What changed in this filing

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Item 1. Financial Statements

2026-08-13 compared with 2026-05-14 · 393 added, 620 removed, 264 unchanged (79% of the section changed)

10 unchanged sentences

Right-of-use lease assets 105 143

Other 390 105

Total assets $ 6,786 $ 6,079

LIABILITIES AND STOCKHOLDERS’ EQUITY

14 unchanged sentences

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

one share authorized, issued and outstanding at March 31, 2026 and December 31, 2025

one share authorized, issued and outstanding at June 30, 2026 and December 31, 2025 — —

Common stock, $ 0.001 par value;

120,000 shares authorized;

12,582 shares and 10,055 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

15,041 and 10,055 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 14 9

Exchangeable shares, no par value;

unlimited shares authorized;

56 shares outstanding at March 31, 2026 and December 31, 2025

Issuable shares, none and 137 shares at March 31, 2026 and December 31, 2025, respectively

56 shares outstanding at June 30, 2026 and December 31, 2025 — —

Issuable shares, none and 137 shares at June 30, 2026 and December 31, 2025, respectively — 162

Additional paid-in capital 191,501 186,338

6 unchanged sentences

(In thousands, except per share data)

Three Months Ended

` Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

Product $ 1,244 $ 2,218 $ 1,911 $ 6,018

Services and other 63 2 359 71

1 unchanged sentence

Cost of net revenue 474 1,147 845 2,336

Gross profit 833 1,073 1,425 3,753

Operating expenses

1 unchanged sentence

Selling, general and administrative 1,444 1,411 2,935 3,022

Software license obligations — ( 223 ) — ( 223 )

Total operating expenses 3,069 2,850 6,145 6,044

2 unchanged sentences

Other income (expense), net 2 ( 23 ) ( 2 ) ( 15 )

Net loss $ ( 2,220 ) $ ( 1,829 ) $ ( 4,717 ) $ ( 2,300 )

Net loss per share

6 unchanged sentences

(In thousands)

Issuable Shares

Exchangeable Shares

Balance as of December 31, 2025 10,055 $ 9 137 $ 162 56 $ — $ 186,338 $ ( 181,873 ) $ 4,636

$ ( 181,873 )

At-the market sales of stock, net 2,372 2 — — — — 2,302 — 2,304

2 unchanged sentences

Stock-based compensation — — — — — — 147 — 147

Net loss — — — — — — — ( 2,497 ) ( 2,497 )

Balance as of March 31, 2026 12,582 11 — — 56 — 188,963 ( 184,370 ) 4,604

$ ( 184,370 )

Issuable Shares

Exchangeable Shares

At-the market sales of stock, net

Issuance of common stock under stock plan, net

Stock-based compensation

Balance as of June 30, 2026

Balance as of December 31, 2024 4,474 $ 3 917 $ 1,193 60 $ — $ 179,390 $ ( 177,120 ) $ 3,466

$ ( 177,120 )

At-the market sales of stock, net 329 1 — — — — 432 — 433

1 unchanged sentence

Stock-based compensation — — — — — — 125 — 125

Net loss — — — — — — — ( 471 ) ( 471 )

Balance as of March 31, 2025 4,843 4 917 1,193 60 — 179,987 ( 177,591 ) 3,593

$ ( 177,591 )

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

The accompanying notes are an integral part of

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net loss $ ( 4,717 ) $ ( 2,300 )

Adjustments to reconcile net loss to net cash used in operating activities:

2 unchanged sentences

Change in fair value of warrant liabilities ( 5 ) ( 6 )

Inventory write-down 33 —

Shares issued for services — 40

Inventory write downs

Other ( 8 ) ( 13 )

Changes in assets and liabilities

Accounts receivable 920 ( 310 )

Prepaid expenses and other assets

Inventories ( 573 ) 783

Prepaid expenses and other ( 209 ) ( 526 )

Accounts payable 78 242

8 unchanged sentences

Proceeds from at-the-market sales of stock, net 4,668 1,512

Proceeds from exercises of stock options

Repayment of financing lease

Payment of deferred equity facility costs

Proceeds from option exercises 21 4

Repayment of financing leases — ( 47 )

Net cash provided by financing activities 4,639 1,469

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents 436 ( 1,583 )

Cash and cash equivalents at beginning of period 2,886 3,344

Cash and cash equivalents at end of period $ 3,322 $ 1,761

Supplemental disclosure:

Noncash investing and financing activities:

Recognition of deferred equity facility costs

The accompanying notes are an integral part of

2 unchanged sentences

The Company and Summary of Significant Accounting Policies

Peraso Inc., formerly known

as MoSys, Inc.

Peraso Inc., formerly known as MoSys, Inc.

(the Company), was incorporated in California in 1991 and reincorporated in 2000 in Delaware.

The Company is a fabless

semiconductor company specializing in the development of millimeter wave (mmWave), which is generally described as the frequency band

from 24 Gigahertz (GHz) to 300 GHz, wireless technology.

The Company derives revenue from selling its semiconductor devices and modules

and performance of non-recurring engineering services.

On September 14, 2021, the

Company and its subsidiaries, 2864552 Ontario Inc.

The Company is a fabless semiconductor company specializing in the development of millimeter wave (mmWave), which is generally described as the frequency band from 24 Gigahertz (GHz) to 300 GHz, wireless technology.

The Company derives revenue from selling its semiconductor devices and modules and performance of non-recurring engineering services.

On September 14, 2021, the Company and its subsidiaries, 2864552 Ontario Inc.

(Callco) and 2864555 Ontario Inc.

(Canco), entered into an Arrangement Agreement (as

amended, the Arrangement Agreement) with Peraso Technologies Inc.

(Peraso Tech), a corporation existing under the laws of the province

of Ontario, to acquire all of the issued and outstanding common shares of Peraso Tech (the Peraso Shares), including those Peraso Shares

to be issued in connection with the conversion or exchange of secured convertible debentures and common share purchase warrants of Peraso

Tech, as applicable, by way of a statutory plan of arrangement (the Arrangement) under the Business Corporations Act (Ontario).

17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed and,

the Company changed its name to “Peraso Inc.” and began trading on the Nasdaq Stock Market (the Nasdaq) under the symbol “PRSO.”

The accompanying condensed

consolidated financial statements of the Company have been prepared without audit.

The condensed consolidated balance sheet as of December

31, 2025 has been derived from the audited consolidated financial statements at that date.

Certain information and disclosures normally

included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have

been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (SEC).

The information

in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes

thereto included in its most recent Annual Report on Form 10-K filed with the SEC.

In the opinion of management,

the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments)

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, 2026 are not necessarily indicative of the results that may be expected for

the year ending December 31, 2026 or for any other future period.

(Canco), entered into an Arrangement Agreement (as amended, the Arrangement Agreement) with Peraso Technologies Inc.

(Peraso Tech), a corporation existing under the laws of the province of Ontario, to acquire all of the issued and outstanding common shares of Peraso Tech (the Peraso Shares), including those Peraso Shares to be issued in connection with the conversion or exchange of secured convertible debentures and common share purchase warrants of Peraso Tech, as applicable, by way of a statutory plan of arrangement (the Arrangement) under the Business Corporations Act (Ontario).

On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed and, the Company changed its name to “Peraso Inc.” and began trading on the Nasdaq Stock Market (the Nasdaq) under the symbol “PRSO.”

The accompanying condensed consolidated financial statements of the Company have been prepared without audit.

The condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements at that date.

Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).

The information in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its most recent Annual Report on Form 10-K filed with the SEC.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) 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 and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or for any other future period.

Liquidity and Going Concern

The Company incurred net losses

of approximately $ 2.5 million for the three months ended March 31, 2026 and $ 4.8 million for the year ended December 31, 2025 and had

an accumulated deficit of approximately $ 184.4 million as of March 31, 2026.

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

to incur operating losses for the foreseeable future as it secures additional customers and continues to invest in the commercialization

of its products.

The Company will need to increase revenues substantially beyond levels that it has attained in the past in order to generate

sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.

As a result of the Company’s expected operating losses and cash burn for the foreseeable future, as well as recurring losses from

operations, management has concluded that there is substantial doubt regarding the Company’s ability to continue as a going concern

for a period of at least 12 months beyond the filing of this Quarterly Report on Form 10-Q.

In addition, the Company’s independent

registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December

31, 2025, expressed substantial doubt about the Company’s ability to continue as a going concern.

These condensed consolidated financial

statements do not include any adjustments that might result from this uncertainty.

There can be no assurance that the Company can raise

additional capital, whether in the form of debt or equity financing, that will be sufficient or available and, if available, that such

capital will be offered on terms and conditions acceptable to the Company.

The Company’s primary focus is producing and selling

its products.

If the Company is unsuccessful in these efforts, it will need to implement additional cost reduction strategies, which could

further affect its near- and long-term business plan.

These efforts may include, but are not limited to, reducing headcount and curtailing

business activities.

The Company incurred net losses of approximately $ 4.7 million for the six months ended June 30, 2026 and $ 4.8 million for the year ended December 31, 2025 and had an accumulated deficit of approximately $ 186.6 million as of June 30, 2026.

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 offerings of its common stock and warrants and the issuance of convertible notes and loans to investors and affiliates.

The Company expects to continue to incur operating losses for the foreseeable future as it secures additional customers and continues to invest in the commercialization of its products.

The Company will need to increase revenues substantially beyond levels that it has attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.

As a result of the Company’s expected operating losses and cash burn for the foreseeable future, as well as recurring losses from operations, management has concluded that there is substantial doubt regarding the Company’s ability to continue as a going concern for a period of at least 12 months beyond the filing of this Quarterly Report on Form 10-Q.

In addition, the Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2025, expressed substantial doubt about the Company’s ability to continue as a going concern.

These condensed consolidated financial statements do not include any adjustments that might result from this uncertainty.

There can be no assurance that the Company can raise additional capital, whether in the form of debt or equity financing, that will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to the Company.

The Company’s primary focus is producing and selling its products.

If the Company is unsuccessful in these efforts, it will need to implement additional cost reduction strategies, which could further affect its near- and long-term business plan.

These efforts may include, but are not limited to, reducing headcount and curtailing business activities.

Basis of Presentation

The condensed consolidated

financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany transactions

and balances have been eliminated in consolidation.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany transactions and balances have been eliminated in consolidation.

The Company’s fiscal year ends on December 31 of each calendar year.

prior year amounts have been reclassified for consistency with the current-period presentation.

These reclassifications had no effect

on the reported results of operations or cash flows.

Certain prior year amounts have been reclassified for consistency with the current-period presentation.

These reclassifications had no effect on the reported results of operations or cash flows.

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

The preparation of financial

statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues

and expenses recognized during the reported period.

Material estimates may include assumptions made in determining reserves for uncollectible

receivables, inventory write-downs, impairment of long-term assets, valuation allowance on deferred tax assets, accruals for potential

liabilities and assumptions made in valuing equity instruments and warrant liabilities.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses recognized during the reported period.

Material estimates may include assumptions made in determining reserves for uncollectible receivables, inventory write-downs, impairment of long-term assets, valuation allowance on deferred tax assets, accruals for potential liabilities and assumptions made in valuing equity instruments and warrant liabilities.

Actual results could differ from those estimates.

Cash Equivalents and Investments

The Company has invested its

cash in money market accounts, certificates of deposit, corporate debt, government-sponsored enterprise bonds and municipal bonds and

considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

with original maturities greater than three months and remaining maturities less than one year are classified as short-term investments.

The Company has invested its cash in money market accounts, certificates of deposit, corporate debt, government-sponsored enterprise bonds and municipal bonds and considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Investments with original maturities greater than three months and remaining maturities less than one year are classified as short-term investments.

Investments with remaining maturities greater than one year are classified as long-term investments.

Management generally determines the

appropriate classification of securities at the time of purchase.

Management generally determines the appropriate classification of securities at the time of purchase.

All securities are classified as available-for-sale.

The Company’s

available-for-sale short-term and long-term investments are carried at fair value, with the unrealized holding gains and losses reported

in accumulated other comprehensive income (loss).

Realized gains and losses and declines in the value judged to be other-than-temporary

are included in the other income, net line item in the condensed consolidated statements of operations.

The cost of securities sold is

based on the specific identification method.

The Company’s available-for-sale short-term and long-term investments are carried at fair value, with the unrealized holding gains and losses reported in accumulated other comprehensive income (loss).

Realized gains and losses and declines in the value judged to be other-than-temporary are included in the other income, net line item in the condensed consolidated statements of operations.

The cost of securities sold is based on the specific identification method.

Fair Value Measurements

The Company measures the fair

value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value

into three broad levels:

Level 1—Inputs used to measure

fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting

Level 2—Pricing is provided by

third party sources of market information obtained through the Company’s investment advisors, rather than models.

The Company does

not adjust for, or apply, any additional assumptions or estimates to the pricing information it receives from advisors.

The Company’s

Level 2 securities include cash equivalents and available-for-sale securities, which consisted primarily of certificates of deposit, corporate

debt, and government agency and municipal debt securities from issuers with high-quality credit ratings.

The Company’s investment

advisors obtain pricing data from independent sources, such as Standard & Poor’s, Bloomberg and Interactive Data Corporation,

and rely on comparable pricing of other securities because the Level 2 securities are not actively traded and have fewer observable transactions.

The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

Level 1—Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

Level 2—Pricing is provided by third party sources of market information obtained through the Company’s investment advisors, rather than models.

The Company does not adjust for, or apply, any additional assumptions or estimates to the pricing information it receives from advisors.

The Company’s Level 2 securities include cash equivalents and available-for-sale securities, which consisted primarily of certificates of deposit, corporate debt, and government agency and municipal debt securities from issuers with high-quality credit ratings.

The Company’s investment advisors obtain pricing data from independent sources, such as Standard & Poor’s, Bloomberg and Interactive Data Corporation, and rely on comparable pricing of other securities because the Level 2 securities are not actively traded and have fewer observable transactions.

The Company considers this the most reliable information available for the valuation of the securities.

Level 3—Unobservable inputs that

are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value.

values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant

The determination of fair value for Level 3 investments and other financial instruments involves the most management

judgment and subjectivity.

The carrying amounts of financial assets

and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable, and other payables, approximate their fair

values because of the short maturity of these instruments.

The carrying values of lease obligations and long-term financing obligations

approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.

The Company measures

the fair value of its warrant liabilities using Level 3 inputs.

Level 3—Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value.

These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable, and other payables, approximate their fair values because of the short maturity of these instruments.

The carrying values of lease obligations and long-term financing obligations approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.

The Company measures the fair value of its warrant liabilities using Level 3 inputs.

Derivatives and Liability-Classified Instruments

The Company accounts for common

stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants

and the guidance provided by the Financial Accounting Standards Board (FASB) in Accounting Standards Codification (ASC) 480 , Distinguishing

Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815).

The assessment considers whether the warrants

are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the

requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and

whether the holders of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control,

among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the

time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and the guidance provided by the Financial Accounting Standards Board (FASB) in Accounting Standards Codification (ASC) 480 , Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and whether the holders of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

Allowance for Credit Losses

The Company establishes an

allowance for credit losses to ensure that its trade receivables balances are not overstated due to uncollectibility.

The Company performs

ongoing customer credit evaluations within the context of the industry in which it operates and generally does not require collateral

from its customers.

The Company establishes an allowance for credit losses to ensure that its trade receivables balances are not overstated due to uncollectibility.

The Company performs ongoing customer credit evaluations within the context of the industry in which it operates and generally does not require collateral from its customers.

A specific allowance of up to 100 % of the invoice value is provided for any problematic customer balances.

account balances are written off after management has determined that the likelihood of collection is remote.

The Company grants credit

only to customers deemed creditworthy in the judgment of management.

The allowance for credit losses was not material as of March 31,

2026 and December 31, 2025.

The Company values its inventories

at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value.

Costs of inventories primarily

consisted of material and third party assembly costs.

The Company records write-downs for estimated obsolescence or unmarketable inventories

based upon assumptions about future demand and market conditions.

If actual market conditions are less favorable than those expected by

management, additional adjustments to inventory valuation may be required.

Charges for obsolete and slow-moving inventories are recorded

based upon an analysis of specific identification of obsolete inventory items and quantification of slow moving inventory items.

Company’s recognition of excess or obsolete inventory is, or if its estimates of potential utility become, less favorable than currently

expected, inventory write-downs may be required.

Delinquent account balances are written off after management has determined that the likelihood of collection is remote.

The Company grants credit only to customers deemed creditworthy in the judgment of management.

The allowance for credit losses was not material as of June 30, 2026 and December 31, 2025.

The Company values its inventories at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value.

Costs of inventories primarily consisted of material and third party assembly costs.

The Company records write-downs for estimated obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions.

If actual market conditions are less favorable than those expected by management, additional adjustments to inventory valuation may be required.

Charges for obsolete and slow-moving inventories are recorded based upon an analysis of specific identification of obsolete inventory items and quantification of slow moving inventory items.

If the Company’s recognition of excess or obsolete inventory is, or if its estimates of potential utility become, less favorable than currently expected, inventory write-downs may be required.

Intangible and Long-lived Assets

Intangible assets are recorded

at cost and amortized on a straight-line method over their estimated useful lives of three to ten years .

Amortization of developed technology

and other intangibles directly related to the Company’s products is included in cost of net revenue, while amortization of customer

relationships and other intangibles not associated with the Company’s products is included in selling, general and administrative

expense in the condensed consolidated statements of operations.

The Company regularly reviews

the carrying value and estimated lives of its long-lived assets and finite-lived intangible assets to determine whether indicators of

impairment may exist which warrant adjustments to carrying values or estimated useful lives.

The determinants used for this evaluation

include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in

future periods as well as the strategic significance of the assets to the Company’s business objective.

Should an impairment exist,

the impairment loss would be measured based on the excess of the carrying amount of the long-lived asset group over the asset’s

Intangible assets are recorded at cost and amortized on a straight-line method over their estimated useful lives of three to ten years .

Amortization of developed technology and other intangibles directly related to the Company’s products is included in cost of net revenue, while amortization of customer relationships and other intangibles not associated with the Company’s products is included in selling, general and administrative expense in the condensed consolidated statements of operations.

The Company regularly reviews the carrying value and estimated lives of its long-lived assets and finite-lived intangible assets to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives.

The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objective.

Should an impairment exist, the impairment loss would be measured based on the excess of the carrying amount of the long-lived asset group over the asset’s fair value.

Deferred Equity Facility Costs

Deferred equity facility costs are commitment, set-up, or legal fees paid to establish the committed equity facility.

The costs are typically deferred and capitalized as a non-current asset.

These costs are charged against equity proceeds as an issuance cost upon future drawdowns during the term of the facility agreement.

When a drawdown occurs, a percentage of the non-current assets will be offset against the proceeds in the equity account.

The percentage applied to offset the capitalized costs is calculated by dividing the total value of the drawdown by the total value of the committed equity facility.

The asset will be evaluated for impairment at each balance sheet date.

Revenue Recognition

The Company recognizes revenue

in accordance with ASC Topic 606, Revenue from Contracts with Customers , and its amendments (ASC 606).

As described below, the

analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that

is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass

to the customer.

The Company generates revenue

primarily from sales of integrated circuits and antenna module products, performance of engineering services and licensing of its intellectual

Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects

to be entitled to receive in exchange for those goods.

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers , and its amendments (ASC 606).

As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer.

The Company generates revenue primarily from sales of integrated circuits and antenna module products, performance of engineering services and licensing of its intellectual property.

Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods.

Revenue recognition is evaluated through the following five steps:

(i) identification

of the contract, or contracts, with a customer;

(i) identification of the contract, or contracts, with a customer;

(ii) identification of the performance obligations in the contract;

(iii) determination

of the transaction price;

(iii) determination of the transaction price;

(iv) allocation of the transaction price to the performance obligations in the contract;

and (v) recognition

of revenue when or as a performance obligation is satisfied.

and (v) recognition of revenue when or as a performance obligation is satisfied.

Product revenue

Revenue is recognized when

performance obligations under the terms of a contract with a customer are satisfied.

The majority of the Company’s contracts have

a single performance obligation to transfer products.

Accordingly, the Company recognizes revenue when title and risk of loss have been

transferred to the customer, generally at the time of shipment of products.

Revenue is measured as the amount of consideration the Company

expects to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price.

sells its products both directly to customers and through distributors generally under agreements with payment terms typically 60 days

The Company may record an

estimated allowance, at the time of shipment, for future returns and other charges against revenue consistent with the terms of sale.

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied.

The majority of the Company’s contracts have a single performance obligation to transfer products.

Accordingly, the Company recognizes revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price.

The Company sells its products both directly to customers and through distributors generally under agreements with payment terms typically 60 days or less.

The Company may record an estimated allowance, at the time of shipment, for future returns and other charges against revenue consistent with the terms of sale.

Engineering services revenue

Engineering and development

contracts with customers generally contain a single performance obligation that is delivered over time.

Revenue is recognized using an

output method that is consistent with the satisfaction of the performance obligation as a measure of progress.

Engineering and development contracts with customers generally contain a single performance obligation that is delivered over time.

Revenue is recognized using an output method that is consistent with the satisfaction of the performance obligation as a measure of progress.

Services and other revenue

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.

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.

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.

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.

Contract liabilities – deferred revenue

The Company’s contract

liabilities consist of advance customer payments and deferred revenue.

The Company classifies advance customer payments and deferred revenue

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

As of March 31, 2026 and December 31,

2025, contract liabilities were in a current position and included in deferred revenue.

During the three months ended

March 31, 2026, the Company recognized an immaterial amount of revenue that had been included in deferred revenue as of December 31, 2025.

The Company’s contract liabilities consist of advance customer payments and deferred revenue.

The Company classifies advance customer payments and deferred revenue as current or non-current based on the timing of when the Company expects to recognize revenue.

As of June 30, 2026 and December 31, 2025, contract liabilities were in a current position and included in deferred revenue.

During the six months ended June 30, 2026, the Company recognized an immaterial amount of revenue that had been included in deferred revenue as of December 31, 2025.

See Note 5 for disaggregation of revenue by geography.

The Company does not have

significant financing components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected

the practical expedient to not value financing components that are less than one year.

Shipping and handling costs are generally incurred

by the customer, and, therefore, are not recorded as revenue.

The Company does not have significant financing components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected the practical expedient to not value financing components that are less than one year.

Shipping and handling costs are generally incurred by the customer, and, therefore, are not recorded as revenue.

Cost of Net Revenue

Cost of net revenue consists

primarily of direct and indirect costs of product sales, including amortization of intangible assets and depreciation of production-related

fixed assets.

Cost of net revenue consists primarily of direct and indirect costs of product sales, including amortization of intangible assets and depreciation of production-related fixed assets.

Stock-Based Compensation

The Company periodically issues

stock options and restricted stock units (RSUs) to employees and non-employees.

The Company accounts for such awards based on ASC 718,

whereby the value of the award is measured on the date of award and recognized as compensation expense on a straight-line basis over the

vesting period.

The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black

Scholes) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options,

and future dividends.

The Company periodically issues stock options and restricted stock units (RSUs) to employees and non-employees.

The Company accounts for such awards based on ASC 718, whereby the value of the award is measured on the date of award and recognized as compensation expense on a straight-line basis over the vesting period.

The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black Scholes) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options, and future dividends.

Compensation expense is recorded based upon the value derived from the Black-Scholes model.

The assumptions used

in the Black-Scholes model could materially affect compensation expense recorded in future periods.

The fair value of restricted stock

awards, restricted stock units, and performance-based restricted stock units is based on the closing price of the Company’s common

stock on the date of grant.

Recognition of compensation expense for non-employees is in the same period and manner as if the Company had

paid cash for the services.

The assumptions used in the Black-Scholes model could materially affect compensation expense recorded in future periods.

The fair value of restricted stock awards, restricted stock units, and performance-based restricted stock units is based on the closing price of the Company’s common stock on the date of grant.

Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.

Foreign Currency Transactions

The functional currency of

the Company is the U.S.

All foreign currency transactions are initially measured and recorded in an entity’s functional

currency using the exchange rate on the date of the transaction.

All monetary assets and liabilities are remeasured at the end of each

reporting period using the exchange rate at that date.

All non-monetary assets and related expense, depreciation or amortization are not

subsequently remeasured and are measured using the historical exchange rate.

An average exchange rate may be used to recognize income

and expense items earned or incurred evenly over a period.

Foreign exchange gains and losses resulting from the settlement of such transactions

are recognized in the statement of operations, except for the gains and losses arising from the conversion of the carrying amount of the

foreign currency denominated convertible preferred shares into the functional currency that are presented as adjustment to the net loss

to arrive at net loss attributable to common stockholders.

The functional currency of the Company is the U.S.

All foreign currency transactions are initially measured and recorded in an entity’s functional currency using the exchange rate on the date of the transaction.

All monetary assets and liabilities are remeasured at the end of each reporting period using the exchange rate at that date.

All non-monetary assets and related expense, depreciation or amortization are not subsequently remeasured and are measured using the historical exchange rate.

An average exchange rate may be used to recognize income and expense items earned or incurred evenly over a period.

Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the statement of operations, except for the gains and losses arising from the conversion of the carrying amount of the foreign currency denominated convertible preferred shares into the functional currency that are presented as adjustment to the net loss to arrive at net loss attributable to common stockholders.

Per-Share Amounts

Basic net loss per share is

computed by dividing net loss for the period by the weighted-average number of exchangeable shares and shares of common stock outstanding

during the period.

In addition, the Company includes the number of issuable 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

securities outstanding that were excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive

(in thousands):

Three Months Ended

Basic net loss per share is computed by dividing net loss for the period by the weighted-average number of exchangeable shares and shares of common stock outstanding during the period.

In addition, the Company includes the number of issuable 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 securities outstanding that were excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive (in thousands):

Six Months Ended

Escrow shares - exchangeable shares 33 33

4 unchanged sentences

Warrants classified as liabilities 235 235

Total 10,190 10,309

Recently Issued Accounting Pronouncements

In November 2024, the FASB

issued ASU No.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The new standard requires disclosures about specific types of expenses included

in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The standard is effective

for the Company for annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028, with early adoption permitted.

The standard may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively

to any or all prior periods presented in the financial statements.

The Company is evaluating the impact that this ASU will have on the

presentation of its consolidated financial statements.

December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements (the “Update”),

an amendment to improve the guidance in Topic 270, Interim Report ing, by improving the navigability of the required interim disclosures

and clarifying when that guidance is applicable.

The amendments add to Topic 270 a 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 this Update clarify interim

disclosure requirements and the applicability of Topic 270 apply to all entities that provide interim financial statements and notes in

accordance with GAAP.

In addition, the amendments in this Update result in a comprehensive list of interim disclosures that are required

by GAAP with the objective to provide clarity about the current requirements.

The Update is effective for the Company for interim reporting

periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Update can be applied either

prospectively or retrospectively to any or all prior periods presented in the financial statements.

The Company is evaluating the impact

that the Update will have on the presentation of its consolidated financial statements.

Other recent authoritative

guidance issued by the FASB (including technical corrections to the ASCs), the American Institute of Certified Public Accountants, and

the SEC did not, or is not expected to, have a material impact on the Company’s consolidated financial statements and related disclosures.

The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The standard is effective for the Company for annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028, with early adoption permitted.

The standard may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements.

The Company is evaluating the impact that this ASU will have on the presentation of its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements (the “Update”), an amendment to improve the guidance in Topic 270, Interim Report ing, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable.

The amendments add to Topic 270 a 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 this Update clarify interim disclosure requirements and the applicability of Topic 270 apply to all entities that provide interim financial statements and notes in accordance with GAAP.

In addition, the amendments in this Update result in a comprehensive list of interim disclosures that are required by GAAP with the objective to provide clarity about the current requirements.

The Update is effective for the Company for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Update can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.

The Company is evaluating the impact that the Update will have on the presentation of its consolidated financial statements.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASCs), the American Institute of Certified Public Accountants, and the SEC did not, or is not expected to, have a material impact on the Company’s consolidated financial statements and related disclosures.

Fair Value of Financial Instruments

The following tables represent

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

March 31, 2026

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

June 30, 2026

Fair Value Level 1 Level 2 Level 3

Money market funds (1) $ 1 $ — $ — $ —

1 unchanged sentence

December 31, 2025

Fair Value Level 1 Level 2 Level 3

Money market funds (1) $ 1 $ — $ — $ —

1 unchanged sentence

(1) Amounts are included in cash and cash equivalents on the condensed consolidated balance sheets.

The following tables represent

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

March 31, 2026

The following tables represent the Company’s determination of fair value for its financial assets (in thousands):

June 30, 2026

Unrealized Unrealized Fair

Cost Gains Losses Value

Cash and cash equivalents $ 3,322 $ — $ — $ 3,322

December 31, 2025

Unrealized Unrealized Fair

Cost Gains Losses Value

Cash and cash equivalents $ 2,886 $ — $ — $ 2,886

Balance Sheet Detail

June 30, December 31,

(in thousands)

2 unchanged sentences

Finished goods 925 465

$ 1,708 $ 1,168

June 30, December 31,

(in thousands)

3 unchanged sentences

Prepaid software 78 46

June 30, December 31,

(in thousands)

Deferred equity facility costs $ 290 $ —

Deposits 97 99

Intangible assets, net 3 6

June 30, December 31,

(in thousands)

Accrued Expenses & Other:

3 unchanged sentences

Commitments and Contingencies

The Company has operating

leases for its facilities in Toronto and Markham, Ontario, Canada and recognizes lease expense on a straight-line basis over the respective

The Company had an operating lease for its corporate headquarters facility in San Jose, California that was not renewed when

the lease term expired on January 14, 2025.

The lease for the facility

in Markham has a 60 -month term, which commenced June 21, 2022.

The initial right-of-use asset and corresponding liability of approximately

CAD$ 1.0 million for the lease were measured at the present value of the future minimum lease payments.

The discount rate used to measure

the lease assets and liabilities was 8 %.

The Company has operating leases for its facilities in Toronto and Markham, Ontario, Canada and recognizes lease expense on a straight-line basis over the respective lease terms.

The Company had an operating lease for its corporate headquarters facility in San Jose, California that was not renewed when the lease term expired on January 14, 2025.

The lease for the facility in Markham has a 60 -month term, which commenced June 21, 2022.

The initial right-of-use asset and corresponding liability of approximately CAD$ 1.0 million for the lease were measured at the present value of the future minimum lease payments.

The discount rate used to measure the lease assets and liabilities was 8 %.

The Markham landlord also provided a lease incentive of approximately CAD$ 286,200 (the Incentive).

In 2023, the Company received payment of CAD$ 143,100 from the Markham landlord of the first installment of the Incentive.

The remaining

balance of the Incentive is paid to the Company in the form of an adjustment to rent during the last three months of each calendar year

during the remaining lease term.

As of December 31, 2025, the pending Incentive to be received was CAD$ 35,775 .

The Toronto office lease has

a one-year term, which commenced January 1, 2026, and the lease is not accounted for under ASC 842.

The following table provides

the details of right-of-use assets and lease liabilities as of March 31, 2026 and December 31, 2025 (in thousands):

The remaining balance of the Incentive is paid to the Company in the form of an adjustment to rent during the last three months of each calendar year during the remaining lease term.

As of June 30, 2026, the pending Incentive to be received was CAD$ 35,775 .

The Toronto office lease has a one-year term, which commenced January 1, 2026, and the lease is not accounted for under ASC 842 .

The following table provides the details of right-of-use assets and lease liabilities as of June 30, 2026 and December 31, 2025 (in thousands):

June 30, December 31,

Right-of-use assets:

4 unchanged sentences

Total lease liabilities $ 128 $ 192

Future minimum payments under

the Markham lease at March 31, 2026 are listed in the table below (in thousands):

Future minimum payments under the Markham lease at June 30, 2026 are listed in the table below (in thousands):

Year ending December 31,

2 unchanged sentences

Present value of lease liabilities $ 128

The following table provides

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

Three Months Ended

The following table provides the details of supplemental cash flow information (in thousands):

Six Months Ended

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

Operating cash flows for leases $ 66 $ 164

Rent expense was approximately

$ 0.1 million for the three months ended March 31, 2026 and 2025.

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.

Rent expense was approximately $ 0.1 million for the three months ended June 30, 2026 and 2025.

Rent expense was approximately $ 0.3 million and $ 0.2 million for the six-months ended June 30, 2026 and 2025, 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

In the ordinary course of

business, the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred

relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain

events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to

past performance.

In the ordinary course of business, the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance.

Such indemnification clauses may not be subject to maximum loss clauses.

The Company has also entered into indemnification

agreements with its officers and directors.

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

statements for the three months ended March 31, 2026 and 2025 related to these indemnifications.

The Company has not estimated

the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique

facts and circumstances applicable to each particular agreement.

To date, the Company has not made any payments related to these indemnification

The Company has also entered into indemnification agreements with its officers and directors.

No material amounts were reflected in the Company’s condensed consolidated financial statements for the three months ended June 30, 2026 and 2025 related to these indemnifications.

The Company has not estimated the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular agreement.

To date, the Company has not made any payments related to these indemnification agreements.

Product Warranties

The Company warrants certain

of its products to be free of defects generally for a period of three years.

The Company estimates its warranty costs based on historical

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

Warranty costs were not material for the three months ended

March 31, 2026 and 2025.

The Company warrants its products to be free of defects generally for a period of up to two years.

The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of net revenues.

Warranty costs were not material for the three and six months ended June 30, 2026 and 2025.

Legal Matters

The Company is not a party

to any legal proceeding that the Company believes is likely to have a material adverse effect on its condensed consolidated financial

position or results of operations.

From time to time the Company may be subject to legal proceedings and claims in the ordinary course

These claims, even if not meritorious, could result in the expenditure of significant financial resources and diversion of

management efforts.

The Company is not a party to any legal proceeding that the Company believes is likely to have a material adverse effect on its condensed consolidated financial position or results of operations.

From time to time the Company may be subject to legal proceedings and claims in the ordinary course of business.

These claims, even if not meritorious, could result in the expenditure of significant financial resources and diversion of management efforts.

Purchase Obligations

The Company’s primary

purchase obligations include non-cancelable purchase orders for inventory.

At March 31, 2026, the Company had outstanding non-cancelable

purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $ 3.2 million.

Business Segments, Concentration of Credit Risk and Significant

The Company’s primary purchase obligations include non-cancelable purchase orders for inventory.

At June 30, 2026, the Company had outstanding non-cancelable purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $ 2.4 million.

Business Segments, Concentration of Credit Risk and Significant Customers

Segment Information

The Company determines its

reporting units in accordance with ASC No.

The Company determines its reporting units in accordance with ASC No.

280, Segment Reporting (ASC 280), as amended by ASU No.

2023-07, Segment Reporting

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which the Company adopted effective December 31, 2024.

Management evaluates

a reporting unit by first identifying its operating segments under ASC 280.

The Company then evaluates each operating segment to determine

if it includes one or more components that constitute a business.

If there are components within an operating segment that meet the definition

of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units.

If applicable,

when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically

similar and, if so, the operating segments are aggregated.

The Company’s chief

executive officer is the chief operating decision maker (CODM), and the CODM evaluates financial performance and makes operating decisions

about allocating resources based on financial data presented on a consolidated basis, including consolidated net income (loss).

the CODM evaluates financial performance on a consolidated basis, the Company operates and manages its business as one reportable and

operating segment as a fabless semiconductor company focused on the development and sale of mmWave wireless technology, semiconductor

devices and antenna modules, the performance of non-recurring engineering, or NRE, services and the licensing of intellectual property.

Management evaluates a reporting unit by first identifying its operating segments under ASC 280.

The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business.

If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units.

If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated.

The Company’s chief executive officer is the chief operating decision maker (CODM), and the CODM evaluates financial performance and makes operating decisions about allocating resources based on financial data presented on a consolidated basis, including consolidated net income (loss).

Because the CODM evaluates financial performance on a consolidated basis, the Company operates and manages its business as one reportable and operating segment as a fabless semiconductor company focused on the development and sale of mmWave wireless technology, semiconductor devices and antenna modules, the performance of non-recurring engineering, or NRE, services and the licensing of intellectual property.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The Company’s reporting segment meets

the definition of an operating segment and does not include the aggregation of multiple operating segments.

Significant segment expenses

include research and development expenditures, salaries and benefits, stock-based compensation and software license obligations.

expenses include all remaining costs necessary to operate the Company’s business, which primarily include facilities, external professional

services and other administrative expenses.

The following table presents the significant segment expenses and other segment items regularly

reviewed by the CODM (in thousands):

Three Months Ended

The Company’s reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

Significant segment expenses include research and development expenditures, salaries and benefits, stock-based compensation and software license obligations.

Operating expenses include all remaining costs necessary to operate the Company’s business, which primarily include facilities, external professional services and other administrative expenses.

The following table presents the significant segment expenses and other segment items regularly reviewed by the CODM (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

Total net revenue $ 1,307 $ 2,220 $ 2,270 $ 6,089

1 unchanged sentence

Research and development 572 610 1,135 1,214

Compensation 1,464 1,518 2,916 2,962

Stock-based compensation 170 141 317 266

Software license obligations — ( 223 ) — ( 223 )

Other operating expenses 863 804 1,777 1,825

Other (income) expense, net ( 16 ) 52 ( 3 ) 9

Net loss $ ( 2,220 ) $ ( 1,829 ) $ ( 4,717 ) $ ( 2,300 )

Concentrations

The Company recognized revenue

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

(in thousands):

Three Months Ended

The Company recognized revenue 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

June 30, June 30,

2026 2025 2026 2025

Europe $ 1,102 $ 1,204 $ 1,381 $ 1,733

Taiwan 5 570 208 1,590

North America 59 8 195 1,779

Rest of world

Rest of the world 141 438 486 987

Total net revenue $ 1,307 $ 2,220 $ 2,270 $ 6,089

The following is a breakdown

of product revenue by category (in thousands):

The following is a breakdown of product revenue by category (in thousands):

Three Months Ended

June 30, Six Months Ended

Product category 2026 2025 2026 2025

Memory ICs $ 7 $ - $ 27 $ 2,267

mmWave ICs 79 1,318 583 2,293

mmWave modules 1,078 886 1,189 1,444

mmWave other products 80 14 112 14

The following table lists

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

$ 1,244 $ 2,218 $ 1,911 $ 6,018

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

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Customer A 71 % * 41 % *

Customer B * 32 % 15 % 12 %

Customer C * 21 % * 15 %

Customer D * 17 % * *

Customer E * 17 % * *

Customer F * * * 19 %

Customer G * * * 26 %

* Represents less than 10%

The following table lists

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

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

Accounts Receivable

June 30, December 31,

Customer A 39 % *

Customer B 27 % *

Customer C 19 % *

Customer D 14 % *

Customer E * 78 %

Customer F * 15 %

* Represents less than 10%

The following table lists

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

Accounts Payable

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

June 30, December 31,

Vendor A 22 % 23 %

Vendor B 16 % 15 %

Vendor C * 15 %

* Represents less than 10%

1 unchanged sentence

Common Stock Equity Plans

In 2010, the Company adopted

the 2010 Equity Incentive Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan).

The Amended 2010 Plan was terminated

in August 2019 and remains in effect as to outstanding equity awards granted prior to the date of expiration.

No new awards may be made

under the Amended 2010 Plan.

In August 2019, the Company’s

stockholders approved the 2019 Stock Incentive Plan (the 2019 Plan) to replace the Amended 2010 Plan.

The 2019 Plan authorizes the board

of directors or the compensation committee of the board of directors to grant a broad range of awards including stock options, stock appreciation

rights, restricted stock, performance-based awards, and restricted stock units.

Under the 2019 Plan, 4,563 shares were initially reserved

for issuance.

In November 2021, December 2024 and December 2025, the Company’s stockholders approved amendments increasing the number

of shares reserved for issuance under the 2019 Plan by 77,674 , 1,500,000 , and 1,000,000 shares, respectively.

Under the 2019 Plan,

the term of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting

power of all classes of the Company’s stock may not exceed five years .

The exercise price of stock options granted under the 2019

Plan must be at least equal to the fair market value of the shares on the date of grant.

Generally, awards under the 2019 Plan will vest

over a three to four-year period, and options will have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides

for automatic acceleration of vesting for options granted to non-employee directors upon a change of control of the Company.

In December 2021, the Company

assumed the Peraso Technologies Inc.

2009 Share Option Plan (the 2009 Plan) and all outstanding options granted pursuant to the terms

of the 2009 Plan.

Each outstanding, unexercised and unexpired option under the 2009 Plan, whether vested or unvested, was assumed by the

Company and converted into options to purchase shares of the Company’s common stock and became exercisable by the holder of such

option in accordance with its terms.

In 2010, the Company adopted the 2010 Equity Incentive Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan).

The Amended 2010 Plan was terminated in August 2019 and remains in effect as to outstanding equity awards granted prior to the date of expiration.

No new awards may be made under the Amended 2010 Plan.

In August 2019, the Company’s stockholders approved the 2019 Stock Incentive Plan (the 2019 Plan) to replace the Amended 2010 Plan.

The 2019 Plan authorizes the board of directors or the compensation committee of the board of directors to grant a broad range of awards including stock options, stock appreciation rights, restricted stock, performance-based awards, and restricted stock units.

Under the 2019 Plan, 4,563 shares were initially reserved for issuance.

In November 2021, December 2024 and December 2025, the Company’s stockholders approved amendments increasing the number of shares reserved for issuance under the 2019 Plan by 77,674 , 1,500,000 , and 1,000,000 shares, respectively.

Under the 2019 Plan, the term of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes of the Company’s stock may not exceed five years .

The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant.

Generally, awards under the 2019 Plan will vest over a three to four-year period, and options will have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control of the Company.

In December 2021, the Company assumed the Peraso Technologies Inc.

2009 Share Option Plan (the 2009 Plan) and all outstanding options granted pursuant to the terms of the 2009 Plan.

Each outstanding, unexercised and unexpired option under the 2009 Plan, whether vested or unvested, was assumed by the Company and converted into options to purchase shares of the Company’s common stock and became exercisable by the holder of such option in accordance with its terms.

No further awards will be made under the 2009 Plan.

The 2009 Plan, the Amended

2010 Plan and the 2019 Plan are referred to collectively as the “Plans.”

The 2009 Plan, the Amended 2010 Plan and the 2019 Plan are referred to collectively as the “Plans.”

Stock-Based Compensation Expense

The Company reflected compensation

costs related to the vesting of stock options of approximately $ 0.1 million and $ 0.1 million during the three-month ended March 31, 2026

and 2025, respectively.

At March 31, 2026, the unamortized compensation cost was approximately $ 1.2 million related to stock options and

is expected to be recognized as expense over a weighted average period of approximately 1.2 years.

The Company reflected compensation

costs of approximately $ 44,000 and $ 17,000 related to the vesting of restricted stock units during the three-months ended March 31, 2026

and 2025, respectively.

The unamortized compensation cost at March 31, 2026 was approximately $ 0.1 million related to restricted stock

units and is expected to be recognized as expense over a weighted average period of approximately 0.8 years.

Valuation Assumptions and Expense Information for Stock-Based

The fair value of the Company’s

option grants for the three months ended March 31, 2026 and March 31, 2025 was approximately $ 656,000 and $ 832,000 , respectively.

weighted-average grant date fair value of options granted was $ 0.73 and $ 0.63 per share for the three months ended March 31, 2026 and

2025, respectively.

The Company reflected compensation costs related to the vesting of stock options of approximately $ 0.2 million during each of the six-months ended June 30, 2026 and 2025.

At June 30, 2026, 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 1.1 years.

The Company reflected compensation costs of approximately $ 0.1 million and $ 25,000 related to the vesting of restricted stock units during the six-months ended June 30, 2026 and 2025, respectively.

The unamortized compensation cost at June 30, 2026 was approximately $ 0.1 million related to restricted stock units and is expected to be recognized as expense over a weighted average period of approximately 0.5 years.

Valuation Assumptions and Expense Information for Stock-Based Compensation

The fair value of the Company’s option grants for the six months ended June 30, 2026 and June 30, 2025 was approximately $ 656,000 and $ 832,000 , respectively.

The weighted-average grant date fair value of options granted was $ 0.73 and $ 0.63 per share for the six months ended June 30, 2026 and 2025, respectively.

The following assumptions were used in the fair-value method calculations:

Option Grants

Three Months Ended

Six Months Ended

Interest rate (risk-free rate) 3.70 % - 3.75 % 4.34 %

2 unchanged sentences

Expected dividend 0 % 0 %

The risk-free interest rate

was derived from the U.S.

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 behavior.

A dividend yield of zero is applied because the Company has never paid dividends and

has no intention to pay dividends in the near future.

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 behavior.

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

The Company accounts for forfeitures as they occur.

Common Stock Options and Restricted Stock Units

The term of all incentive

stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes

of the Company’s stock may not exceed five years.

The exercise price of stock options granted under the 2019 Plan must be at least

equal to the fair market value of the shares on the date of grant.

Generally, options granted under the 2019 Plan will vest over a three

to four-year period and have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for automatic acceleration

of vesting for options granted to non-employee directors upon a change of control (as defined in the 2019 Plan) of the Company.

The following table summarizes

the activity in the shares available for grant under the Plans during the three months ended March 31, 2026 and options outstanding as

of March 31, 2026 (in thousands, except exercise price):

The term of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes of the Company’s stock may not exceed five years.

The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant.

Generally, options granted under the 2019 Plan will vest over a three to four-year period and have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control (as defined in the 2019 Plan) of the Company.

The following table summarizes the activity in the shares available for grant under the Plans during the six months ended June 30, 2026 and options outstanding as of June 30, 2026 (in thousands, except exercise price):

Options Outstanding

Shares Average

Available Number of Exercise

for Grant Shares Prices

Balance as of December 31, 2025 1,189 1,347 $ 3.34

RSUs granted ( 200 ) — —

Options granted ( 893 ) 893 $ 0.88

1 unchanged sentence

Balance as of March 31, 2026 96 2,222 $ 2.33

The following table summarizes

significant ranges of outstanding and exercisable options as of March 31, 2026 (in thousands, except contractual life and exercise price):

Options exercised — ( 9 ) $ 0.78

Options cancelled and returned to the 2019 Plan 47 ( 47 ) $ 0.83

Balance as of June 30, 2026 143 2,166 $ 2.37

The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2026 (in thousands, except contractual life and exercise price):

Options Outstanding Options Exercisable

7 unchanged sentences

$ 0.00 - $ 599.60 2,166 8.93 $ 2.37 638 $ 6.02 $ 70

The total options outstanding

had an intrinsic value of $ 0.4 million.

A summary of RSU activity

under the 2019 Plan is presented below (in thousands, except for fair value):

The total options outstanding had an intrinsic value of $ 0.2 million.

A summary of RSU activity under the 2019 Plan is presented below (in thousands, except for fair value):

Number of Grant-Date

Shares Fair Value

Non-vested shares as of December 31, 2025 — —

Granted 200 $ 0.94

Non-vested shares as of March 31, 2026 200 $ 0.94

Non-vested shares as of June 30, 2026 200 $ 0.94

Stockholders’ Equity

February 2024 Public Offering

On February 6, 2024, the Company

entered into an underwriting agreement (the Underwriting Agreement) with Ladenburg Thalmann & Co.

(Ladenburg), as the sole underwriter,

relating to the issuance and sale in a public offering (the Offering) of:

(i) 480,000 shares of common stock, (ii) pre-funded warrants

to purchase up to 1,424,760 shares of common stock, (iii) Series A warrants to purchase up to 3,809,520 shares of common stock, (iv) Series

B warrants to purchase up to 3,809,520 shares of common stock, and (v) up to 285,714 additional shares of common stock, Series A warrants

to purchase up to 571,428 shares of common stock and Series B warrants to purchase up to 571,428 shares of common stock that may be purchased

pursuant to a 45-day option to purchase additional securities granted to Ladenburg by the Company.

Ladenburg partially exercised this

option on February 7, 2024 for 82,500 shares of common stock, Series A warrants to purchase up to 165,000 shares of common stock and Series

B warrants to purchase up to 165,000 shares of common stock.

The combined public offering price of each share of common stock, together

with the accompanying Series A warrants and Series B warrants, was $ 2.10 , less underwriting discounts and commissions.

The combined public

offering price of each pre-funded warrant, together with the accompanying Series A warrants and Series B warrants, was $ 2.099 , less underwriting

discounts and commissions.

The Offering, including the additional shares of common stock, Series A warrants and Series B warrants sold

pursuant to the partial exercise of Ladenburg’s option, closed on February 8, 2024.

The net proceeds from the

Offering, including the additional shares of common stock, Series A warrants and Series B warrants sold pursuant to the partial exercise

of Ladenburg’s option, after deducting underwriting discounts and commissions and other estimated Offering expenses payable by the

Company and excluding any proceeds from the exercise of the Series A warrants, Series B warrants and pre-funded warrants, were approximately

$ 3.4 million.

The Series A warrants have an exercise price of $ 2.25 , were immediately

exercisable upon issuance, and expire on February 8, 2029 .

The Series B warrants had an original exercise price of $ 2.25 per share, were

immediately exercisable upon issuance, and expired on November 8, 2024 .

The Series B warrants had an initial expiration date of August

8, 2024, which was extended to November 8, 2024 pursuant to amendments to the Warrant Agency Agreement dated as of February 8, 2024 by

and between the Company and the warrant agent, Equiniti Trust Company, LLC.

The pre-funded warrants have an exercise price of $ 0.001 per

share, were exercisable immediately and may be exercised at any time until all of the pre-funded warrants are exercised in full.

December 31, 2024, the holders exercised all of the pre-funded warrants for 1,424,760 shares of common stock.

The exercise price and number

of shares of common stock issuable upon exercise of the warrants is subject to appropriate adjustment in the event of stock dividends,

stock splits, reorganizations or similar events affecting the common stock and the exercise price.

Subject to limited exceptions, a holder

may not exercise any portion of its warrants to the extent that the holder would beneficially own more than 9.99 % or 4.99 % (at the election

of the holder) of the Company’s outstanding common stock after exercise.

On February 8, 2024, pursuant

to the Underwriting Agreement, the Company paid Ladenburg a cash fee of 9 % of the gross proceeds received from the Offering and issued

Ladenburg and its designees warrants to purchase up to an aggregate of 139,108 shares of common stock at an exercise price of $ 2.625 ,

subject to adjustments, which were exercisable immediately and have substantially similar terms to the Series A warrants.

On August 30, 2024, the Company

entered into an At The Market Offering Agreement (the Sales Agreement) with Ladenburg with respect to an “at the market” offering

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.

On November 21, 2025, the Company filed a prospectus supplement to increase the

maximum number of shares of the Company’s common stock up to an aggregate of $ 3,150,000 of shares, which did not include the shares

having an aggregate gross sales price of approximately $ 4,095,176 that had previously been sold under the Sales Agreement.

The Sales Agreement

provides that Ladenburg will be entitled to compensation for its services equal to 3.0 % of the gross proceeds from sales of any shares

of common stock pursuant to the Sales Agreement in addition to the reimbursement of certain expenses.

The Company has no obligation to

sell any shares pursuant to the Sales Agreement and either the Company or Ladenburg may terminate the Sales Agreement in accordance with

During the year ended December

31, 2024, the Company sold 251,621 shares of common stock for net proceeds of approximately $ 336,000 pursuant to the Sales Agreement.

During the year ended December 31, 2025, the Company sold 3,713,939 shares of common stock for net proceeds of approximately $ 4,351,100

pursuant to the Sales Agreement.

During the three months ended March 31, 2026, the Company sold 2,371,943 shares of common stock for net

proceeds of approximately $ 2,303,484 , pursuant to the Sales Agreement.

Amendments to Series C Warrants

On May 2, 2025, the Company

extended the expiration date of its Series C warrants, which were issued in November 2024, 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.

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.

December 5, 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 December 5, 2025 to January 7, 2026, by entering into a third amendment with each holder of the Series C warrants.

In September 2025, the Company effected a warrant inducement offering, and certain of the Series C shares were exercised.

On January 7,

2026, the remaining 1,293,650 Series C warrants expired.

On August 30, 2024, the Company entered into an At The Market Offering Agreement (the “Sales Agreement”) with Ladenburg Thalmann & Co.

(“Ladenburg”) with respect to an “at the market” offering 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.

The Sales Agreement provides that Ladenburg will be entitled to compensation for its services equal to 3.0 % of the gross proceeds from sales of any shares of common stock pursuant to the Sales Agreement in addition to the reimbursement of certain expenses.

The Company has no obligation to sell any shares pursuant to the Sales Agreement and either the Company or Ladenburg may terminate the Sales Agreement in accordance with its terms.

On April 10, 2026, the Company filed a prospectus supplement to increase the maximum number of shares of common stock issuable pursuant to the Sales Agreement, to up to an aggregate of $ 2,125,000 of shares (the “2026 Increase”).

As of June 30, 2026, the Company had sold shares having an aggregate gross sales price of approximately $ 4,827,743 under the Sales Agreement.

During the three months ended June 30, 2026 and 2025, the Company sold 2,449,681 and 941,192 shares of common stock for net proceeds of approximately $ 2,364,000 and $ 1,079,000 , respectively, pursuant to the Sales Agreement.

During the six months ended June 30, 2026 and 2025, the Company sold 4,821,624 and 1,270,158 shares of common stock for net proceeds of approximately $ 4,668,000 and $ 1,512,000 , respectively, pursuant to the Sales Agreement.

Committed Equity Facility

On June 30, 2026, the Company entered into a Common Stock Purchase Agreement, amended by a letter agreement dated July 10, 2026 (as amended, the “Purchase Agreement”), and a related Registration Rights Agreement, with Roth Principal Investments, LLC (“Roth Principal Investments”).

Pursuant to the July 10, 2026 amendment, Roth Principal Investments agreed to adjust the purchase price discount applicable to certain purchases effected outside of regular trading hours;

the terms of the Purchase Agreement are otherwise unchanged, Upon the terms and subject to the satisfaction of the conditions set forth in the Purchase Agreement, the Company will have the right, in its sole discretion, to sell to Roth Principal Investments up to $ 25,000,000 of newly issued shares of common stock, subject to certain conditions and limitations contained in the Purchase Agreement, from time to time during the term of the Purchase Agreement.

Sales of common stock pursuant to the Purchase Agreement, and the timing of any sales, are solely at the option of the Company, and the Company is under no obligation to sell any securities to Roth Principal Investments under the Purchase Agreement.

Upon the initial satisfaction of each of the conditions to Roth Principal Investments’ purchase obligation set forth in the Purchase Agreement (the initial satisfaction of such conditions, the “Commencement”, and the date on which the Commencement occurs, the “Commencement Date”), including that a registration statement registering under the Securities Act of 1933, as amended (the “Securities Act”), the resale by Roth Principal Investments of shares of common stock issued to it by the Company under the Purchase Agreement, which the Company agreed to file with the Securities and Exchange Commission (the “SEC”) pursuant to the Registration Rights Agreement (the “Registration Statement”), is declared effective by the SEC, the Company will have the right, but not the obligation, from time to time in its sole discretion for a period of up to 36 months beginning on the Commencement Date, to direct Roth Principal Investments to purchase up to a specified maximum amount of shares of common stock, in one or more Market Open Purchases, Intraday Purchases, Pre-Market Purchases and/or Post-Market Purchases, by timely delivering written notice to Roth Principal Investments for each such Purchase in accordance with the Purchase Agreement on any trading day selected by the Company as the purchase date therefor (the “Purchase Date”), so long as (i) the closing sale price of common stock on the trading day immediately prior to such Purchase Date is not less than a specified threshold price as set forth in the Purchase Agreement and (ii) all shares of common stock subject to all prior Purchases effected by the Company under the Purchase Agreement, including all prior Purchases effected on the same Purchase Date, have been received by Roth Principal Investments at such time and in the manner set forth in the Purchase Agreement.

The Company will control the timing and amount of any sales of common stock to Roth Principal Investments that it may elect, in its sole discretion, to effect from time to time from and after the Commencement Date and during the term of the Purchase Agreement.

In addition, the Company may not issue or sell any shares of common stock to Roth Principal Investments under the Purchase Agreement which, when aggregated with all other shares of common stock then beneficially owned by Roth Principal Investments and its affiliates would result in Roth Principal Investments beneficially owning more than 4.99 % of the outstanding shares of common stock.

The Purchase Agreement includes an exchange cap of 3,004,114 shares (the “Exchange Cap”) on the number of shares issuable to Roth Principal Investments, representing 19.99 % of the shares of common stock outstanding immediately prior to execution of the Purchase Agreement.

The Exchange Cap will not apply if either (i) the Company obtains stockholder approval to issue shares in excess of the Exchange Cap or (ii) the average price per share paid by Roth Principal Investments for all shares purchased under the Purchase Agreement equals or exceeds $ 0.9853 , in each case in accordance with Nasdaq Listing Rule 5635(d).

The Company intends to seek stockholder approval to remove the Exchange Cap.

There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or Registration Rights Agreement, other than a prohibition (with certain limited exceptions) on entering into specified “Variable Rate Transactions” (as such term is defined in the Purchase Agreement) during the term of the Purchase Agreement.

Such transactions include, among others, the issuance of convertible securities with a conversion or exercise price that is based upon or varies with the trading price of the common stock after the date of issuance, or the Company effecting or entering into an agreement to effect an “equity line of credit” or other substantially similar continuous offering with a third party, in which the Company may offer, issue or sell common stock or any securities exercisable, exchangeable or convertible into common stock at a future determined price.

The Purchase Agreement will automatically terminate on the earliest to occur of (i) the first day of the month following the 36-month anniversary of the Commencement Date, (ii) the date on which Roth Principal Investments shall have purchased from the Company under the Purchase Agreement shares of common stock for an aggregate gross purchase price of $ 25,000,000 , (iii) the date on which the common stock shall have failed to be listed or quoted on Nasdaq or another U.S.

national securities exchange identified as an “eligible market” in the Purchase Agreement for a period of one trading day, (iv) the 30 th trading day after the date on which a voluntary or involuntary bankruptcy proceeding involving the Company has been commenced that is not discharged or dismissed prior to such 30 th trading day, and (v) the date on which a bankruptcy custodian is appointed for all or substantially all of the Company’s property or the Company makes a general assignment for the benefit of its creditors.

As consideration for Roth Principal Investments’ commitment to purchase shares of common stock at the Company’s direction upon the terms and subject to the conditions set forth in the Purchase Agreement, the Company agreed to pay to Roth Principal Investments a cash commitment fee of $ 500,000 (the “Commitment Fee”).

The $ 500,000 Commitment Fee will be paid over time by Roth Principal Investments withholding cash amounts equal to 10 % of the total aggregate purchase price payable by Roth Principal Investments to the Company in connection with each Purchase of shares of common stock effected under the Purchase Agreement, until such time as Roth Principal Investments shall have received from such cash withholdings a total aggregate amount in cash equal to $ 500,000 , representing the entire Commitment Fee payable to Roth Principal Investments pursuant to the Purchase Agreement.

In addition, the Company agreed to reimburse Roth Principal Investments for the reasonable legal fees and disbursements of Roth Principal Investments’ legal counsel in connection with the transactions contemplated by the Purchase Agreement and the Registration Rights Agreement in an amount equal to $ 100,000 , payable upon execution of the Purchase Agreement and Registration Rights Agreement;

provided that if the Company terminates the Purchase Agreement within 90 days following the effective date of the Registration Statement, the Company will be obligated to pay Roth Principal Investments, in cash, the amount, if any, by which $ 500,000 exceeds the aggregate amount of the Commitment Fee withheld by Roth Principal Investments as of the date of termination.

The Company has the right to terminate the Purchase Agreement at any time after Commencement upon 5 trading days’ prior written notice to Roth Principal Investments.

The Company has engaged Digital Offering, LLC, a registered broker-dealer and FINRA member (“Digital Offering”), to be the qualified independent underwriter (“QIU”) in connection with the offering to be registered under the Registration Statement.

The Company has agreed to reimburse Roth Principal Investments for the fees and expenses of Digital Offering up to $ 50,000 .

Deferred Equity Facility Costs

The Company incurred fees totaling approximately $ 290,000 to implement the committed equity facility and file the Registration Statement with the SEC.

The fees comprised legal and accounting and the QIU fee.

These fees have been recorded as a deferred equity facility costs at June 30,2026 (see Note 1).

Warrants Classified as Liabilities

The securities purchase agreements

governing warrants issued in registered direct offerings completed in November 2022 and June 2023 (collectively, the Purchase Warrants)

provide for a value calculation for such warrants using the Black Scholes model in the event of certain fundamental transactions.

fair value calculation provides for a floor on the volatility amount utilized in the value calculation at 100 % or greater.

has determined this provision introduces leverage to the holders of the Purchase Warrants that could result in a value that would be greater

than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares.

Therefore, pursuant to ASC 815, the Company

has classified the Purchase Warrants as liabilities in its consolidated balance sheet.

The classification of the Purchase Warrants, including

whether the Purchase Warrants should be recorded as liabilities or as equity, is evaluated at the end of each reporting period with changes

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

As of March 31, 2026, the

Company had the following Purchase Warrants outstanding (share amounts in thousands):

The securities purchase agreements governing warrants issued in registered direct offerings completed in November 2022 and June 2023 (collectively, the “Purchase Warrants”) provide for a value calculation for such warrants using the Black Scholes model in the event of certain fundamental transactions.

The fair value calculation provides for a floor on the volatility amount utilized in the value calculation at 100 % or greater.

The Company has determined this provision introduces leverage to the holders of the Purchase Warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares.

Therefore, pursuant to ASC 815, the Company has classified the Purchase Warrants as liabilities in its consolidated balance sheet.

The classification of the Purchase Warrants, including whether the Purchase Warrants should be recorded as liabilities or as equity, is evaluated at the end of each reporting period with changes in the fair value reported in other income (expense) in the consolidated statements of operations.

As of June 30, 2026, the Company had the following Purchase Warrants outstanding (share amounts in thousands):

Shares Exercise

Price Expiration

Price Expiration Date

Warrants issued - November 2022 92 $ 40.00 May 28, 2028

Warrants issued - June 2023 143 $ 28.00 June 2, 2028

The following table sets forth

changes in the fair value of the Purchase Warrants outstanding (amounts in thousands):

The following table sets forth changes in the fair value of the Purchase Warrants outstanding (amounts in thousands):

shares Amount

Balance as of December 31, 2025 235 $ 24

1 unchanged sentence

Balance as of March 31, 2026 235 33

The outstanding Purchase Warrants had no intrinsic

value at March 31, 2026.

The fair value of the Purchase

Warrants at March 31, 2026 was determined using the Black Scholes model with the following assumptions:

Change in fair value of warrants — ( 14 )

Balance as of June 30, 2026 235 $ 19

The outstanding Purchase Warrants had no intrinsic value at June 30, 2026.

The fair value of the Purchase Warrants at June 30, 2026 was determined using the Black Scholes model with the following assumptions:

2022 Purchase

Warrant 2023 Purchase

Expected term based on contractual term 1.9 years 1.9 years

4 unchanged sentences

Fair value of warrants (in thousands) $ 9 $ 10

The fair value of the Purchase

Warrants at December 31, 2025 was determined using the Black Scholes model with the following assumptions:

The fair value of the Purchase Warrants at December 31, 2025 was determined using the Black Scholes model with the following assumptions:

2022 Purchase

Warrant 2023 Purchase

Expected term based on contractual term 2.4 years 2.4 years

5 unchanged sentences

Warrants Classified as Equity

As of March 31, 2026, the

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

The following table summarizes the activity in warrants classified as equity during the three and six months ended June 30, 2026 (share amounts in thousands):

Number of Shares

Balance as of December 31, 2025 8,837

Series C warrants expired ( 1,294 )

Balance as of March 31, 2026 7,543

Warrants issued —

Balance as of June 30, 2026 7,543

As of June 30, 2026, the Company had the following equity-classified common stock purchase warrants outstanding (share amounts in thousands):

Warrant Type Number of

Shares Exercise

Price Expiration

Shares Exercise Price Expiration

Common stock warrants 7 $ 28.00 June 2, 2028

1 unchanged sentence

Series A warrants issued 139 $ 2.625 February 8, 2029

Series C warrants issued 2,246 $ 1.610 January 7, 2026

Series C warrants exercised ( 952 ) $ 1.610 —

Series C warrants expired ( 1,294 ) $ 1.610 —

Series C warrants issued 157 $ 1.625 November 6, 2029

2 unchanged sentences

Series E warrants issued 67 $ 1.475 September 12, 2030

Balance as of March 31, 2026 7,543

The outstanding equity-classified warrants had

no intrinsic value at March 31, 2026.

Balance as of June 30, 2026 7,543

The outstanding equity-classified warrants had no intrinsic value at June 30, 2026.

Related Party Transactions

A family member of one of

the Company’s executive officers is an employee of the Company.

The Company recorded compensation expense of approximately $ 38,300

and $ 41,600 for the employed family member during the three months ended March 31, 2026 and 2025, respectively, which includes the aggregate

grant date fair values, as determined pursuant to FASB ASC Topic 718, of any stock options during each period.

Memory IC Product End-of-Life

Taiwan Semiconductor Manufacturing Corporation, the sole foundry that

manufactured the wafers used to produce the Company’s memory IC products, discontinued the foundry process used to produce such

As a result, the Company commenced an end-of-life (EOL) of its memory products in 2023.

During the three months ended March 31,

2026, the Company recorded approximately $ 20,000 of product revenue.

A family member of one of the Company’s executive officers is an employee of the Company.

The Company recorded compensation expense of approximately $ 29,200 and $ 28,600 for the employed family member during the three months ended June 30, 2026 and 2025, respectively, and compensation expense of approximately $ 58,700 and $ 56,100 for the employed family member during the six months ended June 30, 2026 and 2025, respectively.

Compensation expense includes the aggregate grant date fair values, as determined pursuant to FASB ASC Topic 718, of any stock options during each period.

Subsequent Events

Issuance of Common Stock under ATM Offering

On April 10, 2026, the Company

filed a prospectus supplement to its registration statement on Form S-3 to increase the maximum number of shares of common stock available

for sale under the Sales Agreement on such date to $ 2,125,000 , exclusive of previously sold shares.

Subsequent to March 31, 2026, the

Company has sold 2,104,742 shares of common stock for net proceeds of approximately $ 2,061,205 pursuant to the Sales Agreement.

Committed Equity Facility

As required by the Purchase Agreement and the Registration Rights Agreement, the Company filed a resale registration statement, which was declared effective by the SEC on July 14, 2026.

Accordingly, the Commencement Date became July 14, 2026.

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