What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-04 compared with 2025-02-27 · 233 added, 148 removed, 576 unchanged (40% of the section changed)

5 unchanged sentences

Balance Sheets

Statements of Income and Comprehensive Income

Statements of Operations and Comprehensive (Loss) Income

Statements of Stockholders’ Equity

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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”).

(the Company) as of December 31, 2025 and 2024, the related statements of operations and comprehensive (loss) income, stockholders' equity, and cash flows for each of the two years in the period ended December 31, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S.

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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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

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.

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, 2025, the Company’s inventory balance was $10.7 million.

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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.

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.

/s/ Ernst & Young LLP

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Phoenix, Arizona

February 27, 2025

March 4, 2026

EVERSPIN TECHNOLOGIES, INC.

1 unchanged sentence

(In thousands, except share and per share amounts)

2025 December 31,

Current assets:

1 unchanged sentence

Accounts receivable, net 8,101 11,722

Inventory 10,734 9,110

Prepaid expenses and other current assets 1,877 1,272

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Right-of-use assets 3,251 4,549

Other assets 342 2,403

Total assets $ 84,609 $ 77,789

Liabilities and Stockholders’ Equity

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EVERSPIN TECHNOLOGIES, INC.

Statements of Income and Comprehensive Income

Statements of Operations and Comprehensive (Loss) Income

(In thousands, except share and per share amounts)

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Product sales $ 48,292 $ 42,203

Licensing, royalty, patent, and other revenue

Licensing, royalty, patent, engineering services and other revenue 6,910 8,199

Total revenue 55,202 50,402

Cost of product sales 25,938 22,812

Cost of licensing, royalty, patent, and other revenue

Cost of licensing, royalty, patent, engineering services and other revenue 1,022 1,464

Total cost of sales 26,960 24,276

Gross profit 28,242 26,126

Operating expenses:

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Total operating expenses 34,750 33,217

(Loss) income from operations

Interest expense

Loss from operations ( 6,508 ) ( 7,091 )

Interest income 1,646 1,766

Other income, net 4,405 6,066

Net income before income taxes

Income tax benefit

Net income and comprehensive income

Net income per common share:

Net (loss) income before income taxes ( 457 ) 741

Income tax (expense) benefit ( 129 ) 40

Net (loss) income and comprehensive (loss) income $ ( 586 ) $ 781

Net (loss) income per common share:

Basic $ ( 0.03 ) $ 0.04

Diluted $ ( 0.03 ) $ 0.04

Weighted average shares of common stock outstanding:

Basic 22,568,253 21,642,793

Diluted 22,568,253 22,156,420

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

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(In thousands, except share amounts)

Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Shares Amount

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

Exercise of warrants

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

1 unchanged sentence

Stock-based compensation expense — — 5,776 — 5,776

Net loss — — — ( 586 ) ( 586 )

Balance at December 31, 2025 22,977,797 $ 2 $ 206,370 $ ( 137,455 ) $ 68,917

1 unchanged sentence

EVERSPIN TECHNOLOGIES, INC.

Statements of Cash Flow s

Statements of Cash Flows

(In thousands)

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Cash flows from operating activities

Net (loss) income $ ( 586 ) $ 781

Adjustments to reconcile net income to net cash provided by operating activities:

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Stock-based compensation 5,776 6,713

Loss on prepayment and termination of credit facility

Non-cash warrant revaluation

Non-cash interest expense

Changes in operating assets and liabilities:

Accounts receivable 3,621 ( 168 )

Inventory ( 1,624 ) ( 719 )

Prepaid expenses and other current assets ( 605 ) ( 284 )

Other assets 360 ( 492 )

Accounts payable ( 501 ) ( 374 )

3 unchanged sentences

Lease liabilities, net 60 74

Long-term income tax liability

Net cash provided by operating activities 9,960 7,099

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Purchases of intangible assets ( 1,836 ) ( 11 )

Proceeds received from sale of property and equipment

Net cash used in investing activities ( 8,674 ) ( 3,060 )

Cash flows from financing activities

Payments on long-term debt

Proceeds from exercise of stock options and purchase of shares in employee stock purchase plan 1,134 1,178

Payments on finance leases ( 67 ) ( 66 )

Net cash provided by (used in) financing activities

Net cash provided by financing activities 1,067 1,112

Net increase in cash and cash equivalents 2,353 5,151

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Supplementary cash flow information:

Interest paid

Cash paid for taxes $ 38 $ 202

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Purchases of property and equipment in accounts payable and accrued liabilities $ 3,982 $ 182

Cashless exercise of warrants

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

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however, actual results may differ from the Company’s estimates.

Reclassification

Certain reclassifications of previously reported amounts have been made to conform to the current period presentation.

Specifically, interest income was previously presented within other income, net for the year ended December 31, 2024 in the Annual Report on Form 10-K filed with the SEC on February 27, 2025.

Interest income is presented separately in the statement of operations and comprehensive (loss) income within these financial statements.

Segment Information

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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 Company’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.

Significant segment expenses within net income are those separately presented on the Company’s statements of operations and comprehensive (loss) income, which include cost of sales, research and development, general and administrative, and sales and marketing expenses.

Cash and Cash Equivalents

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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.

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, 2025 and 2024.

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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.

At December 31, 2025 and 2024, the unbilled accounts receivable balance was $ 0.2 million in each year.

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.

At December 31, 2025 and 2024, the unbilled contract asset balance was $ 0.4 million and $ 0.5 million, respectively.

The Company establishes an allowance for product returns.

5 unchanged sentences

Accounts receivable, net consisted of the following (in thousands):

2025 December 31,

Trade accounts receivable $ 8,231 $ 11,944

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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:

Accounts Receivable

Revenue Accounts Receivable

December 31, As of

Customers 2025 2024 2025 2024

Customer A 25 % * 57 % *

Customer B * 27 % * 61 %

______________________________________________________________

* Less than 10%

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

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.

The carrying value of inventory is adjusted for excess and obsolescence based on the Company’s 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.

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December 31, 2024

Money market funds

Total assets measured at fair value

December 31, 2023

Level 1 Level 2 Level 3 Total

Money market funds $ 33,617 $ — $ — $ 33,617

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Depreciation is computed using the straight-line method over the following estimated useful lives of the assets:

Computer and network equipment

Manufacturing equipment

Furniture and fixtures

Leasehold improvements

Lesser of useful life of the asset or the remaining lease term

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.

Amortization expense of assets acquired through finance leases is included in the statements of operations and comprehensive (loss) income.

Intangible Assets, Net

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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

difference between the carrying value and the fair value of the impaired asset.

If the asset group is considered to be impaired, the amount of any impairment is measured as the 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.

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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 records operating-related grants and non-income related tax credits as other income in the statements of operations and comprehensive (loss) 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.

These amounts were recognized as other income during the year ended December 31, 2023 when the amounts were reasonably assured to be retained by the Company.

The Company’s compliance with the program’s qualifications may be subject to audit.

In July of 2025, the OBBBA was signed into law, and it included provisions to extend the statute of limitations for the ERTC to be audited.

Amounts received by the Company under this program are subject to audit through the year ended December 31, 2029.

Revenue Recognition

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Price adjustments can be based on a variety of factors, including customer, product, quantity, geography, and competitive differentiation.

protection rights grant distributors the right to a credit in the event of declines in the price of the Company’s products.

Price 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.

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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 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

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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

Engineering services and other Revenue

For certain revenue streams, the Company recognizes revenue based on the pattern of transfer of the services.

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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.

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.

2 unchanged sentences

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.

Other income, net primarily consists of a strategic award, realized gains and losses on sale of assets, and gains and losses on foreign currency transactions.

Product Warranty

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The Company accounts for forfeitures as they occur.

The Black-Scholes option-pricing model requires the input of subjective assumptions including:

Expected volatility.

The Company determines the expected stock price volatility based on the historical volatility of its common stock.

The Company determines the expected stock price volatility based on the historical volatility of its common stock as well as the stock of industry peers for the expected term of the option.

Industry peers consist of several public companies in the technology industry similar in size, stage of life cycle and financial leverage.

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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.

Net (Loss) Income per Common Share

Basic net (loss) income per common share is calculated by dividing the net (loss) 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 (loss) 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.

The Company adopted Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which improves income tax disclosure requirements, primarily through disaggregated information about effective income tax rate reconciliation and additional disclosures regarding income taxes paid.

The guidance is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-09 effective January 1, 2025, on a prospective basis.

The adoption of ASU 2023-09 did not have a significant impact to the financial statements.

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):

In November 2024, the Financial Accounting Standards Board (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.

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The Company is currently evaluating the impact that the standard will have on its financial statements.

In July 2025, the FASB issued ASU No.

2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Accounting Standards Codification (ASC) Topic 606.

Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets.

ASU 2025-05 is effective for the Company’s annual reporting periods beginning after December 15, 2025, and interim reporting periods in those fiscal years.

Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively.

The Company is currently evaluating the impact that the standard will have on its financial statements.

In September 2025, the FASB issued ASU No.

2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Topic 350):

Targeted Improvements to the Accounting for Internal-Use Software , which updates guidance for recognizing software development costs to better align the accounting with how software is developed.

The update removes references to development stages, introduces a probable completion threshold, and incorporates website development costs into the internal-use software framework under ASC Topic 350.

ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those fiscal years, 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.

In December 2025, the FASB issued ASU No.2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements , which clarifies interim disclosure requirements and the applicability of Topic 270.

The objective of the update is to provide clarity about current interim requirements.

The amendments in this update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

The amendments in ASU 2025-11 are effective for interim periods within annual reporting periods beginning after December 15, 2027.

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.

In December 2025, the FASB issued ASU No.2025-12, Codification Improvements , which addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to GAAP.

The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply.

ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years.

The amendments to ASC 260 must be applied retrospectively, while all other amendments may be applied prospectively or retrospectively.

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.

Statements of Operations and Comprehensive (Loss) Income Components

The Company sells products to its distributors, ODMs and OEMs.

The Company sells products to its distributors, OEMs, ODMs and CMs.

The Company also recognizes revenue under licensing, patent, and royalty agreements with some customers.

1 unchanged sentence

Year Ended December 31,

Distributor $ 41,667 $ 39,943

Non-distributor 13,535 10,459

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Point in time $ 49,066 $ 42,903

Over time 6,136 7,499

Total revenue $ 55,202 $ 50,402

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Product sales $ 48,292 $ 42,203

Other revenue

Licensing 1,108 6,346

Royalties 774 700

Engineering services and other revenue 5,028 1,153

Total revenue $ 55,202 $ 50,402

2 unchanged sentences

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 amounts are reported in licensing, royalty, patent, engineering services and other revenue in the statements of operations and comprehensive (loss) 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.

1 unchanged sentence

Year Ended December 31,

APAC $ 34,527 $ 28,688

North America 10,890 10,710

EMEA 9,785 11,004

Total revenue $ 55,202 $ 50,402

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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.

During the year ended December 31, 2025 and 2024, the Company has invoiced $ 4.0 million and $ 8.1 million, respectively, related to this Award of which no balance is outstanding as of December 31, 2025 and 2024.

The contract obligations liability was $ 1.5 million and $ 2.0 million as of December 31, 2025 and 2024, respectively.

The Company recorded $ 4.5 million and $ 6.1 million of other income related to this Award in the year ended December 31, 2025 and 2024, respectively.

Balance Sheet Components

Inventory consisted of the following (in thousands):

2025 December 31,

Raw materials $ 323 $ 238

4 unchanged sentences

Property and equipment, net consisted of the following (in thousands):

2025 December 31,

Manufacturing equipment $ 15,070 $ 14,199

1 unchanged sentence

Furniture and fixtures 113 113

Construction in Progress

Leasehold improvements 1,476 1,476

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December 31, 2025

Gross Carrying

(in years) Gross Carrying

Amount Accumulated

Amortization Net

Internal-use software 1.0 $ 4,456 $ ( 2,742 ) $ 1,714

Total intangible asset

Amortization expense for intangible assets was $ 0.1 million and zero for the years ended December 31, 2024 and 2023, respectively.

Total intangible assets $ 4,456 $ ( 2,742 ) $ 1,714

December 31, 2024

(in years) Gross Carrying

Amount Accumulated

Amortization Net

Internal-use software 2.0 $ 4,389 $ ( 973 ) $ 3,416

Total intangible assets $ 4,389 $ ( 973 ) $ 3,416

Amortization expense for intangible assets was $ 1.8 million and $ 0.1 million for the years ended December 31, 2025 and 2024 , respectively.

The table below presents estimated future amortization expense for finite-lived intangible assets (in thousands):

As of December 31, 2024

As of December 31, 2025 Amount

Thereafter 16

Total $ 1,714

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

2025 December 31,

Payroll-related expenses $ 2,481 $ 1,606

Inventory 425 157

Other 745 686

Total accrued liabilities $ 3,651 $ 2,449

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.

In March 2025, the Company renewed a contractual arrangement with a customer for the development of a strategic radiation hardened (“RAD-Hard”) field programmable gate array product.

The total consideration in the arrangement is $ 1.2 million.

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.

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.

As of December 31, 2025, the Company has billed $ 0.7 million for the performance under the agreement and has recognized $ 0.7 million in revenue for the year ended December 31, 2025.

The Company concluded this contractual arrangement represents 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 interdependency 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.

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.

In January 2025, the Company executed a contractual arrangement with a customer to provide engineering services supporting the customer’s development that uses capabilities of MRAM for in-memory computing.

The total consideration in the arrangement is $ 4.1 million.

As of December 31, 2025, the Company has billed $ 4.1 million for the performance under the agreement and has recognized $ 4.1 million in revenue for the year ended December 31, 2025.

The Company concluded that this contractual arrangement represents one arrangement and assessed the nature of the promises made to the customer to determine whether the performance obligations were distinct.

The Company determined that the engineering services are not separately identifiable from the promised development services, as the engineering services are highly interrelated with, and dependent upon, the overall development services over the life of the contract.

Accordingly, the Company concluded that the engineering services are not distinct within the context of the contract and, therefore, should be combined with the other promised services into a single performance obligation.

Deferred revenue related to these agreements was $ 0.0 million and $ 0.1 million as of December 31, 2025 and 2024, respectively.

Commitments and Contingencies

3 unchanged sentences

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

As of December 31, 2025 Amount

Total lease payments 3,520

4 unchanged sentences

Other information related to the Company's operating lease liabilities was as follows:

2025 December 31,

Weighted-average remaining lease term (years) 2.44 3.39

1 unchanged sentence

Other information related to the Company’s finance lease liabilities was as follows:

2025 December 31,

Weighted-average remaining lease term (years) 3.16 4.15

Weighted-average discount rate 3.90 % 3.90 %

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 operating leases were $ 1.4 million for each of the years ended December 31, 2025 and 2024, respectively.

Lease costs for the Company’s finance lease were immaterial for the years ended December 31, 2025 and 2024.

1 unchanged sentence

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.

Other than the patent infringement lawsuit disclosed in the subsequent event footnote below, management is currently not aware of any matters that would have a material adverse effect on the financial position, results of operations or cash flows of the Company.

Indemnifications

4 unchanged sentences

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.

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.

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.

Stockholders’ Equity

3 unchanged sentences

The Company had reserved shares of common stock for future issuance as follows:

2025 December 31,

Options issued and outstanding 1,365,002 1,521,857

2 unchanged sentences

Common stock warrants — 18,461

Total 2,908,517 3,073,808

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.

The warrant expired on June 5, 2025.

Stock-Based Compensation

10 unchanged sentences

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.

compensation to employees, directors, and consultants.

In addition, the 2016 Plan provides for the grant of performance cash awards to employees, directors, and consultants.

11 unchanged sentences

Options Outstanding

Options Weighted-

Share Weighted-

Life (years) Aggregate

(In thousands)

5 unchanged sentences

Options exercisable—December 31, 2025 1,347,618 $ 6.13 4.9 $ 4,281

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.

The total grant date fair value of options vested was $ 0.7 million and $ 1.2 million during the years ended December 31, 2025 and 2024, respectively.

No options were granted during the years ended December 31, 2025 and 2024.

As of December 31, 2025, there was $ 0.1 million of total unrecognized compensation expense related to unvested options which is expected to be recognized over a weighted-average period of 0.3 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:

Expected volatility

Risk-free interest rate

Expected term (in years)

Dividend yield

Stock-based compensation cost for options capitalized within inventory at December 31, 2025 and 2024 was not material.

2016 Employee Stock Purchase Plan

1 unchanged sentence

The Company had 1,141,546 shares available for issuance under the ESPP as of December 31, 2025.

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.

Employees purchased 110,850 shares for $ 0.5

million during the year ended December 31, 2025, and 69,166 shares for $ 0.4 million during the year ended December 31, 2024.

Restricted Stock Units

4 unchanged sentences

Restricted Stock

Units Weighted-

Fair Value Per

Balance—December 31, 2024 987,965 $ 7.89

Granted 1,000,090 $ 5.82

Vested ( 666,409 ) $ 7.26

Cancelled/forfeited ( 27,480 ) $ 6.89

22 unchanged sentences

United States $ 13,787 $ 2,165

Singapore 238 974

$ 14,140 $ 3,220

Revenue from customers is designated based on the geographic region or country to which the product is delivered or the licensee is located.

2 unchanged sentences

United States $ 9,862 $ 9,968

Japan 6,066 5,974

Hong Kong 6,694 16,220

Germany 6,185 7,168

Singapore 13,154 3,363

Canada 1,028 742

All other 12,213 6,967

Total revenue $ 55,202 $ 50,402

1 unchanged sentence

Year Ended December 31,

Federal $ ( 18 ) $ 52

Total Current $ 5 $ 90

Federal $ — $ 21

State 124 ( 151 )

Total Deferred $ 124 $ ( 130 )

Provision for income taxes $ 129 $ ( 40 )

Net income tax payments in 2025 were as follows:

Year Ended December 31,

Total net income tax payments $ 38

The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

Year Ended December 31, 2025

federal statutory tax rate 21.0 % $ ( 96 )

State taxes, net of federal income tax effect (a) ( 23.3 ) 106

Tax credits - Research and development credits 40.6 ( 184 )

Changes in valuation allowances 53.8 ( 245 )

Nontaxable or nondeductible items

Stock-based compensation ( 47.4 ) 216

IRC Section 162(m) limitation ( 55.0 ) 251

Other adjustments ( 3.8 ) 17

Changes in unrecognized tax benefits ( 14.0 ) 64

Provision for income taxes ( 28.1 ) % $ 129

(a) State taxes in Indiana and Minnesota made up the majority (greater than 50%) of the tax effect in this category.

Year ended December 31,

Tax at statutory federal rate 21.0 %

4 unchanged sentences

Change in valuation allowance 486.1

Other ( 15.1 )

Provision for income taxes ( 5.3 ) %

3 unchanged sentences

Net operating loss carryforwards $ 21,832 $ 20,564

Inventory 260 462

Accruals 614 366

Depreciation and amortization 4 9

8 unchanged sentences

Right of use asset ( 716 ) ( 1,024 )

Other ( 322 ) ( 646 )

Deferred tax liabilities ( 1,038 ) ( 1,670 )

7 unchanged sentences

Accordingly, the Company recorded a partial valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024, respectively.

The net valuation allowance increased by $3.6 million in 2024, as reflected below (in thousands).

The net valuation allowance decreased by less than $ 0.1 million in 2025, as reflected below (in thousands).

Year Ended December 31,

6 unchanged sentences

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.

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.

14 unchanged sentences

The Company has accrued penalties and interest of $ 0.2 million, as of both December 31, 2025 and 2024.

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.

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):

On July 4, 2025, the President signed into law the OBBBA.

The OBBBA maintains the 21 percent corporate tax rate and makes permanent many of the beneficial expired and expiring tax provisions originally enacted in the Tax Cuts and Jobs Act of 2017, including the immediate expensing of domestic research and development expenditures, more favorable interest deductibility and 100 percent bonus depreciation with effective dates in 2025.

Revisions to the international tax framework are effective in 2026.

In the fourth quarter of 2025, the Company elected to immediately expense new domestic research and development expenditures, but continue amortizing the existing capitalized and unamortized expenditures as of December 31, 2024.

Net (Loss) Income Per Common Share

The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except share and per share amounts):

Year Ended December 31,

Net (loss) income $ ( 586 ) $ 781

Weighted-average shares of common stock outstanding, basic 22,568,253 21,642,793

Net income per common share, basic

Net (loss) income per common share, basic $ ( 0.03 ) $ 0.04

Year Ended December 31,

Warrant liability fair value loss recognized

Net income attributable to common stockholders, diluted

Net (loss) income $ ( 586 ) $ 781

Net (loss) income attributable to common stockholders, diluted $ ( 586 ) $ 781

Weighted-average shares of common stock outstanding, basic 22,568,253 21,642,793

1 unchanged sentence

Weighted-average shares of common stock outstanding, diluted 22,568,253 22,156,420

Net income per common share, diluted

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:

Net (loss) income per common share, diluted $ ( 0.03 ) $ 0.04

The following outstanding shares of potentially dilutive securities have been excluded from the computation of diluted net (loss) income per common share for the periods presented as their inclusion would be anti-dilutive:

Year Ended December 31,

Options to purchase common stock 787,937 741,141

Common stock warrants

RSUs 645,747 21,624

Total 1,435,687 762,765

Subsequent Events

Patent Infringement Lawsuit

On January 28, 2026, Avalanche Technology, Inc.

filed a patent infringement lawsuit in the United States District Court for the District of Delaware against the Company.

The lawsuit requests customary remedies for patent infringement and the ITC Complaint requests that the U.S.

International Trade Commission Investigation commence an investigation pursuant to Section 337 of the Tariff Act of 1930, as amended.

The Company denies all allegations and intends to vigorously defend against these claims.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data