Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The registrant has ~~44,609,387~~46,109,765 shares of common stock, par value $0.01 per share, issued and outstanding as of October ~~25, 2019.~~30, 2020.

	September 27, 2019			December 28, 2018			October 2, 2020			January 3, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	112,327		$	103,877		$	128,338		$	119,968
Accounts receivable trade, net of allowance of doubtful accounts of $75 and $550, respectively		30,789			25,946
Accounts receivable trade, net of allowance of doubtful accounts of $131 and $88, respectively								42,063			30,996
Inventories, net		16,440			16,704			18,234			17,142
Prepayments, deposits and other current assets		5,406			5,045			7,368			6,560
Total current assets		164,962			151,572			196,003			174,666
Property, plant and equipment, net		14,846			11,451			22,662			17,065
Finance lease right-of-use assets, net		2,006			—			640			1,867
Operating lease right-of-use assets, net		6,677			—			7,725			6,684
Intangible assets, net		252			243			275			296
Goodwill		1,786			1,786			1,786			1,786
Deferred income taxes		1,460			1,278			5,007			3,750
Other assets		752			1,009			600			751
Total assets	$	192,741		$	167,339		$	234,698		$	206,865
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	2,340		$	3,780		$	1,353		$	1,827
Accounts payable		7,535			6,524			7,830			8,050
Obligations under finance leases		752			1,098			422			560
Obligations under operating leases		2,789			—			2,215			2,700
Allowance for sales returns		3,691			2,895			4,427			3,644
Other current liabilities		12,865			13,431			17,612			17,697
Total current liabilities		29,972			27,728			33,859			34,478
Obligations under finance leases		471			459			73			366
Obligations under operating leases		4,003			—			5,571			4,086
Deferred income taxes		1,539			1,022
Asset retirement obligations		211			206			216			211
Deferred rent		—			188
Pension liability		7,205			5,310			8,587			7,840
Total liabilities		43,401			34,913			48,306			46,981
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 60,000 shares authorized: 44,606 and 44,195 shares issued and outstanding at September 27, 2019 and December 28, 2018, respectively		446			442
Common stock, $0.01 par value; 60,000 shares authorized: 46,072 and 44,822 shares issued and outstanding at October 3, 2020 and January 3, 2020, respectively								461			448
Additional paid-in capital		299,597			289,584			328,074			304,288
Accumulated other comprehensive loss		(2,520	)		(1,320	)		(2,925	)		(3,048	)
Accumulated deficit		(148,183	)		(156,280	)		(139,218	)		(141,804	)
Total stockholders’ equity		149,340			132,426			186,392			159,884
Total liabilities and stockholders’ equity	$	192,741		$	167,339		$	234,698		$	206,865

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			October 2, 2020			September 27, 2019			October 2, 2020			September 27, 2019
Net sales	$	39,055		$	31,770		$	111,302		$	92,768		$	47,081		$	39,055		$	117,462		$	111,302
Cost of sales		10,004			7,910			28,172			24,250			12,210			10,004			33,401			28,172
Gross profit		29,051			23,860			83,130			68,518			34,871			29,051			84,061			83,130
Selling, general and administrative expenses:
General and administrative		7,098			6,087			21,443			18,054			8,589			7,098			24,406			21,443
Marketing and selling		12,463			10,620			34,288			28,733
Selling and marketing														12,649			12,463			34,003			34,288
Research and development		6,156			5,570			17,889			16,323			8,751			6,156			22,960			17,889
Total selling, general and administrative expenses		25,717			22,277			73,620			63,110			29,989			25,717			81,369			73,620
Operating income		3,334			1,583			9,510			5,408			4,882			3,334			2,692			9,510
Other income (expense), net:
Interest income (expense), net		266			(29	)		796			(65	)
Interest income, net														1			266			237			796
Gain (loss) on foreign currency transactions		(584	)		52			(821	)		(545	)		468			(584	)		388			(821	)
Royalty income		106			159			440			465			93			106			239			440
Other income, net		26			40			124			61
Other income (expense), net														(63	)		26			(83	)		124
Total other income (expense), net		(186	)		222			539			(84	)		499			(186	)		781			539
Income before income taxes		3,148			1,805			10,049			5,324			5,381			3,148			3,473			10,049
Provision for income taxes		760			346			2,380			1,452			1,489			760			887			2,380
Net income	$	2,388		$	1,459		$	7,669		$	3,872		$	3,892		$	2,388		$	2,586		$	7,669
Net income per share:
Basic	$	0.05		$	0.03		$	0.17		$	0.09		$	0.08		$	0.05		$	0.06		$	0.17
Diluted	$	0.05		$	0.03		$	0.16		$	0.09		$	0.08		$	0.05		$	0.05		$	0.16
Weighted average shares outstanding:
Basic		44,563			43,054			44,426			42,065			45,903			44,563			45,394			44,426
Diluted		46,857			46,025			46,848			44,618			48,180			46,857			47,589			46,848

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			October 2, 2020			September 27, 2019			October 2, 2020			September 27, 2019
Net income	$	2,388		$	1,459		$	7,669		$	3,872		$	3,892		$	2,388		$	2,586		$	7,669
Other comprehensive loss:
Other comprehensive income (loss):
Defined benefit plans:
Net change in plan assets		(1,037	)		(21	)		(1,677	)		(51	)		(334	)		(1,037	)		(387	)		(1,677	)
Reclassification into other income, net		26			25			80			76			70			26			212			80
Foreign currency translation gain (loss)		(22	)		(321	)		317			(114	)
Foreign currency translation loss														316			(22	)		402			317
Tax effect		115			105			80			38			(68	)		115			(104	)		80
Other comprehensive loss, net of tax		(918	)		(212	)		(1,200	)		(51	)
Other comprehensive income (loss), net of tax														(16	)		(918	)		123			(1,200	)
Comprehensive income	$	1,470		$	1,247		$	6,469		$	3,821		$	3,876		$	1,470		$	2,709		$	6,469

	Three Months Ended															Three Months Ended
	Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total			Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total
Balance, at July 3, 2020																	45,788	$	458	$	320,235	$	(2,909	)	$	(143,110	)	$	174,674
Net income																	—		—		—		—			3,892			3,892
Other comprehensive loss																	—		—		—		(16	)		—			(16	)
Common stock issued upon exercise of options																	269		3		4,426		—			—			4,429
Stock-based compensation																	—		—		3,413		—			—			3,413
Unvested restricted stock																	11		—		—		—			—			—
Vested restricted stock																	4		—		—		—			—			—
Balance, at October 2, 2020																	46,072	$	461	$	328,074	$	(2,925	)	$	(139,218	)	$	186,392
Balance, at June 28, 2019		44,534	$	445	$	296,063	$	(1,602	)	$	(150,571	)	$	144,335			44,534	$	445	$	296,063	$	(1,602	)	$	(150,571	)	$	144,335
Net income		—		—		—		—			2,388			2,388			—		—		—		—			2,388			2,388
Other comprehensive loss		—		—		—		(918	)		—			(918	)		—		—		—		(918	)		—			(918	)
Common stock issued upon exercise of options		64		1		718		—			—			719			64		1		718		—			—			719
Stock-based compensation		—		—		2,816		—			—			2,816			—		—		2,816		—			—			2,816
Vested restricted stock		8		—		—		—			—			—			8		—		—		—			—			—
Balance, at September 27, 2019		44,606	$	446	$	299,597	$	(2,520	)	$	(148,183	)	$	149,340			44,606	$	446	$	299,597	$	(2,520	)	$	(148,183	)	$	149,340
Balance, at June 29, 2018		41,877	$	419	$	210,488	$	(989	)	$	(158,835	)	$	51,083
Net income		—		—		—		—			1,459			1,459
Other comprehensive loss		—		—		—		(212	)		—			(212	)
Proceeds from public stock offering		2,000		20		72,130		—			—			72,150
Common stock issued upon exercise of options		219		2		2,173		—			—			2,175
Stock-based compensation		—		—		2,209		—			—			2,209
Vested restricted stock		8		—		—		—			—			—
Balance, at September 28, 2018		44,104	$	441	$	287,000	$	(1,201	)	$	(157,376	)	$	128,864

	Nine Months Ended																Nine Months Ended
																	Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital			Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total
Balance, at January 3, 2020																		44,822	$	448	$	304,288		$	(3,048	)	$	(141,804	)	$	159,884
Net income																		—		—		—			—			2,586			2,586
Other comprehensive income																		—		—		—			123			—			123
Common stock issued upon exercise of options																		1,146		12		13,974			—			—			13,986
Stock-based compensation																		—		—		9,812			—			—			9,812
Unvested restricted stock																		11		—		—			—			—			—
Vested restricted stock																		93		1		—			—			—			1
Balance, at October 2, 2020																		46,072	$	461	$	328,074		$	(2,925	)	$	(139,218	)	$	186,392
	Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital			Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total
Balance, at December 28, 2018		44,195	$	442	$	289,584		$	(1,320	)	$	(156,280	)	$	132,426			44,195	$	442	$	289,584		$	(1,320	)	$	(156,280	)	$	132,426
Net income		—		—		—			—			7,669			7,669			—		—		—			—			7,669			7,669
Adoption of ASC 842		—		—		—			—			113			113
Adoption of ASU 2018-07		—		—		(315	)		—			315			—
Impact of the adoption of lease accounting standard																		—		—		—			—			113			113
Impact of adoption of nonemployee share-based payment standard																		—		—		(315	)		—			315			—
Other comprehensive loss		—		—		—			(1,200	)		—			(1,200	)		—		—		—			(1,200	)		—			(1,200	)
Common stock issued upon exercise of options		190		2		1,827			—			—			1,829			190		2		1,827			—			—			1,829
Stock-based compensation		—		—		8,501			—			—			8,501			—		—		8,501			—			—			8,501
Unvested restricted stock		11		—		—			—			—			—			11		—		—			—			—			—
Vested restricted stock		210		2		—			—			—			2			210		2		—			—			—			2
Balance, at September 27, 2019		44,606	$	446	$	299,597		$	(2,520	)	$	(148,183	)	$	149,340			44,606	$	446	$	299,597		$	(2,520	)	$	(148,183	)	$	149,340
Balance, at December 29, 2017		41,383	$	414	$	204,920		$	(1,150	)	$	(161,248	)	$	42,936
Net income		—		—		—			—			3,872			3,872
Other comprehensive loss		—		—		—			(51	)		—			(51	)
Proceeds from public offering of stock		2,000		20		72,130			—			—			72,150
Common stock issued upon exercise of options		525		5		4,575			—			—			4,580
Stock-based compensation		—		—		5,375			—			—			5,375
Unvested restricted stock		11		—		—			—			—			—
Vested restricted stock		185		2		—			—			—			2
Balance, at September 28, 2018		44,104	$	441	$	287,000		$	(1,201	)	$	(157,376	)	$	128,864

	Nine Months Ended						Nine Months Ended
	September 27, 2019			September 28, 2018			October 2, 2020			September 27, 2019
Cash flows from operating activities:
Net income	$	7,669		$	3,872		$	2,586		$	7,669
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant, and equipment		2,853			1,792			2,276			2,853
Amortization of intangibles		26			26			26			26
Deferred income taxes		526			363			(1,215	)		526
Change in net pension liability		264			233			522			264
Loss on disposal of property and equipment		14			8			3			14
Stock-based compensation expense		7,778			4,926			8,965			7,778
Provision for sales returns and bad debts		309			892			815			309
Inventory provision		1,222			1,181			1,195			1,222
Changes in working capital:
Accounts receivable		(4,260	)		(3,989	)		(10,975	)		(4,260	)
Inventories		(179	)		(3,625	)		(1,353	)		(179	)
Prepayments, deposits, and other current assets		(230	)		(1,021	)		(636	)		(230	)
Accounts payable		546			2,121			(657	)		546
Other current liabilities		(536	)		3,643			(151	)		(536	)
Net cash provided by operating activities		16,002			10,422			1,401			16,002
Cash flows from investing activities:
Acquisition of property and equipment		(7,169	)		(1,721	)		(6,259	)		(7,169	)
Acquisition of patents and licenses		(30	)		—			—			(30	)
Net cash used in investing activities		(7,199	)		(1,721	)		(6,259	)		(7,199	)
Cash flows from financing activities:
Proceeds from public offering of stock		—			72,150
Repayment of finance lease obligations		(998	)		(1,396	)		(455	)		(998	)
Repayment on line of credit		(1,512	)		(251	)		(511	)		(1,512	)
Proceeds from the exercise of stock options		1,829			4,580			13,986			1,829
Proceeds from vested restricted stock		2			2			1			2
Net cash provided by (used in) financing activities		(679	)		75,085			13,021			(679	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		204			(111	)		207			204
Increase in cash, cash equivalents and restricted cash		8,328			83,675			8,370			8,328
Cash, cash equivalents and restricted cash, at beginning of the period		103,999			18,641			119,968			103,999
Cash, cash equivalents and restricted cash, at end of the period	$	112,327		$	102,316		$	128,338		$	112,327

The Condensed Consolidated Financial Statements of the Company present the financial position, results of operations, and cash flows of STAAR Surgical Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information and footnote disclosures normally included in the Comprehensive Financial Statements have been condensed or omitted pursuant to such rules and regulations. The Consolidated Balance Sheet as of ~~December 28, 2018~~January 3, 2020 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended ~~December 28, 2018.~~January 3, 2020.

The Condensed Consolidated Financial Statements for the three and nine months ended October 2, 2020 and September 27, 2019, ~~and September 28, 2018,~~ in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations. The results of operations for the three and nine months ended October 2, 2020 and September 27, 2019, ~~and September 28, 2018,~~ are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

Each of the Company’s fiscal reporting periods ends on the Friday nearest to the quarter ending date and generally consists of 13 weeks. Unless the context indicates otherwise “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries.

~~The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total~~There were two vendors which accounted for over 29% of the ~~same such amounts shown in the Condensed Consolidated Statements~~Company’s consolidated accounts payable as of ~~Cash Flows (in 000’s):~~

The Company had restricted cash set aside as collateral for a standby letter of credit required by the California Department of Public Health for unforeseen future regulatory costs related to the decommissioning of certain manufacturing equipment. Since the quarter ended June 28, 2019, the Company was no longer required to set aside collateral for this standby letter of credit.

~~The allowance for doubtful accounts decreased during the nine months ended September 27, 2019 due to specific past due receivables that were previously reserved and subsequently collected.~~

On December 29, 2018 (beginning of fiscal year 2019), the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” and its subsequent amendments affecting the Company: (i) ASU 2018-10, “Codification Improvements to Topic 842, Leases,” and (ii) ASU 2018-11, “Leases (Topic 842): Targeted improvements,” using the modified retrospective method. Upon adoption of ASU 2016-02, the Company recognized a cumulative adjustment of $113,000 which decreased the accumulated deficit and recognized right-of-use (“ROU”) assets and lease liabilities for operating leases, whereby the Company’s accounting finance leases remained substantially unchanged.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~Note 1~~ ~~— Basis of Presentation and Significant Accounting Policies (Continued)~~

The Company recognizes ROU assets and lease liabilities for leases with terms greater than twelve months in the Condensed Consolidated Balance Sheets. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the Condensed Consolidated Statement of Income.

A contract contains a lease if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. An asset is either explicitly identified or implicitly identified and must be physically distinct. In addition, the Company must have both the right to obtain substantially all of the economic benefits from use of the identified asset and has the right to direct the use of the identified asset.

Certain leases may have non-lease components such as common area maintenance expense for building leases and maintenance expenses for automobile leases. In general, the Company separates common area maintenance expense component from the value of the ROU asset and lease liability when evaluating rental properties under ASU 2016-02, whereas, the Company includes the maintenance and service components in the value of the ROU asset and lease liability while evaluating automobile leases under ASU 2016-02.

When determining whether a lease is a finance lease or an operating lease, ASU 2016-02 does not specifically define criteria to determine “major part of remaining economic life of the underlying asset” and “substantially all of the fair value of the underlying asset.” For lease classification determination, the Company continues to use (i) greater to or equal to 75% to determine whether the lease term is a major part of the remaining economic life of the underlying asset and (ii) greater to or equal to 90% to determine whether the present value of the sum of lease payments is substantially all of the fair value of the underlying asset.

~~The Company uses either the rate implicit in the lease or its incremental borrowing rate as the discount rate in lease accounting.~~

When adopting ASU 2016-02, the Company did not reassess any expired or existing contracts, reassess the lease classification for any expired or existing leases and reassess initial direct costs for exiting leases. The Company also elected not to capitalize leases that have terms of twelve months or less.

The Company reviews ROU assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company measures recoverability of these assets by comparing the carrying value of such assets to the estimated undiscounted future cash flows the assets are expected to generate. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets’ fair value and their carrying value.

~~As of September 27, 2019, there~~October 2, 2020. There was one vendor which accounted for ~~13%~~over 11% of the Company’s consolidated accounts ~~payable. As~~payable as of ~~December 28, 2018, there were no vendors which~~January 3, 2020. There was one vendor who accounted for over 10% of the Company’s consolidated ~~accounts payable.~~purchases for the three months ended October 2, 2020. There were no vendors who accounted for over 10% of the Company’s consolidated purchases for the nine months ended October 2, 2020.

During the COVID-19 pandemic, the Company believes it has used reasonable estimates and assumptions in determining valuation allowances for uncollectible trade receivables, sales returns reserves, obsolete and excess inventory reserves, deferred income taxes, and tax reserves, including valuation allowances for deferred tax assets, pension liabilities, evaluation of asset impairment, in determining the useful life of depreciable and definite-lived intangible assets, and in the variables and assumptions used to calculate and record stock-based compensation. Throughout the COVID-19 pandemic the Company offered extended payment terms to assist its surgeon customers and their clinics as they resumed business. During the quarter ended October 2, 2020, the Company has experienced improvements in customer payments and is unaware of any material impairment of customer receivables. The Company’s sales representatives throughout the world remain engaged with customers conducting online training and other educational courses which have been very well attended. This activity has given the Company insight into COVID-19’s impact on customers and potential impairment of receivables.

Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Adopted

On ~~December 29, 2018~~January 4, 2020 (beginning of fiscal year ~~2019)~~2020), the Company adopted Accounting Standards Update (“ASU”) 2016‑13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model; and (ii) provides for recording credit losses on available-for-sale debt securities through an allowance account. ASU ~~2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” provides an option~~2016-13 also requires certain incremental disclosures. Subsequently, the FASB issued ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2020-02 and ASU 2020-03 to reclassify stranded tax effects within Accumulated Other Comprehensive Income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cutsclarify and ~~Jobs Act is recorded.~~improve ASU 2016-13. The adoption of ASU ~~2018‑02~~2016-13 did not have a material impact on the Condensed Consolidated Financial Statements.

On December 29, 2018 (beginning of fiscal year 2019), the Company adopted ASU 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” aligns the accounting for share-based payments to nonemployees similar to employees. Upon the adoption of ASU 2018-07, the Company recognized a cumulative adjustment of $315,000 which decreased the accumulated deficit.

Note 1 — Basis of Presentation and Significant Accounting Policies (Continued)

Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Adopted (Continued)

~~In August 2018,~~On January 4, 2020 (beginning of fiscal year 2020), the ~~FASB issued~~Company adopted ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which modifies certain disclosures requirements for reporting fair value measurements. ~~This is effective for fiscal years ending after December 15, 2019. Early~~The adoption ~~is permitted. The Company will adopt this standard as~~ of ASU 2018-13 did not have a material impact on the Condensed Consolidated Financial Statements.

On January 4, 2020 (beginning of fiscal year 2020) ~~and is currently evaluating~~, the ~~disclosure requirements and its effect on the Condensed Consolidated Financial Statements.~~

~~In August 2018, the FASB issued~~Company adopted ASU 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20); Disclosure Framework – Changes in the Disclosure Requirement for Defined Benefit Plans,” which modifies disclosure requirements for employers that sponsor defined benefit pension or other post retirement plans. ~~This~~The adoption of ASU 2018-14 did not have a material impact on the Condensed Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 removes the following exceptions: exception to the incremental approach for intra period tax allocation; exception to accounting for basis differences when there are ownership changes in foreign investments; and exception to interim period tax accounting for year to date losses that exceed anticipated losses. ASU 2019-12 also improves financial reporting for franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacted changes in tax laws in interim periods. ASU 2019-12 is effective for fiscal years ~~ending~~beginning after December 15, ~~2020.~~2020 and interim periods within those fiscal years. Early adoption is permitted. The Company will adopt this standard as of January 2, 2021 (beginning of fiscal year 2021) and is currently evaluating the disclosure requirements and its effect on the Condensed Consolidated Financial Statements.

Inventories, net are stated at the lower of cost and net realizable value, determined on a first-in, first-out basis and consisted of the following (in thousands):

	September 27, 2019		December 28, 2018		October 2, 2020		January 3, 2020
Raw materials and purchased parts	$	1,374	$	2,678	$	1,818	$	3,334
Work in process		724		2,195		4,693		1,870
Finished goods		15,596		13,214		13,018		12,976
Total inventories, gross		17,694		18,087		19,529		18,180
Less inventory reserves		1,254		1,383		1,295		1,038
Total inventories, net	$	16,440	$	16,704	$	18,234	$	17,142

Prepayments, deposits, and other current assets consisted of the following (in thousands):

	September 27, 2019		December 28, 2018		October 2, 2020		January 3, 2020
Prepayments and deposits	$	2,630	$	1,707	$	3,534	$	3,031
Prepaid insurance		585		1,271		242		1,488
Consumption tax receivable		549		912		1,059		875
Value added tax (VAT) receivable		587		565		1,492		713
Income tax receivable		523		285
Other⁽¹⁾		532		305		1,041		453
Total prepayments, deposits and other current assets	$	5,406	$	5,045	$	7,368	$	6,560

	September 27, 2019		December 28, 2018		October 2, 2020		January 3, 2020
Machinery and equipment	$	17,027	$	16,905	$	21,275	$	17,173
Computer equipment and software		6,074		5,992		6,686		6,244
Furniture and fixtures		4,157		3,868		4,614		4,169
Leasehold improvements		10,118		10,045		11,200		10,151
Construction in process		5,952		2,095		10,293		8,477
Total property, plant and equipment, gross		43,328		38,905		54,068		46,214
Less accumulated depreciation		28,482		27,454		31,406		29,149
Total property, plant and equipment, net	$	14,846	$	11,451	$	22,662	$	17,065

Construction in process includes the cost of design plans and build out of facilities and the cost of equipment, as well as the direct costs incurred in the testing and validation of machinery and equipment and facilities before they are ready for productive use. Upon placement in service, costs are reclassified into the appropriate asset category and depreciation commences.

September 27, 2019

December 28, 2018

October 2, 2020

January 3, 2020

Long-lived amortized intangible assets

Gross

Carrying

Amount

Accumulated

Amortization

Net

Gross

Carrying

Amount

Accumulated

Amortization

Net

Gross

Carrying

Amount

Accumulated

Amortization

Net

Gross

Carrying

Amount

Accumulated

Amortization

Net

Patents and licenses

9,301

(9,049

)

252

9,257

(9,014

)

243

9,369

(9,094

)

275

9,353

(9,057

)

296

	September 27, 2019		December 28, 2018		October 2, 2020		January 3, 2020
Accrued salaries and wages	$	4,209	$	3,172	$	5,194	$	4,400
Accrued bonuses						1,000		4,184
Accrued insurance		43		1,061		96		1,346
Income taxes payable						3,898		2,710
Accrued consumption tax		771		995		1,228		1,164
Accrued bonuses		2,354		5,113
Income taxes payable		2,464		1,105
Accrued professional fees for clinical trials						1,554		567
Marketing obligations		747		361		1,197		633
Other⁽¹⁾		2,277		1,624		3,445		2,693
Total other current liabilities	$	12,865	$	13,431	$	17,612	$	17,697

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

Since 1998, the Company’s wholly owned Japanese subsidiary, STAAR Japan, has had an agreement with Mizuho Bank which provides for borrowings of up to 500,000,000 Yen, at an interest rate equal to the uncollateralized overnight call rate (approximately 0.06% as of ~~September 27, 2019)~~October 2, 2020) plus a 0.50% spread, and may be renewed quarterly (the current line expires on November 21, ~~2019)~~2020). The credit facility is not collateralized. The Company had ~~252,500,000~~142,500,000 Yen and ~~417,500,000~~197,500,000 Yen outstanding on the line of credit as of ~~September 27, 2019~~October 2, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively (approximately ~~$2,340,000~~$1,353,000 and ~~$3,780,000~~$1,827,000 based on the foreign exchange rates on ~~September 27, 2019~~October 2, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively), which approximates fair value due to the short-term maturity and market interest rates of the line of credit. In case of default, the interest rate will be increased to 14% per annum. There was ~~247,500,000~~357,500,000 Yen and ~~82,500,000~~302,500,000 Yen available for borrowing as of ~~September 27, 2019~~October 2, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively (approximately ~~$2,293,000~~$3,393,000 and ~~$747,000~~$2,798,000 based on the foreign exchange rate on ~~September 27, 2019~~October 2, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively). At maturity on November 21, ~~2019,~~2020, the Company expects to renew this line of credit for an additional three months, with similar terms.

In September 2013, the Company’s wholly owned Swiss subsidiary, STAAR Surgical AG, entered into a framework agreement for loans (“framework agreement”) with Credit Suisse (the “Bank”). The framework agreement provides for borrowings of up to 1,000,000 CHF (Swiss Francs) (approximately $1,100,000 and $1,000,000 at the rate of exchange on ~~September 27, 2019~~October 2, 2020 and ~~December 28, 2018)~~January 3, 2020 respectively), to be used for working capital purposes. Accrued interest and 0.25% commissions on average outstanding borrowings is payable quarterly and the interest rate will be determined by the Bank based on the then prevailing market conditions at the time of borrowing. The framework agreement is automatically renewed on an annual basis based on the same terms assuming there is no default. The framework agreement may be terminated by either party at any time in accordance with its general terms and conditions. The framework agreement is not collateralized and contains certain conditions such as providing the Bank with audited financial statements annually and notice of significant events or conditions, as defined in the framework agreement. The Bank may also declare all amounts outstanding to be immediately due and payable upon a change of control or a “material qualification” in STAAR Surgical independent auditors’ report, as defined. There were 0 borrowings outstanding as of ~~September 27, 2019~~October 2, 2020 and ~~December 28, 2018.~~January 3, 2020.

The Company is in compliance with covenants of its credit facilities and lines of credit as of ~~September 27, 2019.~~

During the nine months ended September 27, 2019, the Company converted the lease line of credit schedule 011 with Farnam Street Financial, Inc. into a finance lease liability of approximately $500,000.October 2, 2020.

The Company entered into finance leases primarily related to purchases of equipment used for manufacturing or computer-related equipment. These finance leases are two to five years in length and have fixed payment amounts for the term of the contract and have options to purchase the assets at the end of the lease term. Supplemental balance sheet information related to finance leases consisted of the following (dollars in thousands):

	September 27, 2019			October 2, 2020			January 3, 2020
Machinery and equipment	$	1,885		$	569		$	1,885
Computer equipment and software		923			827			912
Furniture and fixtures		102			—			102
Leasehold improvements		27			—			27
Finance lease right-of-use assets, gross		2,937			1,396			2,926
Less accumulated depreciation		931			756			1,059
Finance lease right-of-use assets, net	$	2,006		$	640		$	1,867

Total finance lease liability	$	1,223		$	495		$	926
Weighted-average remaining lease term (in years)		1.4			1.0			1.1
Weighted-average discount rate		6.27	%		3.71	%		6.17	%

11Supplemental cash flow information related to finance leases consisted of the following (dollars in thousands):

~~Supplemental cash flow information related to finance leases consisted of the following (dollars in thousands):~~

The Company entered into operating leases primarily related to real property (office, manufacturing and warehouse facilities), automobiles and copiers. These operating leases are two to ~~five~~ten years in length with options to extend. The Company did not include any lease extensions in the initial valuation unless the Company was reasonably certain to extend the lease. Depending on the lease, there are those with fixed payment amounts for the entire length of the contract or payments which increase periodically as noted in the contract or increased at an inflation rate indicator. For operating leases that increase using an inflation rate indicator, the Company used the inflation rate at the time the lease was entered into for the length of the lease term. Supplemental balance sheet information related to operating leases consisted of the following (dollars in thousands):

	September 27, 2019			October 2, 2020			January 3, 2020
Machinery and equipment	$	813		$	845		$	765
Computer equipment and software		462			462			462
Real property		10,634			14,115			11,116
Operating lease right-of-use assets, gross		11,909			15,422			12,343
Less accumulated depreciation		5,232			7,697			5,659
Operating lease right-of-use assets, net	$	6,677		$	7,725		$	6,684

Total operating lease liability	$	6,792		$	7,786		$	6,786
Weighted-average remaining lease term (in years)		2.4			5.5			2.3
Weighted-average discount rate		1.79	%		2.49	%		1.82	%

Supplemental cash flow information related to operating leases was as follows (dollars in thousands):

	Three Months Ended		Nine Months Ended		Three Months Ended				Nine Months Ended
	September 27, 2019		September 27, 2019		October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
Operating lease cost	$	726	$	2,020	$	752	$	726	$	2,238	$	2,020
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows		739		2,031		780		739		2,281		2,031
Right-of-use assets obtained in exchange for new operating lease liabilities		140		2,797		2,842		140		3,160		2,797

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

Estimated future minimum lease payments under operating and finance leases having initial or remaining non-cancelable lease terms more than one year as of ~~September 27, 2019 and December 28, 2018 are~~October 2, 2020 is as follows (in thousands):

The Company recorded income taxes of $1,489,000 for the three months ended October 2, 2020 due to pre-tax income generated in certain foreign jurisdictions, partially offset by a reversal of $154,000 of its U.S. valuation allowance, as a result of an increase in foreign income and changes in the usage and release of certain deferred tax assets. The Company recorded income taxes of $760,000 for the three months ended September 27, 2019 due to pre-tax income generated in certain foreign jurisdictions and withholding taxes on foreign operations. The Company recorded income taxes of $887,000 for the nine months ended October 2, 2020 due to income tax ~~provision is~~expense from profits generated from its foreign operations, partially offset by the release of its U.S. valuation allowance. The Company recorded income taxes of $2,380,000 for the nine months ended September 27, 2019, primarily due to pre-tax income generated in certain foreign ~~jurisdictions.~~jurisdictions and withholding taxes on foreign operations. The Company’s quarterly provision for income taxes is determined by estimating an annual effective tax rate. This estimate may fluctuate throughout the year as new information becomes available affecting its underlying assumptions. In the fourth quarter of fiscal year 2019, the Company reversed all previously recorded withholding taxes recorded for 2019, at which time the Company formed STAAR Surgical UK Limited as a holding company for its foreign operations. Based on the current tax treaties between the U.S., United Kingdom and Switzerland, the Company will no longer accrue for Switzerland withholding taxes on foreign earnings after fiscal 2018 (see also Note 10 in its fiscal 2019 Form 10-K for more information). There are no0 unrecognized tax benefits related to uncertain tax positions taken by the Company.

All earnings from the Company’s subsidiaries are not considered to be permanently reinvested. ~~Accordingly, the Company provides withholding and U.S. taxes on all unremitted foreign earnings.~~

The 2017 Tax Act subjects a U.S. shareholder to tax on Global Intangible Low Tax Income (“GILTI”) earned by certain foreign subsidiaries. In general, GILTI is the excess of a U.S. shareholder’s total net foreign income over a deemed return on tangible assets. The provision further allows a deduction of 50 percent of GILTI, however this deduction is limited toby the Company’s U.S. taxable income. The Company has elected to account for GILTI as a current period expense when incurred.

~~For~~On July 20, 2020 the U.S. Treasury issued final regulations for addressing the treatment of foreign income that is subject to a high rate of foreign tax (the GILTI high-tax exclusion). The final regulations allow companies to exclude certain high-taxed income from their GILTI calculation. The GILTI high-tax exclusion applies if the effective foreign tax rate is 90% or more of the rate that would apply if the income were subject to the maximum US rate of tax specified in section 11 (currently 18.9%, based on a maximum rate of 21%). The final regulations also provide that the GILTI high-tax exclusion is an annual election made each year and is retroactive to years beginning after December 31, 2017. The Company has made the election to exclude certain high-taxed income from its GILTI calculation for 2019 and the three and nine months ended ~~September 27,~~October 2, 2020.

The ultimate realization of deferred tax assets is dependent upon future generation of income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the projected future income and tax planning strategies in making this assessment. As of fiscal year end 2019, the Company ~~included GILTI~~had three years of ~~$12,084,000 in U.S. gross~~accumulated profits for federal and various state income ~~which was fully offset with net operating loss carryforwards. The Company was~~tax purposes as a result of GILTI. However, the three-year income position is not ~~able to utilize the deduction of 50 percent of GILTI, as this deduction is limited to the Company’s U.S. taxable income.~~

~~As of~~ ~~September 27, 2019,~~ ~~the Company established a full valuation allowance in the U.S. for~~solely determinative and, accordingly, management considers all ~~periods presented due to the significant uncertainty of realizing future tax benefits from its net operating loss carryforwards and~~ other ~~deferred tax assets, with the exception of the refundable alternative minimum tax credit of $273,000.~~ ~~Management will continue to monitor and evaluate all~~ available positive and negative evidence ~~including scheduled reversals of deferred tax liabilities,~~in its analysis. This includes existing profits in foreign jurisdiction as well as projected future ~~taxable income, impact~~profits. As further described in Notes 1 and 10 of ~~GILTI in~~ the ~~U.S., tax-planning strategies, and results of recent operations.~~

~~In projecting future taxable income,~~Company’s fiscal 2019 Form 10-K, under the “incremental cash tax savings approach,” the Company ~~begins with historical results~~recorded a valuation allowance release of $3,003,000 and ~~incorporates assumptions including overall current~~$373,000 against the federal and projected business and industry conditions, the amount of future federal, state, and foreign pretax operating income, the reversal of temporary differences and the feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage the underlying businesses. In evaluating the objective evidence, the Company considers, among other financial information, three years of cumulative operating results. Valuation allowances, or reductions tocertain states deferred tax assets, ~~are recognized if, based on~~respectively. During the ~~weight of all the available evidence, it is more likely than not that some portion or all the deferred tax asset may not be realized. As~~nine months ended October 2, 2020, the Company ~~experiences continued growth~~revised its global forecasts as a result of COVID‑19, and ~~profits~~due to changes in the ~~need for a valuation allowance will be evaluated each reporting period by Management to determine whether it is more likely than not that the Company’s~~usage and release of certain deferred tax assets, ~~will be realizable in a later period. Any such changes~~the Company released an additional $1,215,000 of valuation allowance. As of October 2, 2020, the Company released approximately $4,591,000 of valuation allowance on its deferred tax assets in the ~~assessment of a full or partial valuation allowance could have a material impact on earnings.~~ U.S. jurisdiction utilizing the incremental cash tax savings approach.

Under the incremental cash tax savings approach, the U.S. valuation allowances of $35,745,000, will remain as the usage of the remaining net operating losses and deferred tax assets will not result in cash tax savings and therefore provide no additional benefit. As of October 2, 2020, the Company had net deferred tax assets in the U.S. of $4,727,000, which consisted of the federal and state valuation allowance release of $4,307,000 and $284,000, respectively, and the refundable alternative minimum tax credit of $136,000.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The Company reviewed the provisions of the CARES Act, but does not expect it to have a material impact to its tax provision (also see note 15).

The Company has defined benefit plans covering employees of its Switzerland and Japan operations. The following table summarizes the components of net periodic pension cost recorded for the Company’s defined benefit pension plans (in thousands):

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			October 2, 2020			September 27, 2019			October 2, 2020			September 27, 2019
Service cost⁽¹⁾	$	240		$	137		$	720		$	414		$	320		$	240		$	959		$	720
Interest cost⁽²⁾		20			15			60			44			12			20			34			60
Expected return on plan assets⁽²⁾		(36	)		(28	)		(103	)		(82	)		(47	)		(36	)		(136	)		(103	)
Net amortization of transitional obligation^(2),(3)		—			3			—			8
Prior service credit^(2),(3)		(6	)		(6	)		(17	)		(17	)		(9	)		(6	)		(26	)		(17	)
Actuarial loss recognized in current period^(2),(3)		32			28			97			85			79			32			238			97
Net periodic pension cost	$	250		$	149		$	757		$	452		$	355		$	250		$	1,069		$	757

The Company currently is not required to and does not make contributions to its Japan pension plan. The Company’s contributions to its Swiss pension plan are as follows (in thousands):

The cost that has been charged against income for stock-based compensation is set forth below (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
Employee stock options	$	2,178	$	1,197	$	5,770	$	2,713	$	2,469	$	2,178	$	7,206	$	5,770
Restricted stock		77		82		236		192		119		77		273		236
Restricted stock units		246		501		1,661		1,593		415		246		1,238		1,661
Performance stock units										54		—		54		—
Nonemployee stock options		57		247		111		428		69		57		194		111
Total stock-based compensation expense	$	2,558	$	2,027	$	7,778	$	4,926	$	3,126	$	2,558	$	8,965	$	7,778

The Company recorded stock-based compensation costs in the following categories (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
Cost of sales	$	7	$	4	$	43	$	11	$	30	$	7	$	82	$	43
General and administrative		1,082		701		2,878		1,875		1,307		1,082		3,601		2,878
Marketing and selling		692		471		2,553		1,297		807		692		2,674		2,553
Research and development		777		851		2,304		1,743		982		777		2,608		2,304
Total stock-based compensation expense, net		2,558		2,027		7,778		4,926		3,126		2,558		8,965		7,778
Amounts capitalized as part of inventory		258		182		723		449		287		258		847		723
Total stock-based compensation expense, gross	$	2,816	$	2,209	$	8,501	$	5,375	$	3,413	$	2,816	$	9,812	$	8,501

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

The Amended and Restated Omnibus Equity Incentive Plan (“the Plan”) provides for various forms of stock-based incentives. To date, of the available forms of awards under the Plan, the Company has granted only stock options, restricted stock, unrestricted share grants, ~~and~~ restricted stock units (“RSUs”) and performance stock units (“PSUs”). Options under the Plan are granted at fair market value on the date of grant, become exercisable generally over a three-year period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from the date of grant. Certain option and share awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Plan). Grants of restricted stock outstanding under the Plan generally vest over periods of one to three years. Grants of RSUs and PSUs outstanding under the Plan generally vest based on service, performance, or a combination of both. On July 30, 2020, stockholders approved a proposal to increase the number of shares under the plan by 2,650,000 shares, for a total of 18,035,000 shares. As of ~~September 27, 2019,~~October 2, 2020, there were ~~1,629,976~~3,376,152 shares available for grant under the ~~Plan~~Plan.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model applying the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company’s stock. The expected term of options granted is derived from the historical exercises and post-vesting cancellations and represents the period of time that options granted are expected to be outstanding. The Company has calculated an 8%6% estimated forfeiture rate based on historical forfeiture experience. The risk-free rate is based on the U.S. Treasury yield curve corresponding to the expected term at the time of the grant.

~~A summary of stock option activity under the Plan for the nine months ended September 27, 2019 is presented below:~~

A summary of ~~restricted~~ stock ~~and RSU~~option activity under the Plan for the nine months ended ~~September 27, 2019~~October 2, 2020 is presented below:

A summary of restricted stock, RSUs and PSUs activity under the Plan for the nine months ended October 2, 2020 is presented below:

~~From time to time,~~On August 19, 2020, a putative federal securities class action, Alwazaan v. STAAR Surgical Co., et al., was filed against the Company ~~is involved in various legal proceedings~~ and ~~other matters arising~~certain of its executives in the ~~normal course~~U.S. District Court for the Central District of ~~business. These legal proceedings and other matters may relate to, among other things, contractual rights and obligations, employment matters, or claims of product liability.~~California. On September 1, 2020, a substantially similar federal securities class action, Zhang v. STAAR ~~maintains insurance coverage for various matters, including product liability and certain securities claims. While~~Surgical Co., et al., was filed against the Company ~~does not believe~~and the same executives in the U.S. District Court for the Central District of California. On September 11, 2020, the court consolidated the two actions under the caption In re STAAR Surgical Co. Securities Litigation. The plaintiffs in the lawsuit allege that the Company made material misstatements regarding its sales in China, its marketing spend, and its R&D expenses. Plaintiffs seek compensatory and punitive damages as well as attorneys’ fees. Although the ultimate outcome of this action cannot be determined with certainty, the Company denies any of the claims known is likely to have a material adverse effect on the Company’s financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm.wrongdoing and will vigorously defend itself against these claims.

The Company’s Chief Executive Officer entered into an employment agreement with the Company, effective March 1, 2015. She and certain officers have as provisions of their agreements certain rights, including continuance of cash compensation and benefits, upon a “change in control,” which may include an acquisition of substantially all its assets, or termination “without cause or for good reason” as defined in the employment agreements.

The following table sets forth the computation of basic and diluted net income per share (in thousands except per share amounts):

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			October 2, 2020			September 27, 2019			October 2, 2020			September 27, 2019
Numerator:
Net income	$	2,388		$	1,459		$	7,669		$	3,872		$	3,892		$	2,388		$	2,586		$	7,669
Denominator:
Weighted average common shares:
Common shares outstanding		44,573			43,065			44,436			42,076			45,914			44,573			45,405			44,436
Less: Unvested restricted stock		(10	)		(11	)		(10	)		(11	)		(11	)		(10	)		(11	)		(10	)
Denominator for basic calculation		44,563			43,054			44,426			42,065			45,903			44,563			45,394			44,426
Weighted average effects of potentially diluted common stock:
Stock options		2,194			2,686			2,260			2,245			2,208			2,194			2,124			2,260
Unvested restricted stock		2			4			6			12			—			2			5			6
Restricted stock units		98			281			156			296			68			98			66			156
Performance stock units														1			—			—			—
Denominator for diluted calculation		46,857			46,025			46,848			44,618			48,180			46,857			47,589			46,848
Net income per share:
Basic	$	0.05		$	0.03		$	0.17		$	0.09		$	0.08		$	0.05		$	0.06		$	0.17
Diluted	$	0.05		$	0.03		$	0.16		$	0.09		$	0.08		$	0.05		$	0.05		$	0.16

The following table sets forth (in thousands) the weighted average number of options to purchase shares of common stock, restricted stock, RSUs and ~~restricted stock units~~PSUs with either exercise prices or unrecognized compensation cost per share greater than the average market price per share of the Company’s common stock, which were not included in the calculation of diluted per share amounts because the effects would be anti-dilutive.

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
Stock options		1,836		389		1,446		278		12		1,836		896		1,446
Restricted stock and restricted stock units		—		—		—		1
Restricted stock, restricted stock units and performance stock units										8		—		13		—
Total		1,836		389		1,446		279		20		1,836		909		1,446

In the following tables, sales are disaggregated by category, sales by geographic market and sales by product data. The following breaks down sales into the following categories (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
Non-consignment sales	$	34,696	$	27,503	$	98,518	$	79,345	$	42,535	$	34,696	$	96,381	$	98,518
Consignment sales		4,359		4,267		12,784		13,423		4,546		4,359		21,081		12,784
Total net sales	$	39,055	$	31,770	$	111,302	$	92,768	$	47,081	$	39,055	$	117,462	$	111,302

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~Note 14~~ ~~— Disaggregation of Sales, Geographic Sales and Product Sales (Continued)~~

The Company markets and sells its products in over 75 countries and conducts its manufacturing in the United States. Other than China and Japan, the Company does not conduct business in any country in which its sales exceed 10% of worldwide consolidated net sales. Sales are attributed to countries based on location of customers. The composition of the Company’s net sales to unaffiliated customers ~~is set forth below~~was as follows (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
Domestic									$	1,477	$	1,783	$	4,098	$	5,849
Foreign:
China	$	18,361	$	13,349	$	49,526	$	35,224		23,301		18,361		53,619		49,526
Japan		7,345		6,006		19,139		17,781		9,208		7,345		24,973		19,139
Other⁽¹⁾		13,349		12,415		42,637		39,763		13,095		11,566		34,772		36,788
Total foreign sales										45,604		37,272		113,364		105,453
Total net sales	$	39,055	$	31,770	$	111,302	$	92,768	$	47,081	$	39,055	$	117,462	$	111,302

100% of the Company’s sales are generated from the ophthalmic surgical product segment and the chief operating decision maker makes operating decisions and allocates resources based upon the consolidated operating results, and therefore the Company operates as 1 operating segment for financial reporting purposes. The Company’s principal products are implantable Collamer lenses (“ICLs”) used in refractive surgery and intraocular lenses (“IOLs”) used in cataract surgery. The composition of the Company’s net sales by product line iswas as follows (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 27, 2019		September 28, 2018		September 27, 2019		September 28, 2018		October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
ICLs	$	33,815	$	26,418	$	96,033	$	74,868	$	41,493	$	33,815	$	101,561	$	96,033
Other product sales
IOLs		4,093		3,824		11,984		12,068		3,325		4,093		9,880		11,984
Other surgical products		1,147		1,528		3,285		5,832		2,263		1,147		6,021		3,285
Total other product sales		5,240		5,352		15,269		17,900		5,588		5,240		15,901		15,269
Total net sales	$	39,055	$	31,770	$	111,302	$	92,768	$	47,081	$	39,055	$	117,462	$	111,302

One customer, the Company’s distributor in China, accounted for 49% and 46% of net sales for the three and nine months ended October 2, 2020, respectively, and the same customer, accounted for 47% and 44% of net sales for the three and nine months ended September 27,, 2019, ~~respectively, and the same customer accounted for 42% and 38% of net sales for the three and nine months ended September 28, 2018,~~ respectively. As of ~~September 27, 2019~~October 2, 2020 and ~~December 28, 2018,~~January 3, 2020, respectively, one customer, the Company’s distributor in China, accounted for ~~40%~~59% and ~~37%~~43% of consolidated trade receivables.

~~Computer equipment~~In December 2019, COVID-19 surfaced and ~~software was reclassified into~~in March 2020, the World Health Organization declared a ~~separate line item~~pandemic related to the rapid spread of COVID-19 around the world. The impact of the COVID-19 outbreak on the businesses and the economy in the U.S. and the rest of the world is, and is expected to continue to be, uncertain and may be significant. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected. On March 17, 2020, the Company suspended most of its production and non-essential business locations where employees can work from ~~furniture~~home. A very limited number of manufacturing personnel remained at work for critical late staged processes, until the end of March 2020. Manufacturing resumed on April 27, 2020. The Company’s revenues have been adversely impacted, as customers in China were not able to carry out procedures during the month of February and ~~fixtures~~the Company experienced a substantial slowdown in ~~Note 4~~sales beginning March 20, 2020 in global geographies characterized as “hot spots” for the ~~fiscal year ended 2018~~COVID-19 virus, including parts of Europe, North America, the Middle East and India. In certain of these markets, sales have paused as elective surgeries are discouraged to ~~conform with~~support COVID-19 related needs. The Company expects decreases in sales in certain geographies to continue through the ~~2019 presentation.~~remainder of 2020 and into 2021 as different geographies resume business activities on differing timelines.

The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. The Company did not apply for or require financing available under the CARES Act and does not expect to do so given the strength of our balance sheet. The Company will continue to monitor the impact that the CARES Act may have on its business, financial condition, results of operations, or liquidity.

The matters addressed in this Item 2 that are not historical information constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers can recognize forward-looking statements by the use of words like “anticipate,” “estimate,” “expect,” “intend,” “plan,” “believe,” “will,” “should,” “forecast” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements about any of the following: any projections of or guidance as to earnings, revenue, sales, profit margins, expense rate, cash, effective tax rate, capital expense or any other financial items; the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to their impact on sales, operations or clinical trials globally),the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding new, existing, or improved products, including but not limited to, expectations for success of new, existing, and improved products in the U.S. or international markets or government approval of a new or improved products (including the EVO family of lenses in the U.S. and the ~~EDOF ICL~~EVO Viva family of lenses for presbyopia internationally); commercialization of new or improved products; future economic conditions or size of market opportunities; expected costs of operations; statements of belief, including as to achieving ~~2019~~2020 business plans; expected regulatory activities and approvals, product launches, and any statements of assumptions underlying any of the foregoing.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risks and we can give no assurance that our expectations will prove to be correct. Actual results could differ from those described in this report because of numerous factors, many of which are beyond our control. These factors include, without limitation, risks and uncertainties related to the COVID-19 pandemic and related public health measures,and those described in in our Annual Report on Form 10-K in “Item 1A. Risk Factors” filed on February ~~21, 2019.~~26, 2020, as well as the updated risk factor disclosed in our Quarterly Report on Form 10-Q in “Item 1A. Risk Factors” filed on May 16, 2020. We undertake no obligation to update these forward-looking statements after the date of this report to reflect future events or circumstances or to reflect actual outcomes.

The following discussion should be read in conjunction with the audited consolidated financial statements of STAAR, including the related notes, provided in this report.

STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and companion delivery systems used to deliver the lenses into the eye. We are the world’s leading manufacturer of intraocular lenses for patients seeking refractive vision correction, and we also make lenses for use in surgery to treat cataracts. All the lenses we make are foldable, which allows the surgeon to insert them into the eye through a small incision during minimally invasive surgery. Refractive surgery is performed to treat the type of visual disorders that have traditionally been corrected using eyeglasses or contact lenses. We refer to our lenses used in refractive surgery as “implantable Collamer® lenses” or “ICLs.” The field of refractive surgery includes both lens-based procedures, using products like our ICL family of products, and laser-based procedures like LASIK. Successful refractive surgery can correct common vision disorders such as myopia, hyperopia, and astigmatism. Cataract surgery is a common outpatient procedure where the eye’s natural lens that has become cloudy with age is removed and replaced with an artificial lens called an intraocular lens (IOL) to restore the patient’s vision. STAAR employs a commercialization strategy that strives for sustainable profitable growth. Our goal is to position our refractive lenses throughout the world as primary and premium solutions for patients seeking visual freedom from wearing eyeglasses or contact lenses while achieving excellent visual acuity through refractive vision correction. We position our IOL lenses used in surgery that treats cataracts based on quality and value.

~~We achieved record sales for our~~For the third quarter ~~and all-time record cash generation~~of 2020 STAAR’s net sales increased 21% over the prior year driven by 25% global ICL unit growth as markets more fully reopened following COVID-19 related shutdowns. Notable markets for ICL unit growth in the third quarter of 2020 included China, Japan, South Korea, Spain, Germany, European distributor markets, and rest of APAC. India and the Middle East were the two markets that remained most challenged by COVID-19 during the third quarter. WeDuring the third quarter we completed patient enrollment in our U.S. EVO clinical trial and by October 30, 2020 all primary patients in the trial were implanted with the lens. Primary study analysis will be conducted when 300 primary eyes complete six months of follow-up, which is anticipated early in the second quarter of 2021 with submission of the study results to the FDA shortly thereafter. Considering the subsequent six-month patient follow-up and time to prepare our data submission to the FDA, we believe we are on track for potential marketing approval and commercialization of EVO in the ~~results through~~U.S. in the second half of 2021. Also, on November 4, 2020, we announced the first ~~three quarters~~EVO Viva lens patient who was implanted in Belgium. We are embarking upon the phased rollout of ~~2019 put us on track~~that presbyopia-correcting lens in Europe.

While COVID-19 hotspots and government public health mandates may reoccur moving forward, we anticipate less business interruption and continued interest in our EVO ICL lens-based refractive solutions in the fourth quarter of 2020. We also continue to believe that we will achieve a 20% share of the ~~growth targets of 20% annual top line revenue growth, 30% ICL unit growth, positive cash flow, and higher GAAP net income than 2018, as we disclosed earlier this year for fiscal 2019. Subsequent to~~refractive procedure market in China by the end of the ~~quarter we received a letter from FDA dated October 25, 2019 approving~~year. Assuming significant COVID-19 hotspots and government public health mandates do not reoccur and global economic improvement progresses, our ~~supplement seeking approval~~outlook for the ~~clinical trial for our EVO family~~fourth quarter of ~~lenses~~2020 currently anticipates revenue in the ~~U.S. The letter included~~range of $42 to $44 million with the caveat of increased spending to support a few additional study design recommendations which we are working to include in the study protocol. We are responding to FDA within a week or so. We continue to qualify study sites and expect our timelines will not be impacted as we work to close out the study design including FDA’s recommendations.developing strong outlook for 2021.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses and analyzes data in our unaudited Condensed Consolidated Financial Statements provided in this report, which we have prepared in accordance with U.S. generally accepted accounting principles. Preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses,

and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of our Board of Directors. Actual conditions may differ from our assumptions and actual results may differ from our estimates.

An accounting policy is deemed critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. On December 29, 2018 (beginning of fiscal year 2019), the Company adopted Accounting Standards Update 2016-02, “Leases (Topic 842)” and its subsequent amendments, the impact of this new accounting standard are discussed in Notes 1 and 8 of the Condensed Consolidated Financial Statements. Other than the adoption of Topic 842, managementManagement believes that there have been no significant changes during the nine months ended ~~September 27~~October 2, 2020 ~~, 2019~~ to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended ~~December 28, 2018.~~January 3, 2020.

The following table shows the percentage of our total sales represented by certain items reflected in our Condensed Consolidated Statements of ~~Income~~Operations for the periods indicated.

	Percentage of Net Sales for Three Months						Percentage of Net Sales for Six Months						Percentage of Net Sales for Three Months						Percentage of Net Sales for Nine Months
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018			October 2, 2020			September 27, 2019			October 2, 2020			September 27, 2019
Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		25.6	%		24.9	%		25.3	%		26.1	%		25.9	%		25.6	%		28.4	%		25.3	%
Gross profit		74.4	%		75.1	%		74.7	%		73.9	%		74.1	%		74.4	%		71.6	%		74.7	%
General and administrative		18.2	%		19.2	%		19.3	%		19.5	%		18.2	%		18.2	%		20.8	%		19.3	%
Marketing and selling		31.9	%		33.4	%		30.8	%		31.0	%
Selling and marketing														26.9	%		31.9	%		29.0	%		30.8	%
Research and development		15.8	%		17.5	%		16.1	%		17.6	%		18.6	%		15.8	%		19.5	%		16.1	%
Total selling, general and administrative		65.9	%		70.1	%		66.2	%		68.1	%		63.7	%		65.9	%		69.3	%		66.2	%
Operating income		8.5	%		5.0	%		8.5	%		5.8	%		10.4	%		8.5	%		2.3	%		8.5	%
Total other income (expense), net		(0.5	)%		0.7	%		0.5	%		(0.1	)%		1.1	%		(0.5	)%		0.7	%		0.5	%
Income before income taxes		8.0	%		5.7	%		9.0	%		5.7	%		11.5	%		8.0	%		3.0	%		9.0	%
Provision for income taxes		1.9	%		1.1	%		2.1	%		1.6	%		3.2	%		1.9	%		0.8	%		2.1	%
Net income		6.1	%		4.6	%		6.9	%		4.1	%		8.3	%		6.1	%		2.2	%		6.9	%

	Three Months Ended				Percentage Change			Nine Months Ended				Percentage Change			Three Months Ended				Percentage Change			Nine Months Ended				Percentage Change
	September 27, 2019		September 28, 2018		2019 vs. 2018			September 27, 2019		September 28, 2018		2019 vs. 2018			October 2, 2020		September 27, 2019		2020 vs. 2019			October 2, 2020		September 27, 2019		2020 vs. 2019
ICLs	$	33,815	$	26,418		28.0	%	$	96,033	$	74,868		28.3	%	$	41,493	$	33,815		22.7	%	$	101,561	$	96,033		5.8	%
Other product sales
IOLs		4,093		3,824		7.0	%		11,984		12,068		(0.7	)%		3,325		4,093		(18.8	)%		9,880		11,984		(17.6	)%
Other surgical products		1,147		1,528		(24.9	)%		3,285		5,832		(43.7	)%		2,263		1,147		97.3	%		6,021		3,285		83.3	%
Total other product sales		5,240		5,352		(2.1	)%		15,269		17,900		(14.7	)%		5,588		5,240		6.6	%		15,901		15,269		4.1	%
Net sales	$	39,055	$	31,770		22.9	%	$	111,302	$	92,768		20.0	%	$	47,081	$	39,055		20.6	%	$	117,462	$	111,302		5.5	%

Net sales for the three months ended ~~September 27, 2019~~October 2, 2020 were ~~$39.1~~$47.1 million, an increase of ~~23%~~21% from ~~$31.8~~$39.1 million reported during the same period of ~~2018.~~2019. The increase in net sales was due to ~~an increase in~~increased ICL sales of ~~$7.4~~$7.7 million and other product sales of $0.3 million. Changes in foreign currency favorably impacted net sales by $0.4 million.

Net sales for the nine months ended ~~September 27, 2019~~October 2, 2020 were ~~$111.3~~$117.5 million, an increase of ~~20%~~6% from ~~$92.8~~$111.3 million reported during the same period of ~~2018.~~2019. The increase in net sales was due to ~~an increase in~~increased ICL sales of ~~$21.2~~$5.5 million ~~partially offset by a decrease in~~and other product sales of ~~$2.6~~$0.6 million. ~~Foreign~~Changes in foreign currency ~~primarily the euro, negatively~~favorably impacted net sales by ~~approximately $1.3 million for the nine months ended September 27, 2019.~~$0.5 million.

Total ICL sales for the three months ended ~~September 27, 2019~~October 2, 2020 were ~~$33.8~~$41.5 million, ~~a 28%~~an increase of 23% from ~~$26.4~~$33.8 million reported for the same period of ~~2018,~~2019, with unit increase of 25%. The APAC region sales increased by 29%, with unit growth up ~~35%. The sales increase was driven by the APAC region, which grew 37% with~~31% due to unit growth ~~of 43%~~in Japan up 67%, ~~primarily due to sales growth in~~other APAC Distributors up 67%, China up ~~38%~~33%, ~~Japan up 63%,~~and Korea up ~~33% and other APAC distributors up 19%, partially offset by decreased sales in India of 14%~~21%. The Europe, Middle East, Africa and Latin America region ~~grew 5%~~sales increased 7% with unit ~~growth up 8%,~~decrease of 2% due to ~~sales~~a decrease in units in the Middle East and Africa of 54%, offset by unit growth in the UK up 44%, Spain up ~~12%~~24%, Distributor Operations up ~~7% and~~17%, Germany up ~~5%, partially offset by decreased sales in~~13% and Latin America ~~of 9%~~up 12%. The North America region ~~grew 19%~~sales decreased 3%, with unit ~~growth~~decrease of 2%1%, ~~primarily~~ due to ~~sales growth~~a decrease in units of ~~24%~~8% in the U.S., ~~as a result of sales of Toric ICL in 2019 (none in 2018), partially~~ offset by ~~decreased sales~~unit growth in ~~Canada.~~Canada of 31%. ICL sales represented ~~86.6%~~88.1% and ~~83.2%~~86.6% of our total sales for the three months ended October 2, 2020 and September 27, 2019, ~~and September 28, 2018,~~ respectively.

Total ICL sales for the nine months ended ~~September 27, 2019~~October 2, 2020 were ~~$96.0~~$101.6 million, a ~~28%~~6% increase from ~~$74.9~~$96.0 million reported for the same period of ~~2018,~~2019, with unit growth up ~~36%~~10%. The ~~sales increase was driven by the~~ APAC region ~~which grew 41%~~sales increased by 13%, with unit growth ~~of 47%, primarily~~up 17% due to ~~sales~~unit growth in Japan up ~~58%~~62%, Korea up 17%, China up ~~41%, Korea up 41%,~~16% and other APAC ~~distributors~~Distributors up ~~23% and India up 9%~~30%. The Europe, Middle East, Africa and Latin America region ~~increased 1% with unit growth up 6%, due primarily to~~ sales ~~growth in UK up 30%, Germany up 6%~~decreased 9% and ~~Spain up 3%, partially offset by~~units decreased ~~sales in the Middle East and Latin America of 8%~~12%. The North America region ~~grew 17%, with unit growth of 2%, primarily due to~~ sales ~~growth of 25%~~and units decreased 22%. The decrease in both these regions were impacted by the COVID-19 pandemic in the ~~U.S., as a result~~first half of ~~sales of Toric ICL~~2020; most markets started to reopen in ~~2019 (none in 2018), partially offset by decreased sales in Canada.~~mid-May/early June. ICL sales represented ~~86.3%~~86.5% and ~~80.7%~~86.3% of our total sales for the nine months ended October 2, 2020 and September 27, 2019, ~~and September 28, 2018,~~ respectively.

Other product sales, including IOLs were ~~$5.2~~$5.6 million for the three months ended ~~September 27, 2019, a decrease~~October 2, 2020, an increase of 2%7% from ~~$5.4~~$5.2 million reported for the same period of ~~2018.~~2019. Other product sales ~~including IOLs~~ were ~~$15.3~~$15.9 million for the nine months ended ~~September 27, 2019, a decrease~~October 2, 2020, an increase of ~~15%~~4% from ~~$17.9~~$15.3 million reported for the same period of ~~2018.~~2019. The ~~decrease for~~increase in both periods ~~is primarily~~was due to ~~the decrease in~~increased preloaded injector part sales to a third-party manufacturer for product they sell to their customers, ~~and for the three months ended September 27, 2019, partially~~ offset by ~~an increase in~~decreased IOL sales. Other product sales represented ~~13.4%~~11.9% and ~~16.8%~~13.4% of our total sales for the three months ended October 2, 2020 and September 27, 2019, ~~and September 28, 2018~~respectively,~~, respectively~~ and represented ~~13.7%~~13.5% and ~~19.3%~~13.7% of our total sales for the nine months ended October 2, 2020 and September 27, 2019, ~~and September 28, 2018~~respectively~~, respectively.~~.

	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018			September 27, 2019			September 28, 2018			2019 vs. 2018			October 2, 2020			September 27, 2019			2020 vs. 2019			October 2, 2020			September 27, 2019			2020 vs. 2019
Gross profit	$	29,051		$	23,860			21.8	%	$	83,130		$	68,518			21.3	%	$	34,871		$	29,051			20.0	%	$	84,061		$	83,130			1.1	%
Gross margin		74.4	%		75.1	%					74.7	%		73.9	%					74.1	%		74.4	%					71.6	%		74.7	%

Gross profit for the three months ended ~~September 27, 2019~~October 2, 2020 was ~~$29.1~~$34.9 million, a ~~21.8%~~20.0% increase compared to the ~~$23.9~~$29.1 million reported for the same period of ~~2018.~~2019. Gross profit margin decreased to 74.1% of revenue for the three months ended October 2, 2020 compared to 74.4% of revenue for the three months ended September 27, 2019, due to geographic sales mix, period costs associated with the manufacturing expansion projects, and increased mix of injector part sales which carry a lower margin.

Gross profit for the nine months ended October 2, 2020 was $84.1 million, a 1.1% increase compared to ~~75.1%~~the $83.1 million reported for the same period of 2019. Gross profit margin decreased to 71.6% of revenue for the nine months ended October 2, 2020 compared to 74.7% of revenue for the three months ended September ~~28, 2018,~~27, 2019, due primarily to ~~period~~geographic sales mix, $1.2 million in expenses incurred in the construction of new manufacturing facilities intended to satisfy growing demand for existing products and products currently under review by regulatory agencies. The gross margin impact of lower average selling prices was more than offset by the favorable impact of improved product mix.

~~Gross profit for the nine months ended~~ ~~September 27, 2019~~ ~~was $83.1 million, a 21.3% increase compared~~related to the ~~$68.5 million reported for~~COVID-19 manufacturing pause from March 17 through April 27, 2020, period costs associated with the ~~same period of 2018. Gross profit margin~~manufacturing expansion projects and increased ~~to 74.7% of revenue for the nine months ended~~ ~~September 27, 2019~~ ~~compared to 73.9% of revenue for the nine months ended~~ ~~September 28, 2018, due to increased sales of ICLs and decreased sales~~mix of injector ~~parts resulting in favorable product mix, partially offset by the effect of~~part sales which carry a lower ~~average selling prices and period expenses incurred in the construction of new manufacturing facilities, as discussed above.~~margin.

	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018			September 27, 2019			September 28, 2018			2019 vs. 2018			October 2, 2020			September 27, 2019			2020 vs. 2019			October 2, 2020			September 27, 2019			2020 vs. 2019
General and administrative expense	$	7,098		$	6,087			16.6	%	$	21,443		$	18,054			18.8	%	$	8,589		$	7,098			21.0	%	$	24,406		$	21,443			13.8	%
Percentage of sales		18.2	%		19.2	%					19.3	%		19.5	%					18.2	%		18.2	%					20.8	%		19.3	%

General and administrative expenses for the three months ended ~~September 27, 2019~~October 2, 2020 were ~~$7.1~~$8.6 million, ana 21.0% increase ~~of 16.6% when~~ compared ~~with $6.1~~to the $7.1 million reported for the same period of ~~2018.~~2019, due to increased salary-related expenses, variable compensation and facility costs. General and administrative expenses for the nine months ended ~~September 27, 2019~~October 2, 2020 were ~~$21.4~~$24.4 million, ana 13.8% increase ~~of 18.8% when~~ compared ~~with $18.1~~to the $21.4 million reported for the same period of ~~2018. The increase in general and administrative expenses for both periods was~~2019, due to ~~an increase in headcount and~~increased salary-related expenses, ~~including stock-based~~variable compensation, ~~and increased~~tax consulting, facility costs and ~~professional fees.~~corporate insurance, partially offset by decreased travel expenses.

	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018			September 27, 2019			September 28, 2018			2019 vs. 2018			October 2, 2020			September 27, 2019			2020 vs. 2019			October 2, 2020			September 27, 2019			2020 vs. 2019
Marketing and selling expense	$	12,463		$	10,620			17.4	%	$	34,288		$	28,733			19.3	%
Selling and marketing expense																			$	12,649		$	12,463			1.5	%	$	34,003		$	34,288			(0.8	)%
Percentage of sales		31.9	%		33.4	%					30.8	%		31.0	%					26.9	%		31.9	%					29.0	%		30.8	%

~~Marketing~~Selling and ~~selling~~marketing expenses for the three months ended ~~September 27, 2019~~October 2, 2020 were ~~$12.5~~$12.6 million, ana 1.5% increase ~~of 17.4% when~~ compared ~~with $10.6~~to the $12.5 million reported for the same period of ~~2018.~~2019, due to increased salary-related expenses, advertising and promotional activities and variable compensation, offset by decreased trade show and travel expenses. Marketing and selling expenses for the nine months ended ~~September 27, 2019~~October 2, 2020 were ~~$34.3~~$34.0 million, an ~~increase of 19.3% when~~0.8% decrease compared ~~with $28.7~~to the $34.3 million reported for the same period of ~~2018. The increase in marketing~~2019, due to decreased trade show and ~~selling~~travel expenses, ~~for both periods was due our continued investments in digital, strategic~~offset by increased advertising and ~~consumer marketing, and for the nine months ended September 27, 2019, also includes increases in headcount and~~promotional activities, salary-related expenses ~~including stock-based compensation,~~ and ~~travel expenses.~~variable compensation.

	Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change			Three Months Ended						Percentage Change			Nine Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018			September 27, 2019			September 28, 2018			2019 vs. 2018			October 2, 2020			September 27, 2019			2020 vs. 2019			October 2, 2020			September 27, 2019			2020 vs. 2019
Research and development expense	$	6,156		$	5,570			10.5	%	$	17,889		$	16,323			9.6	%	$	8,751		$	6,156			42.2	%	$	22,960		$	17,889			28.3	%
Percentage of sales		15.8	%		17.5	%					16.1	%		17.6	%					18.6	%		15.8	%					19.5	%		16.1	%

Research and development expenses for the three months ended ~~September 27, 2019~~October 2, 2020 were $8.8 million, a 42.2% increase compared to the $6.2 million ~~an increase of 10.5% compared to $5.6 million~~reported for the ~~for~~ same period of ~~2018.~~2019, primarily due to increased clinical expenses associated with our EVO clinical trial in the U.S., variable compensation and salary-related expenses. Research and development expenses for the nine months ended ~~September 27, 2019~~October 2, 2020 were $23.0 million, a 28.3% increase compared to the $17.9 million ~~an increase of 9.6% compared to $16.3 million~~reported for the ~~for~~ same period of ~~2018. The increase for the three months ended September 27,~~ 2019, ~~was~~ primarily due to ~~an increase in~~increased clinical expenses ~~related to~~associated with our EVO clinical trial ~~activities. The increase for~~in the ~~nine months ended September 27, 2019 was mainly due to increases in headcount~~U.S., and increased salary-related expenses, ~~including stock-based compensation, and expenses related to clinical trial activities.~~partially offset by travel expense.

	Three Months Ended						Percentage Change		Nine Months Ended						Percentage Change		Three Months Ended						Percentage Change		Nine Months Ended						Percentage Change
	September 27, 2019			September 28, 2018			2019 vs. 2018		September 27, 2019			September 28, 2018			2019 vs. 2018		October 2, 2020			September 27, 2019			2020 vs. 2019		October 2, 2020			September 27, 2019			2020 vs. 2019
Other income (expense), net	$	(186	)	$	222			—*	$	539		$	(84	)		—*	$	499		$	(186	)		—*	$	781		$	539			44.9	%
Percentage of sales		-0.5	%		0.7	%				0.5	%		-0.1	%				1.1	%		(0.5	)%				0.7	%		0.5	%

Other income, net for the three months ended October 2, 2020 was $0.5 million, compared to other expense, net of $0.2 million reported for the same period of 2019. The change in other income (expense), net for the three months was due increased foreign exchange gains (primarily euro), partially offset by a decrease interest income, net, as a result of lower interest rates. Other income, net for the nine months ended October 2, 2020 was $0.8 million, a 44.9% increase compared to $0.5 million reported for the same period of 2019. The increase in other income, net for the nine months was due to increased foreign exchange gains (primarily the euro), offset by decreases in interest income, as a result of lower interest rates, and royalty income, which was impacted by COVID-19 pandemic.

We recorded income taxes of $1.5 million for the three months ended October 2, 2020 due to pre-tax income generated in certain foreign jurisdictions, partially offset by a reversal of $0.2 million of our U.S. valuation allowance, as a result of an increase in foreign income and changes in the usage and release of our deferred tax assets. We recorded income taxes of $0.8 million for the three months ended September 27, 2019 ~~was $0.2~~due to pre-tax income generated in certain foreign jurisdictions and withholding taxes on foreign operations. We recorded income taxes of $0.9 million ~~compared to other income of $0.2 million~~ ~~reported~~ for the ~~same period of 2018. The decrease in other expense, net was mainly~~nine months ended October 2, 2020 due to ~~the increase in~~income tax expense from profits generated by our foreign ~~exchange losses (primarily the euro),~~operations, partially offset by ~~an increase in interest~~ the release of our U.S. valuation allowances. We recorded income ~~earned on cash and cash equivalents.~~ ~~Other income, net~~taxes of $2.4 million for the nine months ended September 27, 2019 ~~was $0.5 million, an increase from other expense, net of $0.1 million~~ ~~reported for the same period of 2018. The increase in other income, net was~~primarily due ~~to an increase in interest income earned on cash and cash equivalents, offset by an increase in foreign exchange losses (primarily the euro).~~

The provision for income taxes is determined using an estimated annual effective tax rate. We recorded income taxes of $0.8 million and $2.4 million for the three and nine months ended September 27, 2019, respectively and $0.3 million and $1.5 million for the three and nine months ended September 28, 2018, respectively. The income tax provision was due primarily to pre-tax income generated in certain foreign ~~jurisdictions.~~jurisdictions and withholding taxes on foreign operations. In the fourth quarter of fiscal year 2019, we reversed all previously recorded withholding taxes recorded for 2019, at which time we formed STAAR Surgical UK Limited as a holding company for our foreign operations. Based on the current tax treaties between the U.S., United Kingdom and Switzerland, we will no longer accrue for Switzerland withholding taxes on foreign earnings after fiscal 2018 (see also Note 10 in our fiscal 2019 Form 10-K for more information). We have no unrecognized tax benefits pertaining to any uncertain tax positions as of any period presented.

~~For the three and nine months ended~~ ~~September 27~~, 2019, we included Global Intangible Low Tax Income (“GILTI”) of $4.4 million and $12.1 million, respectively, in U.S. gross income, which was fully offset with net operating loss carryforwards. We were not able to utilize the deduction of 50 percent of GILTI, as this deduction is limited to the Company’s U.S. taxable income.

Due to our history of losses in the U.S., we have maintained a full valuation allowance to offset the value of our U.S. net deferred tax assets on our balance sheet as of September 27, 2019, with the exception of the remaining refundable alternative minimum tax credit of $0.3 million. However, global profit is now includable in U.S. income under GILTI and as a result we have reported income in the U.S. in fiscal year 2018. As our global profitability improves, including our ability to meet or exceed forecasts, we will continue to reassess at each reporting period the need for a full or partial valuation allowance on our U.S. net deferred tax assets. We determine the need forASC 740 requires that a valuation allowance based upon all available positive and negative evidence, including reversals of deferred tax liabilities, projected future taxable income, impact of GILTI in the U.S., tax planning strategies, and results of recent operations. Ifbe established when it is more likely than not that ~~the deferred tax asset is realizable, we would record an income tax benefit for~~ all or a portion of a deferred tax asset may not be realizable. As further described in Notes 1 and 10 of our fiscal 2019 Form 10-K, under the “incremental cash tax savings approach,” we recorded a valuation ~~allowance in~~release of $3.0 million and $0.4 million against federal and certain states deferred tax assets, respectively. During the ~~period in which such determination is made. Any such~~nine months ended October 2, 2020, we revised our global forecasts as a result of COVID-19, and due to changes in the ~~assessment~~usage and release of ~~a full or partial~~certain deferred tax assets, we released an additional $1.2 million of valuation allowance. As of October 2, 2020, we released approximately $4.6 million of valuation allowance ~~could have~~on our deferred tax assets in the U.S. jurisdiction utilizing the incremental cash tax savings approach. The ultimate realization of deferred tax assets is dependent upon future generation of income during the periods in which temporary differences representing net future deductible amounts become deductible. We considered the projected future income, tax planning strategies and all other available evidence both positive and negative, as well as results of recent operations in making this assessment. In applying the incremental cash tax savings approach, we will continue to maintain a ~~material impact on earnings. The~~ valuation allowance ~~was approximately $39.8 million as~~on the balance of ~~September 27, 2019.~~the Company’s net U.S. deferred tax assets of $35.7 million.

We believe ~~our~~that current cash, ~~balances coupled with~~ cash ~~flows~~equivalents and future cash flow from operating activities ~~is expected~~will be sufficient to ~~be adequate to cover~~meet our ~~operational~~anticipated cash needs, including working capital needs, capital expenditures and ~~business needs through~~contractual obligations for at least 12 months from the ~~next 12 months.~~issuance date of the financial statements included in this quarterly report. Although we have experienced some delays in payments on accounts receivable as a result of the COVID-19 pandemic in the first half of 2020, this has improved during the third quarter of 2020 as our customers resume elective refractive surgery. However, at this time we are

unaware of any impairment of assets resulting from the COVID-19 pandemic. The Company did not apply for or require financing available under the Coronavirus Aid, Relief, and Economic Security “CARES” Act and does not expect to do so given the strength of our balance sheet. Our financial condition at ~~September 27, 2019~~October 2, 2020 and ~~December 28, 2018~~January 3, 2020 included the following (in millions):

	September 27, 2019		December 28, 2018		2019 vs. 2018		October 2, 2020		January 3, 2020		2020 vs. 2019
Cash and cash equivalents	$	112.3	$	103.9	$	8.4	$	128.3	$	120.0	$	8.3
Current assets	$	165.0	$	151.6	$	13.4	$	196.0	$	174.7	$	21.3
Current liabilities		30.0		27.7		2.3		33.9		34.5		(0.6	)
Working capital	$	135.0	$	123.9	$	11.1	$	162.1	$	140.2	$	21.9

We invest the net proceeds in short-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government. Additionally, at ~~September 27, 2019,~~October 2, 2020, we have a line of credit with a Japanese lender, in the amount of ~~$4.6~~$1.3 million, with ~~$2.3~~$3.4 million of availability and a line of credit with a Swiss lender, in the amount of ~~$1.0~~$1.1 million, which is fully available for borrowing.

Net cash provided by operating activities was ~~$16.0~~$1.4 million ~~and $10.4~~for the nine months ended October 2, 2020 compared to net cash provided by operating activities of $16.0 million for the nine months ended September 27, ~~2019 and September 28, 2018, respectively.~~2019. Net cash provided by operating activities for the nine months ended ~~September 27, 2019,~~October 2, 2020, consisted of ~~$13.0 million~~$12.6 in non-cash items and ~~$7.7~~$2.6 million in net income, offset by ~~$4.7~~$13.8 million in working-capital changes. The ~~increase~~decrease in net cash provided by operating activities during the nine months ended ~~September 27, 2019~~October 2, 2020 was due to ~~an increase in net income of $3.8 million and an increase of $3.6 million in non-cash items offset by a decrease~~decreases in net working capital of ~~$1.8~~$9.1 million, net income of $5.1 million and non-cash items of $0.4 million.

Net cash used in investing activities was ~~$7.2~~$6.3 million and ~~$1.7~~$7.2 million for the nine months ended October 2, 2020 and September 27, 2019, ~~and September 28, 2018,~~ respectively, and relate primarily to the acquisition of property, plant, and equipment. ~~The increase~~

~~in investment in property, plant and equipment during 2019, relative~~Net cash provided by financing activities was $13.0 million for the nine months ended October 2, 2020 compared to ~~2018, is primarily due to investments in manufacturing facilities intended to satisfy growing demand for our products.~~

~~Net~~net cash used in financing activities ~~was~~of $0.7 million for the nine months ended September 27, ~~2019 and net~~2019. Net cash provided by ~~financing activities was $75.1 million for the nine months ended September 28, 2018. Net cash used in~~ financing activities for the nine months ended ~~September 27, 2019~~October 2, 2020 consisted of ~~$1.5~~$14.0 million of proceeds from the exercise of stock options, partially offset by $0.5 million repayment on the Japan line of credit and ~~$1.0~~$0.5 million repayment of finance lease obligations, offset by $1.8 million of proceeds from the exercise of stock options. During the nine months ended September 28, 2018, we closed an offering of our common stock and received $72.2 million.obligations.

See Notes 7 and 8 of the accompanying Condensed Consolidated Financial Statements.

The Company is in compliance with the covenants of its credit facilities as of ~~September 27, 2019.~~October 2, 2020.

The Company’s Chief Executive Officer entered into an employment agreement with the Company, effective March 1, 2015. She and certain officers have as provisions of their agreements certain rights, including continuance of cash compensation and benefits, upon a “change in control,” which may include an acquisition of substantially all of its assets, or termination “without cause or for good reason” as defined in the employment agreements.

We do not have any off-balance sheet arrangements, as that term is defined in the rules of the SEC, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

During the nine months ended ~~September 27, 2019,~~October 2, 2020, there have been no material changes in the Company’s qualitative and quantitative market risk since the disclosure in the Company’s Annual Report on Form 10-K for the year ended ~~December 28, 2018.~~January 3, 2020.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of the disclosure controls and procedures of the Company. Based on that evaluation, our CEO and CFO concluded, as of the end of the period covered by this quarterly report on Form 10-Q, that our disclosure controls and procedures were effective. For purposes of this statement, the term “disclosure controls and procedures” means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, including the CEO and the CFO, do not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud or material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, our internal control system can provide only reasonable assurance of achieving its objectives and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events, and can provide only reasonable, not absolute, assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, or the degree of compliance with the policies and procedures may deteriorate.

There were no changes in our internal control over financial reporting during the quarter ended ~~September 27, 2019~~October 2, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~From time to time,~~On August 19, 2020, a putative federal securities class action, Alwazaan v. STAAR Surgical Co., et al., was filed against the Company ~~is involved in various legal proceedings~~ and ~~other matters arising~~certain of its executives in the ~~normal course~~U.S. District Court for the Central District of ~~business.~~California. On September 1, 2020, a substantially similar federal securities class action, Zhang v. STAAR Surgical Co., et al., was filed against the Company and the same executives in the U.S. District Court for the Central District of California. On September 11, 2020, the court consolidated the two actions under the caption ~~These legal proceedings~~In re STAAR Surgical Co. Securities Litigation. The plaintiffs in the lawsuit allege that the Company made material misstatements regarding its sales in China, its marketing spend, and ~~other matters may relate to, among other things, contractual rights~~its R&D expenses. Plaintiffs seek compensatory and ~~obligations, employment matters, or claims~~punitive damages as well as attorneys’ fees. Although the ultimate outcome of ~~product liability. STAAR maintains insurance coverage for various matters, including product liability~~this action cannot be determined with certainty, the Company denies any wrongdoing and ~~certain securities~~will vigorously defend itself against these claims. While we do not believe that any of the claims known is likely to have a material adverse effect on our financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm.

Our short and long-term success is subject to many factors that are beyond our control. Investors and prospective investors should consider carefully information contained in this report and the risks and uncertainties described in “Part I—Item 1A—Risk Factors” of the Company’s Form 10-K for the fiscal year ended ~~December 28, 2018.~~January 3, 2020 and in “Part II—Item 1A—Risk Factors” of the Company’s Form 10-Q for the three months ended April 3, 2020. Such risks and uncertainties could materially adversely affect our business, financial condition or operating results.

~~None.~~On or about October 30, 2020, STAAR Surgical Company entered into a lease amendment (the “Lease Amendment”) with 2000 Gold L.P. (its Landlord), exercising its renewal option of a total of approximately 45,000 square feet of leased, industrial use real property located at 1911 Walker Avenue and 1900 Myrtle Avenue, Monrovia, California (“Premises”). The Lease Amendment expires October 31, 2023. The Company has conducted office and manufacturing related operations at the Premises since 2012.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware	95-3797439
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
25651 Atlantic Ocean Drive Lake Forest, California	92630
(Address of Principal Executive Offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	STAA	NASDAQ

		PAGE NUMBER

PART I – FINANCIAL INFORMATION		1

ITEM 1	FINANCIAL STATEMENTS	1

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2019

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2624

ITEM 4.	CONTROLS AND PROCEDURES	2625

PART II – OTHER INFORMATION		2625

ITEM 1.	LEGAL PROCEEDINGS	2625

ITEM 1A.	RISK FACTORS	26

ITEM 4.	MINE SAFETY DISCLOSURES	2726

ITEM 5.	OTHER INFORMATION	2726

ITEM 6.	EXHIBITS	2726

As of September 27, 2019 12 Months Ended	Operating Leases		Finance Leases
September 2020	$	2,920	$	790
September 2021		1,833		426
September 2022		1,082		45
September 2023		867		8
September 2024		319		4
Thereafter		—		—
Total minimum lease payments, including interest	$	7,021	$	1,273
Less amounts representing interest		229		50
Total minimum lease payments	$	6,792	$	1,223

As of December 28, 2018 12 Months Ended	Operating Leases		Finance Leases
December 2019	$	2,606	$	1,153
December 2020		2,202		332
December 2021		980		143
December 2022		507		4
December 2023		202		—
Thereafter		12		—
Total minimum lease payments, including interest		6,509		1,632
Less amounts representing interest		—		75
Total minimum lease payments	$	6,509	$	1,557

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

As of October 2, 2020 12 Months Ended	Operating Leases		Finance Leases
September 2021	$	2,374	$	433
September 2022		1,632		51
September 2023		1,404		15
September 2024		896		8
September 2025		637		—
Thereafter		1,228		—
Total minimum lease payments, including interest	$	8,171	$	507
Less amounts representing interest		385		12
Total minimum lease payments	$	7,786	$	495

	Stock Options (in 000’s)			Minimum Exercise Price		Maximum Exercise Price
Outstanding at December 28, 2018		3,920
Granted		818
Exercised		(190	)
Forfeited or expired		(23	)
Outstanding at September 27, 2019		4,525		$	3.50	$	43.84
Exercisable at September 27, 2019		3,104

	Restricted Stock (in 000’s)			Restricted Stock Units (in 000’s)
Unvested at December 28, 2018		11			322
Granted		11			19
Vested		(11	)		(210	)
Forfeited or expired		—			(6	)
Unvested at September 27, 2019		11			125

	Restricted Stock (in 000’s)			Restricted Stock Units (in 000’s)			Performance Stock Units (in 000’s)
Unvested at January 3, 2020		11			104			—
Granted		11			127			15
Vested		(11	)		(93	)		—
Forfeited or expired		—			(1	)		—
Unvested at October 2, 2020		11			137			15

3.1	Amended and Restated Certificate of Incorporation.(1)

3.2	Amended and Restated Bylaws.(2)

4.1	Form of Certificate for Common Stock, par value $0.01 per share.(3)

†4.2	Amended and Restated Omnibus Equity Incentive Plan.(4)

10.39	Lease agreement entered into on September 14, 2020 between STAAR Surgical Company and Calderari & Schwab.(5)

10.40	First Amendment to Lease Agreement dated October 1, 2020 between STAAR Surgical Company and Pacific Equity Partners, LLC.(6)

10.41	First Amendment to Lease Agreement dated October 30, 2020 between STAAR Surgical Company and 2000 Gold L.P.*

31.1	Certifications Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2	Certifications Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1	Certification Pursuant to 18 U.S.C. Section 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

101	Financial statements from the quarterly report on Form 10-Q of STAAR Surgical Company for the quarter ended ~~September 27, 2019,~~October 2, 2020 formatted in Inline Extensible Business Reporting Language (iXBRL), are filed herewith and include: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text.*

104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 27, 2019,~~October 2, 2020, has been formatted in Inline XBRL with applicable taxonomy extension information contained in Exhibit 101.

		STAAR SURGICAL COMPANY

Dated:	~~October 30, 2019~~November 4, 2020	By:	/s/ ~~DEBORAH J. ANDREWS~~PATRICK F. WILLIAMS
			~~Deborah J. Andrews~~Patrick F. Williams
			Chief Financial Officer
			(on behalf of the Registrant and as its principal financial officer)