What changed in this filing

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Item 1A. Risk Factors

2026-08-11 compared with 2026-02-06 · 125 added, 75 removed, 417 unchanged (32% of the section changed)

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government funding and government shutdowns may materially adversely affect our business and results of operations.

● We cannot assure you that our ongoing evaluation of strategic alternatives will result in any particular outcome, and the perceived uncertainties related to GSI Technology could adversely affect our business and our shareholders.

● We depend upon the sale of our Very Fast SRAMs for most of our revenues while we transform the focus of our business to the sale of in-place associative computing products and services, and a downturn in demand for Very Fast SRAM products or our inability to achieve our revenue goals for our new in-place associative computing products and services may cause us to experience cash shortfalls that would harm our business and our future prospects.

● Our future success is substantially dependent on the successful introduction of new in-place associative computing products which entails significant risks.

● Worldwide inflationary pressures, increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, the military conflict in Ukraine, and the challenging global economic environment may adversely affect our revenues, results of operations and financial condition.

East, and the challenging global economic environment may adversely affect our revenues, results of operations and financial condition.

● We have incurred significant losses and may incur losses in the future.

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● We are dependent on a number of single source suppliers.

● If we do not successfully develop new products to respond to rapid market changes due to changing technology and evolving industry standards, particularly in the networking and telecommunications markets, our business will be harmed.

● If we do not successfully develop new products to respond to rapid market changes due to changing technology and evolving industry standards, our business will be harmed.

● If we are unable to offset increased wafer fabrication and assembly costs, our gross margins will suffer.

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● The successful commercialization of our Gemini-II product and development of our Plato product depends on our ability to attract and retain software engineering talent.

● We may need additional funding to continue the commercialization of Gemini-II and to complete the development of Plato.

● Our use of artificial intelligence in our research and development activities may expose us to risks, including inaccurate outputs, intellectual property concerns and regulatory uncertainty.

● Systems issues, data protection and cyber-attacks could disrupt our internal operations or the operations of our business partners, and any such disruption could harm our business.

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● If our business grows, such growth may place a significant strain on our management and operations.

● Our estimates of the total addressable market and serviceable available market for our APU products are based on publicly available analyst assumptions and internal assumptions and may prove to be materially inaccurate.

● Evolving government regulation of artificial intelligence may increase our compliance costs, delay or restrict the deployment of our products, or otherwise adversely affect our business.

● Technology developed under government-funded contracts may be subject to restrictions that limit our ability to commercialize such technology in civilian markets.

● We face intense competition from significantly larger and better-resourced companies in the AI hardware market, which could limit our ability to commercialize our APU products.

Risks Related to Manufacturing and Product Development

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Risks Related to Our International Business and Operations

● The international political, social and economic environment, including the imposition of tariffs and resulting consequences and the risks for escalating military conflicts, particularly in Taiwan given the recent deterioration of relations between the governments of the Peoples Republic of China and Taiwan, may affect our business performance.

● The international political, social and economic environment, including the imposition of tariffs and resulting consequences and the risks for escalating military conflicts, particularly in Taiwan given the recent deterioration of relations between the governments of the People’s Republic of China and Taiwan, may affect our business performance.

● Governmental export and import controls could impair our ability to compete in international markets or subject us to liability if we violate the controls.

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Our quarterly and annual revenues, expenses and operating results have varied significantly and are likely to vary in the future.

For example, in the eleven fiscal quarters ended December 31, 2025, we recorded net revenues of as much as $6.4 million and as little as $4.6 million, and in nine of those quarters, operating losses from $2.2 million to $6.9 million.

For example, in the nine fiscal quarters ended June 30, 2026, we recorded net revenues of as

much as $6.4 million and as little as $4.6 million, and in eight of those quarters, operating losses from $2.2 million to $6.9 million.

We therefore believe that period-to-period comparisons of our operating results are not a good indication of our future performance, and you should not rely on them to predict our future performance or the future performance of our stock price.

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● continued funding from U.S.

government programs, including Small Business Innovation Research (“SBIR”) grants, to support our research and development activities;

government programs, including SBIR grants, to support our research and development activities;

● our ability to anticipate and conform to new industry standards;

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● our ability to address technology issues as they arise, improve our products' functionality and expand our product offerings;

● we may need additional funding to continue the commercialization of Gemini-II and to complete the development of Plato.

Our expenses are, to a large extent, fixed, and we expect that these expenses will increase in the future.

In fiscal years 2022 and 2023, we experienced price increases for raw materials, including a 20% increase in the price of wafers that was implemented in early calendar 2022 and a 6% increase that was implemented in early calendar 2023, as well as varying pricing increases for manufacturing services due to the supply chain constraints in the semiconductor market .

We may not be able to adjust our spending quickly if our revenues fall short of our expectations.

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If our operating results in future quarters fall below the expectations of market analysts and investors, the price of our common stock could fall.

Worldwide inflationary pressures, increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, the military conflict in Ukraine, and the challenging global economic environment have caused increased stock market volatility and uncertainty in customer demand and the worldwide economy in general, and we may continue to experience decreased sales and revenues in the future.

We expect such impact will in particular affect our SRAM sales and has also impacted the launch of our APU products to some

degree and the adoption of RadHard and RadTolerant SRAM products by aerospace and military customers.

Worldwide inflationary pressures, increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, the military conflicts in Ukraine and the Middle East, and the challenging global economic environment have caused increased stock market volatility and uncertainty in customer demand and the worldwide economy in general, and we may continue to experience decreased sales and revenues in the future.

We expect such impact will in particular affect our SRAM sales and has also impacted the launch of our APU products to some degree and the adoption of RadHard and RadTolerant SRAM products by aerospace and military customers.

However, the magnitude of such impact on our business and its duration is highly uncertain.

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Based on information provided to us by KYEC’s contract manufacturers and distributors, purchases by KYEC represented approximately 14%, 23% and 3% of our net revenues in fiscal 2026, 2025 and 2024, respectively.

Nokia purchases our products directly from us and through contract manufacturers and distributors.

Nokia purchases our products directly from

us and through contract manufacturers and distributors.

Based on information provided to us by Nokia’s contract manufacturers and distributors, purchases by Nokia represented approximately 6%, 12% and 21% of our net revenues in fiscal 2026, 2025 and 2024, respectively.

The significant decline in Nokia’s purchases is due in part to Nokia’s decision to incorporate alternative solutions to the use of SRAMs into certain of its next-generation products in place of our SRAM products that were included in prior versions of such products.

If Nokia continues to expand its use of these alternative solutions across additional product lines, our sales to Nokia could decline further or be eliminated entirely.

Cadence Design Systems purchases products through contract manufacturers and distributors.

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We do not have long-term contracts with KYEC, Nokia and Cadence Design Systems or any of our other major OEM customers, distributors or contract manufacturers that obligate them to purchase our products.

In addition, our customer concentration risk is compounded by the fact that our key customers operate in distinct end markets with differing demand dynamics.

For example, KYEC is a leading provider in the test and measurement market, which is subject to capital expenditure cycles and technology upgrade patterns that differ from those of the networking and telecommunications market served by Nokia.

A downturn in a single end market, such as the test and measurement market, could disproportionately affect our revenues if we are significantly concentrated in that market through a single customer relationship.

Our increasing dependence on the test and measurement market through KYEC, combined with the ongoing decline in the networking and telecommunications market, may reduce the diversification of our revenue base and amplify the impact of adverse conditions in any one application vertical on our overall operating results.

We expect that future direct and indirect sales to KYEC, Nokia and Cadence Design Systems and our other key OEM customers will continue to fluctuate significantly on a quarterly basis and that such fluctuations may substantially affect our operating results in future periods.

If we fail to continue to sell to our key OEM customers, distributors or contract manufacturers in sufficient quantities, our business could be harmed.

Additionally, a small number of customers have historically accounted for a substantial portion of our accounts receivable at period end, and delays or non-payment by any such customer could materially affect our cash flows and liquidity.

We are reliant on U.S.

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If SBIR or related agency budgets are reduced, reallocated, or subject to sequestration, we may experience decreased funding availability that could materially impact our operations, financial condition, and prospects.

We cannot assure you that our ongoing evaluation of strategic alternatives will result in any particular outcome, and the perceived uncertainties related to the Company could adversely affect our business and our stockholders.

On May 2, 2024, we announced that we had initiated a broad strategic review to maximize stockholder value, which includes an evaluation of a wide range of options including equity or debt financing, divestiture of assets, technology licensing or other strategic arrangements including a sale of the Company.

We have not set a timetable for the completion of the strategic review process, nor have we made any decisions relating to any strategic alternative at this time.

No assurance can be given as to the outcome of the process, including whether the process will result in any particular outcome.

Any potential transaction may be dependent on a number of factors that may be beyond our control, for example, market conditions, industry trends or acceptable terms.

The process of reviewing potential strategic alternatives may be time consuming, distracting and disruptive to our business operations.

In addition, given that the exploration of strategic alternatives may eventually result in a potential sale, merger or other strategic transaction, any perceived uncertainty regarding our future operations or employment needs may limit our ability to retain or hire qualified personnel and may contribute to unplanned loss of highly skilled employees through attrition, and result in the loss of customers, suppliers and other key business partners.

We may ultimately determine that no transaction is in the best interest of our stockholders.

Speculation regarding any developments associated with our review of strategic alternatives and any perceived uncertainties related to the Company or its business could cause the price of our shares to fluctuate significantly.

While we currently depend upon the sale of our Very Fast SRAMs for most of our revenues, we are in the process of transforming the focus of our business to the sale of in-place associative computing products and services, and if there is a downturn in demand for Very Fast SRAMs or we are unable to achieve our revenue goals for our new in-place associative computing products and services, we may experience cash shortfalls that would harm our business and our future prospects.

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Our financial results and cash flow depend in large part upon continued demand for our Very Fast SRAM products in the markets we currently serve.

Our future financial results and cash flow will increasingly depend upon our ability to generate revenues from the sale of in-place associative computing products and services.

Our future financial results and cash flow will increasingly

depend upon our ability to generate revenues from the sale of in-place associative computing products and services.

Market adoption of our in-place associative computing products and services will be dependent upon our ability to increase customer awareness of the benefits of those products and services.

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Any decrease in revenues from sales of our Very Fast SRAM products or failure to achieve the revenue goals for our in-place associative computing products and services could result in revenue shortfalls that would leave our business with inadequate cash to finance operations.

Our future success is substantially dependent on the successful introduction of new in-place associative computing products, including Gemini-I, Gemini-II and Plato, which entails significant risks.

Our future success is substantially dependent on the successful introduction of new in-place associative computing products, including Gemini-II and Plato, which entails significant risks.

Since 2015, our principal strategic objective has been the development of our in-place associative computing products.

We have devoted, and will continue to devote, substantial efforts and resources to the development of our new family of in-place associative computing products, including Gemini-I, Gemini-II and Plato.

This ongoing project includes achieving customer acceptance of Gemini-I, the commercialization of Gemini-II and development of new, cutting-edge technology for Plato, and will require a continuing substantial effort during fiscal 2026 and beyond and will be subject to significant risks.

In addition to the typical risks associated with the development of technologically advanced products, the achievement of customer acceptance of Gemini-I, the commercialization of Gemini-II and development of Plato will be subject to enhanced risks of technological problems related to the development of this entirely new category of products, substantial risks of delays or unanticipated costs that may be encountered, and risks associated with the establishment of entirely new markets and customer and partner relationships.

We have devoted, and will continue to devote, substantial efforts and resources to the development of our new family of in-place associative computing products, including Gemini-II and Plato.

This ongoing project includes achieving the commercialization of Gemini-II and development of new, cutting-edge technology for Plato, and will require a continuing substantial effort during fiscal 2027 and will be subject to significant risks.

In addition to the typical risks associated with the development of technologically advanced products, the achievement of the commercialization of Gemini-II and development of Plato will be subject to enhanced risks of technological problems related to the development of this entirely new category of products, substantial risks of delays or unanticipated costs that may be encountered, and risks associated with the establishment of entirely new markets and customer and partner relationships.

The establishment of new customer and partner relationships and selling our in-place associative computing products to such new customers is a significant undertaking that requires us to invest heavily in our sales team, enter into new channel partner relationships, expand our marketing activities and change the focus of our business and operations.

Our inability to successfully establish a market for the product that we have developed will have a material adverse effect on our future financial and business success, including our prospects for increased revenues.

To date, sales of our APU products have been limited primarily to research and academic institutions and government-funded proof-of-concept engagements, and there can be no assurance that these engagements will result in broader commercial adoption or production-volume orders.

The extended duration of our proof-of-concept sales cycles, combined with the nascent stage of market acceptance for our associative computing architecture, creates a risk that our APU products may not progress beyond limited evaluation-stage deployments, which would prevent us from recovering the substantial research and development investment we have made in this technology.

If our APU products fail to achieve meaningful commercial traction within a reasonable period, we may be required to reassess the scope and pace of our investment in associative computing, which could result in impairment charges, reduced market confidence in our technology, and a material adverse effect on our business and the price of our common stock.

Additionally, if we are unable to meet the expectations of market analysts and investors with respect to this major product introduction effort, then the price of our common stock could fall.

Increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, worldwide inflationary pressures, the military conflict in Ukraine, and the resulting challenging global economic environment are expected to adversely affect our revenues, results of operations and financial condition.

Our business is expected to be materially adversely affected by increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, worldwide inflationary pressures and the military conflict in Ukraine, all of which are contributing to a challenging global economic environment.

We expect that a continued rise in interest rates, increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, worldwide inflationary pressures, continued uncertainties in the business climate caused by the military conflict in Ukraine will adversely impact demand for new and existing products, and to impact the mindset of potential commercial partners to launch new products using our technology.

Increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, worldwide inflationary pressures, the military conflicts in Ukraine and the Middle East, and the resulting challenging global economic environment are expected to adversely affect our revenues, results of operations and financial condition.

Our business is expected to be materially adversely affected by increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, worldwide inflationary pressures and the military conflicts in Ukraine and the Middle East, all of which are contributing to a challenging global economic environment.

We expect that an increase in interest rates, increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, worldwide inflationary pressures, continued uncertainties in the business climate caused by the military conflicts in Ukraine and the Middle East will adversely impact demand for new and existing products, and to impact the mindset of potential commercial partners to launch new products using our technology.

The resulting challenging global economic environment is expected to have an adverse impact on our business and financial condition.

Disruptions in the capital and financial markets as a result of increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, worldwide inflationary pressures, the military conflict in Ukraine, and the challenging global economic environment may also adversely affect our ability to obtain additional liquidity should the impacts of a challenging global economic environment continue for a prolonged period.

Disruptions in the capital and financial markets as a result of increased or new tariffs, export controls and other trade barriers, trade disputes and increasing geopolitical tensions, worldwide inflationary pressures, the military conflicts in Ukraine and the Middle East, and the challenging global economic environment may also adversely affect our ability to obtain additional liquidity should the impacts of a challenging global economic environment continue for a prolonged period.

We have incurred significant losses and may incur losses in the future.

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There can be no assurance that our Very Fast SRAMs will continue to receive broad market acceptance, that our new product development initiatives will be successful or that we will be able to achieve sustained revenue growth or profitability.

We identified a material weakness in our internal control over financial reporting in the past.

If we fail to maintain effective internal control over financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected.

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Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.

In addition, any testing by us conducted in connection with Section 404(a) of the Sarbanes-Oxley Act, or any testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.

Inferior internal control over financial reporting could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

In the course of preparing our financial statements for the fiscal year ended March 31, 2022, we identified a material weakness in our internal control over financial reporting which remained un-remediated at March 31, 2023.

During fiscal 2024, we identified and implemented remedial measures to address the control deficiencies that led to the material weakness and determined that the material weakness was remediated as of March 31, 2024.

However, there can be no assurance that remedial measures will continue to operate or that they will prevent other control deficiencies or material weaknesses in our control over financial reporting in the future.

In addition, any testing by us or by our independent registered public accounting firm, may reveal control deficiencies of varying degrees of severity.

While any unremediated deficiencies identified to date have not individually or in the aggregate been determined to constitute a material weakness, we cannot assure you that any such deficiencies, or deficiencies identified in the future, will not be determined to constitute a material weakness, whether individually or in the aggregate with other deficiencies.

Any failure to implement required new or improved controls, or difficulties encountered in remediating identified deficiencies or in implementing new or improved controls, could cause us to fail to meet our reporting obligations or require prospective or retroactive changes to our financial statements.

Inferior internal control over financial reporting, including the existence of uncorrected control deficiencies, could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

If any deficiency in our internal control over financial reporting, whether identified in a prior period or newly identified, is determined in the future to constitute a material weakness, there can be no assurance that measures to remedy such material weakness would be successful or that such remedial measures would prevent other control deficiencies or material weaknesses in our control over financial reporting in the future.

The risk of a control deficiency being determined to constitute a material weakness may be heightened by resource constraints affecting our internal control environment, including the limited size of our finance and accounting function, as described elsewhere in these risk factors.

We regularly evaluate our internal control over financial reporting as our business evolves, including changing relationships with customers and suppliers, changes to finance and accounting processes to address new product lines, and in response to other business activities.

This evolution increases the risk that existing controls may not operate effectively or that new or modified processes may not be designed or operated effectively, which could result in additional control deficiencies.

We are a non-accelerated filer.

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We test for goodwill impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset is more likely than not impaired.

If the carrying value of a material

asset is determined to be impaired, it will be written down to fair value by a charge to operating earnings.

As of March 31, 2025 and December 31, 2025, we had a goodwill balance of $8.0 million and intangible assets of $1.1 million, respectively, from the MikaMonu acquisition.

If the carrying value of a material asset is determined to be impaired, it will be written down to fair value by a charge to operating earnings.

As of June 30, 2026 and March 31, 2026, we had a goodwill balance of $8.0 million and intangible assets of $1.0 million and $1.1 million at June 30, 2026 and March 31, 2026, respectively, from the MikaMonu acquisition.

An adverse change in market conditions, including a sustained decline in our stock price, loss of significant customers, or a weakened demand for our products could be considered to be an impairment triggering event.

If such change has the effect of changing one of our critical assumptions or estimates, a change to the estimation of fair value could result in an impairment charge to our goodwill or intangible assets, which would negatively impact our operating results and harm our business.

There were no impairment indicators at March 31, 2025 or December 31, 2025.

There were no impairment indicators at June 30, 2026 or March 31, 2026.

We are dependent on a number of single source suppliers, and if we fail to obtain adequate supplies, our business will be harmed and our prospects for growth will be curtailed.

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If any of these suppliers cannot provide components on a timely basis, at the same price or at all, our ability to manufacture our products will be constrained and our business will suffer.

For example, due to worldwide inflationary pressures, the cost of wafers and assembly services have increased by approximately 25% since the beginning of fiscal 2021.

Most significantly, we obtain wafers for our Very Fast SRAM and APU products from a single foundry, TSMC, and most of them are packaged at ASE.

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Our suppliers, including TSMC, have no obligation to supply products or services to us for any specific product, in any specific quantity, at any specific price or for any specific time period.

As a result, the loss or failure to perform by any of these suppliers could adversely affect our business and operating results.

As a result, the loss or failure to perform by any of these suppliers, including decisions to allocate capacity to larger, higher volume, or better capitalized customers, could extend lead times, increase prices, or otherwise adversely affect our business and operating results.

Should any of our single source suppliers experience manufacturing failures or yield shortfalls, be disrupted by natural disaster, military action or political instability, choose to prioritize capacity or inventory for other uses or reduce or eliminate deliveries to us for any other reason, we likely will not be able to enforce fulfillment of any delivery commitments and we would have to identify and qualify acceptable replacements from alternative sources of supply.

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Since the manufacturing of wafers and other components is extremely complex, the process of qualifying new foundries and suppliers is a lengthy process and there is no assurance that we would be able to find and qualify another supplier without materially adversely affecting our business, financial condition and results of operations.

In response to these industry dynamics, we have increased, and may continue to increase, our inventory levels and place orders further in advance of anticipated demand than we have historically in order to secure adequate supply and comply with increasing minimum order quantity requirements imposed by our suppliers.

Building inventory in this manner increases our working capital requirements and ties up cash that would otherwise be available for other uses.

If actual demand does not match our forecasts, we may be left holding excess or obsolete inventory, which could result in inventory write-downs and adversely affect our gross margins, operating results and cash flows.

In addition, extended and unpredictable lead times could impair our ability to respond quickly to changes in customer demand or to fulfill customer orders on a timely basis.

In addition, certain of the equipment used in our operations requires specialized repair and maintenance services that are available from only a limited number of vendors.

If any such vendor were to increase prices, curtail services, or otherwise become unable or unwilling to continue providing such services, whether due to a change in

that vendor’s business or otherwise, we may experience disruptions to our operations while we identify, qualify and transition to an alternative provider, which could adversely affect our business, financial condition and results of operations.

If we do not successfully develop new products to respond to rapid market changes due to changing technology and evolving industry standards, our business will be harmed.

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Securing additional manufacturing and assembly capacity may cause our wafer fabrication and assembly costs to increase.

Additionally, increased demand for semiconductor manufacturing capacity driven by AI applications may result in longer lead times, allocation constraints, and increased costs for wafer fabrication and assembly services, which could adversely affect our ability to fulfill customer orders in time.

Inflationary pressures may also cause our wafer fabrication costs to increase.

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The market for Very Fast SRAMs is highly competitive.

The market for Very Fast SRAMs, which are used primarily in networking and telecommunications equipment, is characterized by price erosion, rapid technological change, cyclical market patterns and intense foreign and domestic competition.

foreign and domestic competition.

Several of our competitors offer a broad array of memory products and have greater financial, technical, marketing, distribution and other resources than we have.

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● the supply and cost of wafers.

In fiscal 2022 and 2023 we experienced increases of 20% and 6%, respectively, in wafer fabrication costs due to supply chain constraints, which resulted in us increasing the cost of our products.

Inflationary pressures are expected to result in additional increases in our wafer fabrication costs, which may require us to further increase the cost of our products.

Inflationary pressures are expected to result in price increases in our wafer fabrication costs, which may require us to further increase the cost of our products.

Our customers may decide to purchase products from our competitors rather than accept these price increases and our business may suffer.

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Our failure to compete successfully in these or other areas could harm our business.

In addition, the rapid growth in demand for AI-related semiconductor products has placed significant pressure on semiconductor manufacturing capacity.

This increased demand may result in longer lead times for wafer fabrication and assembly services, allocation constraints at our primary foundry TSMC, and increased costs that could adversely affect our ability to fulfill customer orders on a timely basis and at expected margins.

We rely heavily on distributors and our success depends on our ability to develop and manage our indirect distribution channels.

A significant percentage of our sales are made to distributors and to contract manufacturers who incorporate our products into end products for OEMs.

For example, in the nine months ended December 31, 2025 and in fiscal 2025, 2024 and 2023, our largest distributor Avnet Logistics accounted for 64.0%, 49.6%, 50.6% and 48.1%, respectively, of our net revenues.

For example, in fiscal 2026, 2025 and 2024, our largest distributor Avnet Logistics accounted for 63.7%, 49.6% and 50.6%, respectively, of our net revenues.

Avnet Logistics and our other existing distributors may choose to devote greater resources to marketing and supporting the products of other companies.

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To reduce our costs, we may be required to implement design changes that lower our manufacturing costs, negotiate reduced purchase prices from our independent foundries and our independent assembly and test vendors, and successfully manage our manufacturing and subcontractor relationships.

Because we do not operate our own wafer foundry or assembly facilities, we may not be able to reduce our costs as rapidly as companies that operate their own foundries or facilities.

Because we do not operate our own wafer foundry or assembly facilities, we may not be able to reduce our costs as rapidly as companies that operate their own

foundries or facilities.

Additionally, our inventories face the risk of obsolescence.

If demand falls below our forecasts, if average selling prices decline, or if customer orders are cancelled or deferred due to product obsolescence or otherwise, we may be required to record additional inventory write-downs, which could be material and adversely affect our gross margins and results of operations.

We are substantially dependent on the continued services and performance of our senior management and other key personnel.

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If we are unable to attract and retain the engineering talent required to meet our product milestones, we could experience delays in Gemini-II commercialization, including failure to complete critical features, integrations, performance optimizations, reliability enhancements, and compliance or certification requirements necessary for market launch and adoption.

Similarly, insufficient staffing or turnover within our research and development function could slow or derail the Plato product roadmap, reduce the pace of innovation, and impair our ability to validate core technologies, generate defensible intellectual property, and respond to evolving market and customer requirements.

Similarly, insufficient staffing or turnover within our research and development function could slow or derail the Plato product roadmap, cause us to miss our anticipated tape-out date in early calendar 2027, reduce the pace of innovation, and impair our ability to validate core technologies, generate defensible intellectual property, and respond to evolving market and customer requirements.

Any material delay or shortfall in engineering capacity could increase development costs, force us to reduce scope or quality, or require greater reliance on third-party contractors or offshore vendors, which may introduce coordination challenges, security risks, IP ownership or confidentiality concerns, and variability in deliverable quality and timelines.

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It could lead to missed commercialization windows for Gemini-II, reduced customer satisfaction and adoption, inability to achieve expected performance or compliance standards, slower progress on Plato’s research and development objectives, loss of competitive advantage, and ultimately reduced revenue growth.

Persistent talent gaps could also necessitate changes to our product strategy, impair the value of our technology assets, and increase the risk that we will not achieve our planned milestones or that we will need to raise additional capital on unfavorable terms, any of which could adversely our business.

System security risks, data protection, cyber-attacks and systems integration issues could disrupt our internal operations or the operations of our business partners, and any such disruption could harm our reputation or cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operation or otherwise adversely affect our stock price.

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This process involves the exercise of judgment and use of assumptions as to future uncertainties, including end user demand.

Inventory levels of our products held by our distributors may exceed or fall below the

levels we consider desirable on a going-forward basis.

Inventory levels of our products held by our distributors may exceed or fall below the levels we consider desirable on a going-forward basis.

This could result in distributors returning unsold inventory to us, or in us not having sufficient inventory to meet the demand for our products.

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A small number of customers generally account for a significant portion of our accounts receivable in any period, and if any one of them fails to pay us, our financial position and operating results will suffer.

At December 31, 2025, three customers accounted for 41%, 34% and 15% of our accounts receivable, respectively.

If any of these customers do not pay us, our financial position and operating results will be harmed.

At June 30, 2026, one customer accounted for 62% of our accounts receivable.

If this customer does not pay us, our financial position and operating results will be harmed.

Generally, we do not require collateral from our customers.

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Our products are used as components in our OEM customers’ products, including test and measurement equipment, routers, switches and other networking and telecommunications products.

Accordingly, demand for our products is subject to factors affecting the ability of our OEM customers to successfully introduce and market their products, including:

Accordingly, demand for our

products is subject to factors affecting the ability of our OEM customers to successfully introduce and market their products, including:

● capital spending by telecommunication and network service providers and other end-users who purchase our OEM customers’ products;

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Competition for these individuals is intense, and we may not be able to successfully recruit, assimilate or retain sufficiently qualified personnel.

We may encounter difficulties in

recruiting and retaining a sufficient number of qualified engineers, including those needed for the development and commercialization of our Gemini-II and Plato products.

We may encounter difficulties in recruiting and retaining a sufficient number of qualified engineers, including those needed for the commercialization of our Gemini-II product offerings and the development of our Plato product offerings.

Any difficulties recruiting and retaining engineers could harm our ability to develop new products such as Gemini-II and Plato and adversely impact our relationships with existing and future end-users at a critical stage of development.

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There has been significant litigation in the semiconductor industry involving patents and other intellectual property rights.

We were previously involved in protracted patent infringement litigation, and we could become subject to additional claims or litigation in the future as a result of allegations that we infringe others’ intellectual property rights or that our use of intellectual property otherwise violates the law.

We were previously involved in protracted patent infringement litigation, and we could become

subject to additional claims or litigation in the future as a result of allegations that we infringe others’ intellectual property rights or that our use of intellectual property otherwise violates the law.

Claims that our products infringe the proprietary rights of others would force us to defend ourselves and possibly our customers, distributors or manufacturers against the alleged infringement.

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Any significant cancellations or deferrals in the future could materially and adversely affect our business, financial condition and results of operations.

Cancellations or deferrals

could cause us to hold excess inventory, which could reduce our profit margins, increase product obsolescence and restrict our ability to fund our operations.

Cancellations or deferrals could cause us to hold excess inventory, which could reduce our profit margins, increase product obsolescence and restrict our ability to fund our operations.

We generally recognize revenue upon shipment of products to a customer.

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We are endeavoring to expand our business, and any growth that we are successful in achieving could place a significant strain on our management systems, infrastructure and other resources.

To manage the potential growth of our operations and resulting increases in the number of our personnel, we will need to invest the necessary capital to continue to improve our operational, financial and management controls and our reporting systems and procedures.

To manage the potential growth of our operations and resulting increases in the number of our personnel, we will need to invest the necessary capital

to continue to improve our operational, financial and management controls and our reporting systems and procedures.

Our controls, systems and procedures may prove to be inadequate should we experience significant growth.

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If our management fails to respond effectively to changes in our business, our business may suffer.

Our estimates of the total addressable market and serviceable available market for our APU products are based on a number of internal assumptions and may prove to be materially inaccurate.

We have estimated the total addressable market for our APU products in the markets for AI, search applications and high-performance computing to be approximately $247 billion in 2025, growing to approximately $708 billion by 2028, and the serviceable available market for APU in edge AI deployments to be approximately $7 billion in 2025, growing to approximately $16 billion by 2030.

The total addressable market estimate is based on publicly available research reports.

The serviceable available market estimate is based on our own internal analysis.

The estimates are based on assumptions and judgment, including assumptions about the pace of market adoption of edge AI and associative computing technologies, the continued growth of AI workloads at the edge, and the applicability of our APU architecture to a broad range of use cases.

These estimates have not been independently verified by any third party, and the methodologies used to derive them involve significant uncertainty.

The actual size of our addressable market may be materially smaller than we have estimated if our assumptions about market growth rates, customer adoption patterns, or the competitive landscape prove incorrect.

In particular, the AI hardware market is evolving rapidly, and new architectures, competing technologies, or shifts in industry standards could reduce the portion of the market that is addressable by our APU products.

If the markets for our products are smaller than we have estimated, or if we are unable to capture a meaningful share of those markets, our growth prospects, revenue potential and business could be materially adversely affected, and the market price of our common stock could decline.

Evolving government regulation of artificial intelligence may increase our compliance costs, delay or restrict the deployment of our products, or otherwise adversely affect our business.

Governments in the United States, the European Union and other jurisdictions are actively developing and enacting new laws, regulations and standards governing the development, deployment and use of artificial intelligence.

These include, among others, the European Union’s Artificial Intelligence Act, various U.S.

state and federal legislative proposals addressing AI safety, algorithmic accountability and automated decision-making, and sector-specific regulations that may apply to AI-enabled products used in defense, autonomous systems, and critical infrastructure.

Our APU products are designed for use in AI applications including military edge computing, autonomous navigation, real-time situational awareness for physical AI, and other use cases that may be subject to heightened regulatory scrutiny.

New or evolving AI regulations could impose requirements relating to transparency, explainability, testing and validation, human oversight, data governance, or risk classification that could increase our product development and compliance costs, delay our ability to bring products to market, limit the applications for which our products may be used, or require us to modify or restrict the functionality of our products.

In addition, differing and potentially conflicting AI regulatory frameworks across jurisdictions could create complexity for our global commercialization efforts and increase our legal and compliance expenses.

If we are unable to comply with applicable AI regulations, or if compliance proves to be significantly more costly or burdensome than anticipated, our business, financial condition and results of operations could be materially adversely affected.

Technology developed under government-funded contracts may be subject to restrictions that limit our ability to commercialize such technology in civilian markets.

We have developed and continue to develop technology under contracts funded by U.S.

government agencies, including through SBIR awards from the Space Development Agency, the U.S.

Air Force and the U.S.

Our APU products are designed for both military and commercial applications, and certain of these products may be classified as dual-use items subject to the Export Administration Regulations administered by the Bureau of Industry and Security or, depending on their application, the International Traffic in Arms Regulations administered by the Directorate of Defense Trade Controls.

Compliance with applicable export control regulations may require us to obtain licenses or other authorizations before selling our products to certain customers or in certain markets,

which could delay or prevent sales.

Changes in export control classifications, sanctions programs, or other regulatory requirements applicable to dual-use technologies could further restrict our ability to sell our products internationally or prevent them from being sold at all in certain countries or situations, increase our compliance costs, or subject us to penalties if we fail to comply.

The interplay between government data rights, export controls and our commercial objectives creates legal and operational complexity that could adversely affect our ability to realize the full commercial potential of our technology investments and could have a material adverse effect on our business, financial condition and results of operations.

We face intense competition from significantly larger and better-resourced companies in the AI hardware market, which could limit our ability to commercialize our APU products.

The market for AI hardware and edge computing solutions is intensely competitive and dominated by companies with substantially greater financial, technical, manufacturing, marketing and other resources than we possess.

Our principal competitors for our in-place associative computing solutions include NVIDIA Corporation and new well funded entrants in the market which may have significantly greater name recognition, broader product portfolios, larger installed customer bases, more extensive research and development capabilities, and substantially greater financial resources than we do.

NVIDIA has established a dominant position in the AI hardware ecosystem through its GPU architecture and its widely adopted CUDA software platform, which creates significant switching costs and ecosystem lock-in for developers and customers.

Our APU architecture represents a fundamentally different approach to AI computation, and we must convince potential customers to adopt an unfamiliar technology from a comparatively small company while established competitors continue to improve the performance, efficiency and capabilities of their own products.

Our competitors may respond to our market entry by reducing prices, accelerating product development, acquiring competing technologies or companies, or leveraging their existing customer relationships and distribution channels to exclude us from key markets.

In addition, new competitors, including well-funded startups and large technology companies, may enter the edge AI market with solutions that compete directly with our APU products.

We cannot assure you that we will be able to compete successfully against current or future competitors, and the failure to do so could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Manufacturing and Product Development

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For example, in the third quarter of fiscal 2024, we incurred approximately $2.4 million in research and development expense associated with a pre-production mask set that will not be used in production as part of the transition to our new 16 nanometer SRAM process technology for our APU2 product.

We incurred charges of $3.2 million for intellectual property rights that we purchased for our Plato project during the quarter ended December 31, 2025.

We will incur similar expenses in the future as we continue to transition our products to smaller geometry processes.

We incurred charges of $3.2 million for intellectual property rights that we purchased for our Plato project in the third quarter of fiscal 2026.

We will incur similar expenses in the future as we continue to

transition our products to smaller geometry processes.

The costs inherent in the transition to new manufacturing process technologies will adversely affect our operating results and our gross margin.

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These defects could result in a delay in recognition or loss of revenues, loss of market share or failure to achieve market acceptance.

These defects may also cause us to incur significant warranty, support and repair costs, divert the attention of our engineering personnel from our product

development efforts, result in a loss of market acceptance of our products and harm our relationships with our OEM customers.

These defects may also cause us to incur significant warranty, support and repair costs, divert the attention of our engineering personnel from our product development efforts, result in a loss of market acceptance of our products and harm our relationships with our OEM customers.

Our OEM customers could also seek and obtain damages from us for their losses.

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Because much of the manufacturing and testing of our products is conducted in Taiwan, our business performance may be affected by changes in Taiwan’s political, social and economic environment.

For example, political instability or restrictions on transportation logistics for our products resulting from changes in the relationship among the United States, Taiwan and the People’s Republic of China could negatively impact our business.

For example, political instability or restrictions on transportation logistics for our products resulting from changes in the

relationship among the United States, Taiwan and the People’s Republic of China could negatively impact our business.

There has been a recent deterioration of the relationship between the People’s Republic of China and Taiwan.

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Our international business exposes us to additional risks.

Products shipped to destinations outside of the United States accounted for 45.0%, 60.3%, 47.3% and 51.4% of our net revenues in the nine months ended December 31, 2025 and in fiscal 2025, 2024 and 2023, respectively.

Products shipped to destinations outside of the United States accounted for 51.1%, 60.3% and 47.3% of our net revenues in fiscal 2026, 2025 and 2024, respectively.

Moreover, a substantial portion of our products are manufactured and tested in Taiwan and the software development for our associative computing products occurs in Israel where there is an evolving military conflict.

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● market conditions in our industry, the industries of our customers and the economy as a whole.

In recent years, the stock market in general, and the market for technology stocks in particular, have experienced extreme price fluctuations, which have often been unrelated to the operating performance of affected

The market price of our common stock might experience significant fluctuations in the future, including fluctuations unrelated to our performance.

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We may need to raise additional capital in the future, which may not be available on favorable terms or at all, and which may cause dilution to existing stockholders.

While we recently raised approximately $50 million in gross proceeds through a registered direct offering, we may need to seek additional funding in the future.

Although we raised approximately $50 million in gross proceeds in October 2025 through a registered direct offering and raised approximately $9.6 million in gross proceeds in May 2026 pursuant to an At-the-Market offering, we may need to seek additional funding in the future.

We do not know if we will be able to obtain additional financing on favorable terms, if at all.

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Our executive officers, directors and entities affiliated with them hold a substantial percentage of our common stock.

As of January 31, 2026 , our executive officers, directors and entities affiliated with them beneficially owned approximately 21% of our outstanding common stock.

As of July 31, 2026 , our executive officers, directors and entities affiliated with them beneficially owned approximately 17% of our outstanding common stock.

As a result, these stockholders will be able to exercise substantial influence over, and may be able to effectively control, matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, which could have the effect of delaying or preventing a third party from acquiring control over or merging with us.

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These provisions might also prevent changes in our management.

Unregistered Sales of Equity Securities and Use of Proceeds

Stock Repurchase Program

Our Board of Directors has authorized us to repurchase, at management’s discretion, shares of our common stock.

Under the repurchase program, we may repurchase shares from time to time on the open market or in private transactions.

The specific timing and amount of the repurchases will be dependent on market conditions, securities law limitations and other factors.

The repurchase program may be suspended or terminated at any time without prior notice.

During the quarter ended December 31, 2025, we did not repurchase any of our shares under the repurchase program.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors