EVERSPIN TECHNOLOGIES INC. 10-K

Item 8. Financial Statements and Supplementary Data EVERSPIN TECHNOLOGIES, INC. INDEX TO FINANCIAL STATEMENTS ​ Page Report of Independent Registered Public Accounting Firm (PCAOB ID 42 ) 36 Financial Statements: ​ Balance Sheets 38 Statements of Income and Comprehensive Income 39 Statements of Stockholders’ Equity 40 Statements of Cash Flows 41 Notes to Financial Statements 42 ​ ​ ​ ​ ​ ​ ​ ​ 35 Table of Contents ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Everspin Technologies, Inc. Opinion on the Financial Statements ​ We have audited the accompanying balance sheets of Everspin Technologies, Inc. (the Company) as of December 31, 2024 and 2023, the related statements of income and comprehensive income, stockholders' equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matters ​ The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ ​ 36 Table of Contents Accounting for Inventory ​ ​ ​ ​ ​ ​ Description of the Matter ​ As discussed in Note 2 to the financial statements, Inventory is valued at the lower of cost or net realizable value. At December 31, 2024, the Company’s inventory balance was $9.1 million. ​ Auditing the Company's accounting for inventory was challenging and complex primarily due to the high volume of transactions and multiple data sources involved in the initiation, processing, and recording of inventory transactions. The data sources include information received from the Company’s third-party suppliers involved in the manufacturing process. ​ How We Addressed the Matter in Our Audit ​ To test the Company’s accounting for inventory, we performed audit procedures that included, among others, performing direct confirmations of inventory held at third-party suppliers, and testing a sample of inventory transactions and manufacturing costs incurred during the year to evaluate the cost of inventory. ​ Accounting for the strategic award in Other income, net ​ ​ ​ ​ ​ ​ Description of the Matter ​ As discussed in Note 3 to the financial statements, the Company received a strategic award and entered an arrangement to develop a long-term plan to sustain its manufacturing operations for applications in the aerospace and defense segments. The Company expects to receive approximately $14.6 million as it performs under the arrangement. ​ Auditing the Company’s accounting for this arrangement was especially challenging due to the complex and highly judgmental nature of evaluating its terms and the Company's analogies to the revenue accounting guidance. ​ How We Addressed the Matter in Our Audit ​ To test the Company’s accounting for the arrangement, we performed audit procedures that included, among others, inspecting the contract and related source documentation that establish the performance requirements and assessing whether management’s analogies to the revenue literature was a consistent and rational application of accounting policy. ​ /s/ Ernst & Young LLP We have served as the Company’s auditor since 2008. Phoenix, Arizona February 27, 2025 ​ 37 Table of Contents EVERSPIN TECHNOLOGIES, INC. Balance Sheets (In thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2024 ​ 2023 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 42,097 ​ $ 36,946 Accounts receivable, net ​ 11,722 ​ 11,554 Inventory ​ 9,110 ​ 8,391 Prepaid expenses and other current assets ​ 1,272 ​ 988 Total current assets ​ 64,201 ​ 57,879 Property and equipment, net ​ 3,220 ​ 3,717 Intangible assets, net ​ ​ 3,416 ​ ​ — Right-of-use assets ​ ​ 4,549 ​ 5,495 Other assets ​ 2,403 ​ 212 Total assets ​ $ 77,789 ​ $ 67,303 ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 2,278 ​ $ 2,916 Accrued liabilities ​ 2,449 ​ 4,336 Deferred revenue ​ ​ 78 ​ ​ 336 Lease liabilities, current portion ​ ​ 1,306 ​ ​ 1,190 Contract obligations ​ ​ 2,034 ​ ​ — Software liabilities, current portion ​ ​ 1,769 ​ ​ — Total current liabilities ​ 9,914 ​ 8,778 Lease liabilities, net of current portion ​ ​ 3,336 ​ ​ 4,390 Software liabilities, net of current portion ​ ​ 1,784 ​ ​ — Long-term income tax liability ​ ​ 162 ​ ​ 214 Total liabilities ​ $ 15,196 ​ $ 13,382 Commitments and contingencies (Note 5) ​ ​ Stockholders’ equity: ​ ​ Preferred stock, $ 0.0001 par value per share; 5,000,000 shares authorized; no shares issued and outstanding as of December 31, 2024 and 2023, respectively ​ ​ — ​ ​ — Common stock, $ 0.0001 par value per share; 100,000,000 shares authorized; 22,059,697 and 21,080,472 shares issued and outstanding as of December 31, 2024 and 2023, respectively ​ 2 ​ ​ 2 Additional paid-in capital ​ 199,460 ​ 191,569 Accumulated deficit ​ ( 136,869 ) ​ ( 137,650 ) Total stockholders’ equity ​ 62,593 ​ 53,921 Total liabilities and stockholders’ equity ​ $ 77,789 ​ $ 67,303 ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these financial statements. ​ 38 Table of Contents EVERSPIN TECHNOLOGIES, INC. Statements of Income and Comprehensive Income (In thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Product sales ​ $ 42,203 ​ $ 53,123 Licensing, royalty, patent, and other revenue ​ ​ 8,199 ​ 10,642 Total revenue ​ 50,402 ​ 63,765 Cost of product sales ​ ​ 22,812 ​ ​ 24,693 Cost of licensing, royalty, patent, and other revenue ​ ​ 1,464 ​ ​ 1,827 Total cost of sales ​ 24,276 ​ 26,520 Gross profit ​ 26,126 ​ 37,245 Operating expenses: ​ ​ Research and development ​ 13,686 ​ 11,776 General and administrative ​ 14,141 ​ 14,296 Sales and marketing ​ 5,390 ​ 5,288 Total operating expenses ​ 33,217 ​ 31,360 (Loss) income from operations ​ ( 7,091 ) ​ 5,885 Interest expense ​ — ​ ( 63 ) Other income, net ​ 7,832 ​ 3,214 Net income before income taxes ​ ​ 741 ​ ​ 9,036 Income tax benefit ​ ​ 40 ​ ​ 16 Net income and comprehensive income ​ $ 781 ​ $ 9,052 Net income per common share: ​ ​ ​ ​ ​ ​ Basic ​ $ 0.04 ​ $ 0.44 Diluted ​ $ 0.04 ​ $ 0.42 Weighted average shares of common stock outstanding: ​ ​ ​ ​ ​ ​ Basic ​ 21,642,793 ​ 20,748,302 Diluted ​ 22,156,420 ​ 21,367,304 ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these financial statements. ​ 39 Table of Contents EVERSPIN TECHNOLOGIES, INC. Statements of Stockholders’ Equity (In thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Stockholders’ ​ Shares Amount Capital Deficit Equity Balance at December 31, 2022 ​ 20,374,288 ​ $ 2 ​ $ 185,364 ​ $ ( 146,702 ) ​ $ 38,664 Issuance of common stock under stock incentive plans and exercise of stock options ​ 705,948 ​ ​ — ​ ​ 1,198 ​ ​ — ​ ​ 1,198 Exercise of warrants ​ 236 ​ ​ — ​ ​ 2 ​ ​ — ​ ​ 2 Stock-based compensation expense ​ — ​ ​ — ​ ​ 5,005 ​ ​ — ​ ​ 5,005 Net income ​ — ​ ​ — ​ ​ — ​ ​ 9,052 ​ ​ 9,052 Balance at December 31, 2023 ​ 21,080,472 ​ $ 2 ​ $ 191,569 ​ $ ( 137,650 ) ​ $ 53,921 Issuance of common stock under stock incentive plans and exercise of stock options ​ 979,225 ​ ​ — ​ ​ 1,178 ​ ​ — ​ ​ 1,178 Stock-based compensation expense ​ — ​ ​ — ​ ​ 6,713 ​ ​ — ​ ​ 6,713 Net income ​ — ​ ​ — ​ ​ — ​ ​ 781 ​ ​ 781 Balance at December 31, 2024 ​ 22,059,697 ​ $ 2 ​ $ 199,460 ​ $ ( 136,869 ) ​ $ 62,593 ​ ​ ​ The accompanying notes are an integral part of these financial statements. ​ 40 Table of Contents EVERSPIN TECHNOLOGIES, INC. Statements of Cash Flow s (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Cash flows from operating activities ​ ​ Net income ​ $ 781 ​ $ 9,052 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ Depreciation and amortization ​ 1,731 ​ 1,205 Gain on sale of property and equipment ​ — ​ ( 15 ) Stock-based compensation ​ 6,713 ​ 5,005 Loss on prepayment and termination of credit facility ​ ​ — ​ ​ 170 Non-cash warrant revaluation ​ ​ — ​ ​ ( 25 ) Non-cash interest expense ​ — ​ 26 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ( 168 ) ​ ( 889 ) Inventory ​ ( 719 ) ​ ( 1,708 ) Prepaid expenses and other current assets ​ ( 284 ) ​ ( 384 ) Other assets ​ ( 492 ) ​ ( 150 ) Accounts payable ​ ( 374 ) ​ 499 Accrued liabilities ​ ( 1,939 ) ​ 803 Deferred revenue ​ ​ ( 258 ) ​ ​ ( 485 ) Contract obligations ​ ​ 2,034 ​ ​ — Lease liabilities, net ​ ​ 74 ​ ​ 24 Net cash provided by operating activities ​ 7,099 ​ 13,128 Cash flows from investing activities ​ ​ ​ ​ Purchases of property and equipment ​ ( 3,049 ) ​ ( 1,404 ) Purchases of intangible assets ​ ​ ( 11 ) ​ ​ — Proceeds received from sale of property and equipment ​ ​ — ​ ​ 19 Net cash used in investing activities ​ ( 3,060 ) ​ ( 1,385 ) Cash flows from financing activities ​ ​ ​ ​ Payments on long-term debt ​ — ​ ( 2,790 ) Proceeds from exercise of stock options and purchase of shares in employee stock purchase plan ​ 1,178 ​ 1,198 Payments on finance leases ​ ​ ( 66 ) ​ ​ — Net cash provided by (used in) financing activities ​ 1,112 ​ ( 1,592 ) Net increase in cash and cash equivalents ​ 5,151 ​ 10,151 Cash and cash equivalents at beginning of period ​ 36,946 ​ 26,795 Cash and cash equivalents at end of period ​ $ 42,097 ​ $ 36,946 Supplementary cash flow information: ​ ​ ​ ​ Interest paid ​ $ — ​ $ 37 Cash paid for taxes ​ $ 202 ​ $ — Operating cash flows paid for operating leases ​ $ 1,399 ​ $ 1,384 Financing cash flows paid for finance leases ​ $ 66 ​ $ 12 Non-cash investing and financing activities: ​ ​ ​ ​ Internal-use software asset obtained in exchange for software liabilities ​ $ 3,564 ​ $ — Right-of-use assets obtained in exchange for finance lease liabilities ​ $ 297 ​ $ — Purchases of property and equipment in accounts payable and accrued liabilities ​ $ 182 ​ $ 446 Cashless exercise of warrants ​ $ — ​ $ 2 ​ The accompanying notes are an integral part of these financial statements. ​ 41 Table of Contents EVERSPIN TECHNOLOGIES, INC. Notes to Financial Statements 1. Organization and Operations Everspin Technologies, Inc. (“we”, “our”, “us”, “Everspin Technologies”, “Everspin”, or the “Company”) was incorporated in Delaware on May 16, 2008. The Company’s magnetoresistive random access memory (MRAM) solutions offer the persistence of non-volatile memory with the speed and endurance of random access memory (RAM) and enable the protection of mission critical data particularly in the event of power interruption or failure. The Company’s MRAM solutions allow its customers in key markets, such as industrial, medical, automotive/transportation, aerospace, and data center, to design high performance, power-efficient and reliable systems without the need for bulky batteries or capacitors. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, fair value of assets and liabilities, inventory net realizable value, deferred tax assets and related valuation allowances, and stock-based compensation. The Company believes its estimates and assumptions are reasonable; however, actual results may differ from the Company’s estimates. Segment Information The Company’s MRAM technology solutions are sold as products and services through MRAM-based products, licenses and royalties of MRAM and magnetic sensor technology and backend foundry and design services. The Company identifies and manages the business activities in one reportable segment. Everspin’s Chief Executive Officer is the Chief Operating Decision Maker (CODM). The CODM utilizes the Company’s long-range plan, which includes product development roadmaps and long-range financial models, as a key input to resource allocation. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results using net income. ​ Significant segment expenses within net income are those separately presented on the Company’s Statements of Income and Comprehensive Income, which include cost of revenue, research and development, and selling, general and administrative expenses. ​ Cash and Cash Equivalents The Company considers all highly liquid, short-term investments with maturity dates of 90 days or less at the date of purchase to be cash equivalents. The Company’s cash equivalents consist solely of money market funds. Accounts Receivable, Net Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company generally does not require collateral or other security in support of accounts receivable. Allowances would be provided for individual accounts receivable when the Company becomes aware of a customer’s inability to meet its financial obligations, such as in the case of bankruptcy, deterioration in the customer’s operating results or change in financial position. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. The Company also considers a number of factors in evaluating the sufficiency of its allowance for doubtful accounts, including the length of time receivables are past due, significant one-time events, creditworthiness of customers and historical experience. Account balances would be charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company’s evaluation determined that no material allowance for doubtful accounts was necessary at December 31, 2024 and 2023. 42 Table of Contents The unbilled accounts receivable is an estimate of the unconditional consideration to which the Company expects to be entitled for uses of the Company’s intellectual property. The Company’s right is unconditional because nothing other than the passage of time is required before payment of the amounts are due. Certain customers report on a lagged basis and actual information is not available timely. The estimates recorded are based on historical trends in the customer’s usage and current market conditions. At December 31, 2024 and 2023, the unbilled accounts receivable balance was $ 0.2 million and $ 0.5 million, respectively. The Company’s unbilled conditional consideration is recorded to a contract asset account included in Prepaid Expenses and Other Current Assets. The conditions to the Company’s right to the consideration can include a contractual requirement to satisfy a performance obligation that has not yet begun or for which performance is in process as of the balance sheet date. At December 31, 2024 and 2023, the unbilled contract asset balance was $ 0.5 million and none , respectively. ​ The Company establishes an allowance for product returns. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of products when evaluating the adequacy of sales returns. Returns are processed as credits on future purchases and, as a result, the allowance is recorded against the balance of trade accounts receivable. In addition, the Company from time to time may establish an allowance for estimated price adjustments related to its distributor agreements. The Company estimates credits to distributors based on the historical rate of credits provided to distributors relative to sales and evaluation of current market conditions. At December 31, 2024 and 2023, the allowance for product returns and price adjustments was $ 0.4 million and $ 0.4 million, respectively. Accounts receivable, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2024 ​ 2023 Trade accounts receivable ​ $ 11,944 ​ $ 11,489 Unbilled accounts receivable ​ ​ 187 ​ ​ 475 Allowance for product returns and price adjustments ​ ​ ( 409 ) ​ ​ ( 410 ) Accounts receivable, net ​ $ 11,722 $ 11,554 ​ ​ ​ ​ ​ ​ ​ ​ Concentration of Credit Risk Financial instruments that potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents that are held by a financial institution in the United States and accounts receivable. Amounts on deposit with a financial institution may at times exceed federally insured limits. Significant customers are those which represent more than 10% of the Company’s total revenue or net accounts receivable balance at each respective balance sheet date. For the purposes of this disclosure, the Company defines “customer” as the entity that is purchasing the products or licenses directly from the Company, which includes the distributors of the Company’s products in addition to end customers that the Company sells to directly. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue ​ Accounts Receivable ​ ​ ​ Year Ended December 31, ​ ​ As of December 31, Customers ​ 2024 2023 2024 2023 Customer A ​ * ​ 15 % ​ * ​ 13 % Customer B ​ ​ * ​ 12 % ​ * ​ * ​ Customer C ​ ​ * ​ 11 % ​ * ​ 22 % Customer D ​ ​ 27 % 17 % ​ 61 % 37 % * Less than 10% Inventory Inventory is valued at the lower of cost, using the first-in, first-out or specific identification method, or net realizable value. The carrying value of inventory is adjusted for excess and obsolescence based on the Company’s 43 Table of Contents evaluation which takes into consideration historical and expected future demand, the effect new products may have on the sale of existing products, technological obsolescence, and other factors including inventory age and shipment. At the point of loss recognition, a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that new cost basis. Fair Value of Financial Instruments Fair value is defined as an exit price, representing the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. The framework for measuring fair value provides a three-tier hierarchy prioritizing inputs to valuation techniques used in measuring fair value as follows: Level 1 — Observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2 — Inputs, other than quoted prices for identical assets or liabilities in active markets, which are observable either directly or indirectly; and Level 3 — Unobservable inputs in which there is little or no market data requiring the reporting entity to develop its own assumptions. The carrying value of accounts receivable, accounts payable, and other accruals readily convertible into cash approximate fair value because of the short-term nature of the instruments. The Company’s financial instruments consist of Level 1 assets. Where quoted prices are available in an active market, securities are classified as Level 1. Level 1 assets consist of highly liquid money market funds that are included in cash equivalents. The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 33,617 $ — $ — $ 33,617 Total assets measured at fair value ​ $ 33,617 $ — $ — $ 33,617 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 36,946 $ — $ — $ 36,946 Total assets measured at fair value ​ $ 36,946 $ — $ — $ 36,946 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation begins at the time the asset is placed in service. Maintenance and repairs are charged to operations as incurred. Depreciation is computed using the straight-line method over the following estimated useful lives of the assets: ​ ​ ​ ​ ​ Useful Lives Computer and network equipment ​ 2 years Manufacturing equipment ​ 2 – 7 years Furniture and fixtures ​ 7 years Leasehold improvements ​ Lesser of useful life of the asset or the remaining lease term ​ Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations. Amortization expense of assets acquired through finance leases is included in the statements of income and comprehensive income. 44 Table of Contents Intangible Assets, Net The Company’s intangible assets are comprised of internally developed software and licensed software from third parties to be used in research and development activities that have alternative future use. Costs incurred to develop software for internal use during the application development phase are capitalized and amortized over such software’s estimated useful life. Costs related to the design or maintenance of internal-use software are included in operating expenses as incurred. Licensed software is initially recorded at fair value based on the present value of the license fees to be paid over the term of the license, with a corresponding liability. The licensed software intangible asset is amortized on a straight-line basis over the shorter of the license term or the economic life of the asset, beginning when the asset is substantially ready for use. The licensed software liability is accreted to its settlement amount using the effective interest method. Leases The Company leases office, lab, manufacturing space and equipment in various locations with initial lease terms of up to seven years . These leases require monthly lease payments that may be subject to annual increases throughout the lease term. The terms of these leases also include renewal options at the election of the Company to renew or extend the lease for a range of an additional two to five years . These optional periods have not been considered in the determination of the right-of-use (“ROU”) assets or lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the options. The Company determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The classification of the Company’s leases as operating or finance leases along with the initial measurement and recognition of the associated ROU assets and lease liabilities is performed at the lease commencement date. The measurement of lease liabilities is based on the present value of future lease payments over the lease term. The Company uses its incremental borrowing rate, based on the information available at commencement date, to determine the present value of lease payments when its leases do not provide an implicit rate. The Company uses the implicit rate when readily determinable. The ROU asset is based on the measurement of the lease liability, includes any lease payments made prior to or on lease commencement and excludes lease incentives and initial direct costs incurred, as applicable. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. Amortization expense for ROU assets associated with finance leases is recognized on a straight-line basis over the shorter of the useful life of the asset or the lease term and interest expense associated with finance leases is recognized on the balance of the lease liability using the effective interest method based on the estimated incremental borrowing rate. The Company has lease agreements with lease and non-lease components. The Company has elected to not separate lease and non-lease components for any leases involving real estate and office equipment classes of assets and, as a result, accounts for the lease and non-lease components as a single lease component. The Company has elected to separate lease and non-lease components for any leases involving manufacturing facility classes of assets. Further, the Company elected the short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to leases with terms of 12 months or less (short-term leases) for all classes of assets. As of December 31, 2024, the Company did not have any short-term leases. Operating leases are included in right-of-use assets, lease liabilities, and lease liabilities, net of current portion in the Company’s balance sheet. Finance leases are immaterial. Impairment of Long-lived Assets The Company evaluates its long-lived assets, including property and equipment, leases, and intangible assets, at the asset group level, for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. If such events or changes in circumstances occur, for purposes of this assessment, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by comparison of the carrying amount of each asset group to the future undiscounted cash flows the asset group is expected to generate over its remaining life. If the asset group is considered to be impaired, the amount of any impairment is measured as the 45 Table of Contents difference between the carrying value and the fair value of the impaired asset. There have been no impairments of the Company’s long-lived assets during either of the periods presented. Government Tax Credits, Incentives and Grants From time to time, the Company may receive government funding in the form of tax credits, operating-related grants, capital-related grants, or other incentives to support various business activities, including capital development, research and development, and other activities as defined by the relevant government agency awarding the tax credit, incentive, or grant. The amount received is typically based on the amount of qualifying costs incurred. The Company typically has to meet certain requirements to retain the government funding. The Company records operating-related grants and non-income related tax credits as other income in the statements of income and comprehensive income when there is reasonable assurance that the grant will be received, and the Company will comply with the conditions specified in the grant agreement. ​ The Company received Employee Retention Tax Credit (“ERTC”) refunds from the United States Treasury totaling $ 2.0 million, relating to the payroll periods from October 1, 2020 through September 30, 2021. The amounts were received pursuant to provisions within the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), the Taxpayer Certainty and Disaster Tax Relief Act of 2020 enacted as part of the Consolidated Appropriations Act, 2021 (“Relief Act”), the American Rescue Plan Act of 2021 (“ARPA”) which provide tax relief and other stimulus measures, including the ERTC. The ERTC program allows for employers to claim a refundable tax credit against a portion of the employer share of Social Security tax for qualified wages paid to employees from March 13, 2020 through September 30, 2021. ​ The Company recognized the $ 2.0 million tax credit within other income, net in the statements of income and comprehensive income during the year ended December 31, 2023, which is when the amount was received and it was determined that those amounts were reasonably assured to be retained by the Company. The Company’s compliance with the program’s qualifications may be subject to audit through the year ended December 31, 2025, which is when the statute of limitation expires. The Company has received all expected ERTC refunds based on applications that have been submitted. ​ Revenue Recognition The Company recognizes revenue when a customer obtains control of the promised products or services, in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenue is recognized net of allowances for returns and price adjustments, and any taxes imposed on specific revenue-producing transactions, which are subsequently remitted to governmental authorities. Nature of Products and Services The Company’s revenue is derived from the sale of MRAM-based products in discrete unit form, licenses of and royalties on its MRAM and magnetic sensor technology, the sale of backend foundry services and design services to third parties. Sales of products in discrete unit form are recognized at a point in time, revenue related to licensing agreements is recognized when the Company has delivered control of the technology, revenue related to royalty agreements is recognized in the period in which sales generated from products sold using the Company’s technology occurs, sales of backend foundry services are recognized over time, and design services to third parties are recognized either at a point in time or over time, depending on the nature of the services. Product Revenue For products sold in their discrete form, the Company either sells its products directly to OEMs, ODMs and CMs, or through a network of distributors, who in turn sell to those customers. For sales directly to OEMs, ODMs and CMs, revenue is recognized when the OEM, ODM or CM obtains control of the product, which occurs at a point in time, generally upon shipment to the customer. Contracts for sales of products are generally less than one year. From time to time, the Company may provide distributors with price adjustments subsequent to the delivery of product to them and such amounts are dependent on the end customer and product sales price. Price adjustments can be based on a variety of factors, including customer, product, quantity, geography, and competitive differentiation. Price 46 Table of Contents protection rights grant distributors the right to a credit in the event of declines in the price of the Company’s products. Under these circumstances, the Company remits back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors’ outstanding accounts receivable balance. The credits are on a per unit basis and are not given to the distributor until the distributor provides information regarding the sale to their end customer. The Company estimates these credits and record such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of an allowance for price adjustments for amounts due to distributors. The Company estimates credits to distributors based on the historical rate of credits provided to distributors relative to sales and evaluation of current market conditions. Revenue on shipments to distributors is recorded when control of the products has been transferred to the distributor. The Company estimates the amount of our product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company estimates its product return liability by analyzing its historical returns, current economic trends and changes in customer demand and acceptance of products. The Company has received insignificant returns to date and believes that returns of its products will continue to not be material. Upon the transfer of control, generally at shipment, the Company records a trade receivable for the selling price as there is a legally enforceable obligation of the distributor to pay for the product delivered, an allowance is recorded for the estimated discount that will be provided to the distributor, and the net of these amounts is recorded as revenue on the statements of income and comprehensive income. License Revenue For licenses of technology, recognition of revenue is dependent upon whether the Company has delivered rights to the technology, and whether there are future performance obligations under the contract. In some instances, the license agreements call for future events or activities to occur in order for milestones amounts to become due from the customer. The terms of such agreements include payment to the Company of one or more of the following: non-refundable upfront fees; and royalties on net sales of licensed products. Historically, these license agreements have not included other future performance obligations for the Company once the license has been transferred to the customer. Revenue from non-refundable upfront payments is recognized when the license is transferred to the customer and the Company has no other performance obligations. The Company entered into a contractual agreement with a customer in 2021 for the development of a RAD-Hard product, consisting of a technology license, a design license agreement and development contract, and separate contractual agreements with a customer in 2023 and 2024 for the development of a strategic radiation hardened field programmable gate array product, consisting of a technology license to provide design and development services under the contractual agreement. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the performance obligation is satisfied. ​ The Company concluded these contractual arrangements represent one arrangement and evaluated its promises to the customer and whether the performance obligations granted under the arrangement were distinct. The licenses provided to the customer are not transferable, are of limited value without the promised development services, and the customer cannot benefit from the license agreements without the specific obligated services in the development subcontract, as there is strong interdependence between the licenses and the development subcontract. Accordingly, the Company determined the licenses were not distinct within the context of the contract and combined the license with other performance obligations. ​ As a result, the Company is recognizing revenue related to the performance obligations over the duration of the contract using the input method based on costs incurred to date relative to the total expected costs of the contract over the contract period. ​ 47 Table of Contents Royalties Revenue from sales-based royalties from licenses of the Company’s technology are recognized at the later of when (1) the sale occurs or (2) the performance obligation to which some or all of the sales-based royalty has been allocated is satisfied (in whole or in part). The Company will record an unbilled receivable (within accounts receivable, net) for the portion of sales-based royalties that have been earned but not invoiced at the end of each reporting period. Other Revenue For certain revenue streams, the Company recognizes revenue based on the pattern of transfer of the services. The Company uses the input method of measuring costs incurred to date compared to total estimated costs to be incurred under the contract as this method most faithfully depicts its performance. The Company will record an unbilled receivable (within accounts receivable, net) for the portion of the work that has been completed but not invoiced at the end of each reporting period. At the inception of each agreement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price by using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability or achievement of each such milestone and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. Other Income, Net Other income, net primarily consists of interest income and expense, a strategic award, realized gains and losses on sale of assets, and gains and losses on foreign currency transactions. Product Warranty The Company generally sells products with a limited warranty of product quality and a limited indemnification of customers against intellectual property infringement claims related to the Company’s products. The Company accrues for known warranty and indemnification issues if a loss is probable and can be reasonably estimated and accrues for estimated losses incurred for unidentified issues based on historical experience. A warranty liability was not recorded at December 31, 2024 and 2023, as the estimated future warranty costs were not material based on the Company’s historical experience. Research and Development Research and development expenses are incurred in support of internal development programs or as part of the Company’s joint development agreement with GLOBALFOUNDRIES (see Note 10). Research and development expenses include personnel-related costs (including stock-based compensation), circuit design costs, purchases of materials and laboratory supplies, fabrication and packaging of experimental integrated circuit products, amortization of certain intangible assets, depreciation of research and development related capital equipment and overhead and are expensed as incurred. Stock-based Compensation Stock-based compensation arrangements include stock option grants and restricted stock unit (RSU) awards under the Company’s equity incentive plans, as well as shares issued under the Company’s Employee Stock Purchase Plan (ESPP), through which employees may purchase the Company’s common stock at a discount to the market price. The Company uses RSUs with a service condition as its primary equity incentive compensation instrument for employees. Share-based compensation expense for RSUs is measured on the grant date based on the fair market value of the Company’s common stock and is recognized over the requisite service period using the straight-line method. The Company accounts for forfeitures as they occur. ​ 48 Table of Contents The Company measures its stock option grants based on the estimated fair value of the options as of the grant date using the Black-Scholes option-pricing model. Stock-based compensation expense for stock option grants is recognized over the requisite service period using the straight-line method. The Company accounts for forfeitures as they occur. ​ Expected volatility. The Company determines the expected stock price volatility based on the historical volatility of its common stock. Industry peers consist of several public companies in the technology industry similar in size, stage of life cycle and financial leverage. If circumstances change such that the identified companies are no longer similar, the Company will revise its peer group to substitute more suitable companies in this calculation. Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield with a maturity equal to the expected term of the option in effect at the time of grant. Expected term. The expected term represents the period that the stock-based awards are expected to be outstanding. The Company used the simplified method to determine the expected term, which is calculated as the average of the time to vesting and the contractual life of the options. Dividend yield. The Company has never paid dividends on its common stock and is prohibited from paying dividends on its common stock. Therefore, the Company used an expected dividend yield of zero. Income Taxes The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company must then assess the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits, as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. Net Income per Common Share Basic net income per common share is calculated by dividing the net income by the weighted-average number of shares of common stock outstanding for the period less shares subject to repurchase, without consideration of potentially dilutive securities. Diluted earnings per share is calculated using the treasury stock method by dividing net income by the total weighted average shares of common stock outstanding in addition to the potential impact of dilutive securities including restricted stock units, warrants, and options. In periods with a net loss, diluted net loss per common share is the same as basic net loss per common share since the effect of potentially dilutive securities is anti-dilutive. Recently Adopted Accounting Pronouncements The Company adopted Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280 ) – Improvements to Reportable Segment Disclosures , which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU also expands disclosure requirements to enable users of financial statements to better understand the entity’s measurement and assessment of segment performance and resource allocation. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ​ The Company adopted ASU 2023-07 effective January 1, 2024, on a retrospective basis. The adoption of ASU 2023-07 did not change the way that the Company identifies its single reportable segment and, as a result, did not have a material impact on the Company’s segment-related disclosures. The Company’s chief operating decision maker is its Chief Executive Officer who reviews financial information for purposes of allocating resources and evaluating financial performance for the entire Company. ​ 49 Table of Contents Recently Issued Pronouncements In December 2023, the FASB issued ASU No. 2023-09 , Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which is intended to improve an entity’s income tax disclosures, primarily through disaggregated information about an entity’s effective income tax rate reconciliation and additional disclosures regarding income taxes paid. ASU 2023-09 is effective for the Company’s annual reporting periods, and interim periods within those years, beginning after December 15, 2024, on a prospective basis. The Company is currently evaluating the impact that the standard will have on its financial statements. ​ In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses , which requires additional disclosure of certain amounts included in the expense captions presented on the statement of operations, as well as disclosures about selling expenses. ASU 2024-03 is effective for the Company’s annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, on a prospective basis, with the option for retrospective application. Early adoption is permitted for annual financial statements that have not yet been issued. The Company is currently evaluating the impact that the standard will have on its financial statements. ​ The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the financial statements. ​ Subsequent Events ​ The Company evaluated events after December 31, 2024, and through the date the financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these financial statements. ​ ​ 3. Statements of Operations and Comprehensive (Loss) Income Components Revenue ​ The Company sells products to its distributors, ODMs and OEMs. The Company also recognizes revenue under licensing, patent, and royalty agreements with some customers. The following table presents the Company’s revenues disaggregated by sales channel (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Distributor ​ $ 39,943 ​ $ 49,845 Non-distributor ​ ​ 10,459 ​ ​ 13,920 Total revenue ​ $ 50,402 ​ $ 63,765 ​ ​ ​ The following table presents the Company’s revenues disaggregated by timing of recognition (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Point in time ​ $ 42,903 ​ $ 54,183 Over time ​ ​ 7,499 ​ ​ 9,582 Total revenue ​ $ 50,402 ​ $ 63,765 ​ ​ 50 Table of Contents The following table presents the Company’s revenues disaggregated by type (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Product sales ​ $ 42,203 ​ $ 53,123 Licensing ​ ​ 6,346 ​ ​ 7,476 Royalties ​ ​ 700 ​ ​ 862 Other revenue ​ ​ 1,153 ​ ​ 2,304 Total revenue ​ $ 50,402 ​ $ 63,765 ​ ​ ​ ​ ​ ​ ​ ​ The Company licenses its intellectual property and is entitled to consideration based on the customer’s sales. The Company makes estimates in instances when the customer reports sales on a lagged basis and actual information is not available timely. The estimates are based on historical trends in the customer’s activity and current market conditions. The amounts are reported in licensing, royalty, patent and other revenue in the statements of income and comprehensive income. The Company recognizes revenue by geography based on the region in which its products are sold, and not to where the end products in which they are assembled are shipped. Revenue by region for the periods indicated was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 APAC ​ $ 28,688 ​ $ 33,096 North America ​ ​ 10,710 ​ ​ 15,922 EMEA ​ ​ 11,004 ​ ​ 14,747 Total revenue ​ $ 50,402 ​ $ 63,765 ​ ​ Other Income, Net On August 14, 2024, the Company received a strategic award to develop a long-term plan to provide manufacturing services for aerospace and defense segments (the Award). Under the Award, the Company will provide a plan to mitigate risks to its MRAM manufacturing supply chain. Pursuant to the Award, the Company may receive cash payments upon the achievement of certain technical tasks and deliverables. The Award allows for milestones totaling up to approximately $ 14.6 million for the Company over a span of 2.5 years. ​ The Award is not in the ordinary course of the Company’s business and hence not a contract with a customer. The Company has applied the revenue recognition principles under ASC 606 by analogy. ​ The Company records the total consideration from the Award as other income using an input method based on costs incurred to date relative to the total expected costs of the Award over its term. Amounts invoiced in excess of income recognized are recorded as a contract obligations liability on the balance sheets. This liability represents the Company’s obligation to perform future services for which the Company has received or is entitled to receive payment but which are not yet fulfilled. During the year ended December 31, 2024, the Company has invoiced $ 8.1 million related to this Award of which no balance is outstanding as of December 31, 2024. The contract obligations liability was $ 2.0 million as of December 31, 2024. The Company recorded $ 6.1 million of other income related to this Award in the year ended December 31, 2024. ​ 51 Table of Contents 4. Balance Sheet Components Inventory Inventory consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Raw materials ​ $ 238 ​ $ 189 Work-in-process ​ 7,510 ​ 6,724 Finished goods ​ 1,362 ​ 1,478 Total inventory ​ $ 9,110 ​ $ 8,391 ​ ​ ​ ​ ​ ​ ​ ​ Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Manufacturing equipment ​ $ 14,199 ​ $ 13,494 Computer and network equipment ​ ​ 602 ​ ​ 520 Furniture and fixtures ​ ​ 113 ​ ​ 113 Leasehold improvements ​ ​ 1,476 ​ ​ 1,476 Total property and equipment, gross ​ ​ 16,390 ​ ​ 15,603 Less: accumulated depreciation ​ ​ ( 13,170 ) ​ ​ ( 11,886 ) Total property and equipment, net ​ $ 3,220 ​ $ 3,717 ​ Depreciation expense during years ended December 31, 2024 and 2023 was $ 1.6 million and $ 1.2 million, respectively. Intangible Assets, Net The gross carrying amounts and accumulated amortization of intangible assets are as follows at the dates indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ Weighted- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ Net ​ ​ Life ​ ​ Gross Carrying ​ Accumulated ​ Carrying ​ ​ (in years) ​ Amount Amortization Amount Internal-use software ​ 2.0 ​ $ 4,389 ​ $ ( 973 ) ​ $ 3,416 Total intangible asset ​ ​ ​ $ 4,389 ​ $ ( 973 ) ​ $ 3,416 ​ Amortization expense for intangible assets was $ 0.1 million and zero for the years ended December 31, 2024 and 2023, respectively. 52 Table of Contents The table below presents estimated future amortization expense for finite-lived intangible assets (in thousands): ​ ​ ​ ​ As of December 31, 2024 Amount 2025 ​ $ 1,771 2026 ​ ​ 1,622 2027 ​ ​ 8 2028 ​ ​ 8 Thereafter ​ ​ 7 Total ​ $ 3,416 ​ ​ Accrued Liabilities Accrued liabilities consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Payroll-related expenses ​ $ 1,606 ​ $ 3,347 Inventory ​ ​ 157 ​ ​ 317 Other ​ 686 ​ 672 Total accrued liabilities ​ $ 2,449 ​ $ 4,336 ​ Deferred Revenue In the year ended December 31, 2024, the Company executed a contractual arrangement with a customer for the development of a strategic radiation hardened field programmable gate array product. The total consideration in the arrangement is $ 1.8 million. The Company is recognizing revenue related to the performance obligation over time using the input method based on costs incurred to date relative to the total expected costs of the contract and began recognizing revenue in the third quarter of 2024. As of and for the year ended December 31, 2024, the Company has billed $ 1.6 million for the performance under the agreement and has recognized $ 1.5 million in revenue for the year ended December 31, 2024, with the difference of $ 0.1 million recorded in deferred revenue. The Company expects to recognize the remaining $ 0.1 million of the transaction price as services are performed throughout the contractual period and performance is expected to be complete in the year ended December 31, 2025. In the year ended December 31, 2024, the Company executed a contractual arrangement with a customer for the development of a strategic radiation hardened high-reliability eMRAM macro. The total consideration in the arrangement is $ 1.2 million. The Company is recognizing revenue related to the performance obligation over time using the input method based on costs incurred to date relative to the total expected costs of the contract and began recognizing revenue in the third quarter of 2024. As of and for the year ended December 31, 2024, the Company has billed $ 1.2 million for the performance under the agreement and has recognized $ 1.1 million in revenue, with the difference of $ 0.1 million in recorded in deferred revenue. The Company expects to recognize the remaining $ 0.1 million of the transaction price as services are performed throughout the contractual period and performance is expected to be complete in the year ended December 31, 2025. In 2021, the Company executed contractual arrangements with a customer for the development of a RAD-Hard product, consisting of a technology license, design license agreement and development subcontract (RAD-Hard 1). The Company does not share in the rights to future revenues or royalties. The total arrangements are for $ 6.5 million in consideration. The Company concluded these contractual arrangements represent one arrangement and evaluated its promises to the customer and whether the performance obligations granted under the arrangement were distinct. The licenses provided to the customer are not transferable, are of limited value without the promised development services, and the customer cannot benefit from the license agreements without the specific obligated services in the development subcontract, as there is strong interdependence between the licenses and the development subcontract. Accordingly, the Company determined the licenses were not distinct within the context of the contract and combined the license with other performance obligations. The total transaction price of $ 6.5 million was allocated to the single performance obligation. 53 Table of Contents The Company recognizes revenue related to the performance obligations over time using the input method based on costs incurred to date relative to the total expected costs of the contract and began recognizing revenue in the second quarter of 2021 over the contract period. This method depicts performance under the contract and requires the Company to make estimates about the future costs expected to be incurred to perform under the contact, including labor and material costs. The Company has recognized $ 0.7 million in revenue for the each of years ended December 31, 2024 and 2023, and $ 6.4 million in revenue since inception of the contractual agreements. Deferred revenue related to these agreements was $ 0.1 million and $ 0.3 million as of December 31, 2024 and 2023, respectively. The Company expects to recognize the remaining $ 0.1 million of the transaction price as services are performed throughout the contractual period and performance is expected to be complete in the year ending December 31, 2025. ​ 5. Commitments and Contingencies Leases Operating leases consist of fabrication, lab, and office space expiring at various dates through 2029. Finance leases relate to a server lease expiring in February 2029. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The undiscounted future non-cancellable lease payments under the Company’s operating and finance leases were as follows (in thousands): ​ ​ ​ ​ As of December 31, 2024 Amount 2025 ​ $ 1,481 2026 ​ ​ 1,497 2027 ​ ​ 1,380 2028 ​ ​ 595 Thereafter ​ ​ 48 Total lease payments ​ ​ 5,001 Less: imputed interest ​ ​ ( 359 ) Total lease liabilities ​ ​ 4,642 Less: current portion of lease liabilities ​ ​ ( 1,306 ) Total lease liabilities, net of current portion ​ $ 3,336 ​ Other information related to the Company's operating lease liabilities was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Weighted-average remaining lease term (years) 3.39 ​ ​ 4.37 Weighted-average discount rate ​ 4.50 % ​ 4.50 % ​ Other information related to the Company’s finance lease liabilities was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Weighted-average remaining lease term (years) 4.15 ​ ​ 1.09 Weighted-average discount rate ​ 3.90 % ​ 4.50 % ​ Lease costs for the Company’s operating leases were $ 1.4 million for both of the years ended December 31, 2024 and 2023, respectively. Lease costs for the Company’s finance lease were immaterial for the years ended December 31, 2024 and 2023. 54 Table of Contents Legal Proceedings From time to time, the Company may become involved in legal proceedings arising from the ordinary course of its business. Management is currently not aware of any matters that it expects will have a material adverse effect on the financial position, results of operations or cash flows of the Company. Indemnifications In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance. 6. Debt In March 2023, the 2019 Credit Facility, consisting of the Company’s Term Loan and Line of Credit, was paid in full, and there was no outstanding balance as of December 31, 2024 or 2023. The Company paid an early termination and prepayment fee of $ 0.2 million, which was recorded within other income (expense) within the statements of income and comprehensive income for the year ended December 31, 2023. The Company was in compliance with all covenants throughout the 2019 Credit Facility payoff date in March 2023. ​ ​ 7. Stockholders’ Equity Common Stock Common stockholders are entitled to dividends if and when declared by the board of directors. As of December 31, 2024, no dividends on common stock had been declared by the board of directors. Reserved Shares of Common Stock The Company had reserved shares of common stock for future issuance as follows: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2024 ​ 2023 Options issued and outstanding 1,521,857 1,793,485 Shares available for future option grants 545,525 598,397 RSUs subject to future vesting ​ 987,965 ​ 905,781 Common stock warrants 18,461 18,461 Total ​ 3,073,808 ​ 3,316,124 ​ ​ ​ ​ ​ ​ Warrants In connection with the Company’s prior credit facility with Ares Venture Finance entered into in June 2015, the Company issued Ares Venture Finance a warrant to purchase 18,461 shares of the Company’s common stock at an exercise price of $ 26.00 per share. The warrant can be exercised at any time and expires on June 5, 2025. ​ ​ 55 Table of Contents 8. Stock-Based Compensation Share-Based Compensation Expense The following table presents the details of the Company's share-based compensation expense (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 General and administrative ​ $ 3,304 ​ $ 2,519 Research and development ​ ​ 1,902 ​ ​ 1,981 Sales and marketing ​ ​ 720 ​ ​ 505 Cost of sales ​ ​ 787 ​ ​ — Total stock-based compensation ​ $ 6,713 ​ $ 5,005 ​ 2016 Employee Incentive Plan The Company’s board of directors adopted the 2016 Equity Incentive Plan (the 2016 Plan) on April 25, 2016, which was subsequently approved on September 20, 2016 by the Company’s stockholders. The 2016 Plan became effective on October 7, 2016, the date the Company’s S-8 registration statement relating to the 2016 Plan was declared effective by the SEC. The 2016 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation to employees, directors, and consultants. In addition, the 2016 Plan provides for the grant of performance cash awards to employees, directors, and consultants. The maximum number of shares of common stock that may be issued under the 2016 Plan was initially 500,000 subject to an automatic increase on January 1 of each year, beginning on January 1, 2017, and continuing through and including January 1, 2026, by 3 % of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s board of directors. On May 20, 2021, the Company’s stockholders approved an amendment to the 2016 Plan to increase the total number of authorized shares of common stock available for grant thereunder by an additional 550,000 shares. At December 31, 2024, of the 3,038,336 shares of common stock reserved and available for grant under the 2016 Plan, 545,525 shares of common stock remain available for grant under the 2016 Plan. The Company authorized 632,414 shares during the year ended December 31, 2024. 2008 Employee Incentive Plan The 2008 Equity Incentive Plan (the 2008 Plan) provided for the issuance of incentive stock options (ISO), nonqualified stock options, and other stock compensation awards. Due to the adoption of the 2016 Plan, no further grants will be made under the 2008 Plan. However, any outstanding stock awards granted under the 2008 Plan will remain outstanding, subject to the terms of the Company’s 2008 Plan and the applicable stock award agreements, until such outstanding stock awards that are stock options are exercised or until they terminate or expire by their terms, or until such stock awards are fully settled, terminated, or forfeited. At December 31, 2024, 17,011 options under the 2008 Plan remained outstanding. 56 Table of Contents Summary of Stock Option Activity The following table summarizes the stock option activity for all grants under the 2008 Plan and 2016 Plan: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options Outstanding ​ ​ ​ ​ Weighted- ​ Weighted- ​ ​ ​ ​ ​ ​ ​ Average ​ Average ​ Aggregate ​ ​ ​ ​ Exercise ​ Remaining ​ Intrinsic ​ ​ Number of ​ Price Per ​ Contractual ​ Value ​ ​ Options Share Life (years) (In thousands) Balance—December 31, 2023 1,829,428 ​ $ 5.96 ​ 6.9 ​ $ 5,676 Options granted ​ — ​ ​ ​ ​ ​ ​ ​ ​ Options exercised ( 184,958 ) ​ $ 4.15 ​ ​ ​ $ 612 Options cancelled/forfeited ( 122,613 ) ​ $ 7.74 ​ ​ ​ ​ ​ Balance—December 31, 2024 1,521,857 ​ $ 6.04 ​ 5.9 ​ $ 1,507 Options exercisable—December 31, 2024 ​ 1,357,041 ​ $ 5.88 ​ 5.8 ​ $ 1,466 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ No options were granted during the year ended December 31, 2024. The weighted-average grant date fair value of options granted was $ 3.85 per share during the year ended December 31, 2023. As of December 31, 2024, there was $ 0.7 million of total unrecognized compensation expense related to unvested options which is expected to be recognized over a weighted-average period of 0.9 years. The Company estimated the fair value of each option grant using the Black-Scholes option-pricing model based on the assumptions below. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options was estimated using the assumptions below: ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2023 Expected volatility 50.9 - 73.9 % Risk-free interest rate 2.33 - 3.45 % Expected term (in years) 6.01 - 6.05 ​ Dividend yield — % ​ 2016 Employee Stock Purchase Plan The Company’s board of directors adopted the 2016 Employee Stock Purchase Plan (the ESPP) on April 25, 2016, which was subsequently approved on September 20, 2016 by the Company’s stockholders. The Company had 1,031,800 shares available for issuance under the ESPP as of December 31, 2024. Employees purchased 69,166 shares for $ 0.4 million during the year ended December 31, 2024, and 87,718 shares for $ 0.4 million during the year ended December 31, 2023. Restricted Stock Units In September 2017, the Company’s board of directors authorized the issuance of restricted stock units (RSUs), under the 2016 Plan and adopted a form of Restricted Stock Unit Award Agreement, which is intended to serve as a standard form agreement for RSU grants issued to employees, executive officers, directors, and consultants. The fair value of the RSUs is recognized as expense ratably over the vesting period, as determined by the board of directors on the date of grant. 57 Table of Contents The following table summarizes RSU activity for the year ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ RSUs Outstanding ​ ​ ​ Weighted- ​ ​ ​ Average ​ ​ Number of Grant Date ​ ​ Restricted Stock Fair Value Per ​ Units Share Balance—December 31, 2023 ​ 905,781 ​ $ 6.59 Granted 1,027,963 ​ $ 8.50 Vested ​ ( 725,101 ) ​ $ 6.96 Cancelled/forfeited ​ ( 220,678 ) ​ $ 8.16 Balance—December 31, 2024 987,965 $ 7.89 ​ The fair value of RSUs is determined on the date of grant based on the market price of the Company’s common stock on that date. As of December 31, 2024, there was $ 6.2 million of unrecognized stock-based compensation expense related to RSUs to be recognized over a weighted-average period of 2.4 years. Compensation cost capitalized within inventory was immaterial as of December 31, 2024 and 2023. ​ ​ ​ ​ 9. 401(k) Plan The Company has a defined contribution employee benefit plan pursuant to Section 401(k) of the Internal Revenue Code. The plan allows eligible employees to defer a portion of their annual compensation up to certain statutory limits. At the election of the Board of Directors, the Company may elect to match employee contributions but has not done so to date. 10. Significant Agreements GLOBALFOUNDRIES, Inc. Joint Development Agreement Since October 17, 2014, the Company has participated in a joint development agreement (JDA) with GLOBALFOUNDRIES Inc. (GF), a semiconductor foundry, for the joint development of STT-MRAM technology to produce a family of discrete and embedded MRAM technologies. The term of the agreement is until the completion, termination, or expiration of the last statement of work entered into pursuant to the joint development agreement. The agreement was extended on December 31, 2019 to include a new phase of support for 12nm MRAM development. Under the current JDA extension terms, each party licenses its relevant intellectual property to the other party. For certain jointly developed works, the parties have agreed to follow an invention allocation procedure to determine ownership. In addition, GF possesses the exclusive right to manufacture the Company’s discrete and embedded STT-MRAM devices developed pursuant to the agreement until the earlier of three years after the qualification of the MRAM device for a particular technology node or four years after the completion of the relevant statement of work under which the device was developed. For the same exclusivity period associated with the relevant device, GF agreed not to license intellectual property developed in connection with the JDA to named competitors of the Company. If GF manufactures, sells, or transfers to customers wafers containing production quantified STT-MRAM devices that utilize certain design information, GF will be required to pay the Company a royalty. 58 Table of Contents 11. Geographic Information Property and equipment, net by country was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 United States ​ $ 2,165 ​ $ 2,555 Singapore ​ ​ 974 ​ ​ 1,077 Other ​ ​ 81 ​ ​ 85 ​ ​ $ 3,220 ​ $ 3,717 ​ Revenue from customers is designated based on the geographic region or country to which the product is delivered or the licensee is located. Revenue by country was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 United States ​ $ 9,968 ​ $ 14,599 Japan ​ ​ 5,974 ​ ​ 12,216 Hong Kong ​ ​ 16,220 ​ ​ 10,748 Germany ​ ​ 7,168 ​ ​ 9,767 Singapore ​ ​ 3,363 ​ ​ 4,285 China ​ ​ — ​ ​ 2,727 Canada ​ ​ 742 ​ ​ 1,324 All other ​ ​ 6,967 ​ ​ 8,099 Total revenue ​ $ 50,402 ​ $ 63,765 ​ ​ 12. Income Taxes For the years ended December 31, 2024 and 2023, the Company’s provision for income tax consisted of (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 Current: ​ ​ ​ ​ ​ ​ Federal ​ $ 52 ​ $ — State ​ ​ 38 ​ ​ 134 Foreign ​ ​ — ​ ​ — Total Current ​ $ 90 ​ $ 134 ​ ​ ​ ​ ​ ​ ​ Deferred: ​ ​ ​ ​ ​ ​ Federal ​ $ 21 ​ $ 40 State ​ ​ ( 151 ) ​ ​ ( 190 ) Foreign ​ ​ — ​ ​ — Total Deferred ​ $ ( 130 ) ​ $ ( 150 ) ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ $ ( 40 ) ​ $ ( 16 ) ​ 59 Table of Contents The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 Tax at statutory federal rate ​ 21.0 % 21.0 % State taxes, net of federal benefit ​ 3.6 ​ 1.7 ​ Stock-based compensation ​ 34.8 ​ 0.6 ​ IRC section 162(m) limitation ​ 29.0 ​ 3.9 ​ R&D tax credits ​ ( 564.7 ) ​ — ​ Change in valuation allowance ​ 486.1 ​ ( 28.5 ) ​ Other ​ ( 15.1 ) ​ 1.1 ​ Provision for income taxes ​ ( 5.3 ) % ( 0.2 ) % ​ The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Deferred tax assets: ​ ​ ​ ​ ​ ​ Net operating loss carryforwards ​ $ 20,564 ​ $ 22,068 Inventory ​ ​ 462 ​ ​ 287 Accruals ​ ​ 366 ​ ​ 863 Depreciation and amortization ​ ​ 9 ​ ​ 13 Research and experimental credits ​ ​ 3,995 ​ ​ — Research and experimental expenditures ​ ​ 6,412 ​ ​ 4,728 Stock-based compensation ​ ​ 428 ​ ​ 268 Right of use liability ​ ​ 1,045 ​ ​ 1,245 Gross deferred tax assets ​ ​ 33,281 ​ ​ 29,472 Valuation allowance ​ ​ ( 31,343 ) ​ ​ ( 27,748 ) Deferred tax assets ​ ​ 1,938 ​ ​ 1,724 Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Right of use asset ​ ​ ( 1,024 ) ​ ​ ( 1,226 ) Other ​ ​ ( 646 ) ​ ​ ( 348 ) Deferred tax liabilities ​ ​ ( 1,670 ) ​ ​ ( 1,574 ) Net deferred tax assets ​ $ 268 ​ $ 150 ​ The Company is required to reduce its deferred tax assets by a valuation allowance if it is more likely than not that some or all of its deferred tax assets will not be realized. Management must use judgment in assessing the potential need for a valuation allowance, which requires an evaluation of both negative and positive evidence. The weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. In determining the need for and amount of the valuation allowance, if any, the Company assesses the likelihood that it will be able to recover its deferred tax assets using historical levels of income, estimates of future income and tax planning strategies. As a result of projected taxable income, the Company determined that, based on all available evidence, there was substantial certainty as to whether it will recover recorded net deferred taxes for certain state jurisdictions in future periods. However, as it pertains to the federal, Arizona, and Colorado net deferred tax assets, based on all the available evidence, there is substantial uncertainty as to whether it will recover recorded net deferred taxes in future periods. Accordingly, the Company recorded a partial valuation allowance against its net deferred tax assets as of December 31, 2024 and 2023, respectively. The net valuation allowance increased by $3.6 million in 2024, as reflected below (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Valuation Allowance at beginning of year ​ ​ ( 27,748 ) ​ ​ ( 30,328 ) Current Year Change ​ ​ ( 3,595 ) ​ ​ 2,580 Valuation Allowance at end of year ​ ​ ( 31,343 ) ​ ​ ( 27,748 ) ​ 60 Table of Contents As of December 31, 2024, the Company has federal net operating loss carryforwards of approximately $ 89.2 million, of which $ 53.2 million will expire in 2030 through 2037 if not utilized, and $ 36.0 million that will carryover indefinitely. In addition, the Company has state net operating loss carryforwards of approximately $ 48.3 million, of which $ 45.5 million will expire in 2030 through 2040 if not utilized, and $ 2.8 million that will carryover indefinitely. The Tax Reform Act of 1986 (the Act) provides for a limitation on the annual use of net operating loss carryforwards following certain ownership changes (as defined by the Act and codified under IRC Section 382) that could limit the Company’s ability to utilize these carryforwards. Further, a portion of the carryforwards may expire before utilized to reduce future income tax liabilities as a result of the annual limitation. The Company experienced an ownership change in October 2016 and as a result, $ 43.8 million ($ 9.2 million tax effected) of the federal NOLs are expected to expire unutilized due to limitation under IRC Section 382. Consistent with prior years, the NOLs expected to expire unutilized are included in the NOL carryforward amounts disclosed, subject to a valuation allowance. The Company files income tax returns in the U.S. federal and various state jurisdictions. The Company is generally subject to U.S. federal and state income tax examination for all tax years beginning in 2008, due to the net operating losses that are carried forward. ​ A summary of changes in the Company’s gross unrecognized tax benefits for the years ended December 31, 2024 and 2023 was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 Unrecognized tax expense, beginning of the year ​ $ 473 ​ $ 105 Decrease related to prior year tax positions ​ ​ — ​ ​ — Increase related to prior year tax positions ​ ​ 662 ​ ​ 368 Increase related to current year tax positions ​ ​ 254 ​ ​ — Unrecognized tax expense, end of year ​ $ 1,389 ​ $ 473 ​ Included in the balance of unrecognized tax benefits as of December 31, 2024, are $ 0.1 million of tax benefit that, if recognized, would affect the effective tax rate. Included in the balance of uncertain tax benefits as of December 31, 2024 is $ 1.3 million of tax benefits that, if recognized, would result in adjustments to deferred taxes. ​ The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefit as a component of income tax expense. The Company has accrued penalties and interest of $ 0.2 million, as of both December 31, 2024 and 2023. ​ On October 8, 2021, the Organization for Economic Co-operation and Development ("OECD") released a statement on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges of the digital economy. On December 20, 2021, the OECD released the Model GloBE Rules for Pillar Two defining a 15% global minimum tax rate for large multinational corporations. The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Model GloBE Rules for Pillar Two expected by calendar year 2024. The Company is continuing to evaluate the Model GloBE Rules for Pillar Two and related legislation, and their potential impact on future periods, but does not expect it to have a material impact. ​ 61 Table of Contents 13. Net Income Per Common Share The following table sets forth the computation of basic and diluted net income per share (in thousands, except share and per share amounts): Basic EPS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Numerator: ​ ​ Net income ​ ​ $ 781 ​ $ 9,052 Denominator: ​ ​ ​ Weighted-average shares of common stock outstanding, basic ​ ​ 21,642,793 ​ 20,748,302 Net income per common share, basic ​ ​ $ 0.04 ​ $ 0.44 ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted EPS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Numerator: ​ ​ Net income ​ ​ $ 781 ​ $ 9,052 Warrant liability fair value loss recognized ​ ​ ​ — ​ ​ ( 25 ) Net income attributable to common stockholders, diluted ​ ​ $ 781 ​ $ 9,027 Denominator: ​ ​ ​ Weighted-average shares of common stock outstanding, basic ​ ​ 21,642,793 ​ 20,748,302 Dilutive effect of stock options and RSUs ​ ​ ​ 513,627 ​ ​ 619,002 Weighted-average shares of common stock outstanding, diluted ​ ​ 22,156,420 ​ 21,367,304 Net income per common share, diluted ​ ​ $ 0.04 ​ $ 0.42 ​ The following outstanding shares of potentially dilutive securities outstanding have been excluded from the computation of diluted net income per common share for the periods presented as their inclusion would be anti-dilutive: ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Options to purchase common stock 741,141 613,652 RSUs 21,624 ​ 330,082 Common stock warrants — 18,461 Total 762,765 962,195 ​ ​ ​ Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.