What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-01 compared with 2024-08-02 · 95 added, 69 removed, 130 unchanged (56% of the section changed)

11 unchanged sentences

Similarity search is used in visual search queries for ecommerce, computer vision, drug discovery, cybersecurity and service markets such as NoSQL, Elasticsearch, and OpenSearch.

We have solutions to accelerate multimodal vector search as an on-prem or SaaS solution for OpenSearch and general Fast Vector Search, and for processing large area SAR images in real-time at high resolution.

We have solutions to accelerate multimodal vector search as an on-prem solution for OpenSearch and general Fast Vector Search, and for processing large area SAR images in real-time at high resolution.

Our revenue is currently generated from the design, development and marketing of static random access memories, or SRAMs, that operate at speeds of less than 10 nanoseconds, which we refer to as Very Fast SRAMs, primarily for the networking and telecommunications and the military/defense and aerospace markets.

18 unchanged sentences

Pursuant to an agreed-upon schedule, we will receive milestone payments totaling an estimated $1.25 million upon the successful completion of predetermined milestones.

There were no amounts received under this agreement in the quarter ended June 30, 2024.

In January 2024, we announced that GSI has been selected by AFWERX for an SBIR Direct-to-Phase II contract in the amount of $1.1 million to demonstrate high-data computation use cases leveraging the distinct

compute in-memory architecture of our APU-2.

During the six months ended September 30, 2024, we received payments in the amount of $124,000 under this agreement.

We will create specialized algorithms for the U.S.

2 unchanged sentences

We will also develop algorithms using data from the USSF to showcase the performance benefits of our compute-in-memory APU-2 integrated circuit.

During the quarter ended June 30, 2024, we received payments in the amount of $79,000 under this agreement.

As of June 30, 2024, we had cash and cash equivalents of $21.8 million, with no debt.

During the six months ended September 30, 2024, we received payments in the amount of $157,000 under this agreement.

As of September 30, 2024, we had cash and cash equivalents of $18.4 million, with no debt.

We have a team in-place with tremendous depth and breadth of experience and knowledge, with a legacy business that is providing an ongoing source of funding for the development of new product lines.

2 unchanged sentences

Our level of cash equivalents has historically been sufficient to meet our current and longer term operating and capital needs.

We believe that during the next 12 months, continued inflationary pressures and higher interest rates will continue to negatively impact general economic activity and demand in our end markets.

Although it is difficult to estimate the length or gravity of the continued inflationary pressures and higher interest rates, the evolving conflict in the Middle East and the decline in the global economic environment, are expected to have an adverse effect on our results of operations, financial position, including potential impairments, and liquidity in fiscal 2025.

We believe that during the next 12 months, continued inflationary pressures and high interest rates will continue to negatively impact general economic activity and demand in our end markets.

Although it is difficult to estimate the length or gravity of the continued inflationary pressures and high interest rates, the evolving conflict in the Middle East and the decline in the global economic environment are expected to have an adverse effect on our results of operations, financial position, including potential impairments, and liquidity in fiscal 2025.

In August 2024, we initiated measures to reduce our operating expenses by approximately $3.5 million on an annualized basis, primarily from salary reductions related to reduced headcount, as well as targeted reductions in research and development spending.

These strategic cost reduction measures are expected to enable us to better focus on our operational resources on advancing our proprietary APU technology.

None of the Gemini-II chip development and core APU software development, including the APU compiler, will be affected by the reduction in R&D spending.

The APU marketing, sales, and APU engineering efforts will retain priority in the budget.

The planned spending reductions will not impact the launch of Gemini-I and Gemini-II in target markets, including SAR and search.

The cost reduction initiative was completed in August 2024 and resulted in an approximate 16% decrease in our global workforce.

We incurred approximately $668,000 in cash expenditures for termination costs, including the payout of accrued vacation, in the quarter ended September 30, 2024.

Substantially all of our revenues are derived primarily from sales of our Very Fast SRAM products.

3 unchanged sentences

Our ability to increase net revenues, therefore, is dependent upon our ability to increase unit sales volumes of existing products and to introduce and sell new products with higher average selling prices in quantities sufficient to compensate for the anticipated declines in selling prices of our more mature products.

Although we expect the average selling prices of individual products to decline over time, we believe that, over the next several quarters, our overall average selling prices will increase due to a continuing shift in product mix to a higher percentage of higher price, higher density products, and to a lesser extent, recent price increases to our customers due to supply constraints.

Our ability to increase unit sales volumes is dependent primarily upon increases in customer demand but, particularly in periods of increasing demand, can also be affected by our ability to increase production through the availability of increased wafer fabrication capacity from TSMC, our wafer supplier, and our ability to increase the number of good integrated circuit die produced from each wafer through die size reductions and yield enhancement activities.

1 unchanged sentence

Historically, orders on hand at the beginning of each quarter are insufficient to meet our revenue objectives for that quarter and are generally cancelable up to 30 days prior to scheduled delivery.

Accordingly, we depend on obtaining and shipping orders in the same quarter to achieve our revenue objectives.

Accordingly, we depend on obtaining and shipping

orders in the same quarter to achieve our revenue objectives.

In addition, the timing of product releases, purchase orders and product availability could result in significant product shipments at the end of a quarter.

5 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 occurs at the time of shipment, title and

the risks and rewards of ownership have passed to the customer, and we have a right to payment.

Transfer of control occurs at the time of shipment, title and the risks and rewards of ownership have passed to the customer, and we have a right to payment.

Thus, we will recognize revenue upon shipment of the product for direct sales and sales to our distributors.

1 unchanged sentence

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

Based on information provided to us by its contract manufacturers and our distributors, purchases by Nokia represented approximately 21%, 21%, 17% and 29% of our net revenues in the three months ended June 30, 2024 and in fiscal 2024, 2023 and 2022, respectively.

Based on information provided to us by its contract manufacturers and our distributors, purchases by Nokia represented approximately 20%, 21%, 17% and 29% of our net revenues in the six months ended September 30, 2024 and in fiscal 2024, 2023 and 2022, respectively.

Our revenues have been substantially impacted by significant fluctuations in sales to Nokia, and we expect that future direct and indirect sales to Nokia will continue to fluctuate substantially on a quarterly basis and that such fluctuations may significantly affect our operating results in future periods.

To our knowledge, none of our other OEM customers accounted for more than 10% of our net revenues in fiscal 2024, 2023 or 2022.

To our knowledge, none of our other OEM customers accounted for more than 10% of our net revenues in the six months ended September 30, 2024 and in fiscal 2024, 2023 or 2022.

Cost of Revenues.

17 unchanged sentences

In particular, we are devoting substantial resources to the development of a new category of in-place associative computing products.

Accordingly, we expect that our research and development expenses will continue to be substantial in future periods and may lead to operating losses in some periods.

Accordingly, we expect that our

research and development expenses will continue to be substantial in future periods and may lead to operating losses in some periods.

Such expenses as a percentage of net revenues may fluctuate from period to period.

3 unchanged sentences

We also expect that, in support of any future growth that we are able to achieve, general and administrative expenses will generally increase in absolute dollars.

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

We 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.

in fiscal 2016.

We completed our annual impairment

test during the fourth quarter of fiscal 2024 and concluded that there was no impairment, as it was more likely than not that the fair value of our sole reporting unit exceeded its carrying value and the performance of a quantitative impairment test was not required.

We completed our annual impairment test during the fourth quarter of fiscal 2024 and concluded that there was no impairment, as it was more likely than not that the fair value of our sole reporting unit exceeded its carrying value and the performance of a quantitative impairment test was not required.

Intangible Assets.

2 unchanged sentences

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 and March 31, 2024 .

There were no impairment indicators noted as of September 30, 2024 and March 31, 2024 .

Based on the uncertainty of forecasts inherent with a new product, events such as the failure to generate forecasted revenue from the APU product could result in a non-cash impairment charge in future periods.

1 unchanged sentence

The following table sets forth statement of operations data as a percentage of net revenues for the periods indicated:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Cost of revenues

4 unchanged sentences

Total operating expenses

Income (loss) from operations

Loss from operations

Interest and other income, net

Income (loss) before income taxes

Loss before income taxes

Provision for income taxes

Net income (loss)

Net Revenues .

Net revenues decreased by 16.4% from $5.6 million in the three months ended June 30, 2023 to $4.7 million in the three months ended June 30, 2024.

The decrease in net revenues is related to the current economic environment which has led to cautionary spending by our customers and purchases made as a result of supply chain constraints in the previous periods.

The overall average selling price of all units shipped in the quarter ended June 30, 2024 decreased by 15.8% compared to the quarter ended June 30, 2023 and the number of units shipped decreased 0.5% in the quarter ended June 30, 2024 compared to the quarter ended June 30, 2023.

Net revenues decreased by 20.3% from $5.7 million in the three months ended September 30, 2023 to $4.6 million in the three months ended September 30, 2024 and by 18.4% from $11.3 million in the six months ended September 30, 2023 to $9.2 million in the six months ended September 30, 2024.

The decrease in net revenues in each period is related to the current economic environment that has led to cautionary spending by our customers and purchases made as a result of supply chain constraints in the previous periods.

The overall average selling price of all units shipped in the quarter ended September 30, 2024 decreased by 12.0% compared to the quarter ended September 30, 2023 and the number of units shipped decreased 10.5% in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023.

The overall average selling price of all units shipped in the six months ended September 30, 2024 decreased by 13.7% compared to the six months ended September 30,

2023 and the number of units shipped decreased 5.9% in the six months ended September 30, 2024 compared to the six months ended September 30, 2023.

The change in the average selling price was due to changes in product mix.

Direct and indirect sales to Nokia, currently our largest customer, decreased from $1.9 million in the three months ended June 30, 2023 to $998,000 in the three months ended June 30, 2024.

Direct and indirect sales to Nokia, currently our largest customer, decreased from $1.2 million in the three months ended September 30, 2023 to $812,000 in the three months ended September 30, 2024 and decreased from $3.0 million in the six months ended September 30, 2023 to $1.8 million in the six months ended September 30, 2024.

Shipments to Nokia will continue to fluctuate on a quarterly basis as a result of demand and shipments to its end customers.

While recent customer order patterns have been particularly variable, these fluctuations are related to economic and external factors, which include worldwide inflationary pressures, higher interest rates and the decline in the global economic environment.

In addition, we are seeing early indications of a turnaround in our SRAM business.

Existing customers are depleting their channel inventory, and we anticipate they will resume ordering in the upcoming quarters.

Furthermore, we expect a significant increase in orders from an existing customer over the next 12 months.

This opportunity for additional orders involves collaborating on a cutting-edge product for a leading AI chip developer, which is expected to drive consistent demand for this customer's equipment and our SRAM chips going forward.

Cost of Revenues.

Cost of revenues were unchanged at $2.5 million in each of the three months ended June 30, 2023 and June 30, 2024.

Cost of revenues included a provision for excess and obsolete inventories of $35,000 in the three months ended June 30, 2023 compared to $91,000 in the three months ended June 30, 2024.

Cost of revenues included stock-based compensation expense of $67,000 and $56,000 for the three months ended June 30, 2023 and 2024, respectively.

Cost of revenues increased by 8.0% from $2.6 million in the three months ended September 30, 2023 to $2.8 million in the three months ended September 30, 2024 and increased by 3.9% from $5.1 million in the six months ended September 30, 2023 to $5.3 million in the six months ended September 30, 2024.

Cost of revenues included a provision for excess and obsolete inventories of $94,000 in the six months ended September 30, 2023 compared to $180,000 in the six months ended September 30, 2024.

Cost of revenues includes $203,000 in severance related payments in the three months and six months ended September 30, 2024 related to our August 2024 cost reduction initiative.

Cost of revenues included stock-based compensation expense of $57,000 and $51,000 for the three months ended September 30, 2023 and 2024, respectively, and $124,000 and $107,000 for the six months ended September 30, 2023 and 2024, respectively.

Gross Profit.

Gross profit decreased by 29.6% from $3.1 million in the three months ended June 30, 2023 to $2.2 million in the three months ended June 30, 2024.

Gross margin decreased from 54.9% in the three months ended June 30, 2023 to 46.3% in the three months ended June 30, 2024.

The change in gross margin is primarily

related to changes in the mix of products and customers and the impact of manufacturing overhead on the lower level of net revenue in the quarter ended June 30, 2024 compared to the quarter ended June 30, 2023.

Gross profit decreased by 43.7% from $3.1 million in the three months ended September 30, 2023 to $1.8 million in the three months ended September 30, 2024 and by 36.7% from $6.2 million in the six months ended September 30, 2023 to $3.9 million in the six months ended September 30, 2024.

Gross margin decreased from 54.7% in the three months ended September 30, 2023 to 38.6% in the three months ended September 30, 2024 and from 54.8% in the six months ended September 30, 2023 to 42.5% in the six months ended September 30, 2024.

The changes in gross profit are primarily related to the decreases in net revenues discussed above.

The changes in gross margin are primarily related to changes in the mix of products and customers and the impact of manufacturing overhead on the lower level of net revenues in the three and six months ended September 30, 2024 compared to the comparable periods in fiscal 2023.

Gross margin in the three and six months ended September 30, 2024 was also impacted by the severance related payments related to our August 2024 cost reduction initiative discussed above.

Research and Development Expenses.

Research and development expenses decreased by 19.0% from $5.2 million in the three months ended June 30, 2023 to $4.2 million in the three months ended June 30, 2024 .

The decrease in research and development spending was primarily related to decreases of $430,000 of payroll related expenses due to reductions in headcount, $166,000 in outside consulting expenses for the development of our APU-2 product and stock-based compensation expense of $96,000.

Research and development expenses in the three months ended June 30, 2024 were also offset by $318,000 of funding received under the government contracts discussed above.

Research and development expenses included stock-based compensation expense of $386,000 and $290,000 for the three months ended June 30, 2023 and 2024, respectively.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses decreased by 13.3% from $3.0 million in the three months ended June 30, 2023 to $2.6 million in the three months ended June 30, 2024.

Selling, general and administrative expenses included a decrease of $86,000 in the value of contingent consideration in the three months ended June 30, 2024 compared to a decrease of $45,000 in the quarter ended June 30, 2023.

Selling, general and administrative expenses included decreases of $192,000 in accounting fees, $90,000 in payroll related expenses and $78,000 in outside sales representative commissions.

Selling, general and administrative expenses included stock-based compensation expense of $367,000 and $312,000 for the three months ended June 30, 2023 and 2024, respectively.

Research and development expenses increased by 2.1% from $4.7 million in the three months ended September 30, 2023 to $4.8 million in the three months ended September 30, 2024 .

The increase in research and development spending was primarily related to increases of $221,000 in outside consulting expenses for the development of our next generation APU product and a lesser increase in software maintenance expenses.

Research and development expenses in the three months ended September 30, 2023 were also offset by $260,000 of funding received under the Direct to Phase II award for the development of a Next-Generation Associative Processing Unit-2 (“APU2”) for Enhanced Space-Based Capabilities discussed above.

Payroll related expenses decreased by $465,000 in the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 due to reductions in headcount.

Research and development expenses included stock-based compensation expense of $369,000 and $336,000 for the three months ended September 30, 2023 and 2024, respectively.

Research and development expenses decreased by 9.0% from $9.9 million in the six months ended September 30, 2023 to $9.0 million in the six months ended September 30, 2024.

The decrease in research and development spending was primarily related to decreases of $893,000 in payroll related expenses and lesser decreases in depreciation expense and outside consulting expenses for the development of our next generation APU product.

Research and development expenses in the six months ended September 30, 2023 were also offset by $260,000 of funding received under the government contracts discussed above compared to $318,000 in the six months ended September 30, 2024.

Research and development expenses included stock-based compensation expense of $755,000 and $626,000 for the six months ended September 30, 2023 and 2024, respectively.

Selling, General and Administrative Expense.

Selling, general and administrative expenses increased by 1.2% from $2.5 million in the three months ended September 30, 2023 to $2.6 million in the three months ended September 30, 2024.

Selling, general and administrative expenses included a decrease of $24,000 in the value of contingent consideration in the three months ended September 30, 2024 compared to a decrease of $279,000 in the quarter ended September 30, 2023.

Decreases of $224,000 in professional fees and $51,000 in outside sales representative commissions were partially offset by increases in payroll related expenses and facility related expenses.

Selling, general and administrative expenses included stock-based compensation expense of $250,000 and $276,000 for the three months ended September 30, 2023 and 2024, respectively.

Selling, general and administrative expenses decreased by 6.7% from $5.5 million in the six months ended September 30, 2023 to $5.2 million in the six months ended September 30, 2024.

Selling general and administrative expenses included decreases of $368,000 in professional fees, $129,000 in outside sales representative commissions and a lesser decrease in payroll related expenses.

Selling, general and administrative expenses included a decrease of $109,000 in the value of contingent consideration in the six months ended September 30, 2024 compared to a decrease of $324,000 in the six months ended September 30, 2023.

Selling, general and administrative expenses included stock-based compensation expense of $617,000 and $588,000 for the six months ended September 30, 2023 and 2024, respectively.

Gain from Sale and Leaseback Transaction .

3 unchanged sentences

Interest Income and Other Expense, Net.

Interest and other income, net decreased by $25,000 from $80,000 in the three months ended June 30, 2023 to $55,000 in the three months ended June 30, 2024.

Interest income decreased by $55,000 from $143,000 in the three months ended June 30, 2023 to $88,000 in the three months ended June 30, 2024 primarily due to lower cash balances invested in money market funds in the quarter ended June 30, 2024 compared to the quarter ended June 30, 2023.

Foreign exchange losses were $63,000 for the three months ended June 30, 2023 compared to $33,000 for the three months ended June 30, 2024.

Interest and other income, net increased by $78,000 from $71,000 in the three months ended September 30, 2023 to $149,000 in the three months ended September 30, 2024.

Interest income increased by $31,000 primarily due to higher interest rates received on our cash invested in money market funds.

Foreign exchange losses were $60,000 for the three months ended September 30, 2023 compared to $13,000 for the three months ended September 30, 2024.

Interest and other income, net increased by $53,000 from $151,000 in the six months ended September 30, 2023 to $204,000 in the six months ended September 30, 2024.

Interest income decreased by $25,000 primarily due lower cash balances invested in money market funds in the six months ended September 30, 2024 compared to the six months ended September 30, 2023.

Foreign exchange losses were $123,000 for the six months ended September 30, 2023 compared to $45,000 for the six months ended September 30, 2024.

The exchange losses in each period were related to our Taiwan branch operations and our operations in Israel.

Provision for Income Taxes.

The provision for income taxes increased from $51,000 in the three months ended June 30, 2023 to $57,000 in the three months ended June 30, 2024.

Net Income (Loss) .

Net loss was $5.1 million in the three months ended June 30, 2023 compared to net income of $1.1 million in the three months ended June 30, 2024.

This fluctuation was primarily due to the changes in net revenues, gross profit and operating expenses and the gain from the sale and leaseback transaction discussed above.

The provision for income taxes decreased from $33,000 in the three months ended September 30, 2023 to $23,000 in the three months ended September 30, 2024 and decreased from $84,000 in the six months ended September 30, 2023 to $80,000 in the six months ended September 30, 2024.

Net loss was $4.1 million in the three months ended September 30, 2023 compared to $5.5 million in the three months ended September 30, 2024 and was $9.2 million in the six months ended September 30, 2023 compared to $4.4 million in the six months ended September 30, 2024.

These fluctuations were primarily due to the changes in net revenues, gross profit and operating expenses discussed above.

Liquidity and Capital Resources

As of June 30, 2024, our principal sources of liquidity were cash and cash equivalents of $21.8 million compared to cash and cash equivalents $14.4 million as of March 31, 2024.

Net cash used in operating activities was $4.3 million for the three months ended June 30, 2024 compared to $3.7 million for the three months ended June 30, 2023.

The primary sources of cash in the three months ended June 30, 2024 were net income of $1.1 million and decreases of $419,000 in inventories and $408,000 in accounts receivable.

The primary uses of cash in the three months ended June 30, 2024 were a reduction in accrued expenses and other liabilities of $1.2 million and an increase of $278,000 in prepaid expenses and other current assets.

The primary reason for the use of cash from operations in the quarter ended June 30, 2024 was an adjustment for the gain on the sale and leaseback transaction that was finalized during the quarter in the amount of $5.7 million.

The primary uses of cash in the three months ended June 30, 2023 were the net loss of $5.1 million, and reductions in accrued expenses and other liabilities of $284,000 and accounts payable of $270,000.

The reduction in accrued expenses and other liabilities was primarily related to the payment of fiscal 2023 year-end accruals for incentive compensation.

The uses of cash in the three months ended June 30, 2023 were less than the net loss due to non-cash items including stock-based compensation of $820,000 and depreciation and amortization expenses of $276,000.

The primary sources of cash in the three months ended June 30, 2023 were decreases in inventories of $452,000 and accounts receivable of $399,000.

Net cash provided by investing activities was $11.3 million in the three months ended June 30, 2024 compared to $1.9 million in the three months ended June 30, 2023.

Investment activities in the three months ended June 30, 2024 primarily consisted of the net proceeds of $11.3 million from the sale and leaseback transaction discussed above, partially offset by the purchase of property and equipment of $32,000.

Investment activities in the three months ended June 30, 2023 primarily consisted of the maturity of certificates of deposit and agency bonds of $2.5 million, partially offset by the purchase property and equipment of $607,000.

Net cash provided by financing activities in the three months ended June 30, 2024 consisted of the proceeds from the sale of common stock pursuant to our employee stock plans of $296,000.

Net cash provided by financing activities in the three months ended June 30, 2023 consisted of the proceeds from the sale of common stock pursuant to our employee stock plans of $1.5 million.

As of September 30, 2024, our principal sources of liquidity were cash and cash equivalents of $18.4 million compared to cash and cash equivalents $14.4 million as of March 31, 2024.

Net cash used in operating activities was $7.7 million for the six months ended September 30, 2024 compared to $6.3 million for the six months ended September 30, 2023.

The primary uses of cash in the six months ended September 30, 2024 were the net loss of $4.4 million and a decrease of $1.6 million in accrued expenses.

The primary sources of cash in the six months ended September 30, 2024 were reductions in accounts receivable, inventories and prepaid expenses and other current assets.

Cash from operations in the six months ended September 30, 2024 was adjusted for the non-cash gain on the sale and leaseback transaction in the amount of $5.7 million.

The primary uses of cash in the six months ended September 30, 2023 were the net loss of $9.2 million and a reduction in accrued expenses and other liabilities of $326,000.

The reduction in accrued expenses and other

liabilities was primarily related to the payment of fiscal 2023 year-end accruals for incentive compensation.

The uses of cash in the six months ended September 30, 2023 were less than the net loss due to non-cash items including stock-based compensation of $1.5 million and depreciation and amortization expenses of $505,000.

The primary sources of cash in the six months ended September 30, 2023 were decreases in inventories of $744,000 and accounts receivable of $399,000.

Net cash provided by investing activities was $11.3 million in the six months ended September 30, 2024 compared to $2.1 million in the six months ended September 30, 2023.

Investment activities in the six months ended September 30, 2024 primarily consisted of the net proceeds of $11.3 million from the sale and leaseback transaction discussed above, partially offset by the purchase of property and equipment of $38,000.

Investment activities in the six months ended September 30, 2023 primarily consisted of the maturity of certificates of deposit and agency bonds of $2.8 million, partially offset by the purchase property and equipment of $624,000.

Net cash provided by financing activities in the six months ended September 30, 2024 consisted of the proceeds from the sale of common stock pursuant to our employee stock plans of $373,000.

Net cash provided by financing activities in the six months ended September 30, 2023 consisted of the proceeds from the sale of common stock pursuant to our employee stock plans of $1.5 million and proceeds from the sale of common stock pursuant to an At-the-Market offering of $153,000.

We believe that our existing balances of cash and cash equivalents, and cash flow expected to be generated from our future operations will be sufficient to meet our cash needs for working capital and capital expenditures for at least the next 12 months.

5 unchanged sentences

We sold 133,000 shares pursuant to the offering at an average price of $4.20 for proceeds of $542,000, less offering costs of $389,000 during the quarter ended September 30, 2023.

We did not sell any shares pursuant to the offering in the three months ended June 30, 2024.

We did not sell any shares pursuant to the offering in the six months ended September 30, 2024.

We cannot assure that additional equity or debt financing, if required, will be available on terms that are acceptable or at all.

As of June 30, 2024, we had $14.3 million in purchase obligations for facility leases, wafer, masks, software and test purchase obligations that are binding commitments of which $1.7 million are payable in the next twelve months and $12.6 million are committed in the long term.

As of September 30, 2024, we had $14.9 million in purchase obligations for facility leases, wafer, masks, software and test purchase obligations that are binding commitments of which $1.6 million are payable in the next twelve months and $13.3 million are committed in the long term.

In connection with the acquisition of MikaMonu on November 23, 2015, we are required to make contingent consideration payments to the former MikaMonu shareholders conditioned upon revenue targets for products based on the MikaMonu technology.

As of June 30, 2024, the accrual for potential contingent consideration was $74,000 and is payable at various dates through December 31, 2025.

As of September 30, 2024, the accrual for potential contingent consideration was $51,000 and is payable at various dates through December 31, 2025.

Critical Accounting Estimates

1 unchanged sentence

Off-Balance Sheet Arrangements

At June 30, 2024, we did not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities,

established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

At September 30, 2024, we did not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually

narrow or limited purposes.

Accordingly, we are not exposed to the type of financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

2 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 2. Management’s Discussion and Analysis