What changed in this filing

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Item 1. Financial Statements

2024-11-01 compared with 2024-08-02 · 118 added, 84 removed, 358 unchanged (36% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEET S

September 30,

(In thousands, except share

36 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATION S

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands, except per share amounts)

Cost of revenues ($ 14 , $ 0 , $ 22 and $ 0 to a related party)

4 unchanged sentences

Total operating expenses

Income (loss) from operations

Loss from operations

Interest income

Other expense, net

Income (loss) before income taxes

Loss before income taxes

Provision for income taxes

Net income (loss)

Net income (loss) per share:

Net loss per share:

Weighted average shares used in per share calculations:

1 unchanged sentence

GSI TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30,

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

Net income (loss)

(In thousands)

Net unrealized gain on available-for-sale investments

Total comprehensive income (loss)

Total comprehensive loss

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

3 unchanged sentences

Stockholders'

Three months ended June 30, 2024

Three months ended September 30, 2024

(In thousands, except share amounts)

Balance, March 31, 2024

Balance, June 30, 2024

Issuance of common stock under employee stock option plans

Stock-based compensation expense

Balance, September 30, 2024

Comprehensive

Stockholders'

Three months ended September 30, 2023

Balance, June 30, 2023

Issuance of common stock pursuant to an At-the-Market offering, net of offering costs of $ 389

Stock-based compensation expense

Net unrealized gain on available-for-sale investments

Balance, September 30, 2023

Comprehensive

Stockholders'

Three months ended June 30, 2023

Six months ended September 30, 2024

(In thousands, except share amounts)

Balance, March 31, 2024

1 unchanged sentence

Stock-based compensation expense

Balance, September 30, 2024

Comprehensive

Stockholders'

Six months ended September 30, 2023

Balance, March 31, 2023

Issuance of common stock under employee stock option plans

Issuance of common stock pursuant to an At-the-Market offering, net of offering costs of $ 389

Stock-based compensation expense

Net unrealized gain on available-for-sale investments

Balance, June 30, 2023

Balance, September 30, 2023

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW S

Three Months Ended June 30,

Six Months Ended September 30,

(In thousands)

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Allowance for credit losses

18 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of common stock under At-the-Market offering, net of offering costs of $ 389

Proceeds from issuance of common stock under employee stock plans

18 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, 2024.

The consolidated results of operations for the three months ended June 30, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year.

The consolidated results of operations for the six months ended September 30, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year.

Significant accounting policies

22 unchanged sentences

Risk and uncertainties

The decline in the global economic environment due to, among other things, higher interest rates and worldwide inflationary pressures has affected the business activities of the Company, its customers, suppliers, and other business partners in the fiscal year ended March 31, 2024 and into the three months ended June 30, 2024.

Our software development and certain regional sales activities for our APU product offerings occur in Israel.

2 unchanged sentences

Proof of concept customers for our SAR imagine processing acceleration system are also based in Israel.

We are closely monitoring developments in the evolving military conflict with Hamas that began on October 7, 2023 including potential impacts to our business, customers, employees and operations in Israel.

We are closely monitoring the evolving military conflict in Israel that began on October 7, 2023 including potential impacts to our business, customers, employees and operations in Israel.

At this time, the impact on GSI Technology is uncertain and subject to change given the volatile nature of the situation, but adverse changes in the military conditions in Israel could harm our business and our stock price could decline.

The Company believes that during the next 12 months disruptions in the capital markets as a result of higher interest rates, worldwide inflationary pressures and the decline in the global economic environment could impact general economic activity and demand in the Company’s end markets.

Additionally, fluctuations in customer demand due to previous buffer stock purchases during the semiconductor supply shortage may negatively impact near-term revenues.

The Company believes that during the next 12 months disruptions in the capital markets as a result of high interest rates, worldwide inflationary pressures and the decline in the global economic environment could impact general economic activity and demand in the Company’s end markets.

Accounting pronouncements not yet adopted by the Company

14 unchanged sentences

The Company’s customer contracts, which may be in the form of purchase orders, contracts or purchase agreements, contain performance obligations for delivery of agreed upon products.

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 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.

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 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.

The Company recognizes revenue upon shipment of the product.

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 and for the periods ended June 30, 2024 and March 31, 2024.

Substantially all of the Company’s revenue is derived from sales of SRAM products, which represent approximately 99 % of total revenues in each of the three months ended June 30, 2024 and 2023.

Warranty costs and the accrued warranty liability were not material in all periods presented.

Substantially all of the Company’s revenue is derived from sales of SRAM products, which represent approximately 99 % and 98 % of total revenues in the six months ended September 30, 2024 and 2023.

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 21 % and 34 % of the Company’s net revenues in the three months ended June 30, 2024 and 2023, respectively.

Based on information provided to the Company by its contract manufacturers and distributors, purchases by Nokia represented approximately 18 % and 20 % of the Company’s net revenues in the three months ended September 30, 2024 and 2023, respectively and 20 % and 27 % of the Company’s net revenue in the six months ended September 30, 2024 and 2023, 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 June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

Contract manufacturers

1 unchanged sentence

The Company uses the treasury stock method to calculate the weighted average shares used in computing diluted net loss per share.

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

Three Months Ended June 30,

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

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands, except per share amounts)

Net income (loss)

(In thousands, except per share amounts)

Denominators:

3 unchanged sentences

Weighted average shares—Dilutive

Net income (loss) per common share—Basic

Net income (loss) per common share—Diluted

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

Three Months Ended June 30,

Net loss per common share—Basic

Net loss per common share—Diluted

The following shares of common stock underlying outstanding stock options and unissued ESPP shares, 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 September 30,

Six Months Ended September 30,

(In thousands)

Shares underlying options and ESPP shares

NOTE 4—BALANCE SHEET DETAIL

June 30, 2024

September 30, 2024

March 31, 2024

2 unchanged sentences

Finished goods

Inventory at distributors

June 30, 2024

September 30, 2024

March 31, 2024

3 unchanged sentences

Allowances for credit losses

June 30, 2024

September 30, 2024

March 31, 2024

4 unchanged sentences

Other prepaid expenses and other current assets

June 30, 2024

September 30, 2024

March 31, 2024

5 unchanged sentences

Accumulated depreciation

Depreciation expense was $ 134,000 and $ 217,000 for the three months ended June 30, 2024 and 2023, respectively.

The following tables summarize the components of intangible assets and related accumulated amortization balances at June 30, 2024 and March 31, 2024 (in thousands):

As of June 30, 2024

Depreciation expense was $ 102,000 and $ 172,000 for the three months ended September 30, 2024 and 2023, respectively and $ 236,000 and $ 388,000 for the six months ended September 30, 2024 and 2023, respectively.

The following tables summarize the components of intangible assets and related accumulated amortization balances at September 30, 2024 and March 31, 2024 (in thousands):

As of September 30, 2024

Intangible assets:

3 unchanged sentences

Product designs

Amortization of intangible assets included in cost of revenues was $ 58,000 and $ 59,000 in the three months ended June 30, 2024 and 2023, respectively.

Amortization of intangible assets included in cost of revenues was $ 58,000 for each of the three months ended September 30, 2024 and 2023, and $ 116,000 and $ 117,000 for the six months ended September 30, 2024 and 2023, respectively.

The Company reviews identifiable amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

1 unchanged sentence

Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value.

There were no impairment indicators noted as of June 30, 2024.

As of June 30, 2024, the estimated future amortization expense of intangible assets in the table above is as follows (in thousands):

There were no impairment indicators noted as of September 30, 2024.

As of September 30, 2024, the estimated future amortization expense of intangible assets in the table above is as follows (in thousands):

Fiscal year ending March 31,

2025 (remaining nine months)

June 30, 2024

2025 (remaining six months)

September 30, 2024

March 31, 2024

3 unchanged sentences

Accrued commissions

Income taxes payable

Miscellaneous accrued expenses

In August 2024, the Company implemented strategic cost-cutting measures expected to yield annual savings of approximately $ 3.5 million.

These initiatives include workforce reductions across all departments and enhanced operational efficiencies.

The cost reduction initiatives included an approximate 16 % reduction in the Company’s global workforce.

The Company incurred $ 357,000 in severance related charges during the three and six months ended September 30, 2024, including $ 204,000 recorded as cost of revenues, $ 128,000 recorded as research and development expense and $ 24,000 recorded as selling, general and administrative expense in the condensed consolidated statements of operations.

The Company does not expect to incur any additional severance related charges resulting from these measures.

There were no severance charges accrued as of September 30, 2024 as severance payments to all impacted employees have been completed as of September 30, 2024.

There was no accrued severance as of March 31, 2024 and there were no severance charges incurred during the year ended March 31, 2024.

NOTE 5—GOODWILL

3 unchanged sentences

The Company has one reporting unit.

The Company had a goodwill balance of $ 8.0 million as of both June 30, 2024 and March 31, 2024.

The Company had a goodwill balance of $ 8.0 million as of both September 30, 2024 and March 31, 2024.

The goodwill resulted from the acquisition of MikaMonu Group Ltd.

4 unchanged sentences

Management continues to evaluate the realizability of deferred tax assets and the related valuation allowance.

Management believes that within the next twelve months the Company could have a reduction in uncertain tax benefits of up to $ 767,000 , including interest and penalties, as a result of the lapse of statute of limitations.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes in the Condensed Consolidated Statements of Operations.

2 unchanged sentences

Fiscal years 2020 through 2023 are subject to audit by the Israeli tax authorities.

For the three months ended June 30, 2024 and June 30, 2023, the Company incurred income tax expense of $ 57,000 and $ 51,000 on net income before income taxes of $ 1.1 million and a net loss before income taxes of ($ 5.1 million), respectively.

For the six months ended September 30, 2024 and September 30, 2023, the Company incurred income tax expense of $ 80,000 and $ 84,000 on net losses before income taxes of ($ 4.3 million) and ($ 9.1 million), respectively.

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

The Company’s estimated annual effective income tax rate, excluding discrete items, was approximately ( 2.89 %) and ( 2.25 %) as of June 30, 2024 and 2023, respectively.

The annual effective tax rates as of June 30, 2024 and 2023 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 foreign tax differential.

The Company’s estimated annual effective income tax rate, excluding discrete items, was approximately ( 1.78 %) and ( 1.53 %) for the six months ended September 30, 2024 and 2023, respectively.

The annual effective tax rates for the six months ended September 30, 2024 and 2023 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 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 June 30, 2024, the Level 1 category included money market funds of $ 13.2 million, which were included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

As of September 30, 2024, the Level 1 category included money market funds of $ 10.4 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 June 30, 2024 and March 31, 2024, there were no Level 2 category short-term investments.

As of September 30, 2024 and March 31, 2024, there were no Level 2 category short-term investments.

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 June 30, 2024, 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 September 30, 2024, 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.

3 unchanged sentences

Generally, changes used in the assumptions for future revenues and probability of achievement of the revenue forecast would be accompanied by a directionally similar change in the fair value measurement and expense.

Conversely, changes in the risk-adjusted discount rate would be accompanied by a directionally opposite change in the related fair value measurement and expense.

Conversely, changes in the risk-adjusted discount rate would be

accompanied by a directionally opposite change in the related fair value measurement and expense.

The continued appropriateness of the Monte Carlo valuation model selected or any decision to change the valuation model may also lead to changes in fair value measurement.

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 Consolidated Statements of Operations.

During the most recent re-measurement of the contingent consideration liability as of June 30, 2024, the Company used a risk-adjusted discount rate of approximately 15.8 % to adjust the probability-weighted cash flows to their present value using probabilities ranging from 25 % to 70 % for the remaining contingent events.

The contingent consideration liability is included in contingent consideration, non-current on the Condensed Consolidated Balance Sheets at June 30, 2024 and March 31, 2024 in the amount of $ 74,000 and $ 160,000 , respectively.

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

During the most recent re-measurement of the contingent consideration liability as of September 30, 2024, the Company used a risk-adjusted discount rate of approximately 16.6 % to adjust the probability-weighted cash flows to their present value using probabilities ranging from 25 % to 70 % for the remaining contingent events.

The contingent consideration liability is included in contingent consideration, non-current on the Condensed Consolidated Balance Sheets at September 30, 2024 and March 31, 2024 in the amount of $ 51,000 and $ 160,000 , respectively.

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

Fair Value Measurements at Reporting Date Using

2 unchanged sentences

and Liabilities

June 30, 2024

September 30, 2024

Money market funds

Marketable securities

Contingent consideration

5 unchanged sentences

Money market funds

Marketable securities

Contingent consideration

The following table sets forth the changes in fair value of contingent consideration for the three months ended June 30, 2024 and 2023, respectively:

Three Months Ended June 30,

The following table sets forth the changes in fair value of contingent consideration for the six months ended September 30, 2024 and 2023, respectively:

Six Months Ended September 30,

(In thousands)

4 unchanged sentences

Short-term investments

The Company had money market funds of $ 13.2 million and $ 5.7 million at June 30, 2024 and March 31, 2024, 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.

There were no available-for-sale investments at June 30, 2024 or March 31, 2024, respectively.

The Company had money market funds of $ 10.4 million and $ 5.7 million at September 30, 2024 and March 31, 2024, respectively, included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

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

There were no available-for-sale investments at September 30, 2024 or March 31, 2024, respectively.

NOTE 8—LEASES

7 unchanged sentences

The transaction was accounted for as a sale and leaseback and operating lease accounting classification.

The Company recorded a gain of $ 5.7 million which is recorded in the gain from sale and leaseback transaction in the Condensed Consolidated Statements of Operations in the quarter ended June 30, 2024.

The Company recorded a gain of $ 5.7 million which was recorded in the gain from sale and leaseback transaction in the Condensed Consolidated Statements of Operations in the quarter ended June 30, 2024.

Supplemental balance sheet information related to leases was as follows:

June 30, 2024

September 30, 2024

March 31, 2024

6 unchanged sentences

The following table provides the details of lease costs:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

Operating lease cost

1 unchanged sentence

The following table provides other information related to leases:

Three Months Ended June 30,

Six Months Ended September 30,

(In thousands)

7 unchanged sentences

Operating leases

The following table provides the maturities of the Company’s operating lease liabilities as of June 30, 2024:

The following table provides the maturities of the Company’s operating lease liabilities as of September 30, 2024:

Operating Lease

(In thousands)

2025 (remaining nine months)

2025 (remaining six months)

Total undiscounted future cash flows

12 unchanged sentences

NOTE 10—STOCK-BASED COMPENSATION

As of June 30, 2024, 2,623,851 shares of common stock were available for grant under the Company’s Amended and Restated 2016 Equity Incentive Plan.

The following table summarizes the Company’s stock option activities for the three months ended June 30, 2024:

As of September 30, 2024, 2,539,546 shares of common stock were available for grant under the Company’s Amended and Restated 2016 Equity Incentive Plan.

The following table summarizes the Company’s stock option activities for the six months ended September 30, 2024:

Number of Shares

1 unchanged sentence

Balance at March 31, 2024

Balance at June 30, 2024

Balance at September 30, 2024

Options vested and exercisable

1 unchanged sentence

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 June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

Cost of revenues

2 unchanged sentences

NOTE 11—RELATED PARTY TRANSACTION

The Company incurred manufacturing services of approximately $ 8,000 and $ 0 during the three months ended June 30, 2024 and 2023, 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.

The Company incurred manufacturing services of approximately $ 14,000 and $ 0 during the three months ended September 30, 2024 and 2023, respectively and $ 22,000 and $ 0 during the six months ended September 30, 2024 and 2023, 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, $ 6,000 and $ 0 at June 30, 2024 and March 31, 2024, respectively, is included in accounts payable in the Condensed Consolidated Balance Sheets.

The amount owed to WNC, $ 14,000 and $ 0 at September 30, 2024 and March 31, 2024, respectively, is included in accounts payable in the Condensed Consolidated Balance Sheets.

NOTE 12—SEGMENT AND GEOGRAPHIC INFORMATION

2 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

United States

11 unchanged sentences

The Company applies IAS 20, by analogy, and recognizes the award as a reduction of research and development expenses based on a cost incurred method.

During the three months ended June 30, 2024, the Company recognized $ 281,000 as a reduction to research and development expense in the Condensed Consolidated Statements of Operations.

During the quarter ended June 30, 2024, the Company received total milestone payments of $ 79,000 under the Prototype Agreements.

During the three and six months ended September 30, 2024, the Company recognized $ 318,000 as a reduction to research and development expense in the Condensed Consolidated Statements of Operations compared to $ 260,000 in the three and six months ended September 30, 2023.

During the six months ended September 30, 2024, the Company received total milestone payments of $ 281,000 under the Prototype Agreements.

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