Netlist (NLST) 10-K 4 Mar 16 2015 FY Annual report Financial data

Document And Entity Information

Document And Entity Information - USD ($) $ in Millions	12 Months Ended
	Jan. 02, 2016	Feb. 29, 2016	Jun. 27, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	NETLIST INC
Entity Central Index Key	1,282,631
Document Type	10-K
Document Period End Date	Jan. 2, 2016
Amendment Flag	false
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	FY
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--01-02
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 24.4
Entity Common Stock, Shares Outstanding		50,354,363

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jan. 02, 2016	Dec. 27, 2014
ASSETS
Cash and cash equivalents	$ 19,684	$ 11,040
Restricted cash	400	700
Accounts receivable, net of allowance for doubtful accounts of $40 (2015) and $61 (2014)	716	1,091
Inventories	1,658	1,880
Prepaid expenses and other current assets	1,739	735
Total current assets	24,197	15,446
Property and equipment, net	408	393
Other assets	61	69
Total assets	24,666	15,908
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Accounts payable	3,299	3,957
Accrued payroll and related liabilities	1,243	710
Accrued expenses and other current liabilities	340	420
Deferred revenue	6,857
Accrued engineering charges	500	500
Current portion of long-term debt, net of debt discount	13	1,952
Total current liabilities	12,252	7,539
Long-term debt, net of current portion and debt discount	13,699	3,551
Long-term warranty liability	49	99
Total liabilities	$ 26,000	$ 11,189
Commitments and contingencies
Stockholders' (deficit) equity:
Preferred stock, $0.001 par value - 10,000 shares authorized; no shares issued and outstanding
Common stock, $0.001 par value - 90,000 shares authorized; 50,354 (2015) and 41,498 (2014) shares issued and outstanding	$ 50	$ 41
Additional paid-in capital	132,011	117,546
Accumulated deficit	(133,395)	(112,868)
Total stockholders' (deficit) equity	(1,334)	4,719
Total liabilities and stockholders' (deficit) equity	$ 24,666	$ 15,908

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jan. 02, 2016	Dec. 27, 2014
Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts	$ 40	$ 61
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	50,354,000	41,498,000
Common stock, shares outstanding	50,354,000	41,498,000

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 02, 2016	Sep. 26, 2015	Jun. 27, 2015	Mar. 28, 2015	Dec. 27, 2014	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Jan. 02, 2016	Dec. 27, 2014
Condensed Consolidated Statements Of Operations
Net product sales	$ 1,709	$ 1,617	$ 1,429	$ 2,114					$ 6,869	$ 19,195
Non-recurring engineering revenues	1,143								1,143
Total net revenues	2,852	1,617	1,429	2,114	$ 2,516	$ 4,791	$ 4,887	$ 7,001	8,012	19,195
Cost of sales	1,583	1,593	1,324	1,415	2,629	3,678	3,908	5,016	5,915	15,231
Gross profit	1,269	24	105	699	(113)	1,113	979	1,985	2,097	3,964
Operating expenses:
Research and development	1,680	1,449	1,536	1,384	1,234	1,305	1,168	878	6,049	4,586
Intellectual property legal fees	(1,091)	899	2,238	3,542	2,465	1,692	1,134	1,097	5,588	6,387
Selling, general and administrative	2,628	1,710	1,744	1,759	1,611	1,782	1,781	1,622	7,841	6,796
Total operating expenses	3,217	4,058	5,518	6,685	5,310	4,779	4,083	3,597	19,478	17,769
Operating loss	(1,948)	(4,034)	(5,413)	(5,986)	(5,423)	(3,666)	(3,104)	(1,612)	(17,381)	(13,805)
Other expense, net:
Interest expense, net	(648)	(447)	(489)	(480)	(393)	(393)	(393)	(395)	(2,064)	(1,574)
Other expense, net	(1,749)	(889)	1,548	9	5		6	(11)	(1,081)
Total other expense, net	(2,397)	(1,336)	1,059	(471)	(388)	(393)	(387)	(406)	(3,145)	(1,574)
Loss before provision for income tax	(4,345)	(5,370)	(4,354)	(6,457)	(5,811)	(4,059)	(3,491)	(2,018)	(20,526)	(15,379)
Provision for income taxes				1			2		1	2
Net loss	$ (4,345)	$ (5,370)	$ (4,354)	$ (6,458)	$ (5,811)	$ (4,059)	$ (3,493)	$ (2,018)	$ (20,527)	$ (15,381)
Net loss per common share:
Basic and diluted	$ (0.09)	$ (0.11)	$ (0.09)	$ (0.14)	$ (0.14)	$ (0.10)	$ (0.08)	$ (0.05)	$ (0.42)	$ (0.38)
Weighted-average common shares outstanding:
Weighted Average Number of Shares Outstanding, Basic and Diluted	50,353	50,354	50,354	44,708	41,483	41,472	41,472	36,881	48,967	40,304

Consolidated Statements of Ope5

Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Stock-based compensation expense	$ 1,770	$ 2,012
Cost of sales
Stock-based compensation expense	53	56
Research and development
Stock-based compensation expense	613	726
Selling, general and administrative
Stock-based compensation expense	$ 1,104	$ 1,230

Condensed Consolidated Statemen

Condensed Consolidated Statements Of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Dec. 28, 2013	$ 31	$ 104,469	$ (97,487)	$ 7,013
Balance, shares at Dec. 28, 2013	31,776
Stock-based compensation		2,012		2,012
Exercise of stock options		153		$ 153
Exercise of stock options, shares	303			303
Repurchase of common stock		(22)		$ (22)
Repurchase of common stock, shares	(12)
Issuance of common stock	$ 9	10,267		10,276
Issuance of common stock, shares	8,681
Exercise of warrant	$ 1	667		668
Exercise of warrant, shares	750
Components of comprehensive loss:
Net loss			(15,381)	(15,381)
Balance at Dec. 27, 2014	$ 41	117,546	(112,868)	4,719
Balance, shares at Dec. 27, 2014	41,498
Stock-based compensation		1,770		1,770
Exercise of stock options		8		$ 8
Exercise of stock options, shares	10			10
Issuance of common stock	$ 9	10,535		$ 10,544
Issuance of common stock, shares	8,846
Warrants issued in connection with debt and settlement transactions		2,152		2,152
Components of comprehensive loss:
Net loss			(20,527)	(20,527)
Balance at Jan. 02, 2016	$ 50	$ 132,011	$ (133,395)	$ (1,334)
Balance, shares at Jan. 02, 2016	50,354

Condensed Consolidated Stateme7

Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Cash flows from operating activities:
Net loss	$ (20,527)	$ (15,381)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	349	882
Capitalized payment in kind interest	170	251
Amortization of debt discount and debt issuance costs	1,149	803
Realized (gain) loss on sale of equipment	(3)	6
Stock-based compensation	1,770	2,012
Issuance of warrant in lieu of payment	234
Issuance and repricing of warrants	753
Changes in operating assets and liabilities:
Restricted cash	300	400
Accounts receivable	375	3,775
Inventories	222	740
Prepaid expenses and other assets	(728)	(12)
Accounts payable	(658)	162
Accrued payroll and related liabilities	533	75
Accrued expenses and other current liabilities	(130)	(114)
Deferred revenue	6,857
Net cash used in operating activities	(9,334)	(6,401)
Cash flows from investing activities:
Acquisition of property and equipment	(366)	(141)
Proceeds from sale of equipment	5	3
Net cash used in investing activities	(361)	(138)
Cash flows from financing activities:
Proceeds from long- term loans, net of issuance costs	18,571
Payments on debt	(10,784)	(197)
Proceeds from issuance of common stock, net	10,544	10,276
Proceeds from exercise of equity awards, net of taxes remitted for restricted stock	8	799
Net cash provided by financing activities	18,339	10,878
Net change in cash and cash equivalents	8,644	4,339
Cash and cash equivalents at beginning of period	11,040	6,701
Cash and cash equivalents at end of period	$ 19,684	$ 11,040

Description of Business

Description of Business	12 Months Ended
	Jan. 02, 2016
Description Of Business
Description Of Business	Note 1—Description of Business Netlist, Inc. (the “Company” or “Netlist”) designs, manufactures and sells a wide variety of high-performance, logic-based memory subsystems for the global datacenter, storage and high-performance computing markets. The Company’s memory subsystems consist of combinations of dynamic random access memory integrated circuits (“DRAM ICs” or “DRAM”), NAND flash memory (“NAND flash”), application-specific integrated circuits (“ASICs”) and other components assembled on printed circuit boards (“PCBs”). Netlist primarily markets and sells its products to leading original equipment manufacturer (“OEM”) customers, hyperscale datacenter operators and storage vendors. The Company’s solutions are targeted at applications where memory plays a key role in meeting system performance requirements. The Company leverages a portfolio of proprietary technologies and design techniques, including combining discrete semiconductor technologies from third parties such as DRAM and NAND flash to function as one efficient planar design and alternative packaging technique, to deliver memory subsystems with persistence, high density, small form factor, high signal integrity, attractive thermal characteristics, reduced power consumption and low cost per bit. The Company’s NVvault™ product is the first to offer both DRAM and NAND flash in a standard form factor memory subsystem as a persistent dual-in line memory module (“DIMM”) in mission critical applications. The Company’s HyperCloud ® technology incorporates its patented rank multiplication and load reduction technologies. The Company also has pending and issued patents covering fundamental aspects of hybrid memory DIMM designs that incorporate combinations of DRAM and/or NAND flash, such as its NVvault™ product. The Company is focused on monetizing its patent portfolio through its products business and, where appropriate, through licensing arrangements with third parties that wish to incorporate its patented technologies in their products. Netlist was incorporated in June 2000 and is headquartered in Irvine, California. In 2007, the Company established a manufacturing facility in the People’s Republic of China (the “PRC”), which became operational in July 2007 upon the successful qualification of certain key customers. Liquidity The Company incurred net losses of approximately $ 20 . 5 million and $ 15.4 million for the years ended January 2, 2016 and December 27, 2014 , respectively. On February 24, 2015, the Company completed a registered firm commitment underwritten public offering (the “2015 Offering”) of shares of the Company’s common stock. In the 2015 Offering, the Company issued and sold to the underwriter (“ Underwriter ”) 8,846,154 shares of common stock pursuant to an underwriting agreement, dated as of February 19, 2015, by and between the Company and the Underwriter, at a price of $1.209 per share, including 1,153,846 shares resulting from the Underwriter’s exercise in full of its option to purchase additional shares of Common Stock to cover over-allotments. The price per share to the public in the 2015 Offering was $1.30 per share. The net proceeds from the 2015 Offering were approximately $10.5 million, after deducting underwriting discounts and commissions and estimated offering expenses. On November 12, 2015, the Company entered into a Joint Development and License Agreement (“JDLA”) with Samsung Electronics Co., Ltd. (“Samsung”), pursuant to which the Company and Samsung agreed to work together to jointly develop a standardized product interface for NVDIMM-P memory modules in order to facilitate broad industry adoption of this new technology. The Company received an $8.0 million non-recurring engineering fee (“NRE”) from Samsung for the joint development. Both parties may enter into an additional agreement in the future for Samsung to be granted commercial license for the Company’s NVDIMM-P technology. The JDLA also includes a Right of First Refusal wherein the Company will provide Samsung the right to acquire the Company’s NVDIMM-P technology in a separate, subsequent transaction before the Company offers the technology to a third party. The Company also received $15.0 million under a Senior Secured Convertible Note and Warrant Purchase Agreement (“SVIC Purchase Agreement”) with SVIC No. 28 New Technology Business Investment L.L.P., a Korean limited liability partnership and an affiliate of Samsung Venture Investment Co. (“SVIC”) (see Note 5). If adequate working capital is not available when needed, the Company may be required to significantly modify its business model and operations to reduce spending to a sustainable level. Insufficient working capital could cause the Company to be unable to execute its business plan, take advantage of future opportunities, or respond to competitive pressures or customer requirements. It may also cause the Company to delay, scale back or eliminate some or all of its research and development programs, or to reduce or cease operations. While there is no assurance that the Company can meet its revenue forecasts, management anticipates that it can continue operations for at least the next twelve months. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation, including certain expenses from research and development to intellectual properly legal fees in the consolidated statement of operations and combining other assets with prepaid expenses and other current assets in the consolidated statement of cash flows.

Summary of Significant Accounti

Summary of Significant Accounting Policies	12 Months Ended
	Jan. 02, 2016
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 2—Summary of Significant Accounting Policies Change in Accounting Principle On January 2, 2016, the Company retrospectively adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs be presented as a direct reduction from the carrying amount of debt. As a result of the adoption of ASU 2015-03, the consolidated balance sheet at December 27, 2014 was adjusted to reflect the reclassification of $253,000 from prepaid expenses and other current assets and $81,000 from other assets to long-term debt. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principles of Consolidation The consolidated financial statements include the accounts of Netlist, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Fiscal Year The Company operates under a 52 or 53week fiscal year ending on the Saturday closest to December 31. The 2015 and 2014 fiscal years ended on January 2, 2016 and December 27, 2014, respectively. Fiscal year 2015 consisted of 53 weeks and fiscal year 2014 consisted of 52 weeks. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of net sales and expenses during the reporting period. By their nature, these estimates and assumptions are subject to an inherent degree of uncertainty. Significant estimates made by management include, among others, provisions for uncollectible receivables and sales returns, warranty liabilities, valuation of inventories, fair value of financial instruments, recoverability of long-lived assets, valuation of stock-based transactions , estimates for completion of NRE revenue milestones and realization of deferred tax assets. The Company bases its estimates on historical experience, knowledge of current conditions and the Company’s belief of what could occur in the future considering available information. The Company reviews its estimates on an on-going basis. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Revenue Recognition Product Sales The Company’s revenues primarily consist of product sales of high performance memory subsystems to OEMs , hyperscale data center operators and storage vendors. The Company recognizes revenues in accordance with FASB Accounting Standards Codification (“ASC”) Topic 605. Accordingly, the Company recognizes revenues when there is persuasive evidence that an arrangement exists, product delivery and acceptance have occurred, the sales price is fixed or determinable, and collectability of the resulting receivable is reasonably assured. The Company generally uses customer purchase orders and/or contracts as evidence of an arrangement. Delivery occurs when goods are shipped for customers with shipping point terms and upon receipt for customers with destination terms, at which time title and risk of loss transfer to the customer. Shipping documents are used to verify delivery and customer acceptance. The Company assesses whether the sales price is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund. Customers are generally allowed limited rights of return for up to 30 days, except for sales of excess component inventories, which contain no right-of-return privileges. Estimated returns are provided for at the time of sale based on historical experience or specific identification of an event necessitating a reserve. The Company offers a standard product warranty to its customers and has no other post-shipment obligations. The Company assesses collectability based on the creditworthiness of the customer as determined by credit checks and evaluations, as well as the customer’s payment history. All amounts billed to customers related to shipping and handling are classified as revenues, while all costs incurred by the Company for shipping and handling are classified as cost of sales. Engineering Services We provide engineering services to our customers. We recognize revenue from these services when all of the following conditions are met: (1) evidence existed of an arrangement with the customer, typically consisting of a purchase order or contract; (2) our services were performed and risk of loss passed to the customer; (3) we completed all of the necessary terms of the contract; (4) the amount of revenue to which we were entitled was fixed or determinable; and (5) we believed it was probable that we would be able to collect the amount due from the customer. To the extent that one or more of these conditions has not been satisfied, we defer recognition of revenue. Generally, we recognize revenue as the engineering services stipulated under the contract are completed and accepted by our customers. Engineering services are performed under a signed Statement of Work (“SOW”) with a customer. The deliverables and payment terms stipulated under the SOW provide guidance on the project revenue recognition. Revenues from contracts with substantive defined milestones that we have determined are reasonable, relevant to all the deliverables and payment terms in the SOW that are commensurate with the efforts required to achieve the milestones are recognized under the milestone recognition method. Estimated losses on all SOW projects are recognized in full as soon as they become evident. Deferred Revenue From time-to-time the Company receives pre-payments from its customers related to future services. Engineering development fee revenues, including non-recurring engineering (“NRE”) fees, are deferred and recognized ratably over the period the engineering work is completed. Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less, other than short-term investments in securities that lack an active market. Restricted Cash Restricted cash of $0.4 million, as of January 2, 2016 , consists of cash to secure three standby letters of credit. Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and debt instruments. The fair value of the Company’s cash equivalents is determined based on quoted prices in active markets for identical assets or Level 1 inputs. The Company recognizes transfers between Levels 1 through 3 of the fair value hierarchy at the beginning of the reporting period. The Company believes that the carrying values of all other financial instruments approximate their current fair values due to their nature and respective durations. Allowance for Doubtful Accounts The Company evaluates the collectibility of accounts receivable based on a combination of factors. In cases where the Company is aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, the Company will record an allowance against amounts due, and thereby reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company records allowances for doubtful accounts based primarily on the length of time the receivables are past due based on the terms of the originating transaction, the current business environment, and its historical experience. Uncollectible accounts are charged against the allowance for doubtful accounts when all commercial means of collection have been exhausted. Generally, the Company’s credit losses have been within expectations and the provisions established. However, the Company cannot guarantee that it will continue to experience credit loss rates similar to those experienced in the past. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. The Company invests its cash equivalents primarily in money market mutual funds. Cash equivalents are maintained with high quality institutions, the composition and maturities of which are regularly monitored by management. At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. The Company’s trade accounts receivable are primarily derived from sales to OEMs in the computer industry. The Company performs credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral. The Company believes that the concentration of credit risk in its trade receivables is moderated by its credit evaluation process, relatively short collection terms, the high level of credit worthiness of its customers (see Note 10), foreign credit insurance , and letters of credit issued in its favor. Reserves are maintained for potential credit losses, and such losses historically have not been significant and have been within management’s expectations. Inventories Inventories are valued at the lower of actual cost to purchase or manufacture the inventory or the net realizable value of the inventory. Cost is determined on an average cost basis which approximates actual cost on a first-in, first-out basis and includes raw materials, labor and manufacturing overhead. At each balance sheet date, the Company evaluates its ending inventory quantities on hand and on order and records a provision for excess quantities and obsolescence. Among other factors, the Company considers historical demand and forecasted demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining obsolescence and net realizable value. In addition, the Company considers changes in the market value of components in determining the net realizable value of its inventory. Once established, lower of cost or market write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventories. Property and Equipment Property and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives, which generally range from three to seven years. Leasehold improvements are recorded at cost and amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease term. Ex penditures for repairs and maintenance are charged to expense as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization of assets disposed of are removed from the accounts and any resulting gain or loss is included in other expens e, net. Deferred Financing Costs, Debt Discount and Detachable Debt-Related Warrants Costs incurred in connection with debt are deferred and recorded as a reduction to the debt balance in the accompanying consolidated balance sheets. The Company amortizes debt issuance costs over the expected term of the related debt using the effective interest method. Debt discounts relate to the relative fair value of warrants issued in conjunction with the debt are also recorded as a reduction to the debt balance and accreted over the expected term of the debt to interest expense using the effective interest method . Impairment of Long-Lived Assets The Company evaluates the recoverability of the carrying value of long-lived assets held and used by the Company for impairment on at least an annual basis or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future net cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. If the carrying value is determined not to be recoverable from future operating cash flows, the asset is deemed impaired and an impairment loss is recognized to the extent the carrying value exceeds the estimated fair value of the asset. The fair value of the asset or asset group is based on market value when available, or when unavailable, on discounted expected cash flows. The Company’s management believes there is no impairment of long-lived assets as of January 2, 2016 . There can be no assurance, however, that market conditions will not change or demand for the Company’s products will continue, which could result in future impairment of long-lived assets. Warranty Liability The Company offers product warranties generally ranging from one to three years, depending on the product and negotiated terms of any purchase agreements with customers. Such warranties require the Company to repair or replace defective product returned to the Company during such warranty period a t no cost to the customer. Warranties are not offered on sales of excess component inventory. The Company records an estimate for warranty ‑related costs at the time of sale based on its historical and estimated product return rates and expected repair or replacement costs (see Note 3). While s uch costs have historically been within management’s expectations and the provisions established, unexpected changes in failure rates could have a material adverse impact on the Company, requiring additional warranty liability , and could adversely affect the Company’s gross profit and gross margins. Stock-Based Compensation The Company accounts for equity issuances to non-employees in accordance with ASC Topic 505. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur. In accordance with ASC Topic 718, employee and director stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. Given that stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company’s estimated average forfeiture rates are based on historical forfeiture experience and estimated future forfeitures. The estimated fair value of common stock option awards to employees and directors is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires subjective assumptions regarding future stock price volatility and expected time to exercise, along with assumptions about the risk-free interest rate and expected dividends, all of which affect the estimated fair values of the Company’s common stock option awards. The expected term of options granted is calculated as the average of the weighted vesting period and the contractual expiration date of the option. This calculation is based on the safe harbor method permitted by the SEC in instances where the vesting and exercise terms of options granted meet certain conditions and where limited historical exercise data is available. The expected volatility is based on the historical volatility of the Company’s common stock. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The expected dividend assumption is based on the Company’s history and management’s expectation regarding dividend payouts. The Company evaluates the assumptions used to value their common stock awards on a quarterly basis. If factors change and the Company employs different assumptions, stock-based compensation may differ significantly from what has been recorded in prior periods. Compensation expense for common stock option awards with graded vesting schedules is recognized on a straight-line basis over the requisite service period for the last separately vesting portion of the award, provided that the accumulated cost recognized as of any date at least equals the value of the vested portion of the award. The Company recognizes the estimated fair value of restricted stock awards issued to employees and outside directors as stock-based compensation expense on a straight-line basis over the vesting period for the last separately vesting portion of the awards. Estimated fair value is determined as the difference between the closing price of our common stock on the grant date and the purchase price of the restricted stock award, if any, reduced by expected forfeitures. If there are any modifications or cancellations of the underlying vested or unvested stock-based awards, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense, or record additional expense for vested stock-based awards. Future stock-based compensation expense and unearned stock- based compensation may increase to the extent that the Company grants additional common stock options or other stock-based awards. Income Taxes Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at currently effective tax rates, of future deductible or taxable amounts attributable to events that have been recognized on a cumulative basis in the consolidated financial statements. A valuation allowance related to a net deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. ASC Topic 740 prescribes a recognition threshold and measurement requirement for the financial statement recognition of a tax position that has been taken or is expected to be taken on a tax return and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Under ASC Topic 740 the Company may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from the Company’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Research and Development Expenses Research and development expenditures are expensed in the period incurred. Risks and Uncertainties The Company is subject to certain risks and uncertainties including its ability to obtain profitable operations due to the Company’s history of losses and accumulated deficits, the Company’s dependence on a few customers for a significant portion of revenues, risks related to intellectual property matters, market development of and demand for the Company’s products, and the length of the sales cycle. Such risks could have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. The Company dedicates substantial resources in protecting its intellectual property, including its efforts to defend its patents against challenges made by way of reexamination proceedings at the United States Patent and Trademark Office (“USPTO”). These activities are likely to continue for the foreseeable future, without any guarantee that any ongoing or future patent protection and litigation activities will be successful. The Company is also subject to litigation based on claims that it has infringed on the intellectual property of others, against which the Company intends to defend itself vigorously. Litigation, whether or not eventually decided in the Company’s favor or settled, is costly and time-consuming and could divert management’s attention and resources. Because of the nature and inherent uncertainties of litigation, should the outcome of any of such actions be unfavorable, the Company’s business, financial condition, results of operations or cash flows could be materially and adversely affected. The Company has also invested a significant portion of its research and development budget into the design of ASIC and field-programmable gate array (“FGPA”) devices, including the HyperCloud® and HyperVault memory subsystems, and the NVvault family of products. These products are subject to increased risks as compared to the Company’s legacy products. The Company may be unable to achieve customer or market acceptance of its products, or achieve such acceptance in a timely manner. The Company experienced a longer qualification cycle than anticipated with its HyperCloud® memory subsystems, and did experience supply chain disruption and a shortage of DRAM and flash required to create the HyperCloud® memory subsystem and NVvault products. As of January 2, 2016, Hypercloud has not generated significant revenue relative to the Company’s investment in the product. The Company’s operations in the PRC are subject to various political, geographical and economic risks and uncertainties inherent to conducting business in the PRC. These include, but are not limited to, (i) potential changes in economic conditions in the region, (ii) managing a local workforce that may subject the Company to uncertainties or certain regulatory policies, (iii) changes in other policies of the Chinese governmental and regulatory agencies, and (iv) changes in the laws and policies of the U.S. government regarding the conduct of business in foreign countries, generally, or in the PRC, in particular. Additionally, the Chinese government controls the procedures by which its local currency, the Chinese Renminbi (“RMB”), is converted into other currencies and by which dividends may be declared or capital distributed for the purpose of repatriation of earnings and investments. If restrictions in the conversion of RMB or in the repatriation of earnings and investments through dividend and capital distribution restrictions are instituted, the Company’s operations and may be negatively impacted. The liabilities of the Company’s subsidiaries in the PRC exceeded its assets as of January 2, 2016 and December 27, 2014 . Foreign Currency Remeasurement The functional currency of the Company’s foreign subsidiary is the U.S. dollar. Local currency financial statements are remeasured into U.S. dollars at the exchange rate in effect as of the balance sheet date for monetary assets and liabilities and the historical exchange rate for nonmonetary assets and liabilities. Expenses are remeasured using the average exchange rate for the period, except items related to nonmonetary assets and liabilities, which are remeasured using historical exchange rates. All remeasurement gains and losses are included in determining net loss. Transaction gains and losses were not significant in 201 5 and 201 4 . Net Loss Per Share Basic net loss per share is calculated by dividing net loss by the weighted-average common shares outstanding during the year, excluding unvested shares issued pursuant to restricted share awards under the Company’s share-based compensation plans. Diluted net loss per share is calculated by dividing the net loss by the weighted-average shares and dilutive potential common shares outstanding during the year. Dilutive potential shares consist of dilutive shares issuable upon the exercise or vesting of outstanding stock options and restricted stock awards, respectively, computed using the treasury stock method and shares issuable upon conversion of the SVIC Note (as defined below) using the “if converted method” . In periods of losses, basic and diluted loss per share are the same, as the effect of stock options and unvested restricted share awards on loss per share is anti-dilutive. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in FASB Topic 605, Revenue Recognition . ASU 2014-9 implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. On July 9, 2015, the FASB approved amendments deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date and permitting early adoption of the standard, but not before the original effective date or for reporting periods beginning after December 15, 2016. The Company has not yet selected a transition method and is currently assessing the impact of the adoption of AUS 2014-9 will have on its consolidated financial statements and disclosures. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern. The amendments in this update provide guidance in accounting principles generally accepted in the United States of America about management’s responsibilities to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The main provision of the amendments are for an entity’s management, in connection with the preparation of financial statements, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known or reasonably knowable at the date the consolidated financial statements are issued. When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, the entity should disclose information that enables users of the consolidated financial statements to understand all of the following: (1) principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans); (2) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; and (3) management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern or management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this update are effective for interim and annual reporting periods after December 15, 2016 and early application is permitted. The Company is currently assessing this guidance for future implementation. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). The amendments in ASU 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual and interim periods beginning on or after December 15, 2015. The amendments in this update should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (that is, debt issuance cost asset and the debt liability). The Company has elected to early adopt ASU 2015-03. The Company has reclassified its debt issuance costs previously included in prepaid expenses and other current assets and other assets to a direct reduction in long-term debt in the prior year in the accompanying consolidated balance sheet. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) ("ASU 2015-11"). The amendments in ASU 2015-11 require that an entity measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transaction. The amendments in this update more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards. ASU 2015-11 is effective for annual and interim periods beginning on or after December 15, 2016. The amendments in this update should be applied prospectively with early application permitted as of the beginning of the interim or annual reporting period. The Company is currently assessing this guidance for future implementation. In November 2015, FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”) , which eliminates the current requirement for an entity to separate deferred income tax liabilities and assets into current and non-current amounts in a classified balance sheet. Instead, the ASU requires deferred tax liabilities, deferred tax assets and valuation allowances be classified as non-current in a classified balance sheet. ASU 2015-17 will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. Additionally, this guidance may be applied either prospectively or retrospectively to all periods presented. The Company elected not to early adopt ASU 2015-17 and is evaluating the effect of the adoption of this ASU to its consolidated financial statements. In February 25, 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). Under ASU 2016-02 , lessees will be required recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees must apply a modified retrospective transition appro

Supplemental Financial Informat

Supplemental Financial Information	12 Months Ended
	Jan. 02, 2016
Supplemental Financial Information
Supplemental Financial Information	Note 3—Supplemental Financial Information Inventories Inventories consist of the following (in thousands): January 2, December 27, 2016 2014 Raw materials $ $ Work in process Finished goods $ $ Property and Equipment Property and equipment consist of the following (dollars in thousands): Estimated Useful January 2, December 27, Lives 2016 2014 Machinery and equipment 3 - 7 yrs. $ $ Leasehold improvements * Furniture and fixtures 5 yrs. Computer equipment and software 3 - 7 yrs. Less accumulated depreciation and amortization $ $ * Estimated useful life is generally 7 years, or the remaining lease term, whichever is shorter. Warranty Liability The following table summarizes the activity related to the warranty liability (in thousands): Year Ended January 2, December 27, 2016 2014 Beginning balance $ $ Estimated cost of warranty claims charged to cost of sales Cost of actual warranty claims Ending balance Less current portion Long-term warranty liability $ $ The allowance for warranty liabilities expected to be incurred within one year is included as a component of accrued expenses and other current liabilities in the accompanying consolidated balance sheets. The allowance for warranty liabilities expected to be incurred after one year is classified as long-term warranty liabilit y in the accompanying consolidated balance sheets. Computation of Net Loss Per Share The following table sets forth the computation of basic and diluted net loss per share, including the reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share (in thousands, except per share data): Year Ended January 2, December 27, 2016 2014 Basic and diluted net loss per share: Numerator: Net loss $ $ Denominator: Weighted-average common shares outstanding, basic and diluted Basic and diluted net loss per share $ $ The following table sets forth potentially dilutive common share equivalents, consisting of shares issuable upon the exercise or vesting of outstanding stock options and restricted stock awards, respectively, and the exercise of warrants, computed using the treasury stock method. These potential common shares have been excluded from the diluted net loss per share calculations above as their effect would be anti-dilutive for the years then ended (in thousands): Year Ended January 2, December 27, 2016 2014 Common share equivalents The above common share equivalents would have been included in the calculation of diluted earnings per share had the Company reported net income for the years then ended. Cash Flow Information The following table sets forth supplemental disclosures of cash flow information and non-cash investing and financing activities (in thousands): Year Ended January 2, December 27, 2016 2014 Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ $ Income taxes $ $ Supplemental disclosure of non-cash financing activities: Debt issuance costs associated with February debt financing $ $ - Detachable warrant issued with November debt financing $ $ - Debt financing of directors and officers and cargo insurance $ $

Credit Agreements

Credit Agreements	12 Months Ended
	Jan. 02, 2016
Credit Agreements
Credit Agreements	Note 4—Credit Agreements SVB Credit Agreement On October 31, 2009, the Company entered into a credit agreement with Silicon Valley Bank (“SVB”), which was most recently amended on January 29, 2016 (as amended, the “SVB Credit Agreement and such amendment, the “SVB Amendment”). Pursuant to the terms of the SVB Credit Agreement, the Company is eligible to borrow, in a revolving line of credit, up to the lesser of (i) 80% of its eligible accounts receivable, or (ii) $5.0 million, subject to certain adjustments as set forth in the SVB Credit Agreement. The SVB Amendment modifies certain terms of the SVB Credit Agreement in order to (i) extend the maturity date of advances under the SVB Credit Agreement to January 31, 2017, (ii) adjust the rate at which advances under the SVB Credit Agreement accrue interest to the Wall Street Journal “ prime rate” plus 2.75% (p rior to the SVB Amendment, advances under the SVB Credit Agreement accrued interest at a rate equal to SVB’s most recently announced “prime rate” plus 2.75%) , and (iii) effective as of December 1, 2015, adjust certain of the Company’s financial covenants under the SVB Credit Agreement, including relaxing the Company’s adjusted quick ratio covenant and removing the Company’s tangible net worth covenant. Additionally, pursuant to the terms of the SVB Amendment, SVB allowed for the financing and security interests contemplated under the debt instrument issued to SVIC (see Note 5) and released certain patents and related assets relating to the NVvault™ product line from the collateral subject to SVB’s security interest under the SVB Credit Agreement. The SVB Amendment requires letters of credit to be secured by cash, which is classified as restricted cash in the accompanying consolidated balance sheet. At January 2, 2016 and December 27, 2014, letters of credit in the amount of $0.4 million and $0.7 million, respectively, were outstanding. The following tables present details of interest expense related to borrowings on the line of credit with SVB, along with availability under our credit line with SVB (in thousands): The following table presents details of the Company’s availability under our line of credit with SVB: January 2, December 27, 2016 2014 Availability under the revolving line of credit $ $ All obligations under the SVB Credit Agreement are secured by a first priority lien on the Company’s tangible and intangible assets, other than its patent portfolio, which is subject to a first priority lien held by SVIC. The SVB Credit Agreement subjects the Company to certain affirmative and negative covenants, including financial covenants with respect to the Company’s liquidity and restrictions on the payment of dividends. As of January 2, 2016, the Company was in compliance with its covenants under the SVB Credit Agreement. Fortress Credit Opportunities I LP Loan and Security Agreement and Related Agreements On July 18, 2013, the Company, entered into a loan agreement (“2013 Loan Agreement”) with Fortress Credit Opportunities I LLP (“Fortress”), an affiliate of Fortress Investment Group LLC and successor to DBD Credit Funding, LLC, which provided for up to $10 million in term loans and up to $5 million in revolving loans. The term loans were available in an initial $6 million tranche (the “Initial Term Loan”) with a second tranche in the amount of $4 million becoming available upon achievement of certain performance milestones relating to intellectual property matters (the “IP Monetization Milestones” and such second tranche loan, “IP Milestone Term Loan”). The $5 million in revolving loans were available at Fortress’s discretion and subject to customary conditions precedent. The $6 million Initial Term Loan was fully drawn at closing on July 18, 2013. Proceeds from the Initial Term Loan were used in part to repay the Company’s Consolidated Term Loan with SVB. The remainder of such funds was used to fund the Company’s working capital needs. On February 17, 2015, the 2013 Loan Agreement was amended to accelerate the availability of the term loan and the Company borrowed the remaining $4 million in term loans. The loans bore interest at a stated fixed rate of 11.0% per annum. Until the last business day of February 2015, the payments on the term loans were interest-only at a cash rate of 7.0% per annum and a payment-in-kind deferred cash interest rate of 4.0% , which payment-in-kind interest was capitalized semi-annually, beginning with December 31, 2013. Beginning with the last business day of February 2015, the term loans were amortized with 65% of the principal amount due in equal monthly installments over the following seventeen (17) months with a balloon payment equal to 35% of the remaining principal amount of the term loans, plus accrued interest, being payable on July 18, 2016 (the "Maturity Date"). Term loan payments, including the $4 million borrowed on February 17, 2015, of approximately $370,000 were due monthly through June 18, 2016, with the remaining amount of approximately $4.3 million due on July 18, 2016. In November 2015, the Company repaid all amounts owed under the 2013 Loan Agreement with the proceeds from the SVIC Note, as defined and discussed in Note 5, and terminated the 2013 Loan Agreement in full. Concurrently with the execution of the 2013 Loan Agreement, the Company and Drawbridge Special Opportunities Fund LP (“Drawbridge”) entered into a Monetization Letter Agreement (as amended, the “Letter Agreement”). In connection with an amendment to the 2013 Loan Agreement, the Company also amended the Letter Agreement on February 17, 2015. The Letter Agreement provided, among other things, that DBD may have been entitled to share in certain monetization revenues that we may have derived in the future related to our patent portfolio (the “Patent Portfolio”). The Patent Portfolio did not include certain patents relating to the NVvault™ product line. Monetization revenues subject to this arrangement included revenues recognized during the seven year term of the Letter Agreement from amounts (whether characterized as settlement payments, license fees, royalties, damages, or otherwise) actually paid to the Company or its subsidiaries in connection with any assertion of, agreement not to assert, or license of, the Patent Portfolio (in whole or in part) either (A) in consideration of the grant of a license or covenant not sue, or other immunity with respect to the Patent Portfolio, or (B) as a damages award with respect to such assertion of the Patent Portfolio, less certain legal fees and expenses (subject to a cap on such fees and expenses). Monetization revenues also included the value attributable to the Patent Portfolio in any sale of the Company during the seven year term, subject to a maximum amount payable to Drawbridge. The Letter Agreement also required that the Company use commercially reasonable efforts to pursue opportunities to monetize the Patent Portfolio during the term of the Letter Agreement, provided the Company was under no obligation to pursue any such opportunities that it did not deem to be in its best interest. Concurrently with the termination of the 2013 Loan Agreement in November 2015, the Company also terminated the Letter Agreement in full, as discussed further in Note 5. Concurrently with the execution of the 2013 Loan Agreement, the Company issued to Drawbridge a seven -year warrant (the “Drawbridge Warrant”) to purchase an aggregate of 1,648,351 shares of the Company’s common stock at an exercise price of $1.00 per share. In connection with an amendment to the 2013 Loan Agreement, on February 17, 2015, the Company cancelled the Drawbridge Warrant and issued a replacement warrant in substantially the same form except for the removal of the restrictions upon exercise contained in the original Drawbridge Warrant with respect to an aggregate of 659,340 shares of the Company’s common stock thereunder relating to the achievement of the Company of the IP Monetization Milestones and the borrowing by the Company of amounts under the IP Milestone Term Loan. As used herein, the term “Drawbridge Warrant” refers to the originally issued warrant and the replacement warrant, as the context dictates. The Company accounted for the Drawbridge Warrant as a debt discount and has valued it based on the relative fair value to the debt instrument, at approximately $1,215,000 , to be amortized over the term of the debt instrument, or three years, using the effective interest method. For the years ended January 2, 2016 and December 27, 2014, the Company amortized approximately $524,000 and $487,000 respectively, as interest expense in the consolidated statements of operations. In connection with the SVIC Purchase Agreement, as further described in Note 5, the Company amended the Drawbridge Warrant to reduce the exercise price per share to $0.47 . See Note 8 for further details. Also in connection with the 2013 Loan Agreement, the Company agreed to pay to a consultant a consulting fee equal to (i) $300,000 in connection with the Company’s receipt of the Initial Term Loan and (ii) 5% of any additional principal amount loaned to the Company as an IP Milestone Term Loan. The initial $300,000 and $485,925 of additional debt financing costs were recorded as debt issuance cost to be amortized over the term of the debt instrument, or three years, using the effective interest method. In connection with an amendment to the 2013 Loan Agreement, on February 17, 2015, the Company modified its agreement with the consultant and agreed to pay a consulting fee of 3.5% of $4,000,000 of additional principal loaned to the Company under the 2013 Loan Agreement. The amended consulting fee was equal to $140,000 . The amended consulting fee and $132,899 of additional debt financing costs has been recorded as debt issuance cost to be amortized over the term of the debt instrument, or seventeen months, using the effective interest method. During the years ended January 2, 2016 and December 27, 2014, the Company amortized approximately $607,000 and $316,000 respectively, as interest expense in the consolidated statements of operations. In connection with the repayment of all amounts owed under the 2013 Loan Agreement the debt issuance costs and debt discount costs were expensed in their entirety as interest expense.

Debt

Debt	12 Months Ended
	Jan. 02, 2016
Debt
Debt	Note 5- Long-term Debt The Company’s long-term debt consists of the following (in thousands): January 2, December 27, 2016 2014 Term Loan, Fortress, net of debt discount and debt issuance costs of $0 and $858 $ - $ Convertible promissory note, SVIC, net of debt discount and debt issuance costs of $1,301 and $0 - Note payable to others - $ $ Less current portion (including debt discount and debt issuance costs) $ $ On November 18, 2015 (“Closing Date”), the Company entered into the SVIC Purchase Agreement with SVIC, pursuant to which the Company sold SVIC a Senior Secured Convertible Promissory Note (“SVIC Note”) and a Stock Purchase Warrant (“SVIC Warrant”), each dated as of the Closing Date. The SVIC Note has an original principal amount of $15 million, accrues interest at a rate of 2% per year, is due and payable in full on December 31, 2021 (“SVIC Note Maturity Date”) and the principal and accrued but unpaid interest are convertible into shares of the Company’s common stock at a conversion price of $1.25 per share (the “Conversion Price”), subject to certain adjustments as set forth therein on the SVIC Note Maturity Date. Upon a change of control of the Company prior to the SVIC Note Maturity Date, the SVIC Note may, at the Company’s option, be assumed by the surviving entity or be redeemed upon the consummation of such change of control for the principal and accrued but unpaid interest as of the redemption date. The SVIC Warrant grants SVIC a right to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.30 per share, subject to certain adjustments as set forth therein, is only exercisable in the event the Company exercises its right to redeem the SVIC Note prior to the SVIC Note Maturity Date, and expires on December 31, 2025. The SVIC Warrant was valued at $1,165,000 , based on its relative fair value, and was recorded as a debt discount . The Company also recorded $154,000 as a debt discount for professional services rendered. These amounts will be amortized over the term of the SVIC Note using the effective interest method. For the year ended January 2, 2016, the Company amortized approximately $18,000 to interest expense in the consolidated statement of operations. In connection with the SVIC Note, SVIC was granted a first priority security interest in the Company’s patent portfolio and a second priority security interest in all of the Company’s other assets. On the Closing Date, the Company, SVB and SVIC entered into an Intercreditor Agreement pursuant to which SVB and SVIC agreed to their relative security interest in the Company’s assets. On the Closing Date, the Company and SVIC also entered into a Registration Rights Agreement pursuant to which the Company is obligated to register with the SEC the shares of the Company’s common stock issuable upon conversion of the SVIC Note or upon exercise of the SVIC Warrant. On November 19, 2015, pursuant to the terms of a payoff letter (the “Payoff Letter”) the Company repaid all sums due under the 2013 Loan Agreement with Fortress. The parties also terminated the Letter Agreement with Drawbridge. In connection with the Payoff Letter, the Company made a lump sum payment of $1.0 million to Fortress as an early termination fee, which was included in other expense in the consolidated statement of operations for the year ended January 2, 2016. The Company also agreed to amend the outstanding Drawbridge Warrant to reduce the exercise price per share to $0.47 (see Note 4). Additionally, pursuant to the terms of the Payoff Letter, the Company issued to Fortress a new ten -year warrant to purchase 1,000,000 shares of the Company’s common stock at an exercise price per share of $0.47 (the “Fortress Warrant”) (see Note 8). The estimated value of the new warrant and the estimated incremental value of the amended warrant totaled $0.8 million and were included in other expense on the consolidated statement of operations for the year ended January 2, 2016. As of January 2, 2016, maturities of long-term debt, including amortization of debt discounts and debt issuance costs were as follows (in thousands): Fiscal Year 2016 $ 2017 - 2018 - 2019 - 2020 - Thereafter Total payments on long-term debt Less current portion (including debt discount and debt issuance costs) Long-term debt $ Interest expense, including amortization of debt discounts and debt issuance costs, net of interest income, is presented in the following table (in thousands): Year Ended January 2, December 27, 2016 2014 Interest expense: SVB $ $ Fortress SVIC - Others Interest income - $ $

Income Taxes

Income Taxes	12 Months Ended
	Jan. 02, 2016
Income Taxes
Income Taxes	Note 6—Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): January 2, December 27, 2016 2014 Deferred tax assets: Reserves and allowances $ $ State taxes, net of federal income tax benefit Depreciation and amortization Other accruals Compensatory stock options and rights Other Tax credit carryforwards Operating loss carryforward Foreign operating loss carryforward Total deferred tax assets Deferred tax liabilities: Prepaid expenses Basis difference in warrant value Total deferred tax liabilities Subtotal Valuation allowance $ - $ - The Company evaluates whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. As of January 2, 2016 and December 27, 2014 , a valuation allowance of $ 39.7 million and $ 33.0 million, respectively, has been provided based on the Company’s assessment that it is more likely than not, that sufficient taxable income will not be generated to realize the tax benefits of the temporary differences. The valuation allowance increased by approximately $ 6.7 million and $ 4 .9 million during the years ended January 2, 2016 and December 27, 2014 , respectively, primarily related to the increase in the net operating loss carryforward. At January 2, 2016 , the Comp any had approximately $82.9 million of federal net operating loss carryforwards which begin to expire in year 2029 , and approximately $50.1 million of state net operating loss carryforwards which begin to expire in year 2017 , and federal and state tax credit carryforwards of approximately $1.5 million and $1.6 million, respectively at January 2, 2016. Federal tax credit carryforwards begin to expire in 2025 and state tax credits carry forward indefinitely. In addition, the Company has approximately $5.9 million of operating loss carryforwards in the PRC and Taiwan and had $1.7 million of net operating losses expire at the end of the current year. Utilization of the net operating loss and tax credit carryforwards is subject to an annual limi tation due to the ownership percentage change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions. The annual limitation may result in the expiration of the net operating losses and tax credit carryforwards before utilization. As of January 2, 2016, we had not completed the determination of the amount to be limited under the provision. The deferred tax asset at January 2, 2016 does not include approximately $1.7 million and $1.9 million of excess tax benefits from employee stock option exercises that are a component of the federal and state net operating loss carryover, respectively. The Company’s stockholders’ equity balance will be increased if and when such excess tax benefits are ultimately realized. For financial reporting purposes, loss before provision for income taxes includes the following components (in thousands): Year Ended January 2, December 27, 2016 2014 United States $ $ Foreign $ $ The Company’s income tax provision consists of the following (in thousands): Year Ended January 2, December 27, 2016 2014 Current: Federal $ - $ - State Total current Deferred: Federal State Foreign Change in valuation allowance Total deferred - - Income tax provision $ $ A reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Company’s loss before income taxes to the income tax provision is as follows: Year Ended January 2, December 27, 2016 2014 U.S. federal statutory tax % % Valuation allowance Loss from foreign subsidiary Other Effective income tax provision rate % % The Company files tax returns with federal, state and foreign jurisdictions. The Company is no longer subject to Internal Revenue Service (“IRS”) or state examinations for periods prior to 2012 although certain carryforward attributes that were generated prior to 2012 may still be adjusted by the IRS. The Company follows the policy to classify accrued interest and penalties as part of the accrued tax liability in the provision for income taxes. For the years ended January 2, 2016 and December 27, 2014 , the Company did not recognize any interest or penalties related to unrecognized tax benefits. The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of January 2, 2016 and December 27, 2014 , the Company had no accrued interest and penalties related to uncertain tax matters. As of January 2, 2016 , the Company had no uncertain tax positions that would be reduced as a result of a lapse of the applicable statute of limitations.

Commitments and Contingencies

Commitments and Contingencies	12 Months Ended
	Jan. 02, 2016
Commitments and Contingencies
Commitments and Contingencies	Note 7—Commitments and Contingencies Leases The Company leases certain of its facilities and equipment under non ‑ cancelable operating leases that expire at various dates through 2017. Rental expense, net of amortization of deferred gain and sublease income, is presented in the following table (in thousands): Year Ended January 2, December 27, 2016 2014 Rental expense, net $ $ A summary of future minimum payments under operating lease commitments as of January 2, 2016 is as follows (in thousands): Operating Fiscal Year Leases 2016 $ 2017 Total minimum lease payments $ Litigation and Patent Reexaminations The Company owns numerous patents and continues to enlarge and strengthen its patent portfolios, which cover different aspects of the Company’s technology innovations with various claim scopes. The Company plans to generate revenue by selling or licensing its technology, and intends to vigorously enforce its patent rights against infringers of such rights. The Company dedicates substantial resources in protecting its intellectual property, including its efforts to defend its patents against challenges made by way of reexamination proceedings at the USPTO. These activities are likely to continue for the foreseeable future, without any guarantee that any ongoing or future patent protection and litigation activities will be successful. The Company is also subject to litigation claims that it has infringed on the intellectual property of others, against which the Company intends to defend vigorously. Litigation, whether or not eventually decided in the Company’s favor or settled, is costly and time-consuming and could divert management’s attention and resources. Because of the nature and inherent uncertainties of litigation, should the outcome of any of such actions be unfavorable, the Company’s business, financial condition, results of operations or cash flows could be materially and adversely affected. Additionally, the outcome of pending litigation, and the related patent reexaminations, as well as any delay in their resolution, could affect the Company’s ability to license its intellectual property in the future or to protect against competition in the current and expected markets for its products. Google Litigation In May 2008, the Company initiated discussions with Google, Inc. (“Google”) based on information and belief that Google had infringed on a U.S. patent owned by the Company, U.S. Patent No. 7,289,386 (“the ‘386 patent”), which relates generally to technologies to implement rank multiplication in memory modules. Preemptively, Google filed a declaratory judgment lawsuit against the Company in the U.S. District Court for the Northern District of California (the “Northern District Court”), seeking a declaration that Google did not infringe the ‘386 patent and that the ‘386 patent was invalid. The Company filed a counterclaim for infringement of the ‘386 patent by Google. Claim construction proceedings were held in November 2009, and the Company prevailed on every disputed claim construction issue. In June 2010, the Company filed motions for summary judgment of patent infringement and dismissal of Google’s affirmative defenses. In May 2010, Google requested and was later granted an Inter Partes Reexamination of the ‘386 patent by the USPTO. The reexamination proceedings are described below. The Northern District Court granted Google’s request to stay the litigation pending result of the reexamination, and therefore has not ruled on the Company’s motions for summary judgment. In December 2009, the Company filed a patent infringement lawsuit against Google in the Northern District Court, seeking damages and injunctive relief based on Google’s infringement of U.S. Patent No. 7,619,912 (“the ‘912 patent”), which is related to the ‘386 patent and relates generally to technologies to implement rank multiplication. In February 2010, Google answered the Company’s complaint and asserted counterclaims against the Company seeking a declaration that the patent is invalid and not infringed, and claiming that the Company committed fraud, negligent misrepresentation and breach of contract based on the Company’s activities in the JEDEC standard-setting organization. The counterclaim seeks unspecified compensatory damages. Accruals have not been recorded for loss contingencies related to Google’s counterclaim because it is not probable that a loss has been incurred and the amount of any such loss cannot be reasonably estimated. In October 2010, Google requested and was later granted an Inter Partes Reexamination of the ‘912 patent by the USPTO. The reexamination proceedings are described below. In connection with the reexamination request, the Northern District Court granted the Company and Google’s joint request to stay the ‘912 patent infringement lawsuit against Google until the completion of the reexamination proceedings. Inphi Litigation In September 2009, the Company filed a patent infringement lawsuit against Inphi Corporation (“Inphi”) in the U.S. District Court for the Central District of California (the “Central District Court”). The complaint, as amended, alleges that Inphi is contributorily infringing and actively inducing the infringement of U.S. patents owned by the Company, including the ‘912 patent, U.S. Patent No. 7,532,537 (“the ‘537 patent”), which relates generally to memory modules with load isolation and memory domain translation capabilities, and U.S. Patent No. 7,636,274 (“the ‘274 patent”), which is related to the ‘537 patent and relates generally to load isolation and memory domain translation technologies. The Company is seeking damages and injunctive relief based on Inphi’s use of the Company’s patented technology. Inphi denied infringement and claimed that the three patents are invalid. In April 2010, Inphi requested but was later denied Inter Partes Reexaminations of the ‘912, ‘537 and ‘274 patents by the USPTO. In June 2010, Inphi submitted new requests and was later granted Inter Partes Reexaminations of the ‘912, ‘537 and ‘274 patents by the USPTO. The reexamination proceedings are described below. In connection with the reexamination requests, Inphi filed a motion to stay the patent infringement lawsuit with the Central District Court, which was granted. The Central District Court has requested that the Company notify it within one week of any action taken by the USPTO in connection with the reexamination proceedings, at which time the Central District Court may decide to maintain or lift the stay. SanDisk, Smart Modular, Smart Worldwide, and Diablo Litigations In September 2012, Smart Modular, Inc. (“Smart Modular”) filed a patent infringement lawsuit against the Company in the U.S. District Court for the Eastern District of California (the “Eastern District Court”). The complaint alleges that the Company willfully infringes and actively induces the infringement of six claims of a U.S. patent newly issued to Smart Modular, U.S. Patent No. 8,250,295 (“the ‘295 patent”), and seeks damages and injunctive relief. Smart Modular also filed a motion for preliminary injunction and a memorandum in support of the motion on the same day of the complaint. The Company promptly filed a request for reexamination of the ‘295 patent with the USPTO setting forth six different combinations of prior art that would render the six asserted claims of the ‘295 patent unpatentable. The Company also filed an answer to Smart Modular’s complaint with the Eastern District Court in October 2012 to deny infringement of the ‘295 patent, assert that the ‘295 patent is invalid and unenforceable, and bring a set of counterclaims against Smart Modular. Smart Modular filed various motions on the pleadings on November 1, 2012, which were opposed by the Company in its briefs filed in late November 2012. In December 2012, the USPTO granted the Company’s request for the reexamination of the ‘295 patent, and issued an Office Action rejecting all of the six asserted claims over the six different combinations of prior art set forth by the Company in its request. The Company promptly moved to stay litigation pending result of reexamination. On February 19, 2013, a few days after Smart Modular filed replies in support of its motions, the Eastern District Court issued a Minute Order, in which the court on its own motion took the preliminary injunction; the motion to dismiss and the motion to stay under submission without oral argument and vacated the hearing dates. On February 7, 2013, Smart Modular filed a response to the Office Action in the reexamination of the ‘295 patent. Thereafter, the Company and Smart Modular made various filings to address certain apparent defects contained in Smart Modular’s response. On March 13, 2013, the USPTO issued a Notice of Defective Paper, in which the USPTO found Smart Modular’s responses, both the initial filing and a supplemental filing, to be improper, and both responses were expunged from the record. The USPTO gave Smart Modular 15 days to submit another response, which Smart Modular submitted on March 26, 2013. The Company timely filed its comments on Smart Modular’s corrected response on April 25, 2013. The USPTO ultimately accepted Smart Modular’s corrected response on July 17, 2013. On April 29, 2014, the USPTO issued an Action Closing Prosecution (“ACP”), confirming some claims and rejecting others. Smart Modular filed a response to the ACP on May 29, 2014, and Netlist filed comments related to Smart Modular’s response on June 30, 2014. On August 4, 2015, the USPTO issued a Right of Appeal Notice confirming all pending claims. On September 4, 2015, the Company appealed to the Patent Trial and Appeal Board (“PTAB”) at the USPTO. Thus, the reexamination of the ‘295 patent remains pending and will continue in accordance with established procedures for reexamination proceedings. On May 30, 2013, the Eastern District Court issued an order granting Netlist’s motion to stay pending results of the reexamination of the ‘295 patent and denied Smart Modular’s motion for preliminary injunction. On July 1, 2013, Netlist filed a complaint against Smart Modular in the Santa Ana Division of the U.S. District Court for the Central District of California (“Central District Court”), seeking, among other things, relief under federal antitrust laws for Smart Modular’s violation of Section 2 of the Sherman Act, and damages and other equitable relief under California statutory and common law for Smart Modular’s unfair competition, deceptive trade practices and fraud. On August 23, 2013, Netlist filed an amended complaint for patent infringement, antitrust violations and trade secret misappropriation against Smart Modular, Smart Storage Systems (“Smart Storage”), Smart Worldwide Holdings (“Smart Worldwide”) and Diablo Technologies (“Diablo”) in the Central District Court. Smart Storage was acquired by SanDisk Corporation (“SanDisk”) on August 22, 2013. Netlist’s amended complaint alleges infringement of five Netlist patents by the defendants based on the manufacture and sale of the ULLtraDIMM memory module. Netlist’s complaint also alleges antitrust violations by Smart Modular and Smart Worldwide, contending that Smart Modular procured the ‘295 patent with blatant inequitable conduct at the USPTO, withheld the patent application leading to the patent from relevant JEDEC committees for more than eight years, sought to improperly enforce that patent against Netlist’s JEDEC-compliant HyperCloud® product by seeking a preliminary injunction against Netlist based on the patent, which was denied by the Eastern District Court, and made deceptive statements to the public about its lawsuit against Netlist. Netlist’s complaint also alleges trade secret misappropriation and trademark infringement against Diablo, claiming that Diablo misused Netlist trade secrets to create the ULLtraDIMM product for Smart Storage (now SanDisk), and that Diablo used Netlist’s HyperCloud® technology to create competing products. On the same day Netlist filed its amended complaint, Smart Modular and Diablo each filed a complaint in the San Francisco Division of the U.S. District Court Northern District of California (“Northern District Court”), seeking declaratory judgment of non-infringement and invalidity of the patents asserted in the Netlist’s amended complaint. On September 9, 2013, Netlist filed a Motion to Dismiss or Transfer these declaratory judgment complaints to the Central District Court. This motion was denied by the Northern District Court on October 10, 2013. In the Central District Court, Smart Modular and Smart Worldwide filed motions on September 13, 2013, to dismiss or sever various counts related to the ‘295 patent. On September 26, 2013, Diablo filed a motion to dismiss Netlist’s claims for trade secret misappropriation, breach of contract, and unfair competition. On October 29, 2013, Smart Modular and Diablo filed motions to dismiss or transfer the patent claims related to the ULLtraDIMM memory module. On November 26, 2013, the Central District Court: (i) severed and transferred the claims related to the ‘295 patent to the Eastern District Court, which were stayed by the Eastern District Court on March 7, 2014, along with the other ‘295 related claims pending results of the ‘295 reexamination; (ii) severed and transferred to the Northern District Court the patent claims related to the ULLtraDIMM memory module; (iii) issued an order to show cause why the remaining claims should not also be transferred to the Northern District Court; and (iv) held in abeyance Diablo’s pending motion to dismiss and motion for judgment on the pleadings. The parties filed briefs in response to the order to show cause, and then on December 23, 2013, the Central District Court ordered the remaining claims to be transferred to the Northern District Court. All of the claims from the amended complaint filed on August 23, 2013, in the Central District Court have now been transferred to either the Northern District Court or the Eastern District Court. As reported in its Current Report on Form 8-K filed on December 13, 2013, Netlist received a whistleblower letter postmarked from Canada (where Diablo is based) on November 13, 2013, and obviously written by a current or former Diablo employee. The letter begins by bluntly stating that Diablo stole Netlist’s architecture and design, and goes on to explain that Diablo used Netlist’s HyperCloud TM product to create the ULLtraDIMM product, which it then used in demonstrations to major customers including IBM and Hewlett-Packard. The letter further states that Diablo’s management conspired to hide this theft by instructing its employees not to speak to customers about the fact that Netlist’s product was incorporated into ULLtraDIMM. The letter includes diagrams showing how Diablo implemented the theft of Netlist’s trade secrets, as well as the names of former Diablo employees, customers and suppliers who can verify the theft. The Current Report on Form 8-K included as an exhibit a partially redacted copy of the whistleblower letter. On December 13, 2013, Diablo filed an ex parte application in the Northern District Court requesting that the Court issue an order to show cause why Netlist should not be sanctioned for attaching the redacted copy of the whistleblower letter to the Current Report on Form 8-K. The Northern District Court heard the parties’ arguments on December 16, 2013, and on January 3, 2014, issued an order denying Diablo’s application for sanctions, finding that Diablo had not established a basis for finding the information in the Current Report on Form 8-K and its attachments “confidential” and therefore had not shown why it should be granted the relief sought. On January 21, 2014, Netlist filed a motion for leave to file a second amended answer and counterclaims in the Northern District Court to assert two additional patents, bringing the total to seven patents asserted against the ULLtraDIMM. Diablo did not oppose Netlist’s motion, and the parties filed a joint stipulation and proposed order on February 3, 2014, requesting an additional two months be added to the case schedule to account for the additional patents. On February 5, 2014, the Northern District Court granted Netlist’s motion to add the two patents and entered a new case schedule. On February 12, 2014, the Northern District Court granted the parties’ joint stipulation dismissing Smart Modular without prejudice. On April 7, 2014, the Northern District Court granted Netlist’s motion for leave to file a Second Amended Complaint in the patent case. On March 21, 2014, Netlist filed a Second Amended Complaint against Diablo in the Northern District Court, Case No. 4:13-CV-05962 (the “trade secret case”), alleging, among other things, that in stealing Netlist’s proprietary HyperCloud® and DxD and LRD technologies, Diablo breached its contracts with Netlist, committed trademark violations, and misappropriated Netlist’s trade secrets. Also on March 21, 2014, Netlist served Diablo with its Amended Trade Secret Disclosure, detailing approximately 60 trade secrets Netlist taught to Diablo in connection with the contracted and confidential work on the HyperCloud® project. On April 9, 2014, Diablo filed a motion to dismiss Netlist’s Second Amended Trade Secret Complaint, as well as a motion for judgment on the pleadings. That motion was heard by the Northern District Court on May 13, 2014, and on September 4, 2014, denied the motion with respect to all grounds except one , which Netlist did not contest. On April 1, 2014, the Northern District Court denied Diablo’s motion to strike Netlist’s infringement contentions, finding that Netlist’s contentions did indeed satisfy the relevant requirements and, on April 7, 2014, granted Netlist’s motion to compel defendants to produce certain discovery materials related to the ULLtraDIMM. Diablo filed a motion for relief from these two rulings, which was denied on April 8, 2014. Also on April 7, 2014, the Northern District Court granted Netlist’s motion for issuance of Letters Rogatory to the Canadian courts requesting that summons be issued for two former Diablo employees living in Canada and named in the whistleblower letter to produce documents and to be deposed. These depositions occurred in late August 2014. On April 8, 2014, the Northern District Court granted Netlist’s motion to consolidate the patent related cases (Case Nos. 4:13-CV-05889-YGR and 4:13-CV-03901-YGR) and to coordinate discovery with the trade secret case (4:13-CV-05962-YGR), and denied Diablo’s motion to further consolidate the patent and trade secret cases. On April 15, 2014, the Northern District Court granted the parties’ joint stipulation dismissing Smart Worldwide without prejudice. On April 30, 2014, the Northern District Court denied Diablo’s request that Netlist’s Amended Trade Secret Disclosure and exhibits thereto be re-designated as “Confidential” from the current designation of “Highly Confidential --Attorneys’ Eyes Only”. Between June 18, 2014 and June 24, 2014, SanDisk filed petitions in the USPTO requesting Inter Partes Review (“IPR”) of the five Netlist patents asserted in the August 23, 2013 amended complaint. Diablo similarly filed petitions requesting IPR of the two Netlist patents added in the second amended answer filed on January 21, 2014. Netlist filed patent owner preliminary responses to all of the petitions associated with the seven asserted Netlist patents. The USPTO issued decisions on the petitions in December, 2014, denying the petitions in their entirety as to three patents (U.S. Patent Nos. 8,516,187; 8,301,833; 8,516,185), granting a partial institution on one patent (U.S. Patent No. 8,001,434), and instituting a review of all claims in three patents (U.S. Patent Nos. 7,881,150; 8,081,536; 8,359,501). Reviews will therefore proceed related to four Netlist patents (U.S. Patent Nos. 8,001,434; 7,881,150; 8,081,536; 8,359,501) in accordance with established procedures. On April 7, 2015, SanDisk filed additional petitions in the USPTO requesting IPR of the ‘150 and ‘536 patents that were already under review. On October 8, 2015, the USPTO issued decisions on the additional petitions, instituting reviews of the ‘150 and ‘536 patents which will proceed in accordance with established procedures. On December 14, 2015, the PTAB issued decisions in the first wave of reviews of the ‘434 and ‘501 patents, finding that certain of the challenged claims in the ‘434 and ‘501 patents were valid, and that others were not. On the same day, the PTAB also issued decisions on the first wave of reviews of the ‘150 and ‘536 patents, finding all of the challenged claims invalid. Netlist and the petitioners will have an opportunity to appeal all of these decisions to the Court of Appeals for the Federal Circuit (“Federal Circuit”) in accordance with established procedures. On August 23, 2014, Smart Modular also filed petitions in the USPTO requesting IPR of the five Netlist patents asserted in the August 23, 2013 amended complaint. Netlist filed patent owner preliminary responses to all of the Smart Modular petitions in December, 2014. On March 13, 2015, the USPTO issued decisions on the Smart Modular petitions, denying the petitions in their entirety as to the same three patents that survived the petitions filed by SanDisk in June, 2014 (U.S. Patent Nos. 8,516,187; 8,301,833; 8,516,185), and instituted additional reviews of the two other patents already under review (U.S. Patent No. 8,001,434; 8,359,501) that will proceed in accordance with established procedures. SanDisk filed a motion on June 24, 2014, to stay the Northern District patent cases pending completion of the IPRs (Diablo later joined this motion). Netlist filed its opposition to the motion to stay on July 10, 2014. The Northern District Court heard oral arguments on the motion to stay in early August 2014, and issued an order on August 21, 2014, denying the motion without prejudice. SanDisk renewed its motion to stay on January 20, 2015 and on April 9, 2015, the Court granted the motion for a stay pending resolution of the IPRs. On October 6, 2014, Netlist filed a Motion for Preliminary Injunction in the Northern District Court trade secret suit, asking that Diablo and its partner SanDisk be immediately enjoined from any further manufacture or sale of the ULLtraDIMM module. The Court granted in part Netlist’s motion on January 6, 2015, and entered a preliminary injunction halting the manufacture, use, sale, or distribution of the Diablo Rush and Bolt chips and any ULLtraDIMM module containing those chips, and advanced the trial date to March 9, 2015 on the trade secret misappropriation, breach of contract, and other related claims (4:13-CV-05962-YGR). SanDisk and Diablo filed motions with the U.S. Court of Appeals for the Federal Circuit appealing the January 6, 2015, preliminary injunction and asking for expedited briefing and a stay of the preliminary injunction during the pendency of the appeals. The Federal Circuit denied both requests for expedited briefing, denied Diablo’s request for a stay, but granted SanDisk’s narrower request for a stay of the preliminary injunction as to SanDisk’s existing inventory of enjoined products. The trial commenced on schedule and continued for two weeks , with closing arguments on March 23, 2015. On March 25, 2015, the jury came back with a verdict finding for the defendant on the breach of contract, misappropriation of trade secret and inventorship counts, while finding for Netlist on the trademark and false advertising counts. After the verdict, the court ordered briefing to determine the effect of the jury verdict on the preliminary injunction entered on January 6, 2015, and following oral argument on April 24, 2015, issued an order dissolving the preliminary injunction. The court further issued Findings of Fact and Conclusions of Law on Netlist’s unfair competition claims granting no relief under the statute based on the jury’s verdict. The parties briefed their post-trial motions in May and June of 2015, including Netlist’s motion for Judgment as a Matter of Law (“JMOL”) to reverse the jury’s verdict as to breach of contract and for a new trial on misappropriation of trade secrets. Oral arguments on the post-trial motions were heard by the court on July 8, 2015. On September 1, 2015, the Court denied motions from both parties for JMOL, Netlist’s motion for a new trial, and Diablo’s motion for attorney’s fees, but granted Diablo’s motion to recover on the preliminary injunction a $900,000 bond posted early in the litigation and its bill of costs. This expense is included in other expense, net in the accompanying consolidated statements of operation for the year ended January 2, 2016. On September 29, 2015, Netlist filed a Notice of Appeal to the Federal Circuit and on December 8, 2015, filed an Opening Brief. Netlist’s appeal will continue in accordance with established procedures. ‘386 Patent Reexamination As noted above, in May 2010, Google requested and was later granted an Inter Partes Reexamination of the ‘386 patent by the USPTO. In October 2010, Smart Modular requested and was later granted an Inter Partes Reexamination of the ‘386 patent. The reexaminations requested by Google and Smart Modular were merged by the USPTO into a single proceeding. In April 2011, a Non-Final Action was issued by the USPTO, rejecting all claims in the patent. In July 2011, the Company responded by amending or canceling some of the claims, adding new claims, and making arguments as to the validity of the rejected claims in view of cited references. Both Google and Smart Modular filed their comments to the Company’s response in October 2011. In October 2012, the USPTO issued an ACP rejecting all 60 claims . The Company filed a response to the ACP on December 3, 2012. On June 21, 2013, the USPTO issued a Right of Appeal Notice (“RAN”) in which the examiner maintained his rejection of the claims. Netlist filed a notice of appeal on July 19, 2013. Google filed a notice of cross-appeal on August 2, 2013, and a cross-appeal brief on October 1, 2013. The Company filed an appeal brief and an amendment canceling some of the remaining claims on October 2, 2013 to further focus the issues on appeal. On February 24, 2014, the examiner entered the amendment canceling claims, withdrew the rejections related to those claims, but otherwise maintained the positions previously set forth in the RAN. On September 24, 2014, the USPTO set a hearing date of November 19, 2014. After the hearing, on February 25, 2015, the PTAB issued a decision affirming the examiner’s rejections of the pending claims. The Company requested rehearing of the PTAB’s decision on March 25, 2015. On August 27, 2015, the PTAB denied the Company’s request for rehearing. Netlist appealed to the Federal Circuit on October 26, 2015. The appeal was dismissed on January 28, 2016 by Netlist. Thus, while the reexamination of the ‘386 patent remains pending, it will terminate in accordance with established procedures for merged reexamination proceedings in due course with the cancellation of the original claims. ‘912 Patent Reexamination As noted above, in April 2010, Inphi requested but was later denied an Inter Partes Reexamination of the ‘912 patent by the USPTO. In June 2010, Inphi submitted a new request and was later granted an Inter Partes Reexamination of the ‘912 patent by the USPTO. In September 2010, the USPTO confirmed the patentability of all fifty-one claims of the ‘912 patent. In October 2010, Google and Smart Modular each filed and were later granted requests for reexamination of the ‘912 patent. In February 2011, the USPTO merged the Inphi, Google and Smart Modular ‘912 reexaminations into a single proceeding. In an April 2011 Non-Final Action in the merged reexamination proceeding, the USPTO rejected claims 1-20 and 22-51 and confirmed the patentability of claim 21 of the ‘912 patent. In July 2011, the Company responded by amending or canceling some of the claims, adding new claims, and making arguments as to the validity of the rejected claims. Inphi, Google, and Smart Modular filed their comments on the Company’s response in August 2011. In October 2011, the USPTO mailed a second Non-Final Action confirming the patentability of twenty claims of the ‘912 patent, including claims that were added in the reexamination process. In January 2012, the Company responded by amending or canceling some of the claims, adding new claims, and making arguments as to the validity of the rejected claims. Google, Inphi and Smart Modular filed their comments to the Company’s response in February 2012. The USPTO determined that Smart Modular’s comments were defective, and issued a notice to Smart Modular to rectify and resubmit its comments. Smart Modular filed corrected comments and a petition for the USPTO to withdraw the notice in March 2012. The USPTO issued a non-final Office Action on November 13, 2012 maintaining the patentability of many key claims while rejecting some claims that were previously determined to be patentable. The Company filed a response to the Office Action on January 14, 2013. The requesters filed their comments on February 13, 2013. On March 21, 2014, the USPTO issued an ACP, confirming the patentability of 92 claims and maintaining the rejection of 11 other claims. On June 18, 2014, the USPTO issued a RAN, maintaining the substantive positions taken by the examiner in the ACP. Smart Modular, Inphi and Google filed notices of appeal on July 16, July 18 and July 18, 2014, respectively. Netlist filed a notice of cross-appeal on July 30, 2014. Smart Modular, Inphi and Google filed their respective appeal briefs on September 16, September 30 and September 30, 2014. Netlist filed its cross-appeal brief on September 30, 2014. On January 14, 2015, the examiner maintained his positions previously set forth in the RAN. The parties filed respective rebuttal briefs in February 2015. On September 29, 2015, the PTAB set a hearing date for November 24, 2015 on the parties’ appeals. The hearing was conducted on November 24, 2015, and the parties are awaiting the USPTO’s decision. Thus, the reexamination of the ‘912 patent remains pending and will continue in accordance with established procedures for merged reexamination proceedings. ‘627 Patent Reexamination In September 2011, Smart Modular filed a request for reexamination of U.S. Patent No. 7,864,627 (“the ‘627 patent”) issued to the Company on January 4, 2011. The ‘627 patent is related to the ‘912 patent. In November 2011, the USPTO granted Smart Modular’s request for reexamination of the ‘627 patent and concurrently issued a Non-Final Action confirming the patentability of three claims. In February 2012, the Company responded by amending or canceling some of the claims, adding new claims, and making arguments as to the validity of the rejected claims. Smart Modular filed its comments to the Company’s response in March 2012. The USPTO determined that Smart Modular’s comments were defective and issued a notice in April 2012 to Smart Modular to rectify and resubmit its comments. Smart Modular filed corrected comments and a petition for the USPTO to withdraw the notice in April 2012. The USPTO posted an Office Action on December 19, 2012, confirming one claim and rejecting the rest of the claims in the ‘627 patent. The Company filed a response to the Office Action on March 19, 2013. Smart Modular filed its comments on the Office Action on April 24, 2013. The USPTO issued another Non-Final Office Action on September 26, 2013, withdrawing certain rejections while adopting new rejections for certain of the pending claims. The Company responded to the Non-Final Office Action on November 26, 2013, by amending some of the claims and making arguments as to the validity of the rejected claims. On March 27, 2014, the USPTO issued an ACP, maintaining the claim rejections. On June 27, 2014, the USPTO issued a RAN, maintaining the substantive positions taken by the examiner in the ACP. Netlist filed a notice of appeal on July 28, 2014. On October 14, 2014, the Company filed its appeal brief and, on November 13, 2014, Smart Modular filed its respondent’s brief. On April 27, 2015, the USPTO issued an Examiner’s Answer to Appeal Brief in which the examiner continued to maintain the substantive positions taken previously. On May 27, 2015, the Company filed a Patent Owner Rebuttal Brief in response to the Examiner’s Answer. On October 9, 2015, the PTAB set a hearing date for December 11, 2015 on the Company’s appeal. The hearing was conducted on November 24,

Stockholders' Equity

Stockholders' Equity	12 Months Ended
	Jan. 02, 2016
Stockholders' Equity
Stockholders' Equity	Note 8—Stockholders’ Equity Serial Preferred Stock The Company’s authorized capital includes 10,000,000 shares of Serial Preferred Stock, with a par value of $0.001 per share. No shares were outstanding at January 2, 2016 or December 27, 2014 . Common Stock On February 11, 2014, the Company completed a registered firm commitment underwritten public offering (the “ 2014 Offering ”) of shares of the Company’s common stock. In the 2014 Offering, the Company issued and sold to the Underwriter 8,680,775 shares of common stock pursuant to an underwriting agreement, dated as of February 6, 2014, by and between the Company and the Underwriter, at a price of $1.2115 per share, including 1,132,275 shares resulting from the Underwriter’s exercise in full of its option to purchase additional shares of c ommon s tock to cover over-allotments. The price per share to the public in the 2014 Offering was $1.30 per share. The net proceeds from the 2014 Offering were approximately $10.3 million, after deducting underwriting discounts and commissions and offering expenses. On February 24, 2015, the Company completed the 2015 Offering of shares of the Company’s common stock. In the 2015 Offering, the Company issued and sold to the Underwriter 8,846,154 shares of common stock pursuant to an underwriting agreement, dated as of February 19, 2015, by and between the Company and the Underwriter, at a price of $1.209 per share, including 1,153,846 shares resulting from the Underwriter’s exercise in full of its option to purchase additional shares of c ommon s tock to cover over-allotments. The price per share to the public in the 2015 Offering was $1.30 per share. The net proceeds from the 2015 Offering were approximately $10.5 million, after deducting underwriting discounts and commissions and offering expenses. Cancellation of Shares of Common Stock During the fiscal year ended December 27, 2014 , the Company cancelled 10,015 shares of common stock, valued at approximately $21,000 in connection with its obligation to holders of restricted stock to withhold the number of shares required to satisfy the holders’ tax liabilities in connection with the vesting of such shares. The Company is incorporated in the state of Delaware, and as such, is subject to various state laws which may restrict the payment of dividends or purchase of treasury shares. Stock-Based Compensation The Company has stock-based compensation awards outstanding pursuant to the Amended and Restated 2000 Equity Incentive Plan (the “2000 Plan”) and the Amended and Restated 2006 Equity Incentive Plan (the “2006 Plan”), under which a variety of option and direct stock-based awards may be granted to employees and nonemployees of the Company. Further grants under the 2000 Plan were suspended upon the adoption of the 2006 Plan. In addition to awards made pursuant to the 2006 Plan, the Company periodically issues inducement grants outside the 2006 Plan to certain new hires. Subject to certain adjustments, as of January 2, 2016, the Company was authorized to issue a maximum of 10,205,566 shares of common stock pursuant to awards under the 2006 Plan. Pursuant to the terms of the 2006 Plan, the maximum number of shares of common stock subject to the plan automatically increased on the first day of each subsequent calendar year through January 1, 2016, by the lesser of (i) 5.0% of the number of shares of common stock that are issued and outstanding as of the first day of the calendar year, and (ii) 1,200,000 shares of common stock, subject to adjustment for certain corporate actions. At January 2, 2016, the Company had 1,179,375 shares available for issuance under the 2006 Plan. Options granted under the 2000 Plan and the 2006 Plan equity incentive plans primarily vest at a rate of at least 25% per year over four years and expire 10 years from the date of grant. A summary of the Company’s common stock option activity is presented below (shares in thousands): Options Outstanding Weighted- Average Weighted- Remaining Aggregate Number of Average Contractual Intrinsic Shares Exercise Life Value (in thousands) Price (in years) (in thousands) Options outstanding - December 28, 2013 $ Options granted Options exercised Options cancelled Options outstanding - December 27, 2014 Options granted Options exercised Options cancelled Options outstanding - January 2, 2016 $ $ Options exercisable - January 2, 2016 $ $ Options exercisable and expected to vest - January 2, 2016 $ $ The following table summarizes information about stock options outstanding and exercisable at January 2, 2016: Options Outstanding Options Exercisable Weighted Weighted Average Average Remaining Weighted Remaining Weighted Number of Contractual Average Number of Contractual Average shares Life Exercise shares Life Exercise Exercise Price Range (in thousands) (in years) Price (in thousands) (in years) Price $0.20 - $1.00 $ $ $1.01 - $3.00 $ $ $3.01 - $5.00 $ $ $5.01 - $8.45 $ $ $ $ The following table summarizes the Company’s restricted stock awards (shares in thousands): Restricted Stock Outstanding Weighted- Average Grant-Date Number of Fair Value Shares per Share Balance outstanding at December 28, 2013 $ Restricted stock granted - - Restricted stock vested Restricted stock forfeited Balance outstanding at December 27, 2014 $ Restricted stock granted - - Restricted stock vested Restricted stock forfeited Balance outstanding at January 2, 2016 - $ - The following table presents details of the assumptions used to calculate the weighted-average grant date fair value of common stock options granted by the Company: Year Ended January 2, December 27, 2016 2014 Expected term (in years) Expected volatility % % Risk-free interest rate % % Expected dividends $ - $ - Weighted-average grant date fair value per share $ $ Grant date fair value of options vested $ $ Intrinsic value of options exercised (in thousands) $ $ At January 2, 2016 , the amount of unearned stock-based compensation currently estimated to be expensed from 201 6 through 201 8 related to unvested common stock options is approximately $2.8 million , net of estimated forfeitures. The weighted-average period over which the unearned stock-based compensation is expected to be recognized is approximately 2.4 years. If there are any modifications or cancellations of the underlying unvested awards, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense or calculate and record additional expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that the Company grants additional common stock options or other stock-based awards. Warrants Concurrently with the execution of the SVIC Purchase Agreement (see Note 5), the Company issued to SVIC a warrant to purchase an aggregate of 2,000,000 shares of the Company’s common stock at an exercise price of $0.30 per share, with a relative fair value of approximately $1,165,000 which was recorded as a debt discount. In connection with the termination of the 2013 Loan Agreement with Fortress and the Letter Agreement with Drawbridge, the Company issued to Fortress the Fortress Warrant and amended the exercise price per share of the Drawbridge Warrant. See Note 5 for further information. The Fortress Warrant and amended Drawbridge Warrant were valued using the Black-Scholes option pricing model which computed an estimated fair value of $624,000 and an estimated incremental fair value of $129,000 , respectively. In November 2015, the Company issued warrants to purchase an aggregate of 300,000 and 60,000 shares of the Company’s stock at an exercise price of $0.64 and $0.45 , respectively, to two law firms as partial consideration for legal services rendered. The warrants were valued at approximately $185,000 and $49,000 , respectively, based on their fair values. A summary of the Company’s warrant activity is presented below: Weighted- Number of Average Shares Exercise (in thousands) Price Warrants outstanding - December 28, 2013 $ Warrant granted - - Warrants exercised Warrants outstanding - December 27, 2014 $ Warrant granted Warrants exercised - - Warrants outstanding - January 2, 2016 $

401(k) Plan

401(k) Plan	12 Months Ended
	Jan. 02, 2016
401(k) Plan
401(k) Plan	Note 9—401(k) Plan The Company sponsors a 401(k) defined contribution plan. Employees are eligible to participate in this plan provided they are employed full-time and have reached 21 years of age. Participants may make pre-tax contributions to the plan subject to a statutorily prescribed annual limit. Each participant is fully vested in his or her contributions and investment earnings. The Company may make matching contributions on the contributions of a participant on a discretionary basis. In fiscal 2012, the Company adopted a limited matching contribution policy and made approximately $0.09 and $0.08 million in contributions to participants in this plan in the years ended January 2, 2016 and December 27, 2014 , respectively.

Major Customers, Suppliers and

Major Customers, Suppliers and Products	12 Months Ended
	Jan. 02, 2016
Major Customers, Suppliers and Products
Major Customers, Suppliers and Products	Note 10 -Major Customers, Suppliers and Products The Company’s product sales have historically been concentrated in a small number of customers. The following table sets forth sales to customers comprising 10% or more of the Company’s net product sales as follows: Year Ended January 2, December 27, 2016 2014 Customer A % % Customer B * % Customer C * % % Customer D % * % * less than 10% of total net product sales Sales of the Company’s NVvault™ products represented 20% and 44% of net product sales in 201 5 and 201 4 . The Company’s accounts receivable are concentrated with three customers at January 2, 2016 representing approximately 24% , 19% and 14% of aggregate gross receivables. At December 27, 2014 , three customer s represented approximately 13% , 49% and 11% of aggregate gross receivables. A significant reduction in sales to, or the inability to collect receivables from, a significant customer could have a material adverse impact on the Company. The Company mitigates risk with foreign receivables by purchasing comprehensive foreign credit insurance. The Company’s purchases have historically been concentrated in a small number of suppliers. The following table sets forth purchases from suppliers comprising 10% or more of the Company’s total purchases as follows: Year Ended January 2, December 27, 2016 2014 Supplier A % % Supplier B % * * less than 10% of total purchases While the Company believes alternative suppliers could be utilized, any inability to obtain components or products in the amounts needed on a timely basis or at commercially reasonable prices could result in delays in product introductions, interruption in product shipments or increases in product costs, which could have a material adverse effect on the Company.

Segment and Geographic Informat

Segment and Geographic Information	12 Months Ended
	Jan. 02, 2016
Segment And Geographic Information
Segment And Geographic Information	Note 11—Segment and Geographic Information The Company operates in one reportable segment: the design and manufacture of high-performance memory subsystems for the server, high-performance computing and communications markets. The Company evaluates financial performance on a company-wide basis. To date, a majority of the Company’s international sales relate to shipments of products to its U.S. customers’ international manufacturing sites or third ‑ party hubs. Net product sales derived from shipments to international destinations, primarily to Hong Kong (including foreign subsidiaries of customers that are headquartered in the U.S.), represented approximately 48% and 33% of the Company’s net product sales in 201 5 and 201 4 , respectively. All of the Company’s net sales to date have been denominated in U.S. dollars. As of January 2, 2016 and December 27, 2014 , approximately $0.1 million and $0.2 million, respectively, of the Company’s long-lived assets, net of depreciation and amortization, were located outside the U.S., primarily in the PRC. Substantially all other long-lived assets were located in the U.S.

Subsequent Events

Subsequent Events	12 Months Ended
	Jan. 02, 2016
Subsequent Events
Subsequent Events	Note 12—Subsequent Events The Company has evaluated subsequent events through the filing date of this Annual Report on Form 10-K and determined that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosures in the notes thereto other than as discussed in the accompanying notes.

Quarterly Summary (Unaudited)

Quarterly Summary (Unaudited)	12 Months Ended
	Jan. 02, 2016
Quarterly Summary (Unaudited)
Quarterly Summary (Unaudited)	Note 13—Quarterly Summary (Unaudited, in thousands except per share data) Three Months Ended January 2, September 26, June 27, March 28, 2016 2015 2015 2015 Net product sales $ $ $ $ NRE revenue - - - Total net revenues Cost of sales Gross profit Operating expenses: Research and development Intellectual property legal fees, net of settlement transactions Selling, general and administrative Total operating expenses Operating loss Other expense, net: Interest expense, net Other income (expense), net Total other expense, net Loss before provision for income taxes Provision for income taxes - - - Net loss $ $ $ $ Net loss per common share: Basic and diluted $ $ $ $ Weighted-average common shares outstanding: Basic and diluted Three Months Ended December 27, September 27, June 28, March 29, 2014 2014 2014 2014 Net sales $ $ $ $ Cost of sales Gross profit Operating expenses: Research and development Intellectual property legal fees Selling, general and administrative Total operating expenses Operating loss Other expense, net: Interest expense, net Other income (expense), net - Total other expense, net Loss before provision for income taxes Provision for income taxes - - - Net loss $ $ $ $ Net loss per common share: Basic and diluted $ $ $ $ Weighted-average common shares outstanding: Basic and diluted Each of the Company’s quarters in fiscal 2015 was comprised of 13 weeks, except for the fourth quarter which consisted of 14 weeks. Each of the Company’s quarters in fiscal 2014 was comprised of 13 weeks. Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with the per share amounts for the year.

Summary Of Significant Accoun21

Summary Of Significant Accounting Policies (Policies)	12 Months Ended
	Jan. 02, 2016
Summary of Significant Accounting Policies
Change in Accounting Principle	Change in Accounting Principle On January 2, 2016, the Company retrospectively adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs be presented as a direct reduction from the carrying amount of debt. As a result of the adoption of ASU 2015-03, the consolidated balance sheet at December 27, 2014 was adjusted to reflect the reclassification of $253,000 from prepaid expenses and other current assets and $81,000 from other assets to long-term debt.
Basis Of Presentation	Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Principles Of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of Netlist, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Fiscal Year	Fiscal Year The Company operates under a 52 or 53week fiscal year ending on the Saturday closest to December 31. The 2015 and 2014 fiscal years ended on January 2, 2016 and December 27, 2014, respectively. Fiscal year 2015 consisted of 53 weeks and fiscal year 2014 consisted of 52 weeks.
Use Of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of net sales and expenses during the reporting period. By their nature, these estimates and assumptions are subject to an inherent degree of uncertainty. Significant estimates made by management include, among others, provisions for uncollectible receivables and sales returns, warranty liabilities, valuation of inventories, fair value of financial instruments, recoverability of long-lived assets, valuation of stock-based transactions , estimates for completion of NRE revenue milestones and realization of deferred tax assets. The Company bases its estimates on historical experience, knowledge of current conditions and the Company’s belief of what could occur in the future considering available information. The Company reviews its estimates on an on-going basis. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Revenue Recognition	Revenue Recognition Product Sales The Company’s revenues primarily consist of product sales of high performance memory subsystems to OEMs , hyperscale data center operators and storage vendors. The Company recognizes revenues in accordance with FASB Accounting Standards Codification (“ASC”) Topic 605. Accordingly, the Company recognizes revenues when there is persuasive evidence that an arrangement exists, product delivery and acceptance have occurred, the sales price is fixed or determinable, and collectability of the resulting receivable is reasonably assured. The Company generally uses customer purchase orders and/or contracts as evidence of an arrangement. Delivery occurs when goods are shipped for customers with shipping point terms and upon receipt for customers with destination terms, at which time title and risk of loss transfer to the customer. Shipping documents are used to verify delivery and customer acceptance. The Company assesses whether the sales price is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund. Customers are generally allowed limited rights of return for up to 30 days, except for sales of excess component inventories, which contain no right-of-return privileges. Estimated returns are provided for at the time of sale based on historical experience or specific identification of an event necessitating a reserve. The Company offers a standard product warranty to its customers and has no other post-shipment obligations. The Company assesses collectability based on the creditworthiness of the customer as determined by credit checks and evaluations, as well as the customer’s payment history. All amounts billed to customers related to shipping and handling are classified as revenues, while all costs incurred by the Company for shipping and handling are classified as cost of sales. Engineering Services We provide engineering services to our customers. We recognize revenue from these services when all of the following conditions are met: (1) evidence existed of an arrangement with the customer, typically consisting of a purchase order or contract; (2) our services were performed and risk of loss passed to the customer; (3) we completed all of the necessary terms of the contract; (4) the amount of revenue to which we were entitled was fixed or determinable; and (5) we believed it was probable that we would be able to collect the amount due from the customer. To the extent that one or more of these conditions has not been satisfied, we defer recognition of revenue. Generally, we recognize revenue as the engineering services stipulated under the contract are completed and accepted by our customers. Engineering services are performed under a signed Statement of Work (“SOW”) with a customer. The deliverables and payment terms stipulated under the SOW provide guidance on the project revenue recognition. Revenues from contracts with substantive defined milestones that we have determined are reasonable, relevant to all the deliverables and payment terms in the SOW that are commensurate with the efforts required to achieve the milestones are recognized under the milestone recognition method. Estimated losses on all SOW projects are recognized in full as soon as they become evident.
Deferred Revenue	Deferred Revenue From time-to-time the Company receives pre-payments from its customers related to future services. Engineering development fee revenues, including non-recurring engineering (“NRE”) fees, are deferred and recognized ratably over the period the engineering work is completed.
Cash And Cash Equivalents	Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less, other than short-term investments in securities that lack an active market.
Restricted Cash	Restricted Cash Restricted cash of $0.4 million, as of January 2, 2016 , consists of cash to secure three standby letters of credit.
Fair Value Of Financial Instruments	Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and debt instruments. The fair value of the Company’s cash equivalents is determined based on quoted prices in active markets for identical assets or Level 1 inputs. The Company recognizes transfers between Levels 1 through 3 of the fair value hierarchy at the beginning of the reporting period. The Company believes that the carrying values of all other financial instruments approximate their current fair values due to their nature and respective durations.
Allowance For Doubtful Accounts	Allowance for Doubtful Accounts The Company evaluates the collectibility of accounts receivable based on a combination of factors. In cases where the Company is aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, the Company will record an allowance against amounts due, and thereby reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company records allowances for doubtful accounts based primarily on the length of time the receivables are past due based on the terms of the originating transaction, the current business environment, and its historical experience. Uncollectible accounts are charged against the allowance for doubtful accounts when all commercial means of collection have been exhausted. Generally, the Company’s credit losses have been within expectations and the provisions established. However, the Company cannot guarantee that it will continue to experience credit loss rates similar to those experienced in the past.
Concentration Of Credit Risk	Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. The Company invests its cash equivalents primarily in money market mutual funds. Cash equivalents are maintained with high quality institutions, the composition and maturities of which are regularly monitored by management. At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. The Company’s trade accounts receivable are primarily derived from sales to OEMs in the computer industry. The Company performs credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral. The Company believes that the concentration of credit risk in its trade receivables is moderated by its credit evaluation process, relatively short collection terms, the high level of credit worthiness of its customers (see Note 10), foreign credit insurance , and letters of credit issued in its favor. Reserves are maintained for potential credit losses, and such losses historically have not been significant and have been within management’s expectations.
Inventories	Inventories Inventories are valued at the lower of actual cost to purchase or manufacture the inventory or the net realizable value of the inventory. Cost is determined on an average cost basis which approximates actual cost on a first-in, first-out basis and includes raw materials, labor and manufacturing overhead. At each balance sheet date, the Company evaluates its ending inventory quantities on hand and on order and records a provision for excess quantities and obsolescence. Among other factors, the Company considers historical demand and forecasted demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining obsolescence and net realizable value. In addition, the Company considers changes in the market value of components in determining the net realizable value of its inventory. Once established, lower of cost or market write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventories.
Property And Equipment	Property and Equipment Property and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives, which generally range from three to seven years. Leasehold improvements are recorded at cost and amortized on a straight-line basis over the shorter of their estimated useful lives or the remaining lease term. Ex penditures for repairs and maintenance are charged to expense as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization of assets disposed of are removed from the accounts and any resulting gain or loss is included in other expens
Deferred Financing Costs, Debt Discount and Detachable Debt-Related Warrants	Deferred Financing Costs, Debt Discount and Detachable Debt-Related Warrants Costs incurred in connection with debt are deferred and recorded as a reduction to the debt balance in the accompanying consolidated balance sheets. The Company amortizes debt issuance costs over the expected term of the related debt using the effective interest method. Debt discounts relate to the relative fair value of warrants issued in conjunction with the debt are also recorded as a reduction to the debt balance and accreted over the expected term of the debt to interest expense using the effective interest method .
Impairment Of Long-Lived Assets	Impairment of Long-Lived Assets The Company evaluates the recoverability of the carrying value of long-lived assets held and used by the Company for impairment on at least an annual basis or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future net cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. If the carrying value is determined not to be recoverable from future operating cash flows, the asset is deemed impaired and an impairment loss is recognized to the extent the carrying value exceeds the estimated fair value of the asset. The fair value of the asset or asset group is based on market value when available, or when unavailable, on discounted expected cash flows. The Company’s management believes there is no impairment of long-lived assets as of January 2, 2016 . There can be no assurance, however, that market conditions will not change or demand for the Company’s products will continue, which could result in future impairment of long-lived assets.
Warranty Liability	Warranty Liability The Company offers product warranties generally ranging from one to three years, depending on the product and negotiated terms of any purchase agreements with customers. Such warranties require the Company to repair or replace defective product returned to the Company during such warranty period a t no cost to the customer. Warranties are not offered on sales of excess component inventory. The Company records an estimate for warranty ‑related costs at the time of sale based on its historical and estimated product return rates and expected repair or replacement costs (see Note 3). While s uch costs have historically been within management’s expectations and the provisions established, unexpected changes in failure rates could have a material adverse impact on the Company, requiring additional warranty liability , and could adversely affect the Company’s gross profit and gross margins.
Stock-Based Compensation	Stock-Based Compensation The Company accounts for equity issuances to non-employees in accordance with ASC Topic 505. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur. In accordance with ASC Topic 718, employee and director stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. Given that stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company’s estimated average forfeiture rates are based on historical forfeiture experience and estimated future forfeitures. The estimated fair value of common stock option awards to employees and directors is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires subjective assumptions regarding future stock price volatility and expected time to exercise, along with assumptions about the risk-free interest rate and expected dividends, all of which affect the estimated fair values of the Company’s common stock option awards. The expected term of options granted is calculated as the average of the weighted vesting period and the contractual expiration date of the option. This calculation is based on the safe harbor method permitted by the SEC in instances where the vesting and exercise terms of options granted meet certain conditions and where limited historical exercise data is available. The expected volatility is based on the historical volatility of the Company’s common stock. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The expected dividend assumption is based on the Company’s history and management’s expectation regarding dividend payouts. The Company evaluates the assumptions used to value their common stock awards on a quarterly basis. If factors change and the Company employs different assumptions, stock-based compensation may differ significantly from what has been recorded in prior periods. Compensation expense for common stock option awards with graded vesting schedules is recognized on a straight-line basis over the requisite service period for the last separately vesting portion of the award, provided that the accumulated cost recognized as of any date at least equals the value of the vested portion of the award. The Company recognizes the estimated fair value of restricted stock awards issued to employees and outside directors as stock-based compensation expense on a straight-line basis over the vesting period for the last separately vesting portion of the awards. Estimated fair value is determined as the difference between the closing price of our common stock on the grant date and the purchase price of the restricted stock award, if any, reduced by expected forfeitures. If there are any modifications or cancellations of the underlying vested or unvested stock-based awards, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense, or record additional expense for vested stock-based awards. Future stock-based compensation expense and unearned stock- based compensation may increase to the extent that the Company grants additional common stock options or other stock-based awards.
Income Taxes	Income Taxes Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at currently effective tax rates, of future deductible or taxable amounts attributable to events that have been recognized on a cumulative basis in the consolidated financial statements. A valuation allowance related to a net deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. ASC Topic 740 prescribes a recognition threshold and measurement requirement for the financial statement recognition of a tax position that has been taken or is expected to be taken on a tax return and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Under ASC Topic 740 the Company may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from the Company’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities.
Research And Development Expenses	Research and Development Expenses Research and development expenditures are expensed in the period incurred.
Risks And Uncertainties	Risks and Uncertainties The Company is subject to certain risks and uncertainties including its ability to obtain profitable operations due to the Company’s history of losses and accumulated deficits, the Company’s dependence on a few customers for a significant portion of revenues, risks related to intellectual property matters, market development of and demand for the Company’s products, and the length of the sales cycle. Such risks could have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. The Company dedicates substantial resources in protecting its intellectual property, including its efforts to defend its patents against challenges made by way of reexamination proceedings at the United States Patent and Trademark Office (“USPTO”). These activities are likely to continue for the foreseeable future, without any guarantee that any ongoing or future patent protection and litigation activities will be successful. The Company is also subject to litigation based on claims that it has infringed on the intellectual property of others, against which the Company intends to defend itself vigorously. Litigation, whether or not eventually decided in the Company’s favor or settled, is costly and time-consuming and could divert management’s attention and resources. Because of the nature and inherent uncertainties of litigation, should the outcome of any of such actions be unfavorable, the Company’s business, financial condition, results of operations or cash flows could be materially and adversely affected. The Company has also invested a significant portion of its research and development budget into the design of ASIC and field-programmable gate array (“FGPA”) devices, including the HyperCloud® and HyperVault memory subsystems, and the NVvault family of products. These products are subject to increased risks as compared to the Company’s legacy products. The Company may be unable to achieve customer or market acceptance of its products, or achieve such acceptance in a timely manner. The Company experienced a longer qualification cycle than anticipated with its HyperCloud® memory subsystems, and did experience supply chain disruption and a shortage of DRAM and flash required to create the HyperCloud® memory subsystem and NVvault products. As of January 2, 2016, Hypercloud has not generated significant revenue relative to the Company’s investment in the product. The Company’s operations in the PRC are subject to various political, geographical and economic risks and uncertainties inherent to conducting business in the PRC. These include, but are not limited to, (i) potential changes in economic conditions in the region, (ii) managing a local workforce that may subject the Company to uncertainties or certain regulatory policies, (iii) changes in other policies of the Chinese governmental and regulatory agencies, and (iv) changes in the laws and policies of the U.S. government regarding the conduct of business in foreign countries, generally, or in the PRC, in particular. Additionally, the Chinese government controls the procedures by which its local currency, the Chinese Renminbi (“RMB”), is converted into other currencies and by which dividends may be declared or capital distributed for the purpose of repatriation of earnings and investments. If restrictions in the conversion of RMB or in the repatriation of earnings and investments through dividend and capital distribution restrictions are instituted, the Company’s operations and may be negatively impacted. The liabilities of the Company’s subsidiaries in the PRC exceeded its assets as of January 2, 2016 and December 27, 2014 .
Foreign Currency Remeasurement	Foreign Currency Remeasurement The functional currency of the Company’s foreign subsidiary is the U.S. dollar. Local currency financial statements are remeasured into U.S. dollars at the exchange rate in effect as of the balance sheet date for monetary assets and liabilities and the historical exchange rate for nonmonetary assets and liabilities. Expenses are remeasured using the average exchange rate for the period, except items related to nonmonetary assets and liabilities, which are remeasured using historical exchange rates. All remeasurement gains and losses are included in determining net loss. Transaction gains and losses were not significant in 201 5 and 201 4 .
Net Loss Per Share	Net Loss Per Share Basic net loss per share is calculated by dividing net loss by the weighted-average common shares outstanding during the year, excluding unvested shares issued pursuant to restricted share awards under the Company’s share-based compensation plans. Diluted net loss per share is calculated by dividing the net loss by the weighted-average shares and dilutive potential common shares outstanding during the year. Dilutive potential shares consist of dilutive shares issuable upon the exercise or vesting of outstanding stock options and restricted stock awards, respectively, computed using the treasury stock method and shares issuable upon conversion of the SVIC Note (as defined below) using the “if converted method” . In periods of losses, basic and diluted loss per share are the same, as the effect of stock options and unvested restricted share awards on loss per share is anti-dilutive.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in FASB Topic 605, Revenue Recognition . ASU 2014-9 implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. On July 9, 2015, the FASB approved amendments deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date and permitting early adoption of the standard, but not before the original effective date or for reporting periods beginning after December 15, 2016. The Company has not yet selected a transition method and is currently assessing the impact of the adoption of AUS 2014-9 will have on its consolidated financial statements and disclosures. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern. The amendments in this update provide guidance in accounting principles generally accepted in the United States of America about management’s responsibilities to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The main provision of the amendments are for an entity’s management, in connection with the preparation of financial statements, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known or reasonably knowable at the date the consolidated financial statements are issued. When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, the entity should disclose information that enables users of the consolidated financial statements to understand all of the following: (1) principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans); (2) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; and (3) management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern or management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this update are effective for interim and annual reporting periods after December 15, 2016 and early application is permitted. The Company is currently assessing this guidance for future implementation. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). The amendments in ASU 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual and interim periods beginning on or after December 15, 2015. The amendments in this update should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (that is, debt issuance cost asset and the debt liability). The Company has elected to early adopt ASU 2015-03. The Company has reclassified its debt issuance costs previously included in prepaid expenses and other current assets and other assets to a direct reduction in long-term debt in the prior year in the accompanying consolidated balance sheet. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) ("ASU 2015-11"). The amendments in ASU 2015-11 require that an entity measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transaction. The amendments in this update more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards. ASU 2015-11 is effective for annual and interim periods beginning on or after December 15, 2016. The amendments in this update should be applied prospectively with early application permitted as of the beginning of the interim or annual reporting period. The Company is currently assessing this guidance for future implementation. In November 2015, FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”) , which eliminates the current requirement for an entity to separate deferred income tax liabilities and assets into current and non-current amounts in a classified balance sheet. Instead, the ASU requires deferred tax liabilities, deferred tax assets and valuation allowances be classified as non-current in a classified balance sheet. ASU 2015-17 will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. Additionally, this guidance may be applied either prospectively or retrospectively to all periods presented. The Company elected not to early adopt ASU 2015-17 and is evaluating the effect of the adoption of this ASU to its consolidated financial statements. In February 25, 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). Under ASU 2016-02 , lessees will be required recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach.

Supplemental Financial Inform22

Supplemental Financial Information (Tables)	12 Months Ended
	Jan. 02, 2016
Supplemental Financial Information
Schedule Of Inventories	Inventories consist of the following (in thousands): January 2, December 27, 2016 2014 Raw materials $ $ Work in process Finished goods $ $
Property, Plant And Equipment	Property and equipment consist of the following (dollars in thousands): Estimated Useful January 2, December 27, Lives 2016 2014 Machinery and equipment 3 - 7 yrs. $ $ Leasehold improvements * Furniture and fixtures 5 yrs. Computer equipment and software 3 - 7 yrs. Less accumulated depreciation and amortization $ $ * Estimated useful life is generally 7 years, or the remaining lease term, whichever is shorter.
Schedule Of Warranty Liability Activity	The following table summarizes the activity related to the warranty liability (in thousands): Year Ended January 2, December 27, 2016 2014 Beginning balance $ $ Estimated cost of warranty claims charged to cost of sales Cost of actual warranty claims Ending balance Less current portion Long-term warranty liability $ $
Schedule Of Computation Of Net Loss Per Share	The following table sets forth the computation of basic and diluted net loss per share, including the reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share (in thousands, except per share data): Year Ended January 2, December 27, 2016 2014 Basic and diluted net loss per share: Numerator: Net loss $ $ Denominator: Weighted-average common shares outstanding, basic and diluted Basic and diluted net loss per share $ $
Schedule Of Potential Common Shares Excluded From The Diluted Net Loss Per Share Calculations	The following table sets forth potentially dilutive common share equivalents, consisting of shares issuable upon the exercise or vesting of outstanding stock options and restricted stock awards, respectively, and the exercise of warrants, computed using the treasury stock method. These potential common shares have been excluded from the diluted net loss per share calculations above as their effect would be anti-dilutive for the years then ended (in thousands): Year Ended January 2, December 27, 2016 2014 Common share equivalents
Schedule Of Supplemental Disclosures Of Cash Flow Information And Non-Cash Financing Activities	The following table sets forth supplemental disclosures of cash flow information and non-cash investing and financing activities (in thousands): Year Ended January 2, December 27, 2016 2014 Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ $ Income taxes $ $ Supplemental disclosure of non-cash financing activities: Debt issuance costs associated with February debt financing $ $ - Detachable warrant issued with November debt financing $ $ - Debt financing of directors and officers and cargo insurance $ $

Credit Agreements (Tables)

Credit Agreements (Tables)	12 Months Ended
	Jan. 02, 2016
Credit Agreements
Schedule Of Outstanding Borrowings And Availability Under The Line Of Credit	The following table presents details of the Company’s availability under our line of credit with SVB: January 2, December 27, 2016 2014 Availability under the revolving line of credit $ $

Debt (Tables)

Debt (Tables)	12 Months Ended
	Jan. 02, 2016
Debt
Schedule Of Long-Term Debt	The Company’s long-term debt consists of the following (in thousands): January 2, December 27, 2016 2014 Term Loan, Fortress, net of debt discount and debt issuance costs of $0 and $858 $ - $ Convertible promissory note, SVIC, net of debt discount and debt issuance costs of $1,301 and $0 - Note payable to others - $ $ Less current portion (including debt discount and debt issuance costs) $ $
Schedule of Maturities Of Long-term Debt	As of January 2, 2016, maturities of long-term debt, including amortization of debt discounts and debt issuance costs were as follows (in thousands): Fiscal Year 2016 $ 2017 - 2018 - 2019 - 2020 - Thereafter Total payments on long-term debt Less current portion (including debt discount and debt issuance costs) Long-term debt $
Schedule Of Interest Expense Related To Long-Term Debt	Interest expense, including amortization of debt discounts and debt issuance costs, net of interest income, is presented in the following table (in thousands): Year Ended January 2, December 27, 2016 2014 Interest expense: SVB $ $ Fortress SVIC - Others Interest income - $ $

Income Taxes (Tables)

Income Taxes (Tables)	12 Months Ended
	Jan. 02, 2016
Income Taxes
Schedule Of Deferred Tax Assets And Liabilities	Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): January 2, December 27, 2016 2014 Deferred tax assets: Reserves and allowances $ $ State taxes, net of federal income tax benefit Depreciation and amortization Other accruals Compensatory stock options and rights Other Tax credit carryforwards Operating loss carryforward Foreign operating loss carryforward Total deferred tax assets Deferred tax liabilities: Prepaid expenses Basis difference in warrant value Total deferred tax liabilities Subtotal Valuation allowance $ - $ -
Schedule Of Income before Income Tax, Domestic And Foreign	For financial reporting purposes, loss before provision for income taxes includes the following components (in thousands): Year Ended January 2, December 27, 2016 2014 United States $ $ Foreign $ $
Schedule Of Income Tax Provisions	The Company’s income tax provision consists of the following (in thousands): Year Ended January 2, December 27, 2016 2014 Current: Federal $ - $ - State Total current Deferred: Federal State Foreign Change in valuation allowance Total deferred - - Income tax provision $ $
Schedule Of Effective Income Tax Rate Reconciliation	A reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Company’s loss before income taxes to the income tax provision is as follows: Year Ended January 2, December 27, 2016 2014 U.S. federal statutory tax % % Valuation allowance Loss from foreign subsidiary Other Effective income tax provision rate % %

Commitments and Contingencies (

Commitments and Contingencies (Tables)	12 Months Ended
	Jan. 02, 2016
Commitments and Contingencies
Schedule of Rent Expense	Rental expense, net of amortization of deferred gain and sublease income, is presented in the following table (in thousands): Year Ended January 2, December 27, 2016 2014 Rental expense, net $ $
Schedule of Future Minimum Rental Payments for Operating Leases	A summary of future minimum payments under operating lease commitments as of January 2, 2016 is as follows (in thousands): Operating Fiscal Year Leases 2016 $ 2017 Total minimum lease payments $

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	12 Months Ended
	Jan. 02, 2016
Stockholders' Equity
Schedule Of Common Stock Options Activity	A summary of the Company’s common stock option activity is presented below (shares in thousands): Options Outstanding Weighted- Average Weighted- Remaining Aggregate Number of Average Contractual Intrinsic Shares Exercise Life Value (in thousands) Price (in years) (in thousands) Options outstanding - December 28, 2013 $ Options granted Options exercised Options cancelled Options outstanding - December 27, 2014 Options granted Options exercised Options cancelled Options outstanding - January 2, 2016 $ $ Options exercisable - January 2, 2016 $ $ Options exercisable and expected to vest - January 2, 2016 $ $
Schedule Of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range	The following table summarizes information about stock options outstanding and exercisable at January 2, 2016: Options Outstanding Options Exercisable Weighted Weighted Average Average Remaining Weighted Remaining Weighted Number of Contractual Average Number of Contractual Average shares Life Exercise shares Life Exercise Exercise Price Range (in thousands) (in years) Price (in thousands) (in years) Price $0.20 - $1.00 $ $ $1.01 - $3.00 $ $ $3.01 - $5.00 $ $ $5.01 - $8.45 $ $ $ $
Schedule Of Restricted Stock Awards	The following table summarizes the Company’s restricted stock awards (shares in thousands): Restricted Stock Outstanding Weighted- Average Grant-Date Number of Fair Value Shares per Share Balance outstanding at December 28, 2013 $ Restricted stock granted - - Restricted stock vested Restricted stock forfeited Balance outstanding at December 27, 2014 $ Restricted stock granted - - Restricted stock vested Restricted stock forfeited Balance outstanding at January 2, 2016 - $ -
Schedule Of Assumptions Used To Calculate Weighted-Average Grant Date Fair Value Of Common Stock Options Granted	Year Ended January 2, December 27, 2016 2014 Expected term (in years) Expected volatility % % Risk-free interest rate % % Expected dividends $ - $ - Weighted-average grant date fair value per share $ $ Grant date fair value of options vested $ $ Intrinsic value of options exercised (in thousands) $ $
Schedule Of Warrant Activity	Weighted- Number of Average Shares Exercise (in thousands) Price Warrants outstanding - December 28, 2013 $ Warrant granted - - Warrants exercised Warrants outstanding - December 27, 2014 $ Warrant granted Warrants exercised - - Warrants outstanding - January 2, 2016 $

Major Customers, Suppliers an28

Major Customers, Suppliers and Products (Tables)	12 Months Ended
	Jan. 02, 2016
Major Customers, Suppliers and Products
Schedule Of Customer Concentration of Risk	Year Ended January 2, December 27, 2016 2014 Customer A % % Customer B * % Customer C * % % Customer D % * % * less than 10% of total net product sales
Schedule Of Supplier Concentration of Risk	Year Ended January 2, December 27, 2016 2014 Supplier A % % Supplier B % * * less than 10% of total purchases

Quarterly Summary (Unaudited) (

Quarterly Summary (Unaudited) (Tables)	12 Months Ended
	Jan. 02, 2016
Quarterly Summary (Unaudited)
Schedule Of Quarterly Financial Information	Note 13—Quarterly Summary (Unaudited, in thousands except per share data) Three Months Ended January 2, September 26, June 27, March 28, 2016 2015 2015 2015 Net product sales $ $ $ $ NRE revenue - - - Total net revenues Cost of sales Gross profit Operating expenses: Research and development Intellectual property legal fees, net of settlement transactions Selling, general and administrative Total operating expenses Operating loss Other expense, net: Interest expense, net Other income (expense), net Total other expense, net Loss before provision for income taxes Provision for income taxes - - - Net loss $ $ $ $ Net loss per common share: Basic and diluted $ $ $ $ Weighted-average common shares outstanding: Basic and diluted Three Months Ended December 27, September 27, June 28, March 29, 2014 2014 2014 2014 Net sales $ $ $ $ Cost of sales Gross profit Operating expenses: Research and development Intellectual property legal fees Selling, general and administrative Total operating expenses Operating loss Other expense, net: Interest expense, net Other income (expense), net - Total other expense, net Loss before provision for income taxes Provision for income taxes - - - Net loss $ $ $ $ Net loss per common share: Basic and diluted $ $ $ $ Weighted-average common shares outstanding: Basic and diluted

Description Of Business (Narrat

Description Of Business (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	Feb. 24, 2015	Jan. 02, 2016	Sep. 26, 2015	Jun. 27, 2015	Mar. 28, 2015	Dec. 27, 2014	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Jan. 02, 2016	Dec. 27, 2014	Nov. 12, 2015	Feb. 17, 2015
Net loss incurred		$ (4,345)	$ (5,370)	$ (4,354)	$ (6,458)	$ (5,811)	$ (4,059)	$ (3,493)	$ (2,018)	$ (20,527)	$ (15,381)
Common stock shares issued	8,846,154
Underwritten Private Offering, price per share	$ 1.209
Common stock issued upon Underwriter's exercise of option	1,153,846
Common stock issued, price per share	$ 1.30
Proceeds from issuance of common stock	$ 10,500									10,544	$ 10,276
NRE deferred revenue		$ 6,857								$ 6,857		$ 8,000
Debt instrument, face value												$ 15,000	$ 4,000
Common Stock
Common stock shares issued										8,846,000	8,681,000

Summary Of Significant Accoun31

Summary Of Significant Accounting Policies (Details) - USD ($)	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Prepaid expenses and other current assets	$ 1,739,000	$ 735,000
Other assets	$ 61,000	69,000
Number of days of allowed limited rights of return available to customers	30 days
Restricted cash	$ 400,000	700,000
Minimum
Estimated useful life - property and equipment	3 years
Product warranty period	1 year
Maximum
Estimated useful life - property and equipment	7 years
Product warranty period	3 years
Restatement Adjustment
Prepaid expenses and other current assets		(253,000)
Other assets		$ (81,000)

Supplemental Financial Inform32

Supplemental Financial Information (Schedule Of Inventories) (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Dec. 27, 2014
Supplemental Financial Information
Raw materials	$ 1,174	$ 984
Work in process	98	23
Finished goods	386	873
Inventories	$ 1,658	$ 1,880

Supplemental Financial Inform33

Supplemental Financial Information (Property, Plant And Equipment) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Property and Equipment
Property and equipment, gross	$ 13,957	$ 14,728
Less accumulated depreciation and amortization	(13,549)	(14,335)
Property and equipment, net	408	393
Machinery and Equipment
Property and Equipment
Property and equipment, gross	8,934	8,956
Leasehold Improvements
Property and Equipment
Property and equipment, gross	$ 867	$ 1,915
Estimated Useful Life	7 years	7 years
Furniture and Fixtures
Property and Equipment
Property and equipment, gross	$ 368	$ 367
Estimated Useful Life	5 years	5 years
Computer Equipment And Software
Property and Equipment
Property and equipment, gross	$ 3,788	$ 3,490
Minimum
Property and Equipment
Estimated Useful Life	3 years
Minimum | Machinery and Equipment
Property and Equipment
Estimated Useful Life	3 years	3 years
Minimum | Computer Equipment And Software
Property and Equipment
Estimated Useful Life	3 years	3 years
Maximum
Property and Equipment
Estimated Useful Life	7 years
Maximum | Machinery and Equipment
Property and Equipment
Estimated Useful Life	7 years	7 years
Maximum | Computer Equipment And Software
Property and Equipment
Estimated Useful Life	7 years	7 years

Supplemental Financial Inform34

Supplemental Financial Information (Schedule Of Warranty Liability Activity, I) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Supplemental Financial Information
Beginning balance	$ 246	$ 249
Estimated cost of warranty claims charged to cost of sales	41	116
Cost of actual warranty claims	(165)	(119)
Ending balance	122	246
Less current portion	(73)	(147)
Long-term warranty liability	$ 49	$ 99

Supplemental Financial Inform35

Supplemental Financial Information (Schedule Of Computation Of Net Loss Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 02, 2016	Sep. 26, 2015	Jun. 27, 2015	Mar. 28, 2015	Dec. 27, 2014	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Jan. 02, 2016	Dec. 27, 2014
Supplemental Financial Information
Numerator: Net loss	$ (4,345)	$ (5,370)	$ (4,354)	$ (6,458)	$ (5,811)	$ (4,059)	$ (3,493)	$ (2,018)	$ (20,527)	$ (15,381)
Denominator: Weighted-average common shares outstanding, basic and diluted	50,353	50,354	50,354	44,708	41,483	41,472	41,472	36,881	48,967	40,304
Basic and diluted net loss per share	$ (0.09)	$ (0.11)	$ (0.09)	$ (0.14)	$ (0.14)	$ (0.10)	$ (0.08)	$ (0.05)	$ (0.42)	$ (0.38)

Supplemental Financial Inform36

Supplemental Financial Information (Schedule Of Potential Common Shares Excluded From The Diluted Net Loss Per Share Calculations) (Details) - shares shares in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Supplemental Financial Information
Common share equivalents	101	277

Supplemental Financial Inform37

Supplemental Financial Information (Schedule Of Supplemental Disclosures Of Cash Flow Information And Non-Cash Financing Activities) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Supplemental Financial Information
Cash paid for Interest	$ 906	$ 479
Cash paid for Income taxes	4	4
Debt issuance costs associated with February debt financing	108
Detachable warrant issued with November debt financing	1,165
Debt financing of directors and officers and cargo insurance	$ 268	$ 198

Credit Agreements (Silicon Vall

Credit Agreements (Silicon Valley Credit Agreement Narrative) (Details) - USD ($) $ in Thousands	Jul. 18, 2013	Jan. 02, 2016	Dec. 27, 2014
Line of Credit Facility
Restricted cash		$ 400	$ 700
Line of Credit | Silicon Valley Bank
Line of Credit Facility
Maximum borrowing capacity as a percentage of eligible accounts receivable		80.00%
Maximum borrowing capacity		$ 5,000
Description of variable rate basis		prime
Debt instrument, basis spread on variable rate	2.75%
Letter of Credit | Silicon Valley Bank
Line of Credit Facility
Restricted cash		$ 400	$ 700

Credit Agreements (Schedule Of

Credit Agreements (Schedule Of Outstanding Borrowings And Availability Under The Line Of Credit) (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Dec. 27, 2014
Line of Credit | Silicon Valley Bank
Availability under the revolving line of credit	$ 530	$ 882

Credit Agreements (DBD Credit F

Credit Agreements (DBD Credit Funding, LLC Loan and Security Agreement and Related Agreements, Part I) (Details) - USD ($)	3 Months Ended	10 Months Ended
	Jan. 02, 2016	Jan. 02, 2016	Nov. 12, 2015	Feb. 28, 2015	Feb. 17, 2015	Jul. 18, 2013
Line of Credit Facility [Line Items]
Face amount			$ 15,000,000		$ 4,000,000
Dbd Credit Funding L L C
Line of Credit Facility [Line Items]
Face amount						$ 10,000,000
Maximum borrowing capacity						5,000,000
Debt Instrument, Interest Rate, Stated Percentage	11.00%	11.00%
Stated interest rate percentage, paid in cash				7.00%
Stated interest rate percentage, paid in kind				4.00%
Monthly principal payments	$ 370,000
Remaining amount of monthly principal payments	$ 4,300,000
Debt Instrument, Principal Payment Period		17 months
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid, Percentage		35.00%
Dbd Credit Funding L L C | Loans Payable.
Line of Credit Facility [Line Items]
Debt Instrument, Pentangle of Principal Paid Monthly		65.00%
Dbd Credit Funding L L C | Initial Term Loan [Member]
Line of Credit Facility [Line Items]
Face amount						6,000,000
Dbd Credit Funding L L C | Intellectual Property Milestone Term Loan
Line of Credit Facility [Line Items]
Face amount						$ 4,000,000

Credit Agreements (DBD Credit41

Credit Agreements (DBD Credit Funding, LLC Loan and Security Agreement and Related Agreements, Part II) (Details) - USD ($)	Feb. 24, 2015	Feb. 17, 2015	Jul. 18, 2013	Jan. 02, 2016	Dec. 27, 2014	Nov. 18, 2015	Nov. 12, 2015	Dec. 28, 2013
Debt Instrument [Line Items]
Debt instrument, face value		$ 4,000,000					$ 15,000,000
Exercise price of warrants				$ 0.59	$ 0.96			$ 0.95
Shares issued during the period	8,846,154
Issuance of common stock				$ 10,544,000	$ 10,276,000
Proceeds from issuance of common stock	$ 10,500,000			10,544,000	10,276,000
Loan Agreement
Debt Instrument [Line Items]
Debt instrument, face value		4,000,000
Term of warrants			7 years
Amortization of Financing Costs				607,000	316,000
Debt Issuance Cost		140,000	$ 300,000
Additional Debt issuance cost		$ 132,899	$ 485,925
Consulting fee (as a percent)		3.50%	5.00%
Debt discount amortization term		17 months	3 years
Warrant
Debt Instrument [Line Items]
Number of shares which may be purchased under warrant			1,648,351
Exercise price of warrants			$ 1			$ 0.47
Debt discount				$ 1,215,000
Debt discount amortization term				3 years
Amortization of Financing Costs				$ 524,000	$ 487,000
Vest After I P Milestone | Loan Agreement
Debt Instrument [Line Items]
Issuance of common stock		$ 659,340

Debt (Schedule Of Long-Term Deb

Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Dec. 27, 2014
Debt Instrument [Line Items]
Long-term debt	$ 13,712	$ 5,503
Less current portion	(13)	(1,952)
Long-term debt, net of current portion and debt discount	13,699	3,551
Fortress Term Loan
Debt Instrument [Line Items]
Long-term debt		5,503
Unamortized debt discount and debt issuance costs	0	858
SVIC Senior Secured Convertible Promissory Note
Debt Instrument [Line Items]
Long-term debt	13,699
Unamortized debt discount and debt issuance costs	1,301	$ 0
Note payable to others
Debt Instrument [Line Items]
Long-term debt	$ 13

Debt (Narrative) (Details)

Debt (Narrative) (Details) - USD ($)	Nov. 19, 2015	Nov. 18, 2015	Jan. 02, 2016	Jan. 02, 2016	Dec. 27, 2014	Nov. 12, 2015	Feb. 17, 2015	Dec. 28, 2013
Long-term debt
Face amount						$ 15,000,000	$ 4,000,000
Exercise price of warrants (in dollars per share)			$ 0.59	$ 0.59	$ 0.96			$ 0.95
Amortization of debt discount and debt issuance costs				$ 1,149,000	$ 803,000
SVIC Warrant
Long-term debt
Number of shares which may be purchased under warrant		2,000,000
Exercise price of warrants (in dollars per share)		$ 0.30
Fair value of warrants		$ 1,165,000
New and Amended Warrants
Long-term debt
Fair value of warrants	$ 800,000
Amended Drawbridge Warrant
Long-term debt
Exercise price of warrants (in dollars per share)	$ 0.47
Fair value of warrants	$ 129,000
Fortress Warrant
Long-term debt
Number of shares which may be purchased under warrant	1,000,000
Exercise price of warrants (in dollars per share)	$ 0.47
Fair value of warrants	$ 624,000
Term of warrant	10 years
SVIC Senior Secured Convertible Promissory Note
Long-term debt
Face amount		$ 15,000,000
Interest rate (as a percent)		2.00%
Debt conversion price (in dollars per share)		$ 1.25
Warrant value recorded as debt discount		$ 1,165,000
Debt issuance costs		$ 154,000
SVIC Senior Secured Convertible Promissory Note | Interest Expense
Long-term debt
Amortization of debt discount and debt issuance costs			$ 18,000
Fortress Term Loan
Long-term debt
Early termination fee	$ 1,000,000

Debt (Schedule of Maturities Of

Debt (Schedule of Maturities Of Long-term Debt) (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Dec. 27, 2014
Debt
2,016	$ 13
Thereafter	15,000
Total payments on long-term debt	15,013
Less current portion (including debt discount and debt issuance costs)	(1,314)
Long-term debt	$ 13,699	$ 3,551

Debt (Schedule Of Interest Expe

Debt (Schedule Of Interest Expense Related To Long-Term Debt) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 02, 2016	Sep. 26, 2015	Jun. 27, 2015	Mar. 28, 2015	Dec. 27, 2014	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Jan. 02, 2016	Dec. 27, 2014
Interest expense									$ 2,069	$ 1,574
Interest income									(5)
Interest expense, net	$ 648	$ 447	$ 489	$ 480	$ 393	$ 393	$ 393	$ 395	2,064	1,574
Silicon Valley Bank
Interest expense									71	79
Fortress Term Loan
Interest expense									1,940	1,492
SVIC Senior Secured Convertible Promissory Note
Interest expense									54
Others
Interest expense									$ 4	$ 3

Income Taxes (Schedule Of Defer

Income Taxes (Schedule Of Deferred Tax Assets And Liabilities) (Details) - USD ($) $ in Thousands	Jan. 02, 2016	Dec. 27, 2014
Income Taxes
Reserves and allowances	$ 1,548	$ 1,542
State taxes, net of federal income tax benefit	2	2
Depreciation and amortization	543	570
Other accruals	394	534
Compensatory stock options and rights	2,598	2,364
Other	28	24
Tax credit carryforwards	3,302	3,034
Operating loss carryforward	30,315	23,664
Foreign operating loss carryforward	1,480	1,604
Total deferred tax assets	40,210	33,338
Prepaid expenses	(63)	(96)
Basis difference in warrant value	(452)	(200)
Total deferred tax liabilities	(515)	(296)
Subtotal	39,695	33,042
Valuation allowance	$ (39,695)	$ (33,042)

Income Taxes (Narrative) (Detai

Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Operating Loss Carryforwards.
Valuation allowance	$ 39,695	$ 33,042
Change in valuation allowance	6,433	$ 4,986
Internal Revenue Service (IRS)
Operating Loss Carryforwards.
Net operating loss carryforwards	$ 82,900
Operating Loss Carryforwards, Expiration Date	Dec. 31, 2029
Tax credit carryforwards	$ 1,500
Tax benefits from employee stock option exercises	1,700
State and Local Jurisdiction
Operating Loss Carryforwards.
Net operating loss carryforwards	$ 50,100
Operating Loss Carryforwards, Expiration Date	Dec. 31, 2017
Tax credit carryforwards	$ 1,600
Tax benefits from employee stock option exercises	1,900
Taiwan
Operating Loss Carryforwards.
Net operating loss carryforwards	5,900
CHINA
Operating Loss Carryforwards.
Net operating loss carryforwards	$ 1,700

Income Taxes (Schedule Of Incom

Income Taxes (Schedule Of Income before Income Tax, Domestic And Foreign) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 02, 2016	Sep. 26, 2015	Jun. 27, 2015	Mar. 28, 2015	Dec. 27, 2014	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Jan. 02, 2016	Dec. 27, 2014
Income Taxes
United States									$ (19,737)	$ (14,187)
Foreign									(789)	(1,192)
Loss before provision for income tax	$ (4,345)	$ (5,370)	$ (4,354)	$ (6,457)	$ (5,811)	$ (4,059)	$ (3,491)	$ (2,018)	$ (20,526)	$ (15,379)

Income Taxes (Schedule Of Inc49

Income Taxes (Schedule Of Income Tax Provisions) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 28, 2015	Jun. 28, 2014	Jan. 02, 2016	Dec. 27, 2014
Income Taxes
Current State			$ 1	$ 2
Total Current			1	2
Deferred Federal			(6,093)	(4,477)
Deferred State			(684)	(771)
Deferred Foreign			344	262
Change in valuation allowance			6,433	4,986
Income tax provision	$ 1	$ 2	$ 1	$ 2

Income Taxes (Schedule Of Effec

Income Taxes (Schedule Of Effective Income Tax Rate Reconciliation) (Details) - USD ($)	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Income Taxes
U.S. federal statutory tax	35.00%	35.00%
Valuation allowance	(32.00%)	(30.00%)
Loss from foreign subsidiary	(2.00%)	(3.00%)
Other	(1.00%)	(2.00%)
Effective tax rate	0.00%	0.00%
Additional disclosure
Accrued interest or penalties related to unrecognized tax benefits	$ 0	$ 0
Accrued interest and penalties related to uncertain tax matters	$ 0	$ 0

Commitments and Contingencies51

Commitments and Contingencies (Schedule of Rent Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Commitments and Contingencies
Rental expense, net	$ 526	$ 604

Commitments and Contingencies52

Commitments and Contingencies (Schedule of Future Minimum Lease Payments) (Details) $ in Thousands	Jan. 02, 2016USD ($)
Commitments and Contingencies
2,016	$ 325
2,017	52
Total minimum lease payments	$ 377

Commitments and Contingencies53

Commitments and Contingencies (Litigations and Patent Reexaminations) (Details)

Sep. 04, 2014item

Aug. 23, 2014patent

Apr. 01, 2014item

Mar. 21, 2014claimitem

Feb. 03, 2014

Jan. 21, 2014patent

Jan. 16, 2014claim

Aug. 23, 2013patent

Feb. 07, 2013

Dec. 19, 2012claim

Mar. 31, 2015

Dec. 31, 2014patent

Oct. 31, 2012claim

Sep. 30, 2012claimitem

Mar. 31, 2012claim

Feb. 29, 2012claim

Oct. 31, 2011claim

Sep. 30, 2011claim

Jun. 30, 2011claim

Sep. 30, 2010claim

Jun. 30, 2010

Sep. 30, 2009patent

Jan. 02, 2016USD ($)

Sep. 01, 2015USD ($)

Commitments and Contingencies

Claims granted partial institution, number

1

Patents where all claims review will proceed, number

3

Patents where claims review will proceed, number

4

Duration of trade secret misappropriation trial

14 days

Loss Contingency, Forfeit of Bond Posted | $

$ 900,000

Liabilities recorded for Indemnities, commitments and guarantees | $

$ 0

Inphi

Commitments and Contingencies

Number of patents claimed to be invalid

3

Requested notification window after USPTO action

7 days

Number of days a party has to petition the U.S. Supreme Court for certiorari

90 days

Sandisk Smart Modular Smart Worldwide And Diablo Litigations

Commitments and Contingencies

Claims denied the petition in their entirety, number

3

Patents where claims review will proceed, number

2

Gain Contingency, Patents Allegedly Infringed upon, Number

5

Minimum number of years patent application withheld

8 years

Loss Contingency, Patents Allegedly Infringed, Number

7

6

Diablo

Commitments and Contingencies

Number of trade secrets misappropriated | item

60

Number of grounds motion accepted | item

1

Loss Contingency, Patents Allegedly Infringed, Number

2

Number of months be added to the case schedule

2 months

Number of summons to be issued for former employees | item

2

386 Patent Reexamination

Commitments and Contingencies

Claims settled and dismissed, number | claim

60

912 Patent Reexamination

Commitments and Contingencies

Claims settled and dismissed, number | claim

11

Patent claims reexamined, patentability confirmed | claim

92

20

51

627 Patent Reexamination

Commitments and Contingencies

Patent claims reexamined, patentability confirmed | claim

1

3

537 Patent Reexamination

Commitments and Contingencies

Patent claims reexamined, patentability confirmed | claim

60

60

4

4

274 Patent Reexamination

Commitments and Contingencies

Patent claims reexamined, patentability confirmed | claim

104

6

Number of rejected claims modified | claim

2

295 Patent Reexamination

Commitments and Contingencies

Number of combinations of prior art used in claims defense | item

6

Number of days to submit additional response to USPTO

15 days

Stockholders' Equity (Narrative

Stockholders' Equity (Narrative Part I) (Details) - USD ($)	Feb. 24, 2015	Jul. 18, 2013	Jan. 02, 2016	Dec. 27, 2014	Nov. 18, 2015	Dec. 28, 2013
Class of Stock
Preferred Stock, Shares Authorized			10,000,000	10,000,000
Preferred Stock, Par or Stated Value Per Share			$ 0.001	$ 0.001
Preferred Stock, Shares Outstanding			0	0
Proceeds from sale of shares	$ 10,500,000		$ 10,544,000	$ 10,276,000
Issuance of common stock			$ 10,544,000	$ 10,276,000
Shares issued during the period	8,846,154
Common stock issued, price per share	$ 1.30
Stock Issued During Period, Shares, Other	1,153,846
Underwritten Private Offering, Price per Share	$ 1.209
Number of shares cancelled				10,015
Value of shares cancelled				$ 21,000
Warrants outstanding			7,633,000	4,273,000		5,023,000
Exercise price of warrants (in dollars per share)			$ 0.59	$ 0.96		$ 0.95
Securities Purchase Agreement
Class of Stock
Proceeds from sale of shares	$ 10,500,000			$ 10,300,000
Shares issued during the period	8,846,154		8,680,775
Share Price	$ 1.30		$ 1.30
Underwritten Private Offering, Price per Share	$ 1.209		$ 1.2115
Loan Agreement
Class of Stock
Class of Warrant or Right, Outstanding Term		7 years
Warrant
Class of Stock
Exercise price of warrants (in dollars per share)		$ 1			$ 0.47
Warrant | Securities Purchase Agreement
Class of Stock
Shares issued during the period	1,153,846		1,132,275

Stockholders' Equity (Narrati55

Stockholders' Equity (Narrative Part II) (Details)	12 Months Ended
	Jan. 02, 2016shares
Stockholders' Equity
Common stock pursuant to awards, shares authorized	10,205,566
Automatic annual increase in shares authorized as percentage of common stock outstanding	5.00%
Automatic annual increase in shares authorized, subject to adjustment for corporate actions	1,200,000
Shares available for grant	1,179,375
Rate of vesting of options granted	25.00%
Vesting period of options granted, in years	4 years
Expiration of vested options, period from date of grant	10 years

Stockholders' Equity (Schedule

Stockholders' Equity (Schedule Of Common Stock Options Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Stockholders' Equity
Options outstanding, Number of Shares, Beginning Balance	7,234	5,837
Options granted, Number of Shares	2,515	2,115
Options exercised, Number of Shares	(10)	(303)
Options cancelled, Number of Shares	(795)	(415)
Options outstanding, Number of Shares, Ending Balance	8,944	7,234
Options outstanding, Weighted-Average Exercise Price, Beginning Balance	$ 2.40	$ 2.58
Options granted, Weighted-Average Exercise Price	0.81	1.46
Options exercised, Weighted-Average Exercise Price	0.73	0.51
Options cancelled, Weighted Average Exercise Price	2.06	1.57
Options outstanding, Weighted-Average Exercise Price, Ending Balance	$ 1.98	$ 2.40
Options outstanding, Weighted-Average Remaining Contractual Life	6 years 6 months
Options outstanding, Aggregate Intrinsic Value	$ 757
Options exercisable, Number of Shares	5,159
Options exercisable, Weighted-Average Exercise Price	$ 2.70
Options exercisable, Weighted-Average Remaining Contractual Life	5 years 1 month 6 days
Options exercisable, Aggregate Intrinsic Value	$ 240
Options exercisable and expected to vest, Number of Shares	8,319
Options exercisable and expected to vest, Weighted-Average Exercise Price	$ 2.07
Options exercisable and expected to vest, Weighted-Average Remaining Contractual Life	6 years 6 months
Options exercisable and expected to vest, Aggregate Intrinsic Value	$ 650

Stockholders' Equity (Shares Au

Stockholders' Equity (Shares Authorized Under Stock Option Plans, By Exercise Price Range) (Details) - $ / shares shares in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014	Dec. 28, 2013
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options outstanding, Number of Shares	8,944	7,234	5,837
Options outstanding, Weighted-Average Remaining Contractual Life	6 years 6 months
Options outstanding, Weighted-Average Exercise Price	$ 1.98	$ 2.40	$ 2.58
Options exercisable, Number of Shares	5,159
Options exercisable, Weighted-Average Remaining Contractual Life	5 years 1 month 6 days
Options exercisable, Weighted-Average Exercise Price	$ 2.70
$0.20 - $1.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Limit	0.20
Range of Exercise Prices, Upper Limit	$ 1
Options outstanding, Number of Shares	4,076
Options outstanding, Weighted-Average Remaining Contractual Life	8 years 3 months 18 days
Options outstanding, Weighted-Average Exercise Price	$ 0.70
Options exercisable, Number of Shares	1,435
Options exercisable, Weighted-Average Remaining Contractual Life	7 years
Options exercisable, Weighted-Average Exercise Price	$ 0.72
$1.01 - $3.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Limit	1.01
Range of Exercise Prices, Upper Limit	$ 3
Options outstanding, Number of Shares	3,224
Options outstanding, Weighted-Average Remaining Contractual Life	6 years 2 months 12 days
Options outstanding, Weighted-Average Exercise Price	$ 1.88
Options exercisable, Number of Shares	2,124
Options exercisable, Weighted-Average Remaining Contractual Life	5 years 3 months 18 days
Options exercisable, Weighted-Average Exercise Price	$ 2
$3.01 - $5.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Limit	3.01
Range of Exercise Prices, Upper Limit	$ 5
Options outstanding, Number of Shares	779
Options outstanding, Weighted-Average Remaining Contractual Life	5 years 10 months 24 days
Options outstanding, Weighted-Average Exercise Price	$ 3.58
Options exercisable, Number of Shares	735
Options exercisable, Weighted-Average Remaining Contractual Life	5 years 10 months 24 days
Options exercisable, Weighted-Average Exercise Price	$ 3.58
$5.01 - $8.45
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Limit	5.01
Range of Exercise Prices, Upper Limit	$ 8.45
Options outstanding, Number of Shares	865
Options outstanding, Weighted-Average Remaining Contractual Life	7 months 6 days
Options outstanding, Weighted-Average Exercise Price	$ 6.98
Options exercisable, Number of Shares	865
Options exercisable, Weighted-Average Remaining Contractual Life	7 months 6 days
Options exercisable, Weighted-Average Exercise Price	$ 7

Stockholders' Equity (Schedul58

Stockholders' Equity (Schedule Of Restricted Stock Awards) (Details) - Restricted Stock - $ / shares shares in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Share-based Compensation Arrangement by Share-based Payment Award
Balance outstanding, Number of Shares, Beginning Balance	2	54
Restricted stock vested, Number of Shares	(1)	(50)
Restricted stock forfeited, Number of Shares	(1)	(2)
Balance outstanding, Number of Shares, Ending Balance		2
Balance outstanding, Weighted-Average Grant-Date Fair Value per Share, Beginning Balance	$ 1.51	$ 3.17
Restricted stock forfeited, Weighted-Average Grant-Date Fair Value per Share	1.51	1.51
Restricted stock vested, Weighted-Average Grant-Date Fair Value per Share	$ 1.51	3.30
Balance outstanding, Weighted-Average Grant-Date Fair Value per Share, Ending Balance		$ 1.51

Stockholders' Equity (Schedul59

Stockholders' Equity (Schedule Of Assumptions Used To Calculate Weighted-Average Grant Date Fair Value Of Common Stock Options Granted) (Details) - USD ($)	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Expected term (in years)	6 years 2 months 12 days	6 years 3 months 18 days
Expected volatility	113.00%	124.00%
Risk-free interest rate	1.65%	1.86%
Weighted-average grant date fair value per share	$ 0.69	$ 1.29
Grant date fair value of options vested	$ 1,692	$ 1,842
Intrinsic value of options exercised	5,000	$ 410,000
Restricted Stock
Unearned stock-based compensation related to unvested common stock options and restricted stock awards	$ 2,800,000
Weighted-average period over which unearned stock-based compensation is expected to be recognized	2 years 4 months 24 days

Stockholders' Equity (Warrants)

Stockholders' Equity (Warrants) (Narrative) (Details)	1 Months Ended	12 Months Ended
	Nov. 28, 2015USD ($)item$ / sharesshares	Jan. 02, 2016USD ($)$ / sharesshares	Dec. 27, 2014USD ($)$ / sharesshares	Nov. 19, 2015USD ($)$ / sharesshares	Nov. 18, 2015USD ($)$ / sharesshares	Dec. 28, 2013$ / sharesshares	Jul. 18, 2013$ / sharesshares
Class of Warrant or Right [Line Items]
Warrants outstanding | shares		7,633,000	4,273,000			5,023,000
Exercise price of warrants | $ / shares		$ 0.59	$ 0.96			$ 0.95
Number of law firms | item	2
Warrant
Class of Warrant or Right [Line Items]
Exercise price of warrants | $ / shares					$ 0.47		$ 1
Debt discount		$ 1,215,000
Debt discount amortization term		3 years
Amortization of Financing Costs		$ 524,000	$ 487,000
Number of shares which may be purchased under warrant | shares							1,648,351
SVIC Warrant
Class of Warrant or Right [Line Items]
Exercise price of warrants | $ / shares					$ 0.30
Number of shares which may be purchased under warrant | shares					2,000,000
Fair value of warrants					$ 1,165,000
New and Amended Warrants
Class of Warrant or Right [Line Items]
Fair value of warrants				$ 800,000
Amended Drawbridge Warrant
Class of Warrant or Right [Line Items]
Exercise price of warrants | $ / shares				$ 0.47
Fair value of warrants				$ 129,000
Fortress Warrant
Class of Warrant or Right [Line Items]
Exercise price of warrants | $ / shares				$ 0.47
Number of shares which may be purchased under warrant | shares				1,000,000
Fair value of warrants				$ 624,000
Law Firm One Warrants
Class of Warrant or Right [Line Items]
Exercise price of warrants | $ / shares	$ 0.64
Number of shares which may be purchased under warrant | shares	300,000
Fair value of warrants	$ 185,000
Law Firm Two Warrants
Class of Warrant or Right [Line Items]
Exercise price of warrants | $ / shares	$ 0.45
Number of shares which may be purchased under warrant | shares	60,000
Fair value of warrants	$ 49,000

Stockholders' Equity (Schedul61

Stockholders' Equity (Schedule Of Warrants) (Details) shares in Thousands	12 Months Ended
	Jan. 02, 2016$ / shares$ / itemshares	Dec. 27, 2014$ / shares$ / itemshares
Stockholders' Equity
Warrants outstanding, Number of Shares, Beginning balance	4,273	5,023
Warrants granted, Number of Shares	3,360
Warrants exercised, Number of Shares		(750)
Warrants outstanding, Number of Shares, Ending balance	7,633	4,273
Warrants outstanding, Weighted-Average Exercise Price, Beginning balance | $ / shares	$ 0.96	$ 0.95
Warrants granted, Weighted-Average Exercise Price | $ / item	0.38
Warrants exercised, Weighted-Average Exercise Price | $ / item		0.89
Warrants outstanding, Weighted-Average Exercise Price, Ending balance | $ / shares	$ 0.59	$ 0.96

401(k) Plan (Narrative) (Detail

401(k) Plan (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
401(k) Plan
Minimum participant age	21 years
Employer contributions	$ 90	$ 80

Major Customers, Suppliers an63

Major Customers, Suppliers and Products (Schedule Of Customer Concentration of Risk) (Details) - Customer Concentration Risk - customer	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Sales Revenue, Services, Net | Customer A
Concentration Risk
Concentration Risk, Percentage	27.00%	20.00%
Sales Revenue, Services, Net | Customer B
Concentration Risk
Concentration Risk, Percentage		14.00%
Sales Revenue, Services, Net | Customer C
Concentration Risk
Concentration Risk, Percentage		19.00%
Sales Revenue, Services, Net | Customer D
Concentration Risk
Concentration Risk, Percentage	10.00%
Gross Receivables
Concentration Risk
Concentration Risk, Number of Customers	3	3
Gross Receivables | Customer A
Concentration Risk
Concentration Risk, Percentage	24.00%	13.00%
Gross Receivables | Customer B
Concentration Risk
Concentration Risk, Percentage	19.00%	49.00%
Gross Receivables | Customer C
Concentration Risk
Concentration Risk, Percentage	14.00%	11.00%
Sales Revenue, Product Line | NVVault
Concentration Risk
Concentration Risk, Percentage	20.00%	44.00%

Major Customers, Suppliers an64

Major Customers, Suppliers and Products (Schedule Of Supplier Concentration of Risk) (Details) - Supplier Concentration Risk [Member] - Cost of Goods, Total [Member]	12 Months Ended
	Jan. 02, 2016	Dec. 27, 2014
Supplier A
Concentration Risk
Concentration Risk, Percentage	14.00%	10.00%
Supplier B
Concentration Risk
Concentration Risk, Percentage	12.00%

Segment And Geographic Inform65

Segment And Geographic Information (Details) $ in Millions	12 Months Ended
	Jan. 02, 2016USD ($)segment	Dec. 27, 2014USD ($)
Segment And Geographic Information
Number of reportable segments | segment	1
Percentage of net sales derived from shipments to international destinations	48.00%	33.00%
Net long-lived assets located in the People's Republic of U.S. | $	$ 0.1	$ 0.2

Quarterly Summary (Unaudited)66

Quarterly Summary (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 02, 2016	Sep. 26, 2015	Jun. 27, 2015	Mar. 28, 2015	Dec. 27, 2014	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Jan. 02, 2016	Dec. 27, 2014
Quarterly Summary (Unaudited)
Net product sales	$ 1,709	$ 1,617	$ 1,429	$ 2,114					$ 6,869	$ 19,195
NRE Revenue	1,143								1,143
Total net revenues	2,852	1,617	1,429	2,114	$ 2,516	$ 4,791	$ 4,887	$ 7,001	8,012	19,195
Cost of sales	1,583	1,593	1,324	1,415	2,629	3,678	3,908	5,016	5,915	15,231
Gross profit	1,269	24	105	699	(113)	1,113	979	1,985	2,097	3,964
Research and development	1,680	1,449	1,536	1,384	1,234	1,305	1,168	878	6,049	4,586
Intellectual property legal fees, net of settlement transactions	(1,091)	899	2,238	3,542	2,465	1,692	1,134	1,097	5,588	6,387
Selling, general and administrative	2,628	1,710	1,744	1,759	1,611	1,782	1,781	1,622	7,841	6,796
Total operating expenses	3,217	4,058	5,518	6,685	5,310	4,779	4,083	3,597	19,478	17,769
Operating loss	(1,948)	(4,034)	(5,413)	(5,986)	(5,423)	(3,666)	(3,104)	(1,612)	(17,381)	(13,805)
Interest expense, net	(648)	(447)	(489)	(480)	(393)	(393)	(393)	(395)	(2,064)	(1,574)
Other income (expense), net	(1,749)	(889)	1,548	9	5		6	(11)	(1,081)
Total other expense, net	(2,397)	(1,336)	1,059	(471)	(388)	(393)	(387)	(406)	(3,145)	(1,574)
Loss before provision for income taxes	(4,345)	(5,370)	(4,354)	(6,457)	(5,811)	(4,059)	(3,491)	(2,018)	(20,526)	(15,379)
Provision for income taxes				1			2		1	2
Net loss	$ (4,345)	$ (5,370)	$ (4,354)	$ (6,458)	$ (5,811)	$ (4,059)	$ (3,493)	$ (2,018)	$ (20,527)	$ (15,381)
Basic and diluted	$ (0.09)	$ (0.11)	$ (0.09)	$ (0.14)	$ (0.14)	$ (0.10)	$ (0.08)	$ (0.05)	$ (0.42)	$ (0.38)
Weighted-average common shares outstanding, basic and diluted	50,353	50,354	50,354	44,708	41,483	41,472	41,472	36,881	48,967	40,304