Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

August 1, 2023

Date of Report (Date of earliest event reported):

NETLIST, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-33170	95-4812784
(State or other jurisdiction of	(Commission	(IRS Employer
incorporation)	File Number)	Identification Number)

111 Academy, Suite 100

Irvine, California 92617

(Address of principal executive offices)

(949) 435-0025

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.001 per share		NLST		None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

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

Item 2.02. Results of Operations and Financial Condition.

On August 1, 2023, Netlist, Inc. (the “Company”) issued a press release announcing the Company’s financial results for the second quarter ended July 1, 2023. A copy of the press release is attached hereto as Exhibit 99.1.

The information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d)          Exhibits.

Exhibit
Number		Description
99.1		Press Release of Netlist, Inc., dated August 1, 2023.
104		Cover Page Interactive Data File (embedded with the inline XBRL document)

SIGNATURE

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

	NETLIST, INC.

Date: August 1, 2023	By:	/s/ Gail M. Sasaki
		Gail M. Sasaki
		Executive Vice President and Chief Financial Officer

Exhibit 99.1

Netlist Reports Second Quarter 2023 Results

IRVINE, CALIFORNIA, August 1, 2023 - Netlist, Inc. (OTCQB: NLST) today reported financial results for the second quarter ended July 1, 2023.

“Second quarter results reflect a sluggish memory market which appears to have bottomed, and we expect a return to growth of our product business in the second half of the year” said Chief Executive Officer, C.K. Hong. “We were pleased with the favorable outcome in the Claim Construction in the Micron case last week and look forward to the Court’s final judgement for the $303 million jury verdict for Samsung’s willful past infringement. It should now be clear that Netlist’s IP portfolio is important to the memory industry’s rapid move to DDR5 and AI.”

Net sales for the second quarter ended July 1, 2023 were $10.0 million, compared to net sales of $55.4 million for the second quarter ended July 2, 2022. Gross profit for the second quarter ended July 1, 2023 was $0.2 million, compared to a gross profit of $4.7 million for the second quarter ended July 2, 2022.

Net sales for the six months ended July 1, 2023 were $19.0 million, compared to net sales of $105.6 million for the six months ended July 2, 2022. Gross profit for the six months ended July 1, 2023 was $0.8 million, compared to a gross profit of $8.1 million for the six months ended July 2, 2022.

Net loss for the second quarter ended July 1, 2023 was ($14.0) million, or ($0.06) per share, compared to a net loss in the prior year period of ($5.0) million, or ($0.02) per share. These results include stock-based compensation expense of $1.2 million and $0.8 million for the quarters ended July 1, 2023 and July 2, 2022, respectively.

Net loss for the six months ended July 1, 2023 was ($29.8) million, or ($0.13) per share, compared to a net loss in the prior year period of ($10.8) million, or ($0.05) per share. These results include stock-based compensation expense of $2.3 million and $1.5 million for the six months ended July 1, 2023 and July 2, 2022, respectively.

As of July 1, 2023, cash, cash equivalents and restricted cash was $31.4 million, total assets were $47.0 million, working capital was $19.9 million, total debt was $0.2 million, and stockholders’ equity was $21.6 million.

Conference Call Information

C.K. Hong, Chief Executive Officer, and Gail Sasaki, Chief Financial Officer, will host an investor conference call today, August 1, 2023 at 12:00 p.m. Eastern Time to review Netlist’s results for the second quarter ended July 1, 2023. The live webcast and archived replay of the call can be accessed for 90 days in the Investors section of Netlist’s website at www.netlist.com.

About Netlist

Netlist provides high-performance memory solutions to enterprise customers in diverse industries. The Company’s products are available in various capacities and form factors and its line of custom and specialty memory products bring industry-leading performance to server and storage appliance customers and cloud service providers. Netlist licenses its portfolio of intellectual property including patents, in server memory, hybrid memory and storage class memory, to companies that implement Netlist’s technology. To learn more, visit www.netlist.com.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical facts and often address future events or Netlist’s future performance. Forward-looking statements contained in this news release include statements about Netlist’s ability to execute on its strategic initiatives. All forward-looking statements reflect management’s present expectations regarding future events and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by any forward-looking statements. These risks, uncertainties and other factors include, among others: risks that Samsung will appeal the jury verdict, which could cause a lengthy delay in Netlist’s ability to collect the damage award or overturn the verdict or reduce the damages award; risks related to Netlist’s plans for its intellectual property, including its strategies for monetizing, licensing, expanding, and defending its patent portfolio; risks associated with patent infringement litigation initiated by Netlist, or by others against Netlist, as well as the costs and unpredictability of any such litigation; risks associated with Netlist’s product sales, including the market and demand for products sold by Netlist and its ability to successfully develop and launch new products that are attractive to the market; the success of product, joint development and licensing partnerships; the competitive landscape of Netlist’s industry; and general economic, political and market conditions, including quarantines, factory slowdowns and/or shutdowns. The military conflict between Russia and Ukraine may increase the likelihood of supply interruptions. All forward-looking statements reflect management’s present assumptions, expectations and beliefs regarding future events and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by any forward-looking statements. These and other risks and uncertainties are described in Netlist’s annual report on Form 10-K for its most recently completed fiscal year filed on February 28, 2023, and the other filings it makes with the U.S. Securities and Exchange Commission from time to time, including any subsequently filed quarterly and current reports. In light of these risks, uncertainties and other factors, these forward-looking statements should not be relied on as predictions of future events. These forward-looking statements represent Netlist’s assumptions, expectations and beliefs only as of the date they are made, and except as required by law, Netlist undertakes no obligation to revise or update any forward-looking statements for any reason.

(Tables Follow)

For more information, please contact:
The Plunkett Group	Netlist, Inc.
Mike Smargiassi	Gail M. Sasaki
NLST@theplunkettgroup.com	Chief Financial Officer
(212) 739-6729	(949) 435-0025

Netlist, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)

	(unaudited)
	July 1,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	24,348		$	25,011
Restricted cash		7,100			18,600
Accounts receivable, net		1,470			8,242
Inventories		9,953			10,686
Prepaid expenses and other current assets		736			1,308
Total current assets		43,607			63,847

Property and equipment, net		943			1,138
Operating lease right-of-use assets		1,915			2,043
Other assets		542			295
Total assets	$	47,007		$	67,323

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	21,033		$	28,468
Revolving line of credit		—			4,935
Accrued payroll and related liabilities		1,317			1,588
Accrued expenses and other current liabilities		1,184			2,635
Long-term debt due within one year		152			447
Total current liabilities		23,686			38,073
Operating lease liabilities		1,483			1,744
Other liabilities		189			270
Total liabilities		25,358			40,087

Commitments and contingencies

Stockholders’ equity:
Preferred stock		—			—
Common stock		241			233
Additional paid-in capital		274,649			250,428
Accumulated deficit		(253,241	)		(223,425	)
Total stockholders’ equity		21,649			27,236
Total liabilities and stockholders’ equity	$	47,007		$	67,323

Netlist, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	July 1,			July 2,			July 1,			July 2,
	2023			2022			2023			2022
Net sales	$	10,026		$	55,358		$	19,047		$	105,558
Cost of sales(1)		9,787			50,610			18,248			97,447
Gross profit		239			4,748			799			8,111
Operating expenses:
Research and development(1)		2,255			2,672			4,556			5,129
Intellectual property legal fees		8,947			3,313			20,017			6,139
Selling, general and administrative(1)		3,325			3,724			6,355			7,662
Total operating expenses		14,527			9,709			30,928			18,930
Operating loss		(14,288	)		(4,961	)		(30,129	)		(10,819	)
Other income (expense), net:
Interest income, net		277			15			333			4
Other expense, net		(16	)		(6	)		(19	)		(8	)
Total other income (expense), net		261			9			314			(4	)
Loss before provision for income taxes		(14,027	)		(4,952	)		(29,815	)		(10,823	)
Provision for income taxes		1			—			1			1
Net loss	$	(14,028	)	$	(4,952	)	$	(29,816	)	$	(10,824	)

Loss per common share:
Basic and diluted	$	(0.06	)	$	(0.02	)	$	(0.13	)	$	(0.05	)
Weighted-average common shares outstanding:
Basic and diluted		240,382			231,298			237,752			230,922

(1) Amounts include stock-based compensation expense as follows:

Cost of sales	$	53		$	16		$	71		$	19
Research and development		186			215			460			391
Selling, general and administrative		957			559			1,742			1,062
Total stock-based compensation	$	1,196		$	790		$	2,273		$	1,472

Cover	Aug. 01, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 01, 2023
Entity File Number	001-33170
Entity Registrant Name	NETLIST INC
Entity Central Index Key	0001282631
Entity Tax Identification Number	95-4812784
Entity Incorporation, State or Country Code	DE
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
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	NLST
Entity Emerging Growth Company	false