Netlist (XAB) Risk Analysis
Risk Overview Q2, 2026
Risk Change Over Time
- Sales & Marketing - Risk 1We entered into a Supply Agreement with Samsung Semiconductor with the right to purchase from Samsung Semiconductor for an aggregate of up to $1.5 billion of DRAM and NAND products, subject to certain limitations, and if Samsung Semiconductor breaches or is unable to honor its obligations under the Supply Agreement, our business could be adversely impacted. In addition, the quarterly license fee payments we expect to receive under the Samsung License Agreement are subject to adjustment, reduction, and potential refund obligations, which could reduce the amounts we ultimately retain.
In August 2026, we entered into the Supply Agreement with Samsung Semiconductor for a term of five years, which grants us the right to purchase from Samsung Semiconductor up to $300 million of DRAM and NAND products each year for an aggregate of up to $1.5 billion during the term of the Supply Agreement, subject to certain limitations. There can be no assurance that Samsung Semiconductor will fulfill its obligations under the Supply Agreement. Samsung Semiconductor may breach or fail to honor its obligations under the Supply Agreement for a number of reasons, including as a result of financial difficulties, operational disruptions, changes in its business strategy or priorities, disputes regarding pricing or product specifications, regulatory restrictions (including export controls, sanctions, or trade restrictions) affecting Samsung Semiconductor's ability to transact with us, or a determination by Samsung Semiconductor that performance under the Supply Agreement is no longer commercially viable. In addition, Samsung Semiconductor may experience manufacturing constraints, production delays, or quality control issues that prevent it from delivering products in accordance with the terms of the Supply Agreement. The Supply Agreement also contains significant limitations on our remedies in the event of Samsung Semiconductor's breach or non-performance. As a result, even if Samsung Semiconductor fails to perform, our ability to recover damages may be substantially limited. If the Supply Agreement is terminated or if Samsung Semiconductor is otherwise unable or unwilling to supply the products upon our exercise of purchase rights thereunder, we may experience supply shortages for certain of our products, increased lead times and delays in the delivery of our products to customers. We may also be unable to procure substitute products on comparable terms or at all. Any such disruption could adversely affect our ability to satisfy customer demand, result in lost revenue, and cause us to incur additional costs, any of which could have a material adverse effect on our business, results of operations and financial condition. In addition, under the Samsung License Agreement, the quarterly license fee payments payable by Samsung are calculated based on a revenue-based formula and are subject to a per-quarter cap and to certain adjustment and refund rights that may apply to royalties received in years four and five of the license term. As a result, the aggregate amounts we ultimately receive under the Samsung License Agreement may be less than the maximum amounts payable thereunder. If we fail to receive the amounts expected or due to us pursuant to the Samsung License Agreement, our business, prospects and results of operations and financial condition may be adversely affected.
Risk Highlights Q2, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 43
- Share Price & Shareholder Rights - Risk 1Anti-takeover provisions under our charter documents and Delaware law, as well as our rights agreement, could delay or prevent a change of control and could also limit the market price of our common stock.
Our restated certificate of incorporation, as amended ("Certificate of Incorporation") and amended restated bylaws ("Bylaws") contain provisions that could delay or prevent a change of control of our Company or changes in our board of directors that our stockholders might consider favorable, including: - our board of directors is authorized, without prior stockholder approval, to designate and issue preferred stock, commonly referred to as "blank check" preferred stock, which may have rights senior to those of our common stock;- stockholder action by written consent is prohibited;- nominations for election to our board of directors and the submission of matters to be acted upon by stockholders at a meeting are subject to advance notice requirements; and - our board of directors is expressly authorized to make, alter or repeal our Bylaws. In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. Further, we adopted a rights agreement that would, under certain specified circumstances and for so long as the rights issued under the rights agreement are outstanding, give the holders of our common stock the right to acquire additional shares of our capital stock, which would make it more difficult for a third party to acquire a significant percentage of our outstanding capital stock or attempt a hostile takeover of our Company. These and other provisions in our Certificate of Incorporation and Bylaws and of Delaware law, as well as the existence of our rights agreement, could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by our board of directors, including a merger, tender offer, proxy contest or other change of control transaction involving our Company. Any delay or prevention of a change of control transaction or changes in our board of directors could prevent the consummation of a transaction in which our stockholders could receive a substantial premium over the then-current market price for our common stock. In addition, these anti-takeover provisions could reduce the price that investors are willing to pay for shares of our common stock.
- Share Price & Shareholder Rights - Risk 2Sales of our common stock, or the perception that such sales could occur, could cause the market price of our stock to drop significantly, regardless of the state of our business.
As of December 27, 2025, there were 307,336,851 shares of our common stock outstanding. In addition, 2,698,763 shares of our common stock are subject to outstanding stock options, 5,420,880 shares of our common stock are subject to outstanding unvested restricted stock units, and 87,604,628 shares of our common stock are subject to outstanding warrants. We may also issue up to $75 million shares of common stock pursuant to the March 2025 Purchase Agreement. All outstanding shares of our common stock and stock issuable pursuant to the March 2025 Purchase Agreement are eligible for sale in the public market under applicable federal securities laws, subject in certain cases to the requirements of Rule 144 under the Securities Act of 1933, as amended, and shares issued upon the exercise or conversion of outstanding stock options, or warrants may also be eligible for sale in the public market, to the extent permitted by Rule 144 or other applicable securities laws and the provisions of the applicable stock option, and warrant agreements. If these shares are sold, or if it is perceived that they may be sold, in the public market, the trading price of our common stock could fall.
- Share Price & Shareholder Rights - Risk 3A large portion of our warrants contain anti-dilution provisions for certain dilutive issuances of our securities at prices lower than the exercise prices set forth in such warrants.
We currently have a large number of outstanding warrants to purchase shares of our common stock. These warrants provide for a reduction of the exercise price if we, at any time while these warrants are outstanding, issue, or are deemed to have issued, common stock or common stock equivalents, at a price less than the exercise price then in effect for these warrants, subject to certain customary exceptions. The exercise price of the warrants will also remain subject to adjustment for future dilutive issuances. The dilutive effect of any exercise price adjustments to the warrants would likely have a negative impact on the trading price of our common stock and these terms may cause the exercise price of these warrants to be reduced to a price that is well below their current exercise price or any further reduced exercise price pursuant to the terms of these warrants.
- Share Price & Shareholder Rights - Risk 4Future issuances of our common stock or rights to purchase our common stock, including pursuant to our outstanding warrants, equity incentive plans or the March 2025 Purchase Agreement, would result in additional dilution to the percentage ownership of our stockholders and could cause the price of our common stock to decline.
We have historically funded our operations in large part with proceeds from equity and convertible debt financings, and we expect to continue to do so in the future, including through the issuance of up to $75 million in shares of common stock pursuant to the March 2025 Purchase Agreement. In addition to capital-raising purposes, we may also issue securities from time to time at prices and on other terms as we determine for acquiring other businesses or assets in exchange for shares of our common stock or other securities, issuing securities to collaborators in connection with strategic partnerships, attracting and retaining employees with equity compensation, or other purposes. If we sell common stock or other equity or convertible debt securities in the future, our then-existing stockholders could be materially diluted by such issuances and new investors could gain rights, preferences and privileges senior to the holders of our common stock, which could cause the price of our common stock to decline.
- Share Price & Shareholder Rights - Risk 5As our shares of common stock are not listed on a national securities exchange, it may be more difficult for stockholders to dispose of their shares and our shares of common stock may be less liquid when compared to securities that are listed on a national securities exchange.
Netlist common shares began trading on the Over-the-Counter market in October 2018, following the decision to move trading of our common stock from the Nasdaq Capital Market. Because our stock is no longer listed on a registered national securities exchange, we are subject to certain "blue sky" laws of the various states which impose restrictions on our ability to offer and sell our securities. These "blue sky" laws may make it more difficult for us to raise capital or to issue our common stock for equity compensation or other strategic purposes, which could adversely affect our ability to fund our operations or to attract and retain employees. In addition, and depending on our results of operations, our stock may be defined as a "penny stock" under Rule 3a51-1 of the Exchange Act. "Penny stocks" are subject to Rule 15g-9 of the Exchange Act, which imposes additional sales practice requirements on broker-dealers that sell low-priced securities to persons other than established customers and institutional accredited investors. For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. Consequently, the rule may affect the ability of broker-dealers to sell our common stock and affect the ability of holders to sell their shares of our common stock in the secondary market. To the extent our common stock is subject to the penny stock regulations, the market liquidity for the shares will be adversely affected.
- Share Price & Shareholder Rights - Risk 6The price and trading volume of our common stock has and may continue to fluctuate significantly in reaction to real or perceived developments in our business.
Our common stock has been publicly traded since November 2006. The price and trading volume of our common stock are volatile and have in the past fluctuated significantly. This volatility could continue, in which case an active trading market in our common stock may not be sustained and stockholders may not be able to sell their shares at a desired time or a desired price. The market price at which our common stock trades may be influenced by many factors, including, among others, the following: - the results of legal proceedings in which we are involved;- our operating and financial performance and prospects;- investor perceptions of us and the industry in which we operate;- our ability to meet investor and analyst expectations for our operating results;- the availability and level of research coverage of and market-making in our common stock;- changes in buy/sell recommendations by analysts;- any financial projections we may provide to the public, any changes to these projections or our failure to meet these projections;- our announcement of significant strategic transactions or relationships or the initiation of legal proceedings, including patent infringement actions;- general political, economic and market conditions, including volatility or uncertainty in these conditions;- short selling activities;- third-party manipulation; and - the other risk factors described in this report. In addition, shares of our common stock and the public stock markets in general have experienced, and may continue to experience, extreme price and trading volume volatility, at times irrespective of the state of the business of any particular company. These fluctuations may adversely affect the market price of our common stock. Further, following periods of volatility in the overall market and the market price of a particular company's securities, securities litigation can sometimes be instituted against us. Securities litigation, like other types of litigation, is expensive and time-consuming, and if such litigation is instituted against us in the future, we may incur substantial costs, management's attention and resources may be diverted, and we could be subject to damages in the event of unfavorable results.
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