What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-02-05 · 110 added, 151 removed, 392 unchanged (40% of the section changed)

34 unchanged sentences

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive loss

Retained earnings

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATION S

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands, except per share amounts)

6 unchanged sentences

Interest income, net

Other income (expense), net

Other expense, net

Loss before income taxes

Provision for income taxes

Provision (benefit) for income taxes

Net loss per share:

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands)

7 unchanged sentences

Income (Loss)

Three months ended December 31, 2020

(In thousands, except share amounts)

Balance, September 30, 2020

Issuance of common stock under employee stock option plans

Stock-based compensation expense

Net unrealized loss on available-for-sale investments

Balance, December 31, 2020

Three months ended December 31, 2019

Balance, September 30, 2019

Issuance of common stock under employee stock option plans

Stock-based compensation expense

Net unrealized loss on available-for-sale investments

Balance, December 31, 2019

Comprehensive

Stockholders'

Income (Loss)

Nine months ended December 31, 2020

Three months ended June 30, 2021

(In thousands, except share amounts)

3 unchanged sentences

Net unrealized loss on available-for-sale investments

Balance, December 31, 2020

Nine months ended December 31, 2019

Balance, June 30, 2021

Three months ended June 30, 2020

Balance, March 31, 2020

2 unchanged sentences

Net unrealized gain on available-for-sale investments

Balance, December 31, 2019

Balance, June 30, 2020

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW S

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands)

6 unchanged sentences

Stock-based compensation

Amortization of premium (discount) on investments

Amortization of premium on investments

Changes in assets and liabilities:

7 unchanged sentences

Maturities of short-term investments

Decrease in MikaMonu escrow deposit

Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

Payment of MikaMonu escrow deposit

Proceeds from issuance of common stock under employee stock plans

5 unchanged sentences

Purchases of property and equipment through accounts payable and

Operating lease right-of-use assets exchanged for lease obligations

Supplemental cash flow information:

11 unchanged sentences

However, these financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

The consolidated results of operations for the nine months ended December 31, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year.

The consolidated results of operations for the three months ended June 30, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year.

Significant accounting policies

Except for the changes in disclosure requirements for recurring and nonrecurring fair value measurements and changes in goodwill impairment testing, which were updated as a result of adopting new accounting standards, there have been no material changes to our significant accounting policies that were disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

Except for the changes in the approach to intraperiod tax allocation, the methodology for calculating income taxes in an interim period, the recognition of deferred tax liabilities for outside basis differences and the simplification of other aspects of accounting for income taxes, which were updated as a result of adopting a new accounting standard, there have been no material changes to our significant accounting policies that were disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Risk and uncertainties

On March 11, 2020, the World Health Organization announced that COVID-19, a respiratory illness caused by a novel coronavirus, is a pandemic.

COVID-19 has spread to many of the countries in which the Company, its customers, suppliers and other business partners conduct business.

The COVID-19 pandemic has affected many of the countries in which the Company, its customers, suppliers and other business partners conduct business.

Governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary.

3 unchanged sentences

The Company has instituted many preventative measures and is regularly evaluating those measures and others as it continues to better understand its current and future operating environment.

Except for the Company’s employees located in Taiwan, the majority of its employees are working from home around the world.

Since March 2020, except for the Company’s employees located in Taiwan, the majority of its employees have worked from home around the world.

In May 2021, with the surge in COVID-19 infections in Taiwan, the Company’s Taiwan employees have begun working from home under alternating schedules.

The Company has maintained a substantial portion of its manufacturing operational capacity at its primary manufacturing support facility located in Hsin Chu, Taiwan where the Company’s suppliers are located and where all of the Company’s products are manufactured.

Since the outbreak of COVID-19, aside from the lengthening of lead times for wafers and assembly services, the Company has experienced minimal impact on its manufacturing operations in Taiwan.

Supply chain shortages and the impact of rising COVID infections in Taiwan that have recently impacted the operations of our manufacturing partners are expected to impact our fulfillment of sales in the near term, and possibly for the remainder of the calendar year.

Final testing of the Company’s products is conducted in house.

Shipping and receiving operations are being maintained by a skeleton crew with minimal impact.

The Company’s revenues have been and are expected to continue to be impacted by changes in customer buying patterns and communication limitations related to shelter in place restrictions that

require a significant number of its customer contacts to work from home.

The Company’s results for the three month and nine month periods ended December 31, 2020 demonstrate the challenges that the Company is facing during the COVID-19 global pandemic, which has restricted the activities of the Company’s sales force and distributors, reduced customer demand and caused the postponement of investment in certain customer sectors.

These challenges are also impacting the Company as it enters new markets and engages with target customers.

Industry conferences and on-site training workshops, which are typically used for building a sales pipeline, are unavailable due to COVID-19 related restrictions.

The Company’s revenues have been and are expected to continue to be impacted by changes in customer buying patterns and communication limitations related to COVID-19 restrictions that require a significant number of its customer contacts to work from home.

The Company’s results continue to demonstrate the challenges that the Company is facing during the COVID-19 global pandemic, which has restricted the activities of the Company’s sales force and distributors, reduced customer demand and caused the postponement of investment in certain customer sectors.

These challenges are also impacting the Company as it enters new markets and engages with target customers to sell its new APU product.

Industry conferences and on-site training workshops, which are typically used for building a sales pipeline, have been unavailable due to COVID-19 related restrictions.

The Company has adapted its sales strategies for the COVID-19 environment, where it cannot do face-to-face meetings and conduct secure meetings with government and defense customers, but the Company is still not operating at an optimal level.

2 unchanged sentences

The Company believes that during the next 12 months the COVID-19 pandemic could impact general economic activity and demand in its end markets.

Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it is expected to have an adverse effect on the Company’s results of operations, financial position, and liquidity during fiscal year 2021 and into fiscal year 2022.

This includes results from new information that may emerge concerning COVID-19 and any actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets.

The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods.

Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have an adverse effect on the Company’s results of operations, financial position, including potential impairments, and liquidity in fiscal year 2022 and into fiscal year 2023.

This includes results from new information that may emerge concerning COVID-19, the rollout and effectiveness of vaccines and any actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets.

The Company has made estimates of the impact of COVID-19 within its condensed consolidated financial statements and there may be changes to those estimates in future periods.

Accounting pronouncements recently adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The standard amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying, and adding certain disclosures.

The Company adopted ASU No.

2018-13 in the quarter ended June 30, 2020.

Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No.

2017-04, "

Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment."

The standard eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill.

Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit.

The Company adopted ASU No.

2017-04 in the quarter ended June 30, 2020.

Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Accounting pronouncements not yet effective for fiscal 2021

In December 2019, the FASB issued ASU No.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2019-12, “Income Taxes (Topic 740):

2 unchanged sentences

The standard also clarifies and simplifies other aspects of the accounting for income taxes.

The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

Early adoption is permitted.

The Company is currently evaluating the impact that this guidance will have upon its financial position and results of operations, if any .

The Company adopted ASU No.

2019-12 in the quarter ended June 30, 2021.

Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Accounting pronouncements not yet effective for fiscal 2022

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

For trade and other

receivables, loans, and other financial instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable.

a broader range of reasonable and supportable information to inform credit loss estimates.

For trade and other receivables, loans, and other financial instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable.

Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.

1 unchanged sentence

Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date.

The Company is currently evaluating the impact of this standard on its consolidated financial statements.

The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

NOTE 2—REVENUE RECOGNITION

7 unchanged sentences

Delivery of all performance obligations contained within a contract with a customer typically occurs at the same time (or within the same accounting period).

Transfer of control typically occurs at the time of shipment or at the time the product is pulled from consignment as that is the point at which delivery has occurred, title and the risks and rewards of ownership have passed to the customer, and the Company has a right to payment.

Thus, the Company will generally recognize revenue upon shipment of the product.

Transfer of control typically occurs at the point at which delivery has occurred, title and the risks and rewards of ownership have passed to the customer, and the Company has a right to payment.

For all transactions apart from consignment sales, the Company will generally recognize revenue upon shipment of the product.

For consignment sales, revenue is recognized at the time that the product is pulled from consignment warehouses.

Because all of the Company’s performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption practical expedient provided in ASC 606 and, therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

11 unchanged sentences

The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of revenues.

Warranty costs and the accrued warranty liability were not material as of December 31, 2020.

The majority of the Company’s revenue is derived from sales of SRAM products which represent approximately 98% of total revenues in the nine months ended December 31, 2020.

Warranty costs and the accrued warranty liability were not material as of June 30, 2021.

The majority of the Company’s revenue is derived from sales of SRAM products which represent approximately 99 % of total revenues in the three months ended June 30, 2021.

Nokia, the Company’s largest customer, purchases products directly from the Company and through contract manufacturers and distributors.

Based on information provided to the Company by its contract manufacturers and

distributors, purchases by Nokia represented approximately 40% of the Company’s net revenues in the nine months ended December 31, 2020 and 2019.

Based on information provided to the Company by its contract manufacturers and distributors, purchases by Nokia represented approximately 42.7 % and 26.9 % of the Company’s net revenues in the three months ended June 30, 2021 and 2020, respectively.

See “Note 12 — Segment and Geographic Information” for revenue by shipment destination.

The following table presents the Company’s revenue disaggregated by customer type.

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands)

3 unchanged sentences

The following table sets forth the computation of basic and diluted net loss per share:

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands, except per share amounts)

7 unchanged sentences

The following shares of common stock underlying outstanding stock options, determined on a weighted average basis, were excluded from the computation of diluted net loss per share as they had an anti-dilutive effect:

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands)

1 unchanged sentence

NOTE 4—BALANCE SHEET DETAIL

December 31, 2020

June 30, 2021

March 31, 2021

3 unchanged sentences

Inventory at distributors

December 31, 2020

June 30, 2021

March 31, 2021

3 unchanged sentences

Allowances for doubtful accounts and other

December 31, 2020

June 30, 2021

March 31, 2021

5 unchanged sentences

Other prepaid expenses and other current assets

December 31, 2020

June 30, 2021

March 31, 2021

6 unchanged sentences

Accumulated depreciation

Depreciation expense was $197,000 and $293,000 for the three months ended December 31, 2020 and 2019, respectively, and $787,000 and $904,000 for the nine months ended December 31, 2020 and 2019, respectively.

December 31, 2020

March 31, 2020

(In thousands)

Other assets:

The following tables summarize the components of intangible assets and related accumulated amortization balances at December 31, 2020 and March 31, 2020 (in thousands):

As of December 31, 2020

Depreciation expense was $ 187,000 and $ 296,000 for the three months ended June 30, 2021 and 2020, respectively.

The following tables summarize the components of intangible assets and related accumulated amortization balances at June 30, 2021 and March 31, 2021 (in thousands):

As of June 30, 2021

Intangible assets:

3 unchanged sentences

Product designs

Amortization of intangible assets included in cost of revenues was $58,000 and $58,000 for the three months ended December 31, 2020 and 2019, respectively, and $175,000 and $175,000 for the nine months ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, the estimated future amortization expense of intangible assets in the table above is as follows (in thousands):

Amortization of intangible assets included in cost of revenues was $ 59,000 and $ 58,000 for the three months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021, the estimated future amortization expense of intangible assets in the table above is as follows (in thousands):

Fiscal year ending March 31,

2021 (Remaining three months)

December 31, 2020

2022 (Remaining nine months)

June 30, 2021

March 31, 2021

2 unchanged sentences

Accrued compensation

Purchased intellectual property

Accrued commissions

6 unchanged sentences

The Company assesses goodwill for impairment on an annual basis on the last day of February in the fourth quarter of its fiscal year.

The Company had a goodwill balance of $8.0 million as of both March 31, 2020 and December 31, 2020.

The Company had a goodwill balance of $ 8.0 million as of both March 31, 2021 and June 30, 2021.

The goodwill resulted from the acquisition of MikaMonu Group Ltd.

in fiscal 2016.

The Company utilized a two-step quantitative analysis to complete its annual impairment test during the fourth quarter of fiscal 2020 and concluded that there was no impairment, as the fair value of its sole reporting unit exceeded its carrying value.

The Company determined that the second step of the impairment test was not necessary.

No triggering event took place subsequent to the fiscal 2020 annual assessment that necessitated a quantitative impairment analysis for the Company’s one reporting unit.

The Company completed its annual impairment test during the fourth quarter of fiscal 2021 and concluded that there was no impairment, as the fair value of its sole reporting unit exceeded its carrying value.

The Company believes that the fair value established during the fiscal 2021 annual goodwill impairment testing was reasonable, and no triggering event has taken place subsequent to the fiscal 2021 annual assessment.

NOTE 6—INCOME TAXES

The current portion of the Company’s unrecognized tax benefits was $0 at both December 31, 2020 and March 31, 2020.

The long-term portion at December 31, 2020 and March 31, 2020 was $326,000 and $613,000, respectively, of which the timing of the resolution is uncertain.

As of December 31, 2020, $3.0 million of unrecognized tax benefits had been recorded as a reduction to net deferred tax assets.

As of December 31, 2020, the Company’s net deferred tax assets of $12.4 million were subject to a valuation allowance of $12.4 million.

The current portion and long portion of the Company’s unrecognized tax benefits was $ 0 at both June 30, 2021 and March 31, 2021.

As of June 30, 2021, $ 3.3 million of unrecognized tax benefits had been recorded as a reduction to net deferred tax assets.

As of June 30, 2021, the Company’s net deferred tax assets of $ 13.7 million were subject to a valuation allowance of $ 13.7 million.

As of March 31, 2021, the Company’s net deferred tax assets of $ 13.0 million were subject to a valuation allowance of $ 13.0 million.

1 unchanged sentence

The CARES Act is an approximate $2 trillion emergency economic stimulus package passed in response to the COVID-19 global pandemic.

The CARES Act contains numerous income tax provisions including changes to the net operating loss rules that the Company believes will not have a significant impact.

The CARES Act includes aid to small businesses in the form of loans and grants and other efforts to stabilize the U.S.

The Consolidated Appropriations Act (“CAA”) which was signed into law in 2020 extended some of the CARES Act programs along with adding new stimulus provisions.

In March 2021, the American Rescue Plan Act of 2021 (“ARPA”) was also passed which further extended several CARES Act relief programs and other assistance.

The Company has not filed, and does not intend to file, for funding related to the CARES Act, the CAA or ARPA due to its strong balance sheet and liquidity position with $ 55.8 million in cash and cash equivalents, short-term investments and long-term investments and no debt outstanding as of June 30, 2021.

The Company currently has no plans to defer payroll taxes, to layoff or furlough employees or to modify leases and stock compensation plans.

Also included in the CARES Act are numerous income tax provisions including changes to the net operating loss rules.

During fiscal year 2021, the Company recorded a $ 378,000 tax benefit resulting from the carryback of the Company’s fiscal year 2020 federal net operating loss to fiscal year 2018 due to the five-year net operating loss carryback provision from the CARES Act.

The Company believes that the CAA and ARPA will not have a significant impact on it.

Management believes that within the next twelve months the Company will not have a significant reduction in uncertain tax benefits, including interest and penalties, related to positions taken with respect to credits and loss carryforwards on previously filed tax returns.

2 unchanged sentences

Fiscal years 2012 through 2021 remain open to examination by federal tax authorities, and fiscal years 2011 through 2021 remain open to examination by California tax authorities.

During the quarter ended June 30, 2020, the Company

settled an income tax audit in Israel for fiscal years 2016 through 2019 that resulted in a discrete tax provision of $479,000 and a tax liability of $713,000 as of June 30, 2020 that was paid in the quarter ended September 30, 2020.

The Company’s estimated annual effective income tax rate, including discrete items, was approximately (3.4%) and (2.2%) as of December 31, 2020 and 2019, respectively.

The annual effective tax rates as of December 31, 2020 and 2019 vary from the United States statutory income tax rate primarily due to valuation allowances in the United States, whereby pre-tax losses do not result in the recognition of corresponding income tax benefits and expenses and the foreign tax differential.

During the quarter ended June 30, 2020, the Company settled an income tax audit in Israel for fiscal years 2016 through 2019 that resulted in a discrete tax provision of $ 479,000 and a tax liability of $ 713,000 as of June 30, 2020 that was paid in the quarter ended September 30, 2020.

For the three months ended June 30, 2021 and June 30,2020, the Company incurred income tax expense (benefit) of ($ 172,000 ) and $ 487,000 on net losses before income taxes of ($ 4.4 million) and ($ 5.6 million), respectively.

The provision (benefit) was calculated using the annualized effective tax rate method.

The Company’s estimated annual effective income tax rate, including discrete items, was approximately 0.05 % and ( 4.0 %) as of June 30, 2021 and 2020, respectively.

The annual effective tax rates as of June 30, 2021 and 2020 vary from the United States statutory income tax rate primarily due to valuation allowances in the United States, whereby pre-tax losses do not result in the recognition of corresponding income tax benefits and expenses and the foreign tax differential.

NOTE 7—FINANCIAL INSTRUMENTS

5 unchanged sentences

The fair value of available-for-sale securities included in the Level 1 category is based on quoted prices that are readily and regularly available in an active market.

As of December 31, 2020, the Level 1 category included money market funds of $23.2 million, which were included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

As of June 30, 2021, the Level 1 category included money market funds of $ 20.2 million, which were included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date;

2 unchanged sentences

The fair value of available-for-sale securities included in the Level 2 category is based on the market values obtained from an independent pricing service that were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established independent pricing vendors and broker-dealers.

As of December 31, 2020, the Level 2 category included short-term investments of $9.2 million and long-term investments of $10.1 million, which were comprised of certificates of deposit, government and agency securities.

As of June 30, 2021, the Level 2 category included short-term investments of $ 7.0 million and long-term investments of $ 4.3 million, which were comprised of certificates of deposit, government and agency securities.

Valuations based on inputs that are unobservable and involve management judgment and the reporting entity’s own assumptions about market participants and pricing.

As of December 31, 2020, the Company’s Level 3 financial instruments measured at fair value on the Condensed Consolidated Balance Sheets consisted of the contingent consideration liability related to the acquisition of MikaMonu.

As of June 30, 2021, the Company’s Level 3 financial instruments measured at fair value on the Condensed Consolidated Balance Sheets consisted of the contingent consideration liability related to the acquisition of MikaMonu.

The fair value of the contingent consideration liability was initially determined as of the acquisition date using unobservable inputs.

4 unchanged sentences

Subsequent to the acquisition date, at each reporting period, the contingent consideration liability is re-measured to fair value with changes recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

During the most recent re-measurement of the contingent consideration liability as of March 31, 2020, the Company used a risk-adjusted discount rate of approximately 14.5% to adjust the probability-weighted cash flows to their present value using probabilities ranging from 0% to 10% for the remaining contingent events.

The contingent consideration liability is included in contingent consideration, non-current on the Consolidated Balance Sheet at December 31, 2020 and March 31, 2020 in the amount of $4.0 million and $3.9 million, respectively.

During the most recent re-measurement of the contingent consideration liability as of March 31, 2021, the Company used a

risk-adjusted discount rate of approximately 14.5 % to adjust the probability-weighted cash flows to their present value using probabilities ranging from 0 % to 15 % for the remaining contingent events.

The contingent consideration liability is included in contingent consideration, non-current on the Consolidated Balance Sheet at June 30, 2021 and March 31, 2021 in the amount of $ 4.2 million and $ 4.2 million, respectively.

The fair value of financial assets measured on a recurring basis is as follows (in thousands):

3 unchanged sentences

and Liabilities

December 31, 2020

June 30, 2021

Money market funds

9 unchanged sentences

Contingent consideration

The following table sets forth the changes in fair value of contingent consideration for the nine months ended December 31, 2020 and December 31, 2019:

Nine Months Ended December 31,

The following table sets forth the changes in fair value of contingent consideration for the three months ended June 30, 2021 and 2020, respectively:

Three Months Ended June 30,

(In thousands)

1 unchanged sentence

Change due to accretion

Payment of contingent consideration

Contingent consideration, end of period

3 unchanged sentences

Investments in available-for-sale securities are reported at fair value with unrecognized gains (losses), net of tax, as a component of accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets.

The Company had money market funds of $23.2 million and $14.1 million at December 31, 2020 and March 31, 2020, respectively, included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

The Company had money market funds of $ 20.2 million and $ 23.0 million at June 30, 2021 and March 31, 2021, respectively, included in cash and cash equivalents on the Condensed

Consolidated Balance Sheets.

The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when declines are determined to be other-than-temporary.

The following table summarizes the Company’s available-for-sale investments:

December 31, 2020

June 30, 2021

(In thousands)

11 unchanged sentences

Certificates of deposit

Supranational obligations

Total short-term investments

3 unchanged sentences

Total long-term investments

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position as of December 31, 2020 and March 31, 2020, respectively.

December 31, 2020

June 30, 2021

Less Than 12 Months

8 unchanged sentences

Certificates of deposit

Supranational obligations

The Company’s investment portfolio consists of both corporate and governmental securities that have a maximum maturity of three years .

1 unchanged sentence

Subject to normal credit risks, the Company has the ability to realize the full value of all these investments upon maturity.

The deferred tax liability related to unrecognized gains and losses on short-term and long-term investments was $(22,000) and $(30,000) at December 31, 2020 and March 31, 2020, respectively.

As of December 31, 2020, contractual maturities of the Company’s available-for-sale investments were as follows:

The deferred tax liability related to unrecognized gains and losses on short-term and long-term investments was $( 11,000 ) and $( 15,000 ) at June 30, 2021 and March 31, 2021, respectively.

As of June 30, 2021, contractual maturities of the Company’s available-for-sale investments were as follows:

(In thousands)

6 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

December 31, 2020

June 30, 2021

March 31, 2021

6 unchanged sentences

The following table provides the details of lease costs:

Three Months Ended December 31,

Nine Months Ended December 31,

(In thousands)

Three Months Ended June 30,

(In thousands)

2 unchanged sentences

The following table provides other information related to leases:

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands)

7 unchanged sentences

Operating leases

The following table provides the maturities of the Company’s operating lease liabilities as of December 31, 2020:

The following table provides the maturities of the Company’s operating lease liabilities as of June 30, 2021:

Operating Lease

(In thousands)

2021 (Remaining three months)

2022 (Remaining nine months)

Total undiscounted future cash flows

13 unchanged sentences

The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of revenues.

Warranty costs and the accrued warranty liability were not material as of December 31, 2020 and March 31, 2020 and for the three months ended December 31, 2020 or 2019.

Warranty costs and the accrued warranty liability were not material as of June 30, 2021 and March 31, 2021 and for the three months ended June 30, 2021 or 2020.

NOTE 10—STOCK-BASED COMPENSATION

As of December 31, 2020, 1,576,722 shares of common stock were available for grant under the Company’s 2016 Equity Incentive Plan.

The following table summarizes the Company’s stock option activities for the nine months ended December 31, 2020:

As of June 30, 2021, 1,179,327 shares of common stock were available for grant under the Company’s 2016 Equity Incentive Plan.

The following table summarizes the Company’s stock option activities for the three months ended June 30, 2021:

Number of Shares

1 unchanged sentence

Balance at March 31, 2021

Balance at December 31, 2020

Balance at June 30, 2021

Options vested and exercisable

Options vested and expected to vest

The weighted average fair value per underlying share of options granted during the three months ended December 31, 2020 and 2019 was $2.51 and $2.66, respectively, and $2.39 and $2.84 for the nine months ended December 31, 2020 and 2019, respectively.

Options outstanding by exercise price at December 31, 2020 were as follows:

The weighted average fair value per underlying share of options granted during the three months ended June 30, 2021 and 2020 was $ 2.41 and $ 2.80 , respectively.

Options outstanding by exercise price at June 30, 2021 were as follows:

Options Outstanding

3 unchanged sentences

The following table summarizes stock-based compensation expense by line item in the Condensed Consolidated Statements of Operations, all relating to employee stock plans:

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

(In Thousands)

4 unchanged sentences

The Company estimates forfeitures at the time of grant and revises the original estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

No tax benefit related to stock-based compensation was recognized in the nine months ended December 31, 2020 due to a full valuation allowance.

No tax benefit related to stock-based compensation was recognized in the three months ended June 30, 2021 due to a full valuation allowance.

There were no windfall tax benefits realized from exercised stock options in either of these periods.

Compensation cost capitalized within inventory at December 31, 2020 was immaterial.

As of December 31, 2020, the Company’s total unrecognized compensation cost was $5.2 million, which will be recognized over a weighted average period of 2.09 years.

Compensation cost capitalized within inventory at June 30, 2021 was immaterial.

As of June 30, 2021, the Company’s total unrecognized compensation cost was $ 5.1 million, which will be recognized over a weighted average period of 2.19 years.

The Company calculated the fair value of stock-based awards in the periods presented using the Black-Scholes option pricing model and the following weighted average assumptions:

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

Stock Option Plans:

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NOTE 11—RELATED PARTY TRANSACTION

The Company incurred non-recurring engineering service expense of approximately $326,000 during the nine months ended December 31, 2020 from Wistron Neweb Corp (“WNC”) in connection with the manufacturing of single-APU PCIe boards, to be used in the Company’s in-place associative computing product.

The Company incurred non-recurring engineering service expense and production charges of approximately $ 13,000 and $ 54,000 during the three months ended June 30, 2021 and 2020, respectively, from Wistron Neweb Corp (“WNC”) in connection with the manufacturing of single-APU PCIe boards, to be used in the Company’s in-place associative computing product.

Haydn Hsieh, a member of the Company’s board of directors, is the Chairman and Chief Strategy Officer of WNC.

The amount owed to WNC, of $243,000 at December 31, 2020, is included in accounts payable in the Condensed Consolidated Balance Sheets.

The amount owed to WNC, of $ 13,000 and $ 11,000 at June 30, 2021 and 2020, respectively, is included in accounts payable in the Condensed Consolidated Balance Sheets.

NOTE 12—SEGMENT AND GEOGRAPHIC INFORMATION

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The following is a summary of net revenues by geographic area based on the location to which product is shipped:

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands)

3 unchanged sentences

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 1. Financial Statements