IRVINE, CA / ACCESSWIRE / 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
Mike Smargiassi
NLST@theplunkettgroup.com
(212) 739-6729
Netlist, Inc.
Gail M. Sasaki
Chief Financial Officer
(949) 435-0025
Netlist, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
| (unaudited) September 30, 2023 | December 31, 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, 2023 | October 1, 2022 | September 30, 2023 | October 1, 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 | ||||||||||
SOURCE: Netlist, Inc.
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