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 ) 37 Financial Statements: Balance Sheets 39 Statements of Operations and Comprehensive (Loss) Income 40 Statements of Stockholders’ Equity 41 Statements of Cash Flows 42 Notes to Financial Statements 43 36 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, 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. 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 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. At December 31, 2025, the Company’s inventory balance was $10.7 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. /s/ Ernst & Young LLP 37 Table of Contents We have served as the Company’s auditor since 2008. Phoenix, Arizona March 4, 2026 38 Table of Contents EVERSPIN TECHNOLOGIES, INC. Balance Sheets (In thousands, except share and per share amounts) December 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 44,450 $ 42,097 Accounts receivable, net 8,101 11,722 Inventory 10,734 9,110 Prepaid expenses and other current assets 1,877 1,272 Total current assets 65,162 64,201 Property and equipment, net 14,140 3,220 Intangible assets, net 1,714 3,416 Right-of-use assets 3,251 4,549 Other assets 342 2,403 Total assets $ 84,609 $ 77,789 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 5,180 $ 2,278 Accrued liabilities 3,651 2,449 Deferred revenue — 78 Lease liabilities, current portion 1,381 1,306 Contract obligations 1,472 2,034 Software liabilities, current portion 1,769 1,769 Total current liabilities 13,453 9,914 Lease liabilities, net of current portion 1,956 3,336 Software liabilities, net of current portion 15 1,784 Long-term income tax liability 268 162 Total liabilities $ 15,692 $ 15,196 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, 2025 and 2024, respectively — — Common stock, $ 0.0001 par value per share; 100,000,000 shares authorized; 22,977,797 and 22,059,697 shares issued and outstanding as of December 31, 2025 and 2024, respectively 2 2 Additional paid-in capital 206,370 199,460 Accumulated deficit ( 137,455 ) ( 136,869 ) Total stockholders’ equity 68,917 62,593 Total liabilities and stockholders’ equity $ 84,609 $ 77,789 The accompanying notes are an integral part of these financial statements. 39 Table of Contents EVERSPIN TECHNOLOGIES, INC. Statements of Operations and Comprehensive (Loss) Income (In thousands, except share and per share amounts) Year Ended December 31, 2025 2024 Product sales $ 48,292 $ 42,203 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, 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: Research and development 14,085 13,686 General and administrative 14,552 14,141 Sales and marketing 6,113 5,390 Total operating expenses 34,750 33,217 Loss from operations ( 6,508 ) ( 7,091 ) Interest income 1,646 1,766 Other income, net 4,405 6,066 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. 40 Table of Contents EVERSPIN TECHNOLOGIES, INC. Statements of Stockholders’ Equity (In thousands, except share amounts) Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity 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 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 Issuance of common stock under stock incentive plans and exercise of stock options 918,100 — 1,134 — 1,134 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 The accompanying notes are an integral part of these financial statements. 41 Table of Contents EVERSPIN TECHNOLOGIES, INC. Statements of Cash Flows (In thousands) Year Ended December 31, 2025 2024 Cash flows from operating activities Net (loss) income $ ( 586 ) $ 781 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,212 1,731 Gain on sale of property and equipment ( 25 ) — Stock-based compensation 5,776 6,713 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 ) Accrued liabilities 806 ( 1,939 ) Deferred revenue ( 78 ) ( 258 ) Contract obligations ( 562 ) 2,034 Lease liabilities, net 60 74 Long-term income tax liability 106 — Net cash provided by operating activities 9,960 7,099 Cash flows from investing activities Purchases of property and equipment ( 6,838 ) ( 3,049 ) Purchases of intangible assets ( 1,836 ) ( 11 ) Net cash used in investing activities ( 8,674 ) ( 3,060 ) Cash flows from financing activities 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 financing activities 1,067 1,112 Net increase in cash and cash equivalents 2,353 5,151 Cash and cash equivalents at beginning of period 42,097 36,946 Cash and cash equivalents at end of period $ 44,450 $ 42,097 Supplementary cash flow information: Cash paid for taxes $ 38 $ 202 Operating cash flows paid for operating leases $ 1,415 $ 1,399 Financing cash flows paid for finance leases $ 67 $ 66 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 $ 3,982 $ 182 The accompanying notes are an integral part of these financial statements. 42 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. 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 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. 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 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 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 43 Table of Contents 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. 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, 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, 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. 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, 2025 and 2024, the allowance for product returns and price adjustments was $ 0.3 million and $ 0.4 million, respectively. Accounts receivable, net consisted of the following (in thousands): December 31, 2025 December 31, 2024 Trade accounts receivable $ 8,231 $ 11,944 Unbilled accounts receivable 179 187 Allowance for product returns and price adjustments ( 309 ) ( 409 ) Accounts receivable, net $ 8,101 $ 11,722 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 2025 2024 2025 2024 Customer A 25 % * 57 % * Customer B * 27 % * 61 % ______________________________________________________________ * Less than 10% 44 Table of Contents 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 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 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 operations and comprehensive (loss) income. 45 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, 2025, 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 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. 46 Table of Contents 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 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. 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 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 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 47 Table of Contents 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 operations and comprehensive (loss) 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 2024 and 2025 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. 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. Engineering services and 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 48 Table of Contents 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 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, 2025 and 2024, 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 9). 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. 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. 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 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. 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. 49 Table of Contents 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 (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) 2023-09, 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 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. 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. 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. 50 Table of Contents 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. 3. Statements of Operations and Comprehensive (Loss) Income Components Revenue 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. The following table presents the Company’s revenues disaggregated by sales channel (in thousands): Year Ended December 31, 2025 2024 Distributor $ 41,667 $ 39,943 Non-distributor 13,535 10,459 Total revenue $ 55,202 $ 50,402 The following table presents the Company’s revenues disaggregated by timing of recognition (in thousands): Year Ended December 31, 2025 2024 Point in time $ 49,066 $ 42,903 Over time 6,136 7,499 Total revenue $ 55,202 $ 50,402 51 Table of Contents The following table presents the Company’s revenues disaggregated by type (in thousands): Year Ended December 31, 2025 2024 Product sales $ 48,292 $ 42,203 Licensing 1,108 6,346 Royalties 774 700 Engineering services and other revenue 5,028 1,153 Total revenue $ 55,202 $ 50,402 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, 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. Revenue by region for the periods indicated was as follows (in thousands): Year Ended December 31, 2025 2024 APAC $ 34,527 $ 28,688 North America 10,890 10,710 EMEA 9,785 11,004 Total revenue $ 55,202 $ 50,402 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, 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. 52 Table of Contents 4. Balance Sheet Components Inventory Inventory consisted of the following (in thousands): December 31, 2025 December 31, 2024 Raw materials $ 323 $ 238 Work-in-process 9,269 7,510 Finished goods 1,142 1,362 Total inventory $ 10,734 $ 9,110 Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): December 31, 2025 December 31, 2024 Manufacturing equipment $ 15,070 $ 14,199 Computer and network equipment 731 602 Furniture and fixtures 113 113 Construction in Progress 11,131 — Leasehold improvements 1,476 1,476 Total property and equipment, gross 28,521 16,390 Less: accumulated depreciation ( 14,381 ) ( 13,170 ) Total property and equipment, net $ 14,140 $ 3,220 Depreciation expense during years ended December 31, 2025 and 2024 was $ 1.5 million and $ 1.6 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, 2025 Weighted- Average Life (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software 1.0 $ 4,456 $ ( 2,742 ) $ 1,714 Total intangible assets $ 4,456 $ ( 2,742 ) $ 1,714 December 31, 2024 Weighted- Average Life (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software 2.0 $ 4,389 $ ( 973 ) $ 3,416 Total intangible assets $ 4,389 $ ( 973 ) $ 3,416 53 Table of Contents 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, 2025 Amount 2026 $ 1,633 2027 22 2028 22 2029 21 Thereafter 16 Total $ 1,714 Accrued Liabilities Accrued liabilities consisted of the following (in thousands): December 31, 2025 December 31, 2024 Payroll-related expenses $ 2,481 $ 1,606 Inventory 425 157 Other 745 686 Total accrued liabilities $ 3,651 $ 2,449 Deferred Revenue 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. 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 first quarter of 2025. 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. 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. 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 first quarter of 2025. 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. 54 Table of Contents 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, 2025 Amount 2026 $ 1,497 2027 1,380 2028 595 2029 48 Total lease payments 3,520 Less: imputed interest ( 183 ) Total lease liabilities 3,337 Less: current portion of lease liabilities ( 1,381 ) Total lease liabilities, net of current portion $ 1,956 Other information related to the Company's operating lease liabilities was as follows: December 31, 2025 December 31, 2024 Weighted-average remaining lease term (years) 2.44 3.39 Weighted-average discount rate 4.50 % 4.50 % Other information related to the Company’s finance lease liabilities was as follows: December 31, 2025 December 31, 2024 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 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. Legal Proceedings From time to time, the Company may become involved in legal proceedings arising from the ordinary course of its business. 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 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 55 Table of Contents 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. Stockholders’ Equity Common Stock Common stockholders are entitled to dividends if and when declared by the board of directors. As of December 31, 2025, 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, 2025 December 31, 2024 Options issued and outstanding 1,365,002 1,521,857 Shares available for future option grants 249,349 545,525 RSUs subject to future vesting 1,294,166 987,965 Common stock warrants — 18,461 Total 2,908,517 3,073,808 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 expired on June 5, 2025. 7. 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, 2025 2024 General and administrative $ 2,745 $ 3,304 Research and development 1,755 1,902 Sales and marketing 611 720 Cost of sales 665 787 Total stock-based compensation $ 5,776 $ 6,713 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 56 Table of Contents 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, 2025, of the 2,899,603 shares of common stock reserved and available for grant under the 2016 Plan, 249,349 shares of common stock remain available for grant under the 2016 Plan. The Company authorized 661,790 shares during the year ended December 31, 2025. 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, 2025, 8,361 options under the 2008 Plan remained outstanding. 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 Number of Options Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (years) Aggregate Intrinsic Value (In thousands) Balance—December 31, 2024 1,521,857 $ 6.04 5.9 $ 1,507 Options granted — Options exercised ( 140,841 ) $ 4.76 $ 401 Options cancelled/forfeited ( 16,014 ) $ 7.26 Balance—December 31, 2025 1,365,002 $ 6.16 4.9 $ 4,303 Options exercisable—December 31, 2025 1,347,618 $ 6.13 4.9 $ 4,281 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. Stock-based compensation cost for options capitalized within inventory at December 31, 2025 and 2024 was not material. 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 1,141,546 shares available for issuance under the ESPP as of December 31, 2025. Employees purchased 110,850 shares for $ 0.5 57 Table of Contents 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 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. The following table summarizes RSU activity for the year ended December 31, 2025 : RSUs Outstanding Number of Restricted Stock Units Weighted- Average Grant Date Fair Value Per Share 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 Balance—December 31, 2025 1,294,166 $ 6.63 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, 2025 , there was $ 7.0 million of unrecognized stock-based compensation expense related to RSUs to be recognized over a weighted-average period of 2.6 years. Compensation cost capitalized within inventory was immaterial as of December 31, 2025 and 2024. 8. 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. 9. 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 10. Geographic Information Property and equipment, net by country was as follows (in thousands): Year Ended December 31, 2025 2024 United States $ 13,787 $ 2,165 Singapore 238 974 Other 115 81 $ 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. Revenue by country was as follows (in thousands): Year Ended December 31, 2025 2024 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 11. Income Taxes For the years ended December 31, 2025 and 2024, the Company’s provision for income tax consisted of (in thousands): Year Ended December 31, 2025 2024 Current: Federal $ ( 18 ) $ 52 State 15 38 Foreign 8 — Total Current $ 5 $ 90 Deferred: Federal $ — $ 21 State 124 ( 151 ) Foreign — — Total Deferred $ 124 $ ( 130 ) Provision for income taxes $ 129 $ ( 40 ) 59 Table of Contents Net income tax payments in 2025 were as follows: Year Ended December 31, 2025 Federal $ — State 38 Foreign — 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 Rate Amount U.S. 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, 2024 Tax at statutory federal rate 21.0 % State taxes, net of federal benefit 3.6 Stock-based compensation 34.8 IRC section 162(m) limitation 29.0 R&D tax credits ( 564.7 ) Change in valuation allowance 486.1 Other ( 15.1 ) Provision for income taxes ( 5.3 ) % 60 Table of Contents 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, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 21,832 $ 20,564 Inventory 260 462 Accruals 614 366 Depreciation and amortization 4 9 Research and experimental credits 4,304 3,995 Research and experimental expenditures 4,374 6,412 Stock-based compensation 397 428 Right of use liability 735 1,045 Gross deferred tax assets 32,520 33,281 Valuation allowance ( 31,337 ) ( 31,343 ) Deferred tax assets 1,183 1,938 Deferred tax liabilities: Right of use asset ( 716 ) ( 1,024 ) Other ( 322 ) ( 646 ) Deferred tax liabilities ( 1,038 ) ( 1,670 ) Net deferred tax assets $ 145 $ 268 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, 2025 and 2024, respectively. The net valuation allowance decreased by less than $ 0.1 million in 2025, as reflected below (in thousands). Year Ended December 31, 2025 2024 Valuation Allowance at beginning of year ( 31,343 ) ( 27,748 ) Current Year Change 6 ( 3,595 ) Valuation Allowance at end of year ( 31,337 ) ( 31,343 ) As of December 31, 2025, the Company has federal net operating loss carryforwards of approximately $ 95.2 million, of which $ 53.2 million will expire in 2030 through 2037 if not utilized, and $ 42.0 million that will carryover indefinitely. In addition, the Company has state net operating loss carryforwards of approximately $ 48.4 million, of which $ 45.4 million will expire in 2030 through 2045 if not utilized, and $ 3.0 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 61 Table of Contents 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, 2025 and 2024 was as follows (in thousands): Year Ended December 31, 2025 2024 Unrecognized tax expense, beginning of the year $ 1,389 $ 473 Decrease related to prior year tax positions ( 126 ) — Increase related to prior year tax positions — 662 Increase related to current year tax positions 184 254 Unrecognized tax expense, end of year $ 1,447 $ 1,389 Included in the balance of unrecognized tax benefits as of December 31, 2025, 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, 2025 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, 2025 and 2024. 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. 12. 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): Basic EPS Year Ended December 31, 2025 2024 Numerator: Net (loss) income $ ( 586 ) $ 781 Denominator: Weighted-average shares of common stock outstanding, basic 22,568,253 21,642,793 Net (loss) income per common share, basic $ ( 0.03 ) $ 0.04 62 Table of Contents Diluted EPS Year Ended December 31, 2025 2024 Numerator: Net (loss) income $ ( 586 ) $ 781 Net (loss) income attributable to common stockholders, diluted $ ( 586 ) $ 781 Denominator: Weighted-average shares of common stock outstanding, basic 22,568,253 21,642,793 Dilutive effect of stock options and RSUs — 513,627 Weighted-average shares of common stock outstanding, diluted 22,568,253 22,156,420 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, 2025 2024 Options to purchase common stock 787,937 741,141 RSUs 645,747 21,624 ESPP 2,003 — Total 1,435,687 762,765 13. 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. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.