What changed in this filing

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Item 1. Financial Statements

2025-08-13 compared with 2025-05-13 · 182 added, 122 removed, 780 unchanged (28% of the section changed)

24 unchanged sentences

20,000 shares authorized;

none issued and outstanding

and outstanding

Series A, special voting preferred stock, $ 0.01 par value;

one share authorized, issued and outstanding at March 31, 2025 and December 31, 2024

one share authorized,

issued and outstanding at June 30, 2025 and December 31, 2024

Common stock, $ 0.001 par value;

120,000 shares authorized;

4,843 shares and 4,474 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

and 4,474 shares issued and outstanding at June 30, 2025

and December 31, 2024, respectively

Exchangeable shares, no par value;

unlimited shares authorized;

60 shares outstanding at March 31, 2025 and December 31, 2024

Issuable shares, 917 shares at March 31, 2025 and December 31, 2024

shares outstanding at June 30, 2025 and December 31, 2024, respectively

Issuable shares, 777 and 917 shares at June 30, 2025 and December 31, 2024,

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

Royalty and other

4 unchanged sentences

Selling, general and administrative

Severance and software license obligations

Total operating expenses

1 unchanged sentence

Change in fair value of warrant liabilities

Other income, net

Other income (expense), net

Net loss per share

14 unchanged sentences

Balance as of March 31, 2025

At-the market sales of stock, net

Issuance of abeyance shares

Exchange of exchangeable shares

Issuance of common stock under stock plan, net

Stock-based compensation

Balance as of June 30, 2025

$ ( 179,420 )

8 unchanged sentences

Balance as of March 31, 2024

Issuance of common stock upon exercise of warrants

Sale of common stock

Exchange of exchangeable shares

Issuance of common stock under stock plan, net

Stock-based compensation

Balance as of June 30, 2024

$ ( 172,848 )

3 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

13 unchanged sentences

Cash flows from investing activities:

Purchases of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

1 unchanged sentence

Proceeds from at-the-market sales of stock, net

Proceeds from option exercises

Taxes paid to net share settle equity awards

Repayment of financing leases

37 unchanged sentences

necessary to summarize fairly the Company’s financial position, results of operations and cash flows for the interim periods presented.

The operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for

the year ending December 31, 2025 or for any other future period.

The operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected

for the year ending December 31, 2025 or for any other future period.

Liquidity and Going Concern

The Company incurred net losses

of approximately $ 0.5 million for the three months ended March 31, 2025 and $ 10.7 million for the year ended December 31, 2024 and had

an accumulated deficit of approximately $ 177.6 million as of March 31, 2025.

These and prior year losses have resulted in significant

negative cash flows and have required the Company to raise substantial amounts of additional capital.

To date, the Company has primarily

financed its operations through multiple offerings of its common stock and warrants and the issuance of convertible notes and loans to

investors and affiliates.

of approximately $ 2.3 million for the six months ended June 30, 2025 and $ 10.7 million for the year ended December 31, 2024 and had an

accumulated deficit of approximately $ 179.4 million as of June 30, 2025.

These and prior year losses have resulted in significant negative

cash flows and have required the Company to raise substantial amounts of additional capital.

To date, the Company has primarily financed

its operations through multiple offerings of its common stock and warrants and the issuance of convertible notes and loans to investors

and affiliates.

The Company expects to continue

53 unchanged sentences

Risks and Uncertainties

The Company is subject

to risks from, among other things, competition associated with the industry in general, other risks associated with financing,

liquidity requirements, the volatility of public markets, rapidly changing customer requirements, limited operating history,

tariffs, pandemics, wars and acts of terrorism.

The Company may be unable to access the capital

markets, and additional capital may only be available to the Company on terms that could be significantly detrimental to its

existing stockholders and to its business.

The Company is subject to

risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity

requirements, the volatility of public markets, rapidly changing customer requirements, limited operating history, tariffs, pandemics,

wars and acts of terrorism.

The Company may be unable to access the capital markets, and additional capital may only be available to the

Company on terms that could be significantly detrimental to its existing stockholders and to its business.

Use of Estimates

74 unchanged sentences

The allowance for doubtful accounts receivable was approximately

$ 30,000 as of March 31, 2025 and December 31, 2024.

$ 16,800 and $ 30,000 as of June 30, 2025 and December 31, 2024, respectively.

The Company values its inventories

58 unchanged sentences

Royalty and other

The Company’s licensing

contracts typically provide for royalties based on the licensee’s use of the Company’s memory technology in its currently

shipping commercial products.

The Company estimates its royalty revenue in the calendar quarter in which the licensee uses the licensed

Historically, the Company’s

licensing contracts for its memory technology typically provided for royalties based on the licensee’s use of the Company’s

memory technology in its currently shipping commercial products.

The Company estimates its royalty revenue in the calendar quarter in

which the licensee uses the licensed technology.

Payments are received in the subsequent quarter.

The Company also generates revenue from licensing its technology.

recognizes license fees as revenue at the point of time when the control of the license has been transferred and the Company has no continuing

performance obligations to the customer.

The Company also generates revenue from

licensing its technology.

The Company recognizes license fees as revenue at the point of time when the control of the license has been

transferred and the Company has no continuing performance obligations to the customer.

Engineering services revenue

8 unchanged sentences

as current or non-current based on the timing of when the Company expects to recognize revenue.

As of March 31, 2025 and December 31,

As of June 30, 2025 and December 31, 2024,

contract liabilities were in a current position and included in deferred revenue.

During the three months ended

March 31, 2025, the Company recognized approximately $ 209,000 of revenue that had been included in deferred revenue as of December 31,

During the six months ended

June 30, 2025, the Company recognized approximately $ 320,000 of revenue that had been included in deferred revenue as of December 31,

See Note 6 for disaggregation of revenue by geography.

44 unchanged sentences

during the period.

In addition, the Company includes the number of shares of common stock issuable upon exercise of pre-funded warrants

as outstanding.

Diluted net loss per share gives effect to all potentially dilutive exchangeable and common shares outstanding during

Potentially dilutive common shares consist of incremental exchangeable shares and shares of common stock issuable upon the

achievement of escrow terms, exercise of stock options, vesting of stock awards and exercise of warrants.

In addition, the Company includes the number of abeyance shares and shares of common stock issuable upon exercise of

pre-funded warrants as outstanding.

Diluted net loss per share gives effect to all potentially dilutive exchangeable and common shares

outstanding during the period.

Potentially dilutive common shares consist of incremental exchangeable shares and shares of common stock

issuable upon the achievement of escrow terms, exercise of stock options, vesting of stock awards and exercise of warrants.

The following table sets forth

1 unchanged sentence

(in thousands):

Six months ended

Escrow shares - exchangeable shares

32 unchanged sentences

the Company’s assets and liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):

March 31, 2025

June 30, 2025

Money market funds (1)

6 unchanged sentences

the Company’s determination of fair value for its financial assets (cash equivalents) (in thousands):

March 31, 2025

June 30, 2025

Cash and cash equivalents

24 unchanged sentences

the Company recorded severance charges of approximately $ 446,000 during the six months ended June 30, 2024.

As of March 31, 2025, the

remaining severance liabilities of approximately $ 53,000 are expected to be paid through July 2025.

As a result of the decision

to not recall the Employees, the Company determined that it was probable that a number of its non-cancelable licenses for computer-aided

design software would not be utilized during the remaining license terms.

During the three months ended June 30, 2024, the Company accrued

the value of the remaining contractual liabilities of approximately $ 1,617,000 , which are expected to be paid through September 30, 2025.

As of March 31, 2025, the remaining contractual liabilities of approximately $ 0.6 million and $ 0.3 million are included in accrued expenses

and other (see Note 3) and accounts payable, respectively.

The remaining severance liabilities

of approximately $ 10,000 as of June 30, 2025 were paid in July 2025.

As a result of the decision to not recall the Employees, the Company

determined that it was probable that a number of its non-cancelable licenses for computer-aided design software would not be utilized

during the remaining license terms.

During the three months ended June 30, 2024, the Company accrued the value of the remaining contractual

liabilities of approximately $ 1,617,000 .

During the three months ended June 30, 2025, a licensor terminated one of the license agreements

and initiated a refund of approximately $ 56,300 for amounts previously paid by the Company.

As a result, the Company reversed approximately

$ 222,600 of expense and approximately $ 166,300 of the related contractual liabilities for this licensor during the three months ended

June 30, 2025.

As of June 30, 2025, the remaining contractual liabilities of approximately $ 0.2 million and $ 0.2 million were included

in accrued expenses and other (see Note 3) and accounts payable, respectively, which are expected to be paid by September 30, 2025.

Commitments and Contingencies

3 unchanged sentences

that was not renewed when the lease term expired on January 14, 2025.

In December 2024, the Company

renewed the Toronto office lease for a one-year term, which commenced January 1, 2025, and the Company ceased accounting for the lease

under ASC 842.

December 2024, the Company renewed the Toronto office lease for a one-year term, which commenced January 1, 2025, and the Company ceased

accounting for the lease under ASC 842.

May 2022, the Company entered into a lease for the facility in Markham with a 60 -month term, which commenced June 21, 2022.

8 unchanged sentences

of an adjustment to rent during the last three months of each calendar year during the remaining lease term.

As of March 31, 2025, the

As of June 30, 2025, the

pending Incentive to be received was CAD$ 71,550 .

1 unchanged sentence

a right-of-use asset and lease liability of approximately $ 274,000 .

On March 1, 2025, the finance lease expired, and the Company took ownership of the equipment and the related

right of use asset and liability was fully amortized.

On March 1, 2025, the finance lease expired, and the Company took

ownership of the equipment and the related right of use asset and liability was fully amortized.

November 1, 2022, the Company entered into a 36-month finance lease agreement for the lease of equipment resulting in the recognition

of a right-of-use asset of approximately $ 124,000 and lease liability of approximately $ 117,000 .

following table provides the details of right-of-use assets and lease liabilities as of March 31, 2025 (in thousands):

following table provides the details of right-of-use assets and lease liabilities as of June 30, 2025 (in thousands):

Right-of-use assets:

7 unchanged sentences

Future minimum payments under

the leases at March 31, 2025 are listed in the table below (in thousands):

the leases at June 30, 2025 are listed in the table below (in thousands):

Year ending December 31,

4 unchanged sentences

the details of supplemental cash flow information (in thousands):

Three Months Ended

Six Months Ended June 30,

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Rent expense was approximately

$ 0.1 million and $ 0.2 million for the three months ended March 31, 2025 and 2024, respectively.

In addition to the minimum lease payments,

the Company is responsible for property taxes, insurance and certain other operating costs related to the leased facilities and equipment.

$ 0.1 million and $ 0.2 million for the three months ended June 30, 2025 and 2024, respectively.

Rent expense was approximately $ 0.2 million

and $ 0.3 million for the six-months ended June 30, 2025 and 2024, respectively.

In addition to the minimum lease payments, the Company

is responsible for property taxes, insurance and certain other operating costs related to the leased facilities and equipment.

Indemnification

8 unchanged sentences

No material amounts were reflected in the Company’s condensed consolidated financial

statements for the three months ended March 31, 2025 and 2024 related to these indemnifications.

statements for the three months ended June 30, 2025 and 2024 related to these indemnifications.

The Company has not estimated

7 unchanged sentences

warranty claim experience and includes such costs in cost of net revenues.

Warranty costs were not material for the three months ended

March 31, 2025 and 2024.

Warranty costs were not material for the three and six months

ended June 30, 2025 and 2024.

Legal Matters

8 unchanged sentences

purchase obligations include non-cancelable purchase orders for inventory.

At March 31, 2025, the Company had outstanding non-cancelable

At June 30, 2025, the Company had outstanding non-cancelable

purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $ 3.1 million.

32 unchanged sentences

Three Months Ended

Six Months Ended

Total net revenue

2 unchanged sentences

Stock-based compensation

Severance and software license obligations

Other operating expenses

Other (income) expense, net

Concentrations

The Company recognized revenue

from shipments of products, licensing of its technologies and performance of services to customers by geographical location as follows

from shipments of products, licensing of its technologies and performance of services to customers by geographical destination as follows

(in thousands):

Three Months Ended

Six Months Ended

North America

Rest of world

Rest of the world

Total net revenue

1 unchanged sentence

of product revenue by category (in thousands):

(amounts in thousands)

For the Three

Three months Ended

Six Months Ended

Product category

2 unchanged sentences

The following table lists

significant customers that represented more than 10% of the Company’s total revenue during each respective period:

significant customers that represented more than 10% of total revenue during each respective period:

Three Months Ended

Six Months Ended

* Represents less than 10%

The following table lists

significant customers that represented more than 10% of the Company’s net accounts receivable balance at each respective balance

Accounts Receivable

significant customers that represented more than 10% of the net accounts receivable balance at each respective balance sheet date:

Represents less than 10%

The following table lists

significant vendors that represented more than 10% of the Company’s total accounts payable balance at each respective balance sheet

Accounts Payable

significant vendors that represented more than 10% of the total accounts payable balance at each respective balance sheet date:

Represents less than 10%

36 unchanged sentences

Stock-Based Compensation Expense

The Company reflected compensation

costs related to the vesting of stock options of $ 0.1 million and $ 1.0 million during each of the three-month periods ended March 31,

2025 and 2024, respectively.

At March 31, 2025, the unamortized compensation cost was approximately $ 1.0 million related to stock options

and is expected to be recognized as expense over a weighted average period of approximately 2.5 years.

The Company reflected compensation

costs of approximately $ 17,000 and $ 0.2 million related to the vesting of restricted stock units during each of the three-month periods

ended March 31, 2025 and 2024, respectively.

The unamortized compensation cost at March 31, 2025 was approximately $ 47,000 related to

restricted stock units and is expected to be recognized as expense over a weighted average period of approximately 0.6 years.

were no stock options granted or exercised during the three months ended March 31, 2024.

The Company reflected compensation costs related to the vesting of

stock options of $ 0.2 million and $ 2.0 million during each of the six-month periods ended June 30, 2025 and 2024, respectively.

30, 2025, the unamortized compensation cost was approximately $ 0.8 million related to stock options and is expected to be recognized as

expense over a weighted average period of approximately 2.3 years.

The Company reflected compensation costs of approximately $ 25,000

and $ 0.4 million related to the vesting of restricted stock units during each of the six-month periods ended June 30, 2025 and 2024, respectively.

The unamortized compensation cost at June 30, 2025 was approximately $ 22,000 related to restricted stock units and is expected to be recognized

as expense over a weighted average period of approximately 0.3 years.

No stock options were granted or exercised during the six

months ended June 30, 2024.

Valuation Assumptions and Expense Information for Stock-Based

The fair value of the Company’s

share-based payment awards for the six months ended June 30, 2025 was estimated on the grant dates using the Black-Scholes model with

the following assumptions:

Interest rate (risk-free rate) 4.34 %

Expected volatility 119 %

Expected term 4.38 years

Expected dividend 0 %

Fair value of option grants (in thousands) $ 832

The risk-free interest rate was derived from the U.S.

Treasury Yield

Curve Rates as published by the U.S.

Department of the Treasury as of the grant date for terms equal to the expected terms of the options.

The expected volatility was based on the historical volatility of the Company’s stock price over the expected term of the options.

The expected term of options granted was derived from historical data based on employee exercises and post-vesting employment termination

A dividend yield of zero is applied because the Company has never paid dividends and has no intention to pay dividends in the

The Company accounts for forfeitures as they occur.

Common Stock Options and Restricted Stock

9 unchanged sentences

The following table summarizes

the activity in the shares available for grant under the Plans during the three months ended March 31, 2025 and options outstanding as

of March 31, 2025 (in thousands, except exercise price):

the activity in the shares available for grant under the Plans during the three and six months ended June 30, 2025 and options outstanding

as of June 30, 2025 (in thousands, except exercise price):

Options Outstanding

2 unchanged sentences

Balance as of March 31, 2025

RSUs cancelled and returned to the 2019 Plan

Options exercised

Options cancelled and returned to the 2019 Plan

Balance as of June 30, 2025

The following table summarizes

significant ranges of outstanding and exercisable options as of March 31, 2025 (in thousands, except contractual life and exercise price):

significant ranges of outstanding and exercisable options as of June 30, 2025 (in thousands, except contractual life and exercise price):

Options Outstanding Options Exercisable

11 unchanged sentences

Non-vested shares as of March 31, 2025

Non-vested shares as of June 30, 2025

Stockholders’ Equity

41 unchanged sentences

In January 2025, the Company

issued 40,000 unregistered restricted shares of common stock with a fair value of approximately $ 40,000 to a service provider.

issued 40,000 unregistered shares of common stock with a fair value of approximately $ 40,000 to a service provider.

On August 30, 2024, the Company

1 unchanged sentence

program, under which the Company may, from time to time, in its sole discretion, issue and sell through Ladenburg, acting as agent or

principal, shares of the Company’s common stock initially having an aggregate offering price of up to $ 1,425,000 .

After selling

$ 169,215 of shares pursuant to the Sales Agreement, on December 10, 2024, the Company increased the maximum aggregate offering amount

principal, shares of the Company’s common stock.

On December 10, 2024, the Company increased the maximum aggregate offering amount

of common stock issuable pursuant to the Sales Agreement to $ 2,693,527 .

4 unchanged sentences

Agreement and either the Company or Ladenburg may terminate the Sales Agreement in accordance with its terms.

During the three months

ended March 31, 2025, the Company sold 328,966 shares of common stock for net proceeds of approximately $ 433,000 pursuant to

the Sales Agreement.

Warrant Inducement Offering

During the three and six

months ended June 30, 2025, the Company sold 941,192 and 1,270,158 shares of common stock for net proceeds of approximately

$ 1,086,000 and $ 1,512,000 , respectively, pursuant to the Sales Agreement.

Warrant Inducement Offering and Amendment to Series C Warrants

August 6, 2024, the Company extended the expiration date of the Series B warrants issued in the Offering to October 7, 2024, by entering

12 unchanged sentences

The Series C Warrants have an exercise price of $ 1.61 per share, were exercisable

upon issuance and expire on the six-month anniversary of the date of issuance.

The Series D Warrants have an exercise price of $ 1.61 per

share, were exercisable upon issuance and expire on the five-year anniversary of the date of issuance.

upon issuance and originally expired on the six-month anniversary of the date of issuance.

On May 2, 2025, the Company extended the expiration

date of its Series C Warrants to purchase an aggregate of 2,246,030 shares of common stock from May 6, 2025 to August 4, 2025, by entering

into an amendment with each holder of the Series C Warrants.

The Series D Warrants have an exercise price of $ 1.61 per share, were exercisable

upon issuance and expire on the five-year anniversary of the date of issuance.

Upon exercise of the Existing

6 unchanged sentences

Issuable Shares as a single equity transaction for gross proceeds of approximately $ 2.92 million at the reduced exercise price of $ 1.30

As of March 31, 2025 and December 31, 2024, the fair value of the unissued 917,380 Issuable Shares of approximately $ 1.2 million

has been presented separately as issuable shares on the consolidated balance sheets and statements of stockholders’ equity.

The fair value of the unissued Issuable Shares at each balance sheet date has been presented separately as issuable shares

on the condensed consolidated balance sheets and statements of stockholders’ equity.

In relation to the above warrant

14 unchanged sentences

in the fair value reported in other income (expense) in the consolidated statements of operations.

of March 31, 2025, the Company had the following Purchase Warrants outstanding (share amounts in thousands):

of June 30, 2025, the Company had the following Purchase Warrants outstanding (share amounts in thousands):

Number of Shares Exercise Price Expiration Date

7 unchanged sentences

Balance as of March 31, 2025

The outstanding liability-classified warrants had

no intrinsic value at March 31, 2025.

Change in fair value of warrants

Balance as of June 30, 2025

The outstanding Purchase Warrants had no intrinsic

value at June 30, 2025.

The fair value of the Purchase

Warrants at March 31, 2025 was determined using the Black Scholes model with the assumptions in the following table.

2022 Purchase

2023 Purchase

Warrants at June 30, 2025 was determined using the Black Scholes model with the assumptions in the following table.

2022 Purchase Warrant

2023 Purchase Warrant

Expected term based on contractual term

5 unchanged sentences

Warrants at December 31, 2024 was determined using the Black Scholes model with the assumptions in the following table.

2022 Purchase

2023 Purchase

2022 Purchase Warrant

2023 Purchase Warrant

Expected term based on contractual term

4 unchanged sentences

Warrants Classified as Equity

As of March 31, 2025, the

Company had the following equity-classified common stock purchase warrants outstanding (share amounts in thousands):

As of June 30, 2025, the Company

had the following equity-classified common stock purchase warrants outstanding (share amounts in thousands):

Warrant Type Number of Shares Exercise Price Expiration

2 unchanged sentences

Series A warrants 139 $ 2.625 February 8, 2029

Series C warrants 2,246 $ 1.610 May 5, 2025

Series C warrants 2,246 $ 1.610 August 4, 2025

Series C warrants 157 $ 1.625 November 6, 2029

Series D warrants 2,246 $ 1.610 November 6, 2029

Balance as of March 31, 2025 8,770

Balance as of June 30, 2025 8,770

The outstanding equity-classified warrants had

no intrinsic value at March 31, 2025.

no intrinsic value at June 30, 2025.

Related Party Transactions

2 unchanged sentences

The Company recorded compensation expense of approximately $ 28,600

and $ 27,800 for the employed family member during the three months ended March 31, 2025 and 2024, respectively.

and $ 27,800 for the employed family member during the three months ended June 30, 2025 and 2024, respectively.

The Company recorded compensation

expense of approximately $ 56,100 and $ 55,300 for the employed family member during the six months ended June 30, 2025 and 2024, respectively.

Memory IC Product End-of-Life

5 unchanged sentences

Amendment to Series C Warrants

On May 2, 2025, the Company

extended the expiration date of its Series C Warrants to purchase an aggregate of 2,246,030 shares of common stock from May 6, 2025 to

August 4, 2025, by entering into an amendment with each holder of the Series C Warrants.

See Note 9 for additional information about the

Series C Warrants.

On August 4, 2025, the Company

extended the expiration date of its outstanding Series C Warrants to purchase an aggregate of 2,246,030 shares of common stock from August

4, 2025 to December 5, 2025, by entering into a second amendment with each holder of the Series C Warrants.

See Note 9 for additional

information about the Series C Warrants.

of Common Stock under ATM Offering Program

May 2025, the Company sold 42,284 shares of common stock for net proceeds of approximately $ 46,785 pursuant to the Sales Agreement (see

to June 30, 2025, the Company sold 238,049 shares of common stock for net proceeds of approximately $ 254,364 pursuant to the Sales Agreement

(see Note 8).

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

What changed 10-Q

Item 1. Financial Statements