Netlist Inc

Good morning, everyone, and welcome to the NETLIST first quarter 2024 earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please send to a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and one using a touchtone telephone. To withdraw your question, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Mike Smargiasi, Investor Relations. Sir, please go ahead.

Thank you, Jamie, and good day, everyone. Welcome to NetList's first quarter 2024 conference call. Leading today's call will be Chuck Hong, Chief Executive Officer of NetList, and Gail Sasaki, Chief Financial Officer. As a reminder, you can access the earnings release and a replay of today's call on the Investors section of the NetList website at netlist.com. Before we start the call, I would note that today's presentation of NetList's results and the answers to the questions may include forward-looking statements, which go based on current expectations. The actual results could differ materially from those projected in the forward-looking statements because of the number of risks and uncertainties that are expressed in the call, annual and current SEC filings, and the cautionary statements contained in today's press release. Netlist assumes no obligation to update forward-looking statements. I will now turn the call over to Chuck.

Thanks, Mike, and hello, everyone. In the first quarter, our product revenue came in at $36 million, a three-fold increase from a year-ago period. This performance reflects further improvement in both the price and demand environment. The two recent earthquakes in Taiwan have resulted in minimal market disruption, but we continue to expect additional price increases for both DRAM and NAND products as we move through the rest of the year. As the memory market continues to rebound, NetList remains well positioned to capitalize on the positive market conditions. Now, turning to the legal update. Thus far this year, we have received disappointing results in the IPRs at the Patent Trial and Appeals Board. For the five asserted patents and netlaces, $303 million jury award against Samsung. In that case, we've now received final written decisions of unpatentability for those five patents. We are reviewing each of these decisions carefully and considering next steps. Parties have 30 days to file a request to challenge the result at the PTO itself. This appeal process can take several months and if denied, the PTAB will enter a final decision and denial. The STEN opens the window to file an appeal with the U.S. Federal Circuit Court of Appeals. For the 339 patent covering LRDEM, NETLIST has already filed a Notice of Appeal with the Federal Circuit. We expect the Federal Circuit appeal process to take 18 to 24 months to reach its conclusion. For the 918 and 054 patents covering on module power management technologies for DDR5 memory modules, we plan to file an appeal to the Federal Circuit. Finally, in regard to the 060 and 160 patents covering HBM memory, we will decide shortly whether to file a request for the rehearing by the PTAP panel or a request for the PTO director review. As these proceedings move forward, I would note the jury verdict and judgment against Samsung in the Eastern District of Texas remains in place, and we await a final order from the court. Last week, Netlis' claim 16 of the Seminole 912 patent was also found unpatentable. The 912 patent has been subject to five district five distinct reviews at the USPTO and Federal Circuit between 2010 and today, or 14 years of its total available life. In that time alone, the Patent Office has seen five different directors. And now the 912 patent was found for the first time to be unpatentable by the by this recent PTAP panel. The 912 has been the subject of serial reexaminations and abusive attacks and was invalid and was validated five times over, including by the Federal Circuit Court of Appeals. Only now, in year 14 of its near continuous scrutiny, has this board decided that claim 16 of the 912 patent may be obvious. And this was an IPR filed by Samsung, admittedly acting at Google's behest. In so doing, this board has unwound over a decade of decisions made by its predecessors at the PTAB itself and the Federal Circuit Court of Appeals. and made clear that the purpose of the PTAB is not about culling bad patents, but killing good patents if it serves their interests in some way. The 912 history is the poster child of how to abuse post-grant review processes and prevent innovators like NETLIS from stopping large infringers in court. It is disturbing to see the USPTO reconsider the validity of this patent for the sixth time and only now reverse more than a decade of decisions. We're considering all post-decision options, standard and otherwise, to redress this unprecedented injustice. In the Eastern District of Texas, the court has separated net listed consolidated cases against Micron and Samsung. The jury trial against Micron was set to begin April 29th. However, earlier this week, it was rescheduled to May 20th due to a last minute emergency. The court has not set a trial date for the parallel Samsung case. but we hope to have a date set after our trial against Samsung in the Central District concludes. In the breach of contract case against Samsung in the U.S. District Court for the Central District of California, Judge Mark Scarzi has set the final trial conference for May 6th and the jury trial start date of May 16th. We are looking forward to this proceeding because this trial represents NETLAS' first opportunity to bring all of Samsung's past actions to light before a jury. We expect the trial to last approximately one week. Our case against Micron in the western district of Texas is still currently stayed. but we filed a motion to move this case to the Eastern District of Texas. We're making this motion as the case has been sitting in a non-assigned judicial docket and is still not assigned to a judge. This case involves Netlis' patents covering Micron's use of DDR4 LRDEM technology, and two of the four asserted patents in this case have already been found valid and patentable by the PTAT. In summary, the memory market continues to improve and we are preparing now for a very busy month in May with two federal jury trials to conduct. The breach of contract case against Samsung in Los Angeles and the patent infringement case against Micron in Marshall, Texas. Now I'll turn the call over to Gail for the financial review.