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

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

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

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

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

The registrant has ~~46,109,765~~46,895,095 shares of common stock, par value $0.01 per share, issued and outstanding as of ~~October~~April 30, ~~2020.~~2021.

	October 2, 2020			January 3, 2020			April 2, 2021			January 1, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	128,338		$	119,968		$	162,344		$	152,453
Accounts receivable trade, net of allowance of doubtful accounts of $131 and $88, respectively		42,063			30,996
Accounts receivable trade, net of allowance of doubtful accounts of $60 and $59, respectively								33,733			35,229
Inventories, net		18,234			17,142			16,789			18,111
Prepayments, deposits and other current assets		7,368			6,560			10,649			10,625
Total current assets		196,003			174,666			223,515			216,418
Property, plant and equipment, net		22,662			17,065			26,314			24,030
Finance lease right-of-use assets, net		640			1,867			80			596
Operating lease right-of-use assets, net		7,725			6,684			8,666			8,764
Intangible assets, net		275			296			249			270
Goodwill		1,786			1,786			1,786			1,786
Deferred income taxes		5,007			3,750			4,536			4,944
Other assets		600			751			660			608
Total assets	$	234,698		$	206,865		$	265,806		$	257,416
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	1,353		$	1,827		$	1,288		$	1,379
Accounts payable		7,830			8,050			7,834			7,874
Obligations under finance leases		422			560			124			360
Obligations under operating leases		2,215			2,700			2,373			2,485
Allowance for sales returns		4,427			3,644			4,595			4,532
Other current liabilities		17,612			17,697			19,915			24,606
Total current liabilities		33,859			34,478			36,129			41,236
Obligations under finance leases		73			366			28			38
Obligations under operating leases		5,571			4,086			6,316			6,537
Deferred income taxes								222			222
Asset retirement obligations		216			211			206			221
Pension liability		8,587			7,840			8,729			11,940
Total liabilities		48,306			46,981			51,630			60,194
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 60,000 shares authorized: 46,072 and 44,822 shares issued and outstanding at October 3, 2020 and January 3, 2020, respectively		461			448
Common stock, $0.01 par value; 60,000 shares authorized: 46,857 and 46,448 shares issued and outstanding at April 2, 2021 and January 1, 2021, respectively								469			464
Additional paid-in capital		328,074			304,288			348,063			338,194
Accumulated other comprehensive loss		(2,925	)		(3,048	)		(3,457	)		(5,545	)
Accumulated deficit		(139,218	)		(141,804	)		(130,899	)		(135,891	)
Total stockholders’ equity		186,392			159,884			214,176			197,222
Total liabilities and stockholders’ equity	$	234,698		$	206,865		$	265,806		$	257,416

	Three Months Ended						Nine Months Ended						Three Months Ended
	October 2, 2020			September 27, 2019			October 2, 2020			September 27, 2019			April 2, 2021			April 3, 2020
Net sales	$	47,081		$	39,055		$	117,462		$	111,302		$	50,752		$	35,187
Cost of sales		12,210			10,004			33,401			28,172			11,610			10,427
Gross profit		34,871			29,051			84,061			83,130			39,142			24,760
Selling, general and administrative expenses:
General and administrative		8,589			7,098			24,406			21,443			10,212			7,969
Selling and marketing		12,649			12,463			34,003			34,288			13,201			11,028
Research and development		8,751			6,156			22,960			17,889			8,259			6,898
Total selling, general and administrative expenses		29,989			25,717			81,369			73,620			31,672			25,895
Operating income		4,882			3,334			2,692			9,510
Other income (expense), net:
Interest income, net		1			266			237			796
Gain (loss) on foreign currency transactions		468			(584	)		388			(821	)
Operating income (loss)														7,470			(1,135	)
Other expense, net:
Interest income (expense), net														(7	)		216
Loss on foreign currency transactions														(1,299	)		(468	)
Royalty income		93			106			239			440			160			94
Other income (expense), net		(63	)		26			(83	)		124			(85	)		1
Total other income (expense), net		499			(186	)		781			539
Income before income taxes		5,381			3,148			3,473			10,049
Provision for income taxes		1,489			760			887			2,380
Net income	$	3,892		$	2,388		$	2,586		$	7,669
Net income per share:
Total other expense, net														(1,231	)		(157	)
Income (loss) before income taxes														6,239			(1,292	)
Provision (benefit) for income taxes														1,247			(1,158	)
Net income (loss)													$	4,992		$	(134	)
Net income (loss) per share:
Basic	$	0.08		$	0.05		$	0.06		$	0.17		$	0.11		$	—
Diluted	$	0.08		$	0.05		$	0.05		$	0.16		$	0.10		$	—
Weighted average shares outstanding:
Basic		45,903			44,563			45,394			44,426			46,617			44,953
Diluted		48,180			46,857			47,589			46,848			49,213			44,953

	Three Months Ended						Nine Months Ended						Three Months Ended
	October 2, 2020			September 27, 2019			October 2, 2020			September 27, 2019			April 2, 2021			April 3, 2020
Net income	$	3,892		$	2,388		$	2,586		$	7,669
Net income (loss)													$	4,992		$	(134	)
Other comprehensive income (loss):
Defined benefit plans:
Net change in plan assets		(334	)		(1,037	)		(387	)		(1,677	)		3,084			(25	)
Reclassification into other income, net		70			26			212			80
Reclassification into other income (expense), net														120			70
Foreign currency translation loss		316			(22	)		402			317			(1,116	)		(27	)
Tax effect		(68	)		115			(104	)		80			—			4
Other comprehensive income (loss), net of tax		(16	)		(918	)		123			(1,200	)
Comprehensive income	$	3,876		$	1,470		$	2,709		$	6,469
Other comprehensive income, net of tax														2,088			22
Comprehensive income (loss)													$	7,080		$	(112	)

	Three Months Ended															Three Months Ended
	Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total			Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Compre- hensive Income (Loss)			Accumulated Deficit			Total
Balance, at July 3, 2020		45,788	$	458	$	320,235	$	(2,909	)	$	(143,110	)	$	174,674
Balance, at January 1, 2021																	46,448	$	464	$	338,194	$	(5,545	)	$	(135,891	)	$	197,222
Net income		—		—		—		—			3,892			3,892			—		—		—		—			4,992			4,992
Other comprehensive loss		—		—		—		(16	)		—			(16	)
Common stock issued upon exercise of options		269		3		4,426		—			—			4,429
Stock-based compensation		—		—		3,413		—			—			3,413
Unvested restricted stock		11		—		—		—			—			—
Vested restricted stock		4		—		—		—			—			—
Balance, at October 2, 2020		46,072	$	461	$	328,074	$	(2,925	)	$	(139,218	)	$	186,392
Balance, at June 28, 2019		44,534	$	445	$	296,063	$	(1,602	)	$	(150,571	)	$	144,335
Net income		—		—		—		—			2,388			2,388
Other comprehensive loss		—		—		—		(918	)		—			(918	)
Other comprehensive income																	—		—		—		2,088			—			2,088
Common stock issued upon exercise of options		64		1		718		—			—			719			376		4		6,230		—			—			6,234
Stock-based compensation		—		—		2,816		—			—			2,816			—		—		3,639		—			—			3,639
Vested restricted stock		8		—		—		—			—			—			33		1		—		—			—			1
Balance, at September 27, 2019		44,606	$	446	$	299,597	$	(2,520	)	$	(148,183	)	$	149,340
Balance, at April 2, 2021																	46,857	$	469	$	348,063	$	(3,457	)	$	(130,899	)	$	214,176

Balance, at January 3, 2020																	44,822	$	448	$	304,288	$	(3,048	)	$	(141,804	)	$	159,884
Net loss																	—		—		—		—			(134	)		(134	)
Other comprehensive income																	—		—		—		22			—			22
Common stock issued upon exercise of options																	196		2		2,002		—			—			2,004
Stock-based compensation																	—		—		3,190		—			—			3,190
Vested restricted stock																	87		1		—		—			—			1
Balance, at April 3, 2020																	45,105	$	451	$	309,480	$	(3,026	)	$	(141,938	)	$	164,967

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’ EQUITY (CONTINUED)~~CASH FLOWS

Nine Months Ended

Common
Stock Shares

Common
Stock Par
Value

Additional
Paid-In
Capital

Accumulated
Other
Compre-
hensive
Income
(Loss)

Accumulated
Deficit

Total

Balance, at January 3, 2020

44,822

$
448

$
304,288

$
(3,048
)

$
(141,804
)

$
159,884

Net income

—

—

—

—

2,586

2,586

Other comprehensive income

—

—

—

123

—

123

Common stock issued upon exercise of options

1,146

12

13,974

—

—

13,986

Stock-based compensation

—

—

9,812

—

—

9,812

Unvested restricted stock

11

—

—

—

—

—

Vested restricted stock

93

1

—

—

—

1

Balance, at October 2, 2020

46,072

$
461

$
328,074

$
(2,925
)

$
(139,218
)

$
186,392

Balance, at December 28, 2018

44,195

$
442

$
289,584

$
(1,320
)

$
(156,280
)

$
132,426

Net income

—

—

—

—

7,669

7,669

Impact of the adoption of lease accounting standard

—

—

—

—

113

113

Impact of adoption of nonemployee share-based payment standard

—

—

(315
)

—

315

—

Other comprehensive loss

—

—

—

(1,200
)

—

(1,200
)
Common stock issued upon exercise of options

190

2

1,827

—

—

1,829

Stock-based compensation

—

—

8,501

—

—

8,501

Unvested restricted stock

11

—

—

—

—

—

Vested restricted stock

210

2

—

—

—

2

Balance, at September 27, 2019

44,606

$
446

$
299,597

$
(2,520
)

$
(148,183
)

$
149,340

	Three Months Ended
	April 2, 2021			April 3, 2020
Cash flows from operating activities:
Net income (loss)	$	4,992		$	(134	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property, plant, and equipment		865			766
Amortization of intangibles		9			9
Deferred income taxes		—			(1,369	)
Change in net pension liability		127			173
Loss on disposal of property and equipment		2			3
Stock-based compensation expense		3,330			2,921
Provision for sales returns and bad debts		103			80
Inventory provision		384			336
Changes in working capital:
Accounts receivable		1,138			(3,462	)
Inventories		984			(491	)
Prepayments, deposits, and other current assets		(143	)		(2,446	)
Accounts payable		(399	)		907
Other current liabilities		(4,626	)		(5,464	)
Net cash provided by (used in) operating activities		6,766			(8,171	)
Cash flows from investing activities:
Acquisition of property and equipment		(2,159	)		(2,185	)
Net cash used in investing activities		(2,159	)		(2,185	)
Cash flows from financing activities:
Repayment of finance lease obligations		(235	)		(236	)
Repayment on line of credit		—			(505	)
Proceeds from the exercise of stock options		6,234			2,004
Proceeds from vested restricted stock		1			1
Net cash provided by financing activities		6,000			1,264
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(716	)		(25	)
Increase (decrease) in cash, cash equivalents and restricted cash		9,891			(9,117	)
Cash, cash equivalents and restricted cash, at beginning of the period		152,453			119,968
Cash, cash equivalents and restricted cash, at end of the period	$	162,344		$	110,851

Nine Months Ended

October 2, 2020

September 27, 2019

Cash flows from operating activities:

Net income

$
2,586

$
7,669

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property, plant, and equipment

2,276

2,853

Amortization of intangibles

26

26

Deferred income taxes

(1,215
)

526

Change in net pension liability

522

264

Loss on disposal of property and equipment

3

14

Stock-based compensation expense

8,965

7,778

Provision for sales returns and bad debts

815

309

Inventory provision

1,195

1,222

Changes in working capital:

Accounts receivable

(10,975
)

(4,260
)
Inventories

(1,353
)

(179
)
Prepayments, deposits, and other current assets

(636
)

(230
)
Accounts payable

(657
)

546

Other current liabilities

(151
)

(536
)
Net cash provided by operating activities

1,401

16,002

Cash flows from investing activities:

Acquisition of property and equipment

(6,259
)

(7,169
)
Acquisition of patents and licenses

—

(30
)
Net cash used in investing activities

(6,259
)

(7,199
)
Cash flows from financing activities:

Repayment of finance lease obligations

(455
)

(998
)
Repayment on line of credit

(511
)

(1,512
)
Proceeds from the exercise of stock options

13,986

1,829

Proceeds from vested restricted stock

1

2

Net cash provided by (used in) financing activities

13,021

(679
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash

207

204

Increase in cash, cash equivalents and restricted cash

8,370

8,328

Cash, cash equivalents and restricted cash, at beginning of the period

119,968

103,999

Cash, cash equivalents and restricted cash, at end of the period

$
128,338

$
112,327

The Condensed Consolidated Financial Statements of the Company present the financial position, results of operations, and cash flows of STAAR Surgical Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information and footnote disclosures normally included in the Comprehensive Financial Statements have been condensed or omitted pursuant to such rules and regulations. The Consolidated Balance Sheet as of January ~~3, 2020~~1, 2021 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January ~~3, 2020.~~1, 2021.

The Condensed Consolidated Financial Statements for the three ~~and nine~~ months ended ~~October~~April 2, ~~2020~~2021 and ~~September 27, 2019,~~April 3, 2020, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations. The results of operations for the three ~~and nine~~ months ended ~~October~~April 2, ~~2020~~2021 and ~~September 27, 2019,~~April 3, 2020, are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

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

There ~~were two vendors~~was one vendor which accounted for over ~~29%~~11% and 10% of the Company’s consolidated accounts payable as of ~~October~~April 2, ~~2020. There was one vendor which accounted for over 11% of the Company’s consolidated accounts payable as of~~2021 and January ~~3, 2020. There was one vendor who accounted for over 10% of the Company’s consolidated purchases for the three months ended October 2, 2020.~~1, 2021, respectively. There were no vendors who accounted for over 10% of the Company’s consolidated purchases for the ~~nine~~three months ended ~~October~~April 2, ~~2020.~~2021 and April 3, 2020, respectively.

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

Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Adopted

On January ~~4, 2020~~1, 2021 (beginning of fiscal year ~~2020)~~2021), the Company adopted Accounting Standards Update (“ASU”) 2016‑13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model; and (ii) provides for recording credit losses on available-for-sale debt securities through an allowance account. ASU 2016-13 also requires certain incremental disclosures. Subsequently, the FASB issued ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2020-02 and ASU 2020-03 to clarify and improve ASU 2016-13. The adoption of ASU 2016-13 did not have a material impact on the Condensed Consolidated Financial Statements.

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

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

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

On January 4, 2020 (beginning of fiscal year 2020), the Company adopted ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which modifies certain disclosures requirements for reporting fair value measurements. The adoption of ASU 2018-13 did not have a material impact on the Condensed Consolidated Financial Statements.

On January 4, 2020 (beginning of fiscal year 2020), the Company adopted ASU 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20); Disclosure Framework – Changes in the Disclosure Requirement for Defined Benefit Plans,” which modifies disclosure requirements for employers that sponsor defined benefit pension or other post retirement plans. The adoption of ASU 2018-14 did not have a material impact on the Condensed Consolidated Financial Statements.

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

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

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

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

Since 1998, the Company’s wholly owned Japanese subsidiary, STAAR Japan, has had an agreement with Mizuho Bank which provides for borrowings of up to 500,000,000 Yen, at an interest rate equal to the uncollateralized overnight call rate (approximately ~~0.06%~~0.07% as of ~~October~~April 2 ~~2020)~~2021) plus a 0.50% spread, and may be renewed quarterly (the current line expires on ~~November~~May 21, ~~2020)~~2021). The credit facility is not collateralized. The Company had 142,500,000 Yen ~~and 197,500,000 Yen~~ outstanding on the line of credit as of ~~October~~April 2, ~~2020~~2021 and January ~~3, 2020, respectively~~1, 2021 (approximately ~~$1,353,000~~$1,288,000 and ~~$1,827,000~~$1,379,000 based on the foreign exchange rates on ~~October~~April 2, ~~2020~~2021 and January ~~3, 2020,~~1, 2021, respectively), which approximates fair value due to the short-term maturity and market interest rates of the line of credit. In case of default, the interest rate will be increased to 14% per annum. There was 357,500,000 Yen ~~and 302,500,000 Yen~~ available for borrowing as of ~~October~~April 2, ~~2020~~2021 and January ~~3, 2020, respectively~~1, 2021 (approximately ~~$3,393,000~~$3,232,000 and ~~$2,798,000~~$3,459,000 based on the foreign exchange rate on ~~October~~April 2, ~~2020~~2021 and January ~~3, 2020,~~1, 2021, respectively). At maturity on ~~November~~May 21, ~~2020,~~2021, the Company expects to renew this line of credit for an additional three months, with similar terms.

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

In September 2013, the Company’s wholly owned Swiss subsidiary, STAAR Surgical AG, entered into a framework agreement for loans (“framework agreement”) with Credit Suisse (the “Bank”). The framework agreement provides for borrowings of up to 1,000,000 CHF (Swiss Francs) (approximately $1,100,000 ~~and $1,000,000~~ at the rate of exchange on ~~October~~April 2, ~~2020~~2021 and January ~~3, 2020 respectively)~~1, 2021), to be used for working capital purposes. Accrued interest and 0.25% commissions on average outstanding borrowings is payable quarterly and the interest rate will be determined by the Bank based on the then prevailing market conditions at the time of borrowing. The framework agreement is automatically renewed on an annual basis based on the same terms assuming there is no default. The framework agreement may be terminated by either party at any time in accordance with its general terms and conditions. The framework agreement is not collateralized and contains certain conditions such as providing the Bank with audited financial statements annually and notice of significant events or conditions, as defined in the framework agreement. The Bank may also declare all amounts outstanding to be immediately due and payable upon a change of control or a “material qualification” in STAAR Surgical independent auditors’ report, as defined. There were 0 borrowings outstanding as of ~~October~~April 2, ~~2020~~2021 and January ~~3, 2020.~~1, 2021.

The Company is in compliance with covenants of its credit facilities and lines of credit as of ~~October~~April 2, ~~2020.~~2021.

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

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

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

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

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

Estimated future minimum lease payments under operating and finance leases having initial or remaining non-cancelable lease terms more than one year as of ~~October~~April 2, ~~2020~~2021 is as follows (in thousands):

As of October 2, 2020
12 Months Ended

Operating Leases

Finance Leases

September 2021

$
2,374

$
433

September 2022

1,632

51

September 2023

1,404

15

September 2024

896

8

September 2025

637

—

Thereafter

1,228

—

Total minimum lease payments, including interest

$
8,171

$
507

Less amounts representing interest

385

12

Total minimum lease payments

$
7,786

$
495

As of April 2, 2021 12 Months Ended	Operating Leases			Finance Leases
March 2022	$	2,573		$	127
March 2023		2,395			14
March 2024		1,681			14
March 2025		826			—
March 2026		455			—
Thereafter		1,184			—
Total minimum lease payments, including interest	$	9,114		$	155
Less amounts representing interest		(425	)		(3	)
Total minimum lease payments	$	8,689		$	152

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

The Company recorded income taxes of ~~$1,489,000~~$1,247,000 for the three months ended ~~October~~April 2, ~~2020~~2021 due to pre-tax income generated in certain foreign ~~jurisdictions, partially offset by~~jurisdictions. The Company recorded an income tax benefit of $1,158,000 for the three months ended April 3, 2020 due to a ~~reversal of $154,000~~release of its U.S. valuation allowance of $1,369,000, as a result of ~~an increase~~the Company revising its global forecasts in ~~foreign income~~response to the impacts of COVID‑19, and due to changes in the usage and release of certain deferred tax ~~assets. The Company recorded income taxes of $760,000 for the three months ended September 27, 2019 due to~~assets, offset by pre-tax income generated in certain foreign ~~jurisdictions and withholding taxes on foreign operations.~~ The Company recorded income taxes of $887,000 for the nine months ended October 2, 2020 due to income tax expense from profits generated from its foreign operations, partially offset by the release of its U.S. valuation allowance. The Company recorded ~~income taxes of $2,380,000 for the nine months ended September 27, 2019, primarily due to pre-tax income generated in certain foreign jurisdictions and withholding taxes on foreign operations.~~jurisdictions. The Company’s quarterly provision for income taxes is determined by estimating an annual effective tax rate. This estimate may fluctuate throughout the year as new information becomes available affecting its underlying assumptions. In the fourth quarter of fiscal year 2019, the Company reversed all previously recorded withholding taxes recorded for 2019, at which time the Company formed STAAR Surgical UK Limited as a holding company for its foreign operations. Based on the current tax treaties between the U.S., United Kingdom and Switzerland, the Company will no longer accrue for Switzerland withholding taxes on foreign earnings after fiscal 2018 (see also Note 10 in its fiscal 2019 Form 10-K for more information). There are 0 unrecognized tax benefits related to uncertain tax positions taken by the Company. All earnings from the Company’s subsidiaries are not considered to be permanently reinvested.

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

The final regulations ~~for addressing the treatment of foreign income that is subject to a high rate of foreign tax (the GILTI high-tax exclusion). The final regulations~~also allow companies to exclude certain high-taxed income from their GILTI ~~calculation.~~calculation (the GILTI high-tax exclusion). The GILTI high-tax exclusion applies if the effective foreign tax rate is 90% or more of the rate that would apply if the income were subject to the maximum US rate of tax specified in section 11 (currently 18.9%, based on a maximum rate of 21%). The final regulations also provide that the GILTI high-tax exclusion is an annual election made each year and is retroactive to years beginning after December 31, 2017. The Company has made the election to exclude certain high-taxed income from its GILTI calculation for ~~2019 and~~ the three ~~and nine~~ months ended ~~October~~April 2, 2021 and April 3, 2020.

The ultimate realization of deferred tax assets is dependent upon future generation of income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the projected future income and tax planning strategies in making this assessment. ~~As of fiscal year end 2019,~~Since January 1, 2021, the Company had three years of accumulated profits for federal and various state income tax purposes as a result of GILTI. However, the three-year income position is not solely determinative and, accordingly, management considers all other available positive and negative evidence in its analysis. This includes existing profits in foreign jurisdiction as well as projected future profits. As further described in Notes 1 and 10 of the Company’s fiscal ~~2019~~2020 Form 10-K, under the “incremental cash tax savings approach,” the Company recorded a valuation allowance release of ~~$3,003,000~~$3,576,000 and ~~$373,000~~$294,000 against the federal and certain states deferred tax assets, ~~respectively. During the nine months ended October~~respectively, as of April 2, ~~2020, the Company revised its global forecasts as a result of COVID‑19,~~2021, and ~~due to changes in the usage and release of certain~~January 1, 2021.

Total U.S. net deferred tax assets ~~the Company released an additional $1,215,000~~were $3,870,000 as of ~~valuation allowance. As of October~~April 2, ~~2020, the Company released approximately $4,591,000 of valuation allowance on its deferred tax assets in the U.S. jurisdiction utilizing the incremental cash tax savings approach.~~

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

2021 and January 1, 2021. Under the incremental cash tax savings approach, the U.S. valuation allowances of ~~$35,745,000,~~$41,467,000 and $42,080,000, will remain as the usage of the remaining net operating losses and deferred tax assets will not result in cash tax savings and therefore provide no additional ~~benefit.~~ benefit as of~~As of October~~ April 2, ~~2020,~~ ~~the Company had net deferred tax assets in the U.S. of $4,727,000, which consisted of the federal~~2021 and ~~state valuation allowance release of $4,307,000 and $284,000,~~January 1, 2021, respectively ~~and the refundable alternative minimum tax credit of $136,000.~~

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

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

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

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

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

The Amended and Restated Omnibus Equity Incentive Plan (“the Plan”) provides for various forms of stock-based incentives. To date, of the available forms of awards under the Plan, the Company has granted only stock options, restricted stock, unrestricted share grants, restricted stock units (“RSUs”) and performance stock units (“PSUs”). Options under the Plan are granted at fair market value on the date of grant, become exercisable generally over a three-year period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from the date of grant. Certain option and share awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Plan). Grants of restricted stock outstanding under the Plan generally vest over periods of one to three years. Grants of RSUs and PSUs outstanding under the Plan generally vest based on service, performance, or a combination of both. ~~On July 30, 2020, stockholders approved a proposal to increase the number of shares under the plan by 2,650,000 shares, for a total of 18,035,000 shares.~~ As of ~~October~~April 2, ~~2020,~~2021, there were ~~3,376,152~~3,040,305 shares available for grant under the Plan.

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

A summary of stock option activity under the Plan for the ~~nine~~three months ended ~~October~~April 2, ~~2020~~2021 is presented below:

A summary of restricted stock, RSUs and PSUs activity under the Plan for the ~~nine~~three months ended ~~October~~April 2, ~~2020~~2021 is presented below:

On ~~August 19,~~December 31, 2020, Amir Sitabkhan filed a ~~putative federal securities class action, Alwazaan v. STAAR Surgical Co., et al., was filed~~stockholder derivative complaint against ~~the Company~~certain members of our Board of Directors, Caren Mason, Stephen C. Farrell, John C. Moore, and ~~certain of its executives~~Louis E. Silverman, as well as current Chief Financial Officer (CFO) Patrick F. Williams and former CFO Deborah Andrews in the U.S. District Court for the Central District of California. ~~On September 1, 2020, a substantially similar federal securities class action, Zhang v.~~The plaintiff alleges breaches of fiduciary duties by, among other things, allowing STAAR ~~Surgical Co., et al., was filed against~~to disseminate misleading statements to investors regarding its sales and growth in China and overstating marketing and research and development expenses, failing to properly oversee the Company, and ~~the same executives in the U.S. District Court for the Central District of California.~~unjust enrichment. The complaint sought damages, restitution and governance reforms, attorneys’ fees, and costs. On ~~September 11, 2020,~~January 21, 2021, the court ~~consolidated~~granted the ~~two actions under~~parties’ stipulation extending the ~~caption~~ ~~In re STAAR Surgical Co. Securities Litigation. The plaintiffs in~~time for defendants to respond to the complaint to March 8, 2021. On March 9, 2021, Mr. Sitabkhan’s counsel filed a notice of voluntary dismissal of the lawsuit, ~~allege that~~which dismissed the Company made material misstatements regarding its sales in China, its marketing spend, and its R&D expenses. Plaintiffs seek compensatory and punitive damages as well as attorneys’ fees. Although the ultimate outcome of this action cannot be determined with certainty, the Company denies any wrongdoing and will vigorously defend itself against these claims.lawsuit without prejudice.

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

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

	Three Months Ended						Nine Months Ended						Three Months Ended
	October 2, 2020			September 27, 2019			October 2, 2020			September 27, 2019			April 2, 2021			April 3, 2020
Numerator:
Net income	$	3,892		$	2,388		$	2,586		$	7,669
Net income (loss)													$	4,992		$	(134	)
Denominator:
Weighted average common shares:
Common shares outstanding		45,914			44,573			45,405			44,436			46,628			44,964
Less: Unvested restricted stock		(11	)		(10	)		(11	)		(10	)		(11	)		(11	)
Denominator for basic calculation		45,903			44,563			45,394			44,426			46,617			44,953
Weighted average effects of potentially diluted common stock:
Stock options		2,208			2,194			2,124			2,260			2,491			—
Unvested restricted stock		—			2			5			6			8			—
Restricted stock units		68			98			66			156			88			—
Performance stock units		1			—			—			—			9			—
Denominator for diluted calculation		48,180			46,857			47,589			46,848			49,213			44,953
Net income per share:
Net income (loss) per share:
Basic	$	0.08		$	0.05		$	0.06		$	0.17		$	0.11		$	(0.00	)
Diluted	$	0.08		$	0.05		$	0.05		$	0.16		$	0.10		$	(0.00	)

Because the Company had a net loss for the three months ended April 3, 2020, the number of diluted shares is equal to the number of basic shares. The following table sets forth (in thousands) the weighted average number of options to purchase shares of common stock, restricted stock, RSUs and PSUs with either exercise prices or unrecognized compensation cost per share greater than the average market price per share of the Company’s common stock, which were not included in the calculation of diluted per share amounts because the effects would be anti-dilutive.

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

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

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

One customer, the Company’s distributor in China, accounted for ~~49%~~39% and ~~46%~~33% of net sales for the three ~~and nine~~ months ended ~~October~~April 2, ~~2020, respectively,~~2021 and ~~the same customer, accounted for 47% and 44% of net sales for the three and nine months ended September 27, 2019,~~April 3, 2020, respectively. As of ~~October~~April 2, ~~2020~~2021 and January ~~3, 2020,~~1, 2021, respectively, one customer, the Company’s distributor in China, accounted for ~~59%~~37% and ~~43%~~46% of consolidated trade receivables.

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

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

The Consolidated Appropriations Act (“CAA”) among other things, opened up another round of Paycheck Protection Program loans, expanding eligibility to small nonprofits, destination marking organizations, and housing cooperatives, provided additional funding for the Economic Injury Disaster Loans and grants, extends the Employee Retention Tax Credit, also extended and expanded Paid Sick and Family Leave Credits and the Employee Social Security tax deferral. The Company will continue to monitor the impact that the CAA may have on its business, financial condition, results of operations, or liquidity.

The matters addressed in this Item 2 that are not historical information constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers can recognize forward-looking statements by the use of words like “anticipate,” “estimate,” “expect,” “intend,” “plan,” “believe,” “will,” “should,” “forecast” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements about any of the following: any projections of or guidance as to earnings, revenue, sales, profit margins, expense rate, cash, effective tax rate, capital expense or any other financial items; the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to their impact on sales, operations or clinical trials globally), the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding new, existing, or improved products, including but not limited to, expectations for success of new, existing, and improved products in the U.S. or international markets or government approval of a new or improved products (including the EVO family of lenses in the U.S. and the EVO Viva family of lenses for presbyopia internationally); commercialization of new or improved products; future economic conditions or size of market opportunities; expected costs of operations; statements of belief, including as to achieving ~~2020~~2021 business plans; expected regulatory activities and approvals, product launches, and any statements of assumptions underlying any of the foregoing.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risks and we can give no assurance that our expectations will prove to be correct. Actual results could differ from those described in this report because of numerous factors, many of which are beyond our control. These factors include, without limitation, ~~risks and uncertainties related to the COVID-19 pandemic and related public health measures,and~~ those described in in our Annual Report on Form 10-K in “Item 1A. Risk Factors” filed on February ~~26, 2020, as well as the updated risk factor disclosed in our Quarterly Report on Form 10-Q in “Item 1A. Risk Factors” filed on May 16, 2020.~~24, 2021. We undertake no obligation to update these forward-looking statements after the date of this report to reflect future events or circumstances or to reflect actual outcomes.

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

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

For the ~~third~~first quarter of ~~2020~~2021 STAAR’s net sales increased ~~21%~~44% over the prior year driven by ~~25%~~54% global ICL unit growth as markets continued to more fully ~~reopened~~reopen following COVID-19 related ~~shutdowns.~~shutdowns and we continued to gain momentum towards realization of a lens-based future for refractive vision correction. Notable markets for ICL unit growth in the ~~third~~first quarter of ~~2020~~2021 included China, Japan, South Korea, APAC Distributor Markets, India, Spain, Germany, European ~~distributor markets, and rest of APAC. India~~Distributor Markets, and the ~~Middle East were~~U.S. In late April, the ~~two markets that remained most challenged by COVID-19 during the third quarter. During the third quarter we completed patient enrollment in~~FDA received our ~~U.S.~~clinical data for our EVO ~~clinical trial and by October 30, 2020 all primary patients in the trial were implanted~~family of myopia lenses with the ~~lens. Primary study analysis will be conducted when 300 primary eyes complete six months~~goal of ~~follow-up, which is anticipated early in the second quarter of 2021 with submission of the study results~~bringing EVO to the FDA shortly thereafter. Considering the subsequent six-month patient follow-up and time to prepare our data submission to the FDA, we believe we are on track for potential marketing approval and commercialization of EVO in the U.S. ~~in the second half of 2021. Also, on November 4, 2020, we announced the first EVO~~ ~~Viva~~ ~~lens patient who was implanted in Belgium.~~market later this year. We are ~~embarking upon~~continuing the phased rollout of ~~that~~our EVO Viva lens, which is the presbyopia-correcting lens that received CE Mark approval in ~~Europe.~~2020.

While COVID-19 hotspots and government public health mandates may reoccur moving forward, we anticipate less business interruption and continued interest in our EVO ICL lens-based refractive solutions in the fourth quarter of 2020. We also continue to believe that we will achieve a 20% share of the refractive procedure market in China by the end of the year. Assuming significant COVID-19 hotspots and government public health mandates do not reoccur and global economic improvement progresses, our outlook for the fourth quarter of 2020 currently anticipates revenue in the range of $42 to $44 million with the caveat of increased spending to support a developing strong outlook forthroughout 2021.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses and analyzes data in our unaudited Condensed Consolidated Financial Statements provided in this report, which we have prepared in accordance with U.S. generally accepted accounting principles. Preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of our Board of Directors. Actual conditions may differ from our assumptions and actual results may differ from our estimates.

An accounting policy is deemed critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. Management believes that there have been no significant changes during the ~~nine~~three months ended ~~October~~April 2, ~~2020~~2021 to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended January ~~3, 2020.~~1, 2021.

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

	Percentage of Net Sales for Three Months						Percentage of Net Sales for Nine Months						Percentage of Net Sales for Three Months
	October 2, 2020			September 27, 2019			October 2, 2020			September 27, 2019			April 2, 2021			April 3, 2020
Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		25.9	%		25.6	%		28.4	%		25.3	%		22.9	%		29.6	%
Gross profit		74.1	%		74.4	%		71.6	%		74.7	%		77.1	%		70.4	%
General and administrative		18.2	%		18.2	%		20.8	%		19.3	%		20.1	%		22.6	%
Selling and marketing		26.9	%		31.9	%		29.0	%		30.8	%		26.0	%		31.4	%
Research and development		18.6	%		15.8	%		19.5	%		16.1	%		16.3	%		19.6	%
Total selling, general and administrative		63.7	%		65.9	%		69.3	%		66.2	%		62.4	%		73.6	%
Operating income		10.4	%		8.5	%		2.3	%		8.5	%
Total other income (expense), net		1.1	%		(0.5	)%		0.7	%		0.5	%
Income before income taxes		11.5	%		8.0	%		3.0	%		9.0	%
Provision for income taxes		3.2	%		1.9	%		0.8	%		2.1	%
Net income		8.3	%		6.1	%		2.2	%		6.9	%
Operating income (loss)														14.7	%		(3.2	)%
Total other expense, net														(2.4	)%		(0.5	)%
Income (loss) before income taxes														12.3	%		(3.7	)%
Provision (benefit) for income taxes														2.5	%		(3.3	)%
Net income (loss)														9.8	%		(0.4	)%

	Three Months Ended				Percentage Change			Nine Months Ended				Percentage Change			Three Months Ended				Percentage Change
	October 2, 2020		September 27, 2019		2020 vs. 2019			October 2, 2020		September 27, 2019		2020 vs. 2019			April 2, 2021		April 3, 2020		2021 vs. 2020
ICLs	$	41,493	$	33,815		22.7	%	$	101,561	$	96,033		5.8	%	$	46,501	$	29,340		58.5	%
Other product sales
IOLs		3,325		4,093		(18.8	)%		9,880		11,984		(17.6	)%		3,725		3,994		(6.7	)%
Other surgical products		2,263		1,147		97.3	%		6,021		3,285		83.3	%		526		1,853		(71.6	)%
Total other product sales		5,588		5,240		6.6	%		15,901		15,269		4.1	%		4,251		5,847		(27.3	)%
Net sales	$	47,081	$	39,055		20.6	%	$	117,462	$	111,302		5.5	%	$	50,752	$	35,187		44.2	%

Net sales for the three months ended ~~October~~April 2, ~~2020~~2021 were ~~$47.1~~$50.8 million, an increase of ~~21%~~44% from ~~$39.1~~$35.2 million reported during the same period of ~~2019.~~2020. The increase in net sales was due to increased ICL sales of ~~$7.7~~$17.2 million, ~~and~~partially offset by a decrease in other product sales of ~~$0.3~~$1.6 million. Changes in foreign currency favorably impacted net sales by ~~$0.4~~$1.2 million.

Net sales for the nine months ended October 2, 2020 were $117.5 million, an increase of 6% from $111.3 million reported during the same period of 2019. The increase in net sales was due to increased ICL sales of $5.5 million and other product sales of $0.6 million. Changes in foreign currency favorably impacted net sales by $0.5 million.

Total ICL sales for the three months ended ~~October~~April 2, ~~2020~~2021 were ~~$41.5~~$46.5 million, an increase of ~~23%~~58% from ~~$33.8~~$29.3 million reported for the same period of ~~2019,~~2020, with unit increase of ~~25%~~54%. The APAC region sales increased by ~~29%~~62%, with unit growth up ~~31%~~59%, due to ~~unit~~sales growth in Japan up 77%, China up 67%, India up 65%, other APAC Distributors up ~~67%, China up 33%~~47%, and Korea up ~~21%~~32%. The Europe, Middle East, Africa and Latin America region sales increased 7%51% with unit ~~decrease~~increase of 2%38%, due to ~~a decrease in units in the Middle East and Africa of 54%, offset by unit~~sales growth in ~~the UK up 44%, Spain up 24%,~~ Distributor Operations up ~~17%~~71%, Germany up ~~13% and~~58%, Latin America up ~~12%~~59% and Spain up 55%. The North America region sales ~~decreased 3%~~increased 44%, with unit ~~decrease~~increase of 1%49%, due ~~to a decrease~~increased sales in ~~units of 8% in~~Canada up 60% and the U.S.~~, offset~~ up 42%. First quarter 2021 sales growth continues to follow the third and four quarter 2020 sales growth trends experienced after the initial COVID-19 pandemic closures occurred in many of our primary markets during the first half of 2020. Changes in foreign currency favorably impacted ICL sales by ~~unit growth in Canada of 31%.~~$1.0 million for the three months ended April 2, 2021. ICL sales represented ~~88.1%~~91.6% and ~~86.6%~~83.4% of our total sales for the three months ended ~~October~~April 2, 2021 and April 3, 2020, ~~and September 27, 2019,~~ respectively.

~~Total ICL~~Other product sales, including IOLs were $4.3 million for the ~~nine~~three months ended ~~October~~April 2, ~~2020 were $101.6 million,~~2021, a ~~6% increase~~decrease of 27% from ~~$96.0~~$5.8 million reported for the same period of ~~2019, with unit growth up 10%.~~2020. The APAC region sales increased by 13%, with unit growth up 17% due to unit growth in Japan up 62%, Korea up 17%, China up 16% and other APAC Distributors up 30%. The Europe, Middle East, Africa and Latin America region sales decreased 9% and units decreased 12%. The North America region sales and units decreased 22%. The decrease in both these regions were impacted by the COVID-19 pandemic in the first half of 2020; most markets started to reopen in mid-May/early June. ICL sales represented 86.5% and 86.3% of our total sales for the nine months ended October 2, 2020 and September 27, 2019, respectively.

Other product sales, including IOLs were $5.6 million for the three months ended October 2, 2020, an increase of 7% from $5.2 million reported for the same period of 2019. Other product sales were $15.9 million for the nine months ended October 2, 2020, an increase of 4% from $15.3 million reported for the same period of 2019. The increase in both periods was due to ~~increased~~product yield issues requiring rework related to preloaded injector ~~part sales~~parts manufactured on our behalf by a third-party vendor then sold by us to a third-party manufacturer for product they sell to their customers, ~~offset by~~as well as decreased IOL sales. Changes in foreign currency favorably impacted other product sales by $0.2 million for the three months ended April 2, 2021. Other product sales represented ~~11.9%~~8.4% and ~~13.4%~~16.6% of our total sales for the three months ended ~~October~~April 2, ~~2020~~2021 and ~~September 27, 2019, respectively,~~ ~~and represented~~ ~~13.5% and 13.7% of our total sales for the nine months ended October 2,~~April 3, 2020, ~~and September 27, 2019,~~ respectively.

Gross profit for the three months ended ~~October~~April 2, ~~2020~~2021 was ~~$34.9~~$39.1 million, a ~~20.0%~~58.1% increase compared to the ~~$29.1~~$24.8 million reported for the same period of ~~2019.~~2020. Gross profit margin ~~decreased~~increased to ~~74.1%~~77.1% of revenue for the three months ended ~~October~~April 2, ~~2020~~2021 compared to ~~74.4%~~70.4% of revenue for the three months ended ~~September 27, 2019,~~April 3, 2020, due to geographic sales mix, ~~period costs associated with the manufacturing expansion projects, and increased~~a decreased mix of injector part sales which carry a lower ~~margin.~~

~~Gross profit for the nine months ended October 2, 2020 was $84.1 million, a 1.1% increase compared to the $83.1 million reported for the same period of 2019. Gross profit~~ margin ~~decreased to 71.6% of revenue for the nine months ended October 2, 2020 compared to 74.7% of revenue~~, and for the three months ended ~~September 27, 2019,~~ ~~due primarily to geographic sales mix, $1.2 million in expenses related to~~April 3, 2020 were $150,000 period costs recorded as a result of COVID-19 and the ~~COVID-19~~resulting manufacturing pause ~~from~~which began on March 17, ~~through April 27, 2020,~~ ~~period costs associated with the manufacturing expansion projects and increased mix of injector part sales which carry a lower margin.~~ 2020.

General and administrative expenses for the three months ended ~~October~~April 2, ~~2020~~2021 were ~~$8.6~~$10.2 million, a ~~21.0%~~28.1% increase compared to the ~~$7.1~~$8.0 million reported for the same period of ~~2019,~~2020, due to increased ~~salary-related expenses,~~ variable compensation, and facility costs. General and administrative expenses for the nine months ended October 2, 2020 were $24.4 million, a 13.8% increase compared to the $21.4 million reported for the same period of 2019, due to increased salary-related expenses, ~~variable compensation, tax consulting,~~ facility costs and corporate insurance, partially offset by decreased ~~travel expenses.~~tax consulting costs.

Selling and marketing expenses for the three months ended ~~October~~April 2, ~~2020~~2021 were ~~$12.6~~$13.2 million, a ~~1.5%~~19.7% increase compared to the ~~$12.5~~$11.0 million reported for the same period of ~~2019,~~2020, due to increased salary-related expenses, variable compensation and advertising and promotional activities, ~~and variable compensation,~~slightly offset by ~~decreased trade show and~~ travel expenses. Marketing and selling expenses for the nine months ended October 2, 2020 were $34.0 million, an 0.8% decrease compared to the $34.3 million reported for the same period of 2019, due to decreased trade show and travel expenses, offset by increased advertising and promotional activities, salary-related expenses and variable compensation.

Research and development expenses for the three months ended ~~October~~April 2, ~~2020~~2021 were ~~$8.8~~$8.3 million, a ~~42.2%~~19.7% increase compared to the ~~$6.2~~$6.9 million reported for the same period of ~~2019,~~2020, primarily due to increased variable compensation, clinical expenses associated with our EVO clinical trial in the ~~U.S., variable compensation~~U.S and salary-related expenses. Research and development expenses for the nine months ended October 2, 2020 were $23.0 million, a 28.3% increase compared to the $17.9 million reported for the same period of 2019, primarily due to increased clinical expenses associated with our EVO clinical trial in the U.S., and increased salary-related expenses, partially offset by travel expense.

Other ~~income,~~expense, net for the three months ended ~~October~~April 2, ~~2020~~2021 was ~~$0.5~~$1.2 million, compared to other expense, net of $0.2 million reported for the same period of ~~2019.~~2020. The change in other ~~income (expense),~~expense, net for the three months was due increased foreign exchange ~~gains~~losses (primarily euro)~~, partially offset by a decrease interest income, net, as a result of lower interest rates.~~ ~~Other income, net for the nine months ended October 2, 2020 was $0.8 million, a 44.9% increase compared to $0.5 million~~ reported for the same period of 2019. The increase in other income, net for the nine months was due to increased foreign exchange gains (primarily the euro), offset by decreases in interest income, as a result of lower interest rates, and royalty income, which was impacted by COVID-19 pandemic. .

We recorded income taxes of ~~$1.5~~$1.2 million for the three months ended ~~October~~April 2, ~~2020~~2021 due to pre-tax income generated in certain foreign ~~jurisdictions, partially offset by~~jurisdictions. We recorded an income tax benefit of $1.2 million for the three months ended April 3, 2020 due to a ~~reversal of $0.2 million~~release of our U.S. valuation allowance of $1.4 million, as a result of ~~an increase~~us revising our global forecasts in ~~foreign income~~response to the impacts of COVID-19, and due to changes in the usage and release of ~~our~~certain deferred tax ~~assets. We recorded income taxes of $0.8 million for the three months ended September 27, 2019 due to~~assets, offset by pre-tax income generated in certain foreign ~~jurisdictions and withholding taxes on foreign operations.~~ ~~We recorded income taxes of $0.9 million for the nine months ended~~ ~~October 2, 2020~~ ~~due to income tax expense from profits generated by our foreign operations, partially offset by the release of our U.S. valuation allowances. We recorded~~ income taxes of $2.4 million for the nine months ended September 27, 2019 primarily due to pre-tax income generated in certain foreign jurisdictions and withholding taxes on foreign operations. In the fourth quarter of fiscal year 2019, we reversed all previously recorded withholding taxes recorded for 2019, at which time we formed STAAR Surgical UK Limited as a holding company for our foreign operations. Based on the current tax treaties between the U.S., United Kingdom and Switzerland, we will no longer accrue for Switzerland withholding taxes on foreign earnings after fiscal 2018 (see also Note 10 in our fiscal 2019 Form 10-K for more information). We have no unrecognized tax benefits pertaining to any uncertain tax positions as of any period presented. jurisdictions.

ASC 740 requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset may not be realizable. As further described in Notes 1 and 10 of our fiscal ~~2019~~2020 Form 10-K, under the “incremental cash tax savings approach,” we recorded a valuation release of ~~$3.0~~$3.6 million and ~~$0.4~~$0.3 million against federal and certain states deferred tax assets, ~~respectively. During the nine months ended~~ ~~October 2, 2020, we revised our global forecasts~~respectively, as ~~a result of COVID-19, and due to changes in the usage and release of certain deferred tax assets, we released an additional $1.2 million of valuation allowance. As~~ of ~~October~~April 2, ~~2020~~2021 and January 1, 2021~~, we released approximately $4.6 million of valuation allowance on our deferred tax assets in the U.S. jurisdiction utilizing the incremental cash tax savings approach.~~. The ultimate realization of deferred tax assets is dependent upon future generation of income during the periods in which temporary differences representing net future deductible amounts become deductible. We considered the projected future income, tax planning strategies and all other available evidence both positive and negative, as well as results of recent operations in making this assessment. Total U.S. net deferred tax assets were $3.9 million as of April 2, 2021 and January 1, 2021. In applying the incremental cash tax savings approach, we will continue to maintain a valuation allowance on the balance of the Company’s net U.S. deferred tax assets of ~~$35.7 million.~~$41.5 million and 42.1 million as of April 2, 2021 and January 1, 2021, respectively.

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

unaware of any impairment of assets resulting from the COVID-19 pandemic. The Company did not apply for or require financing available

under the Coronavirus Aid, Relief, and Economic Security “CARES” Act and does not expect to do so given the strength of our balance sheet. Our financial condition at ~~October~~April 2, ~~2020~~2021 and January ~~3, 2020~~1, 2021 included the following (in millions):

We invest the net proceeds in short-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government. Additionally, at ~~October~~April 2, ~~2020,~~2021, we have a line of credit with a Japanese lender, in the amount of $1.3 million, with ~~$3.4~~$3.2 million of availability and a line of credit with a Swiss lender, in the amount of $1.1 million, which is fully available for borrowing.

Net cash provided by operating activities was ~~$1.4~~$6.8 million for the ~~nine~~three months ended ~~October~~April 2, ~~2020~~2021 compared to net cash ~~provided~~used by operating activities of ~~$16.0~~$8.2 million for the ~~nine~~three months ended ~~September 27, 2019.~~April 3, 2020. Net cash provided by operating activities for the ~~nine~~three months ended ~~October~~April 2, ~~2020,~~2021, consisted of ~~$12.6 in non-cash items and $2.6~~$5.0 million in net income, $4.8 in non-cash items, offset by ~~$13.8~~$3.0 million in working-capital changes. The ~~decrease~~increase in net cash provided by operating activities during the ~~nine~~three months ended ~~October~~April 2, ~~2020~~2021 was due to ~~decreases in~~increased net working capital of ~~$9.1~~$7.9 million, non-cash items of $1.9 million and net income of ~~$5.1~~$5.0 million ~~and non-cash items~~for the three months ended April 2, 2021 compared to a net loss of ~~$0.4 million.~~$0.1 million for the three months ended April 3, 2020.

Net cash used in investing activities was ~~$6.3 million and $7.2~~$2.2 million for the ~~nine~~three months ended ~~October~~April 2, ~~2020~~2021 and ~~September 27, 2019, respectively,~~April 3, 2020, and relate primarily to the acquisition of property, plant, and equipment.

Net cash provided by financing activities was ~~$13.0~~$6.0 million for the ~~nine~~three months ended ~~October~~April 2, ~~2020~~2021 compared to net cash ~~used in~~provided by financing activities of ~~$0.7~~$1.3 million for the ~~nine~~three months ended ~~September 27, 2019.~~April 3, 2020. Net cash provided by financing activities for the ~~nine~~three months ended ~~October~~April 2, ~~2020~~2021 consisted of ~~$14.0~~$6.2 million of proceeds from the exercise of stock options, partially offset by ~~$0.5 million repayment on the Japan line of credit and $0.5~~$0.2 million repayment of finance lease obligations.

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

The Company is in compliance with the covenants of its credit facilities as of ~~October~~April 2, ~~2020.~~2021.

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

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

During the ~~nine~~three months ended ~~October~~April 2, ~~2020,~~2021, there have been no material changes in the Company’s qualitative and quantitative market risk since the disclosure in the Company’s Annual Report on Form 10-K for the year ended January ~~3, 2020.~~1, 2021.

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

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

There were no changes in our internal control over financial reporting during the quarter ended ~~October~~April 2, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On ~~August 19,~~December 31, 2020, Amir Sitabkhan filed a ~~putative federal securities class action, Alwazaan v. STAAR Surgical Co., et al., was filed~~stockholder derivative complaint against ~~the Company~~certain members of our Board of Directors, Caren Mason, Stephen C. Farrell, John C. Moore, and ~~certain of its executives~~Louis E. Silverman, as well as current Chief Financial Officer (CFO) Patrick F. Williams and former CFO Deborah Andrews in the U.S. District Court for the Central District of California. ~~On September 1, 2020, a substantially similar federal securities class action, Zhang v.~~The plaintiff alleges breaches of fiduciary duties by, among other things, allowing STAAR ~~Surgical Co., et al., was filed against~~to disseminate misleading statements to investors regarding its sales and growth in China and overstating marketing and research and development expenses, failing to properly oversee the Company, and ~~the same executives in the U.S. District Court for the Central District of California.~~unjust enrichment. The complaint sought damages, restitution and governance reforms, attorneys’ fees, and costs. On ~~September 11, 2020,~~January 21, 2021, the court ~~consolidated~~granted the ~~two actions under~~parties’ stipulation extending the ~~caption~~ ~~In re STAAR Surgical Co. Securities Litigation. The plaintiffs in~~time for defendants to respond to the complaint to March 8, 2021. On March 9, 2021, Mr. Sitabkhan’s counsel filed a notice of voluntary dismissal of the lawsuit, ~~allege that~~which dismissed the ~~Company made material misstatements regarding its sales in China, its marketing spend, and its R&D expenses.~~ ~~Plaintiffs seek compensatory and punitive damages as well as attorneys’ fees.~~ ~~Although the ultimate outcome of this action cannot be determined with certainty, the Company denies any wrongdoing and will vigorously defend itself against these claims.~~lawsuit without prejudice.

Our short and long-term success is subject to many factors that are beyond our control. Investors and prospective investors should consider carefully information contained in this report and the risks and uncertainties described in “Part I—Item 1A—Risk Factors” of the Company’s Form 10-K for the fiscal year ended January ~~3, 2020 and in “Part II—Item 1A—Risk Factors” of the Company’s Form 10-Q for the three months ended April 3, 2020.~~1, 2021. Such risks and uncertainties could materially adversely affect our business, financial condition or operating results.

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

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

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


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

		PAGE NUMBER

PART I – FINANCIAL INFORMATION		1

ITEM 1	FINANCIAL STATEMENTS	1

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1917

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2421

ITEM 4.	CONTROLS AND PROCEDURES	2522

PART II – OTHER INFORMATION		2522

ITEM 1.	LEGAL PROCEEDINGS	2522

ITEM 1A.	RISK FACTORS	2623

ITEM 4.	MINE SAFETY DISCLOSURES	2623

ITEM 5.	OTHER INFORMATION	2623

ITEM 6.	EXHIBITS	2623

	October 2, 2020		January 3, 2020		April 2, 2021			January 1, 2021
Raw materials and purchased parts	$	1,818	$	3,334	$	3,534		$	3,679
Work in process		4,693		1,870		2,272			2,174
Finished goods		13,018		12,976		12,440			13,717
Total inventories, gross		19,529		18,180		18,246			19,570
Less inventory reserves		1,295		1,038		(1,457	)		(1,459	)
Total inventories, net	$	18,234	$	17,142	$	16,789		$	18,111

	October 2, 2020		January 3, 2020		April 2, 2021		January 1, 2021
Prepayments and deposits	$	3,534	$	3,031	$	3,625	$	3,423
Prepaid insurance		242		1,488		1,980		2,677
Prepaid marketing						1,281		368
Consumption tax receivable		1,059		875		170		1,409
Value added tax (VAT) receivable		1,492		713		1,763		2,056
BVG (Swiss Pension) prepayment						808		2
Other⁽¹⁾		1,041		453		1,022		690
Total prepayments, deposits and other current assets	$	7,368	$	6,560	$	10,649	$	10,625

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

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

	Stock Options (in 000’s)			Minimum Exercise Price		Maximum Exercise Price		Stock Options (in 000’s)			Minimum Exercise Price		Maximum Exercise Price
Outstanding at January 3, 2020		4,326
Outstanding at January 1, 2021									3,418
Granted		616							243
Exercised		(1,146	)						(376	)
Forfeited or expired		(14	)						—
Outstanding at October 2, 2020		3,782		$	5.05	$	51.42
Exercisable at October 2, 2020		2,594
Outstanding at April 2, 2021									3,285		$	5.34	$	106.51
Exercisable at April 2, 2021									2,324

	Restricted Stock (in 000’s)			Restricted Stock Units (in 000’s)			Performance Stock Units (in 000’s)		Restricted Stock (in 000’s)		Restricted Stock Units (in 000’s)			Performance Stock Units (in 000’s)
Unvested at January 3, 2020		11			104			—
Unvested at January 1, 2021										11		122			15
Granted		11			127			15		—		48			—
Vested		(11	)		(93	)		—		—		(33	)		—
Forfeited or expired		—			(1	)		—		—		—			—
Unvested at October 2, 2020		11			137			15
Unvested at April 2, 2021										11		137			15

3.1	Amended and Restated Certificate of Incorporation.(1)

3.2	Amended and Restated Bylaws.(2)

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

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

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

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

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

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

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

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

101	Financial statements from the quarterly report on Form 10-Q of STAAR Surgical Company for the quarter ended ~~October~~April 2, ~~2020~~2021 formatted in Inline Extensible Business Reporting Language (iXBRL), are filed herewith and include: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text.*

104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~October~~April 2, ~~2020,~~2021, has been formatted in Inline XBRL with applicable taxonomy extension information contained in Exhibit 101.

		STAAR SURGICAL COMPANY

Dated:	~~November 4, 2020~~May 5, 2021	By:	/s/ PATRICK F. WILLIAMS
			Patrick F. Williams
			Chief Financial Officer
			(on behalf of the Registrant and as its principal financial officer)

	October 2, 2020		January 3, 2020		April 2, 2021			January 1, 2021
Machinery and equipment	$	21,275	$	17,173	$	21,877		$	21,209
Computer equipment and software		6,686		6,244		8,362			7,423
Furniture and fixtures		4,614		4,169		4,672			4,676
Leasehold improvements		11,200		10,151		11,404			11,388
Construction in process		10,293		8,477		12,598			11,120
Total property, plant and equipment, gross		54,068		46,214		58,913			55,816
Less accumulated depreciation		31,406		29,149		(32,599	)		(31,786	)
Total property, plant and equipment, net	$	22,662	$	17,065	$	26,314		$	24,030

	October 2, 2020		January 3, 2020		April 2, 2021		January 1, 2021
Accrued salaries and wages	$	5,194	$	4,400	$	5,086	$	6,061
Accrued bonuses		1,000		4,184		1,896		3,000
Accrued insurance		96		1,346		1,757		2,633
Income taxes payable		3,898		2,710		5,517		4,657
Accrued consumption tax		1,228		1,164		520		1,743
Accrued professional fees for clinical trials		1,554		567
Marketing obligations		1,197		633		1,430		1,484
Other⁽¹⁾		3,445		2,693		3,709		5,028
Total other current liabilities	$	17,612	$	17,697	$	19,915	$	24,606