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Netlist, Inc. (OTCMKTS: NLST) Big reversal brew as semiconductor revenues grow exponentially and Co continues to win in patent infringement lawsuits

By Jerrell C. Esser

Netlist, Inc. (OTCMKTS: NLST) major reversal brew as NLST is under strong accumulation at current levels. NLST is one of the most interesting stocks we’ve reported on here at Microcapdaily (since it was below $0.50) and we will report it when it is listed on NASDAQ, a move that will at least double the current market valuation. Netlist continues to win and win big in its patent infringement lawsuits against Samsung and Google. In 2021, Netlist won a settlement against SK Hynix and more recently they won a significant victory against Google when the judge Seeborg ruled on claim 16 and denied Google rights to intervene, making it liable for the violation of Netlist technology dating back to 2004. There are also numerous cases against Samsung and Micron in which Netlist holds very strong positions. Samsung had its previous contract with Netlist voided, making any licensed technology they sold during the contract period open to litigation. And, as in the case of Google, we know they breached Netlist technology.

Netlist has seen massive business growth over the past year and the company is now in a strong position to collect massive settlements in what could be the biggest patent infringement lawsuit in history that could propel this situation into a whole new stratosphere. In the past year alone, the company’s fast-growing semiconductor business has doubled. According to the company’s recent second quarter filing, Netlist product sales for the second quarter ended July 2, 2022 were $55.4 million, compared to net product sales of $24.4 million for the second quarter. quarter ended July 3, 2021 and $50.2 million in the most recent quarter. Net loss for the second quarter ended July 2, 2022 was ($5.0) million, or ($0.02) per share and as of July 2, 2022, cash, cash equivalents and restricted cash were of $60.6 million, total assets were $99.6 million, working capital was $46.3 million, and total debt was $8.2 million. Netlist’s upside is enormous, as the company’s semiconductor business continues to grow exponentially, while all of the multiple infringement lawsuits Netlist is pursuing could very well result in the largest infringement settlements in history patents.

Netlist, Inc. (OTCMKTS: NLST) provides high performance solid state drives and modular memory solutions to enterprise customers across various industries. The company’s NVMe SSDs in various capacities and form factors and the line of custom and specialized memory products deliver industry-leading performance to server and storage device customers and cloud service providers. Netlist licenses its intellectual property portfolio, including patents, in server memory, hybrid memory and storage class memory, to companies that implement our technology. Netlist holds a portfolio of 130 issued and pending U.S. and foreign patents, many of which are pioneering, 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 its track record of bringing disruptive new products to market.

The company invented the Distributed Buffer Architecture which allows buffering of data signals along the bottom edge of the memory module using multiple data buffer devices distributed between the edge connector and the DRAM. The result is shorter data paths, better signal integrity, and reduced latency compared to the industry standard design for the DDR3 Reduced Load Dual In-Line Memory Module (“LRDIMM”). The memory industry has widely adopted our distributed architecture for DDR4 LRDIMMs. Our HyperCloud product was our first LRDIMM product built on this distributed buffer architecture.

Netlist has designed special algorithms that can be implemented in stand-alone integrated circuits or integrated into other functional blocks in application-specific integrated circuits (“ASICs”). We use these algorithms in our HybriDIMM product to incorporate load reduction functionality. We also integrate these algorithms into our NVvault product line, also known in the industry as NVDIMM-N.

The company is led by visionary CEO CK Hong, CEO, who brings more than two decades of high-tech management experience to Netlist. He most recently served as President of Infinilink, a DSL equipment manufacturer, and Executive Vice President of Viking Components, Inc. Prior to that, he spent 15 years at LG where he held various leadership positions in the United States and in Korea. Mr. Hong holds a master’s degree in technology management from Pepperdine University and a bachelor’s degree in economics from Virginia Commonwealth University.

Below is an excellent summary of Netlist lawsuits from Stokd on Stocktwits

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Earlier this year, Netlist released its financial results for the second quarter ended July 2, 2022.

Second Quarter 2022 Highlights:

  • Net product sales more than doubled to $55.4 million from $24.4 million in the year-ago quarter.
  • Dollar product gross margin increased by 66%. Gross margin on products was $4.7 million compared to $2.9 million for the quarter last year.

Net product sales for the second quarter ended July 2, 2022 were $55.4 million, compared to net product sales of $24.4 million for the second quarter ended July 3, 2021 and $50. $.2 million in the most recent quarter. Gross margin on products for the second quarter ended July 2, 2022 was $4.7 million, compared to gross margin on products of $2.9 million for the second quarter ended July 3, 2021 and 3 $.4 million for the most recent quarter.

Total net sales for the second quarter ended July 2, 2022 were $55.4 million, compared to total net sales of $64.4 million for the second quarter ended July 3, 2021. Net loss for the second quarter ended July 2, 2022 was ($5.0) million. , or ($0.02) per share, compared to net income of $27.8 million for the prior year period, or $0.12 per diluted share. These results include stock-based compensation expense of $0.8 million and $0.4 million for the quarters ended July 2, 2022 and July 3, 2021, respectively.

As of July 2, 2022, cash, cash equivalents and restricted cash were $60.6 million, total assets $99.6 million, working capital $46.3 million , total debt at $8.2 million and equity at $47.9 million.

On August 8, Netlist reported that the United States District Court for the District of Delaware had issued an order granting in part Netlist’s motion to dismiss Samsung’s first amended complaint and denying Samsung’s request to file a second amended complaint. The Court issued a written opinion in support of the order and dismissed Samsung’s counts IV, V, VI, VII, X and XI. The partial rejection means Samsung cannot pursue a separate action over the patents Netlist first asserted in Texas, and can no longer discharge its alleged obligation to protect Google from the ‘912 patent in Delaware. Additionally, Samsung voluntarily withdrew its motion to sever and stay the case that Netlist filed in the Eastern District of Texas. Separately, following the order, Netlist filed a lawsuit against Samsung in the Eastern District of Texas for Samsung’s infringement of the ‘912 patent.

Jayson Sohi, Director of IP Strategy at Netlist, said, “We are pleased that Judge Andrews has dismissed half of the ongoing claims in Samsung’s Delaware lawsuit, including the 912 claim. We look forward to continuing. to defend our intellectual property rights in the remaining part of this case. »

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Currently trading at a market valuation of $644 million NLST has 232 million shares outstanding and an excellent balance sheet with $99 million in assets versus $52 million in liabilities. Netlist traded over $10 per share with the same share structure in the summer of 2021 and since then the company has seen its balance sheets improve significantly. Netlist reported one record quarter after another as the company’s semiconductor business more than doubled in the past year. Netlist’s upside is enormous, as all of the multiple infringement lawsuits Netlist is pursuing could very well result in the largest patent infringement settlements in history.and we could see several resolutions in the next 6 months. It’s no wonder investors are accumulating massively running levels and a major reversal the the reverse is preparing. We’ll update on Netlist when more details emerge, so make sure you’re subscribed to Microcapdaily so you know what’s going on with Netlist.

Disclosure: We have no long or short positions on NLST and we have not been compensated for this article.

Jerrell C. Esser
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