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Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-14 · 160 added, 330 removed, 44 unchanged (92% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

This Management’s

Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying condensed

consolidated financial statements and notes included in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q contains

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the

Securities Exchange Act of 1934, as amended, which include, without limitation, statements about the market for our technology, our strategies,

competition, expected financial performance and capital raising efforts.

Any statements about our business, financial results, financial

condition and operations contained in this Quarterly Report on Form 10-Q that are not statements of historical fact may be deemed

to be forward-looking statements.

Without limiting the foregoing, the words “believes,” “anticipates,” “expects,”

“intends,” “plans,” “projects” or similar expressions are intended to identify forward-looking statements.

Our actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various

factors, including the risk factors described under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31,

2025 and the risk factors described below under Part II, Item 1A of this Quarterly Report on Form 10-Q.

We undertake no obligation to

update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or

events occur in the future.

Our strategy and primary business

objective is to be a profitable, IP-rich fabless semiconductor company offering integrated circuits, or ICs, antenna modules and related

non-recurring engineering services.

We specialize in the development of mmWave semiconductors, primarily in the unlicensed 60 GHz spectrum

band for 802.11ad/ay-compliant devices and in the 28/39 GHz spectrum bands for 5G-compliant devices.

We derive our revenue from selling

semiconductor devices, as well as antenna modules based on using those mmWave semiconductor devices.

We have pioneered a high-volume mmWave

IC production test methodology using standard, low-cost production test equipment.

It has taken us several years to refine performance

of this production test methodology, and we believe this places us in a leadership position in addressing the operational challenges of

delivering mmWave products into high-volume markets.

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying condensed consolidated financial statements and notes included in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which include, without limitation, statements about the market for our technology, our strategies, competition, expected financial performance and capital raising efforts.

Any statements about our business, financial results, financial condition and operations contained in this Quarterly Report on Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements.

Without limiting the foregoing, the words “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects” or similar expressions are intended to identify forward-looking statements.

Our actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including the risk factors described under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and the risk factors described below under Part II, Item 1A of this Quarterly Report on Form 10-Q.

We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or events occur in the future.

Our strategy and primary business objective is to be a profitable, IP-rich fabless semiconductor company offering integrated circuits, or ICs, antenna modules and related non-recurring engineering services.

We specialize in the development of mmWave semiconductors, primarily in the unlicensed 60 GHz spectrum band for 802.11ad/ay-compliant devices and in the 28/39 GHz spectrum bands for 5G-compliant devices.

We derive our revenue from selling semiconductor devices, as well as antenna modules based on using those mmWave semiconductor devices.

We have pioneered a high-volume mmWave IC production test methodology using standard, low-cost production test equipment.

It has taken us several years to refine performance of this production test methodology, and we believe this places us in a leadership position in addressing the operational challenges of delivering mmWave products into high-volume markets.

We also produce and sell complete mmWave antenna modules.

The primary advantage provided

by our antenna modules is that our proprietary mmWave ICs and the antenna are integrated into a single device.

A differentiating characteristic

of mmWave technology is that the RF amplifiers must be as close as possible to the antenna to minimize loss.

Our module is designed to

enhance the performance of the amplifier/antenna interface and simplify customers’ radio frequency (“RF”) engineering,

facilitating more opportunities for customer prospects that have not provided RF-type systems, as well as shortening the time to market

for new products.

We also had a memory product

line comprising our Bandwidth Engine IC products.

Taiwan Semiconductor Manufacturing Corporation, or TSMC, the sole foundry that manufactured

the wafers used to produce our memory IC products, discontinued the foundry process used to produce such wafers.

As a result, in May 2023,

we initiated an end-of-life, or EOL, of our memory IC products, and, in March 2025, we fulfilled all then-outstanding EOL orders for our

memory IC products.

Subsequent to March 2025, we received additional purchase orders and recorded revenue totaling approximately $0.5

million during the second half of 2025.

During the three months ended March 31, 2026, we received an additional purchase order and recorded

revenue totaling approximately $20,000.

We 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 we 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 historically have required us to raise substantial amounts of additional capital.

As discussed below, this raises significant

doubt about our ability to continue as a going concern.

We will need to increase revenues substantially beyond levels that we have 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.

The primary advantage provided by our antenna modules is that our proprietary mmWave ICs and the antenna are integrated into a single device.

A differentiating characteristic of mmWave technology is that the RF amplifiers must be as close as possible to the antenna to minimize loss.

Our module is designed to enhance the performance of the amplifier/antenna interface and simplify customers’ radio frequency (“RF”) engineering, facilitating more opportunities for customer prospects that have not provided RF-type systems, as well as shortening the time to market for new products.

Our integrated mmWave solutions provide secure, low-latency, high-capacity connectivity for applications spanning fixed wireless access, defense, public safety, mobility, industrial networking, and autonomous systems.

In recent quarters, we have been focused on addressing market opportunities for the rapidly expanding requirements of unmanned aerial vehicles (“UAV”), including drones, autonomous systems, and defense communications applications.

In 2025, we secured our first defense application with a customer for a drone identification friend or foe (“IFF”) system designed to operate in highly contested electronic warfare environments.

Since then, we have expanded our initial engagement with this customer for an IFF application for personnel-mounted systems to IFF applications for our module products for drones.

We have also been engaged with another customer for applications for autonomous vehicles and drone swarms.

We believe the autonomous, UAV and defense communications markets represent a significant market opportunity for us.

We also had a memory product line comprising our Bandwidth Engine IC products.

Taiwan Semiconductor Manufacturing Corporation, or TSMC, the sole foundry that manufactured the wafers used to produce our memory IC products, discontinued the foundry process used to produce such wafers.

As a result, in May 2023, we initiated an end-of-life, or EOL, of our memory IC products, and, in March 2025, we fulfilled all then-outstanding EOL orders for our memory IC products.

In the second half of 2025, we fulfilled two purchase orders for revenue totaling approximately $0.5 million.

During the six months ended June 30, 2026, we fulfilled two additional purchase orders for revenue totaling approximately $27,000.

We 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 we 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 historically have required us to raise substantial amounts of additional capital.

As discussed below, this raises significant doubt about our ability to continue as a going concern.

We will need to increase revenues substantially beyond levels that we have 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.

Recent Developments

Unsolicited, Non-binding Proposal from Mobix

Strategic Review Process

On June 27, 2025, we confirmed

in a public press release the receipt of an unsolicited, non-binding proposal from Mobix Labs, Inc.

(“Mobix Labs”) to acquire

all of the Company’s issued and outstanding equity securities in exchange for newly issued shares of Mobix Labs common stock, with

a fixed exchange ratio based on the average daily closing price of our common stock over the 30 calendar days ending on June 11, 2025,

plus a 20% premium, or approximately $1.20 per share.

On July 11, 2025, we issued

a press release announcing the initiation of the strategic review process.

Following this, our financial advisor contacted potential counterparties

to invite them to participate in the process subject to such parties’ execution of our standard non-disclosure agreement, which

includes a standstill provision.

Our financial advisor also contacted Mobix Labs to request that Mobix Labs execute our non-disclosure

agreement in order to participate in the process, which Mobix Labs declined to execute.

On August 19, 2025, we issued

a public press release providing an update on our strategic review process, including our engagement with potential counterparties and

our continued openness to engaging with Mobix Labs and others, while noting that Mobix Labs declined to enter into our standard non-disclosure

agreement and indicated it would not agree to receive material non-public information (“MNPI”).

On September 8, 2025, we issued

a press release providing another update on our strategic review process, including regarding the two letters that we received from Mobix

Labs, dated as of September 4, 2025, and September 5, 2025, in connection with its unsolicited offer to acquire all outstanding shares

of the Company.

The September 4 letter included a revised acquisition proposal involving a combination of cash and stock consideration

in an undetermined amount, and a reiteration of Mobix Labs’ refusal to enter into a confidentiality agreement or receive MNPI from

The September 5 follow-up letter stated that while Mobix Labs continued to oppose any standstill restrictions, it would be willing

to consider a limited confidentiality arrangement to permit us to share MNPI deemed reasonably necessary, provided that such arrangement

did not include a standstill and did not indefinitely constrain Mobix Labs.

In response to such letters, we authorized a limited exploratory

call with Mobix Labs, and we requested that any such discussion take place without us sharing any MNPI and outside the bounds of a confidentiality

agreement, which exploratory call would serve to allow us to better understand Mobix Labs’ revised proposal and intentions.

On September 11, 2025, following

the limited exploratory call with Mobix Labs on September 10, 2025, Mobix Labs issued a public statement describing the discussions had

in such limited exploratory call and announcing an enhanced proposal of approximately 30% cash and 70% Mobix Labs common stock.

on September 12, 2025, we issued a press release to provide clarification to all stockholders relating to such public statements made

by Mobix Labs, including that we did not respond to Mobix Labs’ proposal and that we did not agree to continue discussions with

Mobix Labs during the call, and we sent a letter to Mobix Labs to clarify our position.

On September 13, 2025, Mobix

Labs filed a Form 425 with the SEC and issued a related press release announcing its intent to commence a hostile exchange offer to acquire

all outstanding shares of the Company.

In the press release, Mobix Labs stated that the proposed offer is expected to consist of a mix

of cash and Mobix Labs common stock, with an intended closing timeline of approximately 75 days.

On September 29, 2025, Mobix

Labs delivered another letter to our board of directors reiterating its interest in a business combination and submitting what it described

as a definitive proposal to acquire all outstanding shares of the Company for $1.30 per share, consisting of a mix of cash and Mobix Labs

common stock, and also separately requested our cooperation with respect to an anticipated registration statement on Form S-4.

On October 3, 2025, Mobix

Labs delivered an updated letter superseding its prior proposal and proposing to acquire all outstanding shares of the Company for $1.30

per share in cash, stating that the proposal was not subject to financing contingencies and was based on our publicly reported share count

as of June 30, 2025.

On October 6, 2025, we sent

a letter to Mobix Labs acknowledging receipt of its revised proposal and requesting clarification regarding share count assumptions, treatment

of the Company’s publicly disclosed warrants and equity-linked instruments, and financing sources.

Also on October 6, 2025, Mobix

Labs issued a press release publicly announcing its updated all-cash proposal and reiterating its preference for a cooperative process

with the Company.

On October 30, 2025, we entered

into a mutual confidentiality agreement with Mobix Labs in connection with our ongoing review of strategic alternatives.

The confidentiality

agreement contains customary terms, including mutual 12-month standstill and non-solicitation provisions.

On November 3, 2025, Mobix Labs

issued a press release publicly announcing its entry into a mutual confidentiality agreement with us.

On January 21, 2026, Mobix

Labs issued a press release, and we filed a Current Report on Form 8-K disclosing that the Company and Mobix Labs continue to engage in

discussions regarding a potential strategic transaction and are conducting customary, confidential diligence and that Mobix Labs delivered

to the Company a non-binding indication of interest contemplating a potential all-stock transaction at a premium to the Company’s

trading price, subject to further diligence, negotiation, and the execution of definitive documentation.

Our board of directors continues

to evaluate the Company’s options to enhance stockholder value.

Our board of directors and management team are committed to acting

in the best interests of all stockholders.

Consistent with its fiduciary duties and in consultation with the Company’s financial

and legal advisors, our board of directors will continue to carefully review Mobix Labs’ proposal to determine the course of action

that it believes is in the best interest of the Company and its stockholders.

We do not intend to make further comments regarding potential

transactions or provide any public updates regarding proposed or potential transactions, unless required by applicable law or a regulatory

There can be no assurance that any transaction will be completed with Mobix Labs or any other third party.

On August 30, 2024, we 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 we may, from time to time, in our sole discretion, issue

and sell through Ladenburg, acting as agent or principal, shares of our 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.

We have no obligation to sell any shares pursuant to the Sales

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

During the twelve months ended December

31, 2025 and 2024, we sold 3,713,939 and 251,621 shares, respectively, of common stock for net proceeds of approximately $4,351,100 and

$336,000, respectively, pursuant to the Sales Agreement.

During the three months ended March 31, 2026, we sold 2,371,943 shares of common

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

Subsequent to March 31, 2026, we have sold 2,104,742

shares of common stock for net proceeds of approximately $2,061,205 through May 12, 2026.

We currently have no amounts registered for

sale under the Sales Agreement.

We intend to file a new prospectus supplement under our existing shelf registration statement

on Form S-3 following the filing of this Quarterly Report on Form 10-Q to register additional shares of common stock for sale under the

Sales Agreement.

The amount available for sale under any such prospectus supplement will be subject to limitations under General Instruction

I.B.6 of Form S-3, which limits the aggregate market value of securities that may be sold by us during any 12-month period, as well as

market conditions and other factors.

Strategic Initiatives

We received an unsolicited, non-binding proposal from Mobix Labs, Inc.(“Mobix”) to acquire the Company, as described in our Annual Report on Form 10-K for the year ended December 31, 2025 and Current Report on Form 8-K filed with the SEC on January 21, 2026.

There have been no further developments since that time.

As initially disclosed in July 2025, our board of directors authorized the exploration of strategic alternatives, including a merger, sale of assets or other similar transaction, all intended to maximize stockholder value and further our business operations.

There can be no assurance that any transaction will result from our evaluation of strategic alternatives.

On August 30, 2024, we 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 we may, from time to time, in our sole discretion, issue and sell through Ladenburg, acting as agent or principal, shares of our 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.

We have no obligation to sell any shares pursuant to the Sales Agreement and either we or Ladenburg may terminate the Sales Agreement in accordance with its terms.

During the three months ended June 30, 2026, we sold 2,449,681 shares of common stock for net proceeds of approximately $2,364,376 (net of commissions paid to Ladenburg of approximately $73,591) pursuant to the Sales Agreement.

Subsequent to June 30, 2026, we sold 23,797 shares of common stock for net proceeds of approximately $20,901 pursuant Sales Agreement.

See Note 7 to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information regarding the terms of the Sales Agreement.

Committed Equity Facility

On June 30, 2026, we entered into a Common Stock Purchase Agreement, as 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 which Roth Principal Investments has committed to purchase up to $25.0 million of shares of our common stock from time to time, at our discretion, over a 36-month period, subject to the terms and conditions set forth in the Purchase Agreement.

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 our shares of common stock outstanding immediately prior to execution of the Purchase Agreement.

The Exchange Cap will not apply if either (i) we obtain 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).

We intend to seek stockholder approval to remove the Exchange Cap.

We are under no obligation to sell any shares under the Purchase Agreement.

The registration statement registering the resale of shares issuable under the Purchase Agreement was declared effective by the SEC on July 14, 2026.

See Note 7 to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information regarding the terms of the Purchase Agreement.

Risks and Uncertainties

We are subject to risks from,

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

rapidly changing customer requirements, limited operating history, tariffs, pandemics, wars and acts of terrorism and the volatility of

public markets.

We may be unable to access the capital markets, and additional capital may only be available to us on terms that could

be significantly detrimental to our existing stockholders and to our business.

For additional information

on risks that could impact our future results of operations, please refer to “Risk Factors” in Part II, Item 1A of this Quarterly

Report on Form 10-Q.

We are subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, tariffs, pandemics, wars and acts of terrorism and the volatility of public markets.

We may be unable to access the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business.

For additional information on risks that could impact our future results of operations, please refer to “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

The discussion and analysis

of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared

in accordance with accounting principles generally accepted in the United States (GAAP).

The preparation of these condensed consolidated

financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues

and expenses.

On an ongoing basis we make these estimates based on our historical experience and on assumptions that we consider reasonable

under the circumstances.

Actual results may differ from these estimates and reported results could differ under different assumptions

or conditions.

Our significant accounting policies and estimates are disclosed in Note 1 of the “Notes to Condensed Consolidated

Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 1 of the “Notes

to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2025.

31, 2026, there have been no material changes to our significant accounting policies and estimates.

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).

The preparation of these condensed consolidated financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

On an ongoing basis we make these estimates based on our historical experience and on assumptions that we consider reasonable under the circumstances.

Actual results may differ from these estimates and reported results could differ under different assumptions or conditions.

Our significant accounting policies and estimates are disclosed in Note 1 of the “Notes to Condensed Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 1 of the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2025.

As of June 30, 2026, there have been no material changes to our significant accounting policies and estimates.

Results of Operations

Three Months Ended

Year-Over-Year Change

June 30, Change

2026 2025 2025 to 2026

(dollar amounts in thousands)

Product - three months ended $ 1,244 $ 2,218 $ (974 ) (44 )%

Percentage of total net revenue 95 % 100 %

The following table details

revenue by product category for the three months ended March 31, 2026 and 2025:

(amounts in thousands)

Three Months Ended

Year-Over-Year

Product category

Product - six months ended $ 1,911 $ 6,018 $ (4,107 ) (68 )%

Percentage of total net revenue 84 % 99 %

The following tables details revenue by product category for the three and six months ended June 30, 2026 and 2025:

(amounts in thousands) Three Months Ended

June 30, Year-Over-

Product category 2026 2025 change

Memory ICs $ 7 $ - $ 7

mmWave ICs 79 1,318 (1,239 )

mmWave modules 1,078 886 192

mmWave other products 80 14 66

Product revenue decreased for the three months ended March 31, 2026

compared with the same period of 2025 primarily due to the decrease in sales of our memory IC products due to the significant decrease

in EOL shipments and decreases in shipments of our mmWave ICs and antenna modules.

The decline in mmWave product shipments during the

three months ended March 31, 2026 also reflected the delayed shipment of a sizable order due to material availability constraints from

one of our suppliers, as well as subdued near-term demand from existing fixed wireless access customers.

The delayed order was shipped

subsequent to March 31, 2026.

Three Months Ended

Year-Over-Year Change

$ 1,244 $ 2,218 $ (974 )

(amounts in thousands) Six Months Ended

June 30, Year-Over-

Product category 2026 2025 change

Memory ICs $ 27 $ 2,267 $ (2,240 )

mmWave ICs 583 2,293 (1,710 )

mmWave modules 1,189 1,444 (255 )

mmWave other products 112 14 98

$ 1,911 $ 6,018 $ (4,107 )

Product revenue decreased for the three and six months ended June 30, 2026 compared with the same period of 2025 primarily due to the decrease in sales of our EOL memory IC products and a decrease in shipments of our mmWave ICs and antenna modules.

T he decline in mmWave product shipments during the six months ended June 30, 2026 was attributed to subdued near-term demand from existing fixed wireless access customers.

June 30, Change

2026 2025 2025 to 2026

(dollar amounts in thousands)

Services and other

Services and other - three months ended $ 63 $ 2 $ 61 3050 %

Percentage of total net revenue 5 % 0 %

Services and other revenue

includes royalty, non-recurring engineering services and license revenues.

The increase in services and other revenue for the three months

ended March 31, 2026 compared with the same period of 2025 was primarily due to an increase in non-recurring engineering services revenue

related to our mmWave technology, partially offset by a decrease in royalties from licensees of our memory technology due to reduced shipments

by these licensees, which we attribute to the discontinuation of the foundry process by TSMC.

Services and other - six months ended $ 359 $ 71 $ 288 406 %

Percentage of total net revenue 16 % 1 %

Services and other revenue includes royalty, non-recurring engineering services and license revenues.

The increase in services and other revenue for the three and six months ended June 30, 2026 compared with the same period of 2025 was primarily due to an increase in non-recurring engineering services revenue related to our mmWave technology, partially offset by a decrease in royalties from licensees of our memory technology due to reduced shipments by these licensees, which we attribute to the discontinuation of the foundry process by TSMC.

Cost of Net Revenue and Gross Profit

Three Months Ended

Year-Over-Year Change

June 30, Change

2026 2025 2025 to 2026

(dollar amounts in thousands)

Cost of net revenue

Cost of net revenue -three months ended $ 474 $ 1,147 $ (673 ) -59 %

Percentage of total net revenue 36 % 52 %

Cost of net revenue is primarily

comprised of direct and indirect costs related to the sale of our products, including depreciation of production-related fixed assets.

Cost of net revenue decreased

for the three months ended March 31, 2026 when compared with the same period in 2025, primarily related to the decrease in product revenue.

Three Months Ended

Year-Over-Year Change

Cost of net revenue -six months ended $ 845 $ 2,336 $ (1,491 ) -64 %

Percentage of total net revenue 37 % 38 %

Cost of net revenue is primarily comprised of direct and indirect costs related to the sale of our products, including depreciation of production-related fixed assets.

Cost of net revenue decreased for the three and six months ended June 30, 2026 when compared with the same periods of 2025, due to the corresponding decreases in product revenue.

June 30, Change

2026 2025 2025 to 2026

(dollar amounts in thousands)

Gross profit -three months ended $ 833 $ 1,073 $ (240 ) -22 %

Percentage of total net revenue 64 % 48 %

Gross profit decreased for the three months ended March 31, 2026 compared

with the same period of 2025, primarily due to the reduction in product revenues, partially offset by increased services and other revenues.

During the three months ended March 31, 2026 and 2025, mmWave inventory with values of approximately $182,000 and $94,000, respectively,

which was written down prior to January 1, 2026, was sold to customers.

Gross profit -six months ended $ 1,425 $ 3,753 $ (2,328 ) -62 %

Percentage of total net revenue 63 % 62 %

Gross profit decreased for the three months ended June 30, 2026 compared with the same period of 2025, primarily due to the reduction in product revenues, partially offset by increased services and other revenues.

During the three months ended June 30, 2026 and 2025, we sold mmWave inventory with cost of net revenue values of approximately $0.3 million and $0.2 million, respectively, which was written down prior to January 1, 2026.

Gross profit decreased for the six months ended June 30, 2026 compared with the same period of 2025, primarily due to the reduction in product revenues combined with product mix, specifically the decrease in memory IC shipments.

The decrease was partially offset by the net increase in services and other revenues.

During the six months ended June 30, 2026 and 2025, we sold mmWave inventory with cost of net revenue values of approximately $0.5 million and $0.3 million, respectively.

Research and Development

Three Months Ended

Year-Over-Year Change

June 30, Change

2026 2025 2025 to 2026

(dollar amounts in thousands)

Research and development

Research and development -three months ended $ 1,625 $ 1,662 $ (37 ) (2 )%

Percentage of total net revenue 124 % 75 %

Our research and development,

or R&D, expenses include costs related to the development of our products, including facility allocations.

We expense R&D costs

as they are incurred.

We expect that total R&D

expenses will remain flat for the remainder of 2026 compared with the prior periods of 2025.

Research and development -six months ended $ 3,210 $ 3,245 $ (35 ) (1 )%

Percentage of total net revenue 141 % 53 %

Our research and development, or R&D, expenses include costs related to the development of our products, including facility allocations.

We expense R&D costs as they are incurred.

We expect that total R&D expenses will remain flat for the remainder of 2026 compared with the first six months of 2026.

Selling, General and Administrative

Three Months Ended

Year-Over-Year Change

June 30, Change

2026 2025 2025 to 2026

(dollar amounts in thousands)

SG&A -three months ended $ 1,444 $ 1,411 $ 33 2 %

Percentage of total net revenue 110 % 64 %

Selling, general and administrative,

or SG&A, expenses consist primarily of personnel and related overhead costs for sales, marketing, finance, human resources and general

The decrease for the three

months ended March 31, 2026 compared with the same period of 2025 was primarily attributable to reductions in expenses for facilities

and stock based compensation.

SG&A -six months ended $ 2,935 $ 3,022 $ (87 ) (3 )%

Percentage of total net revenue 129 % 50 %

Selling, general and administrative, or SG&A, expenses consist primarily of personnel and related overhead costs for sales, marketing, finance, human resources and general management.

The slight increase for the three months ended June 30, 2026 compared with the same period of 2025 was primarily attributable to increases in consulting and professional services costs.

The decrease for the six months ended June 30, 2026 compared with the same period of 2025 was primarily attributable to reductions in expenses for facilities and stock based compensation.

These decreases were partially offset by increases in consulting and professional services costs.

that total SG&A expense will remain flat or slightly decrease for the remainder of 2026 compared with 2025, as we continue to manage

our SG&A expenses.

We expect that total SG&A expense will remain flat or slightly decrease for the remainder of 2026 compared with 2025, as we continue to manage our SG&A expenses.

Liquidity and Capital Resources;

Changes in Financial Condition

As of March 31, 2026, we had

cash and cash equivalents of $2.7 million and working capital of $4.0 million.

Net cash used in operating

activities was $2.3 million for the first three months of 2026, which primarily resulted from our net loss of $2.5 million, as partially

offset by non-cash charges of $0.1 million of depreciation and amortization and $0.1 million of stock based compensation.

Net cash used in operating

activities was $1.0 million for the first three months of 2025, which primarily resulted from our net loss of $0.5 million, as adjusted

for cash outflows of $0.7 million in net changes in assets and liabilities, and partially offset by non-cash charges of $0.1 million of

depreciation and amortization and $0.1 million of stock based compensation.

The changes in assets and liabilities primarily related to

the timing of collections of receivables, purchases of inventory and other vendor payables and prepayments.

Net cash used in investing

activities of approximately $0.2 million for the three months ended March 31, 2026 which was attributable to the purchase of fixed assets.

For the three months ended

March 31, 2025 no cash was provided by or used in investing activities.

Net cash provided by financing

activities of $2.3 million for the three months ended March 31, 2026 primarily comprised $2.3 million of net proceeds from sales of our

common stock under the Sales Agreement.

Net cash provided by financing

activities for the three months ended March 31, 2025 comprised $0.4 million of net proceeds from sales of our common stock under the Sales

Agreement, partially offset by repayment of financing lease liabilities.

Our future liquidity and capital

requirements are expected to vary from quarter-to-quarter, depending on numerous factors, including:

As of June 30, 2026, we had cash and cash equivalents of $3.3 million and working capital of $4.0 million.

Net cash used in operating activities was $3.9 million for the first six months of 2026, which primarily resulted from our net loss of $4.7 million, partially offset by non-cash charges of $0.1 million of depreciation and amortization and $0.3 million of stock based compensation, and $0.4 million in net changes in assets and liabilities.

The changes in assets and liabilities primarily related to the timing of collections of receivables, purchases of inventory and other vendor payables and prepayments.

Net cash used in operating activities was $3.0 million for the first six months of 2025, which primarily resulted from our net loss of $2.3 million, as adjusted for $1.1 million in net changes in assets and liabilities, as partially offset by non-cash charges of $0.1 million of depreciation and amortization and $0.3 million of stock based compensation.

The changes in assets and liabilities primarily related to the timing of collections of receivables, purchases of inventory and other vendor payables and prepayments.

Net cash used in investing activities was approximately $0.3 million for the first six months of 2026, which was attributable to the purchase of fixed assets.

Net cash used in investing activities was approximately $45,000 for the first six months of 2025, which was attributable to the purchase of fixed assets.

Net cash provided by financing activities for the six months ended June 30, 2026 comprised $4.7 million of net proceeds from sales under our at-the market offering program, partially offset by approximately $0.1 million of payments related to costs associated with our committed equity facility and proceeds from option exercises.

Net cash provided by financing activities for the six months ended June 30, 2025 comprised $1.5 million of net proceeds from sales under our at-the market offering program, partially offset by repayment of financing lease liabilities.

Our future liquidity and capital requirements are expected to vary from quarter-to-quarter, depending on numerous factors, including:

● level of revenue;

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Purchase Obligations

Our primary purchase obligations

include non-cancelable purchase orders for inventory.

At March 31, 2026, we had outstanding non-cancelable purchase orders for inventory,

primarily wafers and substrates, and related expenditures of approximately $3.2 million.

Our primary purchase obligations include non-cancelable purchase orders for inventory.

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

Going Concern - Working Capital

We 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 we 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 us to raise substantial amounts of additional capital.

To date, we have primarily financed our operations

through loans, offerings of common stock and warrants and issuances of convertible notes.

We expect to continue to incur

operating losses during 2026, as we do not expect to generate any meaningful revenue from shipments of our remaining memory products and

as we continue to secure new customers for and continue to invest in the development of our mmWave products.

Further, we expect our cash

expenditures to continue to exceed receipts for at least the next 12 months, as our revenues will not be sufficient to offset our operating

In addition, we have incurred and may continue to incur substantial costs related to our strategic alternative exploration process,

which costs include the fees of our financial and legal advisors.

We believe that our existing cash and cash equivalents as of March 31,

2026 and expected receipts associated with forecasted product sales will enable us to meet our capital needs into the fourth quarter of

We will need to increase revenues

beyond the levels that we have 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 our expected operating losses and cash burn and recurring

losses from operations, if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty

regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt as to our ability

to continue as a going concern within one year from the date of issuance of our condensed consolidated financial statements.

our independent registered public accounting firm, in its report on our consolidated financial statements for the year ended December

31, 2025, expressed substantial doubt about our ability to continue as a going concern.

The condensed consolidated financial statements

presented in Part I, Item 1 of this Quarterly Report on Form 10-Q have been prepared assuming that we will continue as a going concern,

and do not include any adjustments that might result from the outcome of this uncertainty.

There can be no assurance that such additional

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

offered on terms and conditions acceptable to us.

We are currently selling shares of our common stock under the Sales Agreement and seeking

additional financing in order to meet our cash requirements for the foreseeable future.

If we are unsuccessful in these efforts, we will

need to implement additional cost reduction strategies, which could further affect our near- and long-term business plan.

These cost reduction

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

If we were to raise additional

capital through sales of our equity securities, our stockholders would suffer dilution of their equity ownership.

If we engage in debt

financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, prohibit us from paying dividends,

repurchasing our stock or making investments, and force us to maintain specified liquidity or other ratios, any of which could harm our

business, operating results and financial condition.

If we need additional capital and cannot raise it on acceptable terms, we may not

be able to, among other things:

These and prior year losses have resulted in significant negative cash flows and have required us to raise substantial amounts of additional capital.

To date, we have primarily financed our operations through loans, offerings of common stock and warrants and issuances of convertible notes.

We expect to continue to incur operating losses during 2026, as we do not expect to generate any meaningful revenue from shipments of our remaining memory products and as we continue to secure new customers for and continue to invest in the development of our mmWave products.

Further, we expect our cash expenditures to continue to exceed receipts for at least the next 12 months, as our revenues will not be sufficient to offset our operating expenses.

In addition, we have incurred and may continue to incur substantial costs related to our strategic alternative exploration process, which costs include the fees of our financial and legal advisors.

We believe that our existing cash and cash equivalents as of June 30, 2026 and expected receipts associated with forecasted product sales will enable us to meet our capital needs into the fourth quarter of 2026.

This estimate does not assume any further sales under the Sales Agreement or the Purchase Agreement with Roth Principal Investments, both of which remain available to us, at our discretion, as potential additional sources of capital, subject to compliance with the terms and conditions of each agreement, as applicable.

We will need to increase revenues beyond the levels that we have 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 our expected operating losses and cash burn and recurring losses from operations, if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt as to our ability to continue as a going concern within one year from the date of issuance of our condensed consolidated financial statements.

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

The condensed consolidated financial statements presented in Part I, Item 1 of this Quarterly Report on Form 10-Q have been prepared assuming that we will continue as a going concern, and do not include any adjustments that might result from the outcome of this uncertainty.

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

We may sell shares of our common stock under the Sales Agreement, and may sell shares of our common stock under the Purchase Agreement with Roth Principal Investments, in each case from time to time and at our discretion, and we are seeking additional financing in order to meet our cash requirements for the foreseeable future.

If we are unsuccessful in these efforts, we will need to implement additional cost reduction strategies, which could further affect our near- and long-term business plan.

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

If we were to raise additional capital through sales of our equity securities, our stockholders would suffer dilution of their equity ownership.

If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, prohibit us from paying dividends, repurchasing our stock or making investments, and force us to maintain specified liquidity or other ratios, any of which could harm our business, operating results and financial condition.

If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:

● develop or enhance our products;

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● respond to competitive pressures or unanticipated working capital requirements.

Our failure to do any of these

things could seriously harm our ability to execute our business strategy and may force us to curtail our existing operations.

Our failure to do any of these things could seriously harm our ability to execute our business strategy and may force us to curtail our existing operations.

Off-Balance Sheet Arrangements

We do not maintain any off-balance

sheet arrangements or obligations that are reasonably likely to have a material current or future effect on our financial condition, results

of operations, liquidity or capital resources.

We do not maintain any off-balance sheet arrangements or obligations that are reasonably likely to have a material current or future effect on our financial condition, results of operations, liquidity or capital resources.

Indemnifications

In the ordinary course of

business, we enter into contractual arrangements under which we may agree to indemnify the counter-party from losses relating to a breach

of representations and warranties, a failure to perform certain covenants, or claims and losses arising from certain external events as

outlined within the contract, which may include, for example, losses arising from litigation or claims relating to past performance.

indemnification clauses may not be subject to maximum loss clauses.

We have also entered into indemnification agreements with our officers

and directors.

No material amounts related to these indemnifications are reflected in our condensed consolidated financial statements

for the three months ended March 31, 2026.

In the ordinary course of business, we enter into contractual arrangements under which we may agree to indemnify the counter-party from losses relating to a breach of representations and warranties, a failure to perform certain covenants, or claims and losses arising from certain external events as outlined within the 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.

We have also entered into indemnification agreements with our officers and directors.

No material amounts related to these indemnifications are reflected in our condensed consolidated financial statements for the six months ended June 30, 2026.

Recent Accounting Pronouncements

See Note 1 to the condensed

consolidated financial statements for a discussion of recently-issued accounting pronouncements.

See Note 1 to the condensed consolidated financial statements for a discussion of recently-issued accounting pronouncements.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis