Netlist Inc 10-Q for FY2021 Q3

Netlist Inc (NLST)

10-Q 2021-11-10 For: 2021-10-02

Added on April 12, 2026

About this 10-Q

Netlist Inc filed this 10-Q on November 10, 2021, covering the quarter ended October 2, 2021 (FY2021 Q3).

Headline figures

Quarter ended October 2, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $26.75M; up 161.9% from $10.21M a year earlier
Net loss: $10.71M; compared with a net loss of $2.13M a year earlier
Diluted EPS: -$0.05; compared with -$0.01 a year earlier

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Delaware		95-4812784
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Large accelerated filer ◻	Accelerated filer ◻	Non-accelerated filer ⌧	Smaller reporting company ⌧
			Emerging growth company ◻



		Page
PART I. — FINANCIAL INFORMATION
Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4	Controls and Procedures	29
PART II
Item 1	Legal Proceedings	31
Item 1A	Risk Factors	31
Item 6	Exhibits	56
SIGNATURES		57



	October 2,		January 2,
	2021		2021
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	62,282	$	13,326
Restricted cash		10,900		3,200
Accounts receivable, net of allowances of $198 (2021) and $157 (2020)		4,758		4,680
Inventories		19,387		3,198
Prepaid expenses and other current assets		729		514
Total current assets		98,056		24,918
Property and equipment, net		425		182
Operating lease right-of-use assets		165		114
Other assets		282		58
Total assets	$	98,928	$	25,272

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	28,164	$	5,327
Revolving line of credit		4,487		3,678
Accrued payroll and related liabilities		1,116		806
Accrued expenses and other current liabilities		424		777
Long-term debt due within one year		16,692		17,056
Total current liabilities		50,883		27,644
Long-term debt		—		146
Other liabilities		131		102
Total liabilities		51,014		27,892
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $0.001 par value—10,000 shares authorized: Series A preferred stock, $0.001 par value; 1,000 shares authorized; none issued and outstanding		—		—
Common stock, $0.001 par value—450,000 shares authorized; 225,969 (2021) and 195,978 (2020) shares issued and outstanding		226		195
Additional paid-in capital		229,523		192,071
Accumulated deficit		(181,835)		(194,886)
Total stockholders' equity (deficit)		47,914		(2,620)
Total liabilities and stockholders' equity (deficit)	$	98,928	$	25,272


	Three Months Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2021		2020		2021		2020
Net product sales	$	26,749	$	10,212	$	66,009	$	35,749
License fee		—		—		40,000		—
Net sales		26,749		10,212		106,009		35,749
Cost of sales		24,241		8,875		59,135		30,477
Gross margin		2,508		1,337		46,874		5,272
Operating expenses:
Research and development		2,038		731		5,222		2,083
Intellectual property legal fees		8,461		784		14,585		2,257
Selling, general and administrative		2,590		1,816		7,639		5,994
Total operating expenses		13,089		3,331		27,446		10,334
Operating (loss) income		(10,581)		(1,994)		19,428		(5,062)
Other (expense) income, net:
Interest expense, net		(125)		(139)		(417)		(437)
Other (expense) income, net		(2)		3		641		(2)
Total other (expense) income, net		(127)		(136)		224		(439)
(Loss) income before provision for income taxes		(10,708)		(2,130)		19,652		(5,501)
Provision for income taxes		—		—		6,601		1
Net (loss) income	$	(10,708)	$	(2,130)	$	13,051	$	(5,502)

(Loss) earnings per share:
Basic	$	(0.05)	$	(0.01)	$	0.06	$	(0.03)
Diluted	$	(0.05)	$	(0.01)	$	0.06	$	(0.03)
Weighted-average common shares outstanding:
Basic		224,020		192,257		215,135		179,154
Diluted		224,020		192,257		235,862		179,154


				Additional				Total
	Common Stock			Paid-in		Accumulated		Stockholders'
	Shares	Amount		Capital		Deficit		Equity (Deficit)
Balance, January 2, 2021	195,978	$	195	$	192,071	$	(194,886)	$	(2,620)
Net loss	—		—		—		(4,017)		(4,017)
Issuance of common stock, net	11,700		12		9,349		—		9,361
Exercise of stock options	476		—		376		—		376
Exercise of warrants	6,508		7		3,975		—		3,982
Stock-based compensation	—		—		338		—		338
Restricted stock units vested and distributed	501		1		(1)		—		—
Tax withholdings related to net share settlements of equity awards	(150)		—		(276)		—		(276)
Balance, April 3, 2021	215,013		215		205,832		(198,903)		7,144
Net income	—		—		—		27,776		27,776
Exercise of stock options	345		—		256		—		256
Exercise of warrants	588		1		375		—		376
Stock-based compensation	—		—		379		—		379
Restricted stock units vested and distributed	63		—		—		—		—
Tax withholdings related to net share settlements of equity awards	(22)		—		(47)		—		(47)
Balance, July 3, 2021	215,987		216		206,795		(171,127)		35,884
Net loss	—		—		—		(10,708)		(10,708)
Issuance of common stock, net	2,973		3		16,913		—		16,916
Exercise of stock options	1,909		2		3,178		—		3,180
Exercise of warrants	4,712		5		2,906		—		2,911
Stock-based compensation	—		—		445		—		445
Restricted stock units vested and distributed	521		—		—		—		—
Tax withholdings related to net share settlements of equity awards	(133)		—		(714)		—		(714)
Balance, October 2, 2021	225,969	$	226	$	229,523	$	(181,835)	$	47,914


	Operating		Finance
Fiscal Year	Leases		Leases
2021 (remainder of the year)	$	63	$	6
2022		105		26
2023		—		26
2024		—		10
2025		—		5
Thereafter		—		3
Total lease payments		168		76
Less: imputed interest		(3)		(6)
Total	$	165	$	70


			Weighted
	Number of		Average
	Shares		Exercise
	(in thousands)		Price
Outstanding as of January 2, 2021		13,911	$	0.59
Granted		—		—
Exercised		(11,911)		0.64
Expired		—		—
Outstanding as of October 2, 2021		2,000		0.30


			Weighted-
	Number of		Average
	Shares		Exercise
	(in thousands)		Price
Outstanding as of January 2, 2021		7,519	$	1.12
Granted		1,995		1.01
Exercised		(2,730)		1.40
Expired or forfeited		(740)		1.68
Outstanding as of October 2, 2021		6,044		0.89


		Filed	Incorporated by Reference
Exhibit No.	Exhibit Description	Herewith	Form	File No.	Filing Date
10.1	Purchase Agreement dated as of September 28, 2021, between Netlist, Inc. and Lincoln Park Capital Fund, LLC		8-K	001-33170	September 28, 2021
10.2	Registration Rights Agreement, dated as of September 28, 2021, between Netlist, Inc. and Lincoln Park Capital Fund, LLC		8-K	001-33170	September 28, 2021
31.1	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer	X
31.2	Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer	X
32+	Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer	X
101.INS	Inline XBRL Instance Document	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)


Date:November 10, 2021	Netlist, Inc.


	By:	/s/ Chun K. Hong
		Chun K. Hong
		President, Chief Executive Officer and Sole Director
		(Principal Executive Officer)

	By:	/s/ Gail Sasaki
		Gail Sasaki
		Vice President and Chief Financial Officer
		(Principal Financial Officer)

ugust
Date:November 10, 2021	/s/ Chun K. Hong
	Chun K. Hong
	President, Chief Executive Officer and Sole Director


Date:November 10, 2021	/s/ Gail Sasaki
	Gail Sasaki
	Vice President and Chief Financial Officer


	October 2,		January 2,
	2021		2021
Raw materials	$	3,704	$	578
Work in process		568		2
Finished goods		15,115		2,618
	$	19,387	$	3,198


	October 2,		January 2,
	2021		2021
Secured convertible note, due December 2021, including accrued interest of $1,762 (2021) and $1,538 (2020), respectively	$	16,762	$	16,538
Paycheck protection program loan, due April 2022, including accrued interest of $4 (2020), respectively		—		641
Notes payable		—		251
Unamortized debt discounts and issuance costs		(70)		(228)
Total debt		16,692		17,202
Less: amounts due within one year		(16,692)		(17,056)
Long-term debt	$	—	$	146


	October 2,		January 2,
	2021		2021
Weighted Average Remaining Lease Term (in years)
Operating lease		0.8		0.4
Finance lease		3.1		3.3

Weighted Average Discount Rate
Operating lease		5.5%		6.1%
Finance lease		5.2%		5.1%


			Weighted-
			Average
	Number of		Grant-Date
	Shares		Fair Value
	(in thousands)		per Share
Outstanding as of January 2, 2021		3,037	$	0.53
Granted		305		4.54
Vested		(1,085)		0.57
Forfeited		(88)		0.51
Outstanding as of October 2, 2021		2,169		1.07