Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jul. 01, 2023 | Aug. 03, 2023 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NETLIST INC | |
Entity Central Index Key | 0001282631 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 01, 2023 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-33170 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 95-4812784 | |
Entity Address, Address Line One | 111 Academy, Suite 100 | |
Entity Address, City or Town | Irvine | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92617 | |
City Area Code | 949 | |
Local Phone Number | 435-0025 | |
Title of 12(b) Security | None | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-30 | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 241,526,238 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 24,348 | $ 25,011 |
Restricted cash | 7,100 | 18,600 |
Accounts receivable, net of allowances of $33 (2023) and $137 (2022) | 1,470 | 8,242 |
Inventories | 9,953 | 10,686 |
Prepaid expenses and other current assets | 736 | 1,308 |
Total current assets | 43,607 | 63,847 |
Property and equipment, net | 943 | 1,138 |
Operating lease right-of-use assets | 1,915 | 2,043 |
Other assets | 542 | 295 |
Total assets | 47,007 | 67,323 |
Current Liabilities: | ||
Accounts payable | 21,033 | 28,468 |
Revolving line of credit | 4,935 | |
Accrued payroll and related liabilities | 1,317 | 1,588 |
Accrued expenses and other current liabilities | 1,184 | 2,635 |
Long-term debt due within one year | 152 | 447 |
Total current liabilities | 23,686 | 38,073 |
Operating lease liabilities | 1,483 | 1,744 |
Other liabilities | 189 | 270 |
Total liabilities | 25,358 | 40,087 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value-10,000 shares authorized: Series A preferred stock, $0.001 par value; 1,000 shares authorized; none issued and outstanding | ||
Common stock, $0.001 par value-450,000 shares authorized; 241,307 (2023) and 232,557 (2022) shares issued and outstanding | 241 | 233 |
Additional paid-in capital | 274,649 | 250,428 |
Accumulated deficit | (253,241) | (223,425) |
Total stockholders' equity | 21,649 | 27,236 |
Total liabilities and stockholders' equity | $ 47,007 | $ 67,323 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Accounts receivable, allowance for doubtful accounts | $ 33 | $ 137 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 241,307,000 | 232,557,000 |
Common stock, shares outstanding | 241,307,000 | 232,557,000 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jul. 02, 2022 | Jul. 01, 2023 | Jul. 02, 2022 | |
Condensed Consolidated Statements of Operations (Unaudited) | ||||
Net sales | $ 10,026 | $ 55,358 | $ 19,047 | $ 105,558 |
Cost of sales | 9,787 | 50,610 | 18,248 | 97,447 |
Gross profit | 239 | 4,748 | 799 | 8,111 |
Operating expenses: | ||||
Research and development | 2,255 | 2,672 | 4,556 | 5,129 |
Intellectual property legal fees | 8,947 | 3,313 | 20,017 | 6,139 |
Selling, general and administrative | 3,325 | 3,724 | 6,355 | 7,662 |
Total operating expenses | 14,527 | 9,709 | 30,928 | 18,930 |
Operating loss | (14,288) | (4,961) | (30,129) | (10,819) |
Other income (expense), net: | ||||
Interest income, net | 277 | 15 | 333 | 4 |
Other expense, net | (16) | (6) | (19) | (8) |
Total other income (expense), net | 261 | 9 | 314 | (4) |
Loss before provision for income taxes | (14,027) | (4,952) | (29,815) | (10,823) |
Provision for income taxes | 1 | 1 | 1 | |
Net loss | $ (14,028) | $ (4,952) | $ (29,816) | $ (10,824) |
Loss per share: | ||||
Basic | $ (0.06) | $ (0.02) | $ (0.13) | $ (0.05) |
Diluted | $ (0.06) | $ (0.02) | $ (0.13) | $ (0.05) |
Weighted-average common shares outstanding: | ||||
Basic | 240,382 | 231,298 | 237,752 | 230,922 |
Diluted | 240,382 | 231,298 | 237,752 | 230,922 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Jan. 01, 2022 | $ 231 | $ 243,866 | $ (190,055) | $ 54,042 |
Balance, shares at Jan. 01, 2022 | 230,113 | |||
Net loss | (5,872) | (5,872) | ||
Issuance of common stock, net | 1,767 | 1,767 | ||
Issuance of common stock, net shares | 303 | |||
Exercise of stock options | 138 | 138 | ||
Exercise of stock options, shares | 197 | |||
Stock-based compensation | 682 | 682 | ||
Restricted stock units vested and distributed | $ 1 | (1) | ||
Restricted stock units vested and distributed, shares | 533 | |||
Tax withholdings related to net share settlements of equity awards | (591) | (591) | ||
Tax withholdings related to net share settlements of equity awards, shares | (117) | |||
Balance at Apr. 02, 2022 | $ 232 | 245,861 | (195,927) | 50,166 |
Balance, shares at Apr. 02, 2022 | 231,029 | |||
Balance at Jan. 01, 2022 | $ 231 | 243,866 | (190,055) | 54,042 |
Balance, shares at Jan. 01, 2022 | 230,113 | |||
Net loss | (10,824) | |||
Balance at Jul. 02, 2022 | $ 232 | 248,563 | (200,879) | 47,916 |
Balance, shares at Jul. 02, 2022 | 231,488 | |||
Balance at Apr. 02, 2022 | $ 232 | 245,861 | (195,927) | 50,166 |
Balance, shares at Apr. 02, 2022 | 231,029 | |||
Net loss | (4,952) | (4,952) | ||
Issuance of common stock, net | 1,973 | 1,973 | ||
Issuance of common stock, net shares | 354 | |||
Exercise of stock options | 47 | 47 | ||
Exercise of stock options, shares | 72 | |||
Stock-based compensation | 790 | 790 | ||
Restricted stock units vested and distributed, shares | 50 | |||
Tax withholdings related to net share settlements of equity awards | (108) | (108) | ||
Tax withholdings related to net share settlements of equity awards, shares | (17) | |||
Balance at Jul. 02, 2022 | $ 232 | 248,563 | (200,879) | 47,916 |
Balance, shares at Jul. 02, 2022 | 231,488 | |||
Balance at Dec. 31, 2022 | $ 233 | 250,428 | (223,425) | 27,236 |
Balance, shares at Dec. 31, 2022 | 232,557 | |||
Net loss | (15,788) | (15,788) | ||
Issuance of common stock, net | $ 5 | 10,537 | 10,542 | |
Issuance of common stock, net shares | 4,920 | |||
Exercise of stock options | 264 | 264 | ||
Exercise of stock options, shares | 381 | |||
Stock-based compensation | 1,077 | 1,077 | ||
Restricted stock units vested and distributed | $ 1 | (1) | ||
Restricted stock units vested and distributed, shares | 712 | |||
Balance at Apr. 01, 2023 | $ 239 | 262,305 | (239,213) | 23,331 |
Balance, shares at Apr. 01, 2023 | 238,570 | |||
Balance at Dec. 31, 2022 | $ 233 | 250,428 | (223,425) | 27,236 |
Balance, shares at Dec. 31, 2022 | 232,557 | |||
Net loss | $ (29,816) | |||
Exercise of stock options, shares | 510 | |||
Balance at Jul. 01, 2023 | $ 241 | 274,649 | (253,241) | $ 21,649 |
Balance, shares at Jul. 01, 2023 | 241,307 | |||
Balance at Apr. 01, 2023 | $ 239 | 262,305 | (239,213) | 23,331 |
Balance, shares at Apr. 01, 2023 | 238,570 | |||
Net loss | (14,028) | (14,028) | ||
Issuance of common stock, net | $ 2 | 11,008 | 11,010 | |
Issuance of common stock, net shares | 2,422 | |||
Exercise of stock options | 140 | 140 | ||
Exercise of stock options, shares | 129 | |||
Stock-based compensation | 1,196 | 1,196 | ||
Restricted stock units vested and distributed, shares | 186 | |||
Balance at Jul. 01, 2023 | $ 241 | $ 274,649 | $ (253,241) | $ 21,649 |
Balance, shares at Jul. 01, 2023 | 241,307 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2023 | Jul. 02, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (29,816) | $ (10,824) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 195 | 157 |
Non-cash lease expense | 315 | 314 |
Stock-based compensation | 2,273 | 1,472 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 6,772 | 399 |
Inventories | 733 | (6,187) |
Prepaid expenses and other assets | 325 | 83 |
Accounts payable | (7,435) | 12,422 |
Accrued payroll and related liabilities | (271) | 122 |
Accrued expenses and other liabilities | (1,876) | 609 |
Net cash used in operating activities | (28,785) | (1,433) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (326) | |
Net cash used in investing activities | (326) | |
Cash flows from financing activities: | ||
Net borrowings (repayments) under line of credit | (4,935) | 1,019 |
Principal repayments under finance lease | (104) | (27) |
Payments on notes payable | (295) | (373) |
Proceeds from issuance of common stock, net | 21,552 | 3,740 |
Proceeds from exercise of stock options | 404 | 185 |
Payments for taxes related to net share settlement of equity awards | (699) | |
Net cash provided by financing activities | 16,622 | 3,845 |
Net change in cash, cash equivalents and restricted cash | (12,163) | 2,086 |
Cash, cash equivalents and restricted cash at beginning of period | 43,611 | 58,479 |
Cash, cash equivalents and restricted cash at end of period | $ 31,448 | $ 60,565 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Jul. 01, 2023 | Jul. 02, 2022 |
Reconciliation of cash, cash equivalents and restricted cash at end of period: | ||
Cash and cash equivalents | $ 24,348 | $ 40,465 |
Restricted cash | 7,100 | 20,100 |
Cash, cash equivalents and restricted cash at end of period | $ 31,448 | $ 60,565 |
Description of Business
Description of Business | 6 Months Ended |
Jul. 01, 2023 | |
Description of Business | |
Description of Business | Note 1—Description of Business Netlist, Inc. and its wholly owned subsidiaries (collectively the “Company”, “Netlist”, “we”, “us”, or “our”) provides high-performance memory solutions to enterprise customers in diverse industries. Our products in various capacities and form factors and our line of custom and specialty memory products bring leading performance to customers in a variety of industries globally and cloud service providers. Netlist also licenses its intellectual property. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 01, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2—Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2023 (the “2022 Annual Report”). In the opinion of management, all adjustments for the fair presentation of the Company’s condensed consolidated financial statements have been made. The adjustments are of a normal recurring nature except as otherwise noted. The results of operations for the interim periods are not necessarily indicative of the results to be expected for other periods or the full fiscal year. The Company has evaluated events occurring subsequent to July 1, 2023 through the filing date of this Quarterly Report on Form 10-Q and concluded that there were no events that required recognition and disclosures other than those discussed elsewhere in the notes hereto. Principles of Consolidation The accompanying condensed 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’s fiscal year is the 52- or 53-week period that ends on the Saturday nearest to December 31. The Company’s fiscal year 2023 will include 52 weeks and ends on December 30, 2023. Each quarter of fiscal year 2023 will be comprised of 13 weeks. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in January and the associated quarters, months and periods of those fiscal years. Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results may differ materially from those estimates. Recently Adopted Accounting Guidance Currently, there are no Accounting Standards Updates that the Company is required to adopt that are likely to have a material effect on its financial statements that have not been previously discussed in the Company's 2022 Annual Report. |
Supplemental Financial Informat
Supplemental Financial Information | 6 Months Ended |
Jul. 01, 2023 | |
Supplemental Financial Information | |
Supplemental Financial Information | Note 3—Supplemental Financial Information Inventories Inventories consisted of the following (in thousands): July 1, December 31, 2023 2022 Raw materials $ 7,351 $ 8,223 Work in process 3 185 Finished goods 2,599 2,278 $ 9,953 $ 10,686 Loss Per Share The following table shows the computation of basic and diluted loss per share of common stock (in thousands, except per share data): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Numerator: Net loss $ (14,028) $ (4,952) $ (29,816) $ (10,824) Denominator: Weighted-average basic shares outstanding - basic and diluted 240,382 231,298 237,752 230,922 Net loss per share - basic and diluted $ (0.06) $ (0.02) $ (0.13) $ (0.05) The table below shows potentially dilutive weighted average common share equivalents, consisting of shares issuable upon the exercise of outstanding stock options using the treasury stock method and the shares vesting of issuable upon the restricted stock units (“RSUs”). These potential weighted average common share equivalents have been excluded from the diluted net loss per share calculations above as their effect would be anti-dilutive (in thousands): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Weighted average common share equivalents 4,183 5,419 3,677 5,911 Disaggregation of Net Sales The following table shows disaggregated net sales by major source (in thousands): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Resales of third-party products $ 8,589 $ 49,168 $ 15,498 $ 94,753 Sale of the Company's modular memory subsystems 1,437 6,190 3,549 10,805 Total net sales $ 10,026 $ 55,358 $ 19,047 $ 105,558 Major Customers and Products The Company’s net product sales have historically been concentrated in a small number of customers. The following table sets forth the percentage of net product sales made to customers that each comprise 10% or more of total product sales: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Customer A 36% 32% 42% 42% Customer B * 23% * 16% Customer C 27% * 14% * * Less than 10% of net sales during the period. As of July 1, 2023, four customers represented approximately 20%, 18%, 13% and 10% of aggregated gross accounts receivables, respectively. As of December 31, 2022, one customer represented approximately 69% of aggregate gross accounts receivables. The loss of a major customer or a reduction in sales to or difficulties collecting payments from these customers could significantly reduce the Company’s net sales and adversely affect its operating results. The Company mitigates risks associated with foreign and domestic receivables by purchasing comprehensive credit insurance. The Company resells certain component products to end-customers that are not reached in the distribution models of the component manufacturers, including storage customers, appliance customers, system builders and cloud and datacenter customers. For the three and six months ended July 1, 2023, resales of these products represented approximately 86% and 81% of net product sales, respectively. For the three and six months ended July 2, 2022, resales of these products represented approximately 89% and 90% of net product sales, respectively. |
Credit Agreement and Standby Le
Credit Agreement and Standby Letters of Credit | 6 Months Ended |
Jul. 01, 2023 | |
Credit Agreement and Standby Letters of Credit | |
Credit Agreement and Standby Letters of Credit | Note 4—Credit Agreement and Standby Letters of Credit SVB Credit Agreement On October 31, 2009, the Company and Silicon Valley Bank (“SVB”) entered into a credit agreement, as the same may from time to time be amended, , supplemented or restated, (the “SVB Credit Agreement”), which provided for a revolving line of credit up to $10.0 million, as amended. The SVB Credit Agreement was most recently amended on April 29, 2022 to add 50% of eligible inventory to the previous borrowing base limited to 85% of eligible accounts receivable, subject to certain adjustments. The SVB Credit Agreement required letters of credit to be secured by cash, which were classified as restricted cash in the accompanying condensed consolidated balance sheets. As of December 31, 2022, (i) outstanding letters of credit were $18.6 million, (ii) outstanding borrowings were $4.9 million, and (iii) availability under the revolving line of credit was $0. On the maturity date, April 28, 2023, the SVB Credit Agreement terminated in accordance with its terms. In connection with the termination of the SVB Credit Agreement, all outstanding obligations for principal, interest, and fees were paid in full and all liens securing such obligations were released. Standby Letters of Credit On May 15, 2023 and June 6, 2023, Citibank, N.A. issued on our behalf to third parties irrevocable letters of credit in the amount of $5.0 million and $2.0 million, respectively. The standby letters of credit are valid for a one-year term. As of July 1, 2023, the amount of outstanding letters of credit was approximately $7.0 million, and no amount has been drawn from the letters of credit. A standby letter of credit is a guarantee of payment issued by a bank on our behalf that is used as payment of last resort should we fail to fulfill a contractual commitment with a third party. |
Debt
Debt | 6 Months Ended |
Jul. 01, 2023 | |
Debt | |
Debt | Note 5—Debt The Company’s debt consisted of the following (in thousands): July 1, December 31, 2023 2022 Notes payable $ 152 $ 447 Less: amounts due within one year (152) (447) Long-term debt $ — $ — Insurance Policy Finance Agreement As of July 1, 2023 and December 31, 2022, we had $0.2 million and $0.4 million, respectively, in short-term notes payable for the financing of insurance policies. On January 4, 2023, we entered into a short-term note payable for $0.4 million bearing interest at 7.2% to finance insurance policies. Principal and interest payments on this note began January 15, 2023 and are made evenly based on a straight line amortization over a 9-month period. |
Leases
Leases | 6 Months Ended |
Jul. 01, 2023 | |
Leases | |
Leases | Note 6—Leases The Company has operating and finance leases primarily associated with office and manufacturing facilities and certain equipment. The determination of which discount rate to use when measuring the lease obligation was deemed a significant judgment. Lease cost and supplemental condensed consolidated cash flow information related to operating and finance leases were as follows (in thousands): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Lease cost: Operating lease cost $ 194 $ 198 $ 389 $ 396 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 169 $ 170 $ 338 $ 319 Operating cash flows from finance leases 3 2 6 3 Financing cash flows from finance leases 52 21 104 27 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ — $ 33 $ — $ 588 Finance leases $ — $ 372 $ — $ 372 Lease modification to increase operating lease assets $ 187 $ 204 $ 187 $ 204 For the three and six months ended July 1, 2023 and July 2, 2022, finance lease costs were immaterial. Supplemental condensed consolidated balance sheet information related to leases was as follows (in thousands): July 1, December 31, 2023 2022 Operating Leases Operating lease right-of-use assets $ 1,915 $ 2,043 Accrued expenses and other current liabilities $ 636 $ 451 Operating lease liabilities 1,483 1,744 Total operating lease liabilities $ 2,119 $ 2,195 Finance Leases Property and equipment, at cost $ 488 $ 488 Accumulated depreciation (170) (121) Property and equipment, net $ 318 $ 367 Accrued expenses and other current liabilities $ 194 $ 211 Other liabilities 9 96 Total finance lease liabilities $ 203 $ 307 The following table includes supplemental information: July 1, December 31, 2023 2022 Weighted Average Remaining Lease Term (in years) Operating leases 3.3 3.9 Finance leases 1.0 1.5 Weighted Average Discount Rate Operating leases 5.8% 5.5% Finance leases 4.4% 4.4% Maturities of lease liabilities as of July 1, 2023, were as follows (in thousands): Operating Finance Fiscal Year Leases Leases 2023 (remainder of the year) $ 346 $ 110 2024 702 91 2025 624 5 2026 639 2 2027 23 — Total lease payments 2,334 208 Less: imputed interest (215) (5) Total $ 2,119 $ 203 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 01, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 7 — Commitments and Contingencies Contingent Legal Expenses We may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with our licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fee, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained. Litigation and Patent Reexaminations The Company is, from time to time, a party to litigation that arises in the normal course of its business operations. We own numerous patents and continue to seek to grow and strengthen our patent portfolio, which covers various aspects of our innovations and includes various claim scopes. We plan to pursue avenues to monetize our intellectual property portfolio, in which we would generate revenue by selling or licensing our technology, and we intend to vigorously enforce our patent rights against alleged infringers of such rights. We dedicate substantial resources to protecting and enforcing our intellectual property rights, including with patent infringement proceedings we file against third parties and defense of our patents against challenges made by way of reexamination and review proceedings at the U.S. Patent and Trademark Office (“USPTO”) and Patent Trial and Appeal Board (“PTAB” or the “Board”). We expect these activities to continue for the foreseeable future, with no guarantee that any ongoing or future patent protection or litigation activities will be successful, or that we will be able to monetize our intellectual property portfolio. Any litigation, regardless of its outcome, is inherently uncertain, involves a significant dedication of resources, including time and capital, and diverts management’s attention from our other activities. As a result, any current or future claims, allegations, or challenges by or against third parties, whether eventually decided in our favor or settled, could materially adversely affect our business, financial condition and results of operations. Additionally, the outcome of pending or future litigation and/or related patent reviews and reexaminations, as well as any delay in their resolution, could affect our ability to continue to sell our products, protect against competition in the current and expected markets for our products or license or otherwise monetize our intellectual property rights in the future. Google Litigations On December 4, 2009, Netlist filed a patent infringement lawsuit against Google, Inc. (“Google”) in the U.S. District Court for the Northern District of California (the “NDCA”), seeking damages and injunctive relief based on Google’s alleged infringement of our U.S. Patent No. 7,619,912 (the “‘912 Patent”). The current judge assigned to the case, Hon. Chief Judge Seeborg, entered an order via stipulation on October 17, 2022 staying the NDCA Google case until the resolution of a pending case filed by Netlist, Inc. against Samsung Electronics Co., Ltd. in the United States District Court for the Eastern District of Texas (“EDTX”) ( Netlist, Inc. v. Samsung Elecs. Co., Ltd. et al. On July 26, 2022, Netlist filed patent infringement claims against Google Cloud EMEA Limited, Google Germany GmbH, Redtec Computing GmbH, and Google, seeking damages based on those defendants’ infringement of European Patents EP 2,454,735 (“EP735”) and EP 3,404,660 (“EP660”), which both generally relate to load reduced dual in line memory modules (“LRDIMM”) technologies. As of the reporting date, Google has submitted its statements of defense. As of the reporting date, the date for oral hearings before the Dusseldorf Court is currently scheduled for November 9, 2023. On October 15, 2021, Samsung initiated a declaratory judgement action against Netlist in the U.S. District Court for the District of Delaware (“DDE”) ( Samsung Elecs. Co., Ltd., et. al. v. Netlist, Inc. Micron Litigations On April 28, 2021, Netlist filed a complaint for patent infringement against Micron Technology, Inc. (“Micron”) in the U.S. District Court for the Western District of Texas, Waco Division (“WDTX”) (Case No. 6:21-cv00431 & Case No. 6:21-cv-00430). These proceedings are based on the alleged infringement by Micron’s LRDIMM and Micron’s non-volatile dual in line memory modules (“NVDIMM”) enterprise memory modules under four U.S. patents – U.S. Patent Nos. 10,489,314 (the “‘314 Patent”), 9,824,035 (the “‘035 Patent”), 10,268,608 (the “‘608 Patent”), and 8,301,833 (the “‘833 Patent”). The case was assigned to Hon. Judge Lee Yeakel, and the parties completed briefing on their claim construction arguments. On May 11, 2022, Judge Yeakel entered a stay of the case pending the resolution of Micron’s requested Inter Partes Review (“IPR”) proceedings against the four patents asserted by Netlist in this case (the ‘833, ‘035, ‘608, and ‘314 Patents). On May 4, 2023, the case was reassigned to Docket II in the WDTX Austin Division, given Hon. Judge Yeakel’s retirement. As of the reporting date, the matter remains stayed pending the outcome of the related IPR proceedings and assigned to Docket II pending reassignment to an Article III Judge. As noted above, Micron filed requests to bring IPR proceedings against Netlist’s ‘314, ‘035, ‘608, and ‘833 Patents. The PTAB has granted Micron’s request for the ‘035, ‘833, and ‘314 Patents, but denied its request for the ‘608 Patent. The PTAB further denied Micron’s request for rehearing on the ‘608 Patent’s institution denial. Oral arguments were presented for the ‘035 Patent IPR on April 19, 2023, with the PTAB entering a Final Written Decision finding claims 2, 6, and 22 of the ‘035 Patent patentable. As of the reporting date, the IPR trials under the ‘833 and ‘314 Patents are proceeding. Oral arguments for the ‘833 Patent occurred as scheduled on June 7, 2023. The ‘314 Patent IPRs are still set for a consolidated oral argument on August 15, 2023. On March 31, 2022, Netlist filed patent infringement claims against Micron in Dusseldorf, Germany (“Micron Dusseldorf Action”), seeking damages based on their infringement of EP735 and EP660. On June 24, 2022, Netlist requested injunctive relief. Micron initiated a nullity proceeding against the asserted EP patents in this action, making Netlist’s response to the same as November 19, 2022. Primary briefing in the Micron Dusseldorf Action has concluded, while the German Federal Patent Court entered a preliminary opinion on EP735 and EP660 in a related invalidity proceedings that have been consolidated as of the reporting date. Currently, the Micron Dusseldorf Action is scheduled for oral hearings in April 2024. On November 18, 2022, Micron filed IPR requests contesting the validity of the ‘912, ‘339, and ‘506 Patents, along with motions requesting joinder to the pending Samsung IPRs related to the same patents (see below). As of the reporting date, Micron’s ‘912, ‘339, and ‘506 Patent IPRs have been joined with the corresponding Samsung IPR proceedings for the same respective patents. Oral hearings for the joined Samsung ‘339 and ‘506 Patents IPRs were held on July 19, 2023 and July 20, 2023, respectively. On June 30, 2023, the PTAB resumed the trial on the Samsung ‘912 Patent IPR (which included Micron’s claims via joinder) following USPTO Director Katherine Vidal’s sua sponte matters were joined with the corresponding Samsung IPRs on the same patents. As of the reporting date, the ‘918 and ‘054 Patent IPRs are scheduled for an oral hearing on September 11, 2023. Samsung Litigations On May 28, 2020, Netlist filed a complaint against Samsung in the U.S. District Court for the Central District of California for Samsung’s breach of the parties’ Joint Development and License Agreement (“JDLA”). On July 22, 2020, Netlist amended its complaint to seek a declaratory judgment that it properly terminated the JDLA in light of Samsung’s material breaches. On October 14, 2021, the Court entered summary judgment in Netlist’s favor and confirmed Netlist properly terminated the JDLA as of July 15, 2020. On February 15, 2022, the Court entered a final judgment in favor of Netlist on each of its three claims and confirmed conclusively that the licenses granted by Netlist under the JDLA were terminated. On February 25, 2022, Samsung filed a Notice of Appeal, and the Federal Court of Appeals for the Ninth Circuit Court of Appeals issued a Time Schedule Order on February 28, 2022. On August 4, 2022, Netlist filed a cross-appeal seeking the Appeal Court’s reconsideration of the District Court’s finding that the fees Netlist paid to PwC were consequential damages, rather than recoverable general damages. On June 8, 2023, the Ninth Circuit Court of Appeals heard oral arguments from both parties on the matter following completion of all briefing. As of the reporting date, the Ninth Circuit Court of Appeals has not yet entered its Order on the matter. On October 15, 2021, Samsung initiated a declaratory judgement action against Netlist in the DDE ( Samsung Elecs. Co., Ltd., et. al. v. Netlist, Inc. On November 19, 2021, Samsung filed IPR requests contesting the validity of the ‘218, the ‘595, and the ‘523 Patents. Netlist filed its initial responses to Samsung’s IPR petitions on February 18, 2022, contesting the institution of any IPR on the grounds propounded. As of the reporting date, the PTAB issued a final written decision finding all of the claims of the ‘523 Patent valid and patentable, while finding all of the claims of the ‘218 and ‘595 Patents unpatentable. On December 20, 2021, Netlist filed a complaint for patent infringement against Samsung in the EDTX (Case No. 2:21-cv-00463-JRG) under the ‘506, ‘339, and ‘918 Patents. On May 3, 2022, Netlist entered a First Amended Complaint pursuant to the Federal Rules of Civil Procedure (“FRCP”) Rule 15, adding claims for infringement under three additional patents: the ‘060, ‘160, and ‘054 Patents. Netlist brought claims under the ‘339, ‘918, ‘054, ‘060, and ‘160 Patents in its Jury Trial, which concluded on April 21, 2023, with the entry of the jury’s verdict into the public record. The jury unanimously found that Samsung willfully infringed Netlist’s ‘339, ‘918, ‘054, ‘060, and ‘160 Patents through the sale of their DDR4 LRDIMMs, DDR5 DIMMs, and HBMs, and that none of the patent claims asserted at trial were invalid. The jury awarded Netlist, Inc. a total of million for Samsung’s infringement. On May 30, 2023, Hon. Chief Judge Gilstrap conducted a bench trial to assess the merits of Samsung’s affirmative defenses excusing its infringement of only the ‘339, ‘918, and ‘054 Patents. As of the reporting date, the Court has not yet entered an Order regarding the outcome the May Bench Trial, or a Judgement contemplating both the Jury and Bench Trial. On February 17, 2022, Samsung filed an IPR request contesting the validity of only claim 16 within the ‘912 Patent. Samsung then filed two additional IPR requests contesting the validity of the ‘506 and ‘339 Patents. Netlist filed its Patent Owner’s Preliminary Response for the ‘912 and ‘339 Patent IPRs on July 21, 2022, and for the ‘506 Patent IPR on July 28, 2022. On January 19, 2023, the PTAB instituted IPR trials on both the ‘912 and ‘339 Patents. The following day, the PTAB instituted an IPR trial on the ‘506 Patent. On October 19, 2022, the PTAB instituted IPR trials on the ‘912 and ‘339 Patents, while two days later it instituted an IPR trial on the ’506 Patent. On January 5, 2023, USPTO Director Katherine K. Vidal entered an Order in the ‘912 Patent proceeding mandating a sua sponte On May 17, 2022, Samsung filed two IPR petitions contesting the validity of Netlist’s ‘918 and ‘054 Patents. On December 6, 2022, the Board instituted an IPR trial for the ‘054 Patent, and then instituted an IPR trial for the ‘918 Patent the next day. As of the reporting date, Micron has joined these Samsung IPRs on the ‘918 and ‘054 Patents, and oral arguments are set to be heard on September 11, 2023. On June 3, 2022, Netlist filed patent infringement lawsuits against Samsung in Dusseldorf, Germany, seeking damages for Samsung’s infringement of Netlist’s Patents EP735 and EP660. As of the reporting date, the infringement matters are set for an Oral Hearing in the Dusseldorf Court on September 5, 2023. On August 1, 2022, Netlist filed a complaint for patent infringement against Samsung in the EDTX (Case No. 2:22-cv-00293) under the ‘912 Patent, which relates generally to technologies to implement rank multiplication. On August 15, 2022, Netlist filed its first amended complaint here, further addressing Samsung’s infringement of the ‘215 and ‘417 Patents. On October 21, 2022, Hon. Chief Judge Gilstrap ordered that this action and a parallel action by Netlist against Micron on the same patents (22-cv-00294-JRG) be consolidated and set for a joint scheduling conference on November 17, 2022, further instructing that this Samsung action be considered the “LEAD CASE” and that any further filings from either action be submitted in therefore all pretrial matters. As of the reporting date, the consolidated case stands ready to proceed with a claim construction hearing set for October 5, 2023 and trial beginning on April 15, 2024. On August 26, 2022, Samsung filed two IPR petitions contesting the validity of Netlist’s ‘060 and ‘160 Patents. On January 19, 2023, Netlist filed its Patent Owner Preliminary Responses in those proceedings. As of the reporting date, the Board instituted trials for both IPRs, set substantive briefing deadlines, and ultimately the date for oral argument on January 11, 2024. On January 10, 2023, Samsung filed two IPR petitions contesting the validity of the ‘215 and ‘417 Patents. The Board accorded these IPRs a filing date of January 10, 2023 and Netlist filed its Patent Owner Preliminary Responses by the May 9, 2023 deadline. As of the reporting date, the Board has not yet entered an institution decision on either of Samsung’s IPR petitions here. On April 27, 2023, Samsung filed an IPR petition contesting the validity of the ‘608 Patent. The Board accorded Samsung’s IPR petition a filing date on June 14, 2023. As of the reporting date, Netlist’s deadline to submit its preliminary response to the petition is September 14, 2023. Other Contingent Obligations In the ordinary course of our business, we have made certain indemnities, commitments and guarantees pursuant to which we may be required to make payments in relation to certain transactions. These may include, among others: (i) intellectual property indemnities to our customers and licensees in connection with the use, sale and/or license of our products; (ii) indemnities to vendors and service providers pertaining to claims based on our negligence or willful misconduct; (iii) indemnities involving the accuracy of representations and warranties in certain contracts; (iv) indemnities to our directors and officers to the maximum extent permitted under the laws of the State of Delaware; (v) indemnities pertaining to all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with transactions contemplated by applicable investment or loan documents, as applicable; and (vi) indemnities or other claims related to certain real estate leases, under which we may be required to indemnify property owners for environmental and other liabilities or may face other claims arising from our use of the applicable premises. The duration of these indemnities, commitments and guarantees varies and, in certain cases, may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation of the maximum potential for future payments we could be obligated to make. Historically, we have not been obligated to make significant payments as a result of these obligations, and no liabilities have been recorded for these indemnities, commitments and guarantees in the accompanying consolidated balance sheets. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jul. 01, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | Note 8—Stockholders’ Equity Serial Preferred Stock The Company’s authorized capital stock includes 10,000,000 shares of serial preferred stock, with a par value of $0.001 per share. No shares of preferred stock were outstanding as of July 1, 2023 or December 31, 2022. On April 17, 2017, the Company entered into a rights agreement (as amended from time to time, the “Rights Agreement”) with Computershare Trust Company, N.A., as rights agent. In connection with the adoption of the Rights Agreement and pursuant to its terms, the Company’s board of directors authorized and declared a dividend of one right (each, a “Right”) for each outstanding share of the Company’s common stock to stockholders of record at the close of business on May 18, 2017 (the “Record Date”), and authorized the issuance of one Right for each share of the Company’s common stock issued by the Company (except as otherwise provided in the Rights Agreement) between the Record Date and the Distribution Date (as defined below). Each Right entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from the Company, when exercisable and subject to adjustment, one unit consisting of one one 10 In connection with the adoption of the Rights Agreement, the Company’s board of directors approved a Certificate of Designation of the Series A Preferred Stock (the “Certificate of Designation”) designating 1,000,000 shares of its serial preferred stock as Series A Preferred Stock and setting forth the rights, preferences and limitations of the Preferred Stock. The Company filed the Certificate of Designation with the Secretary of State of the State of Delaware on April 17, 2017. Common Stock September 2021 Lincoln Park Purchase Agreement On September 28, 2021, the Company entered into a purchase agreement (the “September 2021 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company has the right to sell to Lincoln Park up to an aggregate of $75 million in shares of its common stock subject to the conditions and limitations set forth in the September 2021 Purchase Agreement. As consideration for entering into the September 2021 Purchase Agreement, the Company issued to Lincoln Park 218,750 shares of its common stock as initial commitment shares in a noncash transaction on September 28, 2021 and will issue up to 143,750 additional shares of its common stock as additional commitment shares on a pro rata basis in connection with any additional purchases. The Company will not receive any cash proceeds from the issuance of these additional commitment shares. The Company controls the timing and amount of any sales of its common stock to Lincoln Park. There is no upper limit on the price per share that Lincoln Park must pay for the Company’s common stock under the September 2021 Purchase Agreement, but in no event will shares be sold to Lincoln Park on a day the closing price is less than the floor price specified in the September 2021 Purchase Agreement. In all instances, the Company may not sell shares of its common stock to Lincoln Park under the September 2021 Purchase Agreement if that would result in Lincoln Park beneficially owning more than 9.99% of its common stock. The September 2021 Purchase Agreement does not limit the Company’s ability to raise capital from other sources at the Company’s sole discretion, except that, subject to certain exceptions, the Company may not enter into any Variable Rate Transaction (as defined in the September 2021 Purchase Agreement, including the issuance of any floating conversion rate or variable priced equity-like securities) during the 36 months after the date of the September 2021 Purchase Agreement. The Company has the right to terminate the September 2021 Purchase Agreement at any time, at no cost to the Company. During 2022, Lincoln Park purchased an aggregate of 1,050,000 shares of our common stock for a net purchase price of $4.4 million under the September 2021 Purchase Agreement. In connection with the purchases, we issued to Lincoln Park an aggregate of 8,502 shares of our common stock as additional commitment shares in noncash transactions. During the six months ended July 1, 2023, Lincoln Park purchased an aggregate of 7,300,000 shares of our common stock for a net purchase price of $21.6 million under the September 2021 Purchase Agreement. In connection with the purchases, we issued to Lincoln Park an aggregate of 41,500 shares of our common stock as additional commitment shares in noncash transactions. Subsequently, from July 2, 2023 through August 3, 2023, Lincoln Park purchased an aggregate of 160,000 shares of our common stock for a net purchase price of $0.5 million under the September 2021 Purchase Agreement. In connection with the purchases, we issued to Lincoln Park an aggregate of 947 shares of our common stock as additional commitment shares in noncash transactions. |
Stock-Based Awards
Stock-Based Awards | 6 Months Ended |
Jul. 01, 2023 | |
Stock-Based Awards | |
Stock-Based Awards | Note 9—Stock-Based Awards As of July 1, 2023, the Company had 113,836 shares of common stock reserved for future issuance under its Amended and Restated 2006 Incentive Plan (“Amended 2006 Plan”). Stock options granted under the Amended 2006 Plan generally vest at a rate of at least 25% per year over four years and expire 10 years from the grant date. RSUs granted for employees and consultants generally vest in equal installments annually and fully vest over a four-year term from the grant date. Stock Options The following table summarizes the activity related to stock options during the six months ended July 1, 2023: Weighted- Number of Average Shares Exercise (in thousands) Price Outstanding as of December 31, 2022 4,866 $ 0.93 Granted — — Exercised (510) 0.80 Expired or forfeited (147) 2.22 Outstanding as of July 1, 2023 4,209 $ 0.90 Restricted Stock Units The following table summarizes the activity related to RSUs during the six months ended July 1, 2023: Weighted- Average Number of Grant-Date Shares Fair Value (in thousands) per Share Balance nonvested as of December 31, 2022 3,442 $ 3.36 Granted 1,579 3.36 Vested (898) 2.38 Forfeited (180) 3.89 Balance nonvested as of July 1, 2023 3,943 $ 3.55 Stock-Based Compensation The following table summarizes the stock-based compensation expense by line item in the condensed consolidated statements of operations (in thousands): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Cost of sales $ 53 $ 16 $ 71 $ 19 Research and development 186 215 460 391 Selling, general and administrative 957 559 1,742 1,062 Total $ 1,196 $ 790 $ 2,273 $ 1,472 As of July 1, 2023, the Company had approximately $11.3 million, net of estimated forfeitures, of unearned stock-based compensation, which it expects to recognize over a weighted-average period of approximately 2.9 years. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 01, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2023 (the “2022 Annual Report”). In the opinion of management, all adjustments for the fair presentation of the Company’s condensed consolidated financial statements have been made. The adjustments are of a normal recurring nature except as otherwise noted. The results of operations for the interim periods are not necessarily indicative of the results to be expected for other periods or the full fiscal year. The Company has evaluated events occurring subsequent to July 1, 2023 through the filing date of this Quarterly Report on Form 10-Q and concluded that there were no events that required recognition and disclosures other than those discussed elsewhere in the notes hereto. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed 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’s fiscal year is the 52- or 53-week period that ends on the Saturday nearest to December 31. The Company’s fiscal year 2023 will include 52 weeks and ends on December 30, 2023. Each quarter of fiscal year 2023 will be comprised of 13 weeks. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in January and the associated quarters, months and periods of those fiscal years. |
Use of Estimates | Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results may differ materially from those estimates. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance Currently, there are no Accounting Standards Updates that the Company is required to adopt that are likely to have a material effect on its financial statements that have not been previously discussed in the Company's 2022 Annual Report. |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Supplemental Financial Information | |
Schedule Of Inventories | Inventories consisted of the following (in thousands): July 1, December 31, 2023 2022 Raw materials $ 7,351 $ 8,223 Work in process 3 185 Finished goods 2,599 2,278 $ 9,953 $ 10,686 |
Schedule of computation of basic and diluted earnings (loss) per share | The following table shows the computation of basic and diluted loss per share of common stock (in thousands, except per share data): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Numerator: Net loss $ (14,028) $ (4,952) $ (29,816) $ (10,824) Denominator: Weighted-average basic shares outstanding - basic and diluted 240,382 231,298 237,752 230,922 Net loss per share - basic and diluted $ (0.06) $ (0.02) $ (0.13) $ (0.05) |
Schedule of potential common shares excluded from diluted net loss per share calculations | These potential weighted average common share equivalents have been excluded from the diluted net loss per share calculations above as their effect would be anti-dilutive (in thousands): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Weighted average common share equivalents 4,183 5,419 3,677 5,911 |
Schedule of disaggregation of sales by major source | The following table shows disaggregated net sales by major source (in thousands): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Resales of third-party products $ 8,589 $ 49,168 $ 15,498 $ 94,753 Sale of the Company's modular memory subsystems 1,437 6,190 3,549 10,805 Total net sales $ 10,026 $ 55,358 $ 19,047 $ 105,558 |
Schedule of sales from external customers | The Company’s net product sales have historically been concentrated in a small number of customers. The following table sets forth the percentage of net product sales made to customers that each comprise 10% or more of total product sales: Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Customer A 36% 32% 42% 42% Customer B * 23% * 16% Customer C 27% * 14% * * Less than 10% of net sales during the period. |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Debt | |
Schedule of long-term debt | The Company’s debt consisted of the following (in thousands): July 1, December 31, 2023 2022 Notes payable $ 152 $ 447 Less: amounts due within one year (152) (447) Long-term debt $ — $ — |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Leases | |
Schedule of lease cost and supplemental condensed consolidated cash flow information relating to operating leases | Lease cost and supplemental condensed consolidated cash flow information related to operating and finance leases were as follows (in thousands): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Lease cost: Operating lease cost $ 194 $ 198 $ 389 $ 396 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 169 $ 170 $ 338 $ 319 Operating cash flows from finance leases 3 2 6 3 Financing cash flows from finance leases 52 21 104 27 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ — $ 33 $ — $ 588 Finance leases $ — $ 372 $ — $ 372 Lease modification to increase operating lease assets $ 187 $ 204 $ 187 $ 204 |
Schedule of supplemental condensed consolidated balance sheet information | Supplemental condensed consolidated balance sheet information related to leases was as follows (in thousands): July 1, December 31, 2023 2022 Operating Leases Operating lease right-of-use assets $ 1,915 $ 2,043 Accrued expenses and other current liabilities $ 636 $ 451 Operating lease liabilities 1,483 1,744 Total operating lease liabilities $ 2,119 $ 2,195 Finance Leases Property and equipment, at cost $ 488 $ 488 Accumulated depreciation (170) (121) Property and equipment, net $ 318 $ 367 Accrued expenses and other current liabilities $ 194 $ 211 Other liabilities 9 96 Total finance lease liabilities $ 203 $ 307 The following table includes supplemental information: July 1, December 31, 2023 2022 Weighted Average Remaining Lease Term (in years) Operating leases 3.3 3.9 Finance leases 1.0 1.5 Weighted Average Discount Rate Operating leases 5.8% 5.5% Finance leases 4.4% 4.4% |
Schedule of maturities of operating lease liabilities | Maturities of lease liabilities as of July 1, 2023, were as follows (in thousands): Operating Finance Fiscal Year Leases Leases 2023 (remainder of the year) $ 346 $ 110 2024 702 91 2025 624 5 2026 639 2 2027 23 — Total lease payments 2,334 208 Less: imputed interest (215) (5) Total $ 2,119 $ 203 |
Schedule of maturities of finance lease liabilities | Maturities of lease liabilities as of July 1, 2023, were as follows (in thousands): Operating Finance Fiscal Year Leases Leases 2023 (remainder of the year) $ 346 $ 110 2024 702 91 2025 624 5 2026 639 2 2027 23 — Total lease payments 2,334 208 Less: imputed interest (215) (5) Total $ 2,119 $ 203 |
Stock-Based Awards (Tables)
Stock-Based Awards (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Stock-Based Awards | |
Schedule of common stock options activity | Weighted- Number of Average Shares Exercise (in thousands) Price Outstanding as of December 31, 2022 4,866 $ 0.93 Granted — — Exercised (510) 0.80 Expired or forfeited (147) 2.22 Outstanding as of July 1, 2023 4,209 $ 0.90 |
Schedule of restricted stock Awards | Weighted- Average Number of Grant-Date Shares Fair Value (in thousands) per Share Balance nonvested as of December 31, 2022 3,442 $ 3.36 Granted 1,579 3.36 Vested (898) 2.38 Forfeited (180) 3.89 Balance nonvested as of July 1, 2023 3,943 $ 3.55 |
Schedule of stock-based compensation Expense | The following table summarizes the stock-based compensation expense by line item in the condensed consolidated statements of operations (in thousands): Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2023 2022 2023 2022 Cost of sales $ 53 $ 16 $ 71 $ 19 Research and development 186 215 460 391 Selling, general and administrative 957 559 1,742 1,062 Total $ 1,196 $ 790 $ 2,273 $ 1,472 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - item | Jul. 01, 2023 | Dec. 31, 2022 |
Number of weeks in a fiscal year | 52 | |
Number of weeks in first three quarters | 13 | |
Minimum [Member] | ||
Number of weeks in a fiscal year | 52 | |
Maximum [Member] | ||
Number of weeks in a fiscal year | 53 |
Supplemental Financial Inform_3
Supplemental Financial Information (Schedule Of Inventories) (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Supplemental Financial Information | ||
Raw materials | $ 7,351 | $ 8,223 |
Work in process | 3 | 185 |
Finished goods | 2,599 | 2,278 |
Inventories | $ 9,953 | $ 10,686 |
Supplemental Financial Inform_4
Supplemental Financial Information (Schedule Of Computation Of (Loss) Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 01, 2023 | Apr. 01, 2023 | Jul. 02, 2022 | Apr. 02, 2022 | Jul. 01, 2023 | Jul. 02, 2022 | |
Basic and diluted (loss) earnings per share: | ||||||
Net loss | $ (14,028) | $ (15,788) | $ (4,952) | $ (5,872) | $ (29,816) | $ (10,824) |
Weighted-average basic shares outstanding | 240,382 | 231,298 | 237,752 | 230,922 | ||
Weighted-average diluted shares outstanding | 240,382 | 231,298 | 237,752 | 230,922 | ||
Net loss per share - Basic | $ (0.06) | $ (0.02) | $ (0.13) | $ (0.05) | ||
Net loss per share - Diluted | $ (0.06) | $ (0.02) | $ (0.13) | $ (0.05) | ||
Weighted average common share equivalents | 4,183 | 5,419 | 3,677 | 5,911 |
Supplemental Financial Inform_5
Supplemental Financial Information (Disaggregation of Net Sales by Major Source) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jul. 02, 2022 | Jul. 01, 2023 | Jul. 02, 2022 | |
Total net sales | $ 10,026 | $ 55,358 | $ 19,047 | $ 105,558 |
Resales of third-party products | ||||
Total net sales | 8,589 | 49,168 | 15,498 | 94,753 |
Sale of the Company's modular memory subsystems | ||||
Total net sales | $ 1,437 | $ 6,190 | $ 3,549 | $ 10,805 |
Supplemental Financial Inform_6
Supplemental Financial Information (Major Customers and Products) (Details) - Customer Concentration Risk [Member] - customer | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 01, 2023 | Jul. 02, 2022 | Jul. 01, 2023 | Jul. 02, 2022 | Dec. 31, 2022 | |
Sales Revenue, Product Line [Member] | Customer A [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 36% | 32% | 42% | 42% | |
Sales Revenue, Product Line [Member] | Customer B [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 23% | 16% | |||
Sales Revenue, Product Line [Member] | Customer C | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 27% | 14% | |||
Sales Revenue, Resale of Products | Customers [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 86% | 89% | 81% | 90% | |
Gross Receivables [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Number of Customers | 4 | 1 | |||
Gross Receivables [Member] | Customer A [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 20% | 69% | |||
Gross Receivables [Member] | Customer B [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 18% | ||||
Gross Receivables [Member] | Customer C | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 13% | ||||
Gross Receivables [Member] | Customer D | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk, Percentage | 10% |
Credit Agreement and Standby _2
Credit Agreement and Standby Letters of Credit (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | ||||
Jun. 06, 2023 | May 15, 2023 | Apr. 29, 2022 | Apr. 22, 2022 | Jul. 01, 2023 | Dec. 31, 2022 | |
Silicon Valley Bank [Member] | ||||||
Line of Credit Facility | ||||||
Maximum borrowing capacity | $ 10 | |||||
Borrowing capacity as a percentage of eligible accounts receivable | 85% | |||||
Outstanding borrowings | $ 4.9 | |||||
Availability remaining | 0 | |||||
Prime Rate | Silicon Valley Bank [Member] | ||||||
Line of Credit Facility | ||||||
Rate plus "prime rate" | 0.75% | |||||
Svb Credit Agreement [Member] | ||||||
Line of Credit Facility | ||||||
Increase of borrowing capacity as a percentage of eligible accounts receivable | 50% | |||||
Letter of Credit | Silicon Valley Bank [Member] | ||||||
Line of Credit Facility | ||||||
Outstanding borrowings | $ 18.6 | |||||
Standby Letters of Credit | Citibank, N.A | ||||||
Line of Credit Facility | ||||||
Irrecoverable Letter of credit issued | $ 2 | $ 5 | ||||
Term (in years) | 1 year | 1 year | ||||
Outstanding amount | $ 7 | |||||
Amount draw down | $ 0 |
Debt (Schedule Of Long-Term Deb
Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Debt | ||
Notes Payable, Total | $ 152 | $ 447 |
Less: amounts due within one year | $ (152) | $ (447) |
Debt (Narrative) (Details)
Debt (Narrative) (Details) - USD ($) $ in Millions | Jan. 15, 2023 | Jul. 01, 2023 | Jan. 04, 2023 | Dec. 31, 2022 |
Long-term debt | ||||
Note payable | $ 0.2 | $ 0.4 | ||
Insurance Policy Finance, Notes Payable 7.2 Percent | ||||
Long-term debt | ||||
Face amount | $ 0.4 | |||
Interest rate (as a percent) | 7.20% | |||
Amortization period | 9 months |
Leases - Lease cost and supplem
Leases - Lease cost and supplemental condensed consolidated cash flow (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jul. 02, 2022 | Jul. 01, 2023 | Jul. 02, 2022 | |
Lease cost: | ||||
Operating lease cost | $ 194 | $ 198 | $ 389 | $ 396 |
Operating cash flows from operating leases | 169 | 170 | 338 | 319 |
Operating cash flows from finance leases | 3 | 2 | 6 | 3 |
Financing cash flows from finance leases | 52 | 21 | 104 | 27 |
Operating leases | 33 | 588 | ||
Finance leases | 372 | 372 | ||
Lease modification to increase operating lease assets | $ 187 | $ 204 | $ 187 | $ 204 |
Leases - Supplemental condensed
Leases - Supplemental condensed consolidated balance sheet information (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Leases | ||
Operating lease right-of-use assets | $ 1,915 | $ 2,043 |
Accrued expenses and other current liabilities | $ 636 | $ 451 |
Accrued expenses and other current liabilities - extensible list | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Operating lease liabilities | $ 1,483 | $ 1,744 |
Total operating lease liabilities | 2,119 | 2,195 |
Property and equipment, at cost | 488 | 488 |
Accumulated depreciation | (170) | (121) |
Property and equipment, net | $ 318 | $ 367 |
Property and equipment, net - extensible list | Property and equipment, net | Property and equipment, net |
Accrued expenses and other current liabilities | $ 194 | $ 211 |
Accrued expenses and other current liabilities - extensible list | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Other liabilities | $ 9 | $ 96 |
Other liabilities - extensible list | Other liabilities | Other liabilities |
Total finance lease liabilities | $ 203 | $ 307 |
Leases - Weighted Average Remai
Leases - Weighted Average Remaining Lease Term (Details) | Jul. 01, 2023 | Dec. 31, 2022 |
Leases | ||
Weighted Average Remaining Lease Term - Operating leases | 3 years 3 months 18 days | 3 years 10 months 24 days |
Weighted Average Remaining Lease Term - Finance leases | 1 year | 1 year 6 months |
Weighted Average Discount Rate - Operating leases | 5.80% | 5.50% |
Weighted Average Discount Rate - Finance leases | 4.40% | 4.40% |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Operating Leases | ||
2023 (remainder of the year) | $ 346 | |
2024 | 702 | |
2025 | 624 | |
2026 | 639 | |
2027 | 23 | |
Total lease payments | 2,334 | |
Less: imputed interest | (215) | |
Total operating lease liabilities | 2,119 | $ 2,195 |
Finance Leases | ||
2023 (remainder of the year) | 110 | |
2024 | 91 | |
2025 | 5 | |
2026 | 2 | |
Total lease payments | 208 | |
Less: imputed interest | (5) | |
Total finance lease liabilities | $ 203 | $ 307 |
Commitments and Contingencies (
Commitments and Contingencies (Litigations and Patent Reexaminations) (Details) $ in Millions | May 30, 2023 USD ($) |
Samsung Litigations | |
Commitments and Contingencies | |
Settlement awarded | $ 303 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - $ / shares | Apr. 17, 2017 | Jul. 01, 2023 | Dec. 31, 2022 |
Serial Preferred Stock | |||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |
Preferred stock, par value | $ 0.001 | $ 0.001 | |
Preferred stock, shares outstanding | 0 | 0 | |
Number of rights authorized for each outstanding share of stock | 1 | ||
Number of shares issued when right is exercised | 0.001 | ||
Purchase price per share | $ 6.56 | ||
Number of days rights are to be distributed | 10 days | ||
Minimum beneficial ownership percentage for rights to be distributed | 15% | ||
Series A Preferred Stock | |||
Serial Preferred Stock | |||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | |
Preferred stock, par value | $ 0.001 | $ 0.001 | |
Preferred stock, shares outstanding | 0 | 0 | |
Stock-Based Compensation | |||
Shares available for issuance | 1,000,000 |
Stockholders' Equity (Common St
Stockholders' Equity (Common Stock Purchase Agreement) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Sep. 28, 2021 | Aug. 03, 2023 | Sep. 30, 2021 | Jul. 01, 2023 | Apr. 01, 2023 | Jul. 02, 2022 | Apr. 02, 2022 | Jul. 01, 2023 | Dec. 31, 2022 | |
Assets Sold under Agreements to Repurchase [Line Items] | |||||||||
Net purchase price | $ 11,010 | $ 10,542 | $ 1,973 | $ 1,767 | |||||
September 2021 Lincoln Park Purchase Agreement | |||||||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||||||
Commitment shares | 218,750 | ||||||||
Additional commitment shares | 143,750 | 947 | |||||||
Net purchase price | $ 500 | ||||||||
Threshold percentage of common stock to be sold | 9.99% | ||||||||
Period after purchase agreement not to enter into variable rate transaction | 36 months | ||||||||
Terminate agreement cost | $ 0 | ||||||||
Repurchased shares | 7,300,000 | 1,050,000 | |||||||
Repurchase of common stock price | $ 21,600 | $ 4,400 | |||||||
Stock issued common stock | 41,500 | 8,502 | |||||||
Shares issued | 160,000 | ||||||||
Maximum [Member] | September 2021 Lincoln Park Purchase Agreement | |||||||||
Assets Sold under Agreements to Repurchase [Line Items] | |||||||||
Aggregate amount | $ 75,000 |
Stock-Based Awards (Narrative)
Stock-Based Awards (Narrative) (Details) | 6 Months Ended |
Jul. 01, 2023 shares | |
Amended 2006 Plan | |
Stock-Based Compensation | |
Shares available for issuance | 113,836 |
Rate of vesting of options granted | 25% |
Vesting period of options granted, in years | 4 years |
Expiration of vested options, period from date of grant | 10 years |
Restricted Stock Units (RSUs) [Member] | 2006 Plan | |
Stock-Based Compensation | |
Vesting period of options granted, in years | 4 years |
Stock-Based Awards (Schedule Of
Stock-Based Awards (Schedule Of Stock Option Activity) (Details) shares in Thousands | 6 Months Ended |
Jul. 01, 2023 $ / shares shares | |
Number of Shares | |
Outstanding, Beginning Balance | shares | 4,866 |
Exercised | shares | (510) |
Expired or forfeited | shares | (147) |
Outstanding, Ending Balance | shares | 4,209 |
Weighted-Average Grant - Date Fair Value (Per Share) | |
Outstanding, Beginning Balance | $ / shares | $ 0.93 |
Exercised | $ / shares | 0.80 |
Expired or Forfeited | $ / shares | 2.22 |
Outstanding, Ending Balance | $ / shares | $ 0.90 |
Stock-Based Awards (Schedule _2
Stock-Based Awards (Schedule of Restricted Stock Awards) (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 6 Months Ended |
Jul. 01, 2023 $ / shares shares | |
Number of Shares | |
Outstanding, Beginning Balance | shares | 3,442 |
Granted | shares | 1,579 |
Vested | shares | (898) |
Forfeited | shares | (180) |
Outstanding, Ending Balance | shares | 3,943 |
Weighted-Average Grant - Date Fair Value (Per Share) | |
Outstanding, Beginning Balance | $ / shares | $ 3.36 |
Granted | $ / shares | 3.36 |
Vested | $ / shares | 2.38 |
Forfeited | $ / shares | 3.89 |
Outstanding, Ending Balance | $ / shares | $ 3.55 |
Stock-Based Awards (Schedule _3
Stock-Based Awards (Schedule of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jul. 02, 2022 | Jul. 01, 2023 | Jul. 02, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-Based Compensation, Total | $ 1,196 | $ 790 | $ 2,273 | $ 1,472 |
Unearned stock-based compensation | 11,300 | $ 11,300 | ||
Expects to recognize over a weighted-average period | 2 years 10 months 24 days | |||
Cost Of Sales [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-Based Compensation, Total | 53 | 16 | $ 71 | 19 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-Based Compensation, Total | 186 | 215 | 460 | 391 |
Selling, General and Administrative Expenses [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-Based Compensation, Total | $ 957 | $ 559 | $ 1,742 | $ 1,062 |