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Netlist Reports Second Quarter 2019 Results

IRVINE, Calif., Aug. 8, 2019 /PRNewswire/ -- Netlist, Inc. (NLST) today reported financial results for the second quarter ended June 29, 2019.

Netlist logo (PRNewsFoto/Netlist, Inc.) (PRNewsfoto/Netlist, Inc.)

Net sales for the second quarter ended June 29, 2019 were $5.5 million, compared to net sales of $8.4 million for the quarter ended June 30, 2018.  Gross profit for the quarter ended June 29, 2019 was $0.4 million, or 7.3% of net sales, compared to a gross profit of $0.5 million, or 5.7% of net sales, for the quarter ended June 30, 2018. 

GAAP net loss for the second quarter ended June 29, 2019 was ($3.5) million, or a loss per share of ($0.02), compared to a net loss in the prior year period of ($3.4) million, or a loss per share of ($0.04).  These results include stock-based compensation expense of $0.2 million for the quarters ended June 29, 2019 and June 30, 2018.

As of June 29, 2019, cash, cash equivalents and restricted cash was $9.5 million, total assets were $17.7 million, working capital was $3.1 million, total debt and accrued interest, net of debt discount, was $19.4 million, and stockholders' deficit was ($12.1) million.

"During the quarter net sales and gross margins improved on a sequential basis," said Netlist's Chief Executive Officer, C.K. Hong. "We signed a memorandum of understanding with a major semiconductor company for the ASIC implementation of the HybriDIMM Media Controller. Finally, we completed the trial against SK hynix at the United States International Trade Commission and look forward to the Initial Determination this fall."

Conference Call Information
C.K. Hong, Chief Executive Officer, and Gail Sasaki, Chief Financial Officer, will host an investor conference call today, August 8, 2019 at 5:00 p.m. Eastern Time to review Netlist's results for the second quarter ended June 29, 2019.  The dial-in number for the call is 1-412-317-5443.  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 provides high-performance SSDs and modular memory subsystems to enterprise customers in diverse industries.  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. To learn more, 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 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, such as its ongoing proceedings against SK hynix Inc., 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, including its relationship with Samsung Electronics Co., Ltd.; the competitive landscape of Netlist's industry; and general economic, political and market conditions.  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 March 22, 2019, 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 

Netlist, Inc.

Mike Smargiassi/Sharon Oh 

Gail M. Sasaki

NLST@theplunkettgroup.com 

Chief Financial Officer

(212) 739-6729 

(949) 435-0025

 

Netlist, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

















(unaudited)







June 29,


December 29,




2019


2018


ASSETS








Current assets:








Cash and cash equivalents


$

7,432


$

14,802


Restricted cash



2,050



1,850


Accounts receivable, net



2,406



2,917


Inventories



2,294



2,946


Prepaid expenses and other current assets



541



677


Total current assets



14,723



23,192










Property and equipment, net



328



279


Operating lease right-of-use assets



1,267




Other assets



1,393



1,394


Total assets


$

17,711


$

24,865










LIABILITIES AND STOCKHOLDERS' DEFICIT








Current liabilities:








Accounts payable


$

8,100


$

9,497


Revolving line of credit



2,060



2,293


Accrued payroll and related liabilities



542



604


Accrued expenses and other current liabilities



797



343


Note payable



127



376


Total current liabilities



11,626



13,113


Convertible promissory notes and accrued interest, net of debt discounts



17,247



17,346


Operating lease liabilities



768




Other liabilities



150



78


Total liabilities



29,791



30,537










Commitments and contingencies
















Stockholders' deficit:








Preferred stock






Common stock



142



139


Additional paid-in capital



170,513



169,355


Accumulated deficit



(182,735)



(175,166)


Total stockholders' deficit



(12,080)



(5,672)


Total liabilities and stockholders' deficit


$

17,711


$

24,865


 

Netlist, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)





















Three Months Ended


Six Months Ended



June 29,

June 30,

June 29,

June 30,



2019

2018

2019

2018










Net sales


$   5,512


$  8,426


$ 10,617


$ 17,305

Cost of sales(1)


5,108


7,944


9,934


16,444

Gross profit 


404


482


683


861

Operating expenses:









Research and development(1)


565


783


1,155


1,791

Intellectual property legal fees


1,093


1,388


2,588


3,599

Selling, general and administrative(1)


2,004


1,585


3,977


3,276

Total operating expenses


3,662


3,756


7,720


8,666

Operating loss


(3,258)


(3,274)


(7,037)


(7,805)

Other expense, net:









Interest expense, net


(258)


(133)


(530)


(280)

Other expense, net


(2)


(10)


(1)


(5)

Total other expense, net


(260)


(143)


(531)


(285)

Loss before provision for income taxes 


(3,518)


(3,417)


(7,568)


(8,090)

Provision for income taxes


1



1


Net loss


$ (3,519)


$ (3,417)


$ (7,569)


$ (8,090)

Net loss per common share:









Basic and diluted


$   (0.02)


$   (0.04)


$   (0.05)


$   (0.09)

Weighted-average common shares outstanding:









Basic and diluted


140,773


91,685


139,906


87,073



















(1)  Amounts include stock-based compensation expense as follows:
















Cost of sales


$          7


$         6


$        14


$        12

Research and development


45


56


96


136

Selling, general and administrative


145


111


429


266

Total stock-based compensation


$      197


$     173


$      539


$      414

 

Cision

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