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

October 31, 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 October 31, 2023, Netlist, Inc. (the “Company”) issued a press release announcing the Company’s financial results for the third quarter ended September 30, 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 October 31, 2023.
104		Cover Page Interactive Data File (embedded within 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: October 31, 2023	By:	/s/ Gail M. Sasaki
		Gail M. Sasaki
		Executive Vice President and Chief Financial Officer

Exhibit 99.1

Netlist Reports Third Quarter 2023 Results

IRVINE, CALIFORNIA, October 31, 2023 - Netlist, Inc. (OTCQB: NLST) today reported financial results for the third quarter ended September 30, 2023.

“Product revenue in the third quarter improved 67% on a sequential basis, as the memory market has begun to recover,” said Chief Executive Officer, C.K. Hong. “The transition to new DDR5 based servers and high bandwidth memory for AI are creating huge demand for products that require Netlist’s technology. The efforts to defend and fairly license our intellectual property continue and we look forward to the upcoming patent infringement trial in January against Micron. Additionally, the recent split ruling from the U.S. Court of Appeals on the Samsung contract remanded the case back to the district court. Netlist looks forward to having an opportunity to bring forth all the evidence supporting its position.”

Net sales for the third quarter ended September 30, 2023 were $16.7 million, compared to net sales of $34.4 million for the third quarter ended October 1, 2022. Gross profit for the third quarter ended September 30, 2023 was $0.4 million, compared to a gross profit of $2.2 million for the third quarter ended October 1, 2022.

Net sales for the nine months ended September 30, 2023 were $35.8 million, compared to net sales of $140.0 million for the nine months ended October 1, 2022. Gross profit for the nine months ended September 30, 2023 was $1.2 million, compared to a gross profit of $10.3 million for the nine months ended October 1, 2022.

Net loss for the third quarter ended September 30, 2023 was ($17.3) million, or ($0.07) per share, compared to a net loss in the prior year period of ($9.6) million, or ($0.04) per share. These results include stock-based compensation expense of $1.1 million and $0.9 million for the quarters ended September 30, 2023 and October 1, 2022, respectively.

Net loss for the nine months ended September 30, 2023 was ($47.2) million, or ($0.20) per share, compared to a net loss in the prior year period of ($20.4) million, or ($0.09) per share. These results include stock-based compensation expense of $3.4 million and $2.4 million for the nine months ended September 30, 2023 and October 1, 2022, respectively.

As of September 30, 2023, cash, cash equivalents and restricted cash was $50.6 million, total assets were $68.2 million, working capital was $34.5 million, and stockholders’ equity was $36.1 million.

Conference Call Information

C.K. Hong, Chief Executive Officer, and Gail Sasaki, Chief Financial Officer, will host an investor conference call today, October 31, 2023 at 12:00 p.m. Eastern Time to review Netlist’s results for the third quarter ended September 30, 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 is a leading innovator in memory and storage solutions, pushing the boundaries of technology to deliver unparalleled performance and reliability. With a rich portfolio of patented technologies, Netlist has consistently driven innovation in the field of cutting-edge enterprise memory and storage, empowering businesses and industries to thrive in the digital age. To learn more about Netlist, please 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 final judgment by the trial court, 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 that the Ninth Circuit ruling will adversely affect Netlist’s ability to defend the final judgment on appeal; 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)
	September 30,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	43,226		$	25,011
Restricted cash		7,350			18,600
Accounts receivable, net		4,544			8,242
Inventories		9,175			10,686
Prepaid expenses and other current assets		738			1,308
Total current assets		65,033			63,847

Property and equipment, net		846			1,138
Operating lease right-of-use assets		1,754			2,043
Other assets		549			295
Total assets	$	68,182		$	67,323

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	27,360		$	28,468
Revolving line of credit		—			4,935
Accrued payroll and related liabilities		1,401			1,588
Accrued expenses and other current liabilities		1,777			2,635
Long-term debt due within one year		—			447
Total current liabilities		30,538			38,073
Operating lease liabilities		1,350			1,744
Other liabilities		211			270
Total liabilities		32,099			40,087

Commitments and contingencies

Stockholders' equity:
Preferred stock		—			—
Common stock		254			233
Additional paid-in capital		306,409			250,428
Accumulated deficit		(270,580	)		(223,425	)
Total stockholders' equity		36,083			27,236
Total liabilities and stockholders' equity	$	68,182		$	67,323

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

	Three Months Ended						Nine Months Ended
	September 30,			October 1,			September 30,			October 1,
	2023			2022			2023			2022
Net sales	$	16,725		$	34,424		$	35,772		$	139,982
Cost of sales(1)		16,285			32,244			34,533			129,691
Gross profit		440			2,180			1,239			10,291
Operating expenses:
Research and development(1)		2,268			2,550			6,824			7,679
Intellectual property legal fees		12,891			5,577			32,908			11,716
Selling, general and administrative(1)		3,160			3,767			9,515			11,429
Total operating expenses		18,319			11,894			49,247			30,824
Operating loss		(17,879	)		(9,714	)		(48,008	)		(20,533	)
Other income, net:
Interest income, net		507			34			840			38
Other income, net		33			82			14			74
Total other income, net		540			116			854			112
Loss before provision for income taxes		(17,339	)		(9,598	)		(47,154	)		(20,421	)
Provision for income taxes		—			—			1			1
Net loss	$	(17,339	)	$	(9,598	)	$	(47,155	)	$	(20,422	)

Loss per common share:
Basic and diluted	$	(0.07	)	$	(0.04	)	$	(0.20	)	$	(0.09	)
Weighted-average common shares outstanding:
Basic and diluted		247,420			231,739			240,974			231,194

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

Cost of sales	$	19	$	22	$	90	$	41
Research and development		231		283		691		674
Selling, general and administrative		895		587		2,637		1,649
Total stock-based compensation	$	1,145	$	892	$	3,418	$	2,364

Cover	Oct. 31, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 31, 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