Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 21, 2023 | Jul. 02, 2022 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | NETLIST INC | ||
Entity Central Index Key | 0001282631 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2022 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Annual 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 | ||
Entity Address, Address Line Two | 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(g) Security | Common Stock, par value $0.001 per share | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 744.1 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 235,523,847 | ||
Auditor Name | KMJ Corbin & Company LLP | ||
Auditor Firm ID | 170 | ||
Auditor Location | Irvine, California | ||
ICFR Auditor Attestation Flag | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 25,011 | $ 47,679 |
Restricted cash | 18,600 | 10,800 |
Accounts receivable, net of allowances of $137 (2022) and $283 (2021) | 8,242 | 12,727 |
Inventories | 10,686 | 15,670 |
Prepaid expenses and other current assets | 1,308 | 1,126 |
Total current assets | 63,847 | 88,002 |
Property and equipment, net | 1,138 | 989 |
Operating lease right-of-use assets | 2,043 | 1,891 |
Other assets | 295 | 294 |
Total assets | 67,323 | 91,176 |
Current Liabilities: | ||
Accounts payable | 28,468 | 25,887 |
Revolving line of credit | 4,935 | 7,000 |
Accrued payroll and related liabilities | 1,588 | 1,308 |
Accrued expenses and other current liabilities | 2,635 | 632 |
Long-term debt due within one year | 447 | 562 |
Total current liabilities | 38,073 | 35,389 |
Operating lease liabilities | 1,744 | 1,593 |
Other liabilities | 270 | 152 |
Total liabilities | 40,087 | 37,134 |
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; 232,557 (2022) and 230,113 (2021) shares issued and outstanding | 233 | 231 |
Additional paid-in capital | 250,428 | 243,866 |
Accumulated deficit | (223,425) | (190,055) |
Total stockholders' equity | 27,236 | 54,042 |
Total liabilities and stockholders' equity | $ 67,323 | $ 91,176 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 |
Accounts receivable, allowance for doubtful accounts | $ 137 | $ 283 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 232,557,000 | 230,113,000 |
Common stock, shares outstanding | 232,557,000 | 230,113,000 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Net sales | $ 161,637 | $ 142,355 | $ 47,234 |
Cost of sales | 149,745 | 93,458 | 40,503 |
Gross profit | 11,892 | 48,897 | 6,731 |
Operating expenses: | |||
Research and development | 10,624 | 7,241 | 2,953 |
Intellectual property legal fees | 20,421 | 19,494 | 2,368 |
Selling, general and administrative | 14,347 | 10,779 | 8,247 |
Total operating expenses | 45,392 | 37,514 | 13,568 |
Operating (loss) income | (33,500) | 11,383 | (6,837) |
Other income (expense), net: | |||
Interest income (expense), net | 57 | (568) | (531) |
Other income, net | 74 | 643 | 101 |
Total other income (expense), net | 131 | 75 | (430) |
(Loss) income before provision for income taxes | (33,369) | 11,458 | (7,267) |
Provision for income taxes | 1 | 6,627 | 1 |
Net (loss) income | $ (33,370) | $ 4,831 | $ (7,268) |
(Loss) earnings per share: | |||
Basic | $ (0.14) | $ 0.02 | $ (0.04) |
Diluted | $ (0.14) | $ 0.02 | $ (0.04) |
Weighted-average common shares outstanding: | |||
Basic | 231,487 | 218,171 | 183,594 |
Diluted | 231,487 | 225,589 | 183,594 |
Net product sales | |||
Net sales | $ 161,637 | $ 102,355 | $ 47,234 |
License fee | |||
Net sales | $ 40,000 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 28, 2019 | $ 169 | $ 179,086 | $ (187,618) | $ (8,363) |
Balance, shares at Dec. 28, 2019 | 169,539 | |||
Net (loss) income | (7,268) | (7,268) | ||
Issuance of common stock, net | $ 25 | 12,149 | 12,174 | |
Issuance of common stock, net shares | 25,490 | |||
Issuance of warrants | 145 | 145 | ||
Exercise of stock options | 32 | 32 | ||
Exercise of stock options, shares | 226 | |||
Exercise of warrants, shares | 256 | |||
Stock-based compensation | 763 | 763 | ||
Restricted stock units vested and distributed | $ 1 | (1) | ||
Restricted stock units vested and distributed, shares | 801 | |||
Tax withholdings related to net share settlements of equity awards | (103) | (103) | ||
Tax withholdings related to net share settlements of equity awards, shares | (334) | |||
Balance at Jan. 02, 2021 | $ 195 | 192,071 | (194,886) | (2,620) |
Balance, shares at Jan. 02, 2021 | 195,978 | |||
Net (loss) income | 4,831 | 4,831 | ||
Issuance of common stock, net | $ 17 | 39,552 | 39,569 | |
Issuance of common stock, net shares | 16,646 | |||
Exercise of stock options | $ 4 | 3,946 | 3,950 | |
Exercise of stock options, shares | 2,865 | |||
Exercise of warrants | $ 14 | 7,854 | 7,868 | |
Exercise of warrants, shares | 13,808 | |||
Stock-based compensation | 1,580 | 1,580 | ||
Restricted stock units vested and distributed | $ 1 | (1) | ||
Restricted stock units vested and distributed, shares | 1,140 | |||
Tax withholdings related to net share settlements of equity awards | (1,136) | (1,136) | ||
Tax withholdings related to net share settlements of equity awards, shares | (324) | |||
Balance at Jan. 01, 2022 | $ 231 | 243,866 | (190,055) | 54,042 |
Balance, shares at Jan. 01, 2022 | 230,113 | |||
Net (loss) income | (33,370) | (33,370) | ||
Issuance of common stock, net | $ 1 | 4,435 | 4,436 | |
Issuance of common stock, net shares | 1,059 | |||
Exercise of stock options | 284 | $ 284 | ||
Exercise of stock options, shares | 414 | 414 | ||
Stock-based compensation | 3,214 | $ 3,214 | ||
Restricted stock units vested and distributed | $ 1 | (1) | ||
Restricted stock units vested and distributed, shares | 1,358 | |||
Tax withholdings related to net share settlements of equity awards | (1,370) | (1,370) | ||
Tax withholdings related to net share settlements of equity awards, shares | (387) | |||
Balance at Dec. 31, 2022 | $ 233 | $ 250,428 | $ (223,425) | $ 27,236 |
Balance, shares at Dec. 31, 2022 | 232,557 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (33,370) | $ 4,831 | $ (7,268) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 340 | 127 | 147 |
Interest accrued on convertible promissory notes | 300 | 309 | |
Amortization of debt discounts | 228 | 212 | |
Non-cash lease expense | 640 | 375 | 489 |
Gain on extinguishment of debt | (643) | ||
Stock-based compensation | 3,214 | 1,580 | 763 |
Issuance of warrant in lieu of payment | 145 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 4,485 | (8,047) | (1,008) |
Inventories | 4,984 | (12,472) | 298 |
Prepaid expenses and other assets | 264 | (286) | 1,693 |
Accounts payable | 2,581 | 20,166 | (3,807) |
Accrued payroll and related liabilities | 280 | 502 | 66 |
Accrued expenses and other liabilities | 1,587 | (654) | (173) |
Net cash provided by (used in) operating activities | (14,995) | 6,007 | (8,134) |
Cash flows from investing activities: | |||
Acquisition of property and equipment | (467) | (520) | (43) |
Net cash used in investing activities | (467) | (520) | (43) |
Cash flows from financing activities: | |||
Net borrowings (repayments) under line of credit | (2,065) | 3,322 | 688 |
Proceeds from issuance of long-term debt | 637 | ||
Principal repayments under finance lease | (129) | (20) | (18) |
Payments on note payable and long-term debt | (562) | (17,087) | (423) |
Proceeds from issuance of common stock, net | 4,436 | 39,569 | 12,174 |
Proceeds from exercise of stock options and warrants | 284 | 11,818 | 32 |
Payments for taxes related to net share settlement of equity awards | (1,370) | (1,136) | (103) |
Net cash provided by financing activities | 594 | 36,466 | 12,987 |
Net change in cash, cash equivalents and restricted cash | (14,868) | 41,953 | 4,810 |
Cash, cash equivalents and restricted cash at beginning of period | 58,479 | 16,526 | 11,716 |
Cash, cash equivalents and restricted cash at end of period | $ 43,611 | $ 58,479 | $ 16,526 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 |
Reconciliation of cash, cash equivalents and restricted cash at end of period: | |||
Cash and cash equivalents | $ 25,011 | $ 47,679 | $ 13,326 |
Restricted cash | 18,600 | 10,800 | 3,200 |
Cash, cash equivalents and restricted cash at end of period | $ 43,611 | $ 58,479 | $ 16,526 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 1—Summary of Significant Accounting Policies Basis of Presentation Netlist, Inc. and its wholly owned subsidiaries (collectively the “Company”, “Netlist,” “we,” “us,” or “our”) provides high-performance memory solutions to enterprise customers in diverse industries. Our products in various capacities and form factors and the line of custom and specialty memory products bring industry-leading performance to server and storage appliance customers and cloud service providers. We license our portfolio of intellectual property including patents, in server memory, hybrid memory and storage class memory, to companies that implement our technology. We operate in one reportable segment, which is the design and manufacture of high-performance memory subsystems for the server, high-performance computing and communications markets. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of Netlist, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses. Actual results may differ materially from those estimates. We have evaluated events occurring subsequent to December 31, 2022, through the filing date of this Annual Report on Form 10-K and concluded that there were no events that required recognition and disclosures, other than those discussed elsewhere in the notes hereto. Certain prior period amounts have been reclassified to conform to the current period’s presentation. Our fiscal year is the 52- or 53-week period that ends on the Saturday nearest to December 31. Our fiscal year 2022 ended on December 31, 2022, fiscal year 2021 ended on January 1, 2022, and fiscal year 2020 ended on January 2, 2021. All fiscal years presented in this Form 10-K, except fiscal year 2020, included 52 weeks. Additionally, all quarters, except the fourth quarter of 2020, included 13 weeks. Fiscal year 2020 included 53 weeks, with a 14 -week fourth quarter. Unless otherwise stated, references to particular years, quarters, months and periods refer to our fiscal years ended in January or December and the associated quarters, months and periods of those fiscal years. Recently Adopted Accounting Standards In the first quarter of 2022, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity, and also improves and amends the related earnings per share guidance for both Subtopics. The adoption of this ASU did not have an impact on the Company’s condensed consolidated financial statements as the Company paid off its convertible debt in December 2021. Revenue Recognition Product Revenue Revenue is recognized when control is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods and services. Revenue recognition is evaluated through the five steps outlined within the accounting guidance. Substantially all of our product sales relate to products sold at a point in time through ship-and-bill performance obligations. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Contracts with customers are comprised of customer purchase orders, invoices (including our standard terms and conditions) and written contracts. License Revenue For licenses of technology, recognition of revenue is dependent upon whether we have delivered rights to the technology, and whether there are future performance obligations under the contract. In some instances, the license agreements call for future events or activities to occur in order for milestone amounts to become due from the customer. The terms of such agreements include payments to us of one or more of the following: non-refundable upfront fees and royalties on net sales of licensed products. Historically, these license agreements have not included other future performance obligations for us once the license has been transferred to the customer. Revenue from non-refundable upfront payments is recognized when the license is transferred to the customer and we have no other performance obligations. Performance Obligations Net product sales and related cost of sales are primarily the result of promises to transfer products to customers. For performance obligations related to substantially all of the ship-and-bill products, control transfers at a point in time when title transfers upon shipment of the product to the customer, and for some sales, control transfers when title is transferred at time of receipt by the customer. Once a product has shipped or has been delivered, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. We consider control to have transferred upon shipment or delivery, because we have a present right to payment at that time, the customer has legal title to the asset, we have transferred physical possession of the asset, and the customer has the significant risks and rewards of ownership of the asset. Amounts billed to our customers for shipping and handling are recorded in net sales. Shipping and handling costs incurred by us are included in cost of sales in the accompanying consolidated statements of operations. Significant Payment Terms For ship-and-bill type contracts with customers, the invoice states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment terms are typically due within 30 days after delivery but, in limited instances, can range up to 90 days after delivery. Accordingly, our contracts with customers do not include a significant financing component. Variable Consideration Our revenue generating activities include variable consideration which is recorded as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. Common forms of variable consideration include limited rights of return for up to 30 days, except for sales of excess component inventories, which contain no right-of-return privileges and volume rebates for meeting established sales targets. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available. Returns for products sold are estimated using the expected value method and are recorded as a reduction in reported revenues at the time of sale based upon historical product return experience and is adjusted for known trends to arrive at the amount of consideration to which we expect to receive. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Contract Assets and Liabilities We continually evaluate whether the revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities. Generally, we do not have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed. As of January 1, 2022 and December 31, 2022, there were no contract liabilities. Warranties We offer standard product warranties generally ranging from one Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less. Restricted Cash Our restricted cash consists of cash to secure standby letters of credit (see Note 3). Fair Value Measurements Certain assets and liabilities are accounted for at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of those three levels based on the lowest level input that is significant to the fair value measurement in its entirety. ● Level 1 – inputs are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. ● Level 2 – inputs are based on quoted prices of similar instruments in active markets, quoted prices for identical or similar instruments in market that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 – inputs are generally unobservable inputs for the asset or liability, which are typically based on management’s estimates of assumptions that market participants would use in pricing the assets and liabilities. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our financial instruments consist principally of cash and cash equivalents, restricted cash, a revolving line of credit and note payable. Cash equivalents consist of short-term investments with original maturities of three months or less and restricted cash consists of cash to secure standby letters of credit (see Note 3). The carrying value of these instruments approximates their fair value due to their short-term nature. The fair value of the revolving line of credit and the note payable is estimated by using current applicable rates for similar instruments as of the balance sheet date and an assessment of the credit rating. The carrying values of the revolving line of credit as of December 31, 2022 and January 1, 2022 and the note payable as of December 31, 2022 and January 1, 2022 approximate fair value because the interest rate yield is near current market rates for comparable debt instruments. Accounts Receivable, net We extend credit to our customers. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of our customers to make required payments. We specifically analyze the age of customer balances, historical bad debt experiences, customer creditworthiness and changes in customer payment terms when making estimates of the collectability of our accounts receivable balances. If we determine that the financial condition of any of our customers has deteriorated, whether due to customer specific or general economic issues, an increase in the allowance may be made. After all attempts to collect a receivable have failed, the receivable is written off. Concentration of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. We invest our cash equivalents primarily in money market mutual funds. Cash equivalents are maintained with high quality institutions, the composition and maturities of which are regularly monitored by management. At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. Inventories Inventories are valued at the lower of cost or the net realizable value. Cost is determined on an average cost basis which approximates actual cost on a first-in, first-out basis and includes raw materials, labor and manufacturing overhead. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We evaluate inventory balances for excess quantities and obsolescence on a regular basis by analyzing estimated demand, inventory on hand, sales levels and other information and reduce inventory balances to net realizable value for excess and obsolete inventory based on this analysis. At the point of the write-down recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Property and Equipment Property and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives, which generally range from three Impairment of Long-Lived Assets We evaluate the recoverability of the carrying value of long-lived assets held and used by us in our operations for impairment on at least an annual basis or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future net cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. These projected future cash flows may vary significantly over time as a result of increased competition, changes in technology, fluctuations in demand, consolidation of our customers and reductions in average sales prices. If the carrying value is determined not to be recoverable from future operating cash flows, the asset is deemed impaired and an impairment loss is recognized to the extent the carrying value exceeds the estimated fair value of the asset. The fair value of the asset or asset group is based on market value when available, or when unavailable, on discounted expected cash flows. Management believes there is no impairment of long-lived assets as of December 31, 2022 and January 1, 2022. Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, accrued expenses and other current liabilities, and operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, accrued expenses and other current liabilities, and other liabilities in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are accounted for as a single lease component. We do not present short-term leases on the balance sheet, as those leases have a lease term of twelve months or less at inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. Stock-Based Compensation Stock-based awards are comprised principally of stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service period, which is the vesting period, on a straight-line basis, net of estimated forfeitures. We use the Black-Scholes option pricing model to determine the grant date fair value of stock options. The model requires us to estimate the expected volatility and expected term of the stock options, which are highly complex and subjective variables. The expected volatility is based on the historical volatility of our common stock. The expected term is computed using the simplified method as our best estimate given our lack of actual exercise history. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The expected dividend assumption is based on our history and management’s expectation regarding dividend payouts. The grant-date fair value of RSAs and RSUs equals the closing price of our common stock on the grant date. Income Taxes Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of assets and liabilities and the amounts that are reported in the income tax returns. Deferred taxes are evaluated for realization on a jurisdictional basis. We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In making this assessment, management analyzes future taxable income, reversing temporary differences and ongoing tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, we will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of our position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized. The amount of unrecognized tax benefits is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax laws, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. We recognize both accrued interest and penalties associated with uncertain tax positions as a component of provision for income taxes in the consolidated statements of operations. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations may change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from our estimates, which could require us to record additional tax liabilities or to reduce previously recorded tax liabilities, as applicable. Contingent Legal Expenses Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, we may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. Research and Development Expenses Research and development expenditures are expensed in the period incurred. Foreign Currency Remeasurement The functional currency of our foreign subsidiaries is the U.S. dollar. Local currency financial statements are remeasured into U.S. dollars at the exchange rate in effect as of the balance sheet date for monetary assets and liabilities and the historical exchange rate for nonmonetary assets and liabilities. Expenses are remeasured using the average exchange rate for the period, except items related to nonmonetary assets and liabilities, which are remeasured using historical exchange rates. All remeasurement gains and losses are included in determining net loss. Transaction gains and losses were not significant during 2022, 2021 or 2020. Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average common shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing the net income (loss) by the weighted-average shares and dilutive potential common shares outstanding during the period. Dilutive potential shares consist of dilutive shares issuable upon the exercise of outstanding stock options and warrants computed using the treasury stock method, shares issuable under the conversion feature of a convertible note using the “if-converted” method, and shares issuable upon the vesting of RSAs and RSUs. In periods of net loss, basic and diluted loss per share are the same, as the effect of dilutive potential shares on loss per share is anti-dilutive. |
Supplemental Financial Informat
Supplemental Financial Information | 12 Months Ended |
Dec. 31, 2022 | |
Supplemental Financial Information | |
Supplemental Financial Information | Note 2—Supplemental Financial Information Inventories Inventories consisted of the following (in thousands): 2022 2021 Raw materials $ 8,223 $ 4,208 Work in process 185 154 Finished goods 2,278 11,308 $ 10,686 $ 15,670 Property and Equipment, net Property and equipment, net consisted of the following (in thousands): 2022 2021 Machinery and equipment $ 7,881 $ 7,814 Computer equipment and software 2,477 2,145 Leasehold improvements 781 639 Furniture and fixtures 620 474 Construction in progress 6 273 11,765 11,345 Less: accumulated depreciation and amortization (10,627) (10,356) $ 1,138 $ 989 Disaggregation of Net Sales The following table shows disaggregated net sales by major source (in thousands): 2022 2021 2020 Resales of third-party products $ 136,403 $ 81,309 $ 31,031 Sale of the Company's modular memory subsystems 25,234 21,046 16,203 License fee — 40,000 — Total net sales $ 161,637 $ 142,355 $ 47,234 During the second quarter of 2021, we received and recognized an upfront non-refundable license fee of $40 million as consideration to enter into a Strategic Product Supply and License Agreement (“the Strategic Agreement”) with SK hynix, Inc., a South Korean memory semiconductor supplier, (“SK hynix”). The license fee revenue was recognized when we granted the license of our patents to SK hynix, since the performance obligation was satisfied at a point in time. In connection with the receipt of this fee, during the second quarter of 2021, we recorded a provision for income taxes of $6.6 million related to the Korean withholding tax incurred. Net product sales by country presented below are based on the billing location of the customer (in thousands): 2022 2021 2020 United States $ 39,545 $ 53,519 $ 35,826 People's Republic of China(1) 114,480 39,480 6,071 Other countries 7,612 9,356 5,337 Total net sales $ 161,637 $ 102,355 $ 47,234 (1) China includes Hong Kong and Taiwan. The United States and China accounted for more than 10% of our net product sales for 2022, 2021 and 2020. Earnings (Loss) Per Share The following table shows the computation of basic and diluted earnings (loss) per share of common stock (in thousands, except per share data): 2022 2021 2020 Numerator: Net (loss) income $ (33,370) $ 4,831 $ (7,268) Denominator: Weighted-average basic shares outstanding 231,487 218,171 183,594 Effect of dilutive securities — 7,418 — Weighted-average diluted shares 231,487 225,589 183,594 Basic (loss) earnings per share $ (0.14) $ 0.02 $ (0.04) Diluted (loss) earnings per share $ (0.14) $ 0.02 $ (0.04) We computed net loss per share using the two-class method required for unvested participating securities through the three months ended March 28, 2020 as restricted stock awards were considered participating securities until they vested in full during that quarter. No allocation of undistributed earnings to participating securities was performed for periods with net loss as such securities do not have a contractual obligation to share in our loss. The table below sets forth potentially dilutive weighted average common share equivalents, consisting of shares issuable upon the exercise of outstanding stock options and warrants using the treasury stock method, shares issuable upon conversion of the SVIC Note (see Note 4) using the “if-converted” method, and the vesting of RSAs and RSUs. These potential weighted average common share equivalents have been excluded from the diluted net loss per share for 2022 and 2020 calculations above as their effect would be anti-dilutive (in thousands): 2022 2021 2020 Weighted average common share equivalents 4,848 7,418 13,644 Cash Flow Information The following table shows supplemental disclosures of cash flow information and non-cash financing activities (in thousands): 2022 2021 2020 Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ 90 $ 56 $ 70 Income taxes $ 1 $ 6,601 $ — Supplemental disclosure of non-cash investing and financing activities: Acquisition of property and equipment included in liabilities $ 22 $ 414 $ — Gain on extinguishment of debt $ — $ 643 $ — Debt financing of insurance $ 447 $ 562 $ 262 |
Credit Agreement
Credit Agreement | 12 Months Ended |
Dec. 31, 2022 | |
Credit Agreement | |
Credit Agreement | Note 3—Credit Agreement On October 31, 2009, Netlist and Silicon Valley Bank (“SVB”) entered into a credit agreement, which may from time to time be amended, modified, supplemented or restated, (“the SVB Credit Agreement”), which provides 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, and the borrowing base is limited to 85% of eligible accounts receivable, subject to certain adjustments, and 50% of eligible inventory. Borrowings accrue interest on advance at a per annum rate equal to the greater of 0.75% above the Wall Street Journal prime rate (“Prime Rate”) or 4.25%. The maturity date is April 28, 2023, as amended. The SVB Credit Agreement requires letters of credit to be secured by cash, which is classified as restricted cash in the accompanying consolidated balance sheets. As of December 31, 2022 and January 1, 2022, (i) outstanding letters of credit were $18.6 million and $10.8 million, respectively, and (ii) outstanding borrowings were $4.9 million and $7.0 million, respectively. There was no availability under the revolving line of credit as of December 31, 2022 and January 1, 2022. As of December 31, 2022, all obligations under the SVB Credit Agreement were secured by a first priority security interest in our tangible and intangible assets. The SVB Credit Agreement subjects us to certain affirmative and negative covenants, including financial covenants with respect to our liquidity and restrictions on the payment of dividends. As of December 31, 2022, we were in compliance with our covenants under the SVB Credit Agreement. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt | |
Debt | Note 4—Debt Our debt consisted of the following (in thousands): 2022 2021 Notes payable $ 447 $ 562 Less: amounts due within one year (447) (562) Long-term debt $ — $ — Secured Convertible Note On November 18, 2015, in connection with entering into the Joint Development and License Agreement (the “JDLA”) with Samsung, we issued to SVIC a secured convertible note (the “SVIC Note”) and stock purchase warrant (the “SVIC Warrant”). The SVIC Note had an original principal amount of $15.0 million, accrued interest at a rate of 2.0% per year, was due and payable in full on December 31, 2021, and was convertible into shares of our common stock at a conversion price of $1.25 per share, subject to certain adjustments, on the maturity date of the SVIC Note. Upon our change of control prior to the maturity date of the SVIC Note, the SVIC Note might, at our option, be assumed by the surviving entity or be redeemed upon the consummation of such change of control for the principal and accrued but unpaid interest as of the redemption date. The SVIC Warrant granted SVIC a right to purchase 2,000,000 shares of our common stock at an exercise price of $0.30 per share, subject to certain adjustments, was only exercisable in the event we would exercise our right to redeem the SVIC Note prior to its maturity date, and would expire on December 31, 2025. In December 2021, we repaid the full amounts outstanding under the SVIC Note and issued 2,000,000 shares of our common stock upon the exercise of 2,000,000 of our warrants by SVIC for cash proceeds of $0.6 million. The SVIC Warrant was valued at $1.2 million, based on its relative fair value, and was recorded as a debt discount. We also recorded $0.2 million of debt issuance costs as a debt discount for professional services fees rendered in connection with the transaction. These amounts were being amortized to interest expense over the term of the SVIC Note using the interest method. For 2021 and 2020, we amortized $0.2 million and $0.2 million, respectively, to interest expense in the accompanying consolidated statements of operations. The effective interest rate, including accretion of the SVIC Note to par and amortization of debt issuance costs, was approximately 3.4%. In connection with the SVIC Note, SVIC was granted a first priority security interest in our patent portfolio and a second priority security interest in all of our other tangible and intangible assets. Upon issuance of the SVIC Note, Netlist, SVB and SVIC entered into an Intercreditor Agreement pursuant to which SVB and SVIC agreed to their relative security interests in our assets. Additionally, upon issuance of the SVIC Note and the SVIC Warrant, Netlist and SVIC entered into a Registration Rights Agreement pursuant to which we were obligated to register with the Securities and Exchange Commission, upon demand by SVIC, the shares of our common stock issuable upon conversion of the SVIC Note or upon exercise of the SVIC Warrant. The SVIC Note subjected us to certain affirmative and negative operating covenants. We made the repayment of $16.8 million on December 27, 2021 and SVIC purchased 2,000,000 shares of common stock at an exercise price of $0.30 per share on December 28, 2021. As a result, neither the SVIC Note nor the SVIC Warrant remained outstanding as of December 31, 2022 and January 1, 2022. Paycheck Protection Program Loan On April 23, 2020, we entered into an unsecured promissory note with a principal amount of $0.6 million through Hanmi Bank under the Paycheck Protection Program (“PPP”) (the “PPP Loan”) administered by the Small Business Administration (“SBA”) and established as part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Loan bore interest at 1.0% per annum and would mature on April 23, 2022 with the first six months of interest and principal payments deferred. The amount borrowed under the PPP Loan was guaranteed by the SBA and was eligible for forgiveness in an amount equal to the sum of the eligible costs, including payroll, benefits, rent and utilities, incurred by us during the 24-week period beginning on the date we received the proceeds. The PPP Loan contained customary events of default, and the occurrence of an event of default might result in a claim for the immediate repayment of all amounts outstanding under the PPP Loan. In May 2021, the full amount outstanding under the PPP Loan was forgiven, resulting in a gain of $0.6 million during the second quarter of 2021. Insurance Policy Finance Agreement As of December 31, 2022 and January 1, 2022, we had $0.4 million and $0.6 million, respectively, in short-term notes payable for the financing of insurance policies. On December 29, 2021, we entered into a short-term note payable for $0.6 million bearing interest at 3.9% to finance insurance policies. Principal and interest payments on this note began January 15, 2022 and were made evenly based on a straight line amortization over a 9-month period with the final payment being made on September 15, 2022. On January 4, 2023, we entered into a short-term notes 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 | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | Note 5—Leases We have operating and finance leases primarily associated with office and manufacturing facilities and certain equipment. The determination of which discount rate to use when measuring the lease obligation was deemed a significant judgment. Lease cost and supplemental consolidated cash flow information related to operating and finance leases were as follows (in thousands): 2022 2021 2020 Lease cost: Operating lease cost $ 786 $ 422 $ 565 Finance lease cost Amortization of right-of-use assets $ 67 $ 21 $ 19 Interest on lease liabilities 11 3 4 Total finance lease cost $ 78 $ 24 $ 23 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 653 $ 403 $ 561 Operating cash flows from finance leases 11 3 4 Financing cash flows from finance leases 129 20 18 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 588 $ 2,152 $ (365) Finance leases 372 20 — Lease modification to increase operating lease assets 204 — — Supplemental balance sheet information related to leases was as follows (in thousands): 2022 2021 Operating Leases Operating lease right-of-use assets $ 2,043 $ 1,891 Accrued expenses and other current liabilities $ 451 $ 318 Operating lease liabilities 1,744 1,593 Total operating lease liabilities $ 2,195 $ 1,911 Finance Leases Property and equipment, at cost $ 488 $ 116 Accumulated depreciation (121) (54) Property and equipment, net $ 367 $ 62 Accrued expenses and other current liabilities $ 211 $ 24 Other liabilities 96 41 Total finance lease liabilities $ 307 $ 65 The following table includes supplemental information: 2022 2021 Weighted Average Remaining Lease Term (in years) Operating leases 3.9 4.8 Finance leases 1.5 2.9 Weighted Average Discount Rate Operating leases 5.5% 5.5% Finance leases 4.4% 5.2% Maturities of lease liabilities as of December 31, 2022 were as follows (in thousands): Operating Finance Fiscal Year Leases Leases 2023 $ 559 $ 221 2024 613 91 2025 624 4 2026 639 2 2027 23 — Total lease payments 2,458 318 Less: imputed interest (263) (11) Total $ 2,195 $ 307 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | Note 6—Income Taxes United States and foreign income (loss) before provision for income taxes was as follows (in thousands): 2022 2021 2020 United States $ (32,857) $ 12,016 $ (6,741) Foreign (512) (558) (526) $ (33,369) $ 11,458 $ (7,267) The provision for income taxes consisted of the following (in thousands): 2022 2021 2020 Current: Federal $ — $ — $ — State 1 27 1 Foreign — 6,600 — Total current 1 6,627 1 Deferred: Federal (7,822) (1,897) (1,402) State (1,006) (1,913) (415) Foreign 17 15 67 Change in valuation allowance 8,811 3,795 1,750 Total deferred — — — Provision for income taxes $ 1 $ 6,627 $ 1 Income taxes differ from the amounts computed by applying the statutory federal income tax rate of 21% for 2022, 2021 and 2020. The reconciliation of this difference is as follows (in thousands): 2022 2021 2020 Statutory federal income tax rate (21%) 21% 21% Foreign withholding taxes —% 46% —% Excess tax benefits from equity awards (3%) (27%) —% Change in valuation allowance 24% 15% (19%) Other —% 3% (2%) Effective tax rate —% 58% —% Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax assets and liabilities are as follows (in thousands): 2022 2021 Deferred tax assets: Operating loss carryforward $ 42,306 $ 36,563 Tax credit carryforwards 4,828 4,324 Capitalized research and development expenses 1,767 — Reserves and allowances 1,022 748 Foreign operating loss carryforward 662 677 Stock-based compensation 784 551 Other 1,470 958 Total deferred tax assets 52,839 43,821 Deferred tax liabilities: Operating lease right-of-use assets (473) (450) Prepaid expenses (218) (232) Depreciation and amortization (195) — Total deferred tax liabilities (886) (682) Net deferred tax assets 51,953 43,139 Valuation allowance (51,953) (43,139) $ — $ — We evaluate whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. As of December 31, 2022 and January 1, 2022, a valuation allowance of $52.0 million and $43.1 million, respectively, has been provided based on our assessment that it is more likely than not that sufficient taxable income will not be generated to realize the tax benefits of the temporary differences. The valuation allowance increased by $8.9 million, $3.8 million and $1.7 million during 2022, 2021, and 2020, respectively. These increases in these years primarily relate to the increases in the net operating loss (“NOL”) carryforward and tax credit carryforwards. As of December 31, 2022, we had $166.1 million of federal NOL carryforwards, of which $104.2 million will expire from 2029 through 2037, and $61.9 million of which will be carried forward indefinitely, and $84.0 million of state NOL carryforwards that will expire from 2029 through 2041. We had federal and state tax credit carryforwards of $2.5 million and $2.3 million, respectively, at December 31, 2022. Federal tax credit carryforwards began to expire in 2022 and state tax credits carryforward indefinitely. In addition, we had $0.5 million of NOL in the People’s Republic of China (“PRC”) that expired in 2022, with a remaining amount of $2.6 million of NOL carryforward in the PRC at December 31, 2022. Utilization of the NOL and tax credit carryforwards is subject to an annual limitation due to the ownership percentage change limitations provided by Section 382 of the Internal Revenue Code (the “Code”) and similar state and foreign law provisions. Under Section 382 of the Code, substantial changes in our ownership may limit the amount of NOL and tax credit carryforwards that are available to offset taxable income. The annual limitation would not automatically result in the loss of NOL and tax credit carryforwards but may limit the amount available in any given future period. Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examination from various taxing authorities. We file income tax returns with federal, state and foreign jurisdictions. We are no longer subject to Internal Revenue Service (“IRS”) or state examinations for periods prior to 2018, although certain carryforward attributes that were generated prior to 2018 may still be adjusted by the IRS. We include interest and penalties related to uncertain tax positions within the provision for income taxes. As of December 31, 2022 and January 1, 2022, the interest or penalties accrued related to unrecognized tax benefits were insignificant, and during 2022, 2021 and 2020, the interest and penalties related to uncertain tax position recorded were insignificant. As of December 31, 2022, we had no unrecognized tax benefits that would significantly change in the next 12 months. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
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 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”) Patent Trial and Appeal Board (“PTAB”). 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”) which relates generally to technologies to implement rank multiplication. The NDCA case was stayed, pending challenges to the ‘912 Patent before the USPTO. Eventually, the U.S. Court of Appeals for the Federal Circuit confirmed the ‘912 Patent’s validity on June 15, 2020, and the NDCA case stay was lifted and the case proceeded before Hon. Senior Judge Armstrong, where the parties entered cross motions for summary judgment. On May 5, 2022, Hon. Chief Judge Seeborg entered an Order granting Netlist’s Motion for Summary Judgement that Claim 16 of the ‘912 Patent is not subject to Google’s pleaded defense of Intervening Rights. On July 13, 2022, Chief Judge Seeborg ordered – shortly before the planned July 14, 2022 case management conference – that the case be stayed for a 90-day period pending the outcome of an action initiated by Samsung Electronic Co., Ltd. (“Samsung”) in Delaware involving the ‘912 Patent. Samsung’s Delaware cause of action for the ‘912 Patent was dismissed by Judge Andrews there, and Netlist shortly thereafter brought a lawsuit against Samsung for their infringement of at least the ‘912 Patent in the U.S. District Court for the Eastern District of Texas (“EDTX”). In light of the pendency of the ‘912 Patent matter Netlist brought against Samsung in EDTX, Chief Judge Seeborg entered an order via stipulation on October 17, 2022 staying the NDCA Google case until the resolution of that EDTX action. On July 26, 2022, Netlist filed a patent infringement lawsuit against Google Cloud EMEA Limited, Google Germany GmbH, Redtec Computing GmbH, and Google, Inc., 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’s submitted its statement of defense. The date for a final oral hearing on the issues in that German action are currently scheduled for November 9, 2023. 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 has been 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). Following entry of that stay order on September 2, 2022, Micron moved the Court to “temporarily” lift the stay to add counterclaims for declaratory judgment of noninfringement of U.S. Patent Nos. 9,858,215 (the “’215 Patent”), 10,860,506 (the “’506 Patent”), 10,949,339 (the “’339 Patent”), 11,016,918 (the “’918 Patent”), 11,232,054 (the “’054 Patent”), 11,093,417 (the “’417 Patent”), and the ‘912 Patent. This addition would encompass four of the six patents asserted in Netlist’s initial EDTX filing against Micron (Case No. 2:22-cv-00203 – further details of this case below), and all three of the patents asserted in Netlist’s second EDTX filing against Micron (Case No. 2:22-cv-00294 – further details of this case below). On October 5, 2022, Judge Yeakel denied Micron’s motion and returned the action to a stayed state, asking only that the parties submit status reports within 10 days of any activity in the relevant underlying IPR proceedings. As of the reporting date, the matter remains stayed pending the outcome of the related IPR proceedings. As noted above, Micron filed requests to bring IPR proceedings against Netlist’s ‘314, ‘035, ‘068, and ‘833 Patents. As of the reporting date, the PTAB 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. As of the reporting date, the IPR trials under the ‘035, ‘833, and ‘314 Patents are proceeding following Netlist’s timely submissions of its related Patent Owner Responses. Oral arguments for the ‘035, ‘833, and ‘314 Patents are set for April, June, and August 2023, respectively. On March 31, 2022, Netlist filed a patent infringement lawsuit against Micron in Germany (“Micron Dusseldorf Case”), seeking damages based on their infringement of EP735 and EP660. On June 24, 2022, Netlist filed an extension of its Complaint requesting injunctive relief. Micron filed its statement of defense, thus setting Netlist’s deadline for a response as December 1, 2022. Further, Micron initiated a nullity proceeding against the asserted EP patents in this action, making Netlist’s response to the same as November 19, 2022. As of the reporting date, the date for the oral hearing in the Micron Dusseldorf Case is set for May 3, 2023. 2022, Micron moved to withdraw its motion to stay in this action, which Chief Judge Gilstrap entered on October 13, 2022. On October 21, 2022, Chief Judge Gilstrap ordered that this Micron action and a parallel action by Netlist against Samsung on the same patents (22-cv-00293-JRG) be consolidated and set for a joint scheduling conference on November 17, 2022, further instructing that the Samsung action be considered the “LEAD CASE” and that any further filings from either action be submitted in that case for 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. 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 all licenses granted 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 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. As of the reporting date, the parties have completed briefing on the appeal and cross-appeal, and await the Appeal Court setting a date for oral argument in 2023. On October 15, 2021, Samsung filed a declaratory judgement action against Netlist in the U.S. District Court for the District of Delaware (“DDE”), requesting in relevant part that the Delaware District Court declare that Samsung does not infringe Netlist’s U.S. Patent Nos. 9,858,218 (the “’218 Patent”), 10,217,523 (the “’523 Patent”), 10,474,595 (the “’595 Patent”), and the ‘506, ‘339, ‘912 and ‘918 Patents. As of the reporting date, Samsung seeks leave to add the ‘054 Patent (issued Jan. 25, 2022) to the action. Netlist believes Samsung’s claims levied in the DDE action meritless, and the relief Samsung requests unjustified. Netlist filed a motion seeking dismissal of Samsung’s operative DDE complaint, and an opposition contesting the inclusion of the ‘054 Patent as part of Samsung’s proposed second amended complaint filing. On August 1, 2022, the Court entered an Order on the pending motions denying Samsung’s request to amend its operative complaint a second time to add a count against the ‘054 Patent, and granting-in-part Netlist’s motion that various causes of action be dismissed. Specifically, Hon. Judge Andrews dismissed all of Samsung’s counts related to Netlist’s ‘912, ‘506, ‘339, and ‘918 Patents. Thus, on August 22, 2022, Netlist entered its Answer to Samsung’s remaining Counterclaims. On September 12, 2022, Netlist amended its Counterclaims to include counterclaims tying Google, LLC and Alphabet, Inc. to the action. On November 15, 2022, Google, LLC and Alphabet, Inc. responded to Netlist’s Counterclaims by filing a Motion to Dismiss or alternatively to Sever and Stay the claims directed at Google specifically from the action. As of the reporting date, briefing has concluded and Netlist requested an oral argument on Google’s motion. Further, the Court set the Claim Construction hearing for October 20, 2023, and the beginning of the Jury Trial on February 3, 2025. On November 19, 2021, Samsung filed IPR requests contesting the validity of U.S. Patent Nos. 9,858,218 (the “’218 Patent”), 10,474,595 (the “’595 Patent”), and 10,217,523 (the “’523 Patent”). Netlist filed its initial responses to Samsung’s petitions on February 18, 2022, contesting the institution of any IPR on the grounds propounded. As of the reporting date, the PTAB has granted Samsung’s IPR requests related to the ‘218, ‘523, and ‘595 Patents. Netlist filed its Patent Owner’s Response for the ‘523 Patent IPR on August 4, 2022, and its Patent Owner Responses for the ‘218 Patent and ’595 Patent IPRs on August 15, 2022. As of the reporting date, Oral Arguments were heard for the ‘523 IPR (February 1, 2023), and the ‘218 Patent and ‘595 Patent IPRs (February 15, 2023), leaving the PTAB to enter its final written decision on all three IPRs by the second quarter of 2023. On December 20, 2021, Netlist filed a complaint for patent infringement against Samsung, Samsung Semiconductor, Inc., and Samsung Electronics America, Inc. in the EDTX (Case No. 2:21-cv-463) under the ‘506, ‘339, and ‘918 Patents. Samsung responded to Netlist’s complaint on April 12, 2022, and Chief Judge Gilstrap ordered a scheduling conference be set. 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. On May 4, 2022, Netlist complied with the EDTX local patent rules and served its preliminary infringement contentions on Samsung. On May 27, 2022, Samsung moved to stay this action and sever the patents it sought to add to its Declaratory Judgement action in Delaware. On August 2, 2022, Samsung withdrew that first motion to stay in light of Judge Andrews’s order mandating dismissal of all Samsung’s claims related to the Texas Netlist patents the day before. On August 30, 2022 Samsung moved to stay the action a second time, this time in light of its IPR petitions, and its appeal of the Central District California Judgment at the 9th Circuit Court of Appeals. The matter was fully briefed as of October 17, 2022. As of the reporting date, the claim construction hearing took place on November 4, 2022 in Hon. Magistrate Judge Roy Payne’s Court. On December 14, 2022, Magistrate Payne entered an order construing all fourteen claim terms in dispute. As of the reporting date, the matter is set for pretrial proceedings. The Final Pretrial Conference is currently set for March 27, 2023, while the trial start is now set for April 17, 2023. 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 Patent and ‘339 Patent, while two days later it instituted an IPR trial on the ’506 Patent. On November 2, 2022, Netlist file a Request for Rehearing for the ‘912 Patent institution decision, while simultaneously requesting review of the institution decision be undertaken by the USPTO’s Precedential Opinion Panel. On January 5, 2023, USPTO Director Katherine K. Vidal entered an Order in the 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. On December 9, 2022, the Board set a joint schedule for both IPRs, making Netlist’s deadline to file its Patent Owner Response March 1, 2023. On June 3, 2022, Netlist filed a patent infringement lawsuit against Samsung in Dusseldorf, Germany, seeking damages for Samsung’s infringement of Netlist’s Patents EP735 and EP660. The Dusseldorf Court set an Oral Hearing date for September 5, 2023. On August 1, 2022, Netlist filed a complaint for patent infringement against Samsung, Samsung Semiconductor, Inc., and Samsung Electronics America, Inc. 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 Patent and ‘417 Patent. On August 31, 2022, Samsung Semiconductor, Inc. and Samsung Electronics America, Inc. sought and received extensions of time to respond to Netlist’s first amended complaint until October 7, 2022. Before answering on September 20, 2022, Samsung collectively moved the Court to sever and transfer the ‘912 Patent from the action and stay the remaining portions of this proceeding in light of Samsung’s appeal before 9th Circuit Court of Appeals. The matter is fully briefed, but Samsung’s response deadline remains currently set for November 29, 2022. Apart from Samsung’s early motion practice and its remaining response deadline, on October 21, 2022, 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. On January 20, 2023, following the entry of Samsung’s First Amended Answer, Netlist moved the Court for Leave to File a Second Amended Complaint that would include additional claims of infringement related specifically to Samsung’s infringement of Netlist’s ‘608 Patent. 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 U.S. Patent Nos. 8,787,060 (the “’060 Patent”) and 9,318,160 (the “’106 Patent”). On January 19, 2023, Netlist filed its Patent Owner Preliminary Responses in those proceedings. As of the reporting date, the parties await the Board’s decision on institution. On January 10, 2023, Samsung filed two IPR petitions contesting the validity of the ‘215 and ‘417 Patents. As of the reporting date, the Board has accorded these IPR a filing date of January 10, 2023, making the deadline for Netlist to file its Patent Owner Preliminary Response April 10, 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 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 to SVB pertaining to all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with transactions contemplated by the 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 | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | Note 8—Stockholders’ Equity Serial Preferred Stock Our authorized capital stock includes 10,000,000 shares of serial preferred stock, with a par value of $0.001 per share. No shares of preferred stock were outstanding as of December 31, 2022 or January 1, 2022. On April 17, 2017, we entered into a rights agreement (as amended from time to time, the “Rights Agreement”) with Computershare Trust Company, N.A., as rights agent. In connection with the adoption of the Rights Agreement and pursuant to its terms, our board of directors authorized and declared a dividend of one right (each, a “Right”) for each outstanding share of our common stock to stockholders of record at the close of business on May 18, 2017 (the “Record Date”), and authorized the issuance of one Right for each share of our common stock issued by us (except as otherwise provided in the Rights Agreement) between the Record Date and the Distribution Date (as defined below). Each Right entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from us, when exercisable and subject to adjustment, one unit consisting of one one In connection with the adoption of the Rights Agreement, our board of directors approved a Certificate of Designation of the Series A Preferred Stock (the “Certificate of Designation”) designating 1,000,000 shares of our serial preferred stock as Series A Preferred Stock and setting forth the rights, preferences and limitations of the Preferred Stock. We filed the Certificate of Designation with the Secretary of State of the State of Delaware on April 17, 2017. Common Stock We have one class of common stock with a par value of $0.001 per share. The number of shares of the common stock authorized for issuance is 450,000,000. 2019 Lincoln Park Purchase Agreement On June 24, 2019, we entered into a purchase agreement (“the 2019 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which we have the right to sell to Lincoln Park up to an aggregate of $10 million in shares of our common stock subject to the conditions and limitations set forth in the 2019 Purchase Agreement. As consideration for entering into the 2019 Purchase Agreement, we issued to Lincoln Park 818,420 shares of our common stock as initial commitment shares in a noncash transaction on June 24, 2019 and would issue up to 818,420 additional shares of our common stock as additional commitment shares on a pro rata basis in connection with any additional purchases. We would not receive any cash proceeds from the issuance of these additional commitment shares. During 2020, Lincoln Park did not purchase shares of our common stock under the 2019 Purchase Agreement. During 2021, Lincoln Park purchased an aggregate of 2,075,503 shares of our common stock for a net purchase price of $3.6 million under the 2019 Purchase Agreement. In connection with the purchases, during 2021, we issued to Lincoln Park an aggregate of 294,787 shares of our common stock as additional commitment shares in noncash transactions. In July 2021, we completed the sales under the 2019 Purchase Agreement. 2020 Lincoln Park Purchase Agreement On March 5, 2020, we entered into another purchase agreement (“the 2020 Purchase Agreement”) with Lincoln Park, pursuant to which we had the right to sell to Lincoln Park up to an aggregate of $20 million in shares of our common stock over the 36 -month term of the 2020 Purchase Agreement subject to the conditions and limitations set forth in the 2020 Purchase Agreement. As consideration for entering into the 2020 Purchase Agreement, we issued to Lincoln Park 1,529,052 shares of our common stock as initial commitment shares in a noncash transaction on March 6, 2020 and would issue up to 917,431 additional shares of our common stock as additional commitment shares on a pro rata basis in connection with any additional purchases. We would not receive any cash proceeds from the issuance of these additional commitment shares. During 2020, Lincoln Park purchased an aggregate of 23,400,122 shares of our common stock for a net purchase price of $12.2 million, under the 2020 Purchase Agreement. In connection with the purchases, during 2020, we issued to Lincoln Park an aggregate of 560,588 shares of our common stock, as additional commitment shares in noncash transactions. During 2021, Lincoln Park purchased an aggregate of 9,544,595 shares of our common stock for a net purchase price of $7.8 million under the 2020 Purchase Agreement. In connection with the purchases, during 2021, we issued to Lincoln Park an aggregate of 356,843 shares of our common stock as additional commitment shares in noncash transactions. In February 2021, we completed the sales under the 2020 Purchase Agreement. First 2021 Lincoln Park Purchase Agreement On July 12, 2021, we entered into a purchase agreement (the “First 2021 Purchase Agreement”) with Lincoln Park, pursuant to which we have the right to sell to Lincoln Park up to an aggregate of $17.4 million in shares of our common stock subject to the conditions and limitations set forth in the First 2021 Purchase Agreement. As consideration for entering into the First 2021 Purchase Agreement, we issued to Lincoln Park 80,000 shares of our common stock as initial commitment shares in a noncash transaction on July 12, 2021 and would issue up to 120,500 additional shares of our common stock as additional commitment shares on a pro rata basis in connection with any additional purchases. We would not receive any cash proceeds from the issuance of these additional commitment shares. During 2021, Lincoln Park purchased an aggregate of 2,383,748 shares of our common stock for a net purchase price of $17.4 million under the First 2021 Purchase Agreement. In connection with the purchases, during 2021, we issued to Lincoln Park an aggregate of 120,500 shares of our common stock as additional commitment shares in noncash transactions. In October 2021, we completed the sales under the First 2021 Purchase Agreement. Second 2021 Lincoln Park Purchase Agreement On September 28, 2021, we entered into a purchase agreement (the “Second 2021 Purchase Agreement”) with Lincoln Park, pursuant to which we have the right to sell to Lincoln Park up to an aggregate of $75 million in shares of our common stock subject to the conditions and limitations set forth in the Second 2021 Purchase Agreement. Concurrent with the execution of the Second 2021 Purchase Agreement, we also entered into a registration rights agreement with Lincoln Park relating to our common stock to be sold to Lincoln Park. As consideration for entering into the Second 2021 Purchase Agreement, we issued to Lincoln Park 218,750 shares of our common stock as initial commitment shares in a noncash transaction on September 28, 2021 and will issue up to 143,750 additional shares of our common stock as additional commitment shares on a pro rata basis in connection with any additional purchases. We will not receive any cash proceeds from the issuance of these additional commitment shares. Pursuant to the Second 2021 Purchase Agreement, on any business day and as often as every other business day over the 36-month term of the Second 2021 Purchase Agreement, we have the right, from time to time, at our sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 750,000 shares of our common stock, provided Lincoln Park’s obligation under any single such purchase will not exceed $4.0 million, unless we and Lincoln Park mutually agree to increase the maximum amount of such single regular purchase. If we direct Lincoln Park to purchase the maximum number of shares of common stock we then may sell in a regular purchase, then in addition to such regular purchase, and subject to certain conditions and limitations in the Second 2021 Purchase Agreement, we may direct Lincoln Park to purchase an additional amount of common stock that may not exceed the lesser of (i) 300% of the number of shares purchased pursuant to the corresponding regular purchase or (ii) 30% of the total number of shares of our common stock traded during a specified period on the applicable purchase date as set forth in the Second 2021 Purchase Agreement. Under certain circumstances and in accordance with the Second 2021 Purchase Agreement, we may direct Lincoln Park to purchase shares in multiple accelerated purchases on the same trading day. We control the timing and amount of any sales of our common stock to Lincoln Park. There is no upper limit on the price per share that Lincoln Park must pay for our common stock under the Second 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 Second 2021 Purchase Agreement. In all instances, we may not sell shares of our common stock to Lincoln Park under the Second 2021 Purchase Agreement if that would result in Lincoln Park beneficially owning more than 9.99% of our common stock. The Second 2021 Purchase Agreement does not limit our ability to raise capital from other sources at our sole discretion, except that, subject to certain exceptions, we may not enter into any Variable Rate Transaction (as defined in the Second 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 Second 2021 Purchase Agreement. We have the right to terminate the Second 2021 Purchase Agreement at any time and at no cost to us. During 2021, Lincoln Park purchased an aggregate of 1,550,000 shares of our common stock for a net purchase price of $10.9 million under the Second 2021 Purchase Agreement. In connection with the purchases, we issued to Lincoln Park an aggregate of 20,809 shares of our common stock as additional commitment shares in noncash transactions. 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 Second 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. Subsequent to December 31, 2022, Lincoln Park purchased an aggregate of 2,650,000 shares of our common stock for a net purchase price of $4.3 million under the Second 2021 Purchase Agreement. In connection with the purchase, we issued to Lincoln Park an aggregate of 8,284 shares of our common stock as additional commitment shares in noncash transactions. Warrants Warrant activity during 2021 is as follows: Weighted Number of Average Shares Exercise (in thousands) Price Outstanding as of January 2, 2021 13,911 $ 0.59 Granted — — Exercised (13,911) 0.59 Expired — — Outstanding as of January 1, 2022 — — In August and December 2020, we issued warrants to purchase up to 175,000 and 125,000 shares of our common stock at exercise prices of $0.20 and $0.50 per share, respectively, to a consulting firm as partial consideration for their services rendered. During 2020, we issued 255,813 shares of our common stock upon the cashless exercise of 300,000 of our warrants. During 2021, we issued (i) 13,111,110 shares of our common stock upon the exercise of 13,111,110 of our warrants for total cash proceeds of $7.9 million and (ii) 697,387 shares of our common stock upon the cashless exercise of 800,000 of our warrants. |
Benefit Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Benefit Plans | |
Benefit Plans | Note 9—Benefit Plans Equity Incentive Plan Our Amended and Restated 2006 Equity Incentive Plan (the “Amended 2006 Plan”) provides for broad-based equity grants to our employees and non-employee service providers. We also periodically grant equity-based awards outside the Amended 2006 Plan to certain new hires as an inducement to enter into employment with us. Subject to certain adjustments, as of December 31, 2022, we were authorized to issue a maximum of 17,405,566 shares of our common stock pursuant to awards granted under the Amended 2006 Plan. Pursuant to the terms of the Amended 2006 Plan, beginning January 1, 2017, the automatic annual increase to the number of shares of common stock that may be issued pursuant to awards granted under the Amended 2006 Plan is equal to the lesser of (i) 2.5% of the number of shares of our common stock issued and outstanding as of the first day of the applicable calendar year, and (ii) 1,200,000 shares of our common stock, subject to adjustment for certain corporate actions. As of December 31, 2022, we had 240,982 shares of our common stock available for issuance pursuant to future awards to be granted under the Amended 2006 Plan. Stock Options Stock options granted under the Amended 2006 Plan generally vest at a rate of at least 25% per year over four years and expire 10 years from the date of grant. The weighted-average assumptions used in the Black-Scholes option pricing model and the resulting weighted-average grant date fair value of stock options granted were as follows: 2022 2021 2020 Expected term (in years) — 6.06 6.26 Expected volatility — % 121 % 117 % Risk-free interest rate — % 0.64 % 0.46 % Expected dividends $ — $ — $ — Weighted-average grant date fair value per share $ — $ 0.87 $ 0.44 The following table summarizes the activity related to stock options during 2022: Weighted- Average Weighted- Remaining Aggregate Number of Average Contractual Intrinsic Shares Exercise Life Value (in thousands) Price (in years) (in thousands) Outstanding as of January 1, 2022 5,899 $ 0.88 6.46 $ 32,843 Granted - $ - Exercised (414) $ 0.69 Expired or forfeited (619) $ 0.67 Outstanding as of December 31, 2022 4,866 $ 0.93 5.11 $ 1,836 Exercisable as of December 31, 2022 3,573 $ 0.94 4.05 $ 1,261 Vested and expected to vest as of December 31, 2022 4,763 $ 0.92 5.04 $ 1,792 The total intrinsic value of stock options exercised during 2022 and 2021 was $1.5 million and $10.8 million, respectively. There was no significant intrinsic value of options exercised during 2020. Restricted Stock Awards and Restricted Stock Units RSAs granted under the Amended 2006 Plan vest annually on each anniversary of the grant date over a two-year term. RSUs granted for employees and consultants generally vest semi-annually from the grant date over a four Weighted- Average Number of Grant-Date Shares Fair Value (in thousands) per Share Balance nonvested as of January 1, 2022 2,228 $ 1.36 Granted 2,901 $ 4.09 Vested (1,358) $ 1.21 Forfeited (329) $ 5.24 Balance nonvested as of December 31, 2022 3,442 $ 3.36 Stock-Based Compensation The following table summarizes the stock-based compensation expense by line item in the consolidated statements of operations (in thousands): 2022 2021 2020 Cost of sales $ 63 $ 12 $ 10 Research and development 903 570 196 Selling, general and administrative 2,248 998 557 Total $ 3,214 $ 1,580 $ 763 As of December 31, 2022, we had approximately $9.4 million, net of estimated forfeitures, of unearned stock-based compensation, which we expect to recognize over a weighted-average period of approximately 2.9 years. 401(k) Plan We have a defined contribution plan under Section 401(k) of the Code (“401(k)”) covering full-time domestic employees who meet certain eligibility requirements. Under the 401(k) plan, eligible employees may contribute up to 100% of their eligible compensation on either a pre-tax or after-tax Roth 401(k) basis, or up to the annual maximum allowed by the IRS. We may make matching contributions on the contributions of a participant on a discretionary basis. During 2022 and 2021, our matching contributions totaled $0.1 million and $0.1 million, respectively. During 2020, we did not make any matching contributions. |
Major Customers, Suppliers and
Major Customers, Suppliers and Products | 12 Months Ended |
Dec. 31, 2022 | |
Major Customers, Suppliers and Products | |
Major Customers, Suppliers and Products | Note 10—Major Customers, Suppliers and Products Our net product sales have historically been concentrated in a small number of customers. The following table sets forth the percentage of net product sales made to customers that each comprise 10% or more of total net product sales: 2022 2021 2020 Customer A 39% 16% * Customer B * * 17% Customer C 14% * * * Less than 10% of total net product sales As of December 31, 2022, one customer represented approximately 69% of aggregate gross accounts receivable. As of January 1, 2022, four customers represented approximately 26%, 16%, 13% and 13%, respectively, of aggregate gross accounts receivable. The loss of any of our significant customers or a reduction in sales to or difficulties collecting payments from any of these customers could significantly reduce our net product sales and adversely affect our operating results. We mitigate risks associated with foreign receivables by purchasing comprehensive foreign credit insurance. We resell certain component products to end-customers that are not reached in the distribution models of the component manufacturers, including storage customers, appliance customers, system builders and cloud and datacenter customers. For 2022, 2021 and 2020, resales of these products represented approximately 84%, 79% and 66%, respectively, of our net product sales. Our purchases are typically concentrated in a small number of suppliers. The following table shows the percentage of purchases made from suppliers that each comprise 10% or more of total purchases: 2022 2021 2020 Supplier A * 40% 28% Supplier B 73% 30% * Supplier C 11% 10% 14% Supplier D * * 11% * Less than 10% of purchases during the year While we believe alternative suppliers may be available, our dependence on a small number of suppliers and the lack of any guaranteed sources for the essential components of our products and the components we resell exposes us to several risks, including the inability to obtain an adequate supply of these components, increases in their costs, delivery delays and poor quality. If we cannot obtain these components in the amounts needed on a timely basis and at commercially reasonable prices, we may not be able to develop or introduce new products, we may experience significant increases in our cost of sales if we are forced to procure components from alternative suppliers and are not able to negotiate favorable terms with these suppliers, we may experience interruptions or failures in the delivery of our products, or we may be forced to cease sales of products dependent on the components or resales of the components we resell to customers directly. Any of these events could have a material adverse effect on our business, operating results and financial condition. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation 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 the line of custom and specialty memory products bring industry-leading performance to server and storage appliance customers and cloud service providers. We license our portfolio of intellectual property including patents, in server memory, hybrid memory and storage class memory, to companies that implement our technology. We operate in one reportable segment, which is the design and manufacture of high-performance memory subsystems for the server, high-performance computing and communications markets. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of Netlist, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses. Actual results may differ materially from those estimates. We have evaluated events occurring subsequent to December 31, 2022, through the filing date of this Annual Report on Form 10-K and concluded that there were no events that required recognition and disclosures, other than those discussed elsewhere in the notes hereto. Certain prior period amounts have been reclassified to conform to the current period’s presentation. Our fiscal year is the 52- or 53-week period that ends on the Saturday nearest to December 31. Our fiscal year 2022 ended on December 31, 2022, fiscal year 2021 ended on January 1, 2022, and fiscal year 2020 ended on January 2, 2021. All fiscal years presented in this Form 10-K, except fiscal year 2020, included 52 weeks. Additionally, all quarters, except the fourth quarter of 2020, included 13 weeks. Fiscal year 2020 included 53 weeks, with a 14 -week fourth quarter. Unless otherwise stated, references to particular years, quarters, months and periods refer to our fiscal years ended in January or December and the associated quarters, months and periods of those fiscal years. |
Recently Adopted Accounting Standards | In the first quarter of 2022, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity, and also improves and amends the related earnings per share guidance for both Subtopics. The adoption of this ASU did not have an impact on the Company’s condensed consolidated financial statements as the Company paid off its convertible debt in December 2021. |
Revenue Recognition | Revenue Recognition Product Revenue Revenue is recognized when control is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods and services. Revenue recognition is evaluated through the five steps outlined within the accounting guidance. Substantially all of our product sales relate to products sold at a point in time through ship-and-bill performance obligations. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Contracts with customers are comprised of customer purchase orders, invoices (including our standard terms and conditions) and written contracts. License Revenue For licenses of technology, recognition of revenue is dependent upon whether we have delivered rights to the technology, and whether there are future performance obligations under the contract. In some instances, the license agreements call for future events or activities to occur in order for milestone amounts to become due from the customer. The terms of such agreements include payments to us of one or more of the following: non-refundable upfront fees and royalties on net sales of licensed products. Historically, these license agreements have not included other future performance obligations for us once the license has been transferred to the customer. Revenue from non-refundable upfront payments is recognized when the license is transferred to the customer and we have no other performance obligations. Performance Obligations Net product sales and related cost of sales are primarily the result of promises to transfer products to customers. For performance obligations related to substantially all of the ship-and-bill products, control transfers at a point in time when title transfers upon shipment of the product to the customer, and for some sales, control transfers when title is transferred at time of receipt by the customer. Once a product has shipped or has been delivered, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. We consider control to have transferred upon shipment or delivery, because we have a present right to payment at that time, the customer has legal title to the asset, we have transferred physical possession of the asset, and the customer has the significant risks and rewards of ownership of the asset. Amounts billed to our customers for shipping and handling are recorded in net sales. Shipping and handling costs incurred by us are included in cost of sales in the accompanying consolidated statements of operations. Significant Payment Terms For ship-and-bill type contracts with customers, the invoice states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment terms are typically due within 30 days after delivery but, in limited instances, can range up to 90 days after delivery. Accordingly, our contracts with customers do not include a significant financing component. Variable Consideration Our revenue generating activities include variable consideration which is recorded as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. Common forms of variable consideration include limited rights of return for up to 30 days, except for sales of excess component inventories, which contain no right-of-return privileges and volume rebates for meeting established sales targets. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available. Returns for products sold are estimated using the expected value method and are recorded as a reduction in reported revenues at the time of sale based upon historical product return experience and is adjusted for known trends to arrive at the amount of consideration to which we expect to receive. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Contract Assets and Liabilities We continually evaluate whether the revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities. Generally, we do not have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed. As of January 1, 2022 and December 31, 2022, there were no contract liabilities. Warranties We offer standard product warranties generally ranging from one |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less. |
Restricted Cash | Restricted Cash Our restricted cash consists of cash to secure standby letters of credit (see Note 3). |
Fair Value Measurements | Fair Value Measurements Certain assets and liabilities are accounted for at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of those three levels based on the lowest level input that is significant to the fair value measurement in its entirety. ● Level 1 – inputs are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. ● Level 2 – inputs are based on quoted prices of similar instruments in active markets, quoted prices for identical or similar instruments in market that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 – inputs are generally unobservable inputs for the asset or liability, which are typically based on management’s estimates of assumptions that market participants would use in pricing the assets and liabilities. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our financial instruments consist principally of cash and cash equivalents, restricted cash, a revolving line of credit and note payable. Cash equivalents consist of short-term investments with original maturities of three months or less and restricted cash consists of cash to secure standby letters of credit (see Note 3). The carrying value of these instruments approximates their fair value due to their short-term nature. The fair value of the revolving line of credit and the note payable is estimated by using current applicable rates for similar instruments as of the balance sheet date and an assessment of the credit rating. The carrying values of the revolving line of credit as of December 31, 2022 and January 1, 2022 and the note payable as of December 31, 2022 and January 1, 2022 approximate fair value because the interest rate yield is near current market rates for comparable debt instruments. |
Accounts Receivable, net | Accounts Receivable, net We extend credit to our customers. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of our customers to make required payments. We specifically analyze the age of customer balances, historical bad debt experiences, customer creditworthiness and changes in customer payment terms when making estimates of the collectability of our accounts receivable balances. If we determine that the financial condition of any of our customers has deteriorated, whether due to customer specific or general economic issues, an increase in the allowance may be made. After all attempts to collect a receivable have failed, the receivable is written off. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. We invest our cash equivalents primarily in money market mutual funds. Cash equivalents are maintained with high quality institutions, the composition and maturities of which are regularly monitored by management. At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. |
Inventories | Inventories Inventories are valued at the lower of cost or the net realizable value. Cost is determined on an average cost basis which approximates actual cost on a first-in, first-out basis and includes raw materials, labor and manufacturing overhead. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We evaluate inventory balances for excess quantities and obsolescence on a regular basis by analyzing estimated demand, inventory on hand, sales levels and other information and reduce inventory balances to net realizable value for excess and obsolete inventory based on this analysis. At the point of the write-down recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives, which generally range from three |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We evaluate the recoverability of the carrying value of long-lived assets held and used by us in our operations for impairment on at least an annual basis or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future net cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. These projected future cash flows may vary significantly over time as a result of increased competition, changes in technology, fluctuations in demand, consolidation of our customers and reductions in average sales prices. If the carrying value is determined not to be recoverable from future operating cash flows, the asset is deemed impaired and an impairment loss is recognized to the extent the carrying value exceeds the estimated fair value of the asset. The fair value of the asset or asset group is based on market value when available, or when unavailable, on discounted expected cash flows. Management believes there is no impairment of long-lived assets as of December 31, 2022 and January 1, 2022. |
Leases | Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, accrued expenses and other current liabilities, and operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, accrued expenses and other current liabilities, and other liabilities in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are accounted for as a single lease component. We do not present short-term leases on the balance sheet, as those leases have a lease term of twelve months or less at inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. |
Stock-Based Compensation | Stock-Based Compensation Stock-based awards are comprised principally of stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service period, which is the vesting period, on a straight-line basis, net of estimated forfeitures. We use the Black-Scholes option pricing model to determine the grant date fair value of stock options. The model requires us to estimate the expected volatility and expected term of the stock options, which are highly complex and subjective variables. The expected volatility is based on the historical volatility of our common stock. The expected term is computed using the simplified method as our best estimate given our lack of actual exercise history. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected term of the grant effective as of the date of the grant. The expected dividend assumption is based on our history and management’s expectation regarding dividend payouts. The grant-date fair value of RSAs and RSUs equals the closing price of our common stock on the grant date. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of assets and liabilities and the amounts that are reported in the income tax returns. Deferred taxes are evaluated for realization on a jurisdictional basis. We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In making this assessment, management analyzes future taxable income, reversing temporary differences and ongoing tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, we will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of our position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized. The amount of unrecognized tax benefits is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax laws, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. We recognize both accrued interest and penalties associated with uncertain tax positions as a component of provision for income taxes in the consolidated statements of operations. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations may change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from our estimates, which could require us to record additional tax liabilities or to reduce previously recorded tax liabilities, as applicable. |
Contingent Legal Expenses | Contingent Legal Expenses Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, we may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. |
Research and Development Expenses | Research and Development Expenses Research and development expenditures are expensed in the period incurred. |
Foreign Currency Remeasurement | Foreign Currency Remeasurement The functional currency of our foreign subsidiaries is the U.S. dollar. Local currency financial statements are remeasured into U.S. dollars at the exchange rate in effect as of the balance sheet date for monetary assets and liabilities and the historical exchange rate for nonmonetary assets and liabilities. Expenses are remeasured using the average exchange rate for the period, except items related to nonmonetary assets and liabilities, which are remeasured using historical exchange rates. All remeasurement gains and losses are included in determining net loss. Transaction gains and losses were not significant during 2022, 2021 or 2020. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average common shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing the net income (loss) by the weighted-average shares and dilutive potential common shares outstanding during the period. Dilutive potential shares consist of dilutive shares issuable upon the exercise of outstanding stock options and warrants computed using the treasury stock method, shares issuable under the conversion feature of a convertible note using the “if-converted” method, and shares issuable upon the vesting of RSAs and RSUs. In periods of net loss, basic and diluted loss per share are the same, as the effect of dilutive potential shares on loss per share is anti-dilutive. |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Supplemental Financial Information | |
Schedule Of Inventories | 2022 2021 Raw materials $ 8,223 $ 4,208 Work in process 185 154 Finished goods 2,278 11,308 $ 10,686 $ 15,670 |
Schedule of Property and equipment, net | 2022 2021 Machinery and equipment $ 7,881 $ 7,814 Computer equipment and software 2,477 2,145 Leasehold improvements 781 639 Furniture and fixtures 620 474 Construction in progress 6 273 11,765 11,345 Less: accumulated depreciation and amortization (10,627) (10,356) $ 1,138 $ 989 |
Schedule of disaggregation of sales by major source | 2022 2021 2020 Resales of third-party products $ 136,403 $ 81,309 $ 31,031 Sale of the Company's modular memory subsystems 25,234 21,046 16,203 License fee — 40,000 — Total net sales $ 161,637 $ 142,355 $ 47,234 |
Schedule of sales from external customers | 2022 2021 2020 United States $ 39,545 $ 53,519 $ 35,826 People's Republic of China(1) 114,480 39,480 6,071 Other countries 7,612 9,356 5,337 Total net sales $ 161,637 $ 102,355 $ 47,234 (1) China includes Hong Kong and Taiwan. |
Schedule of computation of basic and diluted earnings (loss) per share | 2022 2021 2020 Numerator: Net (loss) income $ (33,370) $ 4,831 $ (7,268) Denominator: Weighted-average basic shares outstanding 231,487 218,171 183,594 Effect of dilutive securities — 7,418 — Weighted-average diluted shares 231,487 225,589 183,594 Basic (loss) earnings per share $ (0.14) $ 0.02 $ (0.04) Diluted (loss) earnings per share $ (0.14) $ 0.02 $ (0.04) |
Schedule of potential common shares excluded from diluted net loss per share calculations | 2022 2021 2020 Weighted average common share equivalents 4,848 7,418 13,644 |
Schedule of supplemental disclosure of non-cash financing activities | 2022 2021 2020 Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ 90 $ 56 $ 70 Income taxes $ 1 $ 6,601 $ — Supplemental disclosure of non-cash investing and financing activities: Acquisition of property and equipment included in liabilities $ 22 $ 414 $ — Gain on extinguishment of debt $ — $ 643 $ — Debt financing of insurance $ 447 $ 562 $ 262 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt | |
Schedule of long-term debt | Our debt consisted of the following (in thousands): 2022 2021 Notes payable $ 447 $ 562 Less: amounts due within one year (447) (562) Long-term debt $ — $ — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Schedule of lease cost and supplemental cash flow information relating to operating leases | Lease cost and supplemental consolidated cash flow information related to operating and finance leases were as follows (in thousands): 2022 2021 2020 Lease cost: Operating lease cost $ 786 $ 422 $ 565 Finance lease cost Amortization of right-of-use assets $ 67 $ 21 $ 19 Interest on lease liabilities 11 3 4 Total finance lease cost $ 78 $ 24 $ 23 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 653 $ 403 $ 561 Operating cash flows from finance leases 11 3 4 Financing cash flows from finance leases 129 20 18 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 588 $ 2,152 $ (365) Finance leases 372 20 — Lease modification to increase operating lease assets 204 — — |
Schedule of supplemental consolidated balance sheet information | Supplemental balance sheet information related to leases was as follows (in thousands): 2022 2021 Operating Leases Operating lease right-of-use assets $ 2,043 $ 1,891 Accrued expenses and other current liabilities $ 451 $ 318 Operating lease liabilities 1,744 1,593 Total operating lease liabilities $ 2,195 $ 1,911 Finance Leases Property and equipment, at cost $ 488 $ 116 Accumulated depreciation (121) (54) Property and equipment, net $ 367 $ 62 Accrued expenses and other current liabilities $ 211 $ 24 Other liabilities 96 41 Total finance lease liabilities $ 307 $ 65 The following table includes supplemental information: 2022 2021 Weighted Average Remaining Lease Term (in years) Operating leases 3.9 4.8 Finance leases 1.5 2.9 Weighted Average Discount Rate Operating leases 5.5% 5.5% Finance leases 4.4% 5.2% |
Schedule of maturities of operating lease liabilities | Maturities of lease liabilities as of December 31, 2022 were as follows (in thousands): Operating Finance Fiscal Year Leases Leases 2023 $ 559 $ 221 2024 613 91 2025 624 4 2026 639 2 2027 23 — Total lease payments 2,458 318 Less: imputed interest (263) (11) Total $ 2,195 $ 307 |
Schedule of maturities of finance lease liabilities | Maturities of lease liabilities as of December 31, 2022 were as follows (in thousands): Operating Finance Fiscal Year Leases Leases 2023 $ 559 $ 221 2024 613 91 2025 624 4 2026 639 2 2027 23 — Total lease payments 2,458 318 Less: imputed interest (263) (11) Total $ 2,195 $ 307 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule Of Income before Income Tax, Domestic And Foreign | 2022 2021 2020 United States $ (32,857) $ 12,016 $ (6,741) Foreign (512) (558) (526) $ (33,369) $ 11,458 $ (7,267) |
Schedule Of Income Tax Provisions | 2022 2021 2020 Current: Federal $ — $ — $ — State 1 27 1 Foreign — 6,600 — Total current 1 6,627 1 Deferred: Federal (7,822) (1,897) (1,402) State (1,006) (1,913) (415) Foreign 17 15 67 Change in valuation allowance 8,811 3,795 1,750 Total deferred — — — Provision for income taxes $ 1 $ 6,627 $ 1 |
Schedule Of Effective Income Tax Rate Reconciliation | 2022 2021 2020 Statutory federal income tax rate (21%) 21% 21% Foreign withholding taxes —% 46% —% Excess tax benefits from equity awards (3%) (27%) —% Change in valuation allowance 24% 15% (19%) Other —% 3% (2%) Effective tax rate —% 58% —% |
Schedule Of Deferred Tax Assets And Liabilities | 2022 2021 Deferred tax assets: Operating loss carryforward $ 42,306 $ 36,563 Tax credit carryforwards 4,828 4,324 Capitalized research and development expenses 1,767 — Reserves and allowances 1,022 748 Foreign operating loss carryforward 662 677 Stock-based compensation 784 551 Other 1,470 958 Total deferred tax assets 52,839 43,821 Deferred tax liabilities: Operating lease right-of-use assets (473) (450) Prepaid expenses (218) (232) Depreciation and amortization (195) — Total deferred tax liabilities (886) (682) Net deferred tax assets 51,953 43,139 Valuation allowance (51,953) (43,139) $ — $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Schedule of warrant activity | Weighted Number of Average Shares Exercise (in thousands) Price Outstanding as of January 2, 2021 13,911 $ 0.59 Granted — — Exercised (13,911) 0.59 Expired — — Outstanding as of January 1, 2022 — — |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Benefit Plans | |
Schedule Of Assumptions Used To Calculate Weighted-Average Grant Date Fair Value Of Common Stock Options Granted | 2022 2021 2020 Expected term (in years) — 6.06 6.26 Expected volatility — % 121 % 117 % Risk-free interest rate — % 0.64 % 0.46 % Expected dividends $ — $ — $ — Weighted-average grant date fair value per share $ — $ 0.87 $ 0.44 |
Schedule of common stock options activity | Weighted- Average Weighted- Remaining Aggregate Number of Average Contractual Intrinsic Shares Exercise Life Value (in thousands) Price (in years) (in thousands) Outstanding as of January 1, 2022 5,899 $ 0.88 6.46 $ 32,843 Granted - $ - Exercised (414) $ 0.69 Expired or forfeited (619) $ 0.67 Outstanding as of December 31, 2022 4,866 $ 0.93 5.11 $ 1,836 Exercisable as of December 31, 2022 3,573 $ 0.94 4.05 $ 1,261 Vested and expected to vest as of December 31, 2022 4,763 $ 0.92 5.04 $ 1,792 |
Schedule of restricted stock Awards | Weighted- Average Number of Grant-Date Shares Fair Value (in thousands) per Share Balance nonvested as of January 1, 2022 2,228 $ 1.36 Granted 2,901 $ 4.09 Vested (1,358) $ 1.21 Forfeited (329) $ 5.24 Balance nonvested as of December 31, 2022 3,442 $ 3.36 |
Schedule of stock-based compensation Expense | The following table summarizes the stock-based compensation expense by line item in the consolidated statements of operations (in thousands): 2022 2021 2020 Cost of sales $ 63 $ 12 $ 10 Research and development 903 570 196 Selling, general and administrative 2,248 998 557 Total $ 3,214 $ 1,580 $ 763 |
Major Customers, Suppliers an_2
Major Customers, Suppliers and Products (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Major Customers, Suppliers and Products | |
Schedule Of Customer Concentration of Risk | 2022 2021 2020 Customer A 39% 16% * Customer B * * 17% Customer C 14% * * * Less than 10% of total net product sales |
Schedule Of Supplier Concentration of Risk | 2022 2021 2020 Supplier A * 40% 28% Supplier B 73% 30% * Supplier C 11% 10% 14% Supplier D * * 11% * Less than 10% of purchases during the year |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) item segment | Jan. 01, 2022 USD ($) item | |
Number of weeks in a fiscal year | 52 | 53 |
Number of weeks in fourth quarter | 13 | 14 |
Number of Reportable Segments | segment | 1 | |
Impairment of long-lived assets | $ | $ 0 | $ 0 |
Minimum [Member] | ||
Number of weeks in a fiscal year | 52 | |
Maximum [Member] | ||
Number of weeks in a fiscal year | 53 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Revenue Recognition) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
Contract liability | $ 0 | $ 0 |
Minimum [Member] | ||
Product warranty period | 1 year | |
Maximum [Member] | ||
Product warranty period | 3 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Property and Equipment) (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Minimum [Member] | |
Estimated useful life - property and equipment | 3 years |
Maximum [Member] | |
Estimated useful life - property and equipment | 7 years |
Supplemental Financial Inform_3
Supplemental Financial Information (Schedule Of Inventories) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 |
Supplemental Financial Information | ||
Raw materials | $ 8,223 | $ 4,208 |
Work in process | 185 | 154 |
Finished goods | 2,278 | 11,308 |
Inventories | $ 10,686 | $ 15,670 |
Supplemental Financial Inform_4
Supplemental Financial Information (Schedule Of Property, Plant And Equipment) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 |
Property and Equipment | ||
Property and equipment, gross | $ 11,765 | $ 11,345 |
Less: accumulated depreciation and amortization | (10,627) | (10,356) |
Property and equipment, net | 1,138 | 989 |
Machinery and Equipment [Member] | ||
Property and Equipment | ||
Property and equipment, gross | 7,881 | 7,814 |
Computer Equipment And Software [Member] | ||
Property and Equipment | ||
Property and equipment, gross | 2,477 | 2,145 |
Leasehold Improvements [Member] | ||
Property and Equipment | ||
Property and equipment, gross | 781 | 639 |
Furniture and Fixtures [Member] | ||
Property and Equipment | ||
Property and equipment, gross | 620 | 474 |
Construction in Progress [Member] | ||
Property and Equipment | ||
Property and equipment, gross | $ 6 | $ 273 |
Supplemental Financial Inform_5
Supplemental Financial Information (Disaggregation of Net Sales by Major Source) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jul. 03, 2021 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Total net sales | $ 161,637 | $ 142,355 | $ 47,234 | |
Provision for income taxes | 1 | 6,627 | 1 | |
South Korean | ||||
Provision for income taxes | $ 6,600 | |||
Strategic Product Supply and License Agreement with SK hynix, Inc. | South Korean | ||||
Upfront non-refundable license fee | $ 40,000 | |||
Resales of third-party products | ||||
Total net sales | 136,403 | 81,309 | 31,031 | |
Sale of the Company's modular memory subsystems | ||||
Total net sales | $ 25,234 | 21,046 | $ 16,203 | |
License fee | ||||
Total net sales | $ 40,000 |
Supplemental Financial Inform_6
Supplemental Financial Information (Net Sales by Country) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Net sales | $ 161,637 | $ 142,355 | $ 47,234 |
Net product sales | |||
Net sales | 161,637 | 102,355 | 47,234 |
UNITED STATES | Net product sales | |||
Net sales | 39,545 | 53,519 | 35,826 |
People's Republic of China | Net product sales | |||
Net sales | 114,480 | 39,480 | 6,071 |
Other Countries | Net product sales | |||
Net sales | $ 7,612 | $ 9,356 | $ 5,337 |
Sales Revenue, Product Line [Member] | Customer Concentration Risk [Member] | United States And China [Member] | |||
Concentration Risk, Percentage | 10% |
Supplemental Financial Inform_7
Supplemental Financial Information (Schedule Of Computation Of (Loss) Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Basic and diluted (loss) earnings per share: | |||
Net (loss) income | $ (33,370) | $ 4,831 | $ (7,268) |
Weighted-average basic shares outstanding | 231,487 | 218,171 | 183,594 |
Effect of dilutive securities | $ 7,418 | ||
Weighted-average diluted shares | 231,487 | 225,589 | 183,594 |
Basic (loss) earnings per share | $ (0.14) | $ 0.02 | $ (0.04) |
Diluted (loss) earnings per share | $ (0.14) | $ 0.02 | $ (0.04) |
Weighted average common share equivalents | 4,848 | 7,418 | 13,644 |
Supplemental Financial Inform_8
Supplemental Financial Information (Schedule Of Supplemental Disclosures Of Cash Flow Information And Non-Cash Financing Activities) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Supplemental Financial Information | |||
Cash paid for interest | $ 90 | $ 56 | $ 70 |
Cash paid for income taxes | 1 | 6,601 | |
Acquisition of property and equipment included in liabilities | 22 | 414 | |
Gain on extinguishment of debt | 643 | ||
Debt financing of insurance | $ 447 | $ 562 | $ 262 |
Credit Agreement (Details)
Credit Agreement (Details) - Silicon Valley Bank [Member] - USD ($) $ in Millions | 12 Months Ended | ||
Apr. 29, 2022 | Dec. 31, 2022 | Jan. 01, 2022 | |
Line of Credit Facility | |||
Maximum borrowing capacity | $ 10 | ||
Borrowing capacity as a percentage of eligible accounts receivable | 85% | ||
Borrowing capacity as a percentage of eligible inventory | 50% | ||
Interest rate (as a percent) | 4.25% | ||
Outstanding borrowings | $ 4.9 | $ 7 | |
Availability remaining | 0 | 0 | |
Prime Rate | |||
Line of Credit Facility | |||
Rate plus "prime rate" | 0.75% | ||
Letter of Credit | |||
Line of Credit Facility | |||
Outstanding borrowings | $ 18.6 | $ 10.8 |
Debt (Schedule Of Long-Term Deb
Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 |
Debt | ||
Notes Payable, Total | $ 447 | $ 562 |
Less: amounts due within one year | (447) | (562) |
Long term debt |
Debt (Narrative) (Details)
Debt (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Jan. 04, 2023 | Dec. 29, 2021 | Dec. 27, 2021 | Nov. 18, 2015 | Dec. 31, 2021 | Jul. 03, 2021 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | Dec. 28, 2021 | Apr. 23, 2020 | |
Long-term debt | |||||||||||
Exercise price of warrants (in dollars per share) | $ 0.59 | ||||||||||
Interest expense | $ 57 | $ (568) | $ (531) | ||||||||
Warrants to purchase shares of common stock | 13,911,000 | ||||||||||
Repayment of debt | 562 | 17,087 | $ 423 | ||||||||
Note payable | $ 400 | 600 | |||||||||
SVIC Warrant | |||||||||||
Long-term debt | |||||||||||
Original issue discount | $ 200 | ||||||||||
Exercise price of warrants (in dollars per share) | $ 0.30 | ||||||||||
Fair value of warrants | $ 1,200 | ||||||||||
Warrants to purchase shares of common stock | 2,000,000 | ||||||||||
Senior Secured Convertible Note Due December 2025 | |||||||||||
Long-term debt | |||||||||||
Face amount | $ 15,000 | ||||||||||
Interest rate (as a percent) | 2% | ||||||||||
Debt conversion price (in dollars per share) | $ 1.25 | ||||||||||
Exercise price of warrants (in dollars per share) | $ 0.30 | ||||||||||
Interest expense | $ 200 | $ 200 | |||||||||
Effective interest rate | 3.40% | ||||||||||
Warrants to purchase shares of common stock | 2,000,000 | 2,000,000 | |||||||||
Exercise of warrants | 2,000,000 | ||||||||||
Cash proceeds | $ 600 | ||||||||||
Repayment of debt | $ 16,800 | ||||||||||
Paycheck Protection Program Loan | |||||||||||
Long-term debt | |||||||||||
Face amount | $ 600 | ||||||||||
Interest rate (as a percent) | 1% | ||||||||||
Forgiven amount | $ 600 | ||||||||||
Insurance Policy Finance, Notes Payable 3.9 Percent | |||||||||||
Long-term debt | |||||||||||
Face amount | $ 600 | ||||||||||
Interest rate (as a percent) | 3.90% | ||||||||||
Amortization period | 9 months | ||||||||||
Insurance Policy Finance, Notes Payable 7.2 Percent | |||||||||||
Long-term debt | |||||||||||
Face amount | $ 400 | ||||||||||
Interest rate (as a percent) | 7.20% | ||||||||||
Amortization period | 9 months |
Leases - Lease Cost and Consoli
Leases - Lease Cost and Consolidated Supplemental Cash Flow (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Lease cost: | |||
Operating lease cost | $ 786 | $ 422 | $ 565 |
Amortization of right-of-use assets | 67 | 21 | 19 |
Interest on lease liabilities | 11 | 3 | 4 |
Total finance lease cost | 78 | 24 | 23 |
Operating cash flows from operating leases | 653 | 403 | 561 |
Operating cash flows from finance leases | 11 | 3 | 4 |
Financing cash flows from finance leases | 129 | 20 | 18 |
Operating leases | 588 | 2,152 | |
Operating leases | $ (365) | ||
Finance leases | 372 | $ 20 | |
Lease modification to increase operating lease assets | $ 204 |
Leases - Leases Supplemental Ba
Leases - Leases Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 |
Lessee, Lease, Description [Line Items] | ||
Operating lease right-of-use assets | $ 2,043 | $ 1,891 |
Accrued expenses and other current liabilities | $ 451 | $ 318 |
Accrued expenses and other current liabilities - extensible list | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Operating lease liabilities | $ 1,744 | $ 1,593 |
Total operating lease liabilities | $ 2,195 | $ 1,911 |
Total operating lease liabilities - extensible list | Accrued Liabilities, Current, Operating lease liabilities | Accrued Liabilities, Current, Operating lease liabilities |
Property and equipment, at cost | $ 11,765 | $ 11,345 |
Accumulated depreciation | (10,627) | (10,356) |
Property and equipment, net | 1,138 | 989 |
Accrued expenses and other current liabilities | $ 211 | $ 24 |
Accrued expenses and other current liabilities - extensible list | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Other liabilities | $ 96 | $ 41 |
Other liabilities - extensible list | Other liabilities | Other liabilities |
Total finance lease liabilities | $ 307 | $ 65 |
Total finance lease liabilities - extensible list | Accrued expenses and other current liabilities, Other liabilities | Accrued expenses and other current liabilities, Other liabilities |
Finance Lease Assets [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Property and equipment, at cost | $ 488 | $ 116 |
Accumulated depreciation | (121) | (54) |
Property and equipment, net | $ 367 | $ 62 |
Leases - Weighted Average Remai
Leases - Weighted Average Remaining Lease Term (Details) | Dec. 31, 2022 | Jan. 01, 2022 |
Leases | ||
Weighted Average Remaining Lease Term - Operating leases | 1 year 6 months | 2 years 10 months 24 days |
Weighted Average Remaining Lease Term - Finance leases | 3 years 10 months 24 days | 4 years 9 months 18 days |
Weighted Average Discount Rate - Operating leases | 5.50% | 5.50% |
Weighted Average Discount Rate - Finance leases | 4.40% | 5.20% |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 |
Operating Leases | ||
2023 | $ 559 | |
2024 | 613 | |
2025 | 624 | |
2026 | 639 | |
2027 | 23 | |
Total lease payments | 2,458 | |
Less: imputed interest | (263) | |
Total operating lease liabilities | 2,195 | $ 1,911 |
Finance Leases | ||
2023 | 221 | |
2024 | 91 | |
2025 | 4 | |
2026 | 2 | |
Total lease payments | 318 | |
Less: imputed interest | (11) | |
Total finance lease liabilities | $ 307 | $ 65 |
Income Taxes (Components of Los
Income Taxes (Components of Loss Before Provision for Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Income Taxes | |||
United States | $ (32,857) | $ 12,016 | $ (6,741) |
Foreign | (512) | (558) | (526) |
(Loss) income before provision for income taxes | $ (33,369) | $ 11,458 | $ (7,267) |
Income Taxes (Provision for Inc
Income Taxes (Provision for Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Current: | |||
State | $ 1 | $ 27 | $ 1 |
Foreign | 6,600 | ||
Total Current | 1 | 6,627 | 1 |
Deferred: | |||
Federal | (7,822) | (1,897) | (1,402) |
State | (1,006) | (1,913) | (415) |
Foreign | 17 | 15 | 67 |
Change in valuation allowance | 8,811 | 3,795 | 1,750 |
Total deferred | |||
Provision for income taxes | $ 1 | $ 6,627 | $ 1 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Operating Loss Carryforwards. | |||
Increase (Decrease) in valuation allowance | $ 8.9 | $ 3.8 | $ 1.7 |
U.S. federal statutory tax | 21% | 21% | 21% |
Net operating loss carryforwards, which will expire from 2029 through 2037 | $ 104.2 | ||
Net operating loss carryforwards, which will be carried forward indefinitely | 61.9 | ||
Unrecognized Tax Benefits | 0 | ||
Federal | |||
Operating Loss Carryforwards. | |||
Net operating loss carryforwards | 166.1 | ||
Tax credit carryforwards | 2.5 | ||
State and Local Jurisdiction [Member] | |||
Operating Loss Carryforwards. | |||
Net operating loss carryforwards | 84 | ||
Tax credit carryforwards | 2.3 | ||
Foreign Tax Authority [Member] | State Administration of Taxation, China [Member] | |||
Operating Loss Carryforwards. | |||
Net operating loss carryforwards | 0.5 | ||
Net operating loss carryforwards expired | $ 2.6 |
Income Taxes (Reconciliation of
Income Taxes (Reconciliation of Income Taxes by Applying the Statutory Federal Income Tax Rate) (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Income Taxes | |||
Statutory federal income tax rate (as a percent) | 21% | 21% | 21% |
Foreign withholding taxes (as a percent) | 46% | ||
Excess tax benefits from equity awards (as a percent) | (3.00%) | (27.00%) | |
Change in valuation allowance (as a percent) | 24% | 15% | (19.00%) |
Other (as a percent) | 3% | (2.00%) | |
Effective tax rate (as a percent) | 58% |
Income Taxes (Schedule Of Defer
Income Taxes (Schedule Of Deferred Tax Assets And Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 |
Deferred tax assets: | ||
Operating loss carryforward | $ 42,306 | $ 36,563 |
Tax credit carryforwards | 4,828 | 4,324 |
Capitalized research and development expenses | 1,767 | |
Reserves and allowances | 1,022 | 748 |
Foreign operating loss carryforward | 662 | 677 |
Stock-based compensation | 784 | 551 |
Other | 1,470 | 958 |
Total deferred tax assets | 52,839 | 43,821 |
Deferred tax liabilities: | ||
Operating lease right-of-use assets | (473) | (450) |
Prepaid expenses | (218) | (232) |
Depreciation and amortization | (195) | |
Total deferred tax liabilities | (886) | (682) |
Net deferred tax assets | 51,953 | 43,139 |
Valuation allowance | (51,953) | (43,139) |
Deferred Tax Assets, Net, Total |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - $ / shares | Apr. 17, 2017 | Dec. 31, 2022 | Jan. 01, 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 | |
Stock-Based Compensation | |||
Shares available for issuance | 1,000,000 |
Stockholders' Equity (Common St
Stockholders' Equity (Common Stock Purchase Agreement) (Details) - USD ($) | 12 Months Ended | |||||||
Jan. 01, 2023 | Sep. 28, 2021 | Jul. 12, 2021 | Mar. 05, 2020 | Jun. 24, 2019 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Net purchase price | $ 4,436,000 | $ 39,569,000 | $ 12,174,000 | |||||
Common Stock Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Commitment shares | 1,529,052 | |||||||
Purchase agreement term | 36 months | |||||||
2019 Lincoln Park Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Commitment shares | 818,420 | |||||||
Additional commitment shares | 294,787 | |||||||
Net purchase price | $ 3,600,000 | |||||||
Shares issued | 2,075,503 | |||||||
2020 Lincoln Park Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Additional commitment shares | 356,843 | 560,588 | ||||||
Net purchase price | $ 7,800,000 | $ 12,200,000 | ||||||
Shares issued | 9,544,595 | 23,400,122 | ||||||
2021 Lincoln Park Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Aggregate amount | $ 17,400,000 | |||||||
Commitment shares | 80,000 | |||||||
Additional commitment shares | 120,500 | |||||||
First 2021 Lincoln Park Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Additional commitment shares | 120,500 | |||||||
Net purchase price | $ 17,400,000 | |||||||
Repurchased shares | 2,383,748 | |||||||
Second First 2021 Lincoln Park Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Commitment shares | 218,750 | |||||||
Purchase agreement term | 36 months | |||||||
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 | 1,050,000 | 1,550,000 | ||||||
Repurchase of common stock price | $ 4,400,000 | $ 10,900,000 | ||||||
Stock issued common stock | 8,502 | 20,809 | ||||||
Subsequent Event | Second First 2021 Lincoln Park Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Repurchased shares | 2,650,000 | |||||||
Repurchase of common stock price | $ 4,300,000 | |||||||
Stock issued common stock | 8,284 | |||||||
Maximum [Member] | Common Stock Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Aggregate amount | $ 20,000,000 | |||||||
Additional commitment shares | 917,431 | |||||||
Maximum [Member] | 2019 Lincoln Park Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Aggregate amount | $ 10,000,000 | |||||||
Additional commitment shares | 818,420 | |||||||
Maximum [Member] | Second First 2021 Lincoln Park Purchase Agreement | ||||||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||||||
Aggregate amount | $ 75,000,000 | |||||||
Additional commitment shares | 143,750 | |||||||
Threshold number of shares of common stock to be issued | 750,000 | |||||||
Threshold value of shares of common stock to be issued under single purchase | $ 4,000,000 | |||||||
Threshold percentage of number of shares issued under regular purchase to purchase additional amount of common stock | 300% | |||||||
Threshold percentage of number of shares of common stock to purchase additional amount of common stock | 30% |
Stockholders' Equity (Warrants)
Stockholders' Equity (Warrants) (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Jan. 01, 2022 | Jan. 02, 2021 | Dec. 31, 2020 | Aug. 31, 2020 | |
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding, Beginning Balance | 13,911,000 | |||
Warrants Exercised | (13,911,000) | |||
Warrants Outstanding, Ending Balance | 13,911,000 | |||
Outstanding, Weighted-Average Exercise Price, Beginning balance | $ 0.59 | |||
Weighted-Average Exercise Price, Exercised | $ 0.59 | |||
Outstanding, Weighted-Average Exercise Price, Ending balance | $ 0.59 | |||
Exercise price of warrants (in dollars per share) | $ 0.59 | |||
Warrants to purchase shares of common stock | 13,911,000 | |||
Warrant [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Exercised | (800,000) | (300,000) | ||
Warrants Outstanding, Ending Balance | 13,111,110 | |||
Warrants issued to purchase additional shares | 697,387 | 255,813 | ||
Exercise price of warrants (in dollars per share) | $ 0.50 | $ 0.20 | ||
Warrants to purchase shares of common stock | 13,111,110 | 125,000 | 175,000 | |
Cash proceeds | $ 7.9 |
Benefit Plans (Narrative) (Deta
Benefit Plans (Narrative) (Details) | 12 Months Ended |
Dec. 31, 2022 shares | |
Stock-Based Compensation | |
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 |
Amended 2006 Plan | |
Stock-Based Compensation | |
Shares available for issuance | 240,982 |
Shares authorized for issuance | 17,405,566 |
Automatic annual increase in shares authorized, subject to adjustment for corporate actions | 1,200,000 |
Common Stock | Amended 2006 Plan | |
Stock-Based Compensation | |
Automatic annual increase in shares authorized as percentage of common stock outstanding | 2.50% |
Vests annually on each anniversary | Restricted Stock [Member] | |
Stock-Based Compensation | |
Vesting period of options granted, in years | 2 years |
Vest semi-annually | Restricted Stock [Member] | 2006 Plan | |
Stock-Based Compensation | |
Vesting period of options granted, in years | 4 years |
Benefit Plans (Schedule Of Assu
Benefit Plans (Schedule Of Assumptions Used To Calculate Weighted-Average Grant Date Fair Value Of Common Stock Options Granted) (Details) - $ / shares | 12 Months Ended | |
Jan. 01, 2022 | Jan. 02, 2021 | |
Benefit Plans | ||
Expected term (in years) | 6 years 21 days | 6 years 3 months 3 days |
Expected volatility | 121% | 117% |
Risk-free interest rate | 0.64% | 0.46% |
Weighted-average grant date fair value per share | $ 0.87 | $ 0.44 |
Benefit Plans (Schedule Of Stoc
Benefit Plans (Schedule Of Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Number of Shares | |||
Outstanding, Beginning Balance | 5,899 | ||
Exercised | (414) | ||
Expired or forfeited | (619) | ||
Outstanding, Ending Balance | 4,866 | 5,899 | |
Weighted-Average Grant - Date Fair Value (Per Share) | |||
Outstanding, Beginning Balance | $ 0.88 | ||
Exercised | 0.69 | ||
Expired or Forfeited | 0.67 | ||
Outstanding, Ending Balance | $ 0.93 | $ 0.88 | |
Options outstanding, Weighted-Average Remaining Contractual Life | 5 years 1 month 9 days | 6 years 5 months 15 days | |
Options outstanding, Aggregate Intrinsic Value | $ 1,836,000 | $ 32,843,000 | |
Options exercisable, Number of Shares | 3,573 | ||
Options exercisable, Weighted-Average Exercise Price | $ 0.94 | ||
Options exercisable, Weighted-Average Remaining Contractual Life | 4 years 18 days | ||
Additional Disclosure | |||
Options exercisable, Aggregate Intrinsic Value | $ 1,261,000 | ||
Options exercisable and expected to vest, Number of Shares | 4,763 | ||
Options exercisable and expected to vest, Weighted-Average Exercise Price | $ 0.92 | ||
Options exercisable and expected to vest, Weighted-Average Remaining Contractual Life | 5 years 14 days | ||
Options exercisable and expected to vest, Aggregate Intrinsic Value | $ 1,792,000 | ||
Intrinsic value of options exercised | $ 1,500,000 | $ 10,800,000 | $ 0 |
Benefit Plans (Schedule of Rest
Benefit Plans (Schedule of Restricted Stock Awards) (Details) - Restricted Stock [Member] shares in Thousands | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of Shares | |
Outstanding, Beginning Balance | shares | 2,228 |
Granted | shares | 2,901 |
Vested | shares | (1,358) |
Forfeited | shares | (329) |
Outstanding, Ending Balance | shares | 3,442 |
Weighted-Average Grant - Date Fair Value (Per Share) | |
Outstanding, Beginning Balance | $ / shares | $ 1.36 |
Granted | $ / shares | 4.09 |
Vested | $ / shares | 1.21 |
Forfeited | $ / shares | 5.24 |
Outstanding, Ending Balance | $ / shares | $ 3.36 |
Benefit Plans (Schedule of St_2
Benefit Plans (Schedule of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Stock-Based Compensation, Total | $ 3,214 | $ 1,580 | $ 763 |
Unearned stock-based compensation | $ 9,400 | ||
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 | $ 63 | 12 | 10 |
Research and development | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Stock-Based Compensation, Total | 903 | 570 | 196 |
Selling, General and Administrative Expenses [Member] | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Stock-Based Compensation, Total | $ 2,248 | $ 998 | $ 557 |
Benefit Plans (401(k) Plan) (De
Benefit Plans (401(k) Plan) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Benefit Plans | |||
Matching contributions | $ 0.1 | $ 0.1 | $ 0 |
Major Customers, Suppliers an_3
Major Customers, Suppliers and Products (Schedule Of Customer Concentration of Risk) (Details) - Customer Concentration Risk [Member] - customer | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Sales Revenue, Product Line [Member] | |||
Concentration Risk | |||
Concentration Risk Percentage Threshold For Reporting | 10% | 10% | 10% |
Sales Revenue, Product Line [Member] | Customer A [Member] | |||
Concentration Risk | |||
Concentration Risk, Percentage | 39% | 16% | |
Sales Revenue, Product Line [Member] | Customer B [Member] | |||
Concentration Risk | |||
Concentration Risk, Percentage | 17% | ||
Sales Revenue, Product Line [Member] | Customer C | |||
Concentration Risk | |||
Concentration Risk, Percentage | 14% | ||
Sales Revenue, Resale of Products | Product to End Customer [Member] | |||
Concentration Risk | |||
Concentration Risk, Percentage | 84% | 79% | 66% |
Gross Receivables [Member] | |||
Concentration Risk | |||
Concentration Risk, Number of Customers | 1 | 4 | |
Gross Receivables [Member] | Customer A [Member] | |||
Concentration Risk | |||
Concentration Risk, Percentage | 69% | 26% | |
Gross Receivables [Member] | Customer B [Member] | |||
Concentration Risk | |||
Concentration Risk, Percentage | 16% | ||
Gross Receivables [Member] | Customer C | |||
Concentration Risk | |||
Concentration Risk, Percentage | 13% | ||
Gross Receivables [Member] | Customer D | |||
Concentration Risk | |||
Concentration Risk, Percentage | 13% |
Major Customers, Suppliers an_4
Major Customers, Suppliers and Products (Schedule Of Supplier Concentration of Risk) (Details) - Supplier Concentration Risk [Member] - Cost of Goods, Total [Member] | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Concentration Risk | |||
Concentration Risk Percentage Threshold For Reporting | 10% | 10% | 10% |
Supplier A [Member] | |||
Concentration Risk | |||
Concentration Risk, Percentage | 40% | 28% | |
Supplier B [Member] | |||
Concentration Risk | |||
Concentration Risk, Percentage | 73% | 30% | |
Supplier C | |||
Concentration Risk | |||
Concentration Risk, Percentage | 11% | 10% | 14% |
Supplier D | |||
Concentration Risk | |||
Concentration Risk, Percentage | 11% |