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Item 9A. Controls and Procedures

2025-03-03 compared with 2024-02-29 · 30 added, 32 removed, 153 unchanged (29% of the section changed)

2 unchanged sentences

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, and due to the finding of the material weakness described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2023, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Notwithstanding the material weakness in internal control over financial reporting described below, management believes and has concluded that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2024, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management ’ s Report on Internal Control over Financial Reporting

1 unchanged sentence

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

During the year-end financial reporting process of fiscal 2023, a material weakness was identified in internal control over financial reporting within the Company’s demand forecast process regarding excess and obsolete inventory.

The material weakness resulted from ineffective design of the controls related to management’s review and documentation of the Company’s inventory demand information and other assumptions used to determine the inventory carrying value adjustments necessary to record such quantities at the lower of their cost or net realizable value.

A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

We do not believe that this material weakness resulted in any material errors.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2024.

Management reviewed the results of its assessment with our Audit Committee.

Ernst & Young LLP independently assessed the effectiveness of our internal control over financial reporting, as stated in the firm’s attestation report, which appears in Part II, Item 8 of this Annual Report on Form 10-K.

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively.

These remediation actions are ongoing and include or are expected to include:

Increased frequency of inventory reserve calculations and reconcile data between the inventory demand forecast system and our financial system at the same frequency;

Amend inventory provision spreadsheet formats to include additional columns and color coding to delineate specific parts and products before and after review, setting dollar thresholds for reserve requirements, and adding a tab for management review comments;

Document discussions and proposed actions and follow-up at inventory demand forecast meetings.

As we continue to evaluate and work to improve our internal control over financial reporting, we may decide to take additional measures to address this identified deficiency or modify the remediation plans described above.

We believe that these actions will remediate the material weakness, however, the weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Management believes the foregoing plans will effectively remediate the deficiency constituting the material weakness and believes that the remediation of this material weakness (including necessary testing) will be completed during 2024.

However, there is no assurance as to when such remediation will be completed.

As the remediation plans are implemented, management may take additional measures or modify the remediation plan elements described above.

Remediation of Previously Disclosed Material Weakness

As disclosed in Item 9A Controls and Procedures in our Annual Report on Form 10-K for the year ended December 31, 2023, a material weakness was identified in internal control over financial reporting within the Company’s demand forecast process regarding excess and obsolete inventory.

During 2024, management completed the implementation of measures designed to ensure the remediation of control deficiencies contributing to the material weakness, including:

Improved the documentation of our review procedures, forecast analysis and management judgments;

Amended inventory provision spreadsheet formats to include procedural checklists, additional columns and color coding to delineate specific parts and products before and after review, set dollar thresholds for reserve requirements, and added a worksheet for management review comments;

Expanded review procedures for inventory reserve calculations and improved reconciliations between the inventory demand forecast and our financial system.

Management has determined, through testing of our internal controls and procedures, that the remediation measures discussed above were effectively designed and operated effectively for a sufficient period of time to allow us to conclude that the material weakness had been remediated as of December 31, 2024.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2023, that would have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

However, the Company has initiated enhancements to its internal control over financial reporting to remediate the material weakness described above identified during the year-end financial reporting process of fiscal 2023.

Other than the remediation of the previously disclosed material weakness as described above, there were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024, that would have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

3 unchanged sentences

10b5-1 Trading Plans

Certain of our executive officers have entered into trading plans pursuant to Rule 10b5 - 1 (c) of the Securities Exchange Act of 1934, as amended.

A trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of our common stock, including the sale of shares acquired pursuant to the 2004 ESPP and the Amended 2004 ESPP, and upon vesting of RSUs.

During the three months ended December 31, 2023 , no director or officer of the Company adopted, modified or terminated trading plans intended to satisfy the affirmative defense conditions of Rule 10b5 - 1 (c) as defined in Item 408 (a) of Regulation S-K.

During the three months ended December 31, 2023, no pre-existing trading plans intended to satisfy the affirmative defense conditions of Rule 10b5 - 1 (c) were modified or terminated, and no other written trading arrangements that are not intended to qualify for the Rule 10b5 - 1 (c) affirmative defense were adopted, modified, or terminated.

Certain of our executive officers and directors have entered into trading plans pursuant to Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended.

2004 Employee Stock Purchase Plan, amended and restated, and upon vesting of RSUs.

The following table summarizes the adoption of trading plans intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) during the three months ended December 31, 2024:

Name and Title

Adoption Date

Plan Duration

Intended Sale Amount (in shares)

Carintia Martinez , Director

November 27, 2024

Through November 28, 2025

During the three months ended December 31, 2024, no trading plans intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) were modified or terminated, and no other written trading arrangements that are not intended to qualify for the Rule 10b5-1(c) affirmative defense were adopted, modified, or terminated.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

1 unchanged sentence

Directors, Executive Officers and Corporate Governance

Reference is made to the information regarding directors and nominees, code of ethics, corporate governance matters and disclosure relating to compliance with Section 16(a) of the Securities Exchange Act of 1934 appearing under the captions “Election of Directors” and “Delinquent Section 16(a) Reports” in the Company’s Proxy Statement for its 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”), which information is incorporated in this Annual Report on Form 10-K by reference.

Reference is made to the information regarding directors and nominees, code of ethics, insider trading policy and other corporate governance matters and disclosure relating to compliance with Section 16(a) of the Securities Exchange Act of 1934 appearing in the Company’s Proxy Statement for its 2025 Annual Meeting of Stockholders (the “2025 Annual Meeting”), which information is incorporated in this Annual Report on Form 10-K by reference.

Information regarding executive officers is set forth under the caption “Information about Executive Officers” in Part I of this Annual Report on Form 10-K.

26 unchanged sentences

Employment Agreement with Maurice Sciammas , and Amendment thereof .

Employment Agreement with Jim Moyer.

Employment Agreement with Deming Xiao , and Amendment thereof .

6 unchanged sentences

2014 Equity Incentive Plan, as amended, and Form of Grant Agreement .

Monolithic Power Systems, Inc.

2014 Equity Incentive Plan, as Amended, and Form of Grant Agreement.

Employment Agreement with Bernie Blegen.

10 unchanged sentences

2004 Employee Stock Purchase Plan, Amended and Restated as of August 16, 2023.

Monolithic Power Systems, Inc.

Insider Trading Compliance Program.

Subsidiaries of Monolithic Power Systems, Inc.

32 unchanged sentences

000-51026), filed with the Securities and Exchange Commission on December 19, 2008.

Incorporated by reference to Exhibit 10.9 of the Registrant’s Registration Statement on Form S-1 (Registration No.

333-117327), filed with the Securities and Exchange Commission on July 13, 2004.

Incorporated by reference to Exhibit 10.10 of the Registrant’s annual report on Form 10-K (File No.

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333-199782), filed with the Securities and Exchange Commission on November 3, 2014.

Incorporated by reference to Exhibit 4.6 of the Registrant’s Registration Statement on Form S-8 (Registration No.

333-199782), filed with the Securities and Exchange Commission on November 3, 2014.

Incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K (File No.

16 unchanged sentences

000-51026), filed with the Securities and Exchange Commission on August 4, 2023.

Incorporated by reference to Exhibit 97.1 of the Registrant’s annual report on Form 10-K (File No.

000-51026), filed with the Securities and Exchange Commission on February 29, 2024.

Form 10-K Summary

1 unchanged sentence

MONOLITHIC POWER SYSTEMS, INC.

February 29, 2024

March 3, 2025

/s/ Michael Hsing

4 unchanged sentences

Bernie Blegen, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 29, 2024 by the following persons on behalf of the registrant and in the capacities indicated:

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 3, 2025 by the following persons on behalf of the registrant and in the capacities indicated:

/s/ Michael Hsing

14 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-K

Item 9A. Controls and Procedures