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What changed in GSI TECHNOLOGY INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of GSI TECHNOLOGY INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+269 added−305 removedSource: 10-K (2024-06-13) vs 10-K (2023-06-28)

Top changes in GSI TECHNOLOGY INC's 2024 10-K

269 paragraphs added · 305 removed · 215 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

80 edited+23 added−24 removed68 unchanged
Biggest changeRobert Yau co-founded our company in March 1995 and has served as our Vice President, Engineering and as a member of our Board of Directors since inception. From December 1993 to February 1995, Mr. Yau was design manager for specialty memory devices at Sony Microelectronics Corporation. From 1990 to 1993, Mr. Yau was design manager at MOSEL/VITELIC, a semiconductor company.
Biggest changeChuang served as the Senior Vice President, Memory Design at Sony Microelectronics Corporation, a semiconductor company and a subsidiary of Sony Corporation . From 1980 to 1990, Mr. Chuang served as Design Director of NMOS DRAM at Advanced Micro Devices, a semiconductor manufacturing company. Didier Lasserre has served as our Vice President, Sales since July 2002.
This two-step manufacturing process enables us to significantly shorten our product lead times, providing flexibility for customization and to increase the availability of our products. All of our manufactured wafers, including wafers for our APU product, are tested for electrical compliance and most are packaged at Advanced Semiconductor Engineering (“ASE”) which is located in Taiwan.
This two-step manufacturing process enables us to significantly shorten our product lead times, providing flexibility for customization and to increase the availability of our products. All of our manufactured wafers, including wafers for our APU products, are tested for electrical compliance and most are packaged at Advanced Semiconductor Engineering (“ASE”) which is located in Taiwan.
Because we have limited experience developing integrated circuit (“IC”) products other than Very Fast SRAMs, any efforts by us to introduce new products based on new technology, including our new in-place associative computing products, may not be successful and, as a result, our business may suffer. 13 Table of Contents Intellectual Property Our ability to compete successfully depends, in part, upon our ability to protect our proprietary technology and information.
Because we have limited experience developing integrated circuit products other than Very Fast SRAMs, any efforts by us to introduce new products based on new technology, including our new in-place associative computing products, may not be successful and, as a result, our business may suffer. 13 Table of Contents Intellectual Property Our ability to compete successfully depends, in part, upon our ability to protect our proprietary technology and information.
Such applications require a combination of high densities and high random transaction rates that GSI is well positioned to serve, being the only SRAM manufacturer to offer 288Mb densities as well as offering the highest truly random transaction rate in the industry – 1866 million transactions per second (MT/s).
Such applications require a combination of high densities and high random transaction rates that GSI is well positioned to serve, being the only SRAM manufacturer to offer monolithic 288Mb densities as well as offering the highest truly random transaction rate in the industry – 1866 million transactions per second (MT/s).
As of March 31, 2023, we employed 16 sales and marketing personnel, and were supported by over 200 independent sales representatives, which we believe will enable us to address an expanded customer base with the continuing introduction of our associative computing products in fiscal 2024.
As of March 31, 2024, we employed 16 sales and marketing personnel, and were supported by over 200 independent sales representatives, which we believe will enable us to address an expanded customer base with the continuing introduction of our associative computing products in fiscal 2024.
Space Force (“USSF”) in processing extensive sets of big data in space. Our overarching objective is to enable and enhance current and future mission capabilities through the deployment of compute in-memory integrated systems that can efficiently handle vast amounts of data in real-time at the edge.
Space Force in processing extensive sets of big data in space. Our overarching objective is to enable and enhance current and future mission capabilities through the deployment of compute in-memory integrated systems that can efficiently handle vast amounts of data in real-time at the edge.
The networking and telecom market demand for high-speed synchronous SRAMs has been, and is expected to continue to decline due to the industry trend of embedding greater amounts of SRAM into each generation of ASICs/controllers products, thereby reducing the need for external SRAMs.
The networking and telecom market demand for high-speed synchronous SRAMs has been declining, and is expected to continue to decline, due to the industry trend of embedding greater amounts of SRAM into each generation of ASICs/controllers products, thereby reducing the need for external SRAMs.
The APU is also an associative machine, which means that data that is resident in the device can be applied to a function only if it is deemed associated (for example, with a meta-tag) to the processing.
Second, the APU is also an associative machine, which means that data that is resident in the device can be applied to a function only if it is deemed associated (for example, with a meta-tag) to the processing.
We intend to supplement our internal development activities by seeking additional opportunities to acquire other businesses, product lines or technologies, or enter into strategic partnerships, that would complement our current product lines, expand the breadth of our markets, enhance our technical capabilities, or otherwise provide growth opportunities. ​ 9 Table of Contents Customers For our compute-in-memory associative computing solutions, we are focusing sales and marketing efforts in the markets for artificial intelligence and high-performance computing, with leading applications in natural language processing, computer vision and synthetic aperture radar.
We intend to supplement our internal development activities by seeking additional opportunities to acquire other businesses, product lines or technologies, or enter into strategic partnerships, that would complement our current product lines, expand the breadth of our markets, enhance our technical capabilities, or otherwise provide growth opportunities. ​ Customers For our compute-in-memory associative computing solutions, we are focusing sales and marketing efforts in the markets for artificial intelligence and high-performance computing, with leading applications in natural language processing, computer vision and synthetic aperture radar.
GSI has similarly determined that the Serviceable Available Market (“SAM”) for APU search applications is approximately $7.1 billion in 2023, and anticipated to grow at a CAGR of 16% to $12.8 billion by 2027. The search market segments included in GSI’s TAM and SAM analyses include vector search HPC.
GSI has similarly determined that the Serviceable Available Market (“SAM”) for APU search applications is approximately $7.1 billion in 2024, and anticipated to grow at a CAGR of 16% to $12.8 billion by 2027. The search market segments included in GSI’s TAM and SAM analyses include vector search and HPC.
The total addressable market (“TAM”) for APU search applications, which is the market where GSI is focusing its commercialization efforts, has been determined by GSI to be approximately $232 billion in 2023, and growing at a compound annual growth rate (“CAGR”) of 13% to $380 billion by 2027.
The total addressable market (“TAM”) for APU search applications, which is the market where GSI is focusing its commercialization efforts, has been determined by GSI to be approximately $232 billion in 2024, and growing at a compound annual growth rate (“CAGR”) of 13% to $380 billion by 2027.
To our knowledge, none of our other OEM customers accounted for more than 10% of our net revenues in any of these periods. 10 Table of Contents Sales, Marketing and Technical Support We sell our products primarily through our worldwide network of independent sales representatives and distributors.
To our knowledge, none of our other OEM customers accounted for more than 10% of our net revenues in any of these periods. Sales, Marketing and Technical Support We sell our products primarily through our worldwide network of independent sales representatives and distributors.
Our future success depends in part on our ability to secure sufficient capacity at TSMC or other independent foundries to supply us with the wafers we require. Our APU products are manufactured at TSMC using 28 nanometer process technology.
Our future success depends in part on our ability to secure sufficient capacity at TSMC or other independent foundries to supply us with the wafers we require. Our APU products are manufactured at TSMC using 28 nanometer and 16 nanometer process technology.
Our radiation-hardened products are assembled and tested at Silicon Turnkey Solutions Inc., located near our Sunnyvale, California headquarters facility. Research and Development We have devoted substantial resources in the last seven years on the development of our APU products.
Our radiation-hardened products are assembled and tested at Silicon Turnkey Solutions Inc., located near our Sunnyvale, California headquarters facility. Research and Development We have devoted substantial resources in the last eight years on the development of our APU products.
From July 2011 to November 2015, Dr. Akerib served as co-founder and chief technologist of MikaMonu Group Ltd, a developer of computer in-memory and storage technologies. From July 2008 to March 2011, Dr. Akerib served as chief scientist of ZikBit Ltd., a developer of DRAM computing technologies. From Jan 2001 to July 2007, Dr.
Akerib served as co-founder and chief technologist of MikaMonu Group Ltd, a developer of computer in-memory and storage technologies. From July 2008 to March 2011, Dr. Akerib served as chief scientist of ZikBit Ltd., a developer of DRAM computing technologies. From Jan 2001 to July 2007, Dr.
Furthermore, GSI’s expertise in developing radiation-tolerant components creates new opportunities in the growing market for AI products that can be used in low earth orbit and space applications, where other AI products are not able to survive the harsh environment. 6 Table of Contents Recent excitement relating to ChatGPT has brought the market for AI search to the forefront of consumer awareness.
Furthermore, GSI’s expertise in developing radiation-tolerant components creates new opportunities in the growing market for AI products that can be used in low earth orbit and space applications, where other AI products are not able to survive the harsh environment. Recent excitement relating to ChatGPT has brought the market for AI search to the forefront of consumer awareness.
The future growth and success of our company largely depends on our ability to attract, train and retain qualified professionals. As part of our effort to do so, we offer competitive compensation and benefit programs including a 401(k) Plan, stock options for all employees, flexible spending accounts and paid time off.
The future growth and success of our company largely depends on our ability to attract, train and retain qualified professionals. As part of our effort to do so, we offer competitive compensation and benefit programs including a 401(k) Plan, stock options for all employees, flexible spending 14 Table of Contents accounts and paid time off.
The U.S. Space Force is actively seeking solutions to address current limitations in processing big data that is needed to execute the mission objectives of the Space Development Agency within the evolving and challenging space environment.
Space Force is actively seeking solutions to address current limitations in processing big data that is needed to execute the mission objectives of the Space Development Agency within the evolving and challenging space environment.
The APU has several benefits that are particularly useful to overcoming the data processing challenges noted above. First, the APU does not have the word size limitation of traditional CPU and GPU processors.
The APU has several benefits that are particularly useful to overcome the data processing challenges noted above. First, the APU does not have the word size limitation of traditional CPU and GPU processors.
The GSI APU has been demonstrated to outperform CPU’s and GPU’s in the market for AI search of large data collections by providing lower latency and increased capacity in a smaller form-factor and achieve such results with lower power consumption. In addition, GSI’s compute-in-place technology has wide application.
Our APU has been demonstrated to outperform CPU’s and GPU’s in the market for AI search of large data collections by providing lower latency and increased capacity in a smaller form-factor and achieve such results with lower power consumption. In addition, our compute-in-place technology has wide application.
Through the use of advanced architectures and design methodologies, we have developed high-performance SRAM products offering superior high speed performance capabilities and low power consumption, while our advanced silicon process technologies allow us to optimize yields, lower manufacturing costs and improve quality. ​ 8 Table of Contents ● Product Innovation .
Through the use of advanced architectures and design methodologies, we have developed high-performance SRAM products offering superior high speed performance capabilities and low power consumption, while our advanced silicon process technologies allow us to optimize yields, lower manufacturing costs and improve quality. ​ ● Product Innovation .
We expect additional competitors to enter the associative computing market as well. While some of our competitors 12 Table of Contents offer a broader array of products and offer some of their products at lower prices than we do, we believe that our focus on performance leadership provides us with key competitive advantages.
We expect additional competitors to enter the associative computing market as well. While some of our competitors offer a broader array of products and offer some of their products at lower prices than we do, we believe that our focus on performance leadership provides us with key competitive advantages.
From January 1995 to March 1995, Mr. Shu was Director, SRAM Design at Sony Microelectronics Corporation, a semiconductor company and a subsidiary of Sony Corporation, and from July 1990 to January 1995, he was a design manager at Sony Microelectronics Corporation. Avidan Akerib has served as our Vice President, Associative Computing since MikaMonu Group Ltd. was acquired in November 2015.
Shu was Director, SRAM Design at Sony Microelectronics Corporation, a semiconductor company and a subsidiary of Sony Corporation, and from July 1990 to January 1995, he was a design manager at Sony Microelectronics Corporation. Avidan Akerib has served as our Vice President, Associative Computing since MikaMonu Group Ltd. was acquired in November 2015. From July 2011 to November 2015, Dr.
Our research and development staff includes engineering professionals with extensive experience in the areas of high-speed circuit design, including APU design, as well as SRAM design and systems level networking and telecommunications equipment design.
Our research and development staff includes engineering professionals with extensive experience in the areas of high- 12 Table of Contents speed circuit design, including APU design, as well as SRAM design and systems level networking and telecommunications equipment design.
We also serve the ongoing needs of the military/defense and aerospace markets by offering robust high-quality radiation-tolerant and radiation-hardened space grade SRAMs in addition to new in-place associative computing solutions including synthetic aperture radar (“SAR”) image processing.
We also serve the ongoing needs of the military/defense and aerospace markets by offering robust high-quality radiation-tolerant and radiation-hardened space grade SRAMs in addition to new in-place associative computing solutions for the military/defense and aerospace markets such as synthetic aperture radar (“SAR”) image processing.
We continue to aggressively target the military/defense and aerospace markets with our RadHard and RadTolerant devices. We plan to continue expansion into the military/defense and aerospace markets with our APU platform that has shown design robustness. ​ ● Exploit opportunities to expand the market for our SRAM products .
We continue to aggressively target the military/defense and aerospace markets with our RadHard and RadTolerant devices. We plan to continue expansion into the military/defense and aerospace markets with our APU platform that has shown design robustness. ​ 9 Table of Contents ● Exploit opportunities to expand the market for our SRAM products .
Item 1. Business Overview GSI provides in-place associative computing solutions for applications in high growth markets such as artificial intelligence (“AI”) and high-performance computing (“HPC”), including natural language processing and computer vision. Our associative processing unit (“APU”) products are focused on applications using similarity search.
Item 1. Business Overview GSI provides in-place associative computing solutions for applications in high growth markets such as artificial intelligence (“AI”) and high-performance computing (“HPC”), including natural language processing and computer vision. Our associative processing unit (“APU”) family of products are focused on applications using similarity search and very flexible Boolean processing.
We currently hold 123 United States patents, including 63 memory patents and 60 associative computing patents, and have in excess of a dozen patent applications pending. We cannot assure you that any patents will be issued as a result of our pending applications.
We currently hold 128 United States patents, including 60 memory patents and 68 associative computing patents, and have in excess of a dozen patent applications pending. We cannot assure you that any patents will be issued as a result of our pending applications.
We have also expanded our product offerings to include 144 megabit, 72 megabit, and 32 megabit SyncBurst and NBT SRAMs RadTolerant products to enable the avionics and other space platforms that have historically leveraged smaller asynchronous devices.
We have also expanded our product offerings to include 144 megabit, 72 megabit, and 32 megabit SyncBurst and NBT SRAMs RadTolerant products to enable the avionics and other space platforms that 8 Table of Contents have historically leveraged smaller asynchronous devices.
Nokia purchases products directly from us and through contract manufacturers and distributors. Based on information provided to us by its contract manufacturers and our distributors, purchases by Nokia represented approximately 17%, 29% and 39% of our net revenues in fiscal 2023, 2022 and 2021, respectively.
Nokia purchases products directly from us and through contract manufacturers and distributors. Based on information provided to us by its contract manufacturers and our distributors, purchases by Nokia represented approximately 21%, 17% and 29% of our net revenues in fiscal 2024, 2023 and 2022, respectively.
This support includes in-depth product presentations, datasheets, application notes, simulation models, sales tools, marketing communications, marketing research, trademark administration and other support functions. We also engage in various marketing activities to increase brand awareness.
This support includes in-depth product presentations, datasheets, application notes, simulation models, 11 Table of Contents sales tools, marketing communications, marketing research, trademark administration and other support functions. We also engage in various marketing activities to increase brand awareness.
The APU is based on a memory line structure, which means the APU can operate on legacy instruction widths of 8 or 16-bits, or just as seamlessly operate on instructions of arbitrary widths from 1 bit to 768-bits or 2048-bits.
The APU is based on a memory line structure, which means that it can operate on legacy instruction widths of 8 or 16-bits, or just as seamlessly operate on instructions of arbitrary widths of 1 bit, 768-bits or 2048-bits.
Realization of this goal will require additional development and marketing efforts in calendar 2023.
Realization of this goal will require additional development and marketing efforts in calendar 2024.
Of these employees, 51 are based in our Sunnyvale facility, 55 are based in our Taiwan facility and 35 are based in our Israel facility. We believe that our future success will depend in large part on our ability to attract and retain highly-skilled, engineering, managerial, sales and marketing personnel.
Of these employees, 50 are based in our Sunnyvale facility, 54 are based in our Taiwan facility and 30 are based in our Israel facility. We believe that our future success will depend in large part on our ability to attract and retain highly-skilled, engineering, managerial, sales and marketing personnel.
The APU can operate on any word width that makes sense for the problem and also for what makes sense at the current processing step. This dynamic flexibility is a tremendous advantage for non-linear processing like trigonometry.
APUs can operate on any word width that makes sense for the problem and also for what makes sense at interim processing steps. This dynamic flexibility is a tremendous advantage for non-linear processing like trigonometry.
APU SaaS Product We are also commercializing the APU as a service. This service offering runs on servers in a datacenter that have a direct connection to Amazon Web Services. Customers can access the APU via the AWS Cognito user identity and data synchronization service for GSI-packaged SaaS applications, or a customer’s own custom APU-accelerated applications.
APU SaaS Product We also offer commercialized APU as-a-service. This service offering runs on servers in a datacenter that have a direct connection to Amazon Web Services. Customers can access the APU via the AWS Cognito user identity and data synchronization service for GSI-packaged SaaS applications, or for customers’ own custom APU- 7 Table of Contents accelerated applications.
The following is a representative list of our OEM customers that directly or indirectly purchased more than $600,000 of our SRAM products in the fiscal year ended March 31, 2023: ​ ​ ​ ​ ​ BAE Systems Ciena Honeywell Lockheed Nokia Raytheon ​ ​ Rockwell ​ ​ ​ Many of our OEM customers use contract manufacturers to assemble their equipment.
The following is a representative list of our OEM customers that directly or indirectly purchased more than $500,000 of our SRAM products in the fiscal year ended March 31, 2024: ​ ​ ​ ​ ​ BAE Systems Ciena General Dynamics Northrup Grumman Nokia Raytheon ​ ​ Rockwell ​ ​ ​ Many of our OEM customers use contract manufacturers to assemble their equipment.
We also sell our products to OEMs that manufacture products for military/defense and aerospace applications such as radar and guidance systems and satellites, for test and measurement applications such as high-speed testers, for automotive applications such as smart cruise control, and for medical applications such as ultrasound and CAT scan equipment .
We sell our products to defense contractors that manufacture products for military/defense and aerospace applications such as radar and guidance systems and satellites. We also sell our products to OEMs for test and measurement applications such as high-speed testers, high performance computing applications such as high volume trading, and for medical applications such as ultrasound and CAT scan equipment .
Such processing is similar to a person looking for his car in a parking lot, but ignoring all cars that are not the color of his car. Another strength of the APU design is that it is multi-threaded. One sensor or query input can be simultaneously applied to multiple functions or searches in the device.
Such processing is like a person looking for his car in a parking lot, but ignoring all cars that are not the color of his car. An additional benefit of the Gemini APU designs is that they are multi-threaded. One sensor or query input can be simultaneously applied to multiple functions or searches in the device.
Operations Robert Yau ​ 70 ​ ​ Vice President, Engineering, Secretary and Director Lee-Lean Shu co-founded our company in March 1995 and has served as our President and Chief Executive Officer and as a member of our Board of Directors since inception. Since October 2000, Mr. Shu has also served as Chairman of our Board.
Operations Lee-Lean Shu co-founded our company in March 1995 and has served as our President and Chief Executive Officer and as a member of our Board of Directors since inception. Since October 2000, Mr. Shu has also served as Chairman of our Board. From January 1995 to March 1995, Mr.
The RadHard products are housed in a hermetically-sealed ceramic column grid array package, and undergo a special fabrication process that diminishes the adverse effects of high-radiation environments.
The RadHard products are offered in two package options: a hermetically-sealed ceramic column grid array package, and standard plastic packaging. These devices undergo a special fabrication process that diminishes the adverse effects of high-radiation environments.
Examples of real-time causal processing are SAR, image re-registration, and mathematical structural similarity index measure (“SSIM”). This combination of sensor processing, image processing, and computer vision at high performance has the potential to bring application processing that normally requires several resources in a data center to real-time edge applications. Possible examples are in-asset aircraft reconnaissance and satellite image processing.
This combination of sensor processing, image processing, and computer vision at high performance has the potential to bring application processing that normally requires several resources in a data center to real-time edge applications. Examples are in-asset aircraft reconnaissance, satellite image processing, and autonomous automotive navigation.
For even smaller footprint applications such as satellites or networking blades, GSI is looking to license the intellectual property (“IP”) underlying the APU to companies that have their own chip design capabilities to incorporate GSI’s IP into their custom products.
For even smaller footprint applications such as satellites or networking blades, GSI will license the intellectual property (“IP”) underlying the APU to companies that have their own chip design capabilities to incorporate GSI’s IP into their custom products, and provide design services to help integrate the IP into new processor, FPGA, or ASIC designs.
The amounts of data being processed, which is coming from increasing numbers of users and continuously increasing amounts of collected data, has resulted in efforts to split and store the processed data among multiple databases, through a process called sharding. Sharding substantially increases processing costs and worsens the power consumption factors associated with processing so much data.
The amounts of data being processed, which is coming from increasing numbers of users and continuously increasing amounts of collected data, has resulted in efforts to split and store the processed data among multiple databases, through a process called sharding.
Customers who are building their own search engines for special use case products could use our SaaS product to support high volume searches run on their products. There are early indications that our SaaS product can be used by vendors of SAR mapping and analysis services to enhance their own product offerings.
Customers who are building their own search engines for special use case products could use our SaaS product to support high volume searches run on their products. GSI also offers our SAR processing as a SaaS product that can be used by mapping and analysis services to scale, speed up, and enhance their own product offerings.
Our APU is further differentiated from other solutions in the market by its scalability for very large datasets. The APU has demonstrated its ability to increase the rate of computation for visual search by orders of magnitude with greater accuracy and reduced power consumption. The APU also adds multi-modal search capability to this computational performance.
The APU has demonstrated its ability to increase the rate of computation for visual search by orders of magnitude with greater accuracy and reduced power consumption. The APU also adds multi-modal search capability to this computational performance.
Accordingly, a significant percentage of our net revenues has been derived from sales to these contract manufacturers, and less frequently, to consignment warehouses who purchase products from us for use by contract manufacturers. In addition, we sell our products to OEM customers indirectly through domestic and international distributors.
Accordingly, a significant percentage of our net revenues has been derived from sales to these contract manufacturers. In addition, we sell our products to OEM customers indirectly through domestic and international distributors. In the case of sales of our products to distributors, the decision to purchase our products is typically made by the OEM customers.
The following direct customers accounted for 10% or more of our net revenues in one or more of the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ March 31, ​ ​ 2023 2022 2021 Contract manufacturers and consignment warehouses: ​ ​ ​ ​ ​ ​ ​ Flextronics Technology ​ 10.4 % 16.0 % 21.1 % Sanmina ​ 8.8 ​ 11.2 ​ 21.5 ​ Distributors: ​ ​ ​ ​ ​ ​ ​ Avnet Logistics ​ 48.1 ​ 38.0 ​ 29.8 ​ Nexcomm ​ 16.6 ​ 17.2 ​ 14.7 ​ ​ Nokia was our largest customer in fiscal 2023, 2022 and 2021.
Sales to foreign and domestic distributors accounted for 76.3%, 77.5% and 66.8% of our net revenues for fiscal 2024, 2023 and 2022, respectively. 10 Table of Contents The following direct customers accounted for 10% or more of our net revenues in one or more of the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ March 31, ​ ​ 2024 2023 2022 Contract manufacturers: ​ ​ ​ ​ ​ ​ ​ Flextronics Technology ​ 13.5 % 10.4 % 16.0 % Sanmina ​ 5.9 ​ 8.8 ​ 11.2 ​ Distributors: ​ ​ ​ ​ ​ ​ ​ Avnet Logistics ​ 50.6 ​ 48.1 ​ 38.0 ​ Nexcomm ​ 9.3 ​ 16.6 ​ 17.2 ​ ​ Nokia was our largest customer in fiscal 2024, 2023 and 2022.
Under the terms of this Direct to Phase II award, we will develop an advanced non-Von-Neumann Associative Processing Unit-2, compute in-memory IC, and design and fabricate an APU2 Evaluation Board. Pursuant to an agreed-upon schedule, we will receive milestone payments totaling an estimated $1.25 million upon the successful completion of predetermined milestones.
Under the terms of this Direct to Phase II award, we will develop an advanced non-Von-Neumann Associative Processing Unit-2, compute in-memory IC, and design and fabricate an APU2 Evaluation Board.
Our principal operations objective is the completion of productization efforts for our initial in-place associative computing product, including the second release of our compiler stack in the second half of calendar 2023. ​ ● Identifying and developing new long tail markets where the APU is differentiated .
Our strategy includes the following key elements: ● Complete productization of our initial In-place Associative Computing product . Our principal operations objective is the completion of productization efforts for our initial in-place associative computing product. ​ ● Identifying and developing new long tail markets where the APU is differentiated .
Manufacturing We outsource our wafer fabrication, assembly and wafer sort testing, which enables us to focus on our design strengths, minimize fixed costs and capital expenditures and gain access to advanced manufacturing technologies.
Manufacturing We outsource our wafer fabrication, assembly and wafer sort testing, which enables us to focus on our design strengths, minimize fixed costs and capital expenditures and gain access to advanced manufacturing technologies. Our engineers work closely with our outsource partners to increase yields, reduce manufacturing costs, and help assure the quality of our products.
Because industry practice allows customers to reschedule or cancel orders on relatively short notice, these orders are not firm and hence we believe that backlog is not a good indicator of our future sales.
Because industry practice allows customers to reschedule or cancel orders on relatively short notice, these orders are not firm and hence we believe that backlog is not a good indicator of our future sales. We have experienced increased costs as a result of inflation and supply chain constraints for wafers and outsourced assembly, burn-in and test operations.
By changing the computational framework to parallel processing and having search functions conducted directly in a processing memory array, the APU can greatly expedite computation and response times in many “big data” applications.
By changing the computational framework to parallel processing and having search functions conducted directly in a processing memory array, the APU can greatly expedite computation and response times in many “big data” applications. We are creating a new category of computing products that are expected to have substantial target markets and a large new customer base in those markets.
Wu was a design manager at Atalent, an IC design company in Taiwan. Ping Wu has served as our Vice President, U.S. Operations since September 2006. He served in the same capacity from February 2004 to April 2006. From April 2006 to August 2006, Mr. Wu was Vice President of Operations at QPixel Technology, a semiconductor company.
He served in the same capacity from February 2004 to April 2006. From April 2006 to August 2006, Mr. Wu was Vice President of Operations at QPixel Technology, a semiconductor company. From July 1999 to January 2004, Mr. Wu served as our Director of Operations. From July 1997 to June 1999, Mr.
For these reasons, the APU is drawing interest from prospective customers in the pharmaceutical and genomics industries. New Markets for the APU The APU is capable of processing large data arrays in a cost competitive solution for large database similarity search, but the mathematical capabilities of the APU also create new opportunities for using real-time causal processing.
New Markets for the APU The APU is capable of processing large data arrays in a cost competitive solution for large database similarity search, but the mathematical capabilities of the APU also create new opportunities in real-time processing. Examples of real-time processing are SAR, image re-registration, and mathematical SSIM.
The growth in demand for associative processing computing solutions is being driven by the increasing market adoption and usage of graphics processing unit (“GPU”) and CPU farms for AI processing of large data collections, including parallel computing in scientific research.
Market applications in these segments include search and retrieval in various fields, synthetic aperture radar in research, aerospace and defense, and service markets such as OpenSearch and AWS. 5 Table of Contents The growth in demand for associative processing computing solutions is being driven by the increasing market adoption and usage of graphics processing unit (“GPU”) and CPU farms for AI processing of large data collections, including parallel computing in scientific research.
The software stack accelerates development by providing an integrated framework environment for the compute-in-memory as well as host, and management code modules. In calendar 2023, we plan on releasing an update to this compiler stack framework allowing customers to write their applications in Python, taking advantage of groundbreaking speed and debug advantages of L-Python.
The software stack accelerates development by providing an integrated framework environment for the compute-in-memory as well as host and management code modules. In calendar 2023, we released an update to this compiler stack framework allowing customers to optimize their applications by editing APIs provided by GSI, or writing their own API’s.
From July 1996 to October 16 Table of Contents 1997, Mr. Lasserre was an account manager at Solectron Corporation, a provider of electronics manufacturing services. From June 1988 to July 1996, Mr. Lasserre was a field sales engineer at Cypress Semiconductor Corporation, a semiconductor company. Douglas Schirle has served as our Chief Financial Officer since August 2000.
Lasserre was a field sales engineer at Cypress Semiconductor Corporation, a semiconductor company. Douglas Schirle has served as our Chief Financial Officer since August 2000. From June 1999 to August 2000, Mr. Schirle served as our Corporate Controller. From March 1997 to June 1999, Mr.
Information About Our Executive Officers The following table sets forth certain information concerning our executive officers as of June 1, 2023: ​ ​ ​ ​ ​ ​ Name Age Title Lee-Lean Shu ​ 68 ​ ​ President, Chief Executive Officer and Chairman Avidan Akerib ​ 67 ​ ​ Vice President, Associative Computing Didier Lasserre ​ 58 ​ ​ Vice President, Sales Douglas Schirle ​ 68 ​ ​ Chief Financial Officer Bor-Tay Wu ​ 71 ​ ​ Vice President, Taiwan Operations Ping Wu ​ 66 ​ ​ Vice President, U.S.
The SEC maintains an Internet site that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC at www.sec.gov . 15 Table of Contents Information About Our Executive Officers The following table sets forth certain information concerning our executive officers as of June 1, 2024: ​ ​ ​ ​ ​ ​ Name Age Title Lee-Lean Shu ​ 69 ​ ​ President, Chief Executive Officer and Chairman Avidan Akerib ​ 68 ​ ​ Vice President, Associative Computing Patrick Chuang ​ 74 ​ ​ Senior Vice President, Memory Design Didier Lasserre ​ 59 ​ ​ Vice President, Sales Douglas Schirle ​ 69 ​ ​ Chief Financial Officer Bor-Tay Wu ​ 72 ​ ​ Vice President, Taiwan Operations Ping Wu ​ 67 ​ ​ Vice President, U.S.
Our extensive historical experience in developing high speed synchronous static random access memory, or SRAM, facilitated our ability to transform the focus of our business to the development of reliable hardware AI products and solutions like the APU.
Similarity search is used in search queries for ecommerce, computer vision, drug discovery, cyber security and service markets such as NoSQL, Elasticsearch, and OpenSearch. Our extensive historical experience in developing high speed synchronous static random access memory, or SRAM, facilitated our ability to transform the focus of our business to the development of reliable hardware AI products and solutions.
If we fail to commercialize our APU products, we may not generate sufficient revenues to offset our development costs and other expenses, which will have an adverse impact on our business including a potential impairment of intangible assets and a negative impact on our market capitalization. 7 Table of Contents High-Speed Synchronous SRAM Market Overview High-speed synchronous SRAMs are incorporated into networking and telecom equipment, military/defense and aerospace applications, audio/video processing, test and measurement equipment, medical and automotive applications, and other miscellaneous applications.
If we fail to materially commercialize our APU products, we may not generate sufficient revenues to offset our development costs and other expenses, which will have an adverse impact on our business including a potential impairment of intangible assets and a negative impact on our market capitalization.
In the case of sales of our products to distributors and consignment warehouses, the decision to purchase our products is typically made by the OEM customers. In the case of contract manufacturers, OEM customers typically provide a list of approved products to the contract manufacturer, which then has discretion whether or not to purchase our products from that list.
In the case of contract manufacturers, OEM customers typically provide a list of approved products to the contract manufacturer, which then has discretion whether or not to purchase our products from that list. Direct sales to contract manufacturers accounted for 20.5%, 19.8% and 31.0% of our net revenues for fiscal 2024, 2023 and 2022, respectively.
From June 1999 to August 2000, Mr. Schirle served as our Corporate Controller. From March 1997 to June 1999, Mr. Schirle was the Corporate Controller at Pericom Semiconductor Corporation, a provider of digital and mixed signal integrated circuits. From November 1996 to February 1997, Mr.
Schirle was the Corporate Controller at Pericom Semiconductor Corporation, a provider of digital and mixed signal integrated circuits. From November 1996 to February 1997, Mr. Schirle was Vice President, Finance for Paradigm Technology, a manufacturer of SRAMs, and from December 1993 to October 1996, he was the Controller for Paradigm Technology. Mr.
APU Commercialization Risk Sales of APU products have not been material to date, and our commercialization efforts have taken much longer than anticipated.
APU Commercialization Risk Sales of APU products continue to be in the research and academic areas and our commercialization efforts have taken much longer than anticipated to gain traction.
The APU differentiates itself most for similarity search, multi-modal vector search, real-time very large database search, and several scientific high-performance computing workloads processing sensor data. The APU’s improved performance over CPU or GPU systems provides a paradigm-shifting ability to process data in real-time.
Our commercialization efforts for the APU product are focused on markets where the APU shows factors of improvement against CPU or GPU systems. The APU differentiates itself most for similarity search, multi-modal vector search, real-time very large database search, and several scientific high-performance computing-workloads processing sensor data.
From July 1999 to January 2004, Mr. Wu served as our Director of Operations. From July 1997 to June 1999, Mr. Wu served as Vice President of Operations at Scan Vision, a semiconductor manufacturer.
Wu served as Vice President of Operations at Scan Vision, a semiconductor manufacturer.
GSI’s fiscal year 2023 net revenue decreased by 11% compared to net revenue in fiscal year 2022, reflecting an easing of the semiconductor supply chain shortage that previously caused customers to purchase extra buffer stock of GSI’s products coupled with its customers continuing to work through the remaining levels of their past 3 Table of Contents buffer stock purchases, the impact of rising interest rates, worldwide inflationary pressures, significant fluctuations in energy prices and the decline in the global economic environment, all of which resulted in a decline in demand for our SRAM products and delays in completing the productization of our APU products.
GSI’s fiscal year 2024 net revenue decreased by 27% compared to net revenue in fiscal year 2023, reflecting cautionary spending by our customers and purchases made as a result of supply chain constraints in the previous periods and the current economic environment, including the impact of rising interest rates, worldwide inflationary 3 Table of Contents pressures and the decline in the global economic environment, all of which resulted in a decline in demand for our SRAM products and delays in completing the productization of our APU products.
The APU, featuring a scalable format, compact footprint, and low power consumption, presents an ideal solution for edge applications where prompt and precise responses are crucial. These capabilities empower the USSF to swiftly detect, warn, analyze, attribute, and forecast potential and actual threats in space, ultimately bolstering the ability of the United States to maintain and leverage space superiority.
The APU, featuring a scalable format, compact footprint, and low power consumption, presents an ideal solution for edge applications where prompt and precise responses are crucial. These capabilities empower the U.S.
We are marketing our OpenSearch Software-as-a-Service (“SaaS”) acceleration platform to strategic customers and intend to support Amazon Web Services (“AWS”), Azure, or Google Cloud Storage (“GCS”) users with fast vector search acceleration with a software plugin. We support customers with prebuilt APIs and libraries to support their parallel programming of the Gemini APU in C, C++.
We are marketing specific differentiated applications and API’s as-a-Service adding Amazon Web Services (“AWS”), Azure, or Google Cloud Storage (“GCS”) users to our customer base along with those that want this hardware product. We support customers with prebuilt APIs and libraries to support their parallel programming of the Gemini-I.
In the first quarter of fiscal 2023, we started a program with a major prime contractor for a radiation-hardened SRAM prototype that shipped in the first half of fiscal 2023 and has prospects for increasing GSI’s net revenue in fiscal 2024 and beyond. We were incorporated in California in 1995 under the name Giga Semiconductor, Inc.
During fiscal 2024, we shipped radiation-hardened SRAM prototype products to three customers for four different programs that have prospects for increasing our net revenue in fiscal 2025 and beyond. We were incorporated in California in 1995 under the name Giga Semiconductor, Inc.
Software and systems are being developed to allow a single LEDA-S to be used without the need for a host PC so that, as an example, it can be packaged in a compact case for quad-copter use.
The single LEDA-S can be used without the need for a host PC in some applications so that, as an example, it can be packaged in a compact case for quad-copter use. It can also be used in small appliances for location recognition, object recognition, and GPS-denied alternate routing useful for drone product delivery or reconnaissance applications.
Similarity search uses a technique called distance metric learning, in which learning algorithms measure how similar related objects are. The APU is well suited for very fast similarity search because its design determines distance metric at fast computation speeds with high degrees of accuracy.
The APU is well suited for very fast similarity search because its design determines distance metric at fast computation speeds with high degrees of accuracy. Our APU is further differentiated from other solutions in the market by its scalability for very large datasets.
We changed our name to GSI Technology in December 2003 and reincorporated in Delaware in June 2004 under the name GSI Technology, Inc.
We changed our name to GSI Technology in December 2003 and reincorporated in Delaware in June 2004 under the name GSI Technology, Inc. Our principal executive offices are located at 1213 Elko Drive, Sunnyvale, California, 94089, and our telephone number is (408) 331-8800.
Schirle was Vice President, Finance for Paradigm Technology, a manufacturer of SRAMs, and from December 1993 to October 1996, he was the Controller for Paradigm Technology. Mr. Schirle was formerly a certified public accountant. Bor-Tay Wu has served as our Vice President, Taiwan Operations since January 1997. From January 1995 to December 1996, Mr.
Schirle was formerly a certified public accountant. 16 Table of Contents Bor-Tay Wu has served as our Vice President, Taiwan Operations since January 1997. From January 1995 to December 1996, Mr. Wu was a design manager at Atalent, an IC design company in Taiwan. Ping Wu has served as our Vice President, U.S. Operations since September 2006.
Akerib is the inventor of more than 50 patents related to parallel and In Memory Associative Computing. Didier Lasserre has served as our Vice President, Sales since July 2002. From November 1997 to July 2002, Mr. Lasserre served as our Director of Sales for the Western United States and Europe.
Akerib is the inventor of more than 50 patents related to parallel and In Memory Associative Computing. Patrick Chuang has served as our Senior Vice President, Memory Design since we acquired substantially all of the assets related to the SRAM memory device product line of Sony Corporation in July 2009. From July 1990 to July 2009, Mr.
Our engineers work closely with our outsource partners to increase yields, reduce manufacturing costs, and help assure the quality of our products. 11 Table of Contents Currently, all of our SRAM and APU wafers are manufactured by TSMC under individually negotiated purchase orders.
Currently, all of our SRAM and APU wafers are manufactured by TSMC under individually negotiated purchase orders.
Our principal executive offices are located at 1213 Elko Drive, Sunnyvale, California, 94089, and our telephone number is (408) 331-8800. 4 Table of Contents Industry and Market Strategy Associative Processing Unit Computing Market Overview The markets for associating processing computing solutions are significant and growing rapidly.
Industry and Market Strategy Associative Processing Unit Computing Market Overview The markets for associating processing computing solutions are significant and growing rapidly.
In total, we expect to incur approximately $917,000 in cash expenditures for termination costs, including the payout of accrued vacation, of which $490,000 was incurred in fiscal 2023. 14 Table of Contents As of March 31, 2023, we had 156 full-time employees, including 107 engineers, of which 70 are engaged in research and development and 48 have PhD or MS degrees, 16 employees in sales and marketing, 10 employees in general and administrative capacities and 60 employees in manufacturing.
Human Capital Resources As of March 31, 2024, we had 148 full-time employees, including 101 engineers, of which 64 are engaged in research and development and 45 have PhD or MS degrees, 16 employees in sales and marketing, 10 employees in general and administrative capacities and 59 employees in manufacturing.
The E1.L form factor enables the use of market standard SSD rack enclosures to build a dense APU compute appliance, such as a 16 card LEDA-S 1U form factor server. We envision that this dense appliance would be of high interest for in-plane real-time SAR applications, for instance.
APU Board Level Product The Gemini-I APU is currently in production as a full-size PCIe card and a 1U E1.L card. These are the Leda-E and Leda-S, respectively. The Leda-S E1.L form factor enables the use of market standard SSD rack enclosures to build a dense APU compute appliance unachievable by GPU cards that require specialized connectivity for expansion.
The contents of our website are not incorporated by reference in this report. The SEC maintains an Internet site that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC at www.sec.gov .
The contents of our website are not incorporated by reference in this report.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf this customer, or any of our other major customers, reduces the amount they purchase, stops purchasing our products or fails to pay us, our financial position and operating results will suffer. ● Rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine, significant fluctuations in energy prices and the decline in the global economic environment may continue to adversely affect our financial condition. ● We have incurred significant losses and may incur losses in the future. 17 Table of Contents ● We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, our ability to produce timely and accurate financial statements could be impaired. ● Goodwill impairment and related charges, as well as other accounting charges or adjustments could negatively impact our operating results. ● We depend upon the sale of our Very Fast SRAMs for most of our revenues and the market for Very Fast SRAMs is highly competitive. ● If we do not successfully implement certain cost reduction initiatives, we may suffer adverse impacts on our business and operations. ● We are dependent on a number of single source suppliers. ● If we do not successfully develop and introduce the new in-place associative computing products, which entails certain significant risks, our business will be harmed. ● If we are unable to offset increased wafer fabrication and assembly costs, our gross margins will suffer. ● We are subject to the highly cyclical nature of the networking and telecommunications markets. ● We rely heavily on distributors and our business will be negatively impacted if we are unable to develop and manage distribution channels and accurately forecast future sales through our distributors. ● The average selling prices of our products are expected to decline. ● We are substantially dependent on the continued services of our senior management and other key personnel.
Biggest changeIf this customer, or any of our other major customers, reduces the amount they purchase, stops purchasing our products or fails to pay us, our financial position and operating results will suffer. ● We cannot assure you that our evaluation of strategic alternatives will result in any particular outcome, and the perceived uncertainties related to the Company could adversely affect our business and our shareholders. ● Higher interest rates, worldwide inflationary pressures, the evolving conflict in the Middle East, the military conflict in Ukraine, and the decline in the global economic environment may adversely affect our revenues, results of operations and financial condition. ● We have incurred significant losses and may incur losses in the future. ● If we fail to maintain effective internal control over financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected. ● If we determine that our goodwill and intangible assets have become impaired, we may incur impairment charges, which would negatively impact our operating results. ● We depend upon the sale of our Very Fast SRAMs for most of our revenues while we transform the focus of our business to the sale of in-place associative computing products and services, and a downturn in demand for Very Fast SRAM products or we are unable to achieve our revenue goals for our new in-place associative computing products and services, may cause us to experience cash shortfalls that would harm our business and our future prospects. ● Our future success is substantially dependent on the successful introduction of new in-place associative computing products which entails significant risks. ● We are dependent on a number of single source suppliers. 17 Table of Contents ● If we do not successfully develop new products to respond to rapid market changes due to changing technology and evolving industry standards, particularly in the networking and telecommunications markets, our business will be harmed. ● If we are unable to offset increased wafer fabrication and assembly costs, our gross margins will suffer. ● We are subject to the highly cyclical nature of the networking and telecommunications markets. ● We rely heavily on distributors and our business will be negatively impacted if we are unable to develop and manage distribution channels and accurately forecast future sales through our distributors. ● The average selling prices of our products are expected to decline. ● We are substantially dependent on the continued services of our senior management and other key personnel.
Our Very Fast SRAM products are incorporated into routers, switches, wireless local area network infrastructure equipment, wireless base stations and network access equipment used in the highly cyclical 24 Table of Contents networking and telecommunications markets. We expect that the networking and telecommunications markets will continue to be highly cyclical, characterized by periods of rapid growth and contraction.
Our Very Fast SRAM products are incorporated into routers, switches, wireless local area network infrastructure equipment, wireless base stations and network access equipment used in the highly cyclical networking and telecommunications markets. We expect that the networking and telecommunications markets will 24 Table of Contents continue to be highly cyclical, characterized by periods of rapid growth and contraction.
Such disruptions could adversely impact our ability to attract and retain customers, fulfill orders and interrupt other processes and could adversely affect our business, financial results, stock price and reputation. 26 Table of Contents We may be unable to accurately forecast future sales through our distributors, which could harm our ability to efficiently manage our resources to match market demand.
Such disruptions could 26 Table of Contents adversely impact our ability to attract and retain customers, fulfill orders and interrupt other processes and could adversely affect our business, financial results, stock price and reputation. We may be unable to accurately forecast future sales through our distributors, which could harm our ability to efficiently manage our resources to match market demand.
We are dependent on our relationships with TSMC to transition successfully to smaller geometry process technologies and to more advanced manufacturing processes. If we or TSMC experience significant delays in this 30 Table of Contents transition or fail to implement these transitions, our business, financial condition and results of operations could be materially and adversely affected.
We are dependent on our relationships with TSMC to transition successfully to smaller geometry process 30 Table of Contents technologies and to more advanced manufacturing processes. If we or TSMC experience significant delays in this transition or fail to implement these transitions, our business, financial condition and results of operations could be materially and adversely affected.
S. Foreign Corrupt Practices Act and other U. S. and foreign anti-corruption laws; · difficulties in collecting accounts receivable and longer accounts receivable payment cycles; and · limited protection for intellectual property rights in some countries. Moreover, our reporting currency is the U.S. dollar.
Foreign Corrupt Practices Act and other U.S. and foreign anti-corruption laws; ● difficulties in collecting accounts receivable and longer accounts receivable payment cycles; and ● limited protection for intellectual property rights in some countries. Moreover, our reporting currency is the U.S. dollar.
Conducting business outside of the United States subjects us to additional risks and challenges, including: · potential political and economic instability in, or armed conflicts that involve or affect, the countries in which we, our customers and our suppliers are located; · uncertainties regarding taxes, tariffs, quotas, export controls and license requirements, trade wars, policies that favor domestic companies over nondomestic companies, including government efforts to provide for the development and growth of local competitors, and other trade barriers; · heightened price sensitivity from customers in emerging markets; · compliance with a wide variety of foreign laws and regulations and unexpected changes in these laws and regulations; · fluctuations in freight rates and transportation disruptions; · difficulties and costs of staffing and managing personnel, distributors and representatives across different geographic areas and cultures, including assuring compliance with the U.
Conducting business outside of the United States subjects us to additional risks and challenges, including: ● potential political and economic instability in, or armed conflicts that involve or affect, the countries in which we, our customers and our suppliers are located; ● uncertainties regarding taxes, tariffs, quotas, export controls and license requirements, trade wars, policies that favor domestic companies over nondomestic companies, including government efforts to provide for the development and growth of local competitors, and other trade barriers; ● heightened price sensitivity from customers in emerging markets; ● compliance with a wide variety of foreign laws and regulations and unexpected changes in these laws and regulations; ● fluctuations in freight rates and transportation disruptions; ● difficulties and costs of staffing and managing personnel, distributors and representatives across different geographic areas and cultures, including assuring compliance with the U.S.
Factors that may affect periodic operating results in the future include: ● commercial acceptance of our associative computing products; ● commercial acceptance of our RadHard and RadTolerant products; ● changes in our customers' inventory management practices; ● unpredictability of the timing and size of customer orders, since most of our customers purchase our products on a purchase order basis rather than pursuant to a long-term contract; ● changes in our product pricing policies, including those made in response to new product announcements, pricing changes of our competitors and price increases by our foundry and suppliers; ● our ability to anticipate and conform to new industry standards; ● fluctuations in availability and costs associated with materials and manufacturing services needed to satisfy customer requirements caused by supply constraints; 19 Table of Contents ● restructuring, asset and goodwill impairment and related charges, as well as other accounting changes or adjustments; ● manufacturing defects, which could cause us to incur significant warranty, support and repair costs, lose potential sales, harm our relationships with customers and result in write-downs; and ● our ability to address technology issues as they arise, improve our products' functionality and expand our product offerings.
Factors that may affect periodic operating results in the future include: ● commercial acceptance of our associative computing products; ● commercial acceptance of our RadHard and RadTolerant products; ● changes in our customers' inventory management practices; ● unpredictability of the timing and size of customer orders, since most of our customers purchase our products on a purchase order basis rather than pursuant to a long-term contract; ● changes in our product pricing policies, including those made in response to new product announcements, pricing changes of our competitors and price increases by our foundry and suppliers; ● our ability to anticipate and conform to new industry standards; ● fluctuations in availability and costs associated with materials and manufacturing services needed to satisfy customer requirements caused by supply constraints; ● restructuring, asset and goodwill impairment and related charges, as well as other accounting changes or adjustments; ● manufacturing defects, which could cause us to incur significant warranty, support and repair costs, lose potential sales, harm our relationships with customers and result in write-downs; and ● our ability to address technology issues as they arise, improve our products' functionality and expand our product offerings.
The trading price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control, including: ● the establishment of a market for our new associative computing products; ● actual or anticipated declines in operating results; ● changes in financial estimates or recommendations by securities analysts; ● the institution of legal proceedings against us or significant developments in such proceedings; ● announcements by us or our competitors of financial results, new products, significant technological innovations, contracts, acquisitions, strategic relationships, joint ventures, capital commitments or other events; ● changes in industry estimates of demand for Very Fast SRAM, RadHard and RadTolerant products; ● the gain or loss of significant orders or customers; ● recruitment or departure of key personnel; and ● market conditions in our industry, the industries of our customers and the economy as a whole.
The trading price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control, including: ● the establishment of a market for our new associative computing products; ● actual or anticipated declines in operating results; ● changes in financial estimates or recommendations by securities analysts; ● the institution of legal proceedings against us or significant developments in such proceedings; 33 Table of Contents ● announcements by us or our competitors of financial results, new products, significant technological innovations, contracts, acquisitions, strategic relationships, joint ventures, capital commitments or other events; ● changes in industry estimates of demand for Very Fast SRAM, RadHard and RadTolerant products; ● the gain or loss of significant orders or customers; ● recruitment or departure of key personnel; and ● market conditions in our industry, the industries of our customers and the economy as a whole.
In addition, in connection with any future acquisitions or investments we may make, we face numerous other risks, including: · difficulties in integrating operations, technologies, products and personnel; · diversion of financial and managerial resources from existing operations; · risk of overpaying for or misjudging the strategic fit of an acquired company, asset or technology; · problems or liabilities stemming from defects of an acquired product or intellectual property litigation that may result from offering the acquired product in our markets; · challenges in retaining key employees to maximize the value of the acquisition or investment; · inability to generate sufficient return on investment; · incurrence of significant one-time write-offs; and · delays in customer purchases due to uncertainty.
In addition, in connection with any future acquisitions or investments we may make, we face numerous other risks, including: ● difficulties in integrating operations, technologies, products and personnel; ● diversion of financial and managerial resources from existing operations; ● risk of overpaying for or misjudging the strategic fit of an acquired company, asset or technology; ● problems or liabilities stemming from defects of an acquired product or intellectual property litigation that may result from offering the acquired product in our markets; 28 Table of Contents ● challenges in retaining key employees to maximize the value of the acquisition or investment; ● inability to generate sufficient return on investment; ● incurrence of significant one-time write-offs; and ● delays in customer purchases due to uncertainty.
These provisions could also have the effect of discouraging others from making tender offers for our common stock. As a result, these provisions might prevent the market price of our common stock from increasing substantially in response to actual or rumored takeover attempts.
These provisions could also have the effect of discouraging others from making tender offers for our common stock. As a result, these provisions might prevent the market price of our common stock from increasing substantially in response to actual or rumored takeover attempts. These provisions might also prevent changes in our management.
For example, political instability or restrictions on transportation logistics for our products resulting from changes in the relationship among the United States, Taiwan and the People’s Republic of China could negatively impact our business. Any significant armed conflict related to this matter would be expected to materially and adversely damage our business.
For example, political instability or restrictions on transportation logistics for our products resulting from changes in the relationship among the United States, Taiwan and the People’s Republic of China could negatively impact our 31 Table of Contents business. Any significant armed conflict related to this matter would be expected to materially and adversely damage our business.
In particular, the networking and telecommunications markets are rapidly evolving and new standards are emerging. We are vulnerable to advances in technology by competitors, including new SRAM architectures, new forms of DRAM and the emergence of new memory 23 Table of Contents technologies that could enable the development of products that feature higher performance or lower cost.
In particular, the networking and telecommunications markets are rapidly evolving and new standards are emerging. We are vulnerable to advances in technology by competitors, including new SRAM architectures, new forms of DRAM and the emergence of new memory technologies that could enable the development of products that feature higher performance or lower cost.
At March 31, 2023, we had outstanding authorization from our Board of Directors to purchase up to an additional $4.3 million of our common stock from time to time under our repurchase program.
At March 31, 2024, we had outstanding authorization from our Board of Directors to purchase up to an additional $4.3 million of our common stock from time to time under our repurchase program.
Our sales cycle can take up to 24 months to complete, and because of this lengthy sales cycle, we may experience a delay between increasing expenses for research and development and our sales and marketing efforts and the generation of volume production revenues, if any, from these expenditures.
Our sales cycle can take up to 24 months to complete, 27 Table of Contents and because of this lengthy sales cycle, we may experience a delay between increasing expenses for research and development and our sales and marketing efforts and the generation of volume production revenues, if any, from these expenditures.
In recent years, the stock market in general, and the market for technology stocks in particular, have experienced extreme price fluctuations, which have often been unrelated to the operating performance of affected 33 Table of Contents companies. The market price of our common stock might experience significant fluctuations in the future, including fluctuations unrelated to our performance.
In recent years, the stock market in general, and the market for technology stocks in particular, have experienced extreme price fluctuations, which have often been unrelated to the operating performance of affected companies. The market price of our common stock might experience significant fluctuations in the future, including fluctuations unrelated to our performance.
Moreover, the value of any design win will largely depend on the commercial success of our 27 Table of Contents OEM customers’ products. There can be no assurance that we will continue to achieve design wins or that any design win will result in future revenues.
Moreover, the value of any design win will largely depend on the commercial success of our OEM customers’ products. There can be no assurance that we will continue to achieve design wins or that any design win will result in future revenues.
As a result, the market price of our common stock and the voting and other rights of our stockholders might be adversely affected. The issuance of preferred stock might result in the loss of voting control to other stockholders. We have no current plans to issue any shares of preferred stock.
As a result, the market price of our common stock and the voting and other rights of our 34 Table of Contents stockholders might be adversely affected. The issuance of preferred stock might result in the loss of voting control to other stockholders. We have no current plans to issue any shares of preferred stock.
The occurrence of an earthquake, typhoon or other natural disaster near the fabrication facilities of TSMC or our other independent suppliers could result in damage, power outages and other disruptions that impair their production and assembly capacity.
The occurrence of an earthquake, typhoon or other natural disaster near the fabrication facilities of TSMC or our other independent suppliers could result in damage, power outages and other disruptions that impair their production and assembly 32 Table of Contents capacity.
If any of these changes were to occur, our business could be harmed and our stock price could decline. Our international business exposes us to additional risks. Products shipped to destinations outside of the United States accounted for 51.4%, 53.5% and 55.4% of our net revenues in fiscal 2023, 2022 and 2021, respectively.
If any of these changes were to occur, our business could be harmed and our stock price could decline. Our international business exposes us to additional risks. Products shipped to destinations outside of the United States accounted for 47.3%, 51.4% and 53.5% of our net revenues in fiscal 2024, 2023 and 2022, respectively.
For example, in the twelve fiscal quarters ended March 31, 2023, we recorded net revenues of as much as $9.0 million and as little as $5.4 million, and operating losses from $2.9 million to $5.7 million.
For example, in the twelve fiscal quarters ended March 31, 2024, we recorded net revenues of as much as $9.0 million and as little as $5.2 million, and operating losses from $2.9 million to $6.7 million.
For example, in fiscal 2023, 2022 and 2021, our largest distributor Avnet Logistics accounted for 48.1%, 38.0% and 29.8%, respectively, of our net revenues. Avnet Logistics and our other existing distributors may choose to devote greater resources to marketing and supporting the products of other companies.
For example, in fiscal 2024, 2023 and 2022, our largest distributor Avnet Logistics accounted for 50.6%, 48.1% and 38.0%, respectively, of our net revenues. Avnet Logistics and our other existing distributors may choose to devote greater resources to marketing and supporting the products of other companies.
If a successful claim is made against us or any of our customers and a license is not made available to us on 28 Table of Contents commercially reasonable terms or we are required to pay substantial damages or awards, our business, financial condition and results of operations would be materially adversely affected.
If a successful claim is made against us or any of our customers and a license is not made available to us on commercially reasonable terms or we are required to pay substantial damages or awards, our business, financial condition and results of operations would be materially adversely affected. 29 Table of Contents Our business will suffer if we are unable to protect our intellectual property.
This ongoing project involves the commercialization of new, cutting-edge technology, will require a continuing substantial effort during fiscal 2024 22 Table of Contents and will be subject to significant risks.
This ongoing project involves the commercialization of new, cutting-edge technology, will require a continuing substantial effort during fiscal 2025 and will be subject to significant risks.
We expect that a continued rise in interest rates, continued inflationary pressures, recent bank failures, continued uncertainties in the business climate 20 Table of Contents caused by the military conflict in Ukraine and related fluctuations in energy prices will adversely impact demand for new and existing products, and to impact the mindset of potential commercial partners to launch new products using GSI’s technology.
We expect that a continued rise in interest rates, continued inflationary pressures, the evolving conflict in the Middle East , continued uncertainties in the business climate caused by the military conflict in Ukraine and related fluctuations in energy prices will adversely impact demand for new and existing products, and to impact the mindset of potential commercial partners to launch new products using GSI’s technology.
As of May 31, 2023 , our executive officers, directors and entities affiliated with them beneficially owned approximately 32% of our outstanding common stock.
As of May 31, 2024 , our executive officers, directors and entities affiliated with them beneficially owned approximately 33% of our outstanding common stock.
If we are unable to recruit or retain qualified personnel, our business could be harmed. ● Cyber-attacks could disrupt our operations or the operations of our partners, and result in reduced revenue, increased costs, liability claims and harm our reputation or competitive position. ● Demand for our products may decrease if our OEM customers experience difficulty manufacturing, marketing or selling their products. ● Our products have lengthy sales cycles that make it difficult to plan our expenses and forecast results. ● Our business could be negatively affected as a result of actions of activist stockholders or others. ● Our acquisition of companies or technologies could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results. ● Our business will suffer if we are unable to protect our intellectual property or if there are claims that we infringe third party intellectual property rights. ● Current unfavorable economic and market conditions may adversely affect our business, financial condition, results of operations and cash flows. ● If our business grows, such growth may place a significant strain on our management and operations.
If we are unable to recruit or retain qualified personnel, our business could be harmed. ● Cyber-attacks and systems integration issues could disrupt our operations or the operations of our partners and result in reduced revenue, increased costs, liability claims, reputational harm. ● Demand for our products may decrease if our OEM customers experience difficulty manufacturing, marketing or selling their products. ● Our products have lengthy sales cycles that make it difficult to plan our expenses and forecast results. ● Our business could be negatively affected as a result of actions of activist stockholders or others. ● Our acquisition of companies or technologies could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results. ● Our business will suffer if we are unable to protect our intellectual property or if there are claims that we infringe third party intellectual property rights. ● Any significant order cancellations or order deferrals could adversely affect our operating results. ● If our business grows, such growth may place a significant strain on our management and operations.
A small number of customers generally account for a significant portion of our accounts receivable in any period, and if any one of them fails to pay us, our financial position and operating results will suffer. At March 31, 2023, three customers accounted for 36%, 25% and 19% of our accounts receivable, respectively.
A small number of customers generally account for a significant portion of our accounts receivable in any period, and if any one of them fails to pay us, our financial position and operating results will suffer. At March 31, 2024, three customers accounted for 46%, 18% and 14% of our accounts receivable, respectively.
Purchases by Nokia represented approximately 17%, 29% and 39% of our net revenues in fiscal 2023, 2022 and 2021, respectively.
Purchases by Nokia represented approximately 21%, 17% and 29% of our net revenues in fiscal 2024, 2023 and 2022, respectively.
Risks Related to Our International Business and Operations Changes in Taiwan’s political, social and economic environment may affect our business performance. Because much of the manufacturing and testing of our products is conducted in Taiwan, our business performance may be affected by changes in Taiwan’s political, social and economic environment.
Because much of the manufacturing and testing of our products is conducted in Taiwan, our business performance may be affected by changes in Taiwan’s political, social and economic environment.
We have incurred significant losses and may incur losses in the future. We have incurred significant losses. We incurred net losses of $16.0 million, $16.4 million and $21.5 million during fiscal 2023, 2022 and 2021, respectively.
We have incurred significant losses and may incur losses in the future. We have incurred significant losses. We incurred net losses of $20.1 million, $16.0 million and $16.4 million during fiscal 2024, 2023 and 2022, respectively.
Disruptions in the capital and financial markets as a result of rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine, significant fluctuations in energy prices and the decline in the global economic environment may also adversely affect our ability to obtain additional liquidity should the impacts of a decline in the global economic environment continue for a prolonged period .
Disruptions in the capital and financial markets as a result of higher interest rates, worldwide inflationary pressures, the evolving conflict in the Middle East, the military conflict in Ukraine, and the decline in the global economic environment may also adversely affect our ability to obtain additional liquidity should the impacts of a decline in the global economic environment continue for a prolonged period.
Rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine, significant fluctuations in energy prices and the decline in the global economic environment have caused increased stock market volatility and uncertainty in customer demand and the worldwide economy in general, and we may continue to experience decreased sales and revenues in the future.
Higher interest rates, worldwide inflationary pressures, the evolving conflict in Israel, the military conflict in Ukraine, and the decline in the global economic environment have caused increased stock market volatility and uncertainty in customer demand and the worldwide economy in general, and we may continue to experience decreased sales and revenues in the future.
For example, in the second quarter of fiscal 2019, we incurred approximately $1.0 million in research and development expense associated with a pre-production mask set that will not be used in production as part of the transition to our new 28 nanometer SRAM process technology for our APU product.
For example, in the third quarter of fiscal 2024, we incurred approximately $2.4 million in research and development expense associated with a pre-production mask set that will not be used in production as part of the transition to our new 16 nanometer SRAM process technology for our APU2 product.
Our business is expected to be materially adversely affected by rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine and the significant fluctuations in energy prices, all of which are contributing to a decline in the global economic environment.
Our business is expected to be materially adversely affected by higher interest rates, worldwide inflationary pressures, the evolving conflict in the Middle East and the military conflict in Ukraine, all of which are contributing to a decline in the global economic environment.
Moreover, a substantial portion of our products is manufactured and tested in Taiwan, and the software development for our associative computing products occurs in 31 Table of Contents Israel. We intend to continue expanding our international business in the future.
Moreover, a substantial portion of our products is manufactured and tested in Taiwan, and the software development for our associative computing products occurs in Israel where there is an evolving military conflict with Hamas. We intend to continue expanding our international business in the future.
There can be no assurance that our Very Fast SRAMs will continue to receive broad market acceptance, that our new product development initiatives will be successful or that we will be able to achieve sustained revenue growth or profitability.
There can be no assurance that our Very Fast SRAMs will continue to receive broad market acceptance, that our new product development initiatives will be successful or that we will be able to achieve sustained revenue growth or profitability. We identified a material weakness in our internal control over financial reporting in the past.
We derive most of our revenues from the sale of Very Fast SRAMs, and we expect that sales of these products will represent the substantial majority of our revenues for the foreseeable future.
We currently derive most of our revenues from the sale of Very Fast SRAMs, and we expect that sales of these products will represent a significant majority of our revenues for the next several years.
A portion of our business activities are conducted in foreign countries, including Taiwan and Israel. Our business benefits from free trade agreements, and we also rely on various U.S. corporate tax provisions related to international commerce as we develop, manufacture, market and sell our products globally.
Our business benefits from free trade agreements, and we also rely on various U.S. corporate tax provisions related to international commerce as we develop, manufacture, market and sell our products globally.
These provisions might also prevent changes in our management. 34 Table of Contents Use of a portion of our cash reserves to repurchase shares of our common stock presents potential risks and disadvantages to us and our continuing stockholders.
Use of a portion of our cash reserves to repurchase shares of our common stock presents potential risks and disadvantages to us and our continuing stockholders.
Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed in a business combination, such as our acquisition of MikaMonu Group Ltd. in fiscal 2016.
If we determine that our goodwill and intangible assets have become impaired, we may incur impairment charges, which would negatively impact our operating results. Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed in a business combination, such as our acquisition of MikaMonu Group Ltd. in fiscal 2016.
In addition, our business could be harmed if such an outbreak resulted in travel being restricted, the implementation of stay-at-home or shelter-in-place orders or if it adversely affected the operations of our OEM customers or the demand for our products or our OEM customers’ products. 32 Table of Contents We do not maintain sufficient business interruption and other insurance policies to compensate us for all losses that may occur.
In addition, our business could be harmed if such an outbreak resulted in travel being restricted, the implementation of stay-at-home or shelter-in-place orders or if it adversely affected the operations of our OEM customers or the demand for our products or our OEM customers’ products.
Since the manufacturing of wafers and other components is extremely complex, the process of qualifying new foundries and suppliers is a lengthy process and there is no assurance that we would be able to find and qualify another supplier without materially adversely affecting our business, financial condition and results of operations.
Since the manufacturing of wafers and other components is extremely complex, the process of qualifying new foundries and suppliers is a lengthy process and there is no assurance that we would be able to find and qualify another supplier without materially adversely affecting our business, financial condition and results of operations. 23 Table of Contents If we do not successfully develop new products to respond to rapid market changes due to changing technology and evolving industry standards, particularly in the networking and telecommunications markets, our business will be harmed.
As of March 31, 2023, we had a goodwill balance of $8.0 million and intangible assets of $1.8 million, respectively, from the MikaMonu acquisition. An adverse change in market conditions, including a sustained decline in our stock price, loss of significant customers, or a weakened demand for our products could be considered to be an impairment triggering event.
An adverse change in market conditions, including a sustained decline in our stock price, loss of significant customers, or a weakened demand for our products could be considered to be an impairment triggering event.
The failure to recruit and retain necessary technical, managerial, sales, marketing and administrative personnel could harm our business and our ability to obtain new OEM customers and develop new products. 29 Table of Contents Our business will suffer if we are unable to protect our intellectual property.
The failure to recruit and retain necessary technical, managerial, sales, marketing and administrative personnel could harm our business and our ability to obtain new customers and develop new products. Claims that we infringe third party intellectual property rights could seriously harm our business and require us to incur significant costs.
Any losses or damages incurred by us as a result of a catastrophic event or any other significant uninsured loss in excess of our insurance policy limits could have a material adverse effect on our business. The United States could materially modify certain international trade agreements, or change tax provisions related to the global manufacturing and sales of our products.
We do not maintain sufficient business interruption and other insurance policies to compensate us for all losses that may occur. Any losses or damages incurred by us as a result of a catastrophic event or any other significant uninsured loss in excess of our insurance policy limits could have a material adverse effect on our business.
If our operating results in future quarters fall below the expectations of market analysts and investors, the price of our common stock could fall.
We may not be able to adjust our spending quickly if our revenues fall short of our 19 Table of Contents expectations. If this were to occur, our operating results would be harmed. If our operating results in future quarters fall below the expectations of market analysts and investors, the price of our common stock could fall.
Claims that we infringe third party intellectual property rights could seriously harm our business and require us to incur significant costs. There has been significant litigation in the semiconductor industry involving patents and other intellectual property rights.
There has been significant litigation in the semiconductor industry involving patents and other intellectual property rights.
Market adoption will be dependent upon our ability to increase customer awareness of the benefits of our products and to prove their high-performance and cost-effectiveness. We may not be able to sustain or increase our revenues from sales of our products, particularly if the networking and telecommunications markets were to experience another significant downturn in the future.
We may not be able to sustain our revenues from sales of our SRAM products or increase our revenues from our in-place associative computing products and services, particularly if the networking and telecommunications markets experience a significant downturn, or we are unable to obtain market traction for our in-place associative computing products and services.
If we fail to continue to sell to our key OEM customers, distributors or contract manufacturers in sufficient quantities, our business could be harmed.
If we fail to continue to sell to our key OEM customers, distributors or contract manufacturers in sufficient quantities, our business could be harmed. We cannot assure you that our evaluation of strategic alternatives will result in any particular outcome, and the perceived uncertainties related to the Company could adversely affect our business and our stockholders.
Risks Relating to Our Common Stock and the Securities Market ● The trading price of our common stock is subject to fluctuation and is likely to be volatile. ● We may need to raise additional capital in the future, which may not be available on favorable terms or at all, and which may cause dilution to existing stockholders. ● Use of a portion of our cash reserves to repurchase shares of our common stock presents potential risks and disadvantages to us and our continuing stockholders. ● Our executive officers, directors and their affiliates hold a substantial percentage of our common stock. ● The provisions of our charter documents might inhibit potential acquisition bids that a stockholder might believe are desirable, and the market price of our common stock could be lower as a result.
Risks Related to Our International Business and Operations ● The international political, social and economic environment, including the risks for escalating military conflicts, particularly relating to Israel and Taiwan, may affect our business performance. ● Certain of our independent suppliers and OEM customers have operations in the Pacific Rim, an area subject to significant risk of natural disasters and outbreak of contagious diseases. ● The United States could materially modify certain international trade agreements, or change tax provisions related to the global manufacturing and sales of our products. ● Some of our products are incorporated into advanced military electronics, and changes in international geopolitical circumstances and domestic budget considerations may hurt our business. 18 Table of Contents Risks Relating to Our Common Stock and the Securities Market ● The trading price of our common stock is subject to fluctuation and is likely to be volatile. ● We may need to raise additional capital in the future, which may not be available on favorable terms or at all, and which may cause dilution to existing stockholders. ● Our executive officers, directors and their affiliates hold a substantial percentage of our common stock. ● The provisions of our charter documents might inhibit potential acquisition bids that a stockholder might believe are desirable, and the market price of our common stock could be lower as a result.
Any decrease in revenues from sales of our products could harm our business more than it would if we offered a more diversified line of products. Our future success is substantially dependent on the successful introduction of new in-place associative computing products which entails significant risks.
Any decrease in revenues from sales of our Very Fast SRAM products or failure to achieve the revenue goals for our in-place associative computing products and services could result in revenue shortfalls that would leave our business with inadequate cash to finance operations. 22 Table of Contents Our future success is substantially dependent on the successful introduction of new in-place associative computing products which entails significant risks.
Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.
Rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine, significant fluctuations in energy prices and the resulting decline in the global economic environment are expected to adversely affect our revenues, results of operations and financial condition.
Speculation regarding any developments associated with our review of strategic alternatives and any perceived uncertainties related to the Company or its business could cause the price of our shares to fluctuate significantly. 20 Table of Contents Higher interest rates, worldwide inflationary pressures, the evolving conflict in the Middle East, the military conflict in Ukraine, and the resulting decline in the global economic environment are expected to adversely affect our revenues, results of operations and financial condition.
Risks Related to Manufacturing and Product Development ● We may experience difficulties in transitioning our manufacturing process technologies, which may result in reduced manufacturing yields, delays in product deliveries and increased expenses. ● Manufacturing process technologies are subject to rapid change and require significant expenditures. ● Our products may contain defects, which could reduce revenues or result in claims against us. 18 Table of Contents Risks Related to Our International Business and Operations ● The international political, social and economic environment, particularly as it relates to Taiwan, may affect our business performance. ● Certain of our independent suppliers and OEM customers have operations in the Pacific Rim, an area subject to significant risk of natural disasters and outbreak of contagious diseases such as COVID-19. ● The United States could materially modify certain international trade agreements, or change tax provisions related to the global manufacturing and sales of our products. ● Some of our products are incorporated into advanced military electronics, and changes in international geopolitical circumstances and domestic budget considerations may hurt our business.
Risks Related to Manufacturing and Product Development ● We may experience difficulties in transitioning our manufacturing process technologies, which may result in reduced manufacturing yields, delays in product deliveries and increased expenses. ● Manufacturing process technologies are subject to rapid change and require significant expenditures. ● Our products may contain defects, which could reduce revenues or result in claims against us.
We depend upon the sale of our Very Fast SRAMs for most of our revenues, and a downturn in demand for these products could significantly reduce our revenues and harm our business.
While we currently depend upon the sale of our Very Fast SRAMs for most of our revenues, we are in the process of transforming the focus of our business to the sale of in-place associative computing products and services, and if there is a downturn in demand for Very Fast SRAMs or we are unable to achieve our revenue goals for our new in-place associative computing products and services, we may experience cash shortfalls that would harm our business and our future prospects.
Our business depends in large part upon continued demand for our products in the markets we currently serve, which will continue to be adversely impacted by the decline in the global economic environment, and adoption of our products in new markets.
We are in the process of transforming the focus of our business to the sale of in-place associative computing products and services instead of Very Fast SRAMs. Our financial results and cash flow depend in large part upon continued demand for our Very Fast SRAM products in the markets we currently serve.
Removed
We expect to experience additional price increases for raw materials in fiscal year 2024 due to worldwide inflationary pressures. We will not be able to adjust our spending quickly if our revenues fall short of our expectations. If this were to occur, our operating results would be harmed.
Added
On May 2, 2024, we announced that we had initiated a broad strategic review to maximize stockholder value, which includes an evaluation of a wide range of options including equity or debt financing, divestiture of assets, technology licensing or other strategic arrangements including a sale of the Company.
Removed
We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
Added
We have not set a timetable for the completion of the strategic review process, nor have we made any decisions relating to any strategic alternative at this time. No assurance can be given as to the outcome of the process, including whether the process will result in any particular outcome.
Removed
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Added
Any potential transaction may be dependent on a number of factors that may be beyond our control, for example, market conditions, industry trends or acceptable terms. The process of reviewing potential strategic alternatives may be time consuming, distracting and disruptive to our business operations.
Removed
The material weakness identified pertains to the design and maintenance of control over the review of the forecasts used to calculate the contingent consideration liability, used in the goodwill impairment test and used in the recoverability test for intangible assets. This material weakness has not been remediated as of March 31, 2023.
Added
In addition, given that the exploration of strategic alternatives may eventually result in a potential sale, merger or other strategic transaction, any perceived uncertainty regarding our future operations or employment needs may limit our ability to retain or hire qualified personnel and may contribute to unplanned loss of highly skilled employees through attrition, and result in the loss of customers, suppliers and other key business partners.
Removed
Our management is taking steps to remediate our material weakness, including re-evaluating the methodology and procedures involved in developing forecasts as well as the review and oversight of the forecasting process.
Added
We may ultimately determine that no transaction is in the best interest of our stockholders.
Removed
We are in the process of implementing a detailed plan for the remediation of the material weakness, including enhancing management’s review controls over the forecasts used to calculate the contingent consideration liability, used in the recoverability test for intangible assets and used in the goodwill impairment test .
Added
If we fail to maintain effective internal control over financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud.
Removed
Although we have begun implementing the enhancements described above, the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Added
In addition, any testing by us conducted in connection with Section 404(a) of the Sarbanes-Oxley Act, or any testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
Removed
Until this material weakness is remediated, we plan to continue to perform additional analyses and other procedures to ensure that our consolidated financial statements are prepared in accordance with GAAP .
Added
Inferior internal control over financial reporting could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
Removed
If we are unable to further implement and maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.
Added
During fiscal 2024, we identified and implemented remedial measures to address the control deficiencies that led to the material weakness and determined that the material weakness was remediated as of March 31, 2024.
Removed
If we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources. 21 Table of Contents Furthermore, we cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to our material weakness in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.
Added
However, there can be no assurance that remedial measures will continue to operate or that they will prevent other control deficiencies or material weaknesses in our control over financial reporting in the future. 21 Table of Contents We are a non-accelerated filer.
Removed
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
Added
For so long as we remain a non-accelerated filer, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.
Removed
Any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of periodic management evaluations. If we determine that our goodwill and intangible assets have become impaired, we may incur impairment charges, which would negatively impact our operating results.
Added
An independent assessment of the effectiveness of our internal control over financial reporting could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, we occupy approximately 25,250 square feet in a facility located in Hsin Chu, Taiwan under a lease expiring in August 2023. This facility supports our manufacturing activities. We believe that both our Sunnyvale and Taiwan facilities are adequate for our needs for the foreseeable future.
Biggest changeWe occupy approximately 25,250 square feet in a facility located in Hsin Chu, Taiwan under a lease expiring in August 2026. This facility supports our outsourced manufacturing activities. We believe that both our Sunnyvale and Taiwan facilities are adequate for our needs for the foreseeable future.
We also lease space in the United States in the states of Georgia and Texas and in Israel. The aggregate annual gross rent for our leased facilities was approximately $764,000 in fiscal 2023. Item 3. Legal Proceedings None. Item 4. Mine Safety Disclosures Not applicable. 35 Table of Contents PART II
We also lease space in the United States in the states of Georgia and Texas and in Israel. The aggregate annual gross rent for our leased facilities was approximately $734,000 in fiscal 2024. Item 3. Legal Proceedings None. Item 4. Mine Safety Disclosures Not applicable. 37 Table of Contents PART II
Added
In April 2024, we entered into an agreement to sell the Sunnyvale facility and, in connection with such sale, agreed that we would enter into a new lease agreement to lease back the applicable property from the purchaser. The closing of the purchase and sale of the Sunnyvale property, and entry into the lease, occurred on June 6, 2024.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 35 ​ ​ ​ PART II ​ 36 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 36 Item 6. Reserved 36 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 37
Biggest changeItem 4. Mine Safety Disclosures 37 ​ ​ ​ PART II ​ 38 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 6. Reserved 38 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 39

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed3 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information, Holders of Common Stock and Dividends Our common stock is traded on the Nasdaq Global Market under the symbol “GSIT”. On May 31, 2023, there were approximately 21 holders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information, Holders of Common Stock and Dividends Our common stock is traded on the Nasdaq Global Market under the symbol “GSIT”. On May 31, 2024, there were approximately 21 holders of record of our common stock.
During the quarter ended March 31, 2023, we did not repurchase any of our shares under the repurchase program.
During the quarter ended March 31, 2024, we did not repurchase any of our shares under the repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

74 edited+11 added−49 removed32 unchanged
Biggest changeWhile the disruptions in the capital markets as a result of rising interest rates, worldwide inflationary pressures, significant fluctuations in energy prices and the decline in the global economic environment have created significant uncertainty as to general economic and capital market conditions for the remainder of 2023 and beyond, we believe that our existing balances of cash, cash equivalents and short-term investments, and cash flow expected to be generated from our future operations, will be sufficient to meet our cash needs for working capital and capital expenditures for at least the next 12 months, although we could be required, or could elect, to seek additional funding prior to that time.
Biggest changeWhile higher interest rates, worldwide inflationary pressures and the decline in the global economic environment have created significant uncertainty as to general economic and capital market conditions for the remainder of calendar 2024 and beyond, we believe that our existing balances of cash and cash equivalents, and cash flow expected to be generated from our future operations and the net proceeds of approximately $11.2 million from the sale of our headquarters building in Sunnyvale, CA which closed on June 6, 2024 will be sufficient to meet our cash needs for working capital and capital expenditures for at least the next 12 months.
Selling, general and administrative expenses consist primarily of commissions paid to independent sales representatives, salaries, stock-based compensation and related expenses for personnel engaged in sales, marketing, administrative, finance and human resources activities, professional fees, costs associated with the promotion of our products and other corporate expenses.
Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of commissions paid to independent sales representatives, salaries, stock-based compensation and related expenses for personnel engaged in sales, marketing, administrative, finance and human resources activities, professional fees, costs associated with the promotion of our products and other corporate expenses.
Since the acquisition date, at each reporting period, the contingent consideration liability is re-measured at its then current fair value with changes recorded selling, general and administrative expenses in the Consolidated Statements of Operations.
Since the acquisition date, at each reporting period, the contingent consideration liability is re-measured at its then current fair value with changes recorded in selling, general and administrative expenses in the Consolidated Statements of Operations.
Critical Accounting Policies and Estimates The preparation of our consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Critical Accounting Estimates The preparation of our consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 includes year-over-year comparisons versus the fiscal year ended March 31, 2021 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” ​ Overview We are a leading provider of high-performance semiconductor memory solutions for in-place associative computing applications in high growth markets such as artificial intelligence and high-performance computing, including natural language processing and computer vision.
Our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 includes year-over-year comparisons versus the fiscal year ended March 31, 2022 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” ​ Overview We are a provider of high-performance semiconductor memory solutions for in-place associative computing applications in high growth markets such as artificial intelligence and high-performance computing, including natural language processing and computer vision.
Recent Accounting Pronouncements Please refer to Note 1 to our consolidated financial statements appearing under Part II, Item 8 for a discussion of recent accounting pronouncements that may impact the Company. 47 Table of Contents Item 7A. Quantitative and Qualitative Disclosures About Market Risk Foreign Currency Exchange Risk.
Recent Accounting Pronouncements Please refer to Note 1 to our consolidated financial statements appearing under Part II, Item 8 for a discussion of recent accounting pronouncements that may impact the Company. 46 Table of Contents Item 7A. Quantitative and Qualitative Disclosures About Market Risk Foreign Currency Exchange Risk.
The following discussion should be read together with our consolidated financial statements and the related notes included elsewhere in this report. This discussion and analysis generally covers our financial condition and results of operations for the fiscal year ended March 31, 2023, including year-over-year comparisons versus the fiscal year ended March 31, 2022.
The following discussion should be read together with our consolidated financial statements and the related notes included elsewhere in this report. This discussion and analysis generally covers our financial condition and results of operations for the fiscal year ended March 31, 2024, including year-over-year comparisons versus the fiscal year ended March 31, 2023.
Our initial associative processing unit (“APU”) products are focused on applications using similarity search, but have not resulted in material revenues to date. Similarity search is used in visual search queries for ecommerce, computer vision, drug discovery, cyber security and service markets such as NoSQL, Elasticsearch, and OpenSearch.
Our initial associative processing unit (“APU”) products are focused on applications using similarity search, but have not resulted in material revenues to date. Similarity search is used in visual search queries for ecommerce, computer vision, drug discovery, cybersecurity and service markets such as NoSQL, Elasticsearch, and OpenSearch.
Our cost of revenues consists primarily of wafer fabrication costs, wafer sort, assembly, test and burn-in expenses, the amortized cost of production mask sets, stock-based compensation and the cost of materials and overhead from operations. All of our wafer manufacturing and assembly operations, and a significant 39 Table of Contents portion of our wafer sort testing operations, are outsourced.
Our cost of revenues consists primarily of wafer fabrication costs, wafer sort, assembly, test and burn-in expenses, the amortized cost of production mask sets, stock-based compensation and the cost of materials and overhead from operations. All of our wafer manufacturing and assembly operations, and a significant portion of our wafer sort testing operations, are outsourced.
Significant estimates are inherent in the preparation of the consolidated financial statements and include estimates affecting obsolete and excess inventory, contingent consideration and the valuation of intangibles and goodwill. We believe that we consistently apply these judgments and estimates and that our financial statements and accompanying notes fairly represent our financial results for all periods presented.
Significant estimates are inherent in the preparation of the consolidated financial statements and include estimates affecting obsolete and excess inventory and contingent consideration. We believe that we consistently apply these judgments and estimates and that our financial statements and accompanying notes fairly represent our financial results for all periods presented.
To our knowledge, none of our other OEM customers accounted for more than 10% of our net revenues in fiscal 2023, 2022 or 2021. Cost of Revenues.
To our knowledge, none of our other OEM customers accounted for more than 10% of our net revenues in fiscal 2024, 2023 or 2022. Cost of Revenues.
Future changes to any of the inputs, including forecasted revenues from a new product, which are inherently difficult to estimate, or the valuation model selected, may result in material adjustments to the recorded fair value . Valuation of Goodwill and Intangibles.
Future changes to any of the inputs, including forecasted revenues from a new product, which are inherently difficult to estimate, or the valuation model selected, may result in material adjustments to the recorded fair value .
However, we charge costs related to pre-production mask sets, which are not used in production, to research and development expenses at the time they are incurred. These charges often arise as we transition to new process technologies and, accordingly, can cause research and development expenses to fluctuate on a quarterly basis.
However, we charge costs related to pre-production mask sets, which are not used in production, to research and development expenses at the time they are incurred. These charges often arise as we transition to new process technologies and, accordingly, 41 Table of Contents can cause research and development expenses to fluctuate on a quarterly basis.
Nokia purchases products directly from us and through contract manufacturers and distributors. Based on information provided to us by its contract manufacturers and our distributors, purchases by Nokia represented approximately 17%, 29% and 39% of our net revenues in fiscal 2023, 2022 and 2021, respectively.
Nokia purchases products directly from us and through contract manufacturers and distributors. Based on information provided to us by its contract manufacturers and our distributors, purchases by Nokia represented approximately 21%, 17% and 29% of our net revenues in fiscal 2024, 2023 and 2022, respectively.
We also design, develop and market static random access memories, or SRAMs, that operate at speeds of less than 10 nanoseconds, which we refer to as Very Fast SRAMs, primarily for the networking and telecommunications and the military/defense and aerospace markets.
We also design, develop and market static random access memories, or SRAMs (our current primary revenue source), that operate at speeds of less than 10 nanoseconds, which we refer to as Very Fast SRAMs, primarily for the networking and telecommunications and the military/defense and aerospace markets.
Declines in interest rates, however, will reduce future investment income. ​ 48 Table of Contents
Declines in interest rates, however, will reduce future investment income. ​ 47 Table of Contents
The purchase price of the acquisition was allocated to the intangible assets acquired, with the excess 40 Table of Contents of the purchase price over the fair value of assets acquired recorded as goodwill.
The purchase price of the acquisition was allocated to the intangible assets acquired, with the excess of the purchase price over the fair value of assets acquired recorded as goodwill.
These inputs included the estimated amount and timing of future cash flows, the probability of achievement of the forecast, and a risk-adjusted discount rate to adjust the probability-weighted cash flows to their present value.
These inputs included the estimated amount and timing of future revenue, the probability of achievement of the revenue forecast, and a risk-adjusted discount rate to adjust the probability-weighted cash flow payments to their present value.
Reductions in uncertain tax benefits due to lapses in the statute of limitations were not significant in the years ended March 31, 2023 and 2022. Net Loss. Net loss was ($16.4) million in fiscal 2022 compared to a net loss of ($16.0) million in fiscal 2023.
Reductions in uncertain tax benefits due to lapses in the statute of limitations were not significant in the years ended March 31, 2024 and 2023. Net Loss. Net loss was ($16.0) million in fiscal 2023 compared to a net loss of ($20.1) million in fiscal 2024.
Because we recorded a cumulative three-year loss on a U.S. tax basis for the year ended March 31, 2023 and the realization of our deferred tax assets is questionable, we recorded a tax provision reflecting a valuation allowance of $17.5 million in net deferred tax assets in fiscal 2023.
Because we recorded a cumulative three-year loss on a U.S. tax basis for the year ended March 31, 2024 and the realization of our deferred tax assets is questionable, we recorded a tax provision reflecting a valuation allowance of $20.2 million in net deferred tax assets in fiscal 2024.
While the COVID-19 pandemic has ended, the significant fluctuations in energy prices, worldwide inflationary pressures, rising interest rates and decline in the global economic environment have had, and may continue to have, an adverse impact on our business and financial condition.
While the COVID-19 pandemic has ended, worldwide inflationary pressures, higher interest rates and decline in the global economic environment have had, and may continue to have, an adverse impact on our business and financial condition.
Critical accounting estimates, as defined by the Securities and Exchange Commission, are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult and subjective judgments and estimates of matters that are inherently uncertain.
Critical accounting estimates, as defined by the Securities and Exchange Commission, are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult and subjective judgments and estimates of matters that are inherently uncertain. Our critical accounting estimates include those regarding the valuation of inventories and contingent consideration.
Historically, a small number of OEM customers have accounted for a substantial portion of our net revenues, and we expect that significant customer concentration will continue for the foreseeable future. Many of our OEMs use contract manufacturers to manufacture their equipment.
Historically, a small number of OEM customers have accounted for a substantial portion of our net revenues, and we expect that significant customer concentration will continue for the foreseeable future. Many of our OEMs use contract manufacturers to manufacture their equipment. Accordingly, a significant percentage of our net revenues is derived from sales to these contract manufacturers.
Net cash provided by investing activities was $6.7 million and $4.2 million in fiscal 2023 and 2022, respectively. Investment activities in fiscal 2023 primarily consisted of the maturity of certificates of deposit and agency bonds of $7.0 million partially offset by the purchase of property and equipment of $316,000.
Net cash provided by investing activities was $2.8 million and $6.7 million in fiscal 2024 and 2023, respectively. Investment activities in fiscal 2024 primarily consisted of the maturity of certificates of deposit and agency bonds of $3.4 million partially offset by the purchase of property and equipment of $645,000.
Cash provided by financing activities was $402,000 and $2.4 million in fiscal 2023 and fiscal 2022, respectively and consisted of the net proceeds from the sale of common stock pursuant to our employee stock plans.
Cash provided by financing activities was $1.8 million and $402,000 in fiscal 2024 and fiscal 2023, respectively and consisted of the net proceeds from the sale of common stock pursuant to our employee stock plans.
The contingent consideration liability is included in contingent consideration, non-current on the Consolidated Balance Sheet at March 31, 2022 and 2023 in the amount of $2.7 million and $1.1 million, respectively. At each reporting period, the contingent consideration liability will be re-measured at then current fair value with changes recorded in the Consolidated Statements of Operations.
The contingent consideration liability is included in contingent consideration, non-current on the Consolidated Balance Sheet at March 31, 2023 and 2024 in the amount of $1.1 million and $160,000, respectively At each reporting period, the contingent consideration liability is re-measured at then current fair value with changes recorded in the Consolidated Statements of Operations.
This decrease was primarily due to the changes in net revenues, gross profit and operating expenses discussed above. 43 Table of Contents Liquidity and Capital Resources As of March 31, 2023, our principal sources of liquidity were cash, cash equivalents and short-term investments of $30.6 million compared to $44.0 million as of March 31, 2022.
This decrease was primarily due to the changes in net revenues, gross profit and operating expenses discussed above. Liquidity and Capital Resources As of March 31, 2024, our principal sources of liquidity were cash and cash equivalents of $14.4 million compared to $30.6 million of cash, cash equivalents and short-term investments as of March 31, 2023.
Our future capital requirements will depend on many factors, including the rate of revenue growth, if any, that we experience, any additional manufacturing cost increases resulting from supply constraints, the extent to which we utilize subcontractors, the levels of inventory and accounts receivable that we maintain, the timing and extent of spending to support our product development efforts and the expansion of our sales and marketing efforts.
Our future capital requirements will depend on many factors, including revenue growth, if any, that we experience, any additional manufacturing cost increases resulting from supply constraints and the continuation of the impact of higher interest rates and inflation may have on our business, the extent to which we utilize subcontractors, the levels of inventory and accounts receivable that we maintain, the timing and extent of spending to support our product development efforts and the expansion of our sales and marketing team.
Due to revisions to the amount of expected revenue, the timing of revenue to be recognized prior to the end of the earnout period and the probability of achievement of the APU revenue forecast, the contingent consideration liability decreased by $1.7 million from March 31, 2022 to March 31, 2023.
Due to revisions to the amount of expected revenue, the timing of revenue to be recognized prior to the end of the earnout period and the probability of achievement of the APU revenue forecast, the contingent consideration liability decreased by $892,000 from March 31, 2023 to March 31, 2024.
The following direct customers accounted for 10% or more of our net revenues in one or more of the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ March 31, ​ ​ 2023 2022 2021 Contract manufacturers and consignment warehouses: ​ ​ ​ ​ ​ ​ ​ Flextronics Technology ​ 10.4 % 16.0 % 21.1 % Sanmina ​ 8.8 ​ 11.2 ​ 21.5 ​ Distributors: ​ ​ ​ ​ ​ ​ ​ Avnet Logistics ​ 48.1 ​ 38.0 ​ 29.8 ​ Nexcomm ​ 16.6 ​ 17.2 ​ 14.7 ​ Nokia was our largest customer in fiscal 2023, 2022 and 2021.
The following direct customers accounted for 10% or more of our net revenues in one or more of the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ March 31, ​ ​ 2024 2023 2022 Contract manufacturers: ​ ​ ​ ​ ​ ​ ​ Flextronics Technology ​ 13.5 % 10.4 % 16.0 % Sanmina ​ 5.9 ​ 8.8 ​ 11.2 ​ Distributors: ​ ​ ​ ​ ​ ​ ​ Avnet Logistics ​ 50.6 ​ 48.1 ​ 38.0 ​ Nexcomm ​ 9.3 ​ 16.6 ​ 17.2 ​ Nokia was our largest customer in fiscal 2024, 2023 and 2022.
In fiscal 2023, the value of contingent consideration liability resulting from the MikaMonu acquisition decreased by $1.5 million compared to a decrease of $1.6 million in fiscal 2022 as a result of re-measurement of contingent consideration liability in each year.
In fiscal 2024, the value of contingent consideration liability resulting from the MikaMonu acquisition decreased by $892,000 compared to a decrease of $1.7 million in fiscal 2023 as a result of re-measurement of contingent consideration liability in each year.
As of March 31, 2023, we had $1.7 million in purchase obligations for facility leases and software and test purchase obligations that are binding commitments, of which $1.3 million are payable in the next twelve months and $416,000 are committed in the long term. ​ As of March 31, 2023, the current portion of our unrecognized tax benefits was $0, and the long-term portion was $0. 44 Table of Contents In connection with the acquisition of MikaMonu on November 23, 2015, we are required to make contingent consideration payments to the former MikaMonu shareholders conditioned upon the achievement of certain revenue targets for products based on the MikaMonu technology.
As of March 31, 2024, we had $2.2 million in purchase obligations for facility leases, wafers and software and test purchase obligations that are binding commitments, of which $1.2 million are payable in the next twelve months and $1.0 million are committed in the long term. ​ In connection with the acquisition of MikaMonu on November 23, 2015, we are required to make contingent consideration payments to the former MikaMonu shareholders conditioned upon the achievement of certain revenue 45 Table of Contents targets for products based on the MikaMonu technology.
The exchange loss in each period was primarily related to our Taiwan branch operations and operations in Israel. Provision (benefit) for Income Taxes. The provision for income taxes increased from a benefit from income taxes of ($45,000) in fiscal 2022 to a provision of $372,000 in fiscal 2023.
The exchange loss in each period was primarily related to our Taiwan branch operations and operations in Israel. Provision (benefit) for Income Taxes. The provision for income taxes decreased from $372,000 in fiscal 2023 to $70,000 in fiscal 2024.
At March 31, 2023, we had total minimum lease obligations of approximately $686,000 from April 1, 2023 through February 29, 2024, under non-cancelable operating leases for our facilities.
At March 31, 2024, we had total minimum lease obligations of approximately $1.6 million from April 1, 2023 through April 30, 2027, under non-cancelable operating leases for our facilities.
We will also make “earnout” payments to the former MikaMonu shareholders in cash or shares of our common stock, at our discretion, during a period of up to ten years following the closing if certain product development milestones and revenue targets for products based on the MikaMonu technology are achieved.
The acquisition agreement provides for potential “earnout” payments to the former MikaMonu shareholders in cash or shares of our common stock, at our discretion, during a period of up to ten years following the closing if certain revenue targets for products based on the MikaMonu technology are achieved.
Cash, cash equivalents and short-term investments totaling $21.4 million were held in foreign locations as of March 31, 2023. Net cash used in operating activities was $16.8 million and $13.8 million for fiscal 2023 and fiscal 2022, respectively.
Cash and cash equivalents totaling $9.4 million were held in foreign locations as of March 31, 2024. Net cash used in operating activities was $17.4 million and $16.8 million for fiscal 2024 and fiscal 2023, respectively.
Accordingly, we expect that our research and development expenses will continue to be substantial in future periods and may lead to operating losses in some periods. Such expenses as a percentage of net revenues may fluctuate from period to period. Selling, General and Administrative Expenses.
In particular, we are devoting substantial resources to the development of our in-place associative computing products. Accordingly, we expect that our research and development expenses will continue to be substantial in future periods and may lead to operating losses in some periods. Such expenses as a percentage of net revenues may fluctuate from period to period.
Inventories are stated at the lower of cost or net realizable value, cost being determined on a weighted average basis. Our inventory write-down allowance is established when conditions indicate that the selling price of our products could be less than cost due to physical deterioration, obsolescence based on changes in technology and demand, changes in price levels, or other causes.
Our inventory write-down allowance is established when conditions indicate that the selling price of our products could be less than cost due to physical deterioration, obsolescence based on changes in technology and demand, changes in price levels, or other causes.
The benefit for income taxes in fiscal 2022 included a benefit of ($220,000) related to the approval by the Israel tax authorities of a “Preferred Company” tax rate that was retroactively applied to fiscal 2018 and subsequent fiscal years.
The provision for income taxes in fiscal 2024 included a benefit of ($117,000) related to the approval by the Israel tax authorities of a “Preferred Company” tax rate that was retroactively applied to fiscal 2023.
Accordingly, we depend on obtaining and shipping orders in the same quarter to achieve our revenue objectives. In addition, the timing of product releases, purchase 38 Table of Contents orders and product availability could result in significant product shipments at the end of a quarter.
Accordingly, we depend on obtaining and shipping orders in the same quarter to achieve our revenue objectives. In addition, the timing of product releases, purchase orders and product availability could result in significant product shipments at the end of a quarter. Failure to ship these products by the end of the quarter may adversely affect our operating results.
The fair value allocated to patents was $3.5 million and the residual value allocated to goodwill was $8.0 million. 41 Table of Contents Results of Operations The following table sets forth statement of operations data as a percentage of net revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ ​ ​ 2023 ​ ​ 2022 ​ Net revenues ​ 100.0 % ​ 100.0 % Cost of revenues ​ 40.4 ​ ​ 44.5 ​ Gross profit ​ 59.6 ​ ​ 55.5 ​ Operating expenses: ​ ​ ​ ​ ​ ​ Research and development ​ 79.3 ​ ​ 73.9 ​ Selling, general and administrative ​ 33.5 ​ ​ 30.6 ​ Total operating expenses ​ 112.8 ​ ​ 104.5 ​ Loss from operations ​ (53.2) ​ ​ (49.0) ​ Interest and other income (expense), net ​ 0.7 ​ ​ (0.2) ​ Loss before income taxes ​ (52.5) ​ ​ (49.2) ​ Provision (benefit) for income taxes ​ 1.3 ​ ​ (0.2) ​ Net loss ​ (53.8) ​ ​ (49.0) ​ ​ Fiscal Year Ended March 31, 2023 Compared to Fiscal Year Ended March 31, 2022 Net Revenues.
Results of Operations The following table sets forth statement of operations data as a percentage of net revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ ​ ​ 2024 ​ ​ 2023 ​ Net revenues ​ 100.0 % ​ 100.0 % Cost of revenues ​ 45.7 ​ ​ 40.4 ​ Gross profit ​ 54.3 ​ ​ 59.6 ​ Operating expenses: ​ ​ ​ ​ ​ ​ Research and development ​ 99.7 ​ ​ 79.3 ​ Selling, general and administrative ​ 48.5 ​ ​ 33.5 ​ Total operating expenses ​ 148.2 ​ ​ 112.8 ​ Loss from operations ​ (93.9) ​ ​ (53.2) ​ Interest and other income, net ​ 1.9 ​ ​ 0.7 ​ Loss before income taxes ​ (92.0) ​ ​ (52.5) ​ Provision for income taxes ​ 0.3 ​ ​ 1.3 ​ Net loss ​ (92.3) ​ ​ (53.8) ​ ​ Fiscal Year Ended March 31, 2024 Compared to Fiscal Year Ended March 31, 2023 Net Revenues.
Net revenues decreased by 11.1% from $33.4 million in fiscal 2022 to $29.7 million in fiscal 2023. The overall average selling price of all units shipped in fiscal 2023 increased by 2.1% in fiscal 2023 compared to the prior fiscal year.
Net revenues decreased by 26.7% from $29.7 million in fiscal 2023 to $21.8 million in fiscal 2024. The overall average selling price of all units shipped in fiscal 2024 increased by 20.8% in fiscal 2024 compared to the prior fiscal year.
Furthermore, the easing of supply chain shortages and prior buffer stock purchases from significant customers have led to a decrease in fiscal 2023 revenues. 37 Table of Contents As of March 31, 2023, we had cash, cash equivalents and short-term investments of $30.6 million, with no debt.
Furthermore, the easing of supply chain shortages and prior buffer stock purchases from significant customers led to a decrease in revenues in the second half of fiscal 2023 and during fiscal 2024. As of March 31, 2024, we had cash and cash equivalents of $14.4 million, with no debt.
Failure to ship these products by the end of the quarter may adversely affect our operating results. Furthermore, our customers may delay scheduled delivery dates and/or cancel orders within specified timeframes without significant penalty. We sell our products through our direct sales force, international and domestic sales representatives and distributors.
Furthermore, our customers may delay scheduled delivery dates and/or cancel orders within specified timeframes without significant penalty. We sell our products through our direct sales force, international and domestic sales representatives and distributors.
Although it is difficult to estimate the length or gravity of the continued inflationary pressures and rising interest rates, the impact of recent bank failures, significant fluctuations in energy prices and the decline in the global economic environment, are expected to have an adverse effect on our results of operations, financial position, including potential impairments, and liquidity in fiscal 2024.
Although it is difficult to estimate the length or gravity of the continued inflationary pressures and higher interest rates, the evolving conflict in the Middle East and the decline in the global economic environment, are expected to have an adverse effect on our results of operations, financial position, including potential impairments, and liquidity into fiscal 2025. Revenues.
We had cash, cash equivalents, short term investments and long-term investments totaling $30.6 million at March 31, 2023. These amounts were invested primarily in money market funds, certificates of deposit and agency bonds. The cash, cash equivalents and short-term marketable securities are held for working capital purposes. We do not enter into investments for trading or speculative purposes.
We had cash and cash equivalents totaling $14.4 million at March 31, 2024. These amounts were invested primarily in money market funds. The cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes.
Investment activities in fiscal 2022 primarily consisted of the maturity of certificates of deposit and agency bonds of $12.1 million partially offset by the purchase of certificates of deposit of $7.2 million.
Investment activities in fiscal 2023 primarily consisted of the maturity of certificates of deposit and agency bonds of $7.0 million partially offset by the purchase of property and equipment of $316,000.
As of March 31, 2023, the accrual for potential payment of contingent consideration was $1.1 million.
As of March 31, 2024, the accrual for potential payment of contingent consideration was $160,000.
Earnout amounts of $750,000 were paid in the fiscal year ended March 31, 2019 based on the achievement of certain product development milestones. Earnout payments, up to a maximum of $30.0 million, equal to 5% of net revenues from the sale of qualifying products in excess of certain thresholds, will be made quarterly through December 31, 2025.
Earnout payments, up to a maximum of $30.0 million, equal to 5% of net revenues from the sale of qualifying products in excess of certain thresholds, will be made quarterly through December 31, 2025.
We have a team in-place with tremendous depth and breadth of experience and knowledge, with a legacy business that is providing an ongoing source of funding for the development of new product lines. We have a strong balance sheet and liquidity position that we anticipate will provide financial flexibility and security in the current environment of economic uncertainty.
We have a team in-place with tremendous depth and breadth of experience and knowledge, with a legacy business that is providing an ongoing source of funding for the development of new product lines.
In addition, if actual market conditions are more favorable than expected, inventory previously written down may be sold to customers resulting in lower cost of sales and higher income from operations than expected in that period. ​ Accounting for Income Taxes.
These factors contribute to the risk that we may be required to record additional inventory write-downs in the future, which could be material. In addition, if actual market conditions are more favorable than expected, inventory previously written down may be sold to customers resulting in lower cost of sales and higher income from operations than expected in that period.
Sales to networking and telecommunications OEMs accounted for 32% to 53% of our net revenues during our last three fiscal years.
Substantially all of our revenues are derived from sales of our Very Fast SRAM products. Sales to networking and telecommunications OEMs accounted for 32% to 49% of our net revenues during our last three fiscal years.
Interest income increased by $252,000 due to higher interest rates received on cash and short-term and long-term investments, partially offset by lower levels of short-term and long-term investments. The foreign currency exchange loss decreased from ($131,000) in fiscal 2022 to ($121,000) in fiscal 2023.
Interest income and other (expense), net increased from income of $202,000 in fiscal 2023 to income of $414,000 in fiscal 2024. Interest income increased by $232,000 due to higher interest rates received on cash and short-term investments. The foreign currency exchange loss increased from ($121,000) in fiscal 2023 to ($127,000) in fiscal 2024.
However, with no debt and substantial liquidity, we believe we are in a better financial position than many other companies of our size. Our revenues in recent years have been impacted by changes in customer buying patterns and communication limitations related to COVID-19 restrictions that required a significant number of our customer contacts to work from home.
Our revenues in recent years were impacted by changes in customer buying patterns and communication limitations related to COVID-19 restrictions that required a significant number of our customer contacts to work from home.
The reduction in research and development spending in fiscal 42 Table of Contents 2023 reflects the impact of cost reduction measures implemented in the quarter ended December 31, 2022.
Research and development expenses decreased 7.9% from $23.6 million in fiscal 2023 to $21.7 million in fiscal 2024. The reduction in research and development spending in fiscal 2024 reflects the impact of cost reduction measures implemented in the quarter ended December 31, 2022.
We believe that during the next 12 months, continued inflationary pressures and rising interest rates will continue to negatively impact general economic activity and demand in our end markets.
Our level of cash equivalents has historically been sufficient to meet our current and 39 Table of Contents longer term operating and capital needs. We believe that during the next 12 months, continued inflationary pressures and higher interest rates will continue to negatively impact general economic activity and demand in our end markets.
While recent customer order patterns have been particularly variable, these fluctuations are related to economic and external factors, which include the rapid rise in energy prices, worldwide inflationary pressures, rising interest rates and the decline in the global economic environment . Cost of Revenues.
Shipments to Nokia will continue to fluctuate on a quarterly basis as a result of demand and shipments to its end customers. While recent customer order patterns have been particularly variable, these fluctuations are related to economic and external factors, which include worldwide inflationary pressures, higher interest rates and the decline in the global economic environment .
Direct sales to contract manufacturers and consignment warehouses accounted for 19.8%, 31.0% and 43.7% of our net revenues for fiscal 2023, 2022 and 2021, respectively. Sales to foreign and domestic distributors accounted for 77.5%, 66.8% and 54.7% of our net revenues for fiscal 2023, 2022 and 2021, respectively.
Sales to foreign and domestic distributors accounted for 76.4%, 77.5% and 66.8% of our net revenues for fiscal 2024, 2023 and 2022, respectively.
The primary uses of cash in fiscal 2022 were the net loss of $16.4 million and increases in accounts receivable, inventory and accrued expenses and other liabilities. The uses of cash in fiscal 2022 were less than the net loss due to non-cash items including stock-based compensation of $3.0 million and depreciation and amortization expenses of $1.0 million.
The uses of cash in fiscal 2024 were less than the net loss due to non-cash items including stock-based compensation of 44 Table of Contents $2.8 million and depreciation and amortization expenses of $927,000. The primary source of cash in fiscal 2024 was a decrease in inventories of $1.3 million.
Cost of revenues included a provision for excess and obsolete inventories of $226,000 in fiscal 2023 compared to $402,000 in fiscal 2022. Cost of revenues included stock-based compensation expense of $202,000 and $248,000, respectively, in fiscal 2023 and fiscal 2022. Gross Profit. Gross profit decreased by 4.6% from $18.5 million in fiscal 2022 to $17.7 million in fiscal 2023.
Cost of revenues included stock-based compensation expense of $228,000 and $202,000, respectively, in fiscal 2024 and fiscal 2023. Gross Profit. Gross profit decreased by 33.1% from $17.7 million in fiscal 2023 to $11.8 million in fiscal 2024. Gross margin decreased from 59.6% in fiscal 2023 to 54.3% in fiscal 2024.
Accordingly, a significant percentage of our net revenues is derived from sales to these contract manufacturers and to consignment warehouses. In addition, a significant portion of our sales are made to foreign and domestic distributors who resell our products to OEMs, as well as their contract manufacturers.
In addition, a significant portion of our sales are 40 Table of Contents made to foreign and domestic distributors who resell our products to OEMs, as well as their contract manufacturers. Direct sales to contract manufacturers accounted for 20.5%, 19.8% and 31.0% of our net revenues for fiscal 2024, 2023 and 2022, respectively.
Transfer of control occurs at the time of shipment or at the time the product is pulled from consignment as that is the point at which delivery has occurred, title and the risks and rewards of ownership have passed to the customer, and we have a right to payment.
Transfer of control occurs at the time of shipment, title and the risks and rewards of ownership have passed to the customer, and we have a right to payment. Thus, we will recognize revenue upon shipment of the product for direct sales and sales to our distributors.
The allocation of the purchase price to acquired identifiable intangible assets and goodwill was based on their estimated fair values at the date of acquisition.
Re-measurement of the contingent consideration liability during the fiscal year ended March 31, 2024 resulted in a decrease of the contingent consideration liability of $0.9 million. 42 Table of Contents The allocation of the purchase price to acquired identifiable intangible assets and goodwill was based on their estimated fair values at the date of acquisition.
We believe that continued investment in research and development is critical to our long-term success, and we expect to continue to devote significant resources to product development activities. In particular, we are devoting substantial resources to the development of a new category of in-place associative computing products.
We incurred charges of $2.4 million for a pre-production mask set for our APU2 during the quarter ended December 31, 2023. We believe that continued investment in research and development is critical to our long-term success, and we expect to continue to devote significant resources to product development activities.
We have experienced increased costs as a result of supply chain constraints for wafers and outsourced assembly, burn-in and test operations. We expect these increased manufacturing costs will continue into fiscal 2024.
We have experienced increased costs as a result of supply chain constraints for wafers and outsourced assembly, burn-in and test operations. We review our manufacturing costs on a regular basis and pass on any cost increases to our customers when it makes sense to do so.
The decrease in research and development spending was primarily related to decreases of $1.7 million in payroll related expenses and $360,000 in stock-based compensation expense, partially offset by increases of $436,000 in outside consulting expenses and $253,000 in software maintenance expense.
The decrease in research and development spending was primarily related to decreases of $2.2 million in payroll related expenses and $1.4 million in outside consulting expenses for the development of our APU-2 product. The decrease in research and development spending was partially offset by an increase in pre-production mask costs of $2.4 million related to our APU-2 product.
Cost of revenues decreased by 19.1% from $14.8 million in fiscal 2022 to $12.0 million in fiscal 2023. Cost of revenues decreased as a result of the lower volume of units shipped in fiscal 2023 compared to fiscal 2022 as discussed above.
Cost of revenues decreased as a result of the lower volume of units shipped in fiscal 2024 compared to fiscal 2023 as discussed above. Cost of revenues included a provision for excess and obsolete inventories of $180,000 in fiscal 2024 compared to $226,000 in fiscal 2023.
Research and development expenses included stock-based compensation expense of $1.3 million and $1.7 million in fiscal 2023 and fiscal 2022, respectively. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 1.4% from $10.2 million in fiscal 2022 to $10.4 million in fiscal 2023.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 6.3% from $9.9 million in fiscal 2023 to $10.6 million in fiscal 2024.
Selling, general and administrative expenses included stock-based compensation expense of $951,000 and $1.1 million, respectively, in fiscal 2023 and fiscal 2022. Interest and Other Income (Expense), Net. Interest and other income (expense), net increased from an expense of $60,000 in fiscal 2022 to income of $202,000 in fiscal 2023.
Decreases of $554,000 in payroll related expenses and $196,000 in outside sales representative commissions were partially offset by increases of $284,000 in outside consultants and $234,000 in professional fees. Selling, general and administrative expenses included stock-based compensation expense of $1.2 million and $951,000 in fiscal 2024 and fiscal 2023, respectively. Interest Income and Other (Expense), Net.
Changes in any of the inputs may result in significant adjustments to the recorded fair value. Re-measurement of the contingent consideration liability during the fiscal year ended March 31, 2023 resulted in a decrease of the contingent consideration liability of $1.9 million.
Changes in any of the inputs may result in significant adjustments to the recorded fair value.
The portion of the retention payment made to the other former MikaMonu shareholders (approximately $1.3 million) plus the maximum amount of the potential earnout payments totals approximately $30.0 million at March 31, 2023. We determined that the fair value of this contingent consideration liability was $5.8 million at the acquisition date.
We determined that the fair value of this contingent consideration liability was $5.8 million at the acquisition date.
Shipments to Nokia will continue to fluctuate as a result of demand and shipments to its end customers. Shipments of our SigmaQuad product line accounted for 49.1% of total shipments in fiscal 2023 compared to 51.2% of total shipments in fiscal 2022.
Shipments of our SigmaQuad product line accounted for 51.2% of total shipments in fiscal 2024 compared to 49.1% of total shipments in fiscal 2023 Cost of Revenues. Cost of revenues decreased by 17.2% from $12.0 million in fiscal 2023 to $9.9 million in fiscal 2024.
We cannot assure you that additional equity or debt financing, if required, will be available on terms that are acceptable or at all.
We sold 133,000 shares pursuant to the offering at an average price of $4.20 for proceeds of $542,000, less offering costs of $389,000 during the quarter ended September 30, 2023. We cannot assure that additional equity or debt financing, if required, will be available on terms that are acceptable or at all.
Direct and indirect sales to Nokia, currently our largest customer, decreased by $4.6 million from $9.6 million in fiscal 2022 to $5.0 million fiscal 2023 due to buffer stock purchases in fiscal 2022 which did not recur in fiscal 2023 as supply shortages eased.
The networking and telecommunications markets represented 34% and 32% of shipments in fiscal 2024 and in fiscal 2023, respectively. Direct and indirect sales to Nokia, currently our largest customer, decreased by $500,000 from $5.0 million in fiscal 2023 to $4.5 million fiscal 2024.
Removed
Our results for the fiscal years ended March 31, 2021 and 2022 demonstrated the challenges that we have faced during the COVID-19 global pandemic, which restricted the activities of our sales force and distributors, reduced customer demand and caused the postponement of investment in certain customer sectors.
Added
We have solutions to accelerate multimodal vector search as an on-prem or SaaS solution for OpenSearch and general Fast Vector Search, and for processing large area SAR images in real-time at high resolution.
Removed
These challenges impacted us as we entered new markets and engaged with target customers to sell our new APU product. Industry conferences and on-site training workshops, which are typically used for building a sales pipeline, were limited due to COVID-19 related restrictions.
Added
Our balance sheet and liquidity position has been strengthened by the recent sale of our Sunnyvale, California property, which we anticipate will provide further financial flexibility and security in the current environment of economic uncertainty. Generally, our primary source of liquidity is cash equivalents.
Removed
We adapted our sales strategies for the COVID-19 environment, where we could not have face-to-face meetings and conduct secure meetings with government and defense customers.
Added
As of March 31, 2024, none of the revenue targets have been achieved and no revenue based earnout payments have been paid to the former MikaMonu shareholders. The maximum amount of the remaining potential earnout payments totals approximately $30.0 million at March 31, 2024.

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