in our securities, including by way of the purchase or sale of a put option, a call option or a short sale (including a short sale “against the box”), but permits pledging if a request is submitted to our corporate secretary at least two weeks prior to the proposed execution of documents evidencing the proposed pledge.

Our officers, directors, employees, consultants and their family members may not purchase or sell our stock (i) during the period starting two weeks before the end of each calendar quarter and ending two full trading days after the release of our quarterly or annual earnings results, or (ii) during any blackout period announced by our corporate secretary unless the sale is made pursuant to a 10b5-1 trading plan.

We believe that our insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations applicable to us.

A copy of our insider trading policy is filed as Exhibit 19 to this Form 10-K.

Equity Award Grant Practices

We do not purposefully time our equity award grants to coincide or be near in time to the release of material non-public information, but some option grants may be granted close in time to the extent those options are being granted upon hiring of new executive officers and in connection with annual grants being made as part of our director compensation policy upon appointment of a new director and on an annual basis at each annual meeting.

Executive Compensatio n

Compensation Discussion and Analysis

The following discussion and analysis of compensation arrangements of our named executive officers for 2023 should be read together with the compensation tables and related disclosures set forth below.

This discussion contains forward-looking statements that are based on our current considerations, expectations and determinations regarding future compensation programs.

The actual amount and form of compensation and the compensation programs that we adopt may differ materially from current or planned programs as summarized in this discussion .

The following discussion and analysis relates to the compensation arrangements for 2023 of (i) our principal executive officer, (ii) our principal financial officer and (iii) the most highly compensated person, other than our principal executive officer and principal financial officer, who was serving as an executive officer at the end of our fiscal year ended December 30, 2023 (our “named executive officers”).

We had no other executive officers serving at the end of our fiscal year ended December 30, 2023.

Our named executive officers for fiscal year 2023 were:

Summary Compensation Table

The following table provides information about the compensation arrangements for fiscal years 2023 and 2024 of (i) our principal executive officer, and (ii) the next two most highly compensated person, other than our principal executive officer, who were serving as an executive officer at the end of fiscal years 2023 and 2024 (our “named executive officers”).

Other than our principal executive officer and Chief Financial Officer, we had no other executive officers serving at the end of fiscal years 2023 and 2024.

Our named executive officers for each of the last two fiscal years were:

Name and Principal Position

Base Salary($)

Stock Awards($)(1)

Compensation($)(2)

President, Chief Executive Officer and Sole Director

Executive Vice President, Chief Financial Officer and Secretary

Compensation Philosophy

Our compensation programs are intended to attract and retain employees with skills necessary to enable us to achieve our financial and strategic objectives and to motivate them through the use of appropriate incentives tied to our performance and market value to achieve those objectives.

We recognize that the goals of employee attraction, retention and motivation must be balanced against the necessity of controlling compensation expense, with the ultimate objective of building shareholder value.

With respect to the compensation of our named executive officers, our President, Chief Executive Officer and sole director, who has the responsibility to design a compensation program and set levels of compensation that attempt to achieve the optimal balance between employee attraction, retention and motivation, adjusted the executive officers’ compensation for 2023.

Key Factors in Determining Executive Compensation

Role of Compensation Consultants

Our sole director has from time to time engaged the services of outside consultants to assist in making decisions regarding the establishment of Netlist’s compensation philosophy and programs.

Role of Executive Officers in Compensation Decisions

Our sole director has overall responsibility for the compensation of our CEO and CFO.

Our sole director considered the executive officers’ responsibilities, performance, compensation, and the compensation program’s ability to attract, retain and motivate executive talent.

These considerations reflected compensation levels that our sole director

believed were qualitatively commensurate with executive officers’ individual qualifications, experience, responsibility level, functional role, knowledge, skills and individual performance, as well as Netlist’s performance.

Role of Stockholder Say-on-Pay Votes

At each annual meeting held every three years, including most recently in 2022, we held triennial stockholder advisory “say-on-pay” votes on the compensation of our named executive officers for the immediately preceding fiscal years.

At the 2022 annual meeting, our stockholders overwhelmingly approved the compensation of our named executive officers, with over 85% of our stockholders present and entitled to vote at the meeting voting in favor of our compensation policies for our named executive officers.

Given this result, and following consideration of them, the former Compensation Committee of the Board had decided to retain our overall approach to executive compensation while continuing to evaluate our practices frequently, including in response to future say-on-pay votes.

Moreover, we are required to hold a vote at least every six years regarding how often to hold a stockholder advisory vote on the compensation of our named executive officers.

We held our most recent such vote at the 2019 annual meeting of stockholders, at which our stockholders indicated a preference for a triennial vote.

Consequently, the Board determined that we will hold a triennial stockholder advisory vote on the compensation of our named executive officers until they consider the results of our next say-on-pay frequency vote, which will be held at the 2025 annual meeting of stockholders.

Current Elements of Named Executive Officer Compensation

Overview and Fiscal Year 2023 Highlights

Our current executive compensation program generally consists of base salary, annual cash incentive compensation, equity-based incentives and other benefits.

We combine these elements in order to formulate compensation packages that provide competitive pay and align the interests of our named executive officers with long-term stockholder interests by rewarding the achievement of financial, operational and strategic objectives.

The following table sets forth information regarding the annualized base salary rates at the end of 2023 for our named executive officers:

Fiscal Year 2023 Base Salary ($)

(1) Represents the grant date fair value of the RSUs granted during the year calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC 718”).

The grant date fair value was determined using the fair value of the underlying shares of our common stock.

(2) For fiscal year 2024, the amount consists of (a) for Mr.

Hong, $11,821 for automobile rental payments, $21,976 for other vehicle-related costs, $36,708 for a country club membership, $29,135 for a health club membership, and $10,274 for income tax and estate planning costs incurred on Mr.

Hong’s behalf and (b) for Ms.

Sasaki, the amount consists of $1,590 for a health club membership, $3,000 for matching contributions under the 401(k) defined contribution plan and $3,268 for cell phone services.

Hong received no additional compensation for his service as a director.

Narrative Disclosure to Summary Compensation Table

Compensation to our named executive officers generally consists of an annual base salary, bonus compensation and equity compensation.

Annual Base Salary

The base salaries of our named executive officers are subject to adjustment and generally determined and approved by our sole director.

The base salaries of each of our named executive officers during the fiscal years 2023 and 2024 are described below under the section “Employment Agreements – CEO .”

Our bonuses are discretionary with substantial weight given to financial performance during the year and the enhancement of long-term stockholder value.

Our named executive officers did not receive bonuses in Fiscal 2024.

Equity-Based Incentives

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We believe that equity awards more closely align the interests of our named executive officers with our stockholders, provide our named executive officers with incentives linked to long-term performance, and create an ownership culture.

In addition, the vesting features of our equity awards contribute to executive retention because these features provide an incentive to our named executive officers to remain in our employment during the scheduled vesting periods or until the achievement of the applicable performance milestones, which are expected to be achieved over the medium- to long-term.

To date, we have not had an established set of criteria for granting equity awards;

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The sole director considers, among other things, the role and responsibility of the named executive officer, competitive factors, the amount of stock-based equity compensation already held by the named executive officer, and the cash-based compensation received by the named executive officer, to determine the level and types of equity awards that it approves.

Our bonuses are discretionary with substantial weight given to financial performance during the year and the enhancement of long-term stockholder value.

Generally, we do not provide any perquisites or other personal benefits to our named executive officers except in certain limited circumstances and as provided in employment agreements.

Health and Welfare Benefits

We provide the following benefits to our named executive officers on the same basis provided to all of our employees:

● medical insurance including mental health, dental and vision;

● life insurance and accidental death and dismemberment insurance;

● a Section 401(k) plan for which discretionary matching contributions provided by Netlist;

● short- and long-term disability insurance;

● medical and dependent care flexible spending account;

● a health savings account.

Employment Agreements – CEO

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Hong may earn annual cash performance bonuses, at the discretion of our Board, of up to 100% of his base salary based upon the achievement of individual and Company performance objectives.

Potential Payments Upon Termination or Change of Control

Hong’s employment agreement automatically renews for additional one-year periods unless we provide or Mr.

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Hong’s employment agreement or whose appointment, election or nomination for election was previously so approved or recommended;

(iii) there is consummated a merger or consolidation of our Company in which our Company does not survive or our Company survives but the shares of our common stock outstanding immediately prior to such merger or consolidation represent 50% or less of the voting power of our Company after such merger or consolidation;

(iii) there is consummated a merger or consolidation of our Company in which our Company does not survive or our Company survives but the shares of our

common stock outstanding immediately prior to such merger or consolidation represent 50% or less of the voting power of our Company after such merger or consolidation;

or (iv) our stockholders approve a plan of our complete liquidation or dissolution or there is consummated an agreement for our sale or disposition of all or substantially all of our assets, other than a sale or disposition of all or substantially all of our assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by our stockholders in substantially the same proportions as their ownership of our Company immediately prior to such sale.

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Sasaki is terminated due to death or disability, 25% of the shares subject to outstanding stock options, or such lesser amount as is then unvested, would immediately vest and no additional shares would vest thereafter.

Sasaki is eligible for a target cash bonus of 75% of her base salary, which are to be determined by our Board in its discretion based on various factors.

Summary Compensation Table

The table below provides information about the compensation awarded to, earned by or paid to each of the following individuals, which we refer to collectively as our “named executive officers,” for each of the last three fiscal years.

Name and Principal Position

Base Salary($)

Stock Awards($)(1)

Compensation($)(3)

President, Chief Executive Officer and Sole Director

Executive Vice President, Chief Financial Officer and Secretary

The grant date fair value was determined using the fair value of the underlying shares of our common stock.

(2) Represents the grant date fair value of the option awards granted during the year calculated in accordance with ASC 718.

The assumptions used in the calculations for these amounts are described in Note 1—Summary of Significant Accounting Policies—Stock-Based Compensation and Note 9—Benefit Plans to our consolidated financial statements included in this Form 10-K.

The material terms of each stock option award granted in 2023 are described below under “Outstanding Equity Awards at Fiscal Year End.”

(3) For 2023, the amount consists of (a) for Mr.

Hong, $11,821 for automobile rental payments, $12,098 for other vehicle-related costs, $34,925 for a country club membership, $18,622 for a health club membership, and $16,266 for income tax and estate planning costs incurred on Mr.

Hong’s behalf and (b) for Ms.

Sasaki, the amount consists of $2,757 for a health club membership and $3,000 for matching contributions under the 401(k) defined contribution plan.

For 2022, the amount consists of (a) for Mr.

Hong, $11,860 for automobile rental payments, $2,414 for other vehicle-related costs, $35,083 for a country club membership, $826 for a health club membership, and $8,705 for income tax and estate planning costs incurred on Mr.

Hong’s behalf and (b) for Ms.

Sasaki, the amount consists of $855 for a health club membership and $3,000 for matching contributions under the 401(k) defined contribution plan.

For 2021, the amount consists of (a) for Mr.

Hong, $10,816 for automobile rental payments, $7,527 for other vehicle-related costs, $26,027 for a country club membership, $5,480 for a health club membership, and $8,365 for income tax and estate planning costs incurred on Mr.

Hong’s behalf and (b) for Ms.

Sasaki, the amount consists of $22,007 for a health club membership and $3,000 for matching contributions under the 401(k) defined contribution plan.

Hong received no additional compensation for his service as a director.

CEO Pay Ratio – 2023

We compared the 2023 annual total compensation of our CEO of $2,053,207 and the 2023 annual total compensation of our median global compensated employee of $72,248.

The result of this calculation was a CEO Pay Ratio of 28 to 1.

We determined the median global compensated employee’s total compensation by using the same methodology used to calculate our CEO’s annual total compensation (see the table entitled “Summary Compensation Table”).

We then applied this measure to our global employee population as of December 30, 2023 (the last day of our 2023 fiscal year).

For the calculation, approximately 49% of the global employee population was based in the United States and 51% was based in China.

Sasaki is eligible for a target cash bonus of 75% of her base salary, which were to be determined by our Board in its discretion based on various factors.

Retirement Benefits

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All of these employee contributions are fully vested upon contribution.

addition, we may make matching contributions on the contributions of our employees on a discretionary basis.

In 2023, 2022, and 2021, we made matching contributions of $115,733, $135,411, and $105,161, respectively.

Grants of Plan-Based Awards – 2023

The following table shows information regarding the incentive awards granted to the named executive officers for 2023:

All other stock awards:

number of shares of stock or units

All other option awards:

number of securities underlying options

Exercise or base price of option awards ($/sh)

Grant date fair value of stock and option awards

Estimated future payouts under non-equity incentive plan awards(1)

Cash Incentive

Time-Based RSUs(2)

Cash Incentive

Time-Based RSUs(2)

(1) The amounts shown in these columns represent the threshold, target, and maximum payout levels.

The actual bonus amount paid to each named executive officer is reported under the “Bonus” column of the Summary Compensation Table.

The material terms of each stock option award granted in 2023 are described below under “Outstanding Equity Awards at Fiscal Year End.”

(2) The material terms of each RSU award granted in 2023 are described below under “Outstanding Equity Awards at Fiscal Year End.”

In addition, we may make matching contributions on the contributions of our employees on a discretionary basis.

In fiscal years 2024 and 2023, we made matching contributions of $117,195 and $115,733, respectively.

Health and Welfare Benefits

We provide the following benefits to our named executive officers on the same basis provided to all of our employees:

● medical insurance including mental health, dental and vision;

● life insurance and accidental death and dismemberment insurance;

● a Section 401(k) plan for which discretionary matching contributions provided by Netlist;

● short- and long-term disability insurance;

● medical and dependent care flexible spending account;

● a health savings account.

Outstanding Equity Awards at Fiscal Year End

The following table shows information about the equity awards held by our named executive officers as of December 30, 2023:

The following table shows information about the equity awards held by our named executive officers as of the end of fiscal year 2024:

Option Awards

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Represents stock option awards granted under the Amended and Restated 2006 Equity Incentive Plan (the “Amended 2006 Plan”).

These stock option awards that are not fully exercisable vest in 16 equal quarterly installments, subject to continued service on each vesting date, subject to accelerated vesting in certain circumstances as described under “Employment Agreements” above.

Represents RSUs granted under the Amended 2006 Plan.

Restrictions on RSUs lapse in eight equal semi-annual installments from the grant date.

2023 Option Exercised and Stock Vested

The following table show information regarding the vesting during 2023 of stock options and RSUs previously granted to the named executive officers.

Option Awards

Number of Shares Acquired on Exercise(#)

Value Realized on Exercise($)(1)

Number of Shares Acquired on Vesting(#)

Value Realized on Vesting($)(2)

(1) Reflects the product of the number of shares of stock subject to the exercised option multiplied by the difference between the market price of our common stock at the time of exercise on the exercise date and the exercise price of the option.

(2) Reflects the product of the number of shares of stock vested multiplied by the market price of our common stock on the vesting date.

Director Compensation

Our sole director receives no additional compensation for his service as director.

Employee Compensation Risks

Our management oversees management of risks relating to our compensation plans and programs and has assessed the risks associated with our compensation policies and practices for all employees, including non-executive officers.

These include risks relating to setting ambitious targets for our employees’ compensation or the vesting of their equity awards and our emphasis on equity-based compensation, and the potential impact of such practices on the retention or decision-making of our employees, particularly our senior management.

Based on the results of this assessment, we do not believe that our compensation policies and practices for all employees, including non-executive officers, create risks that are reasonably likely to have a material adverse effect on us.

Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

We did not grant stock options or similar awards as part of our equity compensation program in fiscal year 2024.

If stock options or similar awards are granted, our policy is to not grant stock options or similar awards in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock, such as a significant positive or negative earnings announcement, and not time the public release of such information based on stock option grant dates, but some option grants may be granted close in time to the extent those options are being granted upon hiring of new executive officers and in connection with annual grants being made as part of our director compensation policy upon appointment of a new director and on an annual basis at each annual meeting.

These restrictions do not apply to RSUs or other types of equity awards that do not include an exercise price related to the market price of our common stock on the date of grant.

During the period covered by this report, we have not timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

During fiscal year 2024, none of our named executive officers were awarded options with an effective grant date during any period beginning four business days before the filing or furnishing of a Form 10-Q, Form 10-K, or Form 8-K that disclosed material nonpublic information (other than a Form 8-K that disclosed a material

new option award grant under Item 5.02(e)), and ending one business day after the filing or furnishing of such reports.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matter s

Security Ownership of Certain Beneficial Owners and Management

The table below sets forth information regarding the ownership of our common stock, as of February 19, 2024 (the “Table Date”) unless otherwise indicated in the footnotes to the table, by (i) all persons known by us to beneficially own more than 5% of our common stock, (ii) each of our current directors, (iii) each of our named executive officers, and (iv) all of our directors and executive officers as a group.

The table below sets forth information regarding the ownership of our common stock, as of March 21, 2025 (the “Table Date”) unless otherwise indicated in the footnotes to the table, by (i) all persons known by us to beneficially own more than 5% of our common stock, (ii) each of our current directors, (iii) each of our named executive officers, and (iv) all of our directors and executive officers as a group.

Unless otherwise indicated, each person named below possesses sole voting and investment power over all shares of common stock shown as beneficially owned by such person.

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(1) All ownership percentages are based on 273,994,997 shares of our common stock outstanding as of the Table Date.

(2) Represents (i) 2,274,750 shares of common stock issuable upon the exercise of stock options that are or will be vested and exercisable within 60 days after the Table Date and (ii) 4,816,124 outstanding shares of common stock, of which 3,611,177 shares are held by Mr.

(2) Represents (i) 1,787,500 shares of common stock issuable upon the exercise of stock options and restricted stock units that are or will be vested and exercisable within 60 days after the Table Date and (ii) 5,110,735 outstanding shares of common stock, of which 3,611,177 shares are held by Mr.

Hong and his wife, Won K.

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available for future equity

available for future issuance under equity

compensation plans (excluding securities reflected in column (a))

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(1) The weighted-average exercise price is calculated based solely on the exercise prices of the outstanding options and do not reflect the shares that will be issued upon the vesting of outstanding awards of RSUs, which have no exercise price.

(2) This number includes the following outstanding awards granted under the Equity Plan:

(2) This number includes the following outstanding awards granted under the Amended 2006 Plan:

3,256,363 shares subject to outstanding stock options and 3,002,510 shares subject to outstanding RSUs.

(3) Subject to certain adjustments, as of December 30, 2023, we were authorized to issue a maximum of 18,605,566 shares of our common stock pursuant to awards granted under the Equity Plan.

(3) Consists of shares that remained available for future issuance under the Amended 2006 Plan as of December 28, 2024, which provides that the number of shares of common stock issuable under the Amended 2006 Plan automatically increases on the first day of each calendar year by the number of shares equal to the lesser of (i) 2.5% of the issued and outstanding shares of common stock as of January 1 of such year and (ii) 1,200,000 shares of common stock.

(4) Consists of 415,000 RSUs outstanding as of December 28, 2024.

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Related Party Transactions

Related party transactions are reviewed by our sole director in accordance with our related party transaction policy.

Related parties include our directors and officers, their family members and affiliates, and certain beneficial owners.

In cases where the related party is a director or an affiliate of a director, that director does not participate in the review of the proposed transaction.

Except as described below and except for employment arrangements, which are described in Item 11 above, during 2023, there were no actual or proposed related party transactions in excess of $120,000 other than the following.

Except as described below and except for employment arrangements, since December 30, 2023, there has not been, nor is there currently proposed, any transaction or series of transactions in which our Company was or is to be a participant, in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for our last two completed fiscal years, and in which any director, officer or beneficial owner of more than 5% of our common stock, or member of any such person’s immediate family, had or will have a direct or indirect material interest.

Our Executive Vice President of Sales and Operations (formerly, our Vice President of Netlist Base and Commodity Sales), Paik K.

Hong, is the brother of Chun K.

Hong, our President, CEO and sole director.

For 2023, Mr.

Hong earned cash salary of $233,334, received $14,950 for weekly fitness training, $3,000 for matching contributions under the 401(k) defined contribution plan, and was granted 50,000 shares of RSUs with the grant-date fair value of $182,500 measured in accordance with ASC 718.

The grant-date fair value was determined using the fair value of the underlying shares of our common stock.

For 2022, Mr.

Hong earned cash salary of $182,500, received $34,067 for weekly fitness training, $3,000 for matching contributions under the 401(k) defined contribution plan, and was granted 200,000 shares of RSUs with the grant-date fair value of $674,000 measured in accordance with ASC 718.

Hong, our President, Chief Executive Officer and sole director.

For fiscal year 2024, Mr.

Hong earned a cash salary of $250,000.

He received $1,400 for weekly fitness training and $3,000 for matching contributions for a savings plan that qualifies as a defined contribution plan under Section 401(k) of the Code.

He was also granted 100,000 shares of RSUs with the grant date fair value of $133,000 measured in accordance with ASC 718.

For fiscal year 2023, Mr.

Hong earned a cash salary of $233,334.

He received $14,950 for weekly fitness training and $3,000 for matching contributions for a savings plan that qualifies as a defined contribution plan under Section 401(k) of the Code.

He was also granted 50,000 shares of RSUs with the grant date fair value of $182,500 measured in accordance with ASC 718.

The grant date fair value was determined using the fair value of the underlying shares of our common stock.

We have entered into indemnification agreements with each of our sole director and executive officers.

In general, these agreements require us to indemnify each such individual to the fullest extent permitted under Delaware law against certain liabilities that may arise by reason of their service for us, and to advance expenses incurred as a result of any such proceeding as to which any such individual could be indemnified.

In general, these agreements require us to indemnify each such individual to the fullest extent permitted under

Delaware law against certain liabilities that may arise by reason of their service for us, and to advance expenses incurred as a result of any such proceeding as to which any such individual could be indemnified.

Director Independence

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Fees Paid to Independent Registered Public Accounting Firm

The following table presents the aggregate fees billed to us by our independent registered public accounting firm, KMJ Corbin & Company LLP (“KMJ”), for 2023 and 2022:

Our independent registered public accounting firm is Macias Gini O’Connell LLP (“MGO”).

MGO served as our independent public accounting firm for the fiscal year ended December 28, 2024, beginning in September 2024.

KMJ Corbin & Company LLP (“KMJ”) served as our independent registered public accounting firm for the fiscal year ended December 30, 2023 and for the fiscal year ended December 28, 2024 until September 2024.

The following table presents fees for professional services rendered by MGO for the fiscal year ended December 28, 2024 and by KMJ for the fiscal years ended December 28, 2024 and December 30, 2023.

Fiscal Year ended

December 28, 2024

Fiscal Year ended

Audit Fees (1)

Audit-Related Fees (2)

Audited-Related Fees (2)

All Other Fees (2)

Audit fees consist of fees billed to us for professional services rendered for the audit of our annual consolidated financial statements, the review of our interim condensed consolidated financial statements included in our quarterly reports and the audit of our internal control over financial reporting as required by Section 404.

( 1) Audit fees consist of fees billed or expected to be billed to us for professional services rendered for the audit of our annual consolidated financial statements, the review of our interim condensed consolidated financial statements included in our quarterly reports and the audit of our internal control over financial reporting as required by Section 404.

These fees also include fees billed to us for professional services that are normally provided in connection with statutory and regulatory filings or engagements, including the review of our registration statements on Form S-3 and Form S-8 and certain other related matters, such as the delivery of comfort letters and consents in connection with these registration statements.

KMJ did not bill to us any audit-related fees, tax fees or other fees in 2023 or 2022.

(2) KMJ and MGO did not bill to us any audit-related fees, tax fees or other fees in fiscal years ended December 28, 2024 and December 28, 2023.

Pre-Approval Policies and Procedures

Our sole director pre-approves all audit and permissible non-audit services to be performed for us by our independent registered public accounting firm, except for certain “de minimus” non-audit services that may be ratified by sole director.

Our sole director pre-approved all services performed by KMJ in 2023.

Our sole director pre-approved all services performed by KMJ and MGO in fiscal year 2024.

Exhibits and Financial Statement Schedule s

15 unchanged sentences

Balance at End of Year

January 1, 2022

December 30, 2023

December 28, 2024

All other financial statement schedules have been omitted, as they are not required, not applicable, or the required information is otherwise included.

All financial statement schedules have been omitted, as they are not required, not applicable, or the required information is otherwise included.

(3) Exhibit listing

11 unchanged sentences

August 15, 2017

Amended and Restated Bylaws of Netlist, Inc.

December 20, 2012

Certificate of Amendment to Amended and Restated Bylaws of Netlist, Inc.

December 29, 2017

Amendment to Amended and Restated Bylaws of Netlist, Inc.

August 10, 2020

Second Amended and Restated Bylaws of Netlist, Inc.

November 7, 2024

Description of the Registrant’s Securities

21 unchanged sentences

August 15, 2023

Amendment No.

4 to Rights Agreement, dated as of April 17, 2024, by and between Netlist, Inc.

and Equiniti Trust Company, LLC, as rights agent

April 17, 2024

Form of Series A Warrant

October 11, 2024

Form of Series B Warrant

October 11, 2024

Form of Indemnity Agreement for officers and directors

7 unchanged sentences

March 31, 2017

Loan and Security Agreement, dated October 31, 2009, between Silicon Valley Bank and Netlist, Inc.

November 2, 2009

Intercompany Subordination Agreement, dated October 31, 2009, among Silicon Valley Bank, Netlist, Inc., and Netlist Technology Texas, L.P.

November 2, 2009

Guarantor Security Agreement, dated October 31, 2009, between Silicon Valley Bank and Netlist Technology Texas LP

November 2, 2009

Intellectual Property Security Agreement, dated October 31, 2009, between Silicon Valley Bank and Netlist, Inc.

November 2, 2009

Amendment to Loan Documents, dated March 24, 2010, between Silicon Valley Bank and Netlist, Inc.

Incorporated by Reference

Filed Herewith

Amendment to Loan Documents, dated June 30, 2010, between Silicon Valley Bank and Netlist, Inc.

August 12, 2010

Amendment to Loan Documents, dated September 30, 2010, between Silicon Valley Bank and Netlist, Inc.

November 16, 2010

Amendment to Loan Documents, dated May 11, 2011, between Silicon Valley Bank and Netlist, Inc.

Amendment to Loan Documents, dated August 10, 2011, between Silicon Valley Bank and Netlist, Inc.

August 15, 2011

Amendment to Loan Documents, dated May 14, 2012, between Silicon Valley Bank and Netlist, Inc.

Forbearance to Loan and Security Agreement, dated March 27, 2013, between Netlist, Inc.

and Silicon Valley Bank

March 29, 2013

Amendment to Loan Documents, dated July 17, 2013, between Netlist, Inc.

and Silicon Valley Bank

November 12, 2013

Amendment to Loan Documents, dated September 30, 2014, between Netlist, Inc.

and Silicon Valley Bank

March 27, 2015

Senior Secured Convertible Promissory Note and Warrant Purchase Agreement, dated November 18, 2015, between Netlist, Inc.

28 New Technology Business Investment LLP

November 19, 2015

Registration Rights Agreement, dated November 18, 2015, between Netlist, Inc.

28 New Technology Business Investment LLP

November 19, 2015

Amendment to Loan Documents, dated January 29, 2016, between Netlist, Inc.

and Silicon Valley Bank

February 1, 2016

Amendment to Loan and Security Agreement, dated March 27, 2017, between Netlist, Inc.

and Silicon Valley Bank

March 29, 2017

Amendment to Loan and Security Agreement, dated April 12, 2017, by and between Netlist, Inc.

and Silicon Valley Bank

August 15, 2017

Amendment to Loan and Security Agreement, dated March 20, 2018, by and between Netlist, Inc.

and Silicon Valley Bank

March 26, 2018

Incorporated by Reference

Filed Herewith

Amendment to Loan and Security Agreement, dated March 21, 2019, by and between Netlist, Inc.

and Silicon Valley Bank

March 22, 2019

Amendment to Loan and Security Agreement, dated February 27, 2020, by and between Netlist, Inc.

and Silicon Valley Bank

March 10, 2020

Amendment to Loan and Security Agreement dated April 9, 2021, by and between Netlist, Inc.

and Silicon Valley Bank

Amendment to Loan and Security Agreement, dated April 29, 2022, by and between Netlist, Inc.

and Silicon Valley Bank

Purchase Agreement, dated June 24, 2019, by and between Netlist, Inc.

and Lincoln Park Capital Fund, LLC

June 24, 2019

Purchase Agreement, dated March 5, 2020, by and between Netlist, Inc.

and Lincoln Park Capital Fund, LLC

March 10, 2020

Purchase Agreement dated July 12, 2021, by and between Netlist, Inc.

and Lincoln Park Capital Fund, LLC

July 12, 2021

Registration Rights Agreement, dated July 12, 2021, by and between Netlist, Inc.

and Lincoln Park Capital Fund, LLC

July 12, 2021

Purchase Agreement, dated September 28, 2021, by and between Netlist, Inc.

and Lincoln Park Capital, LLC

September 28, 2021

Registration Rights Agreement, dated September 28, 2021, by and between Netlist, Inc.

and Lincoln Park Capital Fund, LLC.

September 28, 2021

Lease, dated April 28, 2021, by and between Netlist, Inc.

and University Research Park, LLC

Incorporated by Reference

Filed Herewith

Form of Securities Purchase Agreement, dated August 14, 2023, by and among Netlist, Inc.

8 unchanged sentences

November 9, 2023

Form of Securities Purchase Agreement dated October 11, 2024 between Netlist, Inc.

and the purchasers identified therein

October 11, 2024

Placement Agency Agreement dated October 11, 2024 by and between Netlist, Inc.

and Roth Capital Partners, LLC

October 11, 2024

Form of Lock-Up Agreement

October 11, 2024

Purchase Agreement, dated as of March 13, 2025, between Netlist, Inc.

and Lincoln Park Capital Fund, LLC

March 13, 2025

Registration Rights Agreement, dated as of March 13, 2025, between Netlist, Inc.

and Lincoln Park Capital Fund, LLC

March 13, 2025

Insider Trading Policy

Subsidiaries of Netlist, Inc.

March 1, 2022

Consent of Macias Gini & O’Connell LLP

Consent of KMJ Corbin & Company LLP

Incorporated by Reference

Filed Herewith

Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer

6 unchanged sentences

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Incorporated by Reference

Filed Herewith

Inline XBRL Taxonomy Extension Definition Linkbase Document

3 unchanged sentences

Management contract or compensatory plan or arrangement.

Confidential treatment has been granted with respect to portions of this exhibit.

Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

2 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

February 23, 2024

March 28, 2025

Netlist, Inc.

3 unchanged sentences

(Principal Executive Officer)

February 23, 2024

March 28, 2025

/s/ Gail Sasaki

1 unchanged sentence

(Principal Financial and Accounting Officer)

February 23, 2024

March 28, 2025

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-K

Item 9A. Controls and Procedures