NETLIST INC 10-K

Item 8. Financial Statements and Supplementary Dat a ​ ​ ​ ​ ​ Index to Consolidated Financial Statements Page Consolidated Balance Sheets ​ 56 Consolidated Statements of Operations ​ 57 Consolidated Statements of Stockholders’ Equity (Deficit ) ​ 58 Consolidated Statements of Cash Flows ​ 59 Notes to Consolidated Financial Statements ​ 60 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 324 ) ​ 85 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 170) ​ 86 Schedule II – Valuation and Qualifying Accounts ​ 99 ​ ​ ​ ​ ​ ​ ​ ​ ​ 55 Table of Contents Netlist, Inc. and Subsidiaries ​ CONSOLIDATED BALANCE SHEETS (in thousands, except par value amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 28, ​ December 30, ​ 2024 2023 ASSETS Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 22,507 ​ $ 40,445 Restricted cash ​ ​ 12,100 ​ ​ 12,400 Accounts receivable, net of allowances of $ 41 (2024) and $ 68 (2023) ​ ​ 1,671 ​ ​ 4,562 Inventories ​ ​ 2,744 ​ ​ 12,031 Prepaid expenses and other current assets ​ ​ 733 ​ ​ 441 Total current assets ​ ​ 39,755 ​ ​ 69,879 Property and equipment, net ​ ​ 517 ​ ​ 770 Operating lease right-of-use assets ​ ​ 1,101 ​ ​ 1,590 Other assets ​ ​ 466 ​ ​ 560 Total assets ​ $ 41,839 ​ $ 72,799 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 42,307 ​ $ 39,831 Revolving line of credit ​ ​ 1,230 ​ ​ 3,844 Accrued payroll and related liabilities ​ ​ 808 ​ ​ 1,346 Deferred revenue ​ ​ 40 ​ ​ — Other current liabilities ​ ​ 2,675 ​ ​ 2,569 Total current liabilities ​ ​ 47,060 ​ ​ 47,590 Operating lease liabilities ​ ​ 641 ​ ​ 1,213 Other liabilities ​ ​ 186 ​ ​ 237 Total liabilities ​ ​ 47,887 ​ ​ 49,040 Commitments and contingencies ​ ​ ​ ​ ​ ​ Stockholders' equity (deficit): ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.001 par value— 10,000 shares authorized: Series A preferred stock, $ 0.001 par value; 1,000 shares authorized; none issued and outstanding ​ ​ — ​ ​ — Common stock, $ 0.001 par value— 450,000 shares authorized; 271,986 (2024) and 253,593 (2023) shares issued and outstanding ​ ​ 273 ​ ​ 254 Additional paid-in capital ​ ​ 331,367 ​ ​ 307,328 Accumulated deficit ​ ​ ( 337,688 ) ​ ​ ( 283,823 ) Total stockholders' equity (deficit) ​ ​ ( 6,048 ) ​ ​ 23,759 Total liabilities and stockholders' equity (deficit) ​ $ 41,839 ​ $ 72,799 ​ See accompanying Notes to Consolidated Financial Statements. ​ ​ ​ 56 Table of Contents Netlist, Inc. and Subsidiaries ​ CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 28, ​ December 30, ​ 2024 2023 Net sales ​ $ 147,103 ​ $ 69,205 Cost of sales ​ ​ 144,219 ​ ​ 66,812 Gross profit ​ ​ 2,884 ​ ​ 2,393 Operating expenses: ​ ​ ​ ​ ​ ​ Research and development ​ ​ 8,064 ​ ​ 9,164 Intellectual property legal fees ​ ​ 37,958 ​ ​ 42,572 Selling, general and administrative ​ ​ 12,090 ​ ​ 12,414 Total operating expenses ​ ​ 58,112 ​ ​ 64,150 Operating loss ​ ​ ( 55,228 ) ​ ​ ( 61,757 ) Other income, net: ​ ​ ​ ​ ​ ​ Interest income, net ​ ​ 1,048 ​ ​ 1,300 Other income, net ​ ​ 316 ​ ​ 60 Total other income, net ​ ​ 1,364 ​ ​ 1,360 Loss before provision for income taxes ​ ​ ( 53,864 ) ​ ​ ( 60,397 ) Provision for income taxes ​ ​ 1 ​ ​ 1 Net loss ​ $ ( 53,865 ) ​ $ ( 60,398 ) ​ ​ ​ ​ ​ ​ ​ Loss per share: ​ ​ ​ ​ ​ ​ Basic and diluted ​ $ ( 0.21 ) ​ $ ( 0.25 ) Weighted-average common shares outstanding: ​ ​ ​ ​ ​ ​ Basic and diluted ​ ​ 259,904 ​ ​ 244,118 ​ ​ See accompanying Notes to Consolidated Financial Statements. 57 Table of Contents ​ Netlist, Inc. and Subsidiaries ​ CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-in ​ Accumulated ​ Stockholders' ​ Shares Amount Capital Deficit Equity (Deficit) Balance, December 31, 2022 ​ 232,557 ​ $ 233 ​ $ 250,428 ​ $ ( 223,425 ) ​ $ 27,236 Net loss ​ — ​ ​ — ​ ​ — ​ ​ ( 60,398 ) ​ ​ ( 60,398 ) Issuance of common stock, net ​ 19,021 ​ ​ 20 ​ ​ 52,038 ​ ​ — ​ ​ 52,058 Exercise of stock options ​ 661 ​ ​ — ​ ​ 526 ​ ​ — ​ ​ 526 Stock-based compensation ​ — ​ ​ — ​ ​ 4,337 ​ ​ — ​ ​ 4,337 Restricted stock units vested and distributed ​ 1,354 ​ ​ 1 ​ ​ ( 1 ) ​ ​ — ​ ​ — Balance, December 30, 2023 ​ 253,593 ​ ​ 254 ​ ​ 307,328 ​ ​ ( 283,823 ) ​ ​ 23,759 Net loss ​ — ​ ​ — ​ ​ — ​ ​ ( 53,865 ) ​ ​ ( 53,865 ) Issuance of common stock, net ​ 16,842 ​ ​ 17 ​ ​ 19,439 ​ ​ — ​ ​ 19,456 Exercise of stock options ​ 276 ​ ​ 1 ​ ​ 184 ​ ​ — ​ ​ 185 Stock-based compensation ​ — ​ ​ — ​ ​ 4,436 ​ ​ — ​ ​ 4,436 Restricted stock units vested and distributed ​ 1,289 ​ ​ 1 ​ ​ ( 1 ) ​ ​ — ​ ​ — Tax withholdings related to net share settlements of equity awards ​ ( 14 ) ​ ​ — ​ ​ ( 19 ) ​ ​ — ​ ​ ( 19 ) Balance, December 28, 2024 ​ 271,986 ​ $ 273 ​ $ 331,367 ​ $ ( 337,688 ) ​ $ ( 6,048 ) ​ See accompanying Notes to Consolidated Financial Statements. ​ 58 Table of Contents Netlist, Inc. and Subsidiaries ​ CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 28, ​ December 30, ​ 2024 2023 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 53,865 ) ​ $ ( 60,398 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 345 ​ ​ 368 Non-cash lease expense ​ ​ 570 ​ ​ 640 Gain on forgiveness of debt ​ ​ ( 471 ) ​ ​ — Stock-based compensation ​ ​ 4,436 ​ ​ 4,337 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ 2,891 ​ ​ 3,680 Inventories ​ ​ 9,287 ​ ​ ( 1,345 ) Prepaid expenses and other assets ​ ​ 281 ​ ​ 602 Accounts payable ​ ​ 2,476 ​ ​ 11,363 Accrued payroll and related liabilities ​ ​ ( 538 ) ​ ​ ( 242 ) Deferred revenue ​ ​ 40 ​ ​ — Other liabilities ​ ​ ( 37 ) ​ ​ ( 606 ) Net cash used in operating activities ​ ​ ( 34,585 ) ​ ​ ( 41,601 ) Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Acquisition of property and equipment ​ ​ ( 71 ) ​ ​ — Net cash used in investing activities ​ ​ ( 71 ) ​ ​ — Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Net repayments under line of credit ​ ​ ( 2,614 ) ​ ​ ( 1,091 ) Principal repayments under finance lease ​ ​ ( 90 ) ​ ​ ( 211 ) Payments on notes payable ​ ​ ( 500 ) ​ ​ ( 447 ) Proceeds from issuance of common stock, net ​ ​ 19,456 ​ ​ 52,058 Proceeds from exercise of stock options ​ ​ 185 ​ ​ 526 Payments for taxes related to net share settlement of equity awards ​ ​ ( 19 ) ​ ​ — Net cash provided by financing activities ​ ​ 16,418 ​ ​ 50,835 Net change in cash, cash equivalents and restricted cash ​ ​ ( 18,238 ) ​ ​ 9,234 Cash, cash equivalents and restricted cash at beginning of period ​ ​ 52,845 ​ ​ 43,611 Cash, cash equivalents and restricted cash at end of period ​ $ 34,607 ​ $ 52,845 ​ ​ ​ ​ ​ ​ ​ Reconciliation of cash, cash equivalents and restricted cash at end of period: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 22,507 ​ $ 40,445 Restricted cash ​ ​ 12,100 ​ ​ 12,400 Cash, cash equivalents and restricted cash at end of period ​ $ 34,607 ​ $ 52,845 ​ See accompanying Notes to Consolidated Financial Statements. ​ 59 Table of Contents ​ Netlist, Inc. and Subsidiaries ​ Notes to Consolidated Financial Statements ​ Note 1—Summary of Significant Accounting Policies ​ Basis of Presentation ​ Netlist, Inc. and its wholly owned subsidiaries (collectively the “Company,” “Netlist,” “we,” “us,” or “our”) is a leading innovator in advanced memory and storage solutions, pushing the boundaries of technology to deliver unparalleled performance and reliability. With a rich portfolio of patented technologies, we have consistently driven innovation in the field of cutting-edge enterprise memory and storage, advancing artificial intelligence and empowering businesses and industries to thrive in the digital age. ​ The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of Netlist, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses. Actual results may differ materially from those estimates. We have evaluated events occurring subsequent to December 28, 2024 through the filing date of this Form 10-K and concluded that there were no events that required recognition and disclosures, other than those discussed elsewhere in the notes hereto. Certain prior period amounts have been reclassified to conform to the current period’s presentation. ​ Our fiscal year is the 52 - or 53 -week period that ends on the Saturday nearest to December 31. Our fiscal year 2024 ended on December 28, 2024 and fiscal year 2023 ended on December 30, 2023. All fiscal years presented in this Form 10-K included 52 weeks. Additionally, all quarters included 13 weeks. Unless otherwise stated, 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. ​ Recently Issued Accounting Standards ​ In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for the annual periods beginning January 1, 2024, and becomes effective for interim periods within fiscal years beginning January 1, 2025. We adopted this guidance on December 28, 2024. The adoption only impacted our disclosure and has no material impact on the Company’s consolidated financial statements as of and for the year ended December 28, 2024. ​ In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which updates expense disclosure requirements on an annual and interim basis. This ASU is effective for the annual periods beginning after December 15, 2026, and the interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU. ​ In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which will require us to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. We will adopt this ASU using either a prospective or retrospective transition method. We are currently evaluating the impact of adopting this ASU. 60 Table of Contents ​ Revenue Recognition ​ Product Revenue ​ Revenue is recognized when control is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods and services. Revenue recognition is evaluated through the five steps outlined within the accounting guidance. Substantially all of our product sales relate to products sold at a point in time through ship-and-bill performance obligations. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Contracts with customers are comprised of customer purchase orders, invoices (including our standard terms and conditions) and written contracts. ​ Performance Obligations ​ Net product sales and related cost of sales are primarily the result of promises to transfer products to customers. For performance obligations related to substantially all of the ship-and-bill products, control transfers at a point in time when title transfers upon shipment of the product to the customer, and for some sales, control transfers when title is transferred at time of receipt by the customer. Once a product has shipped or has been delivered, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. We consider control to have transferred upon shipment or delivery, because we have a present right to payment at that time, the customer has legal title to the asset, we have transferred physical possession of the asset, and the customer has the significant risks and rewards of ownership of the asset. ​ Amounts billed to our customers for shipping and handling are recorded in net sales. Shipping and handling costs incurred by us are included in cost of sales in the accompanying consolidated statements of operations. ​ Significant Payment Terms ​ For ship-and-bill type contracts with customers, the invoice states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment terms are typically due within 30 days after delivery but, in limited instances, can range up to 90 days after delivery. Accordingly, our contracts with customers do not include a significant financing component. ​ Variable Consideration ​ Our revenue generating activities include variable consideration which is recorded as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. Common forms of variable consideration include limited rights of return for up to 30 days, except for sales of excess component inventories, which contain no right-of-return privileges and volume rebates for meeting established sales targets. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available. ​ Returns for products sold are estimated using the expected value method and are recorded as a reduction in reported revenues at the time of sale based upon historical product return experience and is adjusted for known trends to arrive at the amount of consideration to which we expect to receive. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. ​ 61 Table of Contents ​ Contract Assets and Liabilities ​ We continually evaluate whether the revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities. Generally, we do not have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed. Contract liabilities (deferred revenues) are comprised of payments received from our customers in advance of transferring products to customers. As of December 28, 2024, deferred revenue was immaterial. As of December 30, 2023, there was no deferred revenue. ​ Warranties ​ We offer standard product warranties generally ranging from one to three years to our memory subsystem products customers, depending on the negotiated terms of any purchase agreements, and have no other post-shipment obligations or separately priced extended warranty or product maintenance contracts. These warranties require us to repair or replace defective product returned to us during the warranty period at no cost to the customer. Warranties are not offered on sales of component products. We record an estimate for warranty related costs at the time of sale based on our historical and estimated future product return rates and expected repair or replacement costs. Estimated future warranty costs are recorded in the period in which the sale is recorded and are included in cost of sales in the consolidated statements of operations. ​ Cash and Cash Equivalents ​ Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less. ​ Restricted Cash ​ Our restricted cash consists of cash to secure standby letters of credit (see Note 3 — Financing Arrangements). ​ Fair Value Measurements ​ Certain assets and liabilities are accounted for at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of those three levels based on the lowest level input that is significant to the fair value measurement in its entirety. ​ ● Level 1 – inputs are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. ● Level 2 – inputs are based on quoted prices of similar instruments in active markets, quoted prices for identical or similar instruments in market that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 – inputs are generally unobservable inputs for the asset or liability, which are typically based on management’s estimates of assumptions that market participants would use in pricing the assets and liabilities. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. ​ Our financial instruments consist principally of cash and cash equivalents, restricted cash, and a revolving line of credit. Cash equivalents consist of short-term investments with original maturities of three months or less and restricted cash consists of cash to secure standby letters of credit (see Note 3 — Financing 62 Table of Contents Arrangements). The carrying value of these instruments approximates their fair value due to their short-term nature. The fair value of the revolving line of credit is estimated by using current applicable rates for similar instruments as of the balance sheet date and an assessment of the credit rating. The carrying values of the revolving line of credit as of December 28, 2024 and December 30, 2023 and the note payable as of December 28, 2024 approximate fair value because the interest rate yield is near current market rates for comparable debt instruments. ​ Accounts Receivable, net ​ We extend credit to our customers. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of our customers to make required payments. We specifically analyze the age of customer balances, historical bad debt experiences, customer creditworthiness and changes in customer payment terms when making estimates of the collectability of our accounts receivable balances. If we determine that the financial condition of any of our customers has deteriorated, whether due to customer specific or general economic issues, an increase in the allowance may be made. After all attempts to collect a receivable have failed, the receivable is written off. As of December 28, 2024 and December 30, 2023, accounts receivable, net, was $ 1.7 million and $ 4.6 million, respectively. ​ Concentration of Credit Risk ​ Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. We invest our cash equivalents primarily in money market mutual funds. Cash equivalents are maintained with high quality institutions, the composition and maturities of which are regularly monitored by management. At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. ​ Our accounts receivable are primarily derived from sales to original equipment manufacturers in the server, high-performance computing and communications markets, as well as from sales to storage customers, appliance customers, system builders and cloud and datacenter customers. We perform credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed necessary, but generally require no collateral. We believe the concentration of credit risk in our accounts receivable is moderated by our credit evaluation process, relatively short collection terms, a high level of credit worthiness of our customers (see Note 9 — Major Customers, Suppliers and Products), foreign credit insurance, and letters of credit issued in our favor. The allowance for credit losses is maintained, and such losses historically have not been significant and have been within management’s expectations. ​ Inventories ​ Inventories are valued at the lower of cost or the net realizable value. Cost is determined on an average cost basis which approximates actual cost on a first-in, first-out basis and includes raw materials, labor and manufacturing overhead. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We evaluate inventory balances for excess quantities and obsolescence on a regular basis by analyzing estimated demand, inventory on hand, sales levels and other information and reduce inventory balances to net realizable value for excess and obsolete inventory based on this analysis. At the point of the write-down recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. ​ Property and Equipment ​ Property and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives, which generally range from three to seven years . Leasehold improvements are recorded at cost and amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease 63 Table of Contents term. Expenditures for repairs and maintenance are expensed as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization of disposed assets are removed from the accounts and any resulting gain or loss is included in other income (expense), net in the consolidated statements of operations. ​ Impairment of Long-Lived Assets ​ We evaluate the recoverability of the carrying value of long-lived assets held and used by us in our operations for impairment on at least an annual basis or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future net cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. These projected future cash flows may vary significantly over time as a result of increased competition, changes in technology, fluctuations in demand, consolidation of our customers and reductions in average sales prices. If the carrying value is determined not to be recoverable from future operating cash flows, the asset is deemed impaired and an impairment loss is recognized to the extent the carrying value exceeds the estimated fair value of the asset. The fair value of the asset or asset group is based on market value when available, or when unavailable, on discounted expected cash flows. Management believes there is no impairment of long-lived assets as of December 28, 2024 and December 30, 2023. ​ Leases ​ We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, accrued expenses and other current liabilities, and operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, accrued expenses and other current liabilities, and other liabilities in our consolidated balance sheets. ​ ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. ​ We have lease agreements with lease and non-lease components, which are accounted for as a single lease component. We do not present short-term leases on the balance sheet, as those leases have a lease term of twelve months or less at inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. ​ Stock-Based Compensation ​ Stock-based awards are comprised principally of stock options and restricted stock units (“RSUs”). Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service period, which is the vesting period, on a straight-line basis, net of estimated forfeitures. We use the Black-Scholes option pricing model to determine the grant date fair value of stock options. The model requires us to estimate the expected volatility and expected term of the stock options, which are highly complex and subjective variables. The expected volatility is based on the historical volatility of our common stock. The expected term is computed using the simplified method as our best estimate given our lack of actual exercise history. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The expected dividend assumption is based on our history and management’s expectation 64 Table of Contents regarding dividend payouts. The grant-date fair value of RSUs equals the closing price of our common stock on the grant date. ​ Income Taxes ​ Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of assets and liabilities and the amounts that are reported in the income tax returns. Deferred taxes are evaluated for realization on a jurisdictional basis. We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In making this assessment, management analyzes future taxable income, reversing temporary differences and ongoing tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, we will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income. ​ We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of our position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized. The amount of unrecognized tax benefits is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax laws, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. We recognize both accrued interest and penalties associated with uncertain tax positions as a component of provision for income taxes in the consolidated statements of operations. ​ The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations may change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from our estimates, which could require us to record additional tax liabilities or to reduce previously recorded tax liabilities, as applicable. ​ Contingent Legal Expenses ​ Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, we may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. ​ Research and Development Expenses ​ Research and development expenditures are expensed in the period incurred. ​ Foreign Currency Remeasurement ​ The functional currency of our foreign subsidiaries is the U.S. dollar. Local currency financial statements are remeasured into U.S. dollars at the exchange rate in effect as of the balance sheet date for monetary assets and liabilities and the historical exchange rate for nonmonetary assets and liabilities. Expenses are remeasured using the average exchange rate for the period, except items related to nonmonetary assets and liabilities, which are remeasured using historical exchange rates. All remeasurement gains and losses are included in determining net loss. Transaction gains and losses were not significant during 2024 and 2023. ​ Loss Per Share ​ Basic loss per share is calculated by dividing net loss by the weighted-average common shares outstanding during the period. Diluted loss per share is calculated by dividing the net loss by the weighted-average shares 65 Table of Contents and dilutive potential common shares outstanding during the period. Dilutive potential shares consist of dilutive shares issuable upon the exercise of outstanding stock options and warrants computed using the treasury stock method, shares issuable under the conversion feature of a convertible note using the “if-converted” method, and shares issuable upon the vesting of RSUs. In periods of net loss, basic and diluted loss per share are the same, as the effect of dilutive potential shares on loss per share is anti-dilutive . ​ Segment Information ​ Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker, the chief executive officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance on a regular basis. Accordingly, the Company considers itself to be one reportable segment, which is comprised of one operating segment: resales of third-party products and sale of our modular memory subsystems. Significant expenses were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Expense: ​ ​ ​ ​ ​ ​ Employee Compensation (1) ​ $ 9,467 ​ $ 10,623 Stock Based Compensation ​ ​ 4,436 ​ ​ 4,337 Program Expenses (2) ​ ​ 4,104 ​ ​ 4,755 Professional Fees (3) ​ ​ 37,147 ​ ​ 43,139 ​ (1) The amounts are consisted of employee compensation related to both COGS and operating expenses. The amounts do not include stock-based compensation. The amounts do not include professional fees. (2) The amounts are consisted of costs, such as outside services, depreciation, and dues and subscriptions, related to both COGS and operating expenses. The amounts do not include professional fees. (3) The amounts are consisted of legal fees, tax and audit fees. ​ ​ 66 Table of Contents Note 2—Supplemental Financial Information ​ Inventories ​ Inventories consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Raw materials ​ $ 379 ​ $ 4,133 Work in process ​ ​ 54 ​ ​ 274 Finished goods ​ ​ 2,311 ​ ​ 7,624 ​ ​ $ 2,744 ​ $ 12,031 ​ ​ Property and Equipment, net ​ Property and equipment, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Machinery and equipment $ 765 ​ $ 7,684 Computer equipment and software ​ 1,761 ​ ​ 2,015 Leasehold improvements ​ 495 ​ ​ 770 Furniture and fixtures ​ 630 ​ ​ 614 Construction in progress ​ - ​ ​ 8 ​ ​ 3,651 ​ ​ 11,091 Less: accumulated depreciation and amortization ​ ( 3,134 ) ​ ​ ( 10,321 ) ​ $ 517 ​ $ 770 ​ Substantially all our property and equipment are located within the United States as of December 28, 2024 and December 30, 2023. ​ Disaggregation of Net Sales ​ The following table shows disaggregated net sales by major source (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Resales of third-party products ​ $ 134,851 ​ $ 58,900 Sale of our modular memory subsystems ​ ​ 12,252 ​ ​ 10,305 Total net sales ​ $ 147,103 ​ $ 69,205 ​ Net product sales by country presented below are based on the billing location of the customer (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 United States ​ $ 19,741 ​ $ 15,253 People's Republic of China (1) ​ ​ 124,173 ​ ​ 50,292 Other countries ​ ​ 3,189 ​ ​ 3,660 Total net sales ​ $ 147,103 ​ $ 69,205 (1) People’s Republic of China (“PRC”) includes Hong Kong and Taiwan. ​ The United States and the PRC accounted for more than 10 % of our net product sales for fiscal years 2024 and 2023. ​ 67 Table of Contents Loss Per Share ​ The following table shows the computation of basic and diluted loss per share of common stock (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Numerator: Net loss ​ $ ( 53,865 ) ​ $ ( 60,398 ) Denominator: Weighted-average basic shares outstanding - basic and diluted ​ ​ 259,904 ​ ​ 244,118 Net loss per share - basic and diluted ​ $ ( 0.21 ) ​ $ ( 0.25 ) ​ No allocation of undistributed earnings to participating securities was performed for periods with net loss as such securities do not have a contractual obligation to share in our loss. ​ The table below sets forth potentially dilutive weighted average common share equivalents, consisting of shares issuable upon the exercise of outstanding stock options and warrants using the treasury stock method and the shares vesting of issuable upon RSUs. These potential weighted average common share equivalents have been excluded from the diluted net loss per share calculations above as their effect would be anti-dilutive (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Weighted average common share equivalents ​ ​ 1,822 ​ ​ 3,017 ​ Cash Flow Information ​ The following table shows supplemental disclosures of cash flow information and non-cash financing activities (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ Cash paid during the year for: ​ ​ ​ ​ ​ ​ Interest ​ $ 101 ​ $ 47 Income taxes ​ $ 1 ​ $ 1 Supplemental disclosure of non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ Debt financing of insurance ​ $ 500 ​ $ — ​ ​ ​ Note 3—Financing Arrangements ​ SVB Credit Agreements ​ On October 31, 2009, Netlist and Silicon Valley Bank, a division of First-Citizen Bank & Trust Company (“SVB”), entered into a credit agreement, which may from time to time be amended, modified, supplemented or restated (“the 2009 SVB Credit Agreement”), which provides for a revolving line of credit up to $ 10.0 million, as amended. The 2009 SVB Credit Agreement was 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 accrued interest on advance at a per annum rate equal to the greater of 0.75 % above the Wall Street Journal prime rate (“ Prime Rate ”) or 4.25 % . ​ 68 Table of Contents On the maturity date, April 28, 2023, the 2009 SVB Credit Agreement terminated in accordance with its terms. In connection with the termination of the 2009 SVB Credit Agreement, all outstanding obligations for principal, interest, and fees were paid in full and all liens securing such obligations were released. ​ On November 7, 2023, we entered into a loan and security agreement (the “2023 SVB Credit Agreement”) with 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. Borrowings accrue interest on advance at a per annum rate equal to the greater of 8.50 % and the Prime Rate. The maturity date is November 7, 2025. ​ As of December 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 December 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 consolidated balance sheets. As of December 28, 2024 and December 30, 2023, (i) outstanding letters of credit were $ 11.9 million and $ 12.4 million, respectively, (ii) outstanding borrowings were $ 1.2 million and $ 3.8 million, respectively, and (iii) availability under the revolving line of credit was $ 0 and $ 0 , respectively. ​ ​ Note 4—Leases ​ We have operating and finance leases primarily associated with office and manufacturing facilities and certain equipment. The determination of which discount rate to use when measuring the lease obligation was deemed a significant judgment. ​ Lease cost and supplemental consolidated cash flow information related to operating and finance leases were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Lease cost: ​ ​ ​ ​ ​ ​ Operating lease cost ​ $ 656 ​ $ 772 Finance lease cost ​ ​ ​ ​ ​ ​ Amortization of right-of-use assets ​ $ 83 ​ $ 98 Interest on lease liabilities ​ ​ 1 ​ ​ 9 Total finance lease cost ​ $ 84 ​ $ 107 ​ ​ ​ ​ ​ ​ ​ Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ Operating cash flows from operating leases ​ $ 717 ​ $ 684 Operating cash flows from finance leases ​ ​ 1 ​ ​ 9 Financing cash flows from finance leases ​ ​ 90 ​ ​ 211 Right-of-use assets obtained in exchange for lease obligations: ​ ​ ​ ​ ​ ​ Operating leases ​ $ 81 ​ $ — Lease modification to increase operating lease assets ​ ​ — ​ ​ 187 69 Table of Contents ​ Supplemental balance sheet information related to leases was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Operating Leases ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ $ 1,101 ​ $ 1,590 Other current liabilities ​ $ 640 ​ $ 617 Operating lease liabilities ​ ​ 641 ​ ​ 1,213 Total operating lease liabilities ​ $ 1,281 ​ $ 1,830 ​ ​ ​ ​ ​ ​ ​ Finance Leases ​ ​ ​ ​ ​ ​ Property and equipment, at cost ​ $ 488 ​ $ 488 Accumulated depreciation ​ ​ ( 302 ) ​ ​ ( 219 ) Property and equipment, net ​ $ 186 ​ $ 269 Other current liabilities ​ $ 4 ​ $ 90 Other liabilities ​ ​ 3 ​ ​ 7 Total finance lease liabilities ​ $ 7 ​ $ 97 ​ The following table includes supplemental information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Weighted Average Remaining Lease Term (in years) ​ ​ ​ ​ ​ ​ Operating leases ​ ​ 2.0 ​ ​ 2.9 Finance leases ​ ​ 1.6 ​ ​ 0.7 ​ ​ ​ ​ ​ ​ ​ Weighted Average Discount Rate ​ ​ ​ ​ ​ ​ Operating leases ​ ​ 5.7 % ​ ​ 5.6 % Finance leases ​ ​ 5.5 % ​ ​ 4.4 % ​ ​ Maturities of lease liabilities as of December 28, 2024 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ Finance Fiscal Year ​ Leases ​ Leases 2025 ​ $ 695 ​ $ 5 2026 ​ ​ 639 ​ ​ 2 2027 ​ ​ 23 ​ ​ — Total lease payments ​ ​ 1,357 ​ ​ 7 Less: imputed interest ​ ​ ( 76 ) ​ ​ — Total ​ $ 1,281 ​ $ 7 ​ ​ Note 5—Income Taxes ​ United States and foreign loss before provision for income taxes was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 United States ​ $ ( 53,527 ) ​ $ ( 59,868 ) Foreign ​ ​ ( 337 ) ​ ​ ( 529 ) ​ ​ $ ( 53,864 ) ​ $ ( 60,397 ) ​ 70 Table of Contents The provision for income taxes consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Current: ​ ​ ​ ​ ​ ​ Federal ​ $ — ​ $ — State ​ ​ 1 ​ ​ 1 Foreign ​ ​ — ​ ​ — Total current ​ ​ 1 ​ ​ 1 Deferred: ​ ​ ​ ​ ​ ​ Federal ​ ​ ( 10,606 ) ​ ​ ( 12,833 ) State ​ ​ ( 713 ) ​ ​ ( 1,189 ) Foreign ​ ​ 44 ​ ​ 4 Change in valuation allowance ​ ​ 11,275 ​ ​ 14,018 Total deferred ​ ​ — ​ ​ — Provision for income taxes ​ $ 1 ​ $ 1 ​ ​ ​ ​ ​ ​ ​ ​ Income taxes differ from the amounts computed by applying the statutory federal income tax rate of 21 % for fiscal years 2024 and 2023. The reconciliation of this difference is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Statutory federal income tax rate ​ ​ ( 21 %) ​ ​ ( 21 %) Foreign withholding taxes ​ ​ —% ​ ​ —% Excess tax benefits from equity awards ​ ​ 1 % ​ ​ —% Change in valuation allowance ​ ​ 20 % ​ ​ 21 % Other ​ ​ —% ​ ​ —% Effective tax rate ​ ​ —% ​ ​ —% ​ ​ ​ ​ ​ ​ ​ ​ Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax assets and liabilities are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Deferred tax assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating loss carryforward ​ ​ ​ ​ $ 65,734 ​ $ 54,762 Tax credit carryforwards ​ ​ ​ ​ ​ 5,434 ​ ​ 5,028 Capitalized research and development expenses ​ ​ ​ ​ ​ 3,825 ​ ​ 3,049 Reserves and allowances ​ ​ ​ ​ ​ 437 ​ ​ 1,028 Foreign operating loss carryforward ​ ​ ​ ​ ​ 614 ​ ​ 658 Stock-based compensation ​ ​ ​ ​ ​ 621 ​ ​ 806 Other ​ ​ ​ ​ ​ 854 ​ ​ 1,074 Total deferred tax assets ​ ​ ​ ​ ​ 77,519 ​ ​ 66,405 Deferred tax liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ ​ ​ ​ ​ ( 245 ) ​ ​ ( 365 ) Prepaid expenses ​ ​ ​ ​ ​ ( 47 ) ​ ​ ( 48 ) Depreciation and amortization ​ ​ ​ ​ ​ ( 82 ) ​ ​ ( 124 ) Total deferred tax liabilities ​ ​ ​ ​ ​ ( 374 ) ​ ​ ( 537 ) Net deferred tax assets ​ ​ ​ ​ ​ 77,145 ​ ​ 65,868 Valuation allowance ​ ​ ​ ​ ​ ( 77,145 ) ​ ​ ( 65,868 ) ​ ​ ​ ​ ​ $ — ​ $ — ​ 71 Table of Contents We evaluate whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. As of December 28, 2024 and December 30, 2023, a valuation allowance of $ 77.1 million and $ 65.9 million, respectively, has been provided based on our assessment that it is more likely than not that sufficient taxable income will not be generated to realize the tax benefits of the temporary differences. The valuation allowance increased by $ 11.3 million and $ 13.9 million during fiscal years 2024 and 2023, respectively. These increases in these years primarily relate to the increases in the net operating loss (“NOL”) carryforward and tax credit carryforwards. ​ As of December 28, 2024 we had $ 269.6 million of federal NOL carryforwards, of which $ 103.2 million will expire from 2030 through 2038, and $ 166.4 million of which will be carried forward indefinitely, and $ 103.1 million of state NOL carryforwards that will expire from 2029 through 2037. We had federal and state tax credit carryforwards of $ 2.8 million and $ 2.6 million, respectively, at December 28, 2024. Federal tax credit carryforwards began to expire in 2024 and state tax credits carryforward indefinitely. In addition, we had $ 2.5 million of NOL in the PRC that expired in 2024, with a remaining amount of $ 0.5 million of NOL carryforward in the PRC at December 28, 2024. Utilization of the NOL and tax credit carryforwards is subject to an annual limitation due to the ownership percentage change limitations provided by Section 382 of the Internal Revenue Code (the “Code”) and similar state and foreign law provisions. Under Section 382 of the Code, substantial changes in our ownership may limit the amount of NOL and tax credit carryforwards that are available to offset taxable income. The annual limitation would not automatically result in the loss of NOL and tax credit carryforwards but may limit the amount available in any given future period. Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examination from various taxing authorities. ​ We file income tax returns with federal, state and foreign jurisdictions. We are no longer subject to Internal Revenue Service (“IRS”) or state examinations for periods prior to 2020, although certain carryforward attributes that were generated prior to 2020 may still be adjusted by the IRS. ​ We include interest and penalties related to uncertain tax positions within the provision for income taxes. As of December 28, 2024 and December 30, 2023, the interest or penalties accrued related to unrecognized tax benefits were insignificant, and during fiscal years 2024 and 2023, the interest and penalties related to uncertain tax position recorded were insignificant. As of December 28, 2024, we had no unrecognized tax benefits that would significantly change in the next 12 months. ​ Note 6—Commitments and Contingencies ​ Contingent Legal Expenses ​ We may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with our licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fee, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained. ​ Litigation and Inter Partes Reviews ​ We are, from time to time, a party to litigation that arises in the normal course of our business operations. We own numerous patents and continue to seek to grow and strengthen our patent portfolio, which covers various aspects of our innovations and includes various claim scopes. We plan to pursue avenues to monetize our intellectual property portfolio, in which we would generate revenue by selling or licensing our technology, and we intend to vigorously enforce our patent rights against alleged infringers of such rights. We dedicate substantial resources to protecting and enforcing our intellectual property rights, including with patent infringement proceedings we file against third parties and defense of our patents against challenges made by way of reexamination and review proceedings at the USPTO and PTAB. We expect these activities 72 Table of Contents to continue for the foreseeable future, with no guarantee that any ongoing or future patent protection or litigation activities will be successful, or that we will be able to monetize our intellectual property portfolio. ​ Any litigation, regardless of its outcome, is inherently uncertain, involves a significant dedication of resources, including time and capital, and diverts management’s attention from our other activities. As a result, any current or future claims, allegations, or challenges by or against third parties, whether eventually decided in our favor or settled, could materially adversely affect our business, financial condition and results of operations. Additionally, the outcome of pending or future litigation and/or related patent reviews and reexaminations, as well as any delay in their resolution, could affect our ability to continue to sell our products, protect against competition in the current and expected markets for our products or license or otherwise monetize our intellectual property rights in the future. ​ Samsung Litigation ​ On May 28, 2020, Netlist filed a complaint against Samsung Electronics Co., Ltd. (“SECL”) in the U.S. District Court for the Central District of California (“CDCA”) ( Netlist Inc. vs. Samsung Electronics Co., Ltd ., Case No. 8:20-cv-00993) for SECL’s breach of the Joint Development and License Agreement (“JDLA”) between the parties. Netlist amended its complaint to seek a declaratory judgment that it properly terminated the JDLA in light of SECL’s material breaches thereof. On October 14, 2021, the Court granted summary judgment in favor of Netlist on SECL’s breach and Netlist’s termination of the JDLA. The case proceeded to trial on the issue of damages on December 1, 2021, and the jury reached a verdict for SECL on December 3, 2021. The Court entered final judgment on February 15, 2022, and both parties appealed to the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit affirmed-in-part and reversed-in-part the judgment of the District Court, and remanded the case to the District Court, which reopened the case on November 13, 2023. The case proceeded to trial on May 14, 2024, and the jury reached a verdict for Netlist on May 17, 2024. On December 26, 2024, the Court granted SECL’s motion for a new trial, holding that one juror’s voir dire responses support a finding of implied juror bias which deprived both parties of their right to a fair trial. A new trial was held from March 18 to March 21, 2025. On March 24, 2025, the jury returned a verdict for Netlist. ​ On October 15, 2021, Samsung Electronics Co., Ltd. (“SECL”) and Samsung Semiconductor, Inc. (“SSI”) (collectively, “Samsung”) filed a declaratory judgement action against Netlist in the U.S. District Court for the District of Delaware (“DDE”) ( Samsung Electronics Co., Ltd. et. al. v. Netlist, Inc., Case No. 1:21-cv-01453), seeking a declaration that Samsung does not infringe the following Netlist patents: U.S. Patent Nos. 7,619,912; 9,858,218; 10,217,523; and 10,474,595 (respectively, the “’912, ’218, ’523, and ’595 Patents”). Samsung filed amended complaints to add other Netlist patents: U.S. Patent Nos. 10,860,506; 10,949,339; 11,016,918; and 11,232,054 (respectively, the “’506, ’339, ’918, and ’054 Patents”). Netlist filed a motion to dismiss, and on August 1, 2022, the Court granted this motion in part, declining to exercise jurisdiction over the ’912, ’506, ’339, ’918, and ’054 Patents. On September 12, 2022, Netlist filed a crossclaim against Google LLC and Alphabet, Inc. (collectively, “Google”). On November 15, 2022, Google filed a motion to dismiss this case as to Google or, alternatively, for a severance, stay, and dismissal of willfulness and indirect infringement allegations. This motion was heard on May 22, 2023. On December 1, 2023, the Court stayed this case pending the resolution of the above CDCA case. ​ On December 20, 2021, Netlist filed a complaint against Samsung in the U.S. District Court for the Eastern District of Texas (“EDTX”), case no. 2:21-cv-00463, for infringement of the ’506, ’339, and ’918 Patents. Netlist later amended its complaint to additionally assert infringement of the ’054 Patent as well as U.S. Patent Nos. 8,787,060 and 9,318,160 (respectively, the “’060 and ’160 Patents”). On April 14, 2023, this case proceeded to a jury trial on the ’339, ’918, ’054, ’060, and ’160 Patents. On April 21, 2023, the jury returned a verdict finding that Samsung willfully infringed all five patents and awarded $ 303 million in damages to Netlist. (The collectability of the damages award may be affected by the outcomes of pending appeals of final written decisions in the respective Inter Partes Reviews of the five patents; see below.) On August 11, 2023, the Court entered final judgment. On August 9, 2024, Samsung filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit (“CAFC”), case no. 2024-2203. On January 6, 2025, 73 Table of Contents Samsung filed a motion to stay this appeal pending the resolution of the above CDCA case. On February 18, 2025, the CAFC denied this motion without prejudice. The appeal is pending. ​ On August 1, 2022, Netlist filed a complaint against Samsung in EDTX (Case No. 2:22-cv-00293), for infringement of the ’912 Patent. Netlist later amended its complaint to additionally assert infringement of U.S. Patent Nos. 11,093,417; 9,858,215; and 10,268,608 (respectively, the “’417, ’215, and ’608 Patents”). On November 12, 2024, this case proceeded to a jury trial on the ’912, ’417, and ’608 Patents. On November 22, 2024, the jury returned a verdict finding that Samsung willfully infringed all three patents and awarded $ 118 million in damages to Netlist. (The collectability of the damages award may be affected by the outcomes of pending appeals of final written decisions in the respective Inter Partes Reviews of the three patents; see below.) On December 2, 2024, the Court entered final judgment. On December 4, 2024, Netlist filed a motion for a preliminary injunction and a subsequent permanent injunction. On December 30, Samsung filed a combined post-trial motion for judgment as a matter of law and for a new trial, and a motion to amend the judgment and to stay this case pending the resolution of the above CDCA case. On January 31, 2025, the Court denied Netlist’s motion for a preliminary injunction and a subsequent permanent injunction. ​ On October 9, 2023, Samsung filed a declaratory judgement action against Netlist in the U.S. District Court for the DDE ( Samsung Elecs. Co., Ltd., et. al. v. Netlist, Inc. , Case No. 1:23-cv-01122-RGA), seeking a declaration that Samsung does not infringe Netlist’s U.S. Patent No. 11,386,024 (the “’024 Patent”). On November 6, 2023, Netlist moved to dismiss for lack of subject matter jurisdiction and failure to state a claim. On March 4, 2025, the Court denied this motion. ​ On May 22, 2024, Samsung filed a declaratory judgement action against Netlist in the U.S. District Court for the DDE (Case no. 1:24-cv-00614), seeking a declaration that Samsung does not infringe Netlist’s U.S. Patent No. 11,880,319 (the “’319 Patent”). On July 15, 2024, Netlist moved to dismiss for lack of subject matter jurisdiction and failure to state a claim, which the Court denied as moot in view of Samsung’s First Amended Complaint filed on August 5, 2024. On August 21, 2024, Netlist moved to dismiss the First Amended Complaint for lack of subject matter jurisdiction and failure to state a claim. On March 4, 2025, the Court denied this motion. ​ Micron Litigation ​ On April 28, 2021, Netlist filed complaints against Micron Semiconductor Products, Inc., Micron Technology, Inc., and Micron Technology Texas, LLC (collectively, “Micron”) in the Western District of Texas (“WDTX”) (Case Nos. 6:21-cv-00430 and 6:21-cv-00431), for infringement of U.S. Patent Nos. 8,301,833; 9,824,035; 10,268,608; and 10,489,314 (respectively, the “’833, ’035, ’608, and ’314 Patents”). On February 14, 2022, the Court granted Micron’s motion to transfer venue for convenience to another court within WDTX, and the transferred cases were assigned new case nos. 1:22-cv-00134 and 1:22-cv-00136. On May 11, 2022, the Court granted motions to stay the two cases pending the respective Inter Partes Reviews of the ’833, ’035, ’608, and ’314 Patents. ​ On June 10, 2022, Netlist filed a complaint against Micron in EDTX (Case No. 2:22-cv-00203), for infringement of the ’506, ’339, ’918, ’054, ’060 and ’160 Patents. On May 19, 2023, Micron filed a motion to stay this case pending the respective Inter Partes Reviews of the six asserted patents. On October 22, 2023, the magistrate judge issued a claim construction order, which the Court adopted on January 17, 2024. On January 3, 2024, the magistrate judge issued a recommendation to deny Micron’s motion to stay this case, which the Court adopted on January 31, 2024. On February 10, 2024, the Court vacated its prior order, staying this case pending the respective Inter Partes Reviews of the six asserted patents. ​ On August 1, 2022, Netlist filed a complaint against Micron in EDTX (Case No. 2:22-cv-00293), for infringement of the ’912 Patent. Netlist later amended its complaint to additionally assert infringement of the ’417 and ’215 Patents. On May 20, 2024, this case proceeded to a jury trial on the ’912 and ’417 Patents. On May 23, 2024, the jury returned a verdict finding that Samsung willfully infringed both patents and awarded $ 445 million in damages to Netlist. The collectability of the damages award may be affected by the 74 Table of Contents outcomes of pending appeals of final written decisions in the respective Inter Partes Reviews of the two patents; see below. On July 11, 2024, the Court entered final judgment. On August 7, 2024, Micron filed post-trial motions for judgment as a matter of law and for a new trial. ​ On December 11, 2023, Micron filed a complaint against Netlist in the District Court of the Fourth Judicial District of the State of Idaho, Ada County (“Idaho State Court”) (Case No. CV01-23-19920), alleging that Netlist violated Idaho Code § 48-1703 by making a bad faith assertion of infringement of the ’833 Patent in WDTX. Netlist removed the case to the U.S. District Court for the District of Idaho, and Micron moved to remand the case to the Idaho State Court. On August 16, 2024, the District of Idaho remanded this case to the Idaho State Court. On August 20, 2024, Netlist appealed the remand to the CAFC, case no. 2024-2281, and moved the District of Idaho to stay the remand. On September 17, 2024, Micron moved to dismiss or transfer the appeal to the U.S. Court of Appeals for the Ninth Circuit, which the CAFC denied on December 19, 2024. Both the appeal and Netlist’s motion to stay the remand remain pending. On September 18, 2024, Netlist moved to dismiss the Idaho State Court case for lack of personal jurisdiction and failure to state a claim, which the Idaho State Court denied on December 5, 2024. The Idaho State Court case is currently set for trial starting on October 27, 2025. ​ On December 23, 2023, Netlist filed a complaint for declaratory judgment against Micron in EDTX (Case No. 2:23-cv-00628), seeking a declaration that Netlist had not asserted patent infringement in bad faith against Micron in the prior EDTX patent infringement cases. On January 19, 2024, Micron moved to dismiss this case for lack of subject matter jurisdiction. On February 7, 2024, Netlist filed a First Amended Complaint. On July 19, 2024, the Court denied Micron’s motion to dismiss as moot. On December 5, 2024, Netlist moved for a protective order to preclude Micron from seeking discovery into Netlist’s subjective intent in filing the prior EDTX patent infringement cases. On December 13, 2024, Micron moved to stay this case on abstention grounds. This case is currently set for trial starting on July March 27, 2025, the Court stayed this case pending the CAFC appeals of the IPR decisions on the Netlist patents asserted against Micron in the prior EDTX patent infringement cases resolution. ​ On January 16, 2024, Micron filed a complaint against Netlist in Idaho State Court (Case No. CV01-24-01032), alleging that Netlist violated Idaho Code § 48-1703 by making a bad faith assertion of infringement of the ’918 and ’054 Patents in the EDTX. Netlist removed the case to the U.S. District Court for the District of Idaho, and Micron moved to remand the case to the Idaho State Court. On August 13, 2024, the District of Idaho remanded this case to the Idaho State Court. On August 20, 2024, Netlist appealed the remand to the CAFC, case no. 2024-2282, and moved the District of Idaho to stay the remand. On September 10, 2024, the appeal was consolidated with the above related appeal, case no. 2024-2281. Netlist’s motion to stay the remand remain pending. On September 17, 2024, Netlist moved to dismiss the Idaho State Court case for lack of personal jurisdiction and failure to state a claim, which the Idaho State Court denied on December 20, 2024. The Idaho State Court case is currently set for trial starting on July 20, 2026. ​ Google Litigation ​ On December 4, 2009, Netlist filed a complaint against Google, Inc. in the U.S. District Court for the Northern District of California (Case no. 3:09-cv-05718), for infringement of the ’912 Patent. On October 17, 2022, the Court entered a stipulated order to stay this case until the resolution of the patent infringement suit against Samsung filed on August 1, 2022 in EDTX (Case No. 2:22-cv-00293), including any appeal thereof. ​ Inter Partes Review (“IPR”) Proceedings ​ On October 15, 2021, SECL filed a Petition for IPR of the ’218 Patent (Case No. IPR2022-00062). On May 8, 2023, the Patent Trial & Appeal Board (“PTAB”) issued a final written decision finding all challenged claims unpatentable. ​ On October 15, 2021, SECL filed a Petition for IPR of the ’523 Patent (Case No. IPR2022-00063). On May 3, 2023, the PTAB issued a final written decision finding no challenged claims unpatentable. On July 3, 2023, 75 Table of Contents SECL filed a notice of appeal to the CAFC (Case No. 2023-2133). The CAFC heard oral arguments on March 4, 2025. On March 5, 2025, the CAFC affirmed the PTAB’s final written decision. ​ On October 15, 2021, SECL filed a Petition for IPR of the ’595 Patent (Case No. IPR2022-00064). On May 9, 2023, the PTAB issued a final written decision finding all challenged claims unpatentable. ​ On February 17, 2022, SECL filed a Petition for IPR of Claim 16 of the ’912 Patent (Case No. IPR2022-00615). On November 18, 2022, Micron also filed a Petition for IPR of Claim 16 of the ’912 Patent, IPR2023-00203. On April 17, 2024, the PTAB issued a final written decision in the two IPRs finding Claim 16 of the ’912 Patent unpatentable. On September 10, 2024, Netlist filed a notice of appeal to the CAFC (Case No. 2024-2304). The appeal is pending. ​ On March 2, 2022, SECL filed a Petition for IPR of the ’339 Patent (Case No. IPR2022-00639). On November 18, 2022, Micron also filed a Petition for IPR of the ’339 Patent (Case No. IPR2023-00204). On October 18, 2023, the PTAB issued a final written decision in the two IPRs finding all challenged claims unpatentable. On April 11, 2024, Netlist filed a notice of appeal to the CAFC (Case No. 2024-1707). The appeal is pending. ​ On March 22, 2022, SECL filed a Petition for IPR of the ’506 Patent (Case No. IPR2022-00711). On November 18, 2022, Micron also filed a Petition for IPR of the ’506 Patent (Case No. IPR2023-00205). On October 17, 2023, the PTAB issued a final written decision in the two IPRs finding all challenged claims unpatentable. On February 21, 2024, Netlist filed a notice of appeal to the CAFC, case no. 2024-1521. The appeal is pending. ​ On March 30, 2022, Micron filed a Petition for IPR of the ’314 Patent (Case No. IPR2022-00745). On October 30, 2023, the PTAB issued a final written decision finding no challenged claims unpatentable. On December 29, 2023, Micron filed a notice of appeal to the CAFC (Case No. 2024-1312). The appeal is pending. ​ On May 17, 2022, SECL filed a Petition for IPR of the ’918 Patent (Case No. IPR2022-00996). On January 6, 2023, Micron also filed a Petition for IPR of the ’918 Patent, case no. IPR2023-00406. On December 6, 2023, the PTAB issued a final written decision in the two IPRs finding all challenged claims unpatentable. On May 20, 2024, Netlist filed a notice of appeal to the CAFC (Case No. 2024-1859). The appeal is pending. ​ On May 17, 2022, SECL filed a Petition for IPR of the ’054 Patent (Case No. IPR2022-00999). On January 6, 2023, Micron also filed a Petition for IPR of the ’054 Patent (Case No. IPR2023-00405). On December 5, 2023, the PTAB issued a final written decision in the two IPRs finding all challenged claims unpatentable. On May 20, 2024, Netlist filed a notice of appeal to the CAFC (Case No. 2024-1863). On June 3, 2024, this appeal was consolidated with the above appeal on the IPR of the ’918 Patent (Case No. 2024-1859). ​ On August 26, 2022, SECL filed a Petition for IPR of the ’160 Patent (Case No. IPR2022-01427). On May 8, 2023, Micron also filed a Petition for IPR of the ’160 Patent, case no. IPR2023-00883. On April 1, 2024, the PTAB issued a final written decision in the two IPRs finding all challenged claims unpatentable. On August 19, 2024, Netlist filed a notice of appeal to the CAFC, case no. 2024-2240. The appeal is pending. ​ On August 26, 2022, SECL filed a Petition for IPR of the ’060 Patent (Case No. IPR2022-01428). On May 8, 2023, Micron also filed a Petition for IPR of the ’060 Patent (Case No. IPR2023-00882). On April 1, 2024, the PTAB issued a final written decision in the two IPRs finding all challenged claims unpatentable. On August 19, 2024, Netlist filed a notice of appeal to the CAFC (Case No. 2024-2241). On September 6, this appeal was consolidated with the above appeal on the IPR of the ’160 Patent (Case No. 2024-2240). ​ On January 10, 2023, SECL filed a Petition for IPR of the ’215 Patent, case no. IPR2023-00455. On May 8, 2023, Micron also filed a Petition for IPR of the ’215 Patent (Case No. IPR 2023-01142). On July 30, 2024, the PTAB issued a final written decision in the two IPRs finding all challenged claims unpatentable. On 76 Table of Contents December 10, 2024, Netlist filed a notice of appeal to the CAFC (Case No. 2025-1286). The appeal is pending. ​ On January 10, 2023, SECL filed a Petition for IPR of the ’417 Patent (Case No. IPR2023-00454). On May 8, 2023, Micron also filed a Petition for IPR of the ’417 Patent (Case No. IPR2023-01141). On July 30, 2024, the PTAB issued a final written decision in the two IPRs finding all challenged claims unpatentable. On December 10, 2024, Netlist filed a notice of appeal to the CAFC (Case No. 2025-1296). On January 15, 2025, this appeal was consolidated with the above appeal on the IPR of the ’215 Patent (Case No. 2025-1286). ​ On April 27, 2023, SECL filed a Petition for IPR of the ’608 Patent (Case No. IPR2023-00847). On January 10, 2024, Micron also filed a Petition for IPR of the ’608 Patent (Case No. IPR2024-00370). On July 23, 2024, the PTAB denied institution of the IPR sought by Micron. On December 10, 2024, the PTAB issued a final written decision in the IPR brought by SECL finding no challenged claims unpatentable. On January 13, 2025, SECL filed a notice of appeal to the CAFC (Case No. 2025-1378). The appeal is pending. ​ On October 18, 2024, SECL filed a Petition for IPR of the ’024 Patent (Case No. IPR2025-00001). On February 20, 2025, Netlist filed its preliminary response to the Petition. ​ On October 24, 2024, SECL filed a Petition for IPR of the ’319 Patent (Case No. IPR2025-00002). On February 21, 2025, Netlist filed its preliminary response to the Petition. ​ German Proceedings ​ On March 31, 2022, Netlist filed infringement claims against Micron in Dusseldorf, Germany, seeking damages for infringement of European Patents EP 2,454,735 (“EP735”) and EP 3,404,660 (“EP660”). On September 1, 2022, Micron initiated nullity proceedings on the two patents in the German Federal Patent Court. On March 27, 2023, the Dusseldorf Court rescheduled the infringement hearing until April 11, 2024. On March 18, 2024, the Dusseldorf Court stayed the case until the German Federal Patent Court decisions on the nullity proceedings on EP735 and EP660 either become final or are reversed or remanded on appeal. On June 3, 2022, Netlist filed infringement claims against Samsung in Dusseldorf, Germany, seeking damages for infringement of European Patents EP735 and EP660. On September 25, 2023, the Dusseldorf Court stayed the case until the German Federal Patent Court decisions on the nullity proceedings on EP735 and EP660 either become final or are reversed or remanded on appeal. ​ On July 26, 2022, Netlist filed infringement claims against Google Cloud EMEA Limited, Google Germany GmbH, Redtec Computing GmbH, and Google LLC in Dusseldorf, Germany, seeking damages for infringement of European Patents EP735 and EP660. On March 18, 2024, the Dusseldorf Court stayed the case until the German Federal Patent Court decisions on the nullity proceedings on EP735 and EP660 either become final or are reversed or remanded on appeal. ​ In the nullity proceeding on EP735, the German Federal Patent Court issued its reasons of judgment revoking EP735 on April 18, 2024. Netlist filed an appeal on May 13, 2024. An oral hearing at the Federal Court of Justice is set for May 21, 2026. In the nullity proceeding on EP660, the German Federal Patent Court issued its reasons of judgment revoking EP660 on February 18, 2025. Netlist filed an appeal on March 12, 2025. ​ Other Contingent Obligations ​ In the ordinary course of our business, we have made certain indemnities, commitments and guarantees pursuant to which we may be required to make payments in relation to certain transactions. These may include, among others: (i) intellectual property indemnities to our customers and licensees in connection with the use, sale and/or license of our products; (ii) indemnities to vendors and service providers pertaining to claims based on our negligence or willful misconduct; (iii) indemnities involving the accuracy of representations and warranties in certain contracts; (iv) indemnities to our directors and officers to the 77 Table of Contents maximum extent permitted under the laws of the State of Delaware; (v) indemnities pertaining to all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with transactions contemplated by applicable investment or loan documents, as applicable; and (vi) indemnities or other claims related to certain real estate leases, under which we may be required to indemnify property owners for environmental and other liabilities or may face other claims arising from our use of the applicable premises. The duration of these indemnities, commitments and guarantees varies and, in certain cases, may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation of the maximum potential for future payments we could be obligated to make. Historically, we have not been obligated to make significant payments as a result of these obligations, and no liabilities have been recorded for these indemnities, commitments and guarantees in the accompanying consolidated balance sheets. ​ Note 7—Stockholders’ Equity ​ Serial Preferred Stock ​ 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 December 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. In connection with the adoption of the Rights Agreement and pursuant to its terms, our board of directors authorized and declared a dividend of one right (each, a “Right”) for each outstanding share of our common stock to stockholders of record at the close of business on May 18, 2017 (the “Record Date”), and authorized the issuance of one Right for each share of our common stock issued by us (except as otherwise provided in the Rights Agreement) between the Record Date and the Distribution Date (as defined below). ​ On April 17, 2024, we entered into a fourth amendment (the “Fourth Amendment”) to the Rights Agreement, pursuant to which Equiniti Trust Company, LLC was appointed as our rights agent and the definition of “Expiration Date” in the Rights Agreement was amended to extend the term for an additional three-year period from April 17, 2024 to April 17, 2027. As a result and pursuant to the Fourth Amendment, the Rights will expire and become unexercisable on or before the close of business on April 17, 2027, in accordance with the terms of the Rights Agreement. ​ 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, 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. We filed the Certificate of Designation with the Secretary of State of the State of Delaware on April 17, 2017. ​ 78 Table of Contents Common Stock ​ We have one class of common stock with a par value of $ 0.001 per share. The number of shares of the common stock authorized for issuance is 450,000,000 . ​ 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 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 have resulted 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 fiscal year 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 fiscal year 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. ​ 2023 Offering ​ On August 14, 2023, the Company entered into a Securities Purchase Agreement (the “2023 Purchase Agreement”) with certain investors, pursuant to which the Company issued and sold to the investors in a registered offering (the “2023 Offering”) an aggregate of 11,111,112 shares of our common stock and warrants to purchase up to an aggregate of 11,111,112 shares of our common stock at a per share purchase price of $ 2.70 per share. The 2023 Offering closed on August 17, 2023. The net proceeds to the Company from the 2023 Offering were approximately $ 28.6 million, after deducting placement agent fees and offering costs paid by the Company. The warrants are exercisable at any time on or after the issuance date, have a term of five years from the issuance date, and have an exercise price of $ 3.20 per share and contain customary 4.99 % / 9.99 % blocker provisions. ​ 79 Table of Contents In addition, pursuant to the 2023 Purchase Agreement, the Company and our director and executive officers entered into lock-up agreements, pursuant to which they agreed not to offer for sale, contract to sell, or sell any shares of the Company’s common stock or any securities convertible into, or exercisable or exchangeable for, shares of the Company’s common stock, for a period of 90 days from the closing of the 2023 Offering, subject to certain customary exceptions. ​ The 2023 Purchase Agreement also provides that the Company may not effect or enter into any Variable Rate Transactions (as defined in the 2023 Purchase Agreement) until the six month anniversary of the closing date of the 2023 Offering. Sales of the Company’s common stock pursuant to the September 2021 Purchase Agreement are permitted after 90 days following the closing of the 2023 Offering. ​ 2024 Offering ​ On October 11, 2024, we entered into a Securities Purchase Agreement (the “2024 Purchase Agreement”) with certain investors, pursuant to which we issued and sold 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 or were 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 had a term of 100 days and an exercise price of $ 1.10 per share. None of the Series B Warrants were exercised prior to their expiration. ​ 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. ​ 80 Table of Contents Warrants ​ Warrant activity during fiscal years 2024 and 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Number of ​ Average ​ ​ Shares ​ Exercise ​ (in thousands) Price Outstanding as of December 31, 2022 ​ ​ — ​ $ — Granted ​ ​ 11,111 ​ ​ 3.20 Exercised ​ ​ — ​ ​ — Expired ​ ​ — ​ ​ — Outstanding as of December 30, 2023 ​ ​ 11,111 ​ ​ 3.20 Granted ​ ​ 27,273 ​ ​ 1.20 Exercised ​ ​ — ​ ​ — Expired ​ ​ — ​ ​ — Outstanding as of December 28, 2024 ​ ​ 38,384 ​ $ 1.78 ​ During fiscal year 2024, in connection with the 2024 Offering, we issued warrants to purchase up to 27,272,728 shares of our common stock with a weighted average exercise price of $ 1.20 . During fiscal year 2023, in connection with the 2023 Offering, we issued warrants to purchase up to 11,111,112 shares of our common stock with an exercise price of $ 3.20 . ​ ​ Note 8—Benefit Plans ​ Equity Incentive Plan ​ Our Amended and Restated 2006 Equity Incentive Plan (the “Amended 2006 Plan”) provides for broad-based equity grants to our employees and non-employee service providers. We also periodically grant equity-based awards outside the Amended 2006 Plan to certain new hires as an inducement to enter into employment with us. Subject to certain adjustments, as of December 28, 2024, we were authorized to issue a maximum of 19,805,566 shares of our common stock pursuant to awards granted under the Amended 2006 Plan. Pursuant to the terms of the Amended 2006 Plan, beginning January 1, 2017, the automatic annual increase to the number of shares of common stock that may be issued pursuant to awards granted under the Amended 2006 Plan is equal to the lesser of (i) 2.5 % of the number of shares of our common stock issued and outstanding as of the first day of the applicable calendar year, and (ii) 1,200,000 shares of our common stock, subject to adjustment for certain corporate actions. As of December 28, 2024, we had 692,001 shares of our common stock available for issuance pursuant to future awards to be granted under the Amended 2006 Plan. ​ 81 Table of Contents Stock Options ​ 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 date of grant. The following table summarizes the activity related to stock options during fiscal year 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ Remaining ​ Aggregate ​ ​ ​ Number of ​ Average ​ Contractual ​ Intrinsic ​ ​ ​ Shares ​ Exercise ​ Life ​ Value ​ ​ (in thousands) Price (in years) (in thousands) ​ Outstanding as of December 30, 2023 ​ ​ 4,039 ​ $ 0.90 ​ ​ 4.44 ​ $ 4,038 ​ Granted ​ ​ - ​ $ - ​ ​ ​ ​ ​ ​ ​ Exercised ​ ​ ( 276 ) ​ $ 0.66 ​ ​ ​ ​ ​ ​ ​ Expired or forfeited ​ ​ ( 506 ) ​ $ 1.86 ​ ​ ​ ​ ​ ​ ​ Outstanding as of December 28, 2024 ​ ​ 3,257 ​ $ 0.78 ​ ​ 3.89 ​ $ 468 ​ Exercisable as of December 28, 2024 ​ ​ 3,172 ​ $ 0.77 ​ ​ 3.83 ​ $ 458 ​ Vested and expected to vest as of December 28, 2024 ​ ​ 3,256 ​ $ 0.78 ​ ​ 3.89 ​ $ 468 ​ ​ The total intrinsic value of stock options exercised during fiscal years 2024 and 2023 was $ 0.2 million and $ 1.1 million, respectively. ​ Restricted Stock Units ​ RSUs granted for employees and consultants generally vest semi-annually from the grant date over a four -year term and RSUs granted for independent directors fully-vested on the grant date. The following table summarizes the activity related to RSUs during fiscal year 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ ​ Average ​ ​ Number of ​ Grant-Date ​ ​ Shares ​ Fair Value ​ (in thousands) per Share Balance nonvested as of December 30, 2023 ​ ​ 3,603 ​ $ 3.49 Granted ​ ​ 2,085 ​ $ 1.25 Vested ​ ​ ( 1,275 ) ​ $ 3.32 Forfeited ​ ​ ( 731 ) ​ $ 2.41 Balance nonvested as of December 28, 2024 ​ ​ 3,682 ​ $ 2.49 ​ Stock-Based Compensation ​ The following table summarizes the stock-based compensation expense by line item in the consolidated statements of operations (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Cost of sales ​ $ 99 ​ $ 110 Research and development ​ ​ 908 ​ ​ 875 Selling, general and administrative ​ ​ 3,429 ​ ​ 3,352 Total ​ $ 4,436 ​ $ 4,337 ​ 82 Table of Contents As of December 28, 2024, we had approximately $ 6.8 million, net of estimated forfeitures, of unearned stock-based compensation, which we expect to recognize over a weighted-average period of approximately 2.1 years. ​ 401(k) Plan ​ We have a defined contribution plan under Section 401(k) of the Code (“401(k)”) covering full-time domestic employees who meet certain eligibility requirements. Under the 401(k) plan, eligible employees may contribute up to 100% of their eligible compensation on either a pre-tax or after-tax Roth 401(k) basis, or up to the annual maximum allowed by the IRS. We may make matching contributions on the contributions of a participant on a discretionary basis. During fiscal years 2024 and 2023, our matching contributions totaled $ 0.1 million and $ 0.1 million, respectively. ​ ​ Note 9—Major Customers, Suppliers and Products ​ Our net product sales have historically been concentrated in a small number of customers. The following table sets forth the percentage of net product sales made to customers that each comprise 10% or more of total net product sales: ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Customer A ​ 37 % ​ 30 % Customer B ​ * ​ 12 % Customer C ​ 20 % ​ * ​ * Less than 10 % of total net product sales ​ As of December 28, 2024, three customers represented approximately 25 % , 11 % , and 10 % , respectively, of aggregate gross accounts receivable. As of December 30, 2023, two customers represented approximately 60 % and 10 % , respectively, of aggregate gross accounts receivable. The loss of any of our significant customers or a reduction in sales to or difficulties collecting payments from any of these customers could significantly reduce our net product sales and adversely affect our operating results. We mitigate risks associated with foreign receivables by purchasing comprehensive foreign credit insurance. 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 fiscal years 2024 and 2023, resales of these products represented approximately 92 % and 85 % , respectively, of our net product sales. ​ Our purchases are typically concentrated in a small number of suppliers. The following table shows the percentage of purchases made from supplier(s) that each comprise 10% or more of total purchases: ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Supplier A ​ 93 % ​ 75 % ​ While we believe alternative suppliers may be available, our dependence on a small number of suppliers and the lack of any guaranteed sources for the essential components of our products and the components we resell exposes us to several risks, including the inability to obtain an adequate supply of these components, increases in their costs, delivery delays and poor quality. If we cannot obtain these components in the amounts needed on a timely basis and at commercially reasonable prices, we may not be able to develop or introduce new products, we may experience significant increases in our cost of sales if we are forced to procure components from alternative suppliers and are not able to negotiate favorable terms with these suppliers, we may experience interruptions or failures in the delivery of our products, or we may be forced to cease sales of products dependent on the components or resales of the components we resell to customers directly. Any of these events could have a material adverse effect on our business, operating results and financial condition. 83 Table of Contents ​ Note 10 – Subsequent Events ​ On March 13, 2025, we entered into a purchase agreement (the “March 2025 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, subject to the conditions and limitations set forth in the March 2025 Purchase Agreement. Concurrent with the execution of the March 2025 Purchase Agreement, we also entered into a registration rights agreement with Lincoln Park relating to the common stock to be sold to Lincoln Park. As consideration for entering into the March 2025 Purchase Agreement, we issued to Lincoln Park 1,123,023 shares of our common stock as initial commitment shares in a noncash transaction on March 13, 2025 and will issue up to 1,123,023 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. ​ Pursuant to the March 2025 Purchase Agreement, on any business day and as often as every other business day over the 36-month term of the March 2025 Purchase Agreement, we have the right, from time to time, at its sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 750,000 shares of our common stock, provided Lincoln Park’s obligation under any single such purchase will not exceed $ 3.0 million, unless we and Lincoln Park mutually agree to increase the maximum amount of such single regular purchase. If we direct Lincoln Park to purchase the maximum number of shares of common stock it then may sell in a regular purchase, then in addition to such regular purchase, and subject to certain conditions and limitations in the March 2025 Purchase Agreement, we may direct Lincoln Park to purchase an additional amount of common stock that may not exceed the lesser of (i) 300 % of the number of shares purchased pursuant to the corresponding regular purchase or (ii) 30 % of the total number of shares of our common stock traded during a specified period on the applicable purchase date as set forth in the March 2025 Purchase Agreement. Under certain circumstances and in accordance with the March 2025 Purchase Agreement, we may direct Lincoln Park to purchase shares in multiple accelerated purchases on the same trading day. ​ 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 March 2025 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 March 2025 Purchase Agreement. In all instances, we may not sell shares of our common stock to Lincoln Park under the March 2025 Purchase Agreement if that would result in Lincoln Park beneficially owning more than 9.99 % of its common stock. ​ The March 2025 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 March 2025 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 March 2025 Purchase Agreement. We have the right to terminate the March 2025 Purchase Agreement at any time, at no cost to us. ​ Subsequently, from March 14, 2025 through March 21, 2025, Lincoln Park purchased an aggregate of 460,000 shares of our common stock for a net purchase price of $ 0.5 million under the March 2025 Purchase Agreement. In connection with the purchase, we issued to Lincoln Park an aggregate of 866 shares of our common stock as additional commitment shares in noncash transactions. ​ 84 Table of Contents ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ To the Stockholders and Sole Member of the Board of Directors Netlist, Inc. Irvine, California ​ Opinion on the Consolidated Financial Statements ​ We have audited the accompanying consolidated balance sheet of Netlist, Inc. and subsidiaries (the “Company”) as of December 28, 2024, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the year then ended, the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 28, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. ​ Basis for Opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. ​ Critical Audit Matters ​ Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. We determined that there are no critical audit matters. ​ ​ /s/ Macias Gini & O’Connell LLP ​ We have served as the Company's auditor since 2024 Irvine, California March 28, 2025 85 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ To the Stockholders and Sole Member of the Board of Directors Netlist, Inc. ​ Opinion on the Consolidated Financial Statements ​ We have audited the accompanying consolidated balance sheet of Netlist, Inc. and subsidiaries (the “Company”) as of December 30, 2023, the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the year then ended, and the related notes and the schedule listed in the Index at Item 15 for the year ended December 30, 2023 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. ​ Basis for Opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. ​ Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. ​ ​ /s/ KMJ Corbin & Company LLP ​ We served as the Company’s auditor from 2005 to 2024. ​ Glendora, California February 23, 2024 ​ ​ ​ 86 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ​ None. ​