What changed in this filing

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Item 1A. Risk Factors

2025-03-26 compared with 2024-03-27 · 92 added, 34 removed, 421 unchanged (23% of the section changed)

6 unchanged sentences

We have experienced net losses in the past years as we continue to develop new products, applications, and technologies.

Some of our new products and products currently under development have generated lower gross margin as a percentage of revenue than our mature products due to the markets that we have targeted, and the larger order quantities associated with these new products.

Most of our new products and products currently under development are generating stable gross margins as a percentage of revenue year over year.

Our mature products also generate stable gross margins due to the markets that they serve.

Whether we can achieve cash flow levels sufficient to support our operations cannot be accurately predicted, and our investment portfolio is subject to a degree of interest rate and liquidity risk.

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(xiv) the cyclical nature of the semiconductor industry and general economic, market, political, and social conditions in the countries where we sell our products and the related effect on our customers, distributors, and suppliers;

and (xv) our ability to obtain capital, debt financing and insurance on commercially reasonable terms, and allocations between our operating expenses and cost of sales .

and (xv) our ability to obtain capital, debt financing, and insurance on commercially reasonable terms, and (xvi) allocations between our operating expenses and cost of sales .

Although certain of these factors are out of our immediate control, unless we can anticipate and be prepared with contingency plans that respond to these factors, our business, results of operations, and financial condition could be materially adversely affected, which could cause our stock price to significantly fluctuate or decline.

8 unchanged sentences

Any future industry-wide oversupply or undersupply of semiconductors could therefore, have a material adverse effect on our business, results of operations, and financial condition.

Our margins vary.

Our profit margins vary due to a number of factors, which may include customer demand and shipment volume;

capital expenditures and resulting depreciation;

our manufacturing processes;

inventory levels;

freight costs;

and new accounting pronouncements or changes in existing accounting practices or standards.

In addition, we operate in a highly competitive market environment that might adversely affect pricing for our products.

Cyberattacks, like our January 2023 cybersecurity incident that was previously disclosed, can lead to disruption of business, reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position.

As demonstrated by our January 2023 cybersecurity incident that was previously disclosed, security vulnerabilities may arise from our hardware, software, employees, contractors or policies we have deployed, which may result in external parties gaining access to our networks, data centers, cloud data centers, corporate computers, manufacturing systems, and/or access to accounts we have at our suppliers, vendors, and customers.

Due to the actions of outside parties, employee error, malfeasance, or otherwise, an unauthorized party may gain access to our data or our users’ or customers’ data or attack the networks causing denial of service or attempt to hold our data or systems in ransom.

As demonstrated by our January 2023 cybersecurity incident that was previously disclosed, security vulnerabilities may arise from our hardware, software, employees, contractors, or policies we have deployed, and which may result in external parties gaining access to our networks, data centers, cloud data centers, corporate computers, manufacturing systems, and/or access to accounts we have at our suppliers, vendors, and customers.

Due to the actions of outside parties, employee error, malfeasance, or otherwise, an unauthorized party may gain access to our data or our users’ or customers’ data, attack the networks causing denial of service, or attempt to hold our data or systems in ransom.

The vulnerability could be caused by inadequate account security practices such as failure to timely remove employee access when terminated.

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Effective May 25, 2018, the European Union ("EU") implemented the General Data Protection Regulation (“GDPR”) a broad data protection framework that expands the scope of current EU data protection law to non-European Union entities that process, or control the processing of, the personal information of EU subjects.

The GDPR allows for the imposition of fines and corrective action on entities that improperly use or disclose the personal information of EU subjects, including through a data security breach.

The State of California enacted the California Consumer Privacy Act of 2018 (“CCPA”) effective on January 1, 2020, which contains requirements similar to GDPR for the handling of personal information of California residents, commencing on January 1, 2020.

Further, the California Privacy Rights Act (“CPRA”), which was voted into law by California residents in 2020 and amends the CCPA, imposes additional data protection obligations on covered companies doing business in California and creates a new California data protection agency specifically tasked to enforce the law, which will likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security.

The substantive requirements for businesses subject to the CPRA went into effect on January 1, 2023 and became enforceable on July 1, 2023.

Further, the California Privacy Rights Act (“CPRA”), which was voted into law by California residents in 2020, became enforceable on July 1, 2023 and amends the CCPA, imposes additional data protection obligations on covered companies doing business in California and creates a new California data protection agency specifically tasked to enforce the law, which will likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security.

Privacy and security laws, self-regulatory schemes, regulations, standards, and other obligations are constantly evolving, and may conflict with each other, and any such laws, schemes, regulations and standards may have an adverse impact on our business if we are not able to comply or if compliance requires time and resources for implementation.

Our company's, collaborators’, and contractors’ failure to fully comply with GDPR, CCPA and other laws could lead to significant fines and require onerous corrective action.

In addition, data security breaches experienced by us, our collaborators or contractors could result in the loss of trade secrets or other intellectual property, public disclosure of sensitive commercial data, and the exposure of personally identifiable information (including sensitive personal information) of our employees, customers, collaborators, and others.

In addition, data security breaches experienced by us or our collaborators or contractors could result in the loss of trade secrets or other intellectual property, public disclosure of sensitive commercial data, and the exposure of personally identifiable information (including sensitive personal information) of our employees, customers, collaborators, and others.

Unauthorized use or disclosure of, or access to, any personal information maintained by us or on our behalf, whether through breach of our systems, breach of the systems of our suppliers or vendors by an unauthorized party, or through employee or contractor error, theft or misuse, or otherwise, could harm our business.

52 unchanged sentences

Our global operations also may be adversely affected by political events and domestic or international terrorist events and hostilities.

Current events, including the ongoing conflict in the Middle East, the Russia-Ukraine military conflict, rising tensions with Taiwan, potential disruption caused by pandemics, the United Kingdom’s recent exit from the European Union, and potential changes in immigration policies and tax reform proposals, create a level of uncertainty for multi-national companies.

Current events, including the ongoing conflict in the Middle East, the Russia-Ukraine military conflict, rising tensions with Taiwan, potential disruption caused by pandemics, and potential changes in tariffs, trade restrictions, immigration policies, and tax reform proposals, create a level of uncertainty for multi-national companies.

companies continue to expand globally, increased complexity exists due to the possibility of renegotiated trade deals, revised international tax law treaties, and changes to the U.S.

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An unfavorable resolution of any particular legal claim or proceeding, and/or the costs and expenses incurred in connection with a legal claim or proceeding, could have a material and adverse effect on our results of operations and financial condition.

Adverse developments affecting financial institutions, companies in the financial services industry or the financial services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems.

For example, on March 10, 2023, Silicon Valley Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation ("FDIC") as receiver.

On March 12, 2023, Signature Bank and Silvergate Capital Corp.

were closed and placed under receivership.

We did not have any direct depository or other financial relationships with the aforementioned closed banks.

Although a statement by the U.S.

Department of the Treasury, the Federal Reserve, and the FDIC stated that all depositors of these financial institutions would have access to all of their money after only one business day following the date of closure, including funds held in uninsured deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with financial institutions placed into receivership by the FDIC may be unable to access undrawn amounts thereunder.

If any of our counterparties to any such instruments that we may enter into in the future were to be placed into receivership, we may be unable to access such funds.

In addition, if any parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

In this regard, counterparties to these financial institutions' credit agreements and arrangements, and third parties such as beneficiaries of letters of credit, among other, may experience direct impacts from the closure of these financial institutions and uncertainty remains over liquidity concerns in the broader financial services industry.

Our access to our cash and cash equivalents in amounts adequate to finance our operations could be significantly impaired by the financial institutions with which we have arrangements directly facing liquidity constraints or failures.

If a financial institution holding our funds fails, we may not be able to pay our operational expenses or make other payments, which could adversely impact our liquidity and financial performance.

Deterioration of financial markets may result in our inability to borrow on favorable terms, which could adversely impact our ability to pursue our growth and other strategic initiatives.

Actual events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past (such as with the March 2023 failures of Silicon Valley Bank, Signature Bank, and Silvergate Capital Corp.) and may in the future lead to market-wide liquidity problems.

We regularly maintain cash balances at financial institutions in amounts exceeding the Federal Deposit Insurance Corporation (FDIC) insurance limit.

If a financial institution in which we hold such funds fails, or is subject to significant adverse conditions in the financial or credit markets, we could lose all or a portion of our uninsured funds, or be subject to a delay in accessing all or a portion of our funds.

If we are unable to access all or a significant portion of our funds for any extended period of time, we may not be able to pay our operational expenses or make other payments, including to our vendors and employees, and we may be subject to other operational challenges, any of which could adversely impact our liquidity and financial performance.

If any parties with whom we conduct business are unable to access funds, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

In addition, investor concerns regarding the U.S.

13 unchanged sentences

Any losses or damages incurred by us as a result of a catastrophic event or any other significant uninsured loss could have a material adverse effect on our business.

Our insurance may not adequately cover certain risks and, as a result, our financial condition and results may be adversely affected.

We carry insurance customary for companies in our industry, including, but not limited to, liability, property, and casualty;

workers' compensation;

cyber liability;

and business interruption insurance.

We also insure our employees for basic medical expenses.

In addition, we have insurance contracts that provide director and officer liability coverage for our directors and officers.

Other than the specific areas mentioned above, we are self-insured with respect to most other risks and exposures, and the insurance we carry in many cases is subject to a significant policy deductible or other limitation before coverage applies.

Based on management's assessment and judgment, we have determined that it is more cost effective to self-insure against certain risks than to incur the insurance premium costs.

The risks and exposures for which we self-insure include, but are not limited to, certain natural disasters, certain product defects, certain matters for which we indemnify third parties, political risk, certain theft, patent infringement, and employment practice matters.

Should there be a catastrophic loss due to an uninsured event (such as an earthquake) or a loss due to adverse occurrences in any area in which we are self-insured, our financial condition or operating results could be adversely affected.

Pandemics or other widespread public health problems could adversely affect our business, results of operations, and financial condition in a material way.

8 unchanged sentences

If the impact of a pandemic becomes more severe in the locations where we, our customers, or suppliers conduct business, or we experience more pronounced disruptions in our operations, we may experience constrained supply or curtailed demand that may materially adversely impact our business, cash flows, and results of operations.

Changes to existing accounting pronouncements or taxation rules or practices may cause adverse income fluctuations, affect our reported financial results or how we conduct our business.

Changes to existing accounting pronouncements or taxation rules or practices may cause adverse income fluctuations or affect our reported financial results or how we conduct our business.

Generally accepted accounting principles in the United States (“GAAP”) are promulgated by and are subject to the interpretation of the Financial Accounting Standards Board (“FASB”) and the SEC.

14 unchanged sentences

Furthermore, our ability to respond to increased demand is limited to inventories on hand or on order, the capacity available at our contract manufacturers, and our capacity to program products to customer specifications.

If we fail to accurately estimate customer demand, or if our available capacity is less than needed to meet customer demand, we may not be able to accurately estimate our quarterly revenue, which may have a material adverse effect on our results of operations and financial condition, and our stock price could be materially fluctuate as a result.

If we do not maintain compliance with the listing requirements of the Nasdaq Capital Market, our common stock could be delisted, which could, among other things, reduce the price of our common stock and the levels of liquidity available to our stockholders.

96 unchanged sentences

The expected NRE and royalty rates we expect to charge for the eFPGA may not be competitive, which may have a material adverse effect on our business, results of operations and financial condition.

Mainstream AI runs on powerful processors and large FPGAs.

SensiML’s AI solution targets end-point solutions that use low-power processors.

The end-point AI market is a developing market with unknown requirements and demand.

The current SensiML solution may not be a good fit to the evolving needs of the end-point AI market.

The support required for customer evaluations and implementation may be higher than expected, which may delay engagements and lead to higher costs.

The expected SaaS licensing fees and royalty rates we expect to charge for the SensiML solutions may not be competitive, which may have a material adverse effect on our business, results of operations and financial condition.

If our AI products are not low touch, the cost of addressing the fragmented AI market will be high, which will delay market penetration, result in reduced revenues, or require increased expenses, any of which could adversely affect our revenue and harm our business financial condition, operating results, and cash flows.

20 unchanged sentences

Obtaining additional supply in the face of product, programming equipment, or capacity shortages may be costly, or not possible, especially in the short-term since most of our products and programming equipment are supplied by a single supplier.

If we fail to adequately forecast demand for our products, our business, the relationship with our customers, our results of operations and financial condition could be materially adversely affected.

If we fail to adequately forecast demand for our products, our business, the relationship with our customers, and our results of operations and financial condition could be materially adversely affected.

Our business could be adversely affected by undetected errors or defects in our products.

5 unchanged sentences

As a result, we may incur substantially higher manufacturing costs, shortages of inventories, or reduced customer demand.

Yield fluctuations frequently occur in connection with the manufacture of newly introduced products, with changes in product architecture, with manufacturing at new facilities, on new fabrication processes, or in conjunction with new back-end manufacturing processes.

Yield fluctuations frequently occur in connection with the manufacture of newly introduced products, with changes in product architecture, and with manufacturing at new facilities, on new fabrication processes, or in conjunction with new back-end manufacturing processes.

Newly introduced solutions and products are often more complex and more difficult to produce, increasing the risk of manufacturing-related defects.

10 unchanged sentences

As a result, our business, results of operations, and financial condition could be materially adversely affected and we may be required to write off related inventories and long-lived assets.

Rising concern of international tariffs, as well as potential export restrictions, could materially and adversely affect our business and results of operations.

In addition to recent trade tariffs, if U.S.

Rising concern of potential export restrictions could materially and adversely affect our business and results of operations.

export controls expand to place new restrictions on the exportation of our products or a subset of our products, such controls could have a material adverse effect on our operating results.

3 unchanged sentences

Changes in, and responses to, United States trade policy could reduce the competitiveness of our products and cause our sales and revenues to drop, which could materially and adversely impact our business and results of operations.

Our business could suffer as a result of tariffs and trade sanctions or similar actions.

The imposition by the United States of tariffs, sanctions or other restrictions on goods exported from the United States or imported into the United States or countermeasures imposed in response to such government actions could adversely affect our operations or our ability to sell our products globally, which could adversely affect our operating results and financial condition.

Beginning in 2018, the U.S.

government imposed significant additional tariffs on many items imported from China, which have since been raised to between 7.5% and 100% on certain products.

China responded by imposing significant tariffs on many items imported from the United States.

Recently, U.S.

government leaders have increased their frequency of discussion of the imposition of stronger tariffs, sanctions, and other restrictions on goods exported from the United States or imported into the United States, and non-U.S.

government leaders have increased their discussion of countermeasures.

For example, in February 2025, the United States imposed an additional 10% tariff on imports of Chinese-origin goods and steel and aluminum imports.

China announced plans to impose retaliatory tariffs on certain U.S.-origin goods and implemented new trade controls restricting the export of tungsten, tellurium, bismuth, molybdenum, and indium.

As the February 2025, U.S.

executive order contains provisions allowing for further increases in the scope and amount of tariffs in the event of retaliatory countermeasures, and the future of existing tariffs, and the possibility for new tariffs, remains very uncertain.

Such escalations in these trade measures may directly impair our business by increasing trade-related costs or disrupting established supply chains and may indirectly impair our business by causing a negative effect on global economic conditions and financial markets.

The ultimate impact of these trade measures is uncertain and may be affected by various factors, including whether and when such trade measures are implemented, the timing when such measures may become effective, and the amount, scope, or nature of such trade measures.

Additional changes or threatened changes in U.S.

trade measures have affected and may continue to affect trade involving additional countries as well, including Mexico, Canada, Colombia, Taiwan, the United Kingdom, and the member countries of the European Union.

Each of these measures or threatened measures may instigate reciprocal countermeasures by affected countries, potentially accelerating further increases in trade measures.

If the President were to impose significant new tariffs against the European Union, Taiwan, or any other country or countries, the macroeconomic effect of any such tariffs could be significant.

The tariff threatened against Taiwan may specifically target imports of semiconductor products, which, if imposed, could seriously and negatively affect our business and the U.S.

economy overall.

The materials subject to these tariffs may impact the cost or availability of raw materials used by our suppliers or in our customers’ products.

The imposition of further tariffs by the United States on a broader range of imports, or further retaliatory trade measures taken in response to additional tariffs, could increase costs in our supply chain or reduce demand of our customers’ products, either of which could adversely affect our results of operations.

Any increase in trade-related costs associated with such measures may impair the profitability of such international production, may strain our suppliers’ ability to reliably provide inputs necessary to produce these items, and may otherwise affect our partners’ abilities to provide our products at previously contracted prices.

Our business and financial results could be negatively affected as a result.

Exchange rate fluctuations could adversely affect our company ’ s results of operations and financial condition.

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If demand for our products or gross margin generated from our products does not meet our expectations or if we are unable to collect amounts due from significant customers, we may be required to write off inventories, provide for uncollectible accounts receivable, or incur charges against long-lived assets, which may have a material adverse effect on our business, results of operations, and financial condition.

Our revenue from U.S.

Government contracts depends on the continued availability of funding from the U.S.

Government, and, accordingly, we have the risk that funding for our existing contracts may be canceled or diverted to other uses or delayed or that funding for new programs will not be available.

We perform work on a number of contracts with the U.S.

Department of Defense and other agencies and departments of the U.S.

Government including subcontracts with government prime contractors.

Sales under contracts with the U.S.

Government, including sales under contracts with the U.S.

Department of Defense, as prime contractor or subcontractor, represented 54% of our total net sales in 2024.

Performance under government contracts has inherent risks that could have a material effect on our business, results of operations, and financial condition.

Government contracts are conditioned upon the continuing availability of Congressional appropriations, and the failure of Congress to appropriate funds for programs in which we participate could negatively affect our results of operations.

Government operation under a continuing resolution could impact the business by preventing new programs from starting as planned and by limiting funding on existing programs.

Government shutdowns have may result in delays in anticipated contract awards and delayed payments of invoices and any new shutdown or increase in shutdowns could have similar or worse effects.

Any renewed emphasis on Federal deficit and debt reduction could lead to a further decrease in overall defense spending.

Budgetary concerns could result in future contracts being awarded more on price than on other competitive factors, and smaller defense budgets could result in government in-sourcing of programs and more intense competition on programs that are not in-sourced, which could result in lower revenues and profits.

The new Presidential administration has announced plans to significantly cut federal spending and the size of the federal government and has taken steps to reduce and reorganize the federal workforce at many agencies.

It is unclear how such cuts, if implemented, could impact our current and future business with the U.S.

If cuts to government personnel lead to staff shortages or disorganization at certain federal agencies, we may experience delays in obtaining contract awards or payments, the loss of current or future contracts, or delays in obtaining necessary permits, licenses or registrations.

Rising inflation and other factors also may result in a shift in U.S.

defense spending between various programs based on priorities, which may result in a reduction or loss of expected revenues on programs in which we participate.

Changes in policy and budget priorities by the U.S.

Presidential Administration could impact our business.

It is also not uncommon for the U.S.

Department of Defense to delay the timing of awards or change orders for major programs for six to twelve months.

These delays by the U.S.

Government could impact our revenues.

Uncertainty over budgets or priorities with the U.S.

Presidential Administration could result in further delays in funding and the timing of awards, and changes in funded programs that could have a material impact on our revenues.

We depend upon partnering with other companies to offer voice, motion, and other solutions into our platform.

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If the informal partnerships do not grow as expected or if they are significantly reduced or terminated by acquisition or other means, our business, results of operations, and financial condition could be materially adversely affected, and we may be required to write off related inventories and long-lived assets.

Our solutions face competition from suppliers of ASSPs, suppliers of integrated application processors, low-power FPGAs, low-power MCUs, and suppliers of ASICs, suppliers of eFPGA IP.

Our solutions face competition from suppliers of ASSPs, integrated application processors, low-power FPGAs, low-power MCUs, ASICs, and eFPGA IP.

We face competition from companies that offer ASSPs.

34 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors