What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-06 · 113 added, 102 removed, 158 unchanged (58% of the section changed)

Management’s Discussion and Analysi s of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements and related notes included in Part I, Item 1 of this report and with our audited financial statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2024.

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Additionally, we monitor and project cash flow to determine our sources and uses for working capital to fund our operations.

We also monitor Adjusted net

income, a non-GAAP financial measure, and design wins.

We also monitor Adjusted net income, a non-GAAP financial measure, and design wins.

We define Adjusted net income as net income adjusted for stock-based compensation expense.

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The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to Adjusted net income for the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

(in thousands)

Adjusted Net Income (Loss) reconciliation:

Net income (loss) $ 54 $ 2,271 $ (1,782) $ (433)

Stock-based compensation expense 1,407 1,532 4,403 5,108

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The following tables set forth our results of operations for the periods indicated:

Three Months Ended June 30,

(In thousands)

(As a percentage of revenue)

Three Months Ended September 30,

2025 2024 2025 2024

(In thousands) (As a percentage of revenue)

Product sales $ 12,690 $ 10,443 90 % 86 %

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Total cost of sales 6,854 6,141 49 51

Gross profit 7,206 5,952 51 49

Operating expenses:

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Interest income 432 463 3 3

Other income (expense), net

Net loss before income taxes

Other income, net 1,164 3,933 8 33

Net income before income taxes 51 2,281 — 19

Income tax benefit (expense) 3 (10) — —

Comparison of the three months ended June 30, 2025 and 2024

We generated 66% and 87% of our revenue from products sold to distributors for the three months ended June 30, 2025 and 2024, respectively.

Net income and comprehensive income $ 54 $ 2,271 — % 19 %

Comparison of the three months ended September 30, 2025 and 2024

We generated 86% and 84% of our revenue from products sold to distributors for the three months ended September 30, 2025 and 2024, respectively.

In addition to selling our products to our distributors, we maintain a direct selling relationship, for strategic purposes, with several key customer accounts.

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Our revenue by region and by type of revenue for the periods indicated were as follows (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

APAC $ 8,571 $ 7,923

North America 2,497 1,874

EMEA 2,992 2,296

Total revenue $ 14,060 $ 12,093

Three Months Ended

Three Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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Total revenue $ 14,060 $ 12,093 $ 1,967 16.3 %

Total revenue increased by $2.6 million, or 24.1%, from $10.6 million during the three months ended June 30, 2024 to $13.2 million during the three months ended June 30, 2025 .

The increase was due to an increase in product sales of $1.2 million, and an increase of licensing, royalty, patent, and other revenue of $1.4 million.

Total revenue increased by $2.0 million, or 16.3%, from $12.1 million during the three months ended September 30, 2024 to $14.1 million during the three months ended September 30, 2025.

The increase was due to an increase in product sales of $2.2 million, and partially offset by a decrease of licensing, royalty, patent, and other revenue of $0.3 million.

Licensing, royalty, patent, and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and terms of each transaction.

Licensing, royalty, patent, and other revenue increased by $1.4 million, or 181.7% from $0.7 million during the three months ended June 30, 2024, to $2.1 million during the three months ended June 30, 2025 .

The increase was primarily due to the progression of our contractual agreements with customers for the development of RAD-Hard products, a new agreement for the development of an AI technology application, partially offset by the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM.

Our best estimate of royalty revenue earned is made throughout the year for royalty contracts with an annual performance period, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year.

Licensing, royalty, patent, and other revenue decreased by $0.3 million, or 17.0% from $1.7 million during the three months ended September 30, 2024, to $1.4 million during the three months ended September 30, 2025.

The decrease was primarily due to the reduced pace of deliverables in our contractual agreements with customers for the development of RAD-Hard products, along with the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM, and partially offset by a new agreement for the development of an AI technology application.

Cost of Sales and Gross Margin

Three Months Ended

Three Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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Total cost of sales $ 6,854 $ 6,141 $ 713 11.6 %

Cost of product sales increased by $0.9 million, or 17.8%, from $5.2 million during the three months ended June 30, 2024 , to $6.2 million during the three months ended June 30, 2025 .

Gross margin 51.3 % 49.2 %

Cost of product sales increase d by $0.9 million , or 15.2% , from $5.8 million during the three months ended September 30, 2024 , to $6.6 million during the three months ended September 30, 2025 .

Cost of product sales relate primarily to costs of our toggle and STT products.

Cost of licensing, royalty, patent, and other revenue slightly increased by $0.1 million, or 44.3% from $0.2 million during the three months ended June 30, 2024, to $0.3 million during the three months ended June 30, 2025 .

The increase was primarily due to an increase in costs related to labor and materials associated with the progression of our RAD-Hard and AI technology application projects.

Gross margin increased from 49.0% during the three months ended June 30, 2024, to 51.3% during the three months ended June 30, 2025.

Gross margin increased as a result of a shift in product mix, an increase in licensing, royalty, patent, and other revenue revenue, offset by a decrease in FAB loadings.

Cost of licensing, royalty, patent, and other revenue slightly decreased by $0.2 million, or 42.1% from $0.4 million during the three months ended September 30, 2024, to $0.2 million during the three months ended September 30, 2025.

The decrease was primarily due to a decrease in licensing costs related to labor and materials associated with the progression of our RAD-Hard projects.

Gross margin increased from 49.2% during the three months ended September 30, 2024, to 51.3% during the three months ended September 30, 2025.

Gross margin increased as a result of improved yields and improved fabrication facility ("Fab") utilization.

Operating Expenses

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Three Months Ended

September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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Research and Development Expenses .

Research and development expenses increased by $0.1 million, or 3.6%, from $3.5 million during the three months ended June 30, 2024 , to $3.6 million during the three months ended June 30, 2025.

Research and development expenses relate primarily to the development and enhancement of our new Extended Serial Peripheral Interface (xSPI) family of STT-MRAM products, which offer high-performance, multiple I/O, SPI-

compatibility and feature a high-speed, low pin count SPI compatible interface, and increases in share-based compensation.

Three Months Ended

Research and development expenses increased by $0.2 million , or 5.9% , from $3.4 million during the three months ended September 30, 2024 , to $3.6 million during the three months ended September 30, 2025 .

Three Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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General and Administrative Expenses .

General and administrative expenses increased by $0.4 million, or 11.9%, from $3.3 million during the three months ended June 30, 2024, to $3.6 million during the three months ended June 30, 2025 .

The increase is primarily due to one-time professional services.

Three Months Ended

General and administrative expenses increased by $0.3 million, or 9.7%, from $3.4 million during the three months ended September 30, 2024, to $3.7 million during the three months ended September 30, 2025.

The increase is primarily due to increases in professional service fees.

Three Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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Sales and Marketing Expenses .

Sales and marketing expenses increased by $0.2 million, or 13.8%, from $1.3 million during the three months ended June 30, 2024, to $1.5 million during the three months ended June 30, 2025.

Sales and marketing expenses increased by $0.2 million, or 12.0%, from $1.3 million during the three months ended September 30, 2024, to $1.5 million during the three months ended September 30, 2025.

Sales and marketing expenses relate primarily to compensation costs and contract labor.

Three Months Ended

Three Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

Interest income $ 432 $ 463 $ (31) (6.7) %

Interest income remained consistent at $0.4 million during the three months ended June 30, 2025 and 2024, respectively.

Other Income (Expense), Net

Three Months Ended

Interest income decreased by $31,000, or 6.7%, from $0.5 million interest income during the three months ended September 30, 2024, to $0.4 million interest income during the three months ended September 30, 2025.

The decrease is primarily due to the decrease in interest rates.

Other Income, Net

Three Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

Other income (expense), net

Other income (expense), net increased by $0.9 million, or 2906.7%, from $30,000 other expense during the three months ended June 30, 2024, to $0.8 million other income during the three months ended June 30, 2025 .

Other income, net $ 1,164 $ 3,933 $ (2,769) (70.4) %

Other income, net decreased by $2.8 million, or 70.4%, from $3.9 million other expense during the three months ended September 30, 2024, to $1.2 million other income during the three months ended September 30, 2025.

Other income relates primarily to other income recognized from a strategic award we received to develop a long-term plan to provide manufacturing services for aerospace and defense segments.

Six Months Ended June 30,

(In thousands)

(As a percentage of revenue)

Nine Months Ended September 30,

2025 2024 2025 2024

(In thousands) (As a percentage of revenue)

Product sales $ 34,807 $ 31,190 86 % 84 %

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Total cost of sales 19,672 17,831 49 48

Gross profit 20,727 19,328 51 52

Operating expenses:

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Interest income 1,263 1,325 3 4

Other income (expense), net

Other income, net 2,394 3,862 6 10

Net loss before income taxes (1,781) (347) (4) (1)

Income tax benefit (expense)

Comparison of the six months ended June 30, 2025 and 2024

We generated 63% and 78% of our revenue from products sold to distributors for the six months ended June 30, 2025 and 2024, respectively.

Income tax expense (1) (86) — —

Net loss and comprehensive loss $ (1,782) $ (433) (4) % (1) %

Comparison of the nine months ended September 30, 2025 and 2024

We generated 71% and 80% of our revenue from products sold to distributors for the nine months ended September 30, 2025 and 2024, respectively.

Our revenue by region and by type of revenue for the periods indicated were as follows (in thousands).

Six Months Ended June 30,

Nine Months Ended September 30,

APAC $ 24,412 $ 21,163

North America 7,906 7,857

EMEA 8,081 8,139

Total revenue $ 40,399 $ 37,159

Six Months Ended

Nine Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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Total revenue $ 40,399 $ 37,159 $ 3,240 8.7 %

Total revenue increased by $1.3 million, or 5.1%, from $25.1 million during the six months ended June 30, 2024 to $26.3 million during the six months ended June 30, 2025.

The increase was primarily due to an increase in product sales revenue of $1.4 million.

Licensing, royalty, patent, and other revenue decreased by $0.1 million, or 2.2% from $4.3 million during the six months ended June 30, 2024, to $4.2 million during the six months ended June 30, 2025.

The decrease was primarily due to the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic

radiation hardened toggle MRAM, partially offset by the progression of our contractual agreements with customers for the development of RAD-Hard products a new agreement for the development of an AI technology application.

Total revenue increased by $3.2 million, or 8.7%, from $37.2 million during the nine months ended September 30, 2024 to $40.4 million during the nine months ended September 30, 2025.

The increase was due to increase in product sales revenue of $3.6 million.

Licensing, royalty, patent, and other revenue decreased by $0.4 million, or 6.3% from $6.0 million during the nine months ended September 30, 2024, to $5.6 million during the nine months ended September 30, 2025.

The decrease was primarily due to the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM, and by the reduced pace of deliverables in our contractual agreements with customers for the development of RAD-Hard products a new agreement for the development of an AI technology application.

Cost of Sales and Gross Margin

Six Months Ended

Nine Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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Total cost of sales $ 19,672 $ 17,831 $ 1,841 10.3 %

Cost of product sales increased by $1.0 million, or 8.5%, from $11.2 million during the six months ended June 30, 2024 , to $12.2 million during the six months ended June 30, 2025 .

Gross margin 51.3 % 52.0 %

Cost of product sales increased by $1.8 million , or 10.8% , from $17.0 million during the nine months ended September 30, 2024 , to $18.8 million during the nine months ended September 30, 2025 .

Cost of product sales relate primarily to costs of our toggle and STT products.

Cost of licensing, royalty, patent, and other revenue slightly increased by $0.2 million, or 37.8% from $0.5 million during the six months ended June 30, 2024, to $0.6 million during the six months ended June 30, 2025.

The increase was primarily due to an increase in costs related to labor and materials associated with the progression of our RAD-Hard and AI technology application projects.

Gross margin decreased from 53.4% during the six months ended June 30, 2024, to 51.3% during the six months ended June 30, 2025.

Gross margin decreased as a result of a decrease in FAB loadings, and a decrease in other revenue.

Cost of licensing, royalty, patent, and other revenue remained consistent at $0.8 million during the nine months ended September 30, 2024 and 2025, respectively.

Gross margin decreased from 52.0% during the nine months ended September 30, 2024, to 51.3% during the nine months ended September 30, 2025.

Gross margin decreased as a result of a decrease in other revenue.

Operating Expenses

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Personnel-related expenses, including salaries, benefits, bonuses and stock-based compensation, are among the most significant components of each of our operating expense categories.

Six Months Ended

Nine Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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Research and development as a % of revenue 26 % 28 %

Research and Development Expenses Research and development expenses increased by $0.1 million, or 0.9%, from $6.9 million during the six months ended June 30, 2024 , to $6.9 million during the six months ended June 30, 2025 .

Research and Development Expenses

Research and development expenses increased by $0.3 million , or 2.5% , from $10.3 million during the nine months ended September 30, 2024 , to $ 10.5 million during the nine months ended September 30, 2025 .

Six Months Ended

Nine Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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General and Administrative Expenses .

General and administrative expenses increased by $0.2 million, or 2.6%, from $7.3 million during the six months ended June 30, 2024, to $7.5 million during the six months ended June 30, 2025.

The increase is primarily due to one-time professional services.

Six Months Ended

General and administrative expenses increased by $0.5 million, or 4.9%, from $10.7 million during the nine months ended September 30, 2024, to $11.2 million during the nine months ended September 30, 2025.

The increase is primarily due to one-time professional service fees.

Nine Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

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Sales and Marketing Expenses .

Sales and marketing expenses increased by $0.4 million, or 14.0%, from $2.6 million during the six months ended June 30, 2024, to $3.0 million during the six months ended June 30, 2025.

Sales and marketing expenses increased by $0.5 million, or 13.3%, from $4.0 million during the nine months ended September 30, 2024, to $4.5 million during the nine months ended September 30, 2025.

Sales and marketing expenses relate primarily to compensation costs and contract labor.

Six Months Ended

Nine Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

Interest income $ 1,263 $ 1,325 $ (62) (4.7) %

Interest income remained consistent at $0.9 million during the six months ended June 30, 2025 and 2024, respectively.

Other Income (Expense), Net

Six Months Ended

Interest incom e remained consistent at $1.3 million during the nine months ended September 30, 2024 and 2025 , respectively.

Other Income, Net

Nine Months Ended September 30, Change

2025 2024 Amount %

(Dollars in thousands)

Other income (expense), net

Other income (expense), net increased by $1.3 million, or 1,832.4%, from $0.1 million other expense during the six months ended June 30, 2024, to $1.2 million other income during the six months ended June 30, 2025.

Other income, net $ 2,394 $ 3,862 $ (1,468) (38.0) %

Other income, net decreased by $1.5 million, or 38.0%, from $3.9 million other expense during the nine months ended September 30, 2024, to $2.4 million other income during the nine months ended September 30, 2025.

Other income relates primarily to income recognized from a strategic award we received to develop a long-term plan to provide manufacturing services for aerospace and defense industries.

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Liquidity and Capital Resources

As of June 30, 2025, we had $45.0 million of cash and cash equivalents, compared to $42.1 million as of December 31, 2024.

We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements in the next 12 months.

Our future capital requirements will depend on many factors, including, among other things, our growth rate, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products.

As of September 30, 2025, we had $45.3 million of cash and cash equivalents, compared to $42.1 million as of December 31, 2024.

We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements in

the next 12 months.

Our long-term capital requirements will depend on many factors, including, among other things, our growth rate, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products.

The following table summarizes our cash flows for the periods indicated (in thousands):

Six Month Ended June 30,

Nine Months Ended September 30,

(In thousands)

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Cash Flows From Operating Activities

During the six months ended June 30, 2025, cash provided by operating activities was $6.5 million , which consisted of net loss of $1.8 million , non-cash charges of $4.7 million and changes of net operating assets and liabilities of $3.6 million .

The non-cash charges consisted of stock-based compensation of $3.0 million and depreciation and amortization of $1.7 million.

The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $4.4 million due to a one-time distributor transition, which provided improved payment terms , an increase in accounts payable of $0.8 million, an increase in contract obligation of $0.7 million, a decrease in prepaid and other current assets of $0.2 million, offset by an increase in inventory of $2.2 million and a decrease in accrued liabilities of $0.2 million.

During the six months ended June 30, 2024 , cash provided by operating activities was $0.4 million, which consisted of net loss of $2.7 million, non-cash charges of $4.4 million and changes of net operating assets and liabilities of $1.2 million.

During the nine months ended September 30, 2025 , cash provided by operating activities was $7.3 million , which consisted of net loss of $1.8 million , non-cash charges of $6.9 million and changes of net operating assets and liabilities of $2.2 million .

The non-cash charges consisted of stock-based compensation of $4.4 million and depreciation and amortization of $2.6 million .

The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $1.4 million due to timing of cash receipts for outstanding balances, a decrease in prepaid and other current assets of $0.5 million, and a decrease in inventory of $0.4 million offset by a decrease in accounts payable of $0.6 million, a decrease in accrued liabilities of $2.6 million and a decrease in deferred revenue of $0.3 million.

The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $3.0 million, an increase in deferred revenue of $0.9 million, an increase in accrued liabilities of $0.5 million, an increase in contract obligation of $0.5 million, a decrease in prepaid and other current assets of $0.4 million, an increase in long-term income tax liability of $0.1 million, offset by an increase in inventory of $2.7 million and a decrease in accounts payable of $0.6 million.

During the nine months ended September 30, 2024 , cash provided by operating activities was $3.3 million , which consisted of net loss of $0.4 million , non-cash charges of $ 6.3 million and changes of net operating assets and liabilities of $2.6 million .

The non-cash charges primarily consisted of stock-based compensation of $5.1 million , depreciation and amortization of $1.2 million .

The change in our net operating assets and liabilities was primarily due to an increase in accounts payable of $0.2 million , an increase in contract obligations of $3.0 million , an increase in prepaid and other current assets of $3.6 million , a decrease in accounts receivable of $0.1 million due to timing of cash receipts for outstanding balances, and a decrease in accrued liabilities of $2.2 million .

Cash Flows From Investing Activities

Cash used in investing activities during the six months ended June 30, 2025 was $3.9 million due to $2.9 million of purchases of manufacturing equipment and $1.0 million in purchases of intangible assets.

Cash used in investing activities during the six months ended June 30, 2024 was $1.2 million, reflecting purchases of manufacturing equipment.

Cash used in investing activities during the nine months ended September 30, 2025 was $4.7 million due to $3.2 million of purchases of manufacturing equipment and $1.5 million in purchases of intangible assets.

Cash used in investing activities during the nine months ended September 30, 2024 was $1.3 million, reflecting purchases of manufacturing equipment.

Cash Flows From Financing Activities

Cash provided by financing activities during the six months ended June 30, 2025 was $0.3 million, primarily due to proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan offset by a nominal amount in payments on finance leases.

Cash provided by financing activities during the six months ended June 30, 2024 was $0.6 million, consisting of proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan.

Critical Accounting Policies and Significant Judgements and Estimates

Cash provided by financing activities during the nine months ended September 30, 2025 was $0.6 million, primarily due to proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan offset by a nominal amount in payments on finance leases.

Cash provided by financing activities during the nine months ended September 30, 2024 was $0.7 million, consisting of proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan.

Critical Accounting Policies and Significant Judgments and Estimates

Our condensed financial statements have been prepared in accordance with GAAP.

The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods.

reported revenue generated, and expenses incurred during the reporting periods.

We base our estimates on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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There have been no changes to our critical accounting policies and estimates described in the Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025, that have had a material impact on our condensed financial statements and related notes.

Quantitative and Qualitativ e Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk

Not required for a smaller reporting company.

Controls and Procedure s

Evaluation of disclosure controls and procedures.

Our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of June 30, 2025, the end of the period covered by this Quarterly Report on Form 10-Q.

Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025.

There have been no changes in our internal control over financial reporting that occurred during the three and six months ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent limitation on the effectiveness of internal control.

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely.

Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances.

In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

PART II—O THER INFORMATIO N

Legal Proceedings

We are not party to any material legal proceedings at this time.

From time to time, we may become involved in various legal proceedings that arise in the ordinary course of our business.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis