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Monday, September 20, 2021

The Exciting Story of Netlist, Inc. (OTCMKTS: NLST)

Netlist, Inc. (OTCMKTS: NLST) is an exciting Company making big moves in recent times; the stock exploded to $1.10 in September after the Company announced a favorable claim construction order in ITC Investigation of SK hynix. Since a recent dip below $0.30 Netlist is rising fast.

Netlist provides high-performance SSDs and modular memory subsystems to enterprise customers in diverse industries. Flagship products NVvault® and EXPRESSvault™ enable customers to accelerate data in their servers and storage and reliably protect enterprise-level cache, metadata and log data in the event of a system failure or power outage. 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 and provides 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, many seminal, in the areas of hybrid memory, storage class memory, rank multiplication and load reduction.

Netlist exploded in September after the Company announced a favorable claim construction order in ITC Investigation of SK hynix. The order was favorable to Netlist with regard to both of its asserted patents, U.S. Patent Nos. 9,606,907, and 9,535,623. The Administrative Law Judge (ALJ) sided with Netlist on the key claim construction issues at the heart of the 1089 Investigation.  The claim construction order serves as the framework from which the ITC will ultimately decide if the patents are valid and infringed by SK hynix, and therefore represents a critical juncture in the case.

On April 12, 2018, the ALJ granted SK hynix’s motion for summary determination of non-infringement and terminated the 1089 Investigation. On May 29, 2018, in response to Netlist’s petition, the ITC Commission remanded the investigation back to the ALJ to resolve the parties’ claim construction disputes and continue the investigation. In the claim construction order, the ALJ resolved the parties’ disputes in favor of Netlist on these key issues. Having conclusively established the meaning of the asserted patent claims, the focus now shifts to whether the operation of SK hynix’s products, which is undisputed between the parties, falls within the scope of the claims.

“We are very pleased with the order and believe this is an important turning point in our dispute with SK hynix,” said Netlist’s Chief Executive Officer, C.K. Hong. “In our view, the claim construction order was thorough, well-reasoned, and vindicates our belief as to the strength of our fundamental IP.  This interpretation of the patents puts us in a strong position with respect to infringement, which was the only issue we didn’t win in our first ITC action. The order gives us significant momentum heading into the trials scheduled later this year in both the ITC and in Germany.”

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On November 8 NLST reported financial results for the third quarter ended September 29, 2018. Revenues for the third quarter ended September 29, 2018 were $7.2 million, compared to revenues of $9.0 million for the quarter ended September 30, 2017.  Gross profit for the quarter ended September 29, 2018 was $0.6 million, or 8.1% of revenues, compared to a gross profit of $0.7 million, or 8.0% of revenues, for the quarter ended September 30, 2017.

As of September 29, 2018, cash, cash equivalents and restricted cash were $19.4 million, total assets were $28.8 million, working capital was $14.0 million, total debt and accrued interest, net of debt discount, was $19.7 million, and stockholders’ deficit was ($1.5) million.

“During the third quarter we received a favorable ruling from the U.S. International Trade Commission (ITC) as part of our case against SK hynix which targets billions of dollars of unlicensed server memory products.  The ITC order provides momentum as we commence trials in Germany next month and in Washington D.C. at the ITC early next year,” said Netlist’s Chief Executive Officer, C.K. Hong. ” Bottom line performance in the quarter highlights improved product margins sequentially and ongoing operational cost controls offset by increased legal expenses associated with the upcoming trials.”

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Currently trading at a $51 million market valuation Netlist has $18.1 million in the treasury and significant sales reporting revenues for the third quarter ended September 29, 2018 were $7.2 million, compared to revenues of $9.0 million for the quarter ended September 30, 2017.  The Company recently received a favorable ruling from the U.S. International Trade Commission (ITC) as part of its case against SK hynix which targets billions of dollars of unlicensed server memory products. With the recent financing behind them NLST now has the cash on hand to make it through to the end of litigation and the prospect is promising. 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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