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Tuesday, September 21, 2021

Netlist, Inc. (OTCMKTS: NLST) Powerful Runner as Lawsuit Over (‘912) Seminal Patent Moves Forward

Netlist, Inc. (OTCMKTS: NLST) continues to rocket up the charts in recent weeks regularly topping $10 million in daily dollar volume and trading more like a big board stock and a powerful rise up the charts in recent months that speaks of big things coming on the horizon. Microcapdaily has been covering NLST since it was below $0.25 and the boards were filled with long suffering longs but that has all changed and many believed it would not. Everything changed in July of last year when the U.S. Court of Appeals for the Federal Circuit affirmed the U.S. Patent Trial and Appeal Board’s decision upholding the validity of Netlist’s U.S. 7,619,912 (‘912) patent that applies to DDR server memory modules. Many suggested NLST would drop down below a quarter but it never did and just kept on going. Microcapdaily suggested in July that there were way too many good things happening here for Netlist not to keep rising and that is exactly what has happened. Watch the l2, there are plenty of buyers and not a lot of sellers. 

The netlist story really took off in July when the US Court of Appeals for the Federal Circuit affirmed the U.S. Patent Trial and Appeal Board’s decision upholding the validity of Netlist’s U.S. 7,619,912 (‘912) patent that applies to DDR server memory modules. The decision is final and binding on future cases and represents a resounding win for Netlist. The (‘912) patent is a seminal patent; an invention so impactful that it creates or shifts the technology space. This ruling has much larger implications than just GOOG which will more than likely set the tone for other settlements long overdue here. Since last year the case has been progressing forward and today is the day for the joint letter to the court on discovery if the parties did not come to terms! If they could not come to terms the letter explaining both parties’ position on discovery process no longer than 10 pages is to be submitted today! Once the letter is submitted Judge Spero will decide the discovery process going forward. CA courts favor broad Discovery! The Judge already told Google they would probably not like the result if he had to decide. 

Image result for netlist patentNetlist (NLST) headquartered in Irvine, California provides high-performance SSDs and modular memory subsystems to enterprise customers in diverse industries. The Company’s NVMe™ SSD portfolio provides industry-leading performance offered in multiple capacities and form factors. HybriDIMM™, Netlist’s next-generation storage class memory product, addresses the growing need for real-time analytics in Big Data applications, in-memory databases, high-performance computing and advanced data storage solutions. Netlist also manufactures a line of specialty and legacy memory products to storage customers, appliance customers, system builders and cloud and datacenter customers. Netlist holds a portfolio of patents in the areas of server memory, hybrid memory, storage class memory, rank multiplication and load reduction.  Netlist continues this tradition with the introduction of HybriDIMM, the industry’s first Storage Class Memory product built on commodity DRAM and flash. HybriDIMM is the first SCM product to operate in current Intel® x86 servers without BIOS and hardware changes, and the first unified DRAM-NAND solution that scales memory to terabyte storage capacities and accelerates storage to nanosecond memory speeds. Netlist first gained attention back in 2015 when the Company announced a partnership with Samsung to produce and commercialize its NVDIMM-N solution, HyperVault / NVvault. At the time the product was considered as a potential 3D XPoint alternative.

Netlist holds a portfolio of patents, many seminal, in the areas of hybrid memory, storage class memory, rank multiplication and load reduction, among others. The strength of Netlist’s patent portfolio reflects its many years of research and development and track record of bringing disruptive new products to market. The Company has over 130 issued and pending U.S. and foreign patents. Netlist has been monetizing its intellectual property through a combination of product sales and licensing, royalty and other revenue-producing arrangements. With state-of-the-art, wholly owned, ISO- and OSHAS-certified manufacturing and testing facilities in Suzhou, China, Netlist’s strategy is to marry its unique board-level intellectual property with a thorough understanding of semiconductor building blocks and system-level applications to deliver performance, cost, and time-to-market advantages to OEMs. 

NLST is ex Nasdaq having been delisted on January 3, 2018 and we have been reporting on the Company for years. OTC speculators love ex big board stocks for their ready liquidity and proven ability to make spectacular moves once on the bb’s and NLST is proving to be no exception as investors look ahead and a return to a higher exchange. 

The Company is led by founder and CEO Chun K. Hong. Prior to Netlist, Mr. Hong was president and chief operating officer of Infinilink Corp., a communications software company based in Irvine, CA. Prior to that, he was executive vice president of Viking Components, Inc., a memory manufacturing company based in RSM, CA. From 1983 to 1998, Mr. Hong held various management positions at LG subsidiaries in South Korea and in the U.S. He received a B.S. degree in economics from Virginia Commonwealth University and an M.S. degree in technology management from Pepperdine University’s Graduate School of Management. According to recent form 4’s Mr. Hong has sold 550,215 shares of NLST stock on 02/09/2021 at the average price of $1.01. Mr. Hong has assembled an impressive management team including Gail Sasaki, the Company’s VP and CFO who joined netlist in 2006 and helped take the Company public. Prior to Netlist, Ms. Sasaki served as Senior VP of Finance and Treasurer at eMotion, Inc., previously a subsidiary of Eastman Kodak. The Companys Chief Licensing Officer is Marc Frechette who has more than eighteen years of licensing and patent prosecution experience and most recently served as Senior Vice President and Senior Counsel at WiLAN, where he managed their U.S.-based licensing business unit. Other executives in Netlist are Paik Ki Hong, Todd Levy, Scott Milton, Tinh Ngo, and Jerry Alston. 

Microcapdaily has been reporting on Netlist since November 9, 2018 and was here too last summer when the stock was under $0.25. On July 18, 2020 we stated on Netlist: “The stock is quickly emerging as the darling of small caps, attracting legions of shareholders ever since the U.S. Court of Appeals for the Federal Circuit affirmed the U.S. Patent Trial and Appeal Board’s decision upholding the validity of Netlist’s U.S. 7,619,912 (‘912) patent that applies to DDR server memory modules. The decision is final and binding on future cases and represents a resounding win for Netlist. The (‘912) patent is a seminal patent; an invention so impactful that it creates or shifts the technology space. This ruling has much larger implications than just GOOG which will more than likely set the tone for other settlements long overdue here. 

NLST CEO C.K. Hong who fired his BOD giving him full control of the Company and the ability to make big decisions quickly stated at the time of the U.S. Court of Appeals decision: “For ten years Netlist has steadfastly opposed Google’s misguided campaign to invalidate the ‘912 patent,” said Netlist’s CEO, C.K. Hong. “We are very pleased that in the end the appellate court made it clear that the claims of this seminal patent are indeed valid and in so doing, further vindicate our decade-long defense of the company’s strategic intellectual property. We will now move to lift the stay in the patent infringement lawsuit against Google in the U.S. District Court for the Northern District of CA., in order to recover current and past damages related to the ‘912 patent.” 

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NLSTMicrocapdaily back in November 2018 reporting on NLST when the stock was $0.30 per share.

Earlier this year NLST reported the availability and shipment of its N1962 Gen4 Enterprise NVMe™ Solid State Drives (SSDs) to server and storage users. This next generation SSD utilizes the PCIe Gen4 protocol with backward compatibility to Gen3, best-in-class firmware, and a wide array of enterprise feature sets. Netlist’s N1962 delivers ultra-fast performance and superior reliability to handle the toughest computational & read / write intensive enterprise application workloads, including high-frequency trading, artificial intelligence, content delivery, and database acceleration. The use of Gen4 NVMe server and storage systems continues to expand, and has resulted in increased demand for high-performance enterprise SSDs. This has caused a tight supply environment for Gen4 SSDs and resulted in supply chain and operational disruptions in the marketplace. With availability in 8TB and 16TB, and a robust feature set, Netlist’s N1962 SSDs provide the high performance and supply requirements demanded by enterprise customers. 

Also in April Netlist and SK hynix Inc. formed an agreement for a patent cross license covering memory technologies of both companies and an agreement for the supply of SK hynix products and technical cooperation on Netlist’s CXL HybriDIMM technology. The agreements provide SK hynix with access to Netlist’s portfolio of U.S. and foreign patents. Netlist will receive a royalty from SK hynix, a cross license to SK hynix’s patent portfolio and supply of SK hynix’s memory and storage products. The companies also plan to collaborate on Netlist’s HD CXL technology for future commercialization.

On May 11 Netlist reported financial results for the first quarter ended April 3, 2021. Net sales for the first quarter ended April 3, 2021 were $14.9 million, compared to net sales of $14.6 million for the quarter ended March 28, 2020. Gross profit for the quarter ended April 3, 2021 was $1.5 million, or 10.1% of net sales, compared to a gross profit of $2.1 million, or 14.4% of net sales, for the quarter ended March 28, 2020. As of April 3, 2021, cash, cash equivalents and restricted cash was $26.5 million, total assets were $41.8 million, working capital was $6.9 million, total debt and accrued interest, net of debt discount, was $21.9 million, and stockholders’ equity was $7.1 million.

Netlist CEO C.K. Hong stated: “Product revenue grew 30% sequentially during the first quarter as we benefited from continued sales momentum and a strong demand environment. Bottom line results reflect investments in CXL R&D, as well as nonrecurring legal expense related to closing the strategic agreement with SK Hynix. Finally, we remain active with intellectual property licensing and enforcement efforts with pending and newly filed cases.”  

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Netlist, Inc. continues to rocket up the charts in recent weeks regularly topping $10 million in daily dollar volume and trading more like a big board stock and a powerful rise up the charts in recent months that speaks of big things coming on the horizon. Microcapdaily has been covering NLST since it was below $0.25 and the boards were filled with long suffering longs but that has all changed and many believed it would not. Everything changed in July of last year when the U.S. Court of Appeals for the Federal Circuit affirmed the U.S. Patent Trial and Appeal Board’s decision upholding the validity of Netlist’s U.S. 7,619,912 (‘912) patent that applies to DDR server memory modules. Many suggested NLST would drop down below a quarter but it never did and just kept on going. Microcapdaily suggested in July that there were way too many good things happening here for Netlist not to keep rising and that is exactly what has happened. Watch the l2, there are plenty of buyers and not a lot of sellers.  The netlist story really took off in July when the US Court of Appeals for the Federal Circuit affirmed the U.S. Patent Trial and Appeal Board’s decision upholding the validity of Netlist’s U.S. 7,619,912 (‘912) patent that applies to DDR server memory modules. The decision is final and binding on future cases and represents a resounding win for Netlist. The (‘912) patent is a seminal patent; an invention so impactful that it creates or shifts the technology space. This ruling has much larger implications than just GOOG which will more than likely set the tone for other settlements long overdue here. Since last year the case has been progressing forward and today is the day for the joint letter to the court on discovery if the parties did not come to terms! If they could not come to terms the letter explaining both parties’ position on discovery process no longer than 10 pages is to be submitted today! Once the letter is submitted Judge Spero will decide the discovery process going forward. CA courts favor broad Discovery! The Judge already told Google they would probably not like the result if he had to decide. 

We will be updating on Netlist when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with Netlist.

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Disclosure: we hold no position in NLST either long or short and we have not been compensated for this article.

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