Netlist (NASDAQ: NLST) Q1 sales surge 262% as company returns to profit
Rhea-AI Filing Summary
Netlist, Inc. reported a sharp turnaround for the quarter ended March 28, 2026, with net sales of $104.9 million versus $29.0 million a year earlier and net income of $8.6 million after a prior-period loss. Gross profit rose to $22.4 million and gross margin improved to 21% from 4%, driven mainly by stronger pricing and higher volumes for resold memory products, especially RDIMMs.
Operating cash flow was negative $21.8 million, largely due to a significant inventory build to $41.2 million and higher prepaid expenses. Cash, cash equivalents and restricted cash totaled $27.0 million, with working capital of $9.3 million and stockholders’ equity of $10.4 million turning positive from a deficit. Management believes existing liquidity, a $10.0 million SVB credit line and prior equity financings will cover at least the next 12 months.
Results remain highly exposed to customer and supplier concentration, with one supplier representing 89% of purchases and the PRC accounting for most net sales. The company is also deeply engaged in patent litigation and inter partes reviews with Samsung, Micron and others, including several large jury awards and ongoing appeals that could affect future cash flows.
Positive
- Netlist delivered a strong operational rebound, with Q1 2026 net sales of $104.9 million (up 262%) and net income of $8.6 million versus a prior-year loss, while gross margin expanded from 4% to 21%.
Negative
- The business remains highly concentrated, with a single supplier representing 89% of purchases, the People’s Republic of China driving most net sales, and extensive ongoing patent litigation and PTAB reviews creating meaningful uncertainty around future cash flows.
Insights
Netlist swings to profitability on surging memory resale demand but cash flow and legal overhangs remain key constraints.
Net sales jumped to $104.9M with gross margin improving to 21%, producing operating income of $8.6M after a prior-year operating loss. The improvement is tied mainly to tighter supply in memory markets supporting higher pricing for RDIMMs and related products.
Despite the earnings rebound, Netlist used $21.8M in operating cash, driven by a jump in inventories to $41.2M and higher prepayments. Cash, cash equivalents and restricted cash were $27.0M, while the SVB facility provides up to $10.0M in revolving credit, with $2.6M drawn as of March 28, 2026.
Customer and supplier concentration remains pronounced, with one supplier at 89% of purchases and the People’s Republic of China representing the majority of net sales. Extensive patent litigation and PTAB proceedings with Samsung and Micron have yielded sizable jury awards but also multiple adverse IPR decisions and pending appeals. Future filings for periods after March 28, 2026 will show whether pricing strength and collection of any awards can offset these structural risks.
Key Figures
Key Terms
Inter Partes Review regulatory
Product Purchase and Supply Agreement financial
Rights Agreement regulatory
Series A Preferred Stock financial
equity line arrangement financial
Post Grant Review regulatory
Earnings Snapshot
Table of Contents
]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from _____ to _____
Commission file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻ | Accelerated filer ◻ |
Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of May 8, 2026, there were
Table of Contents
NETLIST, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended March 28, 2026
TABLE OF CONTENTS
Page | ||||
PART I. — FINANCIAL INFORMATION | ||||
Item 1 | Financial Statements | 3 | ||
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 30 | ||
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 37 | ||
Item 4 | Controls and Procedures | 37 | ||
PART II. — OTHER INFORMATION | ||||
Item 1 | Legal Proceedings | 39 | ||
Item 1A | Risk Factors | 39 | ||
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 39 | ||
Item 3 | Defaults Upon Senior Securities | 39 | ||
Item 4 | Mine Safety Disclosures | 39 | ||
Item 5 | Other Information | 39 | ||
Item 6 | Exhibits | 40 | ||
SIGNATURES | 41 | |||
2
Table of Contents
PART I. — FINANCIAL INFORMATION
Item 1. | Financial Statements |
NETLIST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value) (Unaudited)
March 28, | December 27, | |||||
| 2026 | | 2025 | |||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash | | | ||||
Accounts receivable, net of allowances of $ | | | ||||
Inventories | | | ||||
Prepaid expenses and other current assets | | | ||||
Total current assets | | | ||||
Property and equipment, net | | | ||||
Operating lease right-of-use assets | | | ||||
Other assets | | | ||||
Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||
Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Revolving line of credit | | | ||||
Accrued payroll and related liabilities | | | ||||
Deferred revenue | | | ||||
Other current liabilities | | | ||||
Debt due within one year | | — | ||||
Total current liabilities | | | ||||
Operating lease liabilities | | | ||||
Other liabilities | | | ||||
Total liabilities | | | ||||
Commitments and contingencies | ||||||
Stockholders' equity (deficit): | ||||||
Preferred stock, $ | ||||||
Common stock, $ | | | ||||
Additional paid-in capital | | | ||||
Accumulated deficit | ( | ( | ||||
Total stockholders' equity (deficit) | | ( | ||||
Total liabilities and stockholders' equity (deficit) | $ | | $ | | ||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Table of Contents
NETLIST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) (Unaudited)
Three Months Ended | ||||||||
March 28, | March 29, | |||||||
| | 2026 | | 2025 | ||||
Net sales | $ | | $ | | ||||
Cost of sales | | | ||||||
Gross profit | | | ||||||
Operating expenses: | ||||||||
Research and development | | | ||||||
Intellectual property legal fees | | | ||||||
Selling, general and administrative | | | ||||||
Total operating expenses | | | ||||||
Operating income (loss) | | ( | ||||||
Other income, net: | ||||||||
Interest income, net | | | ||||||
Other income, net | | | ||||||
Total other income, net | | | ||||||
Income (loss) before provision for income taxes | | ( | ||||||
Provision for income taxes | — | — | ||||||
Net income (loss) | $ | | $ | ( | ||||
Earnings (loss) per share: | ||||||||
Basic | $ | | $ | ( | ||||
Diluted | $ | | $ | ( | ||||
Weighted-average common shares outstanding: | ||||||||
Basic | | | ||||||
Diluted | | | ||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
4
Table of Contents
B
NETLIST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands) (Unaudited)
Additional | Total | |||||||||||||
Common Stock | Paid-in | Accumulated | Stockholders' | |||||||||||
| Shares | | Amount | | Capital | | Deficit | | Equity | |||||
Balance, December 27, 2025 | | $ | | $ | | $ | ( | $ | ( | |||||
Net income | — | — | — | | | |||||||||
Exercise of stock options | | — | | — | | |||||||||
Exercise of warrants | | | | — | | |||||||||
Stock-based compensation | — | — | | — | | |||||||||
Restricted stock units vested and distributed | | | ( | — | — | |||||||||
Balance, March 28, 2026 | | $ | $ | | $ | ( | $ | | ||||||
Additional | Total | |||||||||||||
Common Stock | Paid-in | Accumulated | Stockholders' | |||||||||||
| Shares | | Amount | | Capital | | Deficit | | Deficit | |||||
Balance, December 28, 2024 | | $ | | $ | | $ | ( | $ | ( | |||||
Net loss | — | — | — | ( | ( | |||||||||
Issuance of common stock, net | | | | — | | |||||||||
Exercise of stock options | | — | | — | | |||||||||
Stock-based compensation | — | — | | — | | |||||||||
Restricted stock units vested and distributed | | | ( | — | — | |||||||||
Tax withholdings related to net share settlements of equity awards | ( | ( | ( | — | ( | |||||||||
Balance, March 29, 2025 | | $ | $ | | $ | ( | $ | ( | ||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
5
Table of Contents
NETLIST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
Three Months Ended | |||||||
March 28, | March 29, | ||||||
| | 2026 | | 2025 | |||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | | $ | ( | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||
Depreciation and amortization | | | |||||
Non-cash lease expense | | | |||||
Gain on forgiveness of payables | ( | ( | |||||
Stock-based compensation | | | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | ( | ( | |||||
Inventories | ( | | |||||
Prepaid expenses and other assets | ( | | |||||
Accounts payable | | ( | |||||
Accrued payroll and related liabilities | | | |||||
Deferred revenue | | | |||||
Other liabilities | ( | ( | |||||
Net cash used in operating activities | ( | ( | |||||
Cash flows from investing activities: | |||||||
Acquisition of property and equipment | — | ( | |||||
Net cash used in investing activities | — | ( | |||||
Cash flows from financing activities: | |||||||
Net borrowings under line of credit | | | |||||
Payments on notes payable | ( | ( | |||||
Proceeds from issuance of common stock, net | — | | |||||
Proceeds from exercise of stock options and warrants | | | |||||
Payments for taxes related to net share settlement of equity awards | — | ( | |||||
Net cash provided by financing activities | | | |||||
Net change in cash, cash equivalents and restricted cash | ( | ( | |||||
Cash, cash equivalents and restricted cash at beginning of period | | | |||||
Cash, cash equivalents and restricted cash at end of period | $ | | $ | | |||
Reconciliation of cash, cash equivalents and restricted cash at end of period: | |||||||
Cash and cash equivalents | $ | | $ | | |||
Restricted cash | | | |||||
Cash, cash equivalents and restricted cash at end of period | $ | | $ | | |||
See accompanying Notes to the Condensed Consolidated Financial Statements.
6
Table of Contents
NETLIST, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1—Summary of Significant Accounting Policies
Basis of Presentation
Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 27, 2025, included in our Annual Report on Form 10-K filed with the SEC on March 19, 2026.
In the opinion of management, all adjustments for the fair presentation of our condensed consolidated financial statements have been made. The adjustments are of a normal recurring nature except as otherwise noted. The results of operations for the interim periods are not necessarily indicative of the results to be expected for other periods or the full fiscal year. We have evaluated events occurring subsequent to March 28, 2026 through the filing date of this Quarterly Report on Form 10-Q and concluded that there were no events that required recognition and disclosures other than those discussed elsewhere in the notes hereto.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Netlist, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Fiscal Year
Our fiscal year is the
Use of Estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Significant items subject to such estimates and assumptions made by management include, but are not limited to, the determination of inventory reserves, allowance for doubtful accounts, and the discount rate used for lease obligation. Actual results may differ materially from those estimates.
7
Table of Contents
Liquidity
We incurred net income of $
Recently Issued Accounting Standards
In November 2024, the Financial Accounting Standards Board issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which updates expense disclosure requirements on an annual and interim basis. This ASU is effective for the annual periods beginning after December 15, 2026, and the interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU.
Segment Information
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Company’s chief operating decision maker, the chief executive officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance on a regular basis. Accordingly, the Company considers itself to be
8
Table of Contents
Significant expenses were as follows (in thousands):
Three Months Ended | ||||||
March 28, | March 29, | |||||
2026 | 2025 | |||||
Expense: | ||||||
Employee Compensation (1) | $ | | $ | | ||
Stock Based Compensation | | | ||||
Program Expenses (2) | | | ||||
Professional Fees (3) | | | ||||
| (1) | The amounts consisted of employee compensation related to both cost of goods sold (“COGS”) and operating expenses. The amounts do not include stock-based compensation. The amounts do not include professional fees. |
| (2) | The amounts consisted of costs, such as outside services, depreciation, and dues and subscriptions, related to both COGS and operating expenses. The amounts do not include professional fees. |
| (3) | The amounts consisted of legal fees, tax and audit fees. |
9
Table of Contents
Note 2—Supplemental Financial Information
Inventories
Inventories consisted of the following (in thousands):
March 28, | December 27, | |||||
| 2026 | | 2025 | |||
Raw materials | $ | | $ | | ||
Work in process | | | ||||
Finished goods | | | ||||
$ | | $ | | |||
Cash Flow Information
The following table shows supplemental disclosures of cash flow information and non-cash financing activities (in thousands):
Three Months Ended | ||||||
March 28, | March 29, | |||||
2026 | | 2025 | ||||
Supplemental disclosure of cash flow information: | ||||||
Cash paid during the year for: | ||||||
Interest | $ | | $ | | ||
Supplemental disclosure of non-cash investing and financing activities: | ||||||
Debt financing of insurance | $ | | $ | | ||
Lease modification to increase operating lease assets | $ | | $ | — | ||
Earnings (Loss) Per Share
The following table shows the computation of basic and diluted earnings (loss) per share of common stock (in thousands, except per share data):
Three Months Ended | ||||||
March 28, | March 29, | |||||
2026 | | 2025 | ||||
Numerator: Net income (loss) | $ | | $ | ( | ||
Denominator: | ||||||
Weighted-average basic shares outstanding | | | ||||
Effect of dilutive securities | | — | ||||
Weighted-average diluted shares | | | ||||
Basic earnings (loss) per share | $ | | $ | ( | ||
Diluted earnings (loss) per share | $ | | $ | ( | ||
10
Table of Contents
The table below shows potentially dilutive weighted average common share equivalents, consisting of shares issuable upon the exercise of outstanding stock options and warrants using the treasury stock method and the shares issuable upon vesting of the restricted stock units (“RSUs”).
Three Months Ended | ||||||
March 28, | March 29, | |||||
2026 | | 2025 | ||||
Weighted average common share equivalents | | | ||||
Disaggregation of Net Sales
The following table shows disaggregated net sales by major source (in thousands):
Three Months Ended | ||||||
March 28, | March 29, | |||||
| 2026 | 2025 | ||||
Resales of third-party products | $ | | $ | | ||
Sale of our modular memory subsystems | | | ||||
Total net sales | $ | | $ | | ||
Net product sales by country presented below are based on the billing location of the customer (in thousands):
Three Months Ended | ||||||
March 28, | March 29, | |||||
| 2026 | | 2025 | |||
United States | $ | | $ | | ||
People's Republic of China (1) | | | ||||
Other countries | | | ||||
Total net sales | $ | | $ | | ||
(1) | The People’s Republic of China (“PRC”) includes Hong Kong and Taiwan. |
The PRC accounted for more than
As of December 27, 2025, we had deferred revenue of $
As of March 28, 2026, we had deferred revenue of $
11
Table of Contents
Major Customers, Suppliers and Products
Our net product sales have historically been concentrated in a small number of customers. The following table sets forth the percentage of net product sales made to customers that each comprise 10% or more of total product sales:
Three Months Ended | ||||
March 28, | March 29, | |||
2026 | 2025 | |||
Customer A | ||||
Customer B | * | |||
Customer C | * | |||
Customer D | * | |||
* | Less than 10% of net sales during the period. |
As of March 28, 2026,
We resell certain component products to end-customers that are not reached in the distribution models of the component manufacturers, including storage customers, appliance customers, system builders and cloud and datacenter customers. For the three months ended March 28, 2026 and March 29, 2025, resales of these products represented approximately
Our purchases are typically concentrated in a small number of suppliers. The following table shows the percentage of purchases made from supplier(s) that each comprise 10% or more of total purchases:
Three Months Ended | ||||
March 28, | March 29, | |||
2026 | 2025 | |||
Supplier A | ||||
While we believe alternative suppliers may be available, our dependence on a small number of suppliers and the lack of any guaranteed sources for the essential components of our products and the components we resell exposes us to several risks, including the inability to obtain an adequate supply of these components, increases in their costs, delivery delays and poor quality. If we cannot obtain these components in the amounts needed on a timely basis and at commercially reasonable prices, we may not be able to develop or introduce new products, we may experience significant increases in our cost of sales if we are forced to procure components from alternative suppliers and are not able to negotiate favorable terms with these suppliers, we may experience interruptions or failures in the delivery of our products, or we may be forced to cease sales of products dependent on the components or resales of the components we resell to customers directly. Any of these events could have a material adverse effect on our business, operating results and financial condition.
Note 3—Financing Arrangements
On November 7, 2023, we entered into a loan and security agreement (as amended to date, the “2023 SVB Credit Agreement”) with Silicon Valley Bank, a division of First Citizen Bank & Trust Company (“SVB”), which provides for a revolving line of credit up to $
12
Table of Contents
rate equal to the greater of
As of March 28, 2026, all obligations under the 2023 SVB Credit Agreement were secured by a first priority security interest in our tangible and intangible assets (excluding our intellectual property). The 2023 SVB Credit Agreement subjects us to certain affirmative and negative covenants, including financial covenants with respect to our liquidity and restrictions on the payment of dividends. As of March 28, 2026, we were in compliance with our covenants under the 2023 SVB Credit Agreement.
We have letters of credit issued by SVB under the 2023 SVB Credit Agreement and Citibank, N.A., which are secured by cash and are classified as restricted cash in the condensed consolidated balance sheets. As of March 28, 2026 and December 27, 2025, (i) outstanding letters of credit were $
Note 4—Leases
We have operating and finance leases primarily associated with office and manufacturing facilities and certain equipment. The determination of which discount rate to use when measuring the lease obligation was deemed a significant judgment.
Lease cost and supplemental condensed consolidated cash flow information related to operating and finance leases were as follows (in thousands):
Three Months Ended | ||||||
March 28, | March 29, | |||||
| 2026 | | 2025 | |||
Lease cost: | ||||||
Operating lease cost | $ | | $ | | ||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||
Operating cash flows from operating leases | $ | | $ | | ||
Lease modification to increase operating lease assets | $ | | $ | — | ||
For each of the three months ended March 28, 2026 and March 29, 2025, finance lease costs and cash flows from finance leases were immaterial.
13
Table of Contents
Supplemental condensed consolidated balance sheet information related to leases was as follows (in thousands):
March 28, | December 27, | |||||
2026 | 2025 | |||||
Operating Leases | ||||||
Operating lease right-of-use assets | $ | | $ | | ||
$ | | $ | | |||
Operating lease liabilities | | | ||||
Total operating lease liabilities | $ | | $ | | ||
Finance Leases | ||||||
Property and equipment, at cost | $ | | $ | | ||
Accumulated depreciation | ( | ( | ||||
$ | | $ | | |||
Other current liabilities | $ | | $ | | ||
| | |||||
$ | | $ | | |||
The following table includes supplemental information:
March 28, | December 27, | |||||
2026 | 2025 | |||||
Weighted Average Remaining Lease Term (in years) | ||||||
Operating leases | ||||||
Finance leases | ||||||
Weighted Average Discount Rate | ||||||
Operating leases | ||||||
Finance leases | ||||||
Maturities of lease liabilities as of March 28, 2026, were as follows (in thousands):
Operating | Finance | |||||
Fiscal Year | Leases | Leases | ||||
2026 | $ | | $ | | ||
2027 | | — | ||||
2028 | | — | ||||
2029 | | — | ||||
Total lease payments | | | ||||
Less: imputed interest | ( | — | ||||
Total | $ | | $ | | ||
On March 4, 2026, we entered into a First Amendment to Lease (the “Lease Amendment”) with University Research Park LLC (the “Landlord”), pursuant to which we and the Landlord agreed to renew the Company’s existing lease dated April 28, 2021 (the “Lease”), relating to our corporate headquarters located at 111 Academy, Suite 100, Irvine, CA 92617.
The Lease Amendment extends the current term of the Lease to December 31, 2029 with no renewal option. The annual base rent starting on January 1, 2027 will be $
14
Table of Contents
Note 5—Commitments and Contingencies
Contingent Legal Expenses
Any litigation, regardless of its outcome, is inherently uncertain, involves a significant dedication of resources, including time and capital, and diverts management’s attention from our other activities. As a result, any current or future claims, allegations, or challenges by or against third parties, whether eventually decided in our favor or settled, could materially adversely affect our business, financial condition and results of operations. Additionally, the outcome of pending or future litigation and/or related patent reviews and reexaminations, as well as any delay in their resolution, could affect our ability to continue to sell our products, protect against competition in the current and expected markets for our products or license or otherwise monetize our intellectual property rights in the future.
We retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with our licensing and enforcement activities. These law firms are often retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fee, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained.
Litigation and Challenges to Netlist Patents at the U.S. Patent and Trademark Office (“USPTO”) and the Patent Trial & Appeal Board (“PTAB”)
We are, from time to time, a party to litigation that arises in the normal course of our business operations. We own numerous patents and continue to seek to grow and strengthen our patent portfolio, which covers various aspects of our innovations and includes various claim scopes. We plan to pursue avenues to monetize our intellectual property portfolio, in which we would generate revenue by selling or licensing our technology, and we intend to vigorously enforce our patent rights against alleged infringers of such rights. We dedicate substantial resources to protecting and enforcing our intellectual property rights, including with patent infringement proceedings we file against third parties and defense of our patents against challenges made by way of reexamination and review proceedings at the USPTO and PTAB. We expect these activities to continue for the foreseeable future, with no guarantee that any ongoing or future patent protection or litigation activities will be successful, or that we will be able to monetize our intellectual property portfolio.
Samsung Litigation
On May 28, 2020, Netlist filed a complaint against Samsung Electronics Co., Ltd. (“SECL”) in the U.S. District Court for the Central District of California (“CDCA”) (Netlist Inc. vs. Samsung Electronics Co., Ltd., Case No. 8:20-cv-00993) for SECL’s breach of the Joint Development and License Agreement (“JDLA”) between the parties. Netlist amended its complaint to seek a declaratory judgment that it properly terminated the JDLA in light of SECL’s material breaches thereof. On October 14, 2021, the Court granted summary judgment in favor of Netlist on SECL’s breach and Netlist’s termination of the JDLA. The case proceeded to trial on the issue of damages on December 1, 2021, and the jury reached a verdict for SECL on December 3, 2021. The Court entered final judgment on February 15, 2022, and both parties appealed to the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit affirmed-in-part and reversed-in-part the judgment of the District Court, and remanded the case to the District Court, which reopened the case on November 13, 2023. The case proceeded to trial on May 14, 2024, and the jury reached a verdict for Netlist on May 17, 2024. On December 26, 2024, the Court granted SECL’s motion for a new trial, holding that one juror’s voir dire responses support a finding of implied juror bias which deprived both parties of their right to a fair trial. A new trial was held from March 18 to March 21, 2025. On March 24, 2025, the jury returned a verdict for Netlist. On April 7, 2025, the Court entered final judgment in favor of Netlist on its claims that SECL breached the JDLA and that Netlist properly terminated the JDLA. On May 5, 2025, SECL filed a motion for a new trial. On June 27, 2025, the Court issued an order directing the parties to file a status report proposing how the Court should elicit testimony from the jurors at issue in SECL’s motion for a new trial. The parties filed the status report on July 9, 2025 and appeared before the Court on July 11, 2025. On July 17, 2025, the Court issued an order setting
15
Table of Contents
an evidentiary hearing regarding SECL’s motion for a new trial, and the evidentiary hearing was held on July 30, 2025. On August 4, 2025, the Court issued an order denying SECL’s motion for a new trial. On August 29, 2025, SECL filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. On September 2, 2025, the appeal was docketed and assigned Case No. 25-5531. The appeal is pending.
On October 15, 2021, SECL and Samsung Semiconductor, Inc. (“SSI”) filed a declaratory judgement action against Netlist in the U.S. District Court for the District of Delaware (“DDE”) (Samsung Electronics Co., Ltd. et. al. v. Netlist, Inc., Case No. 1:21-cv-01453), seeking a declaration that SECL and SSI do not infringe the following Netlist patents: U.S. Patent Nos. 7,619,912; 9,858,218; 10,217,523; and 10,474,595 (respectively, the “’912, ’218, ’523, and ’595 Patents”). SECL and SSI filed amended complaints to add other Netlist patents: U.S. Patent Nos. 10,860,506; 10,949,339; 11,016,918; and 11,232,054 (respectively, the “’506, ’339, ’918, and ’054 Patents”). Netlist filed a motion to dismiss, and on August 1, 2022, the Court granted this motion in part, declining to exercise jurisdiction over the ’912, ’506, ’339, ’918, and ’054 Patents. On September 12, 2022, Netlist filed a crossclaim against Google LLC and Alphabet, Inc. (collectively, “Google”) and counterclaims against SECL and SSI, seeking damages from the infringement by Google, SECL, and SSI, a finding of willful infringement by Google, SECL, and SSI and enhanced damages pursuant to 35 U.S.C. § 284, an exceptional case finding and reasonable attorneys’ fees pursuant to 35 U.S.C. § 285, and equitable relief. On November 15, 2022, Google filed a motion to dismiss this case as to Google or, alternatively, for a severance, stay, and dismissal of willfulness and indirect infringement allegations. This motion was heard on May 22, 2023. On December 1, 2023, the Court stayed this case pending the resolution of the above CDCA case and ordered the parties to notify the Court within seven days of any action by the CDCA pertaining to the parties’ rights under the JDLA that may merit lifting the stay. On March 31, 2025, the parties notified the Court of the jury verdict in the above CDCA case.
On December 20, 2021, Netlist filed a complaint against SECL, SSI, and Samsung Electronics America, Inc. (“SEA”) (collectively, “Samsung”) in the U.S. District Court for the Eastern District of Texas (“EDTX”), Case No. 2:21-cv-00463, for infringement of the ’506, ’339, and ’918 Patents. Netlist later amended its complaint to additionally assert infringement of the ’054 Patent as well as U.S. Patent Nos. 8,787,060 and 9,318,160 (respectively, the “’060 and ’160 Patents”). On April 14, 2023, this case proceeded to a jury trial on the ’339, ’918, ’054, ’060, and ’160 Patents. On April 21, 2023, the jury returned a verdict finding that Samsung willfully infringed all
On August 1, 2022, Netlist filed a complaint against Samsung in EDTX (Case No. 2:22-cv-00293), for infringement of the ’912 Patent. Netlist later amended its complaint to additionally assert infringement of U.S. Patent Nos. 11,093,417; 9,858,215; and 10,268,608 (respectively, the “’417, ’215, and ’608 Patents”). On November 12, 2024, this case proceeded to a jury trial on the ’912, ’417, and ’608 Patents. On November 22, 2024, the jury returned a verdict finding that Samsung willfully infringed all
16
Table of Contents
On October 9, 2023, Samsung filed a declaratory judgement action against Netlist in the DDE (Case No. 1:23-cv-01122), seeking a declaration that Samsung does not infringe Netlist’s U.S. Patent No. 11,386,024 (the “’024 Patent”). On November 6, 2023, Netlist moved to dismiss for lack of subject matter jurisdiction and failure to state a claim. On March 4, 2025, the Court denied this motion. On June 13, 2025, Netlist filed a motion to stay this action pending the resolution of the IPR of the ’024 Patent (Case No. IPR2025-00001). On July 8, 2025, the Court issued a scheduling and consolidation order consolidating this action with the action below (Case No. 1:24-cv-00614) and setting a Markman hearing on June 26, 2026, a hearing on case dispositive and Daubert motions on June 16, 2027, a pretrial conference on July 26, 2027, and a five-day jury trial starting on August 2, 2027. On August 1, 2025, the Court granted Netlist’s motion to stay the consolidated action pending the final written decisions in the two IPRs.
On May 22, 2024, Samsung filed a declaratory judgement action against Netlist in the DDE (Case No. 1:24-cv-00614), seeking a declaration that Samsung does not infringe Netlist’s U.S. Patent No. 11,880,319 (the “’319 Patent”). On July 15, 2024, Netlist moved to dismiss for lack of subject matter jurisdiction and failure to state a claim, which the Court denied as moot in view of Samsung’s First Amended Complaint filed on August 5, 2024. On August 21, 2024, Netlist moved to dismiss the First Amended Complaint for lack of subject matter jurisdiction and failure to state a claim. On March 4, 2025, the Court denied this motion. On June 13, 2025, Netlist filed a motion to stay this action pending the resolution of the IPR of the ’319 Patent (Case No. IPR2025-00002). On July 8, 2025, the Court issued a scheduling and consolidation order consolidating this action with the action above (Case No. 1:23-cv-01122).
On May 19, 2025, Netlist filed a complaint against Samsung in the EDTX (Case No. 2:25-cv-00557) for infringement of U.S. Patent 12,308,087 (the “’087 Patent”). On June 27, 2025, the Court consolidated this case with the case against Micron asserting the ’087 Patent (Case No. 2:25-cv-00558). On July 8, 2025, Netlist filed (a) a First Amended Complaint against Samsung and Avnet, Inc. (“Avnet”) and (b) a First Amended Complaint against Micron and Avnet, asserting infringement of the ’087 Patent and U.S. Patent 10,025,731 (the “’731 Patent”), seeking damages from the infringement by the defendants, a finding of willful infringement and enhanced damages pursuant to 35 U.S.C. § 284, an exceptional case finding and reasonable attorneys’ fees pursuant to 35 U.S.C. § 285, a permanent injunction pursuant to 35 U.S.C. § 283, and equitable relief. On July 22, 2025, Micron moved to dismiss the First Amended Complaint for improper venue. On July 25, 2025, the Court issued a Docket Control Order setting a claim construction hearing on September 25, 2026 and a trial date of March 15, 2027. On September 11, 2025, SEA and SSI filed a motion to dismiss for improper venue. On September 11, 2025, Samsung filed a motion to dismiss certain of Netlist’s infringement claims in the First Amended Complaint. On September 15, 2025, Avnet filed motions to dismiss both First Amended Complaints. On October 9, 2025, Netlist filed a Second Amended Complaint against Samsung and Avnet asserting infringement of the ’087 and ’731 Patents. On October 10, 2025, Micron moved to stay pending resolution of the venue dispute. On November 24, 2025, SEA and SSI filed a motion to dismiss for improper venue. On November 24, 2025, Samsung filed a motion to dismiss certain of Netlist’s infringement claims in the Second Amended Complaint. On November 24, 2025, Avnet filed a motion to partially dismiss the Second Amended Complaint. On January 28, 2026, Samsung filed a motion to stay this case pending the U.S. International Trade Commission (“ITC”) investigation. On January 28, 2026, Avnet filed a motion to sever and stay. On February 27, 2026, Netlist filed a Third Amended Complaint against Samsung and Avnet. On March 6, 2026, the Court granted Micron’s motion to dismiss and transferred the member case against Micron to the DDE. On March 6, 2026, the Court granted Samsung’s motion to stay the case as to Samsung and Avnet pending ITC Investigation No. 337-TA-1472.
On May 20, 2025, Samsung filed a declaratory judgement action against Netlist in the DDE (Case No. 1:25-cv-00626) seeking a declaration that Samsung does not infringe Netlist’s ’087 Patent. On June 11, 2025, Netlist filed a motion to dismiss or transfer this declaratory judgement action to the EDTX based upon its first-filed EDTX action asserting the ’087 Patent. On July 29, 2025, Samsung filed a motion seeking leave to file an amended complaint seeking a declaration that Samsung does not infringe the ’087 and ’731 Patents as well as U.S. Patent 12,373,366 (the “’366 Patent”).
17
Table of Contents
On July 28, 2025, Netlist filed a complaint against Samsung and Avnet in the EDTX (Case No. 2:25-cv-00748) for infringement of the ’366 Patent, seeking damages from the infringement by the defendants, a finding of willful infringement and enhanced damages pursuant to 35 U.S.C. § 284, an exceptional case finding and reasonable attorneys’ fees pursuant to 35 U.S.C. § 285, a permanent injunction pursuant to 35 U.S.C. § 283, and equitable relief. On October 29, 2025, the Court consolidated this case with the case against Micron and Avnet asserting the ’366 Patent (Case No. 2:25-cv-00749). On November 19, 2025, SSI and SEA moved to dismiss for improper venue. On November 19, 2025, Samsung filed a motion to dismiss certain of Netlist’s infringement claims. On December 10, 2025, the Court issued a Docket Control Order setting a claim construction hearing on February 18, 2027 and a trial date of August 16, 2027. On January 4, 2026, Netlist filed a First Amended Complaint against Samsung and Avnet, and a First Amended Complaint against Micron and Avnet. On January 26, 2026, Micron filed a motion to dismiss Netlist’s First Amended Complaint. On January 28, 2026, Samsung filed a motion to stay this case pending the ITC investigation. On January 28, 2026, Avnet filed a motion to sever and stay. On March 2, 2026, Netlist filed a Second Amended Complaint against Samsung and Avnet. On March 6, 2026, the Court granted Samsung’s motion to stay the case as to Samsung and Avnet pending ITC Investigation No. 337-TA-1472.
On September 30, 2025, Netlist filed a complaint under Section 337 of the Tariff Act of 1930, as amended (19 U.S.C. § 1337) at the U.S. ITC for patent infringement against Samsung, Google, and Super Micro Computer, Inc. (“Super Micro”) (collectively, “Respondents”). The complaint alleges infringement of six Netlist patents (the ’366, ’731, ’608, ’523, ’035, and ’087 Patents) by one or more of Samsung’s Double Data Rate 5th Gen. (“DDR5”) Dual Inline Memory Module (“DIMM”) or High Bandwidth Memory (“HBM”) products, Google and Super Micro products containing the same, and components thereof. Netlist seeks a limited exclusion order and a permanent cease-and-desist order from the ITC to stop Respondents’ infringing acts with respect to these infringing products. On December 29, 2025, the ITC instituted an investigation into the Respondents’ alleged infringing acts (Investigation No. 337-TA-1472).
On November 11, 2025, Samsung filed a declaratory judgement action against Netlist in the DDE (Case No. 1:25-cv-01371) seeking a declaration that Samsung does not infringe Netlist’s ’035 Patent.
On December 31, 2025, Samsung filed its counterclaims in the ITC investigation, asserting counterclaims for violations of Section 2 of the Sherman Act, breach of contract, and unfair competition by Netlist, and sought a declaratory judgment of unenforceability of an exclusion order. Pursuant to ITC procedure, the counterclaims were immediately removed to the DDE and docketed as Case No. 1:25-cv-01589.
Micron Litigation
On April 28, 2021, Netlist filed complaints against Micron Semiconductor Products, Inc., Micron Technology, Inc., and Micron Technology Texas, LLC (collectively, “Micron”) in the Western District of Texas (“WDTX”) (Case Nos. 6:21-cv-00430 and 6:21-cv-00431), for infringement of U.S. Patent Nos. 8,301,833; 9,824,035; 10,268,608; and 10,489,314 (respectively, the “’833, ’035, ’608, and ’314 Patents”), seeking damages, a finding of willful infringement and enhanced damages pursuant to 35 U.S.C. § 284, and an exceptional case finding and reasonable attorneys’ fees pursuant to 35 U.S.C. § 285. On February 14, 2022, the Court granted Micron’s motion to transfer venue for convenience to another court within WDTX, and the transferred cases were assigned new case nos. 1:22-cv-00134 and 1:22-cv-00136. On May 11, 2022, the Court granted motions to stay the two cases pending the respective Inter Partes Reviews of the ’833, ’035, ’608, and ’314 Patents.
On June 10, 2022, Netlist filed a complaint against Micron in EDTX (Case No. 2:22-cv-00203), for infringement of the ’506, ’339, ’918, ’054, ’060 and ’160 Patents, seeking damages, a finding of willful infringement and enhanced damages pursuant to 35 U.S.C. § 284, an exceptional case finding and reasonable attorneys’ fees pursuant to 35 U.S.C. § 285, and equitable relief. On May 19, 2023, Micron filed a motion to stay this case pending the respective Inter Partes Reviews of the six asserted patents. On October 22, 2023, the magistrate judge issued a claim construction order, which the Court adopted on January 17, 2024. On January 3, 2024, the magistrate judge issued a recommendation to deny Micron’s motion to stay
18
Table of Contents
this case, which the Court adopted on January 31, 2024. On February 10, 2024, the Court vacated its prior order, staying this case pending the respective Inter Partes Reviews of the six asserted patents.
On August 1, 2022, Netlist filed a complaint against Micron in EDTX (Case No. 2:22-cv-00294), for infringement of the ’912 Patent. Netlist later amended its complaint to additionally assert infringement of the ’417 and ’215 Patents. On May 20, 2024, this case proceeded to a jury trial on the ’912 and ’417 Patents. On May 23, 2024, the jury returned a verdict finding that Samsung willfully infringed both patents and awarded $
On December 11, 2023, Micron filed a complaint against Netlist in the District Court of the Fourth Judicial District of the State of Idaho, Ada County (“Idaho State Court”) (Case No. CV01-23-19920), alleging that Netlist violated Idaho Code § 48-1703 by making a bad faith assertion of infringement of the ’833 Patent in WDTX, seeking compensatory and exemplary damages pursuant to Code §§ 48-1706(b) and (d), and costs and fees, including reasonable attorneys’ fees, pursuant to Code § 48-1706(c). Netlist removed the case to the U.S. District Court for the District of Idaho, and Micron moved to remand the case to the Idaho State Court. On August 16, 2024, the District of Idaho remanded this case to the Idaho State Court. On August 20, 2024, Netlist appealed the remand to the CAFC, Case No. 2024-2281, and moved the District of Idaho to stay the remand. On September 17, 2024, Micron moved to dismiss or transfer the appeal to the U.S. Court of Appeals for the Ninth Circuit, which the CAFC denied on December 19, 2024. On September 18, 2024, Netlist moved to dismiss the Idaho State Court case for lack of personal jurisdiction and failure to state a claim, which the Idaho State Court denied on December 5, 2024. On June 12, 2025, the CAFC denied Netlist’s motion to stay the remand pending the appeal; the appeal remains pending. On December 8, 2025, the Idaho State Court set a trial date for December 7, 2026. On January 12, 2026, the Court appointed a discovery master to address the pending discovery disputes between the parties.
On December 23, 2023, Netlist filed a complaint for declaratory judgment against Micron in EDTX (Case No. 2:23-cv-00628), seeking a declaration that Netlist had not asserted patent infringement in bad faith against Micron in the prior EDTX patent infringement cases. On January 19, 2024, Micron moved to dismiss this case for lack of subject matter jurisdiction. On February 7, 2024, Netlist filed a First Amended Complaint. On July 19, 2024, the Court denied Micron’s motion to dismiss as moot. On December 5, 2024, Netlist moved for a protective order to preclude Micron from seeking discovery into Netlist’s subjective intent in filing the prior EDTX patent infringement cases. On December 13, 2024, Micron moved to stay this case on abstention grounds. On March 27, 2025, the Court stayed this case pending the conclusion of the CAFC appeals of the IPR decisions on the Netlist patents asserted against Micron in the prior EDTX patent infringement cases.
On January 16, 2024, Micron filed a complaint against Netlist in Idaho State Court (Case No. CV01-24-01032), alleging that Netlist violated Idaho Code § 48-1703 by making a bad faith assertion of infringement of the ’918 and ’054 Patents in the EDTX, seeking compensatory and exemplary damages pursuant to Code §§ 48-1706(b) and (d), and costs and fees, including reasonable attorneys’ fees, pursuant to Code § 48-1706(c). Netlist removed the case to the U.S. District Court for the District of Idaho, and Micron moved to remand the case to the Idaho State Court. On August 13, 2024, the District of Idaho remanded this case to the Idaho State Court. On August 20, 2024, Netlist appealed the remand to the CAFC, Case No. 2024-2282, and moved the District of Idaho to stay the remand. On September 10, 2024, the appeal was consolidated with the above-related appeal (Case No. 2024-2281). On September 17, 2024, Netlist moved to dismiss the Idaho State Court case for lack of personal jurisdiction and failure to state a claim, which the Idaho State Court denied on December 20, 2024. On June 27, 2025, the Idaho State Court granted Netlist’s motion to stay this case until the CAFC issues its opinion in the appeal of the IPR decisions involving the two patents.
19
Table of Contents
On May 19, 2025, Netlist filed a complaint against Micron in the EDTX (Case No. 2:25-cv-00558) for infringement of ’087 Patent. On June 17, 2025, Micron moved to dismiss the complaint for improper venue.
On June 27, 2025, the Court consolidated this case with the case against Samsung asserting the ’087 Patent (Case No. 2:25-cv-00557). On March 6, 2026, the Court granted Micron’s motion to dismiss (in the lead case) and transferred this case against Micron to the DDE, which was assigned DDE case no. 1:26-cv-00246 on March 9, 2026.
On May 20, 2025, Micron filed a declaratory judgement action against Netlist in the DDE (Case No. 1:25-cv-00629) seeking a declaration that Micron does not infringe Netlist’s ’087 Patent. On June 11, 2025, Netlist filed a motion to dismiss or transfer this declaratory judgement action to the EDTX based upon its first-filed EDTX action asserting the ’087 Patent. On March 25, 2026, the Court denied this motion.
On June 2, 2025, Micron filed a complaint against Netlist in Idaho State Court (Case No. CV01-25-09858), alleging that Netlist violated Idaho Code § 48-1703 by making a bad faith assertion of infringement of the ’060, ’160, ’506, ’339, ’912, and ’417 Patents in the EDTX, seeking compensatory and exemplary damages pursuant to Code §§ 48-1706(b) and (d), and costs and fees, including reasonable attorneys’ fees, pursuant to Code § 48-1706(c). On June 24, 2025, Netlist removed the case to the U.S. District Court for the District of Idaho. On July 1, 2025, Netlist moved to dismiss or to transfer the case to the EDTX. On July 17, 2025, Micron filed a motion to remand the case to the Idaho State Court. On March 25, 2026, the Court granted this motion and remanded the case to the Idaho State Court.
On July 10, 2025, Micron filed a declaratory judgement action against Netlist in the DDE (Case No. 1:25-cv-00863) seeking a declaration that Micron does not infringe Netlist’s ’731 Patent. On August 12, 2025, Netlist filed a motion to dismiss or transfer this declaratory judgement action to the EDTX based upon its first-filed EDTX action asserting the ’731 Patent. On March 25, 2026, the Court denied this motion.
On July 28, 2025, Netlist filed a complaint against Micron and Avnet in the EDTX (Case No. 2:25-cv-00749) for infringement of the ’366 Patent, seeking damages from the infringement by the defendants, a finding of willful infringement and enhanced damages pursuant to 35 U.S.C. § 284, an exceptional case finding and reasonable attorneys’ fees pursuant to 35 U.S.C. § 285, a permanent injunction pursuant to 35 U.S.C. § 283, and equitable relief. On October 29, 2025, the Court consolidated this case with the case against Samsung and Avnet asserting the ’366 Patent (Case No. 2:25-cv-00748). On April 1, 2026, the Court granted Micron’s motion to dismiss (in the lead case) and transferred this case against Micron to the DDE, which was assigned DDE Case no. 1:26-cv-00362 on April 2, 2026.
On July 29, 2025, Micron filed a declaratory judgement action against Netlist in the DDE (Case No. 1:25-cv-00942) seeking a declaration that Micron does not infringe Netlist’s ’366 Patent. On August 19, 2025, Netlist filed a motion to dismiss or transfer this declaratory judgement action to the EDTX based upon its first-filed EDTX action asserting the ’366 Patent. On March 25, 2026, the Court denied this motion.
Google Litigation
On December 4, 2009, Netlist filed a complaint against Google, Inc. in the U.S. District Court for the Northern District of California (Case no. 3:09-cv-05718), for infringement of the ’912 Patent, seeking damages, a finding of willful infringement and enhanced damages pursuant to 35 U.S.C. § 284, an exceptional case finding and reasonable attorneys’ fees pursuant to 35 U.S.C. § 285, and a preliminary and permanent injunction. On October 17, 2022, the Court entered a stipulated order to stay this case until the resolution of the patent infringement suit against Samsung filed on August 1, 2022 in EDTX (Case No. 2:22-cv-00293), including any appeal thereof.
20
Table of Contents
Challenges to Netlist Patents at the USPTO and the PTAB
On October 15, 2021, SECL filed a Petition for IPR of the ’218 Patent (Case No. IPR2022-00062). On May 8, 2023, the PTAB issued a final written decision finding all challenged claims unpatentable.
On October 15, 2021, SECL filed a Petition for IPR of the ’523 Patent (Case No. IPR2022-00063). On May 3, 2023, the PTAB issued a final written decision finding no challenged claims unpatentable. On July 3, 2023, SECL filed a notice of appeal to the CAFC (Case No. 2023-2133). The CAFC heard oral arguments on March 4, 2025. On March 5, 2025, the CAFC affirmed the PTAB’s final written decision.
On October 15, 2021, SECL filed a Petition for IPR of the ’595 Patent (Case No. IPR2022-00064). On May 9, 2023, the PTAB issued a final written decision finding all challenged claims unpatentable.
On February 17, 2022, SECL filed a Petition for IPR of Claim 16 of the ’912 Patent (Case No. IPR2022-00615). On November 18, 2022, Micron also filed a Petition for IPR of Claim 16 of the ’912 Patent, IPR2023-00203. On April 17, 2024, the PTAB issued a final written decision in the
On March 2, 2022, SECL filed a Petition for IPR of the ’339 Patent (Case No. IPR2022-00639). On November 18, 2022, Micron also filed a Petition for IPR of the ’339 Patent (Case No. IPR2023-00204). On October 18, 2023, the PTAB issued a final written decision in the
On March 22, 2022, SECL filed a Petition for IPR of the ’506 Patent (Case No. IPR2022-00711). On November 18, 2022, Micron also filed a Petition for IPR of the ’506 Patent (Case No. IPR2023-00205). On October 17, 2023, the PTAB issued a final written decision in the
On March 30, 2022, Micron filed
On May 17, 2022, SECL filed a Petition for IPR of the ’918 Patent (Case No. IPR2022-00996). On January 6, 2023, Micron also filed a Petition for IPR of the ’918 Patent, Case No. IPR2023-00406. On December 6, 2023, the PTAB issued a final written decision in the
On May 17, 2022, SECL filed a Petition for IPR of the ’054 Patent (Case No. IPR2022-00999). On January 6, 2023, Micron also filed a Petition for IPR of the ’054 Patent (Case No. IPR2023-00405). On December 5, 2023, the PTAB issued a final written decision in the
21
Table of Contents
On August 26, 2022, SECL filed a Petition for IPR of the ’160 Patent (Case No. IPR2022-01427). On May 8, 2023, Micron also filed a Petition for IPR of the ’160 Patent, Case No. IPR2023-00883. On April 1, 2024, the PTAB issued a final written decision in the
On August 26, 2022, SECL filed a Petition for IPR of the ’060 Patent (Case No. IPR2022-01428). On May 8, 2023, Micron also filed a Petition for IPR of the ’060 Patent (Case No. IPR2023-00882). On April 1, 2024, the PTAB issued a final written decision in the
On January 10, 2023, SECL filed a Petition for IPR of the ’215 Patent, Case No. IPR2023-00455. On May 8, 2023, Micron also filed a Petition for IPR of the ’215 Patent (Case No. IPR 2023-01142). On July 30, 2024, the PTAB issued a final written decision in the
On January 10, 2023, SECL filed a Petition for IPR of the ’417 Patent (Case No. IPR2023-00454). On May 8, 2023, Micron also filed a Petition for IPR of the ’417 Patent (Case No. IPR2023-01141). On July 30, 2024, the PTAB issued a final written decision in the
On April 27, 2023, SECL filed a Petition for IPR of the ’608 Patent (Case No. IPR2023-00847). On January 10, 2024, Micron also filed a Petition for IPR of the ’608 Patent (Case No. IPR2024-00370). On July 23, 2024, the PTAB denied institution of the IPR sought by Micron. On December 10, 2024, the PTAB issued a final written decision in the IPR brought by SECL finding no challenged claims unpatentable. On January 13, 2025, SECL filed a notice of appeal to the CAFC (Case No. 2025-1378). The CAFC heard oral arguments on December 5, 2025. On December 9, 2025, the CAFC affirmed the PTAB’s final written decision.
On October 18, 2024, SECL filed a Petition for IPR of the ’024 Patent (Case No. IPR2025-00001). On February 20, 2025, Netlist filed its preliminary response to the Petition. On May 15, 2025, the PTAB granted institution of the IPR. On May 29, 2025, Netlist requested director review of the institution decision, which was denied on July 17, 2025. On August 7, 2025, Netlist filed a statutory disclaimer and a request for adverse judgment. On September 8, 2025, the PTAB granted Netlist’s request for adverse judgment.
On October 24, 2024, SECL filed a Petition for IPR of the ’319 Patent (Case No. IPR2025-00002). On February 21, 2025, Netlist filed its preliminary response to the Petition. On May 15, 2025, the PTAB granted institution of the IPR. On May 29, 2025, Netlist requested director review of the institution decision, which was denied on July 17, 2025. On August 7, 2025, Netlist filed a statutory disclaimer and a request for adverse judgment. On September 8, 2025, the PTAB granted Netlist’s request for adverse judgment.
On August 14, 2025, an unidentified party filed a request for Ex Parte Reexamination of the ’608 Patent (Application No. 90/015,449). On October 17, 2025, Netlist filed a petition to the Director to terminate this reexamination. On November 5, 2025, the unidentified party opposed. On November 7, 2025, the request for reexamination was granted by the examiner. On January 6, 2026, Netlist filed a renewed petition to the Director to terminate this reexamination. On January 15, 2026, the unidentified party opposed.
22
Table of Contents
On August 25, 2025, SECL filed a Petition for Post Grant Review (“PGR”) of the ’087 Patent (Case No. PGR2025-00071) and a Petition for IPR of the ’087 Patent (IPR2025-01402). On February 18, 2026, the PTAB denied institution of the IPR but granted institution of the PGR. On March 4, 2026, Netlist filed a Request for Director Review of the PGR institution decision.
On August 29, 2025, SECL filed a Petition for IPR of the ’731 Patent (IPR2025-01431). On February 18, 2026, the PTAB granted institution of the IPR. On March 4, 2026, Netlist filed a Request for Director Review of the institution decision.
On October 27, 2025, SECL filed a Petition for IPR of the ’035 Patent (IPR2026-00017). On February 24, 2026, the PTAB denied institution of the IPR.
On November 7, 2025, SECL filed a Petition for PGR of the ’366 Patent (Case No. PGR2026-00001) and a Petition for IPR of the ’366 Patent (IPR2026-00018). On March 23, 2026, the PTAB denied institution of both the PGR and the IPR.
German Proceedings
On March 31, 2022, Netlist filed infringement claims against Micron in Dusseldorf, Germany, seeking damages for infringement of European Patents EP 2,454,735 (“EP735”) and EP 3,404,660 (“EP660”). On September 1, 2022, Micron initiated nullity proceedings on the
On June 3, 2022, Netlist filed infringement claims against Samsung in Dusseldorf, Germany, seeking damages for infringement of European Patents EP735 and EP660. On September 25, 2023, the Dusseldorf Court stayed the case until the German Federal Patent Court decisions on the nullity proceedings on EP735 and EP660 either become final or are reversed or remanded on appeal.
On July 26, 2022, Netlist filed infringement claims against Google Cloud EMEA Limited, Google Germany GmbH, Redtec Computing GmbH, and Google LLC in Dusseldorf, Germany, seeking damages for infringement of European Patents EP735 and EP660. On March 18, 2024, the Dusseldorf Court stayed the case until the German Federal Patent Court decisions on the nullity proceedings on EP735 and EP660 either become final or are reversed or remanded on appeal.
In the nullity proceeding on EP735, the German Federal Patent Court issued its reasons of judgment revoking EP735 on April 18, 2024. Netlist filed an appeal on May 13, 2024. An oral hearing at the Federal Court of Justice is set for May 21, 2026. In the nullity proceeding on EP660, the German Federal Patent Court issued its reasons of judgment revoking EP660 on February 18, 2025. Netlist filed an appeal on March 12, 2025.
23
Table of Contents
Other Contingent Obligations
In the ordinary course of our business, we have made certain indemnities, commitments and guarantees pursuant to which we may be required to make payments in relation to certain transactions. These may include, among others: (i) intellectual property indemnities to our customers and licensees in connection with the use, sale and/or license of our products; (ii) indemnities to vendors and service providers pertaining to claims based on our negligence or willful misconduct; (iii) indemnities involving the accuracy of representations and warranties in certain contracts; (iv) indemnities to our directors and officers to the maximum extent permitted under the laws of the State of Delaware; (v) indemnities pertaining to all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with transactions contemplated by applicable investment or loan documents, as applicable; (vi) severance and other related obligations; and (vii) indemnities or other claims related to certain real estate leases, under which we may be required to indemnify property owners for environmental and other liabilities or may face other claims arising from our use of the applicable premises. The duration of these indemnities, commitments and guarantees varies and, in certain cases, is indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation of the maximum potential for future payments we could be obligated to make. Historically, we have not been obligated to make significant payments as a result of these obligations, and no liabilities have been recorded for these indemnities, commitments and guarantees in the accompanying consolidated balance sheets.
Note 6—Stockholders’ Equity
Serial Preferred Stock
Our authorized capital stock includes
On April 17, 2017, we entered into a rights agreement (as amended from time to time, the “Rights Agreement”) with Computershare Trust Company, N.A., as rights agent. In connection with the adoption of the Rights Agreement and pursuant to its terms, our board of directors authorized and declared a dividend of
On April 17, 2024, we entered into a fourth amendment (the “Fourth Amendment”) to the Rights Agreement, pursuant to which Equiniti Trust Company, LLC was appointed as our rights agent and the definition of “Expiration Date” in the Rights Agreement was amended to extend the term for an additional three-year period from April 17, 2024 to April 17, 2027. As a result, and pursuant to the Fourth Amendment, the Rights will expire and become unexercisable on or before the close of business on April 17, 2027, in accordance with the terms of the Rights Agreement.
Each Right entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from us, when exercisable and subject to adjustment,
24
Table of Contents
In connection with the adoption of the Rights Agreement, our board of directors approved a Certificate of Designation of the Series A Preferred Stock (the “Certificate of Designation”) designating
Common Stock
On September 24, 2025, our stockholders approved the Certificate of Amendment to the Restated Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from
March 2025 Lincoln Park Purchase Agreement
On March 13, 2025, we entered into a purchase agreement (the “March 2025 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which we have the right to sell to Lincoln Park up to an aggregate of $
Pursuant to the March 2025 Purchase Agreement, on any business day and as often as every other business day over the term of the March 2025 Purchase Agreement, we have the right, from time to time, at our sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to
We control the timing and amount of any sales of our common stock to Lincoln Park. There is no upper limit on the price per share that Lincoln Park must pay for our common stock under the March 2025 Purchase Agreement, but in no event will shares be sold to Lincoln Park on a day the closing price is less than the floor price specified in the March 2025 Purchase Agreement. In all instances, we may not sell shares of our common stock to Lincoln Park under the March 2025 Purchase Agreement if that would result in Lincoln Park beneficially owning more than
The March 2025 Purchase Agreement does not limit our ability to raise capital from other sources at our sole discretion, except that, subject to certain exceptions, we may not enter into any Variable Rate Transaction (as defined in the March 2025 Purchase Agreement, including the issuance of any floating conversion rate or variable priced equity-like securities) during the
25
Table of Contents
During the three months ended March 28, 2026, Lincoln Park did not purchase any shares of our common stock under the March 2025 Purchase Agreement.
We evaluated the March 2025 Purchase Agreement, which includes the right to require Lincoln Park to purchase shares of our common stock in the future (“put right”), and considered the guidance in ASC 815-40, Derivatives and Hedging – Contracts on an Entity’s Own Equity. We concluded that the March 2025 Purchase Agreement is an equity-linked contract that does not qualify for equity classification and, therefore, requires fair value accounting as a derivative asset (liability). We have analyzed the terms of the put right and have concluded that it had insignificant value upon grant and as of March 28, 2026.
October 2025 Offering
On October 6, 2025, we entered into a Securities Purchase Agreement (the “October 2025 Purchase Agreement”) with certain investors (collectively, the “October 2025 Purchasers”), pursuant to which we issued and sold to the October 2025 Purchasers in a registered offering (the “October 2025 Offering”) an aggregate of (i)
The October 2025 Warrants are exercisable at any time on or after the issuance date, have a term of
The October 2025 Purchase Agreement also provided that we could not, subject to the exceptions described in the October 2025 Purchase Agreement (including an exception permitting us to utilize the March 2025 Purchase Agreement following the expiration of the 90-day period following the closing of the October 2025 Offering), effect or enter into any Variable Rate Transactions (as defined in the October 2025 Purchase Agreement) until the six-month anniversary of the closing date of the October 2025 Offering.
The October 2025 Warrants were accounted for as equity classified financial instruments as they meet the requirements for equity classification under ASC 815, Derivatives and Hedging.
June 2025 Offering
On June 24, 2025, we entered into a Securities Purchase Agreement (the “June 2025 Purchase Agreement”) with certain investors, including Chun K. Hong, Chairperson of our board of directors, President and Chief Executive Officer (collectively, the “June 2025 Purchasers”), pursuant to which we issued and sold to the June 2025 Purchasers in a registered offering (the “June 2025 Offering”) an aggregate of (i) 17,142,860 shares of our common stock and (ii) Common Stock Purchase Warrants (the “June 2025 Warrants”) to purchase up to an aggregate of
26
Table of Contents
The June 2025 Warrants are exercisable at any time on or after the issuance date, have a term of
The June 2025 Warrants were accounted for as equity classified financial instruments as they meet the requirements for equity classification under ASC 815, Derivatives and Hedging.
On October 6, 2025, we amended the June 2025 Warrants. Some of the purchasers pursuant to the October 2025 Purchase Agreement are also holders of the June 2025 Warrants and were purchasers pursuant a securities purchase agreement dated October 11, 2024 (the “October 2024 Purchase Agreement”). Pursuant to the terms of the October 2025 Purchase Agreement, these holders agreed to waive certain variable rate prohibitions and participation rights set forth in the October 2024 Purchase Agreement relating to the October 2025 Offering and to, among other things, revise certain anti-dilution provisions relating to the June 2025 Warrants in exchange for our reduction of the exercise price of the June 2025 Warrants to an exercise price equal to the lesser of $
The June 2025 Purchase Agreement provided that we could not, subject to the exceptions described in the June 2025 Purchase Agreement (including an exception permitting us to utilize the March 2025 Purchase Agreement following the expiration of the 90-day period following the closing of the June 2025 Offering), effect or enter into any Variable Rate Transactions (as defined in the June 2025 Purchase Agreement) until the six-month anniversary of the closing date of the June 2025 Offering.
Note 7—Stock-Based Awards
On September 9, 2025, our stockholders approved the Netlist, Inc. 2025 Equity Incentive Plan (the “2025 Plan”) at our 2025 Annual Meeting of Stockholders, pursuant to which (i)
27
Table of Contents
shares of our common stock reserved for future issuance under the Amended 2006 Plan. Stock options granted under the 2025 Plan and the Amended 2006 Plan generally vest at a rate of at least
Stock Options
The following table summarizes the activity related to stock options during the three months ended March 28, 2026:
Weighted- | ||||||
Number of | Average | |||||
Shares | Exercise | |||||
(in thousands) | | Price | ||||
Outstanding as of December 27, 2025 | | $ | | |||
Granted | — | — | ||||
Exercised | ( | | ||||
Expired or forfeited | ( | | ||||
Outstanding as of March 28, 2026 | | $ | | |||
Restricted Stock Units
The following table summarizes the activity related to RSUs during the three months ended March 28, 2026:
Weighted- | ||||||
Average | ||||||
Number of | Grant-Date | |||||
Shares | Fair Value | |||||
(in thousands) | per Share | |||||
Balance nonvested as of December 27, 2025 | | $ | | |||
Granted | | | ||||
Vested | ( | | ||||
Forfeited | ( | | ||||
Balance nonvested as of March 28, 2026 | | $ | | |||
Stock-Based Compensation
The following table summarizes the stock-based compensation expense by line item in the condensed consolidated statements of operations (in thousands):
| Three Months Ended | |||||||
March 28, | March 29, | |||||||
2026 | 2025 | |||||||
Cost of sales | $ | | $ | | ||||
Research and development | | | ||||||
Selling, general and administrative | | | ||||||
Total | $ | | $ | | ||||
As of March 28, 2026, we had approximately $
28
Table of Contents
Note 8—Warrants
Warrant activity for the three months ended March 28, 2026 is as follows:
Weighted | ||||||
Number of | Average | |||||
Shares | Exercise | |||||
| (in thousands) | | Price | |||
Outstanding as of December 27, 2025 | | $ | | |||
Granted | — | — | ||||
Exercised | ( | | ||||
Expired | — | — | ||||
Outstanding as of March 28, 2026 | | $ | | |||
Note 9—Subsequent Events
Warrant Exercises
Since March 28, 2026 and through May 8, 2026, we received $
29
Table of Contents
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Note Regarding Forward-Looking Statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and other parts of this report include “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 our future performance. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “will,” “might,” “plan,” “predict,” “believe,” “should,” “could” and similar words or expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
Forward-looking statements contained in this MD&A and the condensed consolidated financial statements and the related notes included in Part I, Item 1 of this report include statements about, among other things:
| ● | our beliefs regarding the market and demand for our products or the component products we resell, including our beliefs regarding memory chip shortages and when new manufacturing facilities may become operational; |
| ● | our ability to collect any damages awarded to us, including in our litigation with Samsung Electronics Co., Ltd., Samsung Semiconductor Inc., and Samsung Electronics America Inc. (collectively, “Samsung”) and/or in our litigation with Micron Technology, Inc. (“Micron”); |
| ● | our beliefs and estimates regarding potential intellectual property suits or claims in process under current litigation; |
| ● | our ability to defend successfully any challenges to our intellectual property or claims asserting patent infringement relating to our products; |
| ● | our ability to develop and launch new products that are attractive to the market and stimulate customer demand for these products; |
| ● | our plans relating to our intellectual property, including our goals of monetizing, protecting, licensing, expanding and defending our patent portfolio; |
| ● | our expectations and strategies regarding outstanding legal proceedings and patent reexaminations relating to our intellectual property portfolio; |
| ● | our expectations with respect to any strategic partnerships or other similar relationships we currently have and may pursue in the future; |
| ● | the competitive landscape of our industry; |
| ● | general market, economic and political conditions; |
| ● | our business strategies and objectives; |
| ● | our expectations regarding our future operations and financial position, including revenues, costs and prospects, and our liquidity and capital resources, including cash flows, sufficiency of cash resources, efforts to reduce expenses and the potential for future financings; |
| ● | our ability to remediate any material weakness and maintain effective internal control over financial reporting; and |
| ● | the impact of the above factors and other future events on the market price and trading volume of our common stock. |
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 risks and uncertainties include those described under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 19, 2026 (the “Annual Report”). In light of these risks and uncertainties, our forward-looking statements should not be relied on as predictions of future events. All forward-looking statements reflect our assumptions, expectations and beliefs only as of the date they are made, and except as required by law, we undertake no obligation to revise or update any forward-looking statements for any reason.
30
Table of Contents
The following MD&A should be read in conjunction with our condensed consolidated financial statements and the related notes included in Part I, Item 1 of this report, as well as our Annual Report. All information presented herein is based on our fiscal calendar, and references to particular years, quarters, months or periods refer to our fiscal years ended in January or December and the associated quarters, months and periods of those fiscal years. Each of the terms the “Company,” “Netlist,” “we,” “us,” or “our” as used herein refers collectively to Netlist, Inc. and its consolidated subsidiaries, unless otherwise stated.
Overview
We are a leading innovator in advanced memory and storage solutions. With a rich portfolio of patented technologies, our inventions are foundational to the advancement of artificial intelligence (“AI”) computing. During the first quarter of 2026, we recorded net sales of $104.9 million, gross profit of $22.4 million and net income of $8.6 million. We have historically financed our operations primarily with proceeds from issuances of equity and debt securities and cash receipts from revenues. We have also funded our operations with a revolving line of credit under a bank credit facility with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (“SVB”), funds raised through our equity line arrangement under the March 2025 Purchase Agreement (as defined below), proceeds raised from the June 2025 Offering (as defined below) and the October 2025 Offering (as defined below) and through the cash exercise of our outstanding warrants to purchase common stock. See “Liquidity and Capital Resources” below for more information.
Economic Conditions, Challenges and Risks
Our performance improved since the second half of 2025, driven by increased demand for our memory products and disciplined commercial execution. In our view, accelerated AI adoption has tightened industry supply relative to demand, contributing to broad-based price increases. We currently expect these dynamics to continue until additional industry fabrication capacity becomes available, potentially beginning in late 2027 or 2028; however, this capacity timing and end-market demand may differ from our expectations. Increased industry fabrication capacity could improve component availability, place downward pressure on pricing, and shift product mix, which may moderate our volumes, pricing, and margins. Future demand for our products is inherently unpredictable, and our current results of operations may not be indicative of our future results.
In addition, the vast majority of our net product sales in recent periods have been generated from resales of products sourced from SK hynix pursuant to the Product Purchase and Supply Agreement with SK hynix, which was entered into on April 5, 2021 (the “Supply Agreement”). The term of the supply provisions of this Supply Agreement expired in April 2026. We continue to purchase products from SK hynix following expiration of the Supply Agreement on a purchase order basis on similar terms to the prior Supply Agreement, but SK hynix ultimately may not continue to supply us with products for resale on similar terms or at all. In such circumstances, our financial results, including our revenue, profits and margins in future periods may be adversely affected.
We are party to ongoing intellectual property litigation. Although certain matters have resulted in favorable and significant court judgments in our favor, these judgements remain subject to appeal and other proceedings, and any ultimate recovery may be less than the amounts awarded or may not be realized. We account for potential recoveries as gain contingencies and do not recognize them until realization is probable and reasonably estimable. See “Legal Proceedings” in Part II, Item 1 of this report and See Note 5 to the condensed consolidated financial statements included in Part I, Item 1 of this report for more information.
Our performance, financial condition and prospects are also affected by a number of factors and are exposed to a number of other risks and uncertainties. We operate in a competitive and rapidly evolving industry in which new risks emerge from time to time, and it is not possible for us to predict all of the risks we may face, nor can we assess the impact of all factors on our business or the extent to which any factor or combination of factors could cause actual results to differ from our expectations. See the discussion of certain risks that we face under “Risk Factors” in Part I, Item 1A of our Annual Report.
31
Table of Contents
Results of Operations
Net Sales and Gross Profit
Net sales and gross profit for the three months ended March 28, 2026 and March 29, 2025 were as follows (dollars in thousands):
Three Months Ended | ||||||||
March 28, | March 29, | % | ||||||
| 2026 | | 2025 | | Change | |||
Net sales | $ | 104,892 | $ | 28,975 | 262% | |||
Cost of sales | 82,503 | 27,675 | 198% | |||||
Gross profit | $ | 22,389 | $ | 1,300 | 1622% | |||
Gross margin percentage | 21% | 4% | ||||||
Net Sales
Net sales increased by approximately $75.9 million during the first quarter of 2026 compared to the same period of 2025, primarily as a result of a $63.7 million increase in the sale of registered DIMM (“RDIMM”) and discrete memory component products, a $0.2 million increase in sales of our flash and solid-state drives products, and a $12.0 million increase in sales of low-profile memory subsystem products. These increases are primarily due to the current supply-demand environment we discussed above.
Gross Profit and Gross Margin
Gross profit and gross margin percentage increased significantly during the first quarter of 2026 compared to the same period of 2025, primarily as a result of higher sales prices due to the current supply demand environment discussed above and product sales mix.
32
Table of Contents
Operating Expenses
Operating expenses for the three months ended March 28, 2026 and March 29, 2025, were as follows (dollars in thousands):
Three Months Ended | ||||||||
March 28, | March 29, | % | ||||||
| 2026 | | 2025 | | Change | |||
Research and development | $ | 1,101 | $ | 893 | 23% | |||
Percentage of net sales | 1% | 3% | ||||||
Intellectual property legal fees | $ | 8,974 | $ | 7,027 | 28% | |||
Percentage of net sales | 9% | 24% | ||||||
Selling, general and administrative | $ | 3,748 | $ | 3,147 | 19% | |||
Percentage of net sales | 4% | 11% | ||||||
Research and Development
Research and development expenses increased during the first quarter of 2026 compared to the same period of 2025, primarily due to higher employee headcount and the associated increase in overhead costs.
Intellectual Property Legal Fees
Intellectual property legal fees consist of fees incurred for patent enforcement and licensing, appeals, patent drafting and prosecution, and opposition to third-party post-grant patent proceedings. Although we expect intellectual property legal fees to generally increase over time as we continue to expand, protect and enforce our patent portfolio, these increases may not be linear but may occur in lump sums depending on jury trial management, due dates of various filings and their associated fees, and the arrangements we may make with our legal advisors in connection with enforcement proceedings, which may include fee arrangements or contingent fee arrangements in which we would pay these legal advisors on a scaled percentage of any negotiated fees, settlements or judgments awarded to us based on if, how and when the fees, settlements or judgments are obtained. See Note 5 to the condensed consolidated financial statements included in Part I, Item 1 of this report for further discussion.
Intellectual property legal fees increased during the first quarter of 2026 compared to the same period of 2025 due primarily to higher legal expenses incurred to protect and enforce our patent portfolio.
Selling, General and Administrative
Selling, general and administrative expenses increased during the first quarter of 2026 compared to the same period of 2025 due primarily to increase in public company related fees and reporting costs and increased commissions due to higher sales that were completed in the first quarter of 2026 as compared to the first quarter of 2025.
33
Table of Contents
Other Income, Net
Other income, net for the three months ended March 28, 2026 and March 29, 2025 was as follows (dollars in thousands):
Three Months Ended | ||||||||
March 28, | March 29, | % | ||||||
| 2026 | | 2025 | | Change | |||
Interest income, net | $ | 49 | $ | 220 | ||||
Other income, net | 32 | 60 | ||||||
Total other income, net | $ | 81 | $ | 280 | (71%) | |||
Interest income, net decreased during the first quarter of 2026 compared to the same period of 2025, primarily as a result of lower interest earned on lower cash balances. Other income, net included a deposit returned for our former manufacturing facility located in the PRC during the first quarter of 2025.
Liquidity and Capital Resources
Our primary sources of cash are historically proceeds from issuances of equity and receipts from revenues. In addition, we previously received proceeds from our entry into a Strategic Product Supply and License Agreement with SK hynix on April 5, 2021, which we used to support our operations. We have also funded our operations with our revolving line of credit under a bank credit facility with SVB and funds raised through the March 2025 Purchase Agreement.
The following tables present selected financial information as of March 28, 2026 and December 27, 2025 and for the first three months of 2026 and 2025 (in thousands):
March 28, | December 27, | |||||
| 2026 | | 2025 | |||
Cash, cash equivalents and restricted cash | $ | 27,005 | $ | 42,082 | ||
Working capital | 9,275 | (6,432) | ||||
Three Months Ended | ||||||
March 28, | March 29, | |||||
| 2026 | | 2025 | |||
Net cash used in operating activities | $ | (21,822) | $ | (10,070) | ||
Net cash used in investing activities | — | (13) | ||||
Net cash provided by financing activities | 6,745 | 1,056 | ||||
During the three months ended March 28, 2026, net cash used in operating activities was primarily a result of net income of $8.6 million, non-cash adjustments to net income of $1.1 million, and net cash outflows from changes in operating assets and liabilities of $31.5 million driven predominantly by an increase in accounts receivable, an increase in inventories due to orders not shipped in March 2026, an increase in prepaid expenses and other assets, partially offset by an increase in accounts payable and an increase in deferred revenue related to advance payments received on orders shipped in April 2026. Net cash provided by financing activities during the three months ended March 28, 2026 primarily consisted of $6.0 million in net proceeds from exercise of stock options and warrants, and $0.8 million in net borrowings under the 2023 SVB Credit Agreement (as defined below), partially offset by $0.1 million in payments of notes payable to finance insurance policies.
During the three months ended March 29, 2025, net cash used in operating activities was primarily a result of net loss of $9.5 million, non-cash adjustments to net loss of $0.9 million, and net cash outflows from changes in operating assets and liabilities of $1.5 million driven predominantly by a decrease in accounts payable due to the payments made for the legal fees incurred to defend our patent portfolio, partially offset by a decrease in inventories due to higher turnovers and an increase in deferred revenue related to advance payments
34
Table of Contents
received on orders shipped in April 2025. Net cash provided by financing activities during the three months ended March 29, 2025 primarily consisted of $0.9 million in net proceeds from issuance of common stock under the March 2025 Purchase Agreement and $0.3 million in net borrowings under the 2023 SVB Credit Agreement, partially offset by $0.2 million in payments of notes payable to finance insurance policies.
Capital Resources
March 2025 Lincoln Park Purchase Agreement
On March 13, 2025, we entered into a purchase agreement (the “March 2025 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which we have the right to sell to Lincoln Park up to an aggregate of $75 million in shares of our common stock over the 36-month term of the March 2025 Purchase Agreement subject to the conditions and limitations set forth in the March 2025 Purchase Agreement. As of March 28, 2026, $73.7 million remains available under the March 2025 Purchase Agreement with Lincoln Park. Sales under the March 2025 Purchase Agreement are subject to daily volume-based limits and a contractual floor price, and our ability to access the remaining capacity at any point in time depends on prevailing market prices and trading volumes.
October 2025 Offering
On October 6, 2025, we entered into a Securities Purchase Agreement (the “October 2025 Purchase Agreement”) with certain investors (collectively, the “October 2025 Purchasers”), pursuant to which we issued and sold to the October 2025 Purchasers in a registered offering (the “October 2025 Offering”) an aggregate of (i) 14,285,716 shares of our common stock and (ii) Common Stock Purchase Warrants (the “October 2025 Warrants”) to purchase up to an aggregate of 28,571,432 shares of our common stock (the “October 2025 Warrant Shares”) at a combined purchase price of $0.70 per share and accompanying October 2025 Warrant. The October 2025 Offering closed on October 7, 2025. The net proceeds to us from the October 2025 Offering were approximately $9.3 million, after deducting placement agent fees and offering costs paid by us.
The October 2025 Purchase Agreement also provided that we could not, subject to the exceptions described in the October 2025 Purchase Agreement (including an exception permitting us to utilize the March 2025 Purchase Agreement following the expiration of the 90-day period following the closing of the October 2025 Offering), effect or enter into any Variable Rate Transactions (as defined in the October 2025 Purchase Agreement) until the six-month anniversary of the closing date of the October 2025 Offering.
June 2025 Offering
On June 24, 2025, we entered into a Securities Purchase Agreement (the “June 2025 Purchase Agreement”) with certain investors, including Chun K. Hong, Chairperson of our board of directors, President and Chief Executive Officer (collectively, the “June 2025 Purchasers”), pursuant to which we issued and sold to the June 2025 Purchasers in a registered offering (the “June 2025 Offering”) an aggregate of (i) 17,142,860 shares of our common stock and (ii) Common Stock Purchase Warrants (the “June 2025 Warrants”) to purchase up to an aggregate of 34,285,720 shares of our common stock (the “June 2025 Warrant Shares”) at a combined purchase price of $0.70 per share and accompanying June 2025 Warrant. Mr. Hong purchased $3.0 million of shares and accompanying June 2025 Warrants in the June 2025 Offering. The June 2025 Offering closed on June 25, 2025. The net proceeds to us from the June 2025 Offering were approximately $11.6 million, after deducting placement agent fees and offering costs paid by us.
The June 2025 Purchase Agreement also provided that we could not, subject to the exceptions described in the June 2025 Purchase Agreement (including an exception permitting us to utilize the March 2025 Purchase Agreement following the expiration of the 90-day period following the closing of the June 2025 Offering),
35
Table of Contents
effect or enter into any Variable Rate Transactions (as defined in the June 2025 Purchase Agreement) until the six-month anniversary of the closing date of the June 2025 Offering.
2023 SVB Credit Agreement
On November 7, 2023, we entered into a loan and security agreement (as amended to date, the “2023 SVB Credit Agreement”) with SVB, which provides for a revolving line of credit up to $10.0 million. The borrowing base is limited to 85% of eligible accounts receivable, subject to certain adjustments. Borrowings accrue interest on advance at a per annum rate equal to the greater of 8.50% and the Wall Street Journal prime rate. The maturity date was originally November 7, 2025. On November 7, 2025, we entered into a first amendment to the loan and security agreement (the “2023 SVB Credit Agreement Amendment”) to, among other things, extend the maturity date from November 7, 2025 to November 7, 2027.
As of March 28, 2026, the outstanding borrowings under the 2023 SVB Credit Agreement were $2.6 million with no availability under the revolving line of credit. During the three months ended March 28, 2026, we had net borrowings of $0.8 million under the 2023 SVB Credit Agreement; because borrowing capacity is driven by eligible receivables and reserve adjustments, availability may fluctuate with collections and sales mix, and letters of credit issued under the facility and with other banks are secured by cash and reduce unrestricted liquidity.
Warrant Exercises
During the quarter ended March 28, 2026, we received $5.8 million in proceeds from the cash exercise of issued and outstanding warrants to purchase 9,642,860 shares of common stock. Since March 28, 2026 and through May 8, 2026, we received $10.5 million in proceeds from the cash exercise of issued and outstanding warrants to purchase 15,395,749 shares of common stock. Future warrant exercises will likely depend on market conditions, the strategies of the individual warrant holders, and are ultimately at the discretion of the individual warrant holders. As such, future warrant exercises (if any) may be unpredictable and may not be representative of recent exercise activity.
Sufficiency of Cash Balances and Potential Sources of Additional Capital
We believe our existing balance of cash and cash equivalents (including restricted cash balances), which totaled $27 million as of March 28, 2026, along with cash receipts from revenues, borrowing availability under the 2023 SVB Credit Agreement, funds raised through the March 2025 Purchase Agreement and other future debt and equity offerings and taking into account cash expected to be used in our operations, will be sufficient to meet our anticipated cash needs for at least the next 12 months. This belief reflects our current assessment of known trends and uncertainties that could affect near-term liquidity, including the timing of cash effects from customer advance payments, fluctuations in borrowing-base availability and letters-of-credit usage and market conditions that affect our ability to utilize the March 2025 Purchase Agreement. However, this estimate may ultimately be incorrect and we may use our cash resources faster than we expect as a result of many factors, including costs to defend our intellectual property portfolio, the results of ongoing litigation and legal proceedings, demand and acceptance of our products, whether our current customers continue purchasing our products, costs of developing and improving our products, our results of operations, including our level of net product sales that we receive which can vary based on a number of factors, including the amount and timing of vendor payments, the timing of customer orders, the effects of changes in international trade policy, non-reoccurring items and changing projected inventory needs and estimates.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources that is material to investors.
36
Table of Contents
Recent Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which updates expense disclosure requirements on an annual and interim basis. This ASU is effective for the annual periods beginning after December 15, 2026, and the interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU.
Critical Accounting Policies and Use of Estimates
The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of net sales and expenses during the reporting period. By their nature, these estimates and assumptions are subject to an inherent degree of uncertainty. We base our estimates and assumptions on our historical experience, knowledge of current conditions and our beliefs of what could occur in the future considering available information. We review our estimates and assumptions on an ongoing basis. Actual results may differ from our estimates, which may result in material adverse effects on our consolidated operating results and financial position.
Our critical accounting policies and estimates are discussed in Note 1 to the condensed consolidated financial statements in this report and in the notes to consolidated financial statements in Part II, Item 8 of our Annual Report and in the MD&A in our Annual Report. There have been no significant changes to our critical accounting policies since our Annual Report.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Not Applicable.
Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, and we maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
In designing our disclosure controls and procedures and internal control over financial reporting, our management recognizes that any control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of our controls and procedures must reflect the fact that there are resource constraints, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of the inherent limitations, our disclosure and internal controls may not prevent or detect all instances of fraud, misstatements or other control issues, and our evaluations of disclosure and internal controls cannot provide assurance that all such control issues have been detected. In addition, projections of any evaluation of the effectiveness of disclosure or internal controls to future periods are subject to risks, including, among others, that controls may become inadequate because of changes in conditions or that compliance with policies or procedures may deteriorate.
37
Table of Contents
Our management conducted an evaluation, with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of the end of the period covered by this report. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on this evaluation, our management concluded there was a material weakness in our internal controls due to the historical lack of independent board member and audit committee oversight of our financial reporting process until the recent board appointments and audit committee’s reformation in June 2025. While we now have a standing audit committee comprised of an independent board member, this oversight will need to operate effectively for a sufficient period of time before management may consider our previously identified material weakness to be remediated. As a result of these circumstances, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of March 28, 2026.
While we are not required to provide an auditor’s attestation report on internal control over financial reporting in this Form 10-Q, our independent registered public accounting firm expects to conduct an integrated audit of our financial statements and internal control over financial reporting in preparation for our Form 10-K for the year ending January 2, 2027. An integrated audit involves both an opinion on the financial statements and an opinion on the effectiveness of internal control over financial reporting, in accordance with the Public Company Accounting Oversight Board Auditing Standard No. 2201.
Notwithstanding the material weakness in our internal control over financial reporting, we have concluded that the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
Changes in Internal Control over Financial Reporting and Remediation Initiatives
In June 2025, we formed an audit committee of our board of directors (the “Audit Committee”) and appointed two additional independent members of our Board of Directors. This Audit Committee now assists in evaluating our system of internal controls and provides oversight of our financial reporting process. Despite the reformation of our Audit Committee and these recent appointments, the material weakness discussed above cannot be considered remediated until these controls operate for a sufficient period and management has concluded, through testing, that our internal controls are operating effectively.
There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 28, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
38
Table of Contents
PART II. — OTHER INFORMATION
Item 1. | Legal Proceedings |
The information under “Commitments and Contingencies” in Note 5 to the condensed consolidated financial statements included in Part I, Item 1 of this report is incorporated herein by reference.
Item 1A. | Risk Factors |
There have been no material changes to the risk factors set forth in “Risk Factors” in Part I, Item 1A of our Annual Report.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
None.
Item 3. | Defaults Upon Senior Securities |
None.
Item 4. | Mine Safety Disclosures |
Not applicable.
Item 5. | Other Information |
Insider Trading Arrangements
During the fiscal quarter ended March 28, 2026,
39
Table of Contents
Item 6. | Exhibits |
Filed | Incorporated by Reference | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Exhibit No. | | Exhibit Description | | Herewith | | Form | | File No. | | Filing Date |
3.1 | Restated Certificate of Incorporation of Netlist, Inc. | 10-Q | 001-33170 | August 15, 2017 | ||||||
3.1.1 | Certificate of Amendment to the Restated Certificate of Incorporation of Netlist, Inc. | 10-Q | 001-33170 | August 15, 2017 | ||||||
3.1.2 | Certificate of Amendment of the Restated Certificate of Incorporation of Netlist, Inc. | 8-K | 001-33170 | August 17, 2018 | ||||||
3.1.3 | Certificate of Amendment to the Restated Certificate of Incorporation of Netlist, Inc. | 8-K | 001-33170 | August 10, 2020 | ||||||
3.1.4 | Certificate of Designation of the Series A Preferred Stock of Netlist, Inc. | 10-Q | 001-33170 | August 15, 2017 | ||||||
3.1.5 | Certificate of Amendment to the Restated Certificate of Incorporation of Netlist, Inc. | 8-K/A | 001-33170 | September 25, 2025 | ||||||
3.2 | Second Amended and Restated Bylaws of Netlist, Inc. | 10-Q | 001-33170 | November 7, 2024 | ||||||
10.1 | First Amendment to Lease, dated March 4, 2026, by and between Netlist, Inc. and University Research Park LLC | 8-K | 001-33170 | March 9, 2026 | ||||||
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 | ||||||||
32.1+ | 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) | |||||||||
+ | Furnished herewith. |
40
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date:May 12, 2026 | Netlist, Inc. | |
By: | /s/ Chun K. Hong | |
Chun K. Hong | ||
President, Chief Executive Officer and Director | ||
(Principal Executive Officer) | ||
By: | /s/ Gail Sasaki | |
Gail Sasaki | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
41