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What changed in EVERSPIN TECHNOLOGIES INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of EVERSPIN TECHNOLOGIES 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.

+185 added−224 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in EVERSPIN TECHNOLOGIES INC.'s 2024 10-K

185 paragraphs added · 224 removed · 161 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIntellectual Property Our success depends, in part, on our ability to protect our products and technologies from unauthorized third-party copying and use. To accomplish this, we rely on a combination of intellectual property rights, including patents, trade secrets, copyrights, and trademarks, as well as customary contractual protections.
Biggest changeTo accomplish this, we rely on a combination of intellectual property rights, including patents, trade secrets, copyrights, and trademarks, as well as customary contractual protections. As of December 31, 2024, we held 563 issued patents that expire at various times between March 2025 and January 2043 and had 131 patent applications pending.
Furthermore, the STT-MRAM based configuration memory can be programmed multiple times with OTA updates or can be hard coded depending on the application. Since STT-MRAM can be scaled to advanced nodes and is already available on 22nm, monolithic embedded solutions are possible, we believe this solution is ideal for next generation FPGAs.
Furthermore, the STT-MRAM based configuration memory can be programmed multiple times with OTA updates or can be hard coded depending on the application. Since STT-MRAM can be scaled to advanced nodes and is already available on 22nm, monolithic embedded solutions are possible and we believe this solution is ideal for next generation FPGAs.
Our corporate website is at www.Everspin.com . 10 Table of Contents Available Information Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are available free of charge on our website, as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.
Our corporate website is at www.Everspin.com . 9 Table of Contents Available Information Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are available free of charge on our website, as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.
We have never had an end-of-life event for any of our Toggle MRAM products which enables our customers to design in a product with the assurance that it will be available for many years to come. Spin-Transfer Torque MRAM STT-MRAM technology can be tuned to deliver products in Dynamic Random Access Memory (DRAM), SRAM and NOR Flash applications.
We have never had an end-of-life event for any of our Toggle MRAM products which enables our customers to design a product incorporating our technology with the assurance that it will be available for many years to come. Spin-Transfer Torque MRAM STT-MRAM technology can be tuned to deliver products in Dynamic Random Access Memory (DRAM), SRAM and NOR Flash applications.
With over 15 years of MRAM technology and manufacturing leadership, our memory solutions deliver significant value to our customers in key markets such as industrial, medical, automotive/transportation, aerospace, and data center. We are the leading supplier of discrete MRAM components and a successful licensor of our broad portfolio of related technology intellectual property.
With over 15 years of MRAM technology and manufacturing leadership, our memory solutions deliver significant value to our customers in key markets such as industrial, medical, automotive/transportation, aerospace and defense, and data center. We are the leading supplier of discrete MRAM components and a successful licensor of our broad portfolio of related technology and intellectual property.
Wafer Manufacturing We perform BEOL manufacturing for our Toggle MRAM products and provide foundry services for licensed MRAM products and Magnetic Tunnel Junction (MTJ)-based sensors in our 200mm manufacturing facility. Our facility is in an ISO-4 clean room and our manufacturing line is ISO 9001:2015 certified.
Wafer Manufacturing We perform BEOL manufacturing for our Toggle MRAM products and provide foundry services for licensed MRAM products and Magnetic Tunnel Junction (MTJ)-based sensors in our leased 200mm manufacturing facility. Our facility is in an ISO-4 clean room and our manufacturing line is ISO 9001:2015 certified.
Arrangements with GLOBALFOUNDRIES Joint Development Agreement Since October 17, 2014, we have participated in a joint development agreement with GLOBALFOUNDRIES Inc., a semiconductor foundry, for the joint development of STT-MRAM technology to produce a family of discrete and embedded MRAM technologies.
Arrangements with GLOBALFOUNDRIES Joint Development Agreement Since October 17, 2014, we have participated in a joint development agreement with GLOBALFOUNDRIES, a semiconductor foundry, for the joint development of STT-MRAM technology to produce a family of discrete and embedded MRAM technologies.
Our ability to compete successfully in the market for our products is based on a number of factors, including: ● our products’ attributes and specifications; ● customer adoption of MRAM technology despite the price per bit premium of our products versus competing technologies; ● successful controller supplier and customer engagements throughout the product life cycle; ● high quality and reliability as measured by our customers; ● the ease of implementation of our products by customers; ● preferred supplier status at numerous customers and ODMs; ● manufacturing expertise and strength; ● product manufacturing yield analysis and testing; ● manufacturing capacity and allocation; ● reputation and strength of customer relationships; ● competitive pricing in the market against the competition while maintaining our gross margin profile; and 9 Table of Contents ● our success in meeting the needs of future customer requirements through continued development of new products.
Our ability to compete successfully in the market for our products is based on a number of factors, including: ● our products’ attributes and specifications; ● customer adoption of MRAM technology despite the price per bit premium of our products versus competing technologies; ● successful controller supplier and customer engagements throughout the product life cycle; ● high quality and reliability as measured by our customers; ● the ease of implementation of our products by customers; ● preferred supplier status at numerous customers and ODMs; ● manufacturing expertise and strength; ● product manufacturing yield analysis and testing; ● manufacturing capacity and allocation; ● reputation and strength of customer relationships; ● competitive pricing in the market against the competition while maintaining our gross margin profile; and ● our success in meeting the needs of future customer requirements through continued development of new products.
We purchase industry-standard complementary metal-oxide semiconductor (CMOS) wafers from semiconductor foundries and perform back end of line (BEOL) processing that includes our magnetic-bit technology at our 200mm fabrication facility in Chandler, Arizona. We also manufacture full-flow 300mm CMOS wafers with our STT-MRAM magnetic-bit technology integrated in BEOL as part of our strategic relationship with GLOBALFOUNDRIES.
We purchase industry-standard complementary metal-oxide semiconductor (CMOS) wafers from semiconductor foundries and perform back end of line (BEOL) processing that includes our magnetic-bit technology at our leased 200mm fabrication facility in Chandler, Arizona. We also manufacture full-flow 300mm CMOS wafers with our STT-MRAM magnetic-bit technology integrated in BEOL as part of our strategic relationship with GLOBALFOUNDRIES Inc. (GLOBALFOUNDRIES).
Due to the limitations of NOR scaling past 45nm and availability of STT-MRAM on 22nm technology, we believe there is potential for STT-MRAM to enter multiple non-volatile memory (NVM) markets where fast reads/writes, high cycle counts, and extended data retention are required.
Due to the limitations of NOR scaling past 45nm and availability of STT-MRAM on 28nm and 22nm technology nodes, we believe there is potential for STT-MRAM to enter multiple non-volatile memory (NVM) markets where fast reads/writes, high cycle counts, and extended data retention are required.
In addition, there is a security concern with the download of the configuration bit stream from the NOR to the SRAM. We have developed our STT-MRAM technology to act as the "configuration memory” in a FPGA eliminating the security concern and enabling instant-on characteristics.
In addition, there is a security concern with the download of the configuration bit stream from the NOR to the SRAM. We have developed our STT-MRAM technology to act as the "configuration memory” in a FPGA addressing the security concern and enabling instant-on characteristics.
If GLOBALFOUNDRIES manufactures, sells, or transfers wafers containing production qualified MRAM devices that utilized certain Everspin design information to its customers, GLOBALFOUNDRIES will pay royalties to us for each such wafer transferred or sold to a customer.
If GLOBALFOUNDRIES manufactures, sells, or transfers wafers containing production qualified MRAM devices that utilize certain Everspin design information to its customers, GLOBALFOUNDRIES will pay royalties to us for each such wafer transferred or sold to a customer.
Item 1. Business. General Everspin is a pioneer in the successful commercialization of Magnetoresistive Random Access Memory (MRAM) technology. Our portfolio of MRAM technologies, including Toggle MRAM and Spin-transfer Torque MRAM (STT-MRAM), is delivering superior performance, persistence and reliability in non-volatile memories that transform how mission-critical data is protected against power loss.
Item 1. Business General We are a pioneer in the successful commercialization of Magnetoresistive Random Access Memory (MRAM) technology. Our portfolio of MRAM technologies, including Toggle MRAM and Spin-transfer Torque MRAM (STT-MRAM), is delivering superior performance, persistence and reliability in non-volatile memories that transform how mission-critical data is protected against power loss.
Except for breaches of confidentiality provisions and each party’s indemnification obligations to one another under the agreement, liability under the agreement is capped at the lesser of a set amount or the total purchase price received by GLOBALFOUNDRIES from us in the 12 months immediately preceding the claim for the specific product that caused the damages.
Except for breaches of confidentiality provisions and each party’s indemnification obligations to one another under the agreement, liability under the agreement is capped at the lesser of a set amount or the total purchase price received by GLOBALFOUNDRIES from us in the 12 months immediately preceding the claim for the specific product that 7 Table of Contents caused the damages.
GLOBALFOUNDRIES also has the ability to discontinue its manufacture of any of our wafers upon due notice and 8 Table of Contents completion of the notice period. The initial term of the manufacturing agreement is for three years, which automatically renews for successive one year periods thereafter unless either party provides sufficient advance notice of non-renewal.
GLOBALFOUNDRIES also has the ability to discontinue its manufacture of any of our wafers upon due notice and completion of the notice period. The initial term of the manufacturing agreement is for three years, which automatically renews for successive one-year periods thereafter unless either party provides sufficient advance notice of non-renewal.
Our STT-MRAM products targeting DRAM replacement started production in 2017 and are currently shipping in 256Mb and 1Gb densities. These high density, high performance persistent memories are 5 Table of Contents delivering significant value to SSD, Persistent Memory Cards, Fabric Accelerator, and other applications in the data center market.
Our STT-MRAM products targeting DRAM replacement started production in 2017 and are currently shipping in 256Mb and 1Gb densities. These high density, high performance persistent memories are delivering significant value to SSD, Persistent Memory Cards, Fabric Accelerator, and other applications in the data center market.
For the same exclusivity period associated with the relevant device, GLOBALFOUNDRIES agreed not to license intellectual property developed in connection with the agreement to named competitors of ours.
For the same exclusivity period associated with the relevant device, GLOBALFOUNDRIES agreed not to license intellectual property developed in connection with the agreement to our named competitors.
For the years ended December 31, 2023 and 2022, we recorded revenue of $63.8 million and $60.0 million, gross margin of 58.4% and 56.6%, and net income of $9.1 million and $6.1 million, respectively. Our headquarters is located in Chandler, Arizona.
For the years ended December 31, 2024 and 2023, we recorded revenue of $50.4 million and $63.8 million, gross margin of 51.8% and 58.4%, and net income of $0.8 million and $9.1 million, respectively. Our headquarters is located in Chandler, Arizona.
We also maintain direct selling relationships with several strategic customers. Our direct sales representatives are located in North America, Germany, Italy, Japan, Hong Kong, and Taiwan. Our typical sales cycle consists of a sales and development process in which our field engineers and sales personnel work closely with our customers’ design engineers.
Our direct sales representatives are located in North America, Germany, Italy, Japan, Hong Kong, and Taiwan. Our typical sales cycle consists of a sales and development process in which our field engineers and sales personnel work closely with our customers’ design engineers.
During the year ended December 31, 2023, more than 1,400 end customers purchased our products. Our two largest end customers together accounted for 22% of our total revenue for the year ended December 31, 2023, and each of these customers accounted for more than 10% of our revenue during that period.
During the year ended December 31, 2024, more than 1,435 end customers purchased our products. Our two largest end customers together accounted for 37% of our total revenue for the year ended December 31, 2024 and one of these customers accounted for more than 10% of our revenue during that period.
Our four largest end customers together accounted for 24% of our total revenue for the year ended December 31, 2022, and one of those customers individually accounted for more than 10% of our total revenue during the period. Manufacturing We rely on third-party suppliers for most phases of the manufacturing process, including initial fabrication, final test, and assembly.
Our two largest end customers together accounted for 32% of our total revenue for the year ended December 31, 2023, and each of these customers accounted for more than 10% of our total revenue during the period. Manufacturing We rely on third-party suppliers for most phases of the manufacturing process, including initial fabrication, final test, and assembly.
These services allow aerospace and satellite 6 Table of Contents electronic system manufacturers to integrate our EAR99 technology that is able to withstand exposure to the levels of radiation encountered in avionics and space applications by virtue of such technology being magnetic rather than electrical charge based which would be susceptible to alpha particles.
These services allow aerospace and satellite electronic system manufacturers to integrate our EAR99 technology that is able to withstand exposure to the levels of radiation encountered in avionics and space applications by virtue of such technology being magnetic rather than electrical charge based which would be susceptible to alpha particles. 5 Table of Contents Sales and Marketing We sell our products through a direct sales channel and a network of representatives and distributors.
Sales and Marketing We sell our products through a direct sales channel and a network of representatives and distributors. The majority of our customers, and their associated contract manufacturers, buy our products through our distributors. We maintain sales, support, supply chain and logistics operations and have distributors in Asia to service the production needs of contract manufacturers.
The majority of our customers, and their associated contract manufacturers, buy our products through our distributors. We maintain sales, support, supply chain and logistics operations and have distributors in Asia to service the production needs of contract manufacturers. We also maintain direct selling relationships with several strategic customers.
These products are ideal for replacing NOR in Field Programmable Gate Array (FPGA) systems to store configuration memory and simultaneously enabling 100x faster Over The Air (OTA) updates. Today, no viable single chip solution exists except STT-MRAM.
These products are ideal for replacing NOR in Field Programmable Gate Array (FPGA) systems to store configuration memory while simultaneously enabling 100x faster Over The Air (OTA) updates.
Our STT-MRAM products are produced in 300mm fabrication facilities operated by GLOBALFOUNDRIES. 7 Table of Contents Assembly and Test Our product and test engineering teams develop and implement wafer-level and final test programs for the manufacture of our MRAM devices. We utilize third-party industry-leading assembly and test sub-contractors, including Amkor, OSE, GTC, ChipMos and UTAC.
Assembly and Test Our product and test engineering teams develop and implement wafer-level and final test programs for the manufacture of our MRAM devices. 6 Table of Contents We utilize third-party industry-leading assembly and test sub-contractors, including Amkor, OSE, GTC, ChipMos and Sigurd UTC.
These products are enabling our customers to simplify their system architecture and easily replace legacy memory components like SRAM and FRAM. They are ideal for use in electronic systems where data persistence and integrity, low power, low latency, and security are paramount, such as industrial IoT, artificial intelligence (AI), network/enterprise infrastructure, process automation and control, aeronautics/avionics, medical, and gaming.
They are ideal for use in electronic systems where data persistence and integrity, low power, low latency, and security are paramount, such as industrial IoT, artificial intelligence (AI), network/enterprise infrastructure, process automation and control, aeronautics/avionics, and medical and gaming applications.
We actively manage inventory, including automated process flows, process controls and recipe management, and we use standard equipment to manufacture our products.
We actively manage inventory, including automated process flows, process controls and recipe management, and we use standard equipment to manufacture our products. Our STT-MRAM products are produced in 300mm fabrication facilities operated by GLOBALFOUNDRIES.
We offer these products with DDR3 and DDR4 derivative interfaces, facilitating the replacement of battery-backed DRAM with STT-MRAM. STT-MRAM enabled scaling of our Toggle MRAM products to higher densities on advanced CMOS nodes. In 2022, we started production of high density (8Mb to 128Mb) STT-MRAM products on 28nm CMOS node with standardized SPI, xSPI, QSPI, and Octal SPI (OSPI) interfaces.
We offer these products with DDR3 and DDR4 derivative interfaces, facilitating the replacement of battery-backed DRAM with STT-MRAM. 4 Table of Contents STT-MRAM enabled scaling of our Toggle MRAM products to higher densities on advanced CMOS nodes.
Any failure by us to adequately control the storage, use, discharge, and disposal of regulated substances could result in significant future liabilities.
Any failure by us to adequately control the storage, use, discharge, and disposal of regulated substances could result in significant future liabilities. Employees As of December 31, 2024, we had 87 total employees in the United States, of which 86 were full-time employees and 1 was a part-time employee.
We seek to file for patents that have broad application in the semiconductor industry and that would be helpful in the magnetoresistive memory and sensor markets.
Included in our issued patents and pending applications are patents/applications in the United States, China, Europe, France, Germany, Ireland, Italy, Japan, the Netherlands, the Republic of Korea, Singapore, Taiwan, and the United Kingdom. We seek to file for patents that have broad application in the semiconductor industry and that would be helpful in the magnetoresistive memory and sensor markets.
Removed
As of December 31, 2023, we held 529 issued patents that expire at various times between March 2026 and February 2044 and had 136 patent applications pending. Included in our issued patents and pending applications are patents/applications in the United States, China, Europe, France, Germany, Ireland, Italy, Japan, the Netherlands, the Republic of Korea, Singapore, Taiwan, and the United Kingdom.
Added
In 2022, we started production of high density (4Mb to 128Mb) STT-MRAM products on 28nm CMOS node with standardized SPI, xSPI, QSPI, and Octal SPI (OSPI) interfaces. These products are enabling our customers to simplify their system architecture and easily replace legacy memory components like SRAM, FRAM and NOR Flash.
Removed
Employees As of December 31, 2023, we had 83 total employees in the United States, of which 82 were full-time employees and one was a part-time employee, along with 18 full-time equivalent and four part-time equivalent contractors and consultants in the United States, China, Germany, Italy, Japan, Malaysia, Singapore, and Taiwan.
Added
In the event of a market downturn, competition in the markets in which we operate may intensify as our customers reduce their purchase orders.
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Our competitors that are significantly larger and have greater financial, technical, marketing, distribution, customer support and other resources or more established market recognition than us, may be better positioned to accept lower prices and withstand adverse economic or market conditions. 8 Table of Contents ​ Intellectual Property Our success depends, in part, on our ability to protect our products and technologies from unauthorized third-party copying and use.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks include the following: ​ ​ ● our interests could diverge from those of our foundries, or we may not be able to agree with them on ongoing development, manufacturing and operational activities, or on the amount, timing, or nature of further investments in our joint development; ​ ● we may experience difficulties in transferring technology to a foundry; ​ ● we may experience difficulties and delays in getting to and/or ramping production at foundries; ​ ● our control over the operations of foundries is limited; 14 Table of Contents ​ ● due to financial constraints, our joint development collaborators may be unable to meet their commitments to us and may pose credit risks for our transactions with them; ​ ● due to differing business models or long-term business goals, our collaborators may decide not to join us in funding capital investment, which may result in higher levels of cash expenditures by us; ​ ● our cash flows may be inadequate to fund increased capital requirements; ​ ● we may experience difficulties or delays in collecting amounts due to us from our collaborators; ​ ● the terms of our arrangements may turn out to be unfavorable; ​ ● we are migrating toward a fabless model as 300mm production becomes required and this increases risks related to less control over our critical production processes; and ​ ● changes in tax, legal, or regulatory requirements may necessitate changes in our agreements. ​ The term of the agreement, as amended, is the completion, termination, or expiration of the last statement of work entered into pursuant to the joint development agreement. ​ If our strategic relationships are unsuccessful, our business, results of operations, or financial condition may be materially adversely affected. ​ We must continuously develop new and enhanced products, and if we are unable to successfully market our new and enhanced products for which we incur significant expenses to develop, our results of operations and financial condition will be materially adversely affected. ​ To compete effectively in our markets, we must continually design, develop, and introduce new and improved technology and products with improved features in a cost-effective manner in response to changing technologies and market demand.
Biggest changeThese risks include the following: ​ ● our interests could diverge from those of our foundries, or we may not be able to agree with them on ongoing development, manufacturing and operational activities, or on the amount, timing, or nature of further investments in our joint development; ● we may experience difficulties in transferring technology to a foundry; ● we may experience difficulties and delays in getting to and/or ramping production at foundries; ● we do not have control over the operations of foundries; ● our joint development collaborators may be unable to meet their commitments to us; 12 Table of Contents ● due to differing business models or long-term business goals, our collaborators may decide not to join us in funding capital investment, which may result in higher levels of cash expenditures by us; ● our cash flows may be inadequate to fund increased capital requirements; ● we may experience difficulties or delays in collecting amounts due to us from our collaborators; ● the terms of our arrangements may turn out to be unfavorable; ● we are migrating toward a fabless model as 300mm production becomes required and this increases risks related to less control over our critical production processes; and ● changes in tax, legal, or regulatory requirements may necessitate changes in our agreements.
We may not be able to compete successfully against current or potential competitors, which include our current or potential customers as they seek to internally develop solutions competitive with ours or as we develop products potentially competitive with their existing products. If we do not compete successfully, our market share and revenue may decline.
We may not be able to compete successfully against current or potential competitors, which include our current and potential customers as they seek to internally develop solutions competitive with ours or as we develop products potentially competitive with their existing products. If we do not compete successfully, our market share and revenue may decline.
For example, if we are unable to generate more customer adoption of our 1Gb product and address new growth opportunities with subsequent STT-MRAM products, we may not be able to materially increase our revenue.
For example, if we are unable to generate more customer adoption of our 1Gb MRAM product and address new growth opportunities with subsequent STT-MRAM products, we may not be able to materially increase our revenue.
As a result, we could be required to invest significant time and effort and to incur significant expense to redesign our products to ensure compliance with relevant standards and requirements.
As a result, we could be required to invest significant time and effort and incur significant expense to redesign our products to ensure compliance with relevant standards and requirements.
Among others, these provisions include that: ​ ● our board of directors has the right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; ​ ● our stockholders may not act by written consent or call special stockholders’ meetings; as a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions other than at annual stockholders’ meetings or special stockholders’ meetings called by the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors, the chairman of the board or the chief executive officer; ​ 24 Table of Contents ● our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; ​ ● the affirmative vote of holders of at least 66-2/3% of the voting power of all of the then outstanding shares of voting stock, voting as a single class, will be required (a) to amend certain provisions of our certificate of incorporation, including provisions relating to the size of the board, special meetings, actions by written consent and cumulative voting and (b) to amend or repeal our amended and restated bylaws, although such bylaws may be amended by a simple majority vote of our board of directors; ​ ● stockholders must provide advance notice and additional disclosures to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; and ​ ● our board of directors may issue, without stockholder approval, shares of undesignated preferred stock; the ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. ​ Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. ​ Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees. ​ Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: ● any derivative action or proceeding brought on our behalf; ● any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders; ● any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; and ● any action asserting a claim against us that is governed by the internal-affairs doctrine. ​ This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act.
Among others, these provisions include that: ​ ● our board of directors has the right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; ● our stockholders may not act by written consent or call special stockholders’ meetings; as a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions other than at annual stockholders’ meetings or special stockholders’ meetings called by the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors, the chairman of the board or the chief executive officer; ● our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; ● the affirmative vote of holders of at least 66-2/3% of the voting power of all of the then outstanding shares of voting stock, voting as a single class, will be required (a) to amend certain provisions of our certificate of incorporation, including provisions relating to the size of the board, special meetings, actions by written consent and cumulative voting and (b) to amend or repeal our amended and restated bylaws, although such bylaws may be amended by a simple majority vote of our board of directors; ● stockholders must provide advance notice and additional disclosures to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; and ● our board of directors may issue, without stockholder approval, shares of undesignated preferred stock; the ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. ​ Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. ​ Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees. ​ Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: ● any derivative action or proceeding brought on our behalf; ● any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders; ● any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; and ● any action asserting a claim against us that is governed by the internal-affairs doctrine. ​ This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act.
We rely on third parties to distribute, manufacture, package, assemble and test our products, which exposes us to a number of risks, including reduced control over manufacturing and delivery timing and potential exposure to price fluctuations, which could result in a loss of revenue or reduced profitability. ​ Although we operate an integrated magnetic fabrication line located in Chandler, Arizona, we purchase wafers from third parties and outsource the manufacturing, packaging, assembly and testing of our products to third-party foundries and assembly and testing service providers.
We rely on third parties to distribute, manufacture, package, assemble and test our products, which exposes us to a number of risks, including reduced control over manufacturing and delivery timing and potential price fluctuations, which could result in a loss of revenue or reduced profitability. ​ Although we operate an integrated magnetic fabrication line located in Chandler, Arizona, we purchase wafers from third parties and outsource the manufacturing, packaging, assembly and testing of our products to third-party foundries and assembly and testing service providers.
Additionally, any failure to properly manage the collection, handling, transfer, or disposal of personal data of employees and customers may result in regulatory penalties, bans on processing personal data or orders not to use or destroy data, enforcement actions, remediation obligations, litigation, fines, and other actions. ​ We may experience attacks on our data and/or information systems, attempts to breach our security and attempts to introduce malicious software into our IT systems.
Additionally, any failure to manage the collection, handling, transfer, or disposal of personal data of employees and customers may result in regulatory penalties, bans on processing personal data or orders not to use or destroy data, enforcement actions, remediation obligations, litigation, fines, and other actions. ​ We may experience attacks on our data and/or information systems, attempts to breach our security and attempts to introduce malicious software into our IT systems.
Additionally, certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive data. ​ Risk Factors Related to Regulatory Matters and Compliance ​ To comply with environmental laws and regulations, we may need to modify our activities or incur substantial costs, and if we fail to comply with environmental regulations, we could be subject to substantial fines or be required to have our suppliers alter their processes. ​ The semiconductor memory industry is subject to a variety of international, federal, state, and local governmental regulations directed at preventing or mitigating environmental harm, as well as to the storage, discharge, handling, generation, disposal and labeling of toxic or other hazardous substances.
Additionally, certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive data. ​ 19 Table of Contents Risk Factors Related to Regulatory Matters and Compliance ​ To comply with environmental laws and regulations, we may need to modify our activities or incur substantial costs, and if we fail to comply with environmental regulations, we could be subject to substantial fines or be required to have our suppliers alter their processes. ​ The semiconductor memory industry is subject to a variety of international, federal, state, and local governmental regulations directed at preventing or mitigating environmental harm, as well as to the storage, discharge, handling, generation, disposal and labeling of toxic or other hazardous substances.
A continued shortage of electronic components may impact us significantly and could cause us to experience extended lead times and increased prices from our suppliers, which could be significant.
A continued shortage of electronic components may impact us and could cause us to experience extended lead times and increased prices from our suppliers, which could be significant.
We manufacture MRAM products at our 200mm facility we lease in Chandler, Arizona and use a single foundry, GLOBALFOUNDRIES, for production of higher density products on advanced technology nodes, which may not have sufficient capacity to meet customer demand. The rapid pace of innovation in our industry could also render significant portions of our inventory obsolete.
We manufacture MRAM products at our leased 200mm facility in Chandler, Arizona and use a single foundry, GLOBALFOUNDRIES, for production of higher density products on advanced technology nodes, which may not have sufficient capacity to meet customer demand. The rapid pace of innovation in our industry could also render significant portions of our inventory obsolete.
Any significant disruption to or other compromise of our systems, networks or data (or those of third parties upon whom we rely), including, but not limited to, due to new system implementations, computer viruses, social-engineering attacks, personnel (including former personnel) misconduct or error, supply-chain attacks, ransomware attacks, software bugs, software or hardware failure, security breaches, facility issues, natural disasters, terrorism, war, telecommunication failures, energy blackouts, loss, theft or similar threats, could have a material adverse impact on our operations, sales, and financial results.
Any significant disruption to or other compromise of our systems, networks or data (or those of third parties upon whom we rely), including, but not limited to, due to new system implementations, computer viruses, social-engineering attacks, personnel (including former personnel) 18 Table of Contents misconduct or error, supply-chain attacks, ransomware attacks, software bugs, software or hardware failure, security breaches, facility issues, natural disasters, terrorism, war, telecommunication failures, energy blackouts, loss, theft or similar threats, could have a material adverse impact on our operations, sales, and financial results.
If current or prospective customers do not include our solutions in their products and we fail to achieve a sufficient number of design wins, our results of operations and business may be harmed. ​ The loss of one or several of our customers or reduced orders or pricing from existing customers may have a significant adverse effect on our operations and financial results. ​ We have derived and expect to continue to derive a significant portion of our revenues from a small group of customers during any particular period due in part to the concentration of market share in the semiconductor industry.
If current or prospective customers do not include our solutions in their products and we fail to achieve a sufficient number of design wins, our results of operations and business may be harmed. ​ The loss of one or several of our customers or reduced orders or pricing from existing customers may have a significant adverse effect on our operations and financial results. ​ 13 Table of Contents We have derived and expect to continue to derive a significant portion of our revenues from a small group of customers during any particular period due in part to the concentration of market share in the semiconductor industry.
Item 1A. Risk Factor s. ​ The following are important factors that could cause actual results or events to differ materially from those contained in any forward-looking statements made by us or on our behalf. The risks and uncertainties described below are not the only ones we face.
Item 1A. Risk Factors ​ The following are important factors that could cause actual results or events to differ materially from those contained in any forward-looking statements made by us or on our behalf. The risks and uncertainties described below are not the only ones we face.
If our products are not in compliance with prevailing industry standards and technical requirements for a significant period of time, we could miss opportunities to achieve crucial design wins, our revenue may decline and we may incur significant expenses to redesign our products to meet the relevant standards, which could adversely affect our business, results of operations and prospects. ​ Our success depends on our ability to attract and retain key employees, and our failure to do so could harm our ability to grow our business and execute our business strategies. ​ Our success depends on our ability to attract and retain our key employees, including our management team and experienced engineers.
If our products are not in compliance with prevailing industry standards and technical requirements for a significant period of time, we could miss opportunities to achieve crucial design wins, our revenue may decline and we may incur significant expenses to redesign our products to meet the relevant standards, which could adversely affect our business. ​ Our success depends on our ability to attract and retain key employees, and our failure to do so could harm our ability to grow our business and execute our business strategies. ​ Our success depends on our ability to attract and retain our key employees, including our management team and experienced engineers.
Our products are typically purchased pursuant to individual purchase orders. While our customers may provide us with their demand forecasts, they are not contractually committed to buy any quantity of products beyond purchase orders. Furthermore, many of our customers may increase, decrease, cancel, or delay purchase orders already in place without significant penalty.
Our products are typically purchased pursuant to individual purchase orders. While our customers may provide us with their demand forecasts, they are not contractually committed to buy any quantity of products beyond purchase orders. Furthermore, many of our customers may increase, decrease, cancel, or delay purchase orders already in place without significant penalties.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, 22 Table of Contents among other considerations, our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
Our customers also may design certain specifications and other technical requirements specific to their products and solutions. These technical requirements may change as the customer introduces new or enhanced products and solutions. ​ Our ability to compete in the future will depend on our ability to identify and comply with evolving industry standards and technical requirements.
Our customers also may design certain specifications and other technical requirements specific to their products and solutions. These technical requirements may change as the customer introduces new or enhanced products and solutions. ​ Our ability to compete will depend on our ability to identify and comply with evolving industry standards and technical requirements.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. In the event that these service providers do not properly safeguard the data that they hold, security breaches and loss of data could result.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. In the event that these service providers do not adequately safeguard the data that they hold, security breaches and loss of data could result.
These ongoing efforts require us from time to time to modify the manufacturing processes for our products and to redesign some products, which in turn may result in delays in product deliveries. ​ For example, as smaller line width geometry manufacturing processes become more prevalent, we intend to move our future products to increasingly smaller geometries to integrate greater levels of memory capacity and/or functionality into our products.
These ongoing efforts require us from time to time to modify the 14 Table of Contents manufacturing processes for our products and to redesign some products, which in turn may result in delays in product deliveries. ​ For example, as smaller line width geometry manufacturing processes become more prevalent, we intend to move our future products to increasingly smaller geometries to integrate greater levels of memory capacity and/or functionality into our products.
Excess or obsolete inventory levels could result in unexpected expenses or write-downs of inventory values that could adversely affect our business, operating results, and financial condition. As we expand into new potential markets, we expect to face intense competition, including from our customers and potential customers, and may not be able to compete effectively, which could harm our business.
Excess or obsolete inventory levels could result in unexpected expenses or write-downs of inventory values that could adversely affect our business, operating results, and financial condition. 10 Table of Contents As we expand into new potential markets, we expect to face intense competition, including from our customers and potential customers, and may not be able to compete effectively, which could harm our business.
We do not have any guarantees of supply from our third-party suppliers, and in certain cases we have limited contractual arrangements or are relying on standard purchase orders or on component parts available on the open market, which may further result in increased costs combined with reduced availability.
We do not have any guarantees of supply from our third-party suppliers, other than GLOBALFOUNDRIES, and in certain cases we have limited contractual arrangements or are relying on standard purchase orders or on component parts available on the open market, which may further result in increased costs combined with reduced availability.
For example, the European Union adopted its Restriction on Hazardous Substance Directive which prohibits, with specified exceptions, the sale in the EU market of new electrical and electronic equipment 22 Table of Contents containing more than agreed levels of lead or other hazardous materials and China has enacted similar regulations.
For example, the European Union (EU) adopted its Restriction on Hazardous Substance Directive which prohibits, with specified exceptions, the sale in the EU market of new electrical and electronic equipment containing more than agreed levels of lead or other hazardous materials and China has enacted similar regulations.
We have in the past, and may in the future, face such claims. ​ 20 Table of Contents Claims that our products, processes, or technology infringe third-party intellectual property rights, regardless of their merit or resolution, could be costly to defend or settle and could divert the efforts and attention of our management and technical personnel.
We have in the past, and may in the future, face such claims. ​ Claims that our products, processes, or technology infringe third-party intellectual property rights, regardless of their merit or resolution, could be costly to defend or settle and could divert the efforts and attention of our management and technical personnel.
Moreover, even if a customer selects our solution, we cannot guarantee that this will result in any sales of our products, as the customer may ultimately change or cancel its product plans, or efforts by our customer to market and sell its 15 Table of Contents product may not be successful.
Moreover, even if a customer selects our solution, we cannot guarantee that this will result in any sales of our products, as the customer may ultimately change or cancel its product plans, or efforts by our customer to market and sell its product may not be successful.
Typically, minimum acceptable yields for our new products are generally lower at first and gradually improve as we achieve full production but yield issues can occur even in mature processes due to break downs in mechanical systems, equipment failures or calibration errors.
Typically, minimum acceptable yields for our new products are generally lower at first and gradually improve as we achieve full production but yield issues can occur even in mature processes due to breakdowns in mechanical systems, equipment failures or calibration errors.
From time to time, we and/or the third-party foundries that we contract to manufacture our products may experience manufacturing defects and reduced manufacturing yields. In some cases, we and/or our third-party foundries may not be able to detect these defects early in the fabrication process or determine the cause of such defects in a timely manner.
From time to time, we and/or the third-party foundries with which we contract to manufacture our products may experience manufacturing defects and reduced manufacturing yields. In some cases, we and/or our third-party foundries may not be able to detect these defects early in the fabrication process or determine the cause of such defects in a timely manner.
Moreover, if we are unable to find another foundry to manufacture our products or if we have to redesign our core technology, this could cause material harm to our business and operating results. ​ 13 Table of Contents If we need other foundries or packaging, assembly, and testing contractors, or if we are unable to obtain timely and adequate deliveries from our providers, we might not be able to cost-effectively and quickly retain other vendors to satisfy our requirements.
Moreover, if we are unable to find another foundry to manufacture our products or if we have to redesign our core technology, this could cause material harm to our business and operating results. ​ If we need other foundries or packaging, assembly, and testing contractors, or if we are unable to obtain timely and adequate deliveries from our providers, we might not be able to cost-effectively and quickly retain other vendors to satisfy our requirements.
We compete with large semiconductor manufacturers and designers and others, and our current and 12 Table of Contents potential competitors have longer operating histories, significantly greater resources and name recognition and a larger base of customers than we do. This may allow them to respond more quickly than we can to new or emerging technologies or changes in customer requirements.
We compete with large semiconductor manufacturers and designers and others, and some of our current and potential competitors have longer operating histories, significantly greater resources and name recognition and a larger base of customers than we do. This may allow them to respond more quickly than we can to new or emerging technologies or changes in customer requirements.
As a result, we might not be able to utilize a material portion of our state NOLs and tax credits. ​ Risks Related to Our Common Stock ​ We expect that the price of our common stock will fluctuate substantially. ​ The market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including: ​ ● the introduction of new products or product enhancements by us or others in our industry; ​ 23 Table of Contents ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, capital commitments or restructurings; ​ ● disputes or other developments with respect to our or others’ intellectual property rights; ​ ● product liability claims or other litigation; ​ ● quarterly variations in our results of operations or those of others in our industry; ​ ● sales of large blocks of our common stock, including sales by our executive officers and directors; ​ ● changes in senior management or key personnel; ​ ● changes in earnings estimates or recommendations by securities analysts; and ​ ● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors, including the effects of COVID-19 and the military conflict in Ukraine. ​ Stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
As a result, we might not be able to utilize a material portion of our state NOLs and tax credits. ​ Risks Related to Our Common Stock ​ We expect that the price of our common stock will fluctuate substantially. ​ The market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including: ​ ● the introduction of new products or product enhancements by us or others in our industry; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, capital commitments or restructurings; ● disputes or other developments with respect to our or others’ intellectual property rights; ● product liability claims or other litigation; ● quarterly variations in our results of operations or those of others in our industry; ● sales of large blocks of our common stock, including sales by our executive officers and directors; ● changes in senior management or key personnel; ● changes in earnings estimates or recommendations by securities analysts; and ● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors, including the effects of health-related events or outbreaks and the military conflict between Russia and Ukraine. ​ Stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
We also rely on achieving specific cost reduction targets that have uncertainty in their timing and magnitude. We may also incur unforeseen expenses in the ongoing operation of our 11 Table of Contents business that cause us to exceed our operational spending plan.
We also rely on achieving specific cost reduction targets that have uncertainty in their timing and magnitude. We may also incur unforeseen expenses in the ongoing operation of our business that cause us to exceed our operational spending plan.
In addition, the time and expense to qualify a new foundry could result in additional expense, diversion of resources or lost sales, any of which would negatively impact our financial results. ​ If any of our current or future foundries or packaging, assembly and testing subcontractors significantly increases the costs of wafers or other materials or services, interrupts or reduces our supply, including for reasons outside of their control, such as due to COVID-19, or if any of our relationships with our suppliers is terminated, our operating results could be adversely affected.
In addition, the time and expense to qualify a new foundry could result in additional expense, diversion of resources or lost sales, any of which would negatively impact our financial results. ​ If any of our current or future foundries or packaging, assembly and testing subcontractors significantly increases the costs of wafers or other materials or services, interrupts or reduces our supply, including for reasons outside of their control, such as due to health-related events or outbreaks, or if any of our relationships with our suppliers is terminated, our operating results could be adversely affected.
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders 21 Table of Contents to replace members of our board of directors.
However, we cannot assure our stockholders that these contractual protections and security measures will not be breached, that we will have adequate remedies for any such breach or that our customers, suppliers, distributors, employees, or consultants will not assert rights to intellectual property or damages arising out of such contracts. ​ We may initiate claims against third parties to protect our intellectual property rights if we are unable to resolve matters satisfactorily through negotiation.
However, we cannot ensure that these contractual protections and security measures will not be breached, that we will have adequate 17 Table of Contents remedies for any such breach or that our customers, suppliers, distributors, employees, or consultants will not assert rights to intellectual property or damages arising out of such contracts. ​ We may initiate claims against third parties to protect our intellectual property rights if we are unable to resolve matters satisfactorily through negotiation.
Our revenue may also be adversely impacted by a number of other possible reasons, many of which are outside our control, including business conditions that adversely affect the semiconductor memory industry resulting in a decline in end market demand for our products, adverse impacts resulting from COVID-19, increased competition, ongoing supply chain constraints, or our failure to capitalize on growth opportunities.
Our revenue may also be adversely impacted by a number of other possible reasons, many of which are outside our control, including business conditions that adversely affect the semiconductor memory industry resulting in a decline in end market demand for our products, adverse impacts resulting from health-related events or outbreaks, increased competition, ongoing supply chain constraints, or our failure to capitalize on growth opportunities.
However, our manufacturing arrangement is also subject to both a minimum and maximum order quantity that while we believe currently addresses our projected foundry capacity needs, may not address our maximum foundry capacity requirements in the future. We may also be obligated to pay for unused capacity if our demand decreases in the future, or if our estimates prove inaccurate.
Our manufacturing arrangement is also subject to both a minimum and maximum order quantity, which we believe currently addresses our projected foundry capacity needs, but may not address our maximum foundry capacity requirements in the future. We may also be obligated to pay for unused capacity if our demand decreases in the future, or if our estimates prove inaccurate.
Additionally, future or past business 21 Table of Contents transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Any of the foregoing could adversely affect our business, financial condition, results of operations and cash flows. ​ Our business may be adversely impacted by natural disasters and other catastrophic events. ​ Our operations and business, and those of our manufacturing partners, customers, distributors, or suppliers, can be disrupted by natural disasters; industrial accidents; public health issues, such as COVID-19; cybersecurity incidents; interruptions of service from utilities, transportation, telecommunications, or IT systems providers; manufacturing equipment failures; or other catastrophic events.
Any of the foregoing could adversely affect our business, financial condition, results of operations and cash flows. ​ Our business may be adversely impacted by natural disasters and other catastrophic events. ​ Our operations and business, and those of our manufacturing partners, customers, distributors, or suppliers, can be disrupted by natural disasters; industrial accidents; public health-related events or outbreaks; cybersecurity incidents; interruptions of service from utilities, transportation, telecommunications, or IT systems providers; manufacturing equipment failures; or other catastrophic events.
Because the lead time needed to establish a relationship with a new third-party supplier could be several quarters, there is no readily available alternative source of supply for any specific component.
Because the lead time needed to establish a relationship with a new third-party supplier could be several quarters, there may not be any readily available alternative source of supply for any specific component.
If we lose the services of any key senior management member or employee, we may not be able to locate suitable or qualified replacements, and may incur additional expenses to recruit and train new 18 Table of Contents personnel, which could severely impact our business and prospects.
If we lose the services of any key senior management member or employee, we may not be able to attract suitable or qualified replacements, and may incur additional expenses to recruit and train new personnel, which could severely impact our business and prospects.
We also use standard CMOS wafers from third-party foundries, which we process at our Chandler, Arizona facility. ​ Relying on third-party distribution, manufacturing, assembly, packaging, and testing presents a number of risks, including but not limited to: ​ ​ ● our interests could diverge from those of our foundries, or we may not be able to agree with them on ongoing development, manufacturing and operational activities, or on the amount, timing, or nature of further investments in our joint development; ​ ● capacity and materials shortages during periods of high demand or supply constraints; ​ ● reduced control over delivery schedules, inventories and quality; ​ ● the unavailability of, or potential delays in obtaining access to, key process technologies; ​ ● the inability to achieve required production or test capacity and acceptable yields on a timely basis; ​ ● misappropriation of our intellectual property; ​ ● the third party’s ability to perform its obligations due to bankruptcy or other financial constraints; ​ ● exclusive representatives for certain customer engagements; ​ ● limited warranties on wafers or products supplied to us; and ​ ● potential increases in prices including due to inflation. ​ Our manufacturing agreement with GLOBALFOUNDRIES includes a customary forecast and ordering mechanism for the supply of certain of our wafers, and we are obligated to order and pay for, and GLOBALFOUNDRIES is obligated to supply, wafers consistent with the binding portion of our forecast.
We also use standard CMOS wafers from third-party foundries, which we process at our Chandler, Arizona facility. ​ Relying on third-party distribution, manufacturing, assembly, packaging, and testing presents a number of risks, including but not limited to: ​ ● our interests could diverge from those of our foundries, or we may not be able to agree with them on ongoing development, manufacturing and operational activities, or on the amount, timing, or nature of further investments in our joint development; ● capacity and materials shortages during periods of high demand or supply constraints; ● reduced control over delivery schedules, inventories and quality; ● the unavailability of, or potential delays in obtaining access to, key process technologies; ● the inability to achieve required production or test capacity and acceptable yields on a timely basis; ● misappropriation of our intellectual property; ● the third party’s ability to perform its obligations due to bankruptcy or other financial constraints; ● exclusive representatives for certain customer engagements; ● limited warranties on wafers or products supplied to us; and ● potential increases in prices including due to tariffs and/or inflation.
The federal NOLs generated prior to 2018 will continue to be governed by the NOL tax rules as they existed prior to the adoption of the 2017 Tax Cuts and Jobs Act (2017 Tax Act) , which means that generally they will expire 20 years after they were generated if not used prior thereto.
The federal NOLs generated prior to 2018 will continue to be governed 20 Table of Contents by the NOL tax rules as they existed prior to the adoption of the 2017 Tax Act, which means that generally they will expire 20 years after they were generated if not used prior thereto.
As of December 31, 2023, we had cash and cash equivalents of approximately $36.9 million. Based on our current operating plan, we believe our existing cash and cash equivalents, coupled with our anticipated growth and sales levels, will be sufficient to meet our anticipated cash requirements for at least the next 12 months.
As of December 31, 2024, we had cash and cash equivalents of approximately $42.1 million. Based on our current operating plan, we believe our existing cash and cash equivalents, coupled with our anticipated growth and sales levels, will be sufficient to meet our anticipated cash requirements for at least the next 12 months.
Any significant losses that are not recoverable under our insurance policies could seriously impair our business and financial condition. ​ Item 1B. Unresolved Staff Comments. None.
Any significant losses that are not recoverable under our insurance policies could seriously impair our business and financial condition. 23 Table of Contents ​ Item 1B. Unresolved Staff Comments None.
Any time spent engaging a new manufacturer or redesigning our core technology could be costly and time consuming and may allow potential competitors to take opportunities in the marketplace.
Any time spent engaging a new manufacturer or redesigning our core technology could be costly and time 11 Table of Contents consuming and allow potential competitors to take opportunities in the marketplace.
These companies include patent holding companies or other adverse patent owners who have no relevant product revenue and against whom our own patents may provide little or no deterrence. From time to time, third parties may assert against us and our customers’ patent and other intellectual property rights to technologies that are important to our business.
These companies include patent holding companies or other adverse patent owners who have no relevant product revenue and against whom our own patents may provide little or no deterrence. From time to time, third parties may assert patent and other intellectual property rights claims against us and our customers.
The success and profitability, as well as the expansion, of our international operations are subject to numerous risks and uncertainties, many of which are outside of our control, such as the following: ​ ● public health issues, such as COVID-19, which can result in varying impacts to our business, employees, partners, customers, distributors or suppliers internationally as discussed elsewhere in this “Risk Factors” section; ​ ● difficulties, inefficiencies and costs associated with staffing and managing foreign operations; ​ ● longer and more difficult customer qualification and credit checks; ​ ● greater difficulty collecting accounts receivable and longer payment cycles; ​ ● the need for various local approvals to operate in some countries; ​ ● difficulties in entering some foreign markets without larger-scale local operations; ​ ● changes in import/export laws, trade restrictions, regulations and customs and duties and tariffs (foreign and domestic); ​ ● compliance with local laws and regulations; ​ ● unexpected changes in regulatory requirements, including the elimination of tax holidays; ​ ● reduced protection for intellectual property rights in some countries; ​ ● adverse tax consequences as a result of repatriating cash generated from foreign operations to the United States; ​ ● adverse tax consequences, including potential additional tax exposure if we are deemed to have established a permanent establishment outside of the United States; ​ ● the effectiveness of our policies and procedures designed to ensure compliance with the Foreign Corrupt Practices Act of 1977 and similar regulations; ​ ● fluctuations in currency exchange rates, which could increase the prices of our products to customers outside of the United States, increase the expenses of our international operations by reducing the purchasing power of the U.S. dollar and expose us to foreign currency exchange rate risk if, in the future, we denominate our international sales in currencies other than the U.S. dollar; ​ ● new and different sources of competition; ​ ● political, economic, and social instability; ​ 19 Table of Contents ● terrorism and acts of war, such as the military conflict in Ukraine, which could have a negative impact on sales throughout Europe and Asia; and ​ ● US Department of Commerce regulations or restrictions on exports of certain semiconductor technologies and equipment to China. ​ Our failure to manage any of these risks successfully could harm our operations and reduce our revenue. ​ Risk Factors Related to Our Intellectual Property and Technology ​ Failure to protect our intellectual property could substantially harm our business. ​ Our success and ability to compete depend in part upon our ability to protect our intellectual property.
The success and profitability, as well as the expansion, of our international operations are subject to numerous risks and uncertainties, many of which are outside of our control, such as the following: ​ ● public health-related events or outbreaks, which can result in varying impacts to our business, employees, partners, customers, distributors or suppliers internationally as discussed elsewhere in this “Risk Factors” section; ● difficulties, inefficiencies and costs associated with staffing and managing foreign operations; ● longer and more difficult customer qualification and credit checks; ● greater difficulty collecting accounts receivable and longer payment cycles; ● the need for various local approvals to operate in some countries; ● difficulties in entering some foreign markets without larger-scale local operations; ● changes in import/export laws, trade restrictions, regulations and customs and duties and tariffs (foreign and domestic); ● compliance with local laws and regulations; ● unexpected changes in regulatory requirements, including the elimination of tax holidays; ● reduced protection for intellectual property rights in some countries; ● adverse tax consequences as a result of repatriating cash generated from foreign operations to the United States; ● adverse tax consequences, including potential additional tax exposure if we are deemed to have established a permanent establishment outside of the United States; ● the effectiveness of our policies and procedures designed to ensure compliance with the Foreign Corrupt Practices Act of 1977 and similar regulations; ● fluctuations in currency exchange rates, which could increase the prices of our products to customers outside of the United States, increase the expenses of our international operations by reducing the purchasing power of the U.S. dollar and expose us to foreign currency exchange rate risk if, in the future, we denominate our international sales in currencies other than the U.S. dollar; ● new and different sources of competition; ● political, economic, and social instability; ● terrorism and acts of war, such as the military conflict between Russia and Ukraine, which could have a negative impact on the operations of our business or our customers’ businesses; and ● US Department of Commerce regulations or restrictions on exports of certain semiconductor technologies and equipment to China. 16 Table of Contents ​ Our failure to manage any of these risks successfully could harm our operations and reduce our revenue. ​ We may need additional funding and may be unable to raise capital when needed, which could force us to delay, reduce, or eliminate planned activities. ​ Our total revenue was approximately $50.4 million for the year ended December 31, 2024, and $63.8 million for the year ended December 31, 2023.
In addition to significantly harming our results of operations and cash flow, poor yields may delay shipment of our products and harm our relationships with existing and potential customers. ​ The complexity of our products may lead to defects, which could negatively impact our reputation with customers and result in liability. ​ Products as complex as ours may contain defects when first introduced to customers or as new versions are released.
In addition to significantly harming our results of operations and cash flow, poor yields may delay shipment of our products and harm our relationships with existing and potential customers. ​ Products as complex as ours may contain defects, particularly when first introduced to customers or as new versions are released.
We would likely experience significant delays or cessation in producing some of our products if a labor strike, natural disaster, public health crisis, geopolitical event, or other supply disruption were to occur, including as a result of COVID-19 or the military conflict in Ukraine, at any of our main suppliers.
We would likely experience significant delays or cessation in producing some of our products if a labor strike, natural disaster, public health crisis, geopolitical event, or other supply disruption were to occur, including health-related events or outbreaks at any of our main suppliers.
A design win occurs after a customer has tested our product, verified that it meets the customer’s requirements and qualified our solutions for their products. We believe we are dependent, among other things, on the adoption of our 256Mb and 1Gb MRAM products by our customers to secure design wins.
A design win occurs after a customer has tested our product, verified that it meets the customer’s requirements and qualified our solutions for their products. The adoption of our 256Mb and 1Gb MRAM products by our customers is critical for us to secure design wins.
This requires us to devote substantial financial and other resources to research and development. We are developing new technology and products, which we expect to be one of the drivers of our revenue growth in the future.
This requires us to devote substantial financial and other resources to research and development. We are developing new technology and products, which we expect to be one of the drivers of our revenue growth in the future. We also face the risk that customers may not elect to incorporate our new and enhanced products into their products.
Extended lead times and decreased availability of key components could result in a significant disruption to our production schedule, all of which would have an adverse effect on our business, results of operations and financial condition. Additionally, the military conflict in Ukraine creates additional uncertainty and risks relating to our supply chain and the cost of components.
Extended lead times and decreased availability of key components could result in a significant disruption to our production schedule, all of which would have an adverse effect on our business, results of operations and financial condition.
We cannot assure our stockholders that our third-party foundries will be able to effectively manage such transitions or that we will be able to maintain our relationship with our third-party foundries or develop relationships with new third-party foundries.
Our third-party foundries may not be able to effectively manage such transitions and/or we may not be able to maintain our relationship with our third-party foundries or develop relationships with new third-party foundries.
If adequate funding is not available when needed, we may be forced to curtail operations, including our commercial activities and research and development programs, or cease operations altogether, file for bankruptcy, or undertake any combination of the foregoing.
If adequate funding is not available when needed, we may be forced to curtail operations, including our commercial activities and research and development programs, or cease operations altogether, file for bankruptcy, or undertake any combination of the foregoing. ​ Further, we may need to raise additional funds through financings or borrowings in order to accomplish our long-term planned objectives.
The loss of a significant customer, a business combination among our customers, a reduction in orders or decrease in price from a significant customer or disruption in any of our commercial or distributor arrangements may result in a significant decline in our revenues and could have a material adverse effect on our business, liquidity, results of operations, financial condition, and cash flows. ​ We face competition and expect competition to increase in the future.
The loss of a significant customer, a business combination among our customers, a reduction in orders or decrease in price from a significant customer or disruption in any of our commercial or distributor arrangements may result in a significant decline in our revenues and could have a material adverse effect on our business, liquidity, results of operations, financial condition, and cash flows. ​ Our costs may increase substantially if we or our third-party manufacturing contractors do not achieve satisfactory product yields or quality.
If we do not manage these risks and overcome these difficulties successfully, our business will suffer. ​ We may be unable to match production with customer demand for a variety of reasons including macroeconomic factors due to the cyclical nature of the semiconductor industry, our inability to accurately forecast customer demand, supply chain constraints, or the capacity constraints of our suppliers, which could adversely affect our operating results. ​ We make planning and spending decisions, including determining production levels, production schedules, component procurement commitments, personnel needs, and other resource requirements, based on our estimates of product demand and customer requirements.
We cannot predict the duration or timing of any downturn or upturn in the semiconductor industry. ​ We may be unable to match production with customer demand for a variety of reasons including our inability to accurately forecast customer demand, supply chain constraints, or the capacity constraints of our suppliers, which could adversely affect our operating results. ​ We make planning and spending decisions, including determining production levels, production schedules, component procurement commitments, personnel needs, and other resource requirements, based on our estimates of product demand and customer requirements.
As of December 31, 2023, we had gross federal net operating loss carryforwards of approximately $96.2 million, of which $55.8 million will expire in 2028 through 2037 if not utilized, and $40.5 million will carryover indefinitely.
As of December 31, 2024, we had gross federal net operating loss carryforwards of approximately $89.2 million, of which $53.2 million will expire in 2030 through 2037 if not utilized, and $36 million that will carryover indefinitely.
As of December 31, 2023, we had state net operating loss carryforwards of approximately $48.7 million, of which $45.9 million will expire in 2028 through 2043 if not utilized, and $2.8 million will carryover indefinitely.
As of December 31, 2024, we had state net operating loss carryforwards of approximately $48.3 million, of which $45.5 million will expire in 2030 through 2040 if not utilized, and $2.8 million that will carry over indefinitely.
GLOBALFOUNDRIES also has the ability to discontinue its manufacture of any of our wafers upon due notice and completion of the notice period. This could cause us to have to find another foundry to manufacture those wafers or redesign our core technology and would mean that we may not have products to sell until such time.
This would cause us to have to find another foundry to manufacture those wafers or redesign our core technology and would mean that we may not have products to sell until such time.
If we are unable to successfully develop and market our new and enhanced products that we have incurred significant expenses developing, our results of operations and financial condition will be materially and adversely affected. ​ Our success and future revenue depend on our ability to secure design wins and on our customers’ ability to successfully sell the products that incorporate our solutions.
If we are unable to successfully develop and market our new and enhanced products that we have incurred significant expenses developing, our results of operations and financial condition will be materially and adversely affected. ​ We sell to customers, including OEMs and ODMs, that incorporate MRAM into their products.
We may not generate any revenue from design wins after incurring the associated costs, which would cause our business and operating results to suffer. ​ If a current or prospective customer incorporates a competitor’s solution into its product, it becomes significantly more difficult for us to sell our solutions to that customer because changing suppliers involves significant time, cost, effort, and risk for the customer even if our solutions are superior to other solutions and remain compatible with their product design.
Some of our current and potential customers with their own internally developed solutions may choose not to purchase products from third-party suppliers like us. ​ If a current or prospective customer incorporates a competitor’s solution into its product, it becomes significantly more difficult for us to sell our solutions to that customer because changing suppliers involves significant time, cost, effort, and risk for the customer even if our solutions are superior to other solutions and remain compatible with their product design.
However, our existing capital may be insufficient to meet our long-term requirements. We have no committed sources of funding and there is no assurance that additional funding will be available to us in the future or be secured on acceptable terms.
We have no committed sources of funding and there are no assurances that additional funding will be available to us in the future or on acceptable terms.
For example, any such problems could result in: ​ ● delays in development, manufacture and roll-out of new products; ​ ● additional development costs; ​ ● loss of, or delays in, market acceptance; ​ ● diversion of technical and other resources from our other development efforts; ​ ● claims for damages by our customers or others against us; and ​ ● loss of credibility with our current and prospective customers. ​ Any such event could have a material adverse effect on our business, financial condition, and results of operations. ​ 17 Table of Contents We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased expenses. ​ We aim to use the most advanced manufacturing process technology appropriate for our solutions that is available from our third-party foundries.
For example, any such problems could result in: ​ ● delays in development, manufacture and roll-out of new products; ● additional development costs; ● loss of, or delays in, market acceptance; ● diversion of technical and other resources from our other development efforts; ● claims for damages by our customers or others against us; and ● loss of credibility with our current and prospective customers. ● Any such event could have a material adverse effect on our business, financial condition, and results of operations.
Our inability to capitalize on or realize substantial revenue from our significant investments in research and development could harm our operating results and distract management, harming our business. ​ Interruptions in or other compromises of our information technology systems or data or that of third parties upon whom we rely could adversely affect our business. ​ We rely on the efficient, uninterrupted and uncompromised operation of complex information technology systems and networks (and those of third parties) to operate our business.
In addition, third parties may make infringement and similar or related claims after we have acquired technology that had not been asserted prior to the acquisition. ​ Interruptions in or other compromises of our information technology systems or data or that of third parties upon whom we rely could adversely affect our business. ​ We rely on the efficient, uninterrupted and uncompromised operation of complex information technology systems and networks (and those of third parties) to operate our business.
The ability to utilize our net operating losses and tax credits could also be impaired under state law.
Future changes in our stock ownership, many of which are outside of our control, could result in additional ownership changes under IRC Section 382 of the Code. The ability to utilize our net operating losses and tax credits could also be impaired under state law.
The loss of the services of one or more of our key employees, especially our key engineers, or our inability to attract and retain qualified engineers, could harm our business, financial condition, and results of operations. ​ We currently maintain and are seeking to expand operations outside of the United States which exposes us to significant risks. ​ The success of our business depends, in large part, on our ability to operate successfully from geographically disparate locations and to further expand our international operations and sales.
In addition, if we become unable to (or are perceived not to) successfully implement certain of our workforce initiatives, including in keeping with current or potential future laws or interpretations thereof, our ability to recruit, attract and retain talent may be adversely impacted. ​ We currently maintain and are seeking to expand operations outside of the United States which exposes us to significant risks. ​ The success of our business depends, in large part, on our ability to operate successfully from geographically disparate locations and to further expand our international operations and sales.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources. During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks. If attacks are successful, we may be unaware of the incident, its magnitude, or its effects until significant harm is done.
If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant 25 Table of Contents additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business. ​ General Risk Factors ​ Unfavorable economic and market conditions, domestically and internationally, may adversely affect our business, financial condition, results of operations and cash flows. ​ We have significant customer sales both in the United States and internationally.
If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business. ​ ​ General Risk Factors ​ We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws. ​ Our products are subject to various restrictions under U.S. export control and sanctions laws and regulations, including the U.S.
If attacks are successful, we may be unaware of the incident, its magnitude, or its effects until significant harm is done. Any such attack or disruption could result in additional costs related to rebuilding of our internal systems, defending litigation, responding to regulatory actions, or paying damages.
Any such attack or disruption could result in additional costs related to rebuilding of our internal systems, defending litigation, responding to regulatory actions, or paying damages. Such attacks or disruptions could have a material adverse impact on our business, operations, and financial results.
As a result, our ability to generate sufficient revenue growth and/or control expenses to transition to profitability and generate consistent positive cash flows is uncertain. ​ Risk Factors Related to Our Business and Our Industry ​ The limited history of STT-MRAM adoption makes it difficult to evaluate our current business and future prospects. ​ We have been in existence as a stand-alone company since 2008, when Freescale Semiconductor, Inc.
As a result, our ability to generate sufficient revenue growth and/or control expenses to transition to profitability and generate consistent positive cash flows is uncertain. ​ Risk Factors Related to Our Intellectual Property and Technology ​ Failure to protect our intellectual property could substantially harm our business. ​ Our success and ability to compete depend in part upon our ability to protect our intellectual property.
Any such loss of data by our third-party service providers could negatively impact our business, operations, and financial results, as well as our relationship with our customers. ​ While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
Any such loss of data by our third-party service providers could negatively impact our business, operations, and financial results, as well as our relationship with our customers. ​ In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, ability to provide our products or services, loss of sensitive data and income, reputational harm, and diversion of funds.
Removed
If any of the following risks or such other risks actually occurs, our business, financial condition, results of operations and cash flows could be harmed. ​ ​ Risk Factors Related to Our Financial Condition ​ We may need additional funding and may be unable to raise capital when needed, which could force us to delay, reduce, or eliminate planned activities. ​ Our total revenue was approximately $63.8 million for the year ended December 31, 2023, and $60.0 million for the year ended December 31, 2022.
Added
If any of the following risks or such other risks actually occurs, our business, financial condition, results of operations and cash flows could be harmed. ​ Risk Factors Related to Our Business and Our Industry ​ We are subject to the cyclical nature of the semiconductor industry. ​ The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, long sales cycles, rapid product obsolescence, price erosion, evolving standards, short product life cycles, and wide fluctuations in product supply and demand.
Removed
In such event, our stockholders may lose their entire investment in our company. ​ Further, we may need to raise additional funds through financings or borrowings in order to accomplish our long-term planned objectives.
Added
From time to time, these factors, together with changes in macroeconomic conditions, can cause significant upturns and downturns in the semiconductor industry, and in our business. Downturns in the semiconductor industry have been characterized by diminished product demand, production overcapacity, high inventory levels for us and our customers, and erosion of average selling prices.
Removed
Even if we are successful in defending against these claims, litigation could result in substantial costs and would be a distraction to management, and may have other unfavorable results that could further adversely impact our financial condition.
Added
Any downturns in the semiconductor industry could harm our business, financial condition, and results of operations. Any significant upturn in the semiconductor industry could result in increased competition for access to third-party foundry and assembly capacity.
Removed
(subsequently acquired by NXP Semiconductor) spun-out its MRAM business as Everspin. We have been shipping magnetoresistive random-access memory (MRAM) products since our incorporation in 2008. However, we only began to manufacture and ship our STT-MRAM products in the fourth quarter of 2017.
Added
We are dependent on the availability of this capacity to manufacture and assemble our products and we can provide no assurance that adequate capacity will be available to us in the future.
Removed
We began to manufacture our second set of STT-MRAM products targeting the NVSRAM markets in the fourth quarter of 2022. ​ Our limited experience in selling our STT-MRAM products, combined with the rapidly evolving and competitive nature of our markets, makes it difficult to evaluate our current business and future prospects.
Added
Our manufacturing agreement with GLOBALFOUNDRIES includes a forecast and ordering mechanism for the supply of certain of our wafers, and we are obligated to order and pay for, and GLOBALFOUNDRIES is obligated to supply, wafers consistent with the binding portion of our forecast.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe board of directors receives periodic reports from management and its designees concerning the Company’s significant cybersecurity threats and risks, and the processes the Company has implemented in an effort to address them. The board of directors also has access to various reports, summaries or presentations related to cybersecurity threats, risk, and mitigation. 27 Table of Contents ​
Biggest changeThe board of directors receives periodic reports from management and its designees concerning our significant cybersecurity threats and risks, and the processes we have implemented in an effort to address them. The board of directors also has access to various reports, summaries or presentations related to cybersecurity threats, risk, and mitigation. ​
Our assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes. For example, the Senior Director of IT works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business.
Our assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes. For example, the Senior Director of IT works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business.
For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part 1. Item 1A.
For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, see our risk factors under Part 1. Item 1A.
The board of directors is responsible for overseeing Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our Senior Director of IT, the Chief Executive Officer, and the Chief Financial Officer.
The board of directors is responsible for overseeing our cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by certain members of our management, including our Senior Director of IT, the Chief Executive Officer, and the Chief Financial Officer.
Risk Management and Strategy We implement and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical comp uter networks, third party hosted services, communications systems, hardware and software, products and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature (collectively, “Information Systems and Data”).
Cybersecurity Risk Management and Strategy We implement and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software, products and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature (collectively, Information Systems and Data).
Risk Factors in this Annual Report on Form 10-K, including “Interruptions in or other compromises of our information technology systems or data or that of third parties upon whom we rely could adversely affect our business.” ​ Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
Risk Factors in this Annual Report on Form 10-K, including “Interruptions in or other compromises of our information technology systems or data or that of third parties upon whom we rely could adversely affect our business.” ​ 24 Table of Contents Governance Our board of directors addresses our cybersecurity risk management as part of its general oversight function.
The Chief Executive Officer and Chief Financial Officer work with the Company’s incident response team in an effort to help the Company mitigate and remediate cybersecurity incidents of which they are notified. In addition, the Company’s management and its designees report to the board of directors for certain cybersecurity incidents.
The Chief Executive Officer and Chief Financial Officer work with our incident response team in an effort to help us mitigate and remediate cybersecurity incidents of which they are notified. In addition, our management and its designees report to the board of directors for certain cybersecurity incidents.
Our Senior Director of Information Technology (“IT”), internal IT, information security and legal functions, and third-party service providers (collectively, “Cybersecurity Team”) help identify, assess and manage the Company’s 26 Table of Contents cybersecurity threats and risks. Our Cybersecurity Team identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment.
Our Senior Director of Information Technology (IT), internal IT, information security and legal functions, and third-party service providers (collectively, Cybersecurity Team) help identify, assess and manage our cybersecurity threats and risks. Our Cybersecurity Team identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe prior lease for the Chandler, Arizona corporate headquarters facility expired in January 2022, upon which a new lease was entered into, with an initial term that ends on January 31, 2029, and an option to renew the lease through January 31, 2034. The Austin, Texas lease is for 6,171 square feet of space for our design facility.
Biggest changeThe Chandler, Arizona corporate headquarters lease is for 18,815 square feet of office and laboratory space, with an initial term that ends on January 31, 2029, and an option to renew the lease through January 31, 2034.
Item 2. Properties. We lease office space for our corporate headquarters located in Chandler, Arizona and for our design facility located in Austin, Texas. We also lease fabrication, lab, and office space for our manufacturing operations in Chandler, Arizona. The Chandler, Arizona corporate headquarters lease is for 18,815 square feet of office and laboratory space.
Item 2. Properties We lease office space for our corporate headquarters located in Chandler, Arizona and for our design facility located in Austin, Texas. We also lease fabrication, lab, and office space for our manufacturing operations in Chandler, Arizona.
The prior lease for the Austin, Texas facility expired in January 2022, upon which a new lease was entered into with an initial term that ends on April 15, 2027, and an option to renew the lease through April 15, 2030. The Chandler, Arizona manufacturing operations lease is for 11,496 square feet of fabrication, lab, and office space.
The Austin, Texas lease is for 6,171 square feet of space for our design facility, with an initial term that ends on April 15, 2027, and an option to renew the lease through April 15, 2030. The Chandler, Arizona manufacturing operations lease is for 11,496 square feet of fabrication, lab, and office space and expires in January 2028.
The prior Chandler, Arizona manufacturing operations lease was initially set to expire in January 2023 but was renewed and amended in 2022 to extend the lease through January 2028. We believe our existing facilities are well maintained and in good operating condition and they are adequate for our foreseeable business needs.
We believe our existing facilities are well maintained and in good operating condition and they are adequate for our foreseeable business needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeNot applicable. ​ ​ 28 Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Trading Market for our Common Stock Our common stock has been listed on the Nasdaq Global Market under the symbol “MRAM” since October 7, 2016.
Biggest changeMine Safety Disclosures Not applicable. 25 Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Trading Market for our Common Stock Our common stock has been listed on the Nasdaq Global Market under the symbol “MRAM” since October 7, 2016.
Item 3. Legal Proceedings. From time to time, we may become involved in legal proceedings arising from the ordinary course of our business. Management is currently not aware of any matters that will have a material adverse effect on our financial position, results of operations or cash flows. Item 4. Mine Safety Disclosures.
Item 3. Legal Proceedings From time to time, we may become involved in legal proceedings arising from the ordinary course of our business. Management is currently not aware of any matters that will have a material adverse effect on our financial position, results of operations or cash flows. Item 4.
Prior to that date, there was no public trading market for our common stock. Holders of Record As of February 26, 2024, we had 17 holders of record of our common stock.
Prior to that date, there was no public trading market for our common stock. Holders of Record As of February 24, 2025, we had 17 holders of record of our common stock.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 28 ​ ​ ​ PART II ​ ​ ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29 Item 6. [Reserved] 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A.
Biggest changeItem 4. Mine Safety Disclosures 25 ​ ​ ​ PART II ​ ​ ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. [Reserved] 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 38 Item 8. Financial Statements and Supplementary Data 39
Quantitative and Qualitative Disclosures About Market Risk 34 Item 8. Financial Statements and Supplementary Data 35

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−4 removed0 unchanged
Biggest changeItem 5.02 ​ 5/12/2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 23.1* ​ Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 24.1* ​ Power of Attorney (included on the Signatures page of this Annual Report on Form 10-K). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 72 Table of Contents 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 32.1** ​ Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C.
Biggest changeItem 5.02 ​ 5/12/2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.25 † ​ Offer Letter, dated July 10, 2018, by and between the registrant and David Schrenk. ​ 10-Q ​ 001-37900 ​ 10.1 ​ 5/02/2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.26 † ​ Offer Letter, dated July 16, 2024, by and between the registrant and Matthew Tenorio. ​ 8-K ​ 001-37900 ​ 10.1 ​ 7/18/2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.27 † ​ Separation Letter, dated July 17, 2024, by and between the registrant and Anuj Aggarwal. ​ 10-Q ​ 001-37900 ​ 10.2 ​ 11/05/2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.28 † ˄ ​ Joint Development Agreement, dated August 8, 2024, by and between the registrant and Frontgrade Colorado Springs LLC. ​ 10-Q ​ 001-37900 ​ 10.3 ​ 11/05/2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.29 † ​ Offer Letter, dated November 12, 2024, by and between the registrant and William Cooper. ​ 8-K ​ 001-37900 ​ 10.1 ​ 1/08/2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.30 †* ​ Executive Employment Agreement , dated February 26, 2025, by and between the registrant and William Cooper. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 19.1* ​ Insider Trading and Trading Window Policy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 23.1* ​ Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 24.1* ​ Power of Attorney (included on the Signatures page of this Annual Report on Form 10-K). ​ ​ ​ ​ ​ ​ ​ ​ 71 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 32.1** ​ Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 97.1* ​ Incentive Compensation Recoupment Policy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.INS* ​ Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.SCH* ​ Inline XBRL Taxonomy Extension Schema Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.CAL* ​ Inline XBRL Taxonomy Extension Calculation Linkbase Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.DEF* ​ Inline XBRL Taxonomy Extension Definition Linkbase Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.LAB* ​ Inline XBRL Taxonomy Extension Label Linkbase Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.PRE* ​ Inline XBRL Taxonomy Extension Presentation Linkbase Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 104* ​ Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ​ ​ ​ ​ ​ ​ ​ ​ ​ * Filed herewith. ** Furnished herewith.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 97.1 ​ Incentive Compensation Recoupment Policy ​ 10-K ​ 001-37900 ​ 97.1 ​ 2/29/2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.INS* ​ Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.SCH* ​ Inline XBRL Taxonomy Extension Schema Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.CAL* ​ Inline XBRL Taxonomy Extension Calculation Linkbase Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.DEF* ​ Inline XBRL Taxonomy Extension Definition Linkbase Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.LAB* ​ Inline XBRL Taxonomy Extension Label Linkbase Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.PRE* ​ Inline XBRL Taxonomy Extension Presentation Linkbase Document. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 104* ​ Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ​ ​ ​ ​ ​ ​ ​ ​ ​ * Filed herewith. ** Furnished herewith.
Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. + Confidential treatment has been granted for certain portions of this exhibit. ++ Portions of the exhibit, marked by brackets, have been omitted because the omitted information (i) is not material and (ii) would likely cause competitive harm if publicly disclosed. 73 Table of Contents † Indicates a management contract or compensatory plan.
Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. + Confidential treatment has been granted for certain portions of this exhibit. ++ Portions of the exhibit, marked by brackets, have been omitted because the omitted information (i) is not material and (ii) would likely cause competitive harm if publicly disclosed. 72 Table of Contents ˄ Portions of the exhibit have been omitted pursuant to Item 601(b) of Regulation S-K because the omitted information is (a) not material and (b) the type of information that the Registrant both customarily and actually treats as private and confidential.
(b) We have filed or incorporated into this Annual Report on Form 10-K by reference, the exhibits listed on the Exhibit Index immediately above. (c) See Item 15(a)2 above. Item 16. Form 10-K Summary .
In addition, certain exhibits and schedules to the exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. † Indicates a management contract or compensatory plan. (b) We have filed or incorporated into this Annual Report on Form 10-K by reference, the exhibits listed on the Exhibit Index immediately above. (c) See Item 15(a)2 above.
Removed
Not provided. ​ 74 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in Chandler, Arizona, on February 29, 2024. ​ Everspin Technologies, Inc. ​ ​ ​ ​ By: /s/ Sanjeev Aggarwal ​ ​ Sanjeev Aggarwal ​ ​ Chief Executive Officer ​ ​ (Principal Executive Officer ) ​ ​ ​ ​ ​ ​ ​ By: /s/ Anuj Aggarwal ​ ​ Anuj Aggarwal ​ ​ Chief Financial Officer ​ ​ (Principal Financial and Accounting Officer) ​ ​ 75 Table of Contents KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Sanjeev Aggarwal and Anuj Aggarwal, and each of them, as his true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him and in his name, place or stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Removed
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. ​ ​ ​ ​ ​ Signature Title Date ​ ​ ​ ​ ​ /s/ Sanjeev Aggarwal ​ Chief Executive Officer and Director ​ February 29, 2024 Sanjeev Aggarwal ​ (Principal Executive Officer) ​ ​ ​ ​ ​ ​ ​ /s/ Anuj Aggarwal ​ Chief Financial Officer ​ February 29, 2024 Anuj Aggarwal ​ (Principal Financial and Accounting Officer) ​ ​ ​ ​ ​ ​ ​ /s/ Darin G.
Removed
Billerbeck ​ Chairman of the Board ​ February 29, 2024 Darin G. Billerbeck ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Lawrence G. Finch ​ Director ​ February 29, 2024 Lawrence G.
Removed
Finch ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Geoff Ribar ​ Director ​ February 29, 2024 Geoff Ribar ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Tara Long ​ Director ​ February 29, 2024 Tara Long ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Glen Hawk ​ Director ​ February 29, 2024 Glen Hawk ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Douglas Mitchell ​ Director ​ February 29, 2024 Douglas Mitchell ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 76

Item 7. Management's Discussion & Analysis

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

40 edited+1 added−26 removed30 unchanged
Biggest changeThe following table sets forth our results of operations for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2023 2022 2023 2022 ​ ​ ​ (In thousands) ​ (As a percentage of revenue) ​ Product sales ​ $ 53,123 ​ $ 55,032 ​ ​ 83 % ​ 92 % Licensing, royalty, patent, and other revenue ​ 10,642 ​ 4,953 ​ 17 ​ 8 ​ Total revenue ​ 63,765 ​ 59,985 ​ 100 ​ 100 ​ Cost of product sales ​ ​ 24,693 ​ ​ 25,112 ​ ​ 39 ​ ​ 42 ​ Cost of licensing, royalty, patent, and other revenue ​ ​ 1,827 ​ ​ 928 ​ ​ 3 ​ ​ 2 ​ Total cost of sales ​ 26,520 ​ 26,040 ​ 42 ​ 43 ​ Gross profit ​ 37,245 ​ 33,945 ​ 58 ​ 57 ​ Operating expenses: ​ ​ ​ ​ ​ Research and development ​ 11,776 ​ 11,108 ​ 19 ​ 19 ​ General and administrative ​ 14,296 ​ 11,741 ​ 22 ​ 20 ​ Sales and marketing ​ 5,288 ​ 4,869 ​ 8 ​ 8 ​ Total operating expenses ​ 31,360 ​ 27,718 ​ 49 ​ 47 ​ Income from operations ​ 5,885 ​ 6,227 ​ 9 ​ 10 ​ Interest expense ​ (63) ​ (274) ​ — ​ — ​ Other income, net ​ 3,214 ​ 190 ​ 5 ​ — ​ Net income before income taxes ​ 9,036 ​ 6,143 ​ 14 ​ 10 ​ Income tax benefit (expense) ​ 16 ​ (14) ​ — ​ — ​ Net income and comprehensive income ​ $ 9,052 ​ $ 6,129 ​ ​ 14 % ​ 10 % ​ ​ Comparison of the Years Ended December 31, 2023 and 2022 Revenue We generated 78% and 85% of our revenue from products sold through distributors for the years ended December 31, 2023 and 2022, respectively.
Biggest changeThe following table sets forth our results of operations for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2024 2023 2024 2023 ​ ​ ​ (In thousands) ​ (As a percentage of revenue) ​ Product sales ​ $ 42,203 ​ $ 53,123 ​ ​ 84 % ​ 83 % Licensing, royalty, patent, and other revenue ​ 8,199 ​ 10,642 ​ 16 ​ 17 ​ Total revenue ​ 50,402 ​ 63,765 ​ 100 ​ 100 ​ Cost of product sales ​ ​ 22,812 ​ ​ 24,693 ​ ​ 45 ​ ​ 39 ​ Cost of licensing, royalty, patent, and other revenue ​ ​ 1,464 ​ ​ 1,827 ​ ​ 3 ​ ​ 3 ​ Total cost of sales ​ 24,276 ​ 26,520 ​ 48 ​ 42 ​ Gross profit ​ 26,126 ​ 37,245 ​ 52 ​ 58 ​ Operating expenses: ​ ​ ​ ​ ​ ​ Research and development ​ 13,686 ​ 11,776 ​ 27 ​ 19 ​ General and administrative ​ 14,141 ​ 14,296 ​ 28 ​ 22 ​ Sales and marketing ​ 5,390 ​ 5,288 ​ 11 ​ 8 ​ Total operating expenses ​ 33,217 ​ 31,360 ​ 66 ​ 49 ​ (Loss) income from operations ​ (7,091) ​ 5,885 ​ (14) ​ 9 ​ Interest expense ​ — ​ (63) ​ — ​ — ​ Other income, net ​ 7,832 ​ 3,214 ​ 16 ​ 5 ​ Net income before income taxes ​ 741 ​ 9,036 ​ 2 ​ 14 ​ Income tax benefit ​ 40 ​ 16 ​ — ​ — ​ Net income ​ $ 781 ​ $ 9,052 ​ ​ 2 % ​ 14 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparison of the Years Ended December 31, 2024 and 2023 Revenue We generated 79% and 78% of our revenue from products sold through distributors for the years ended December 31, 2024 and 2023, respectively. 28 Table of Contents We maintain a direct selling relationship, for strategic purposes, with several key customer accounts.
We record inventory write-downs for the valuation of inventory when required based on our analyses and any write-downs result in a new cost basis for the affected item. ​ Recent Accounting Pronouncements See Note 2 in the accompanying Notes to Financial Statements in Part II, Item 8 of this Form 10-K for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations. ​
We record inventory write-downs for the valuation of inventory when required based on our analyses and any write-downs result in a new cost basis for the affected item. ​ Recent Accounting Pronouncements See Note 2 in the accompanying Notes to Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations. ​
Accordingly, we determined the 37 Table of Contents licenses were not distinct within the context of the contract and combined the license with other performance obligations. ​ As a result, we are recognizing revenue related to the performance obligations over time using the input method based on costs incurred to date relative to the total expected costs of the contract over the performance obligation period. ​ Inventory We record inventories at the lower of cost, determined on a first-in, first-out basis or net realizable value.
Accordingly, we determined the licenses were not distinct within the context of the contract and combined the license with other performance obligations. ​ As a result, we are recognizing revenue related to the performance obligations over time using the input method based on costs incurred to date relative to the total expected costs of the contract over the performance obligation period. ​ 33 Table of Contents Inventory We record inventories at the lower of cost, determined on a first-in, first-out basis or net realizable value.
The licenses provided to the customer are not transferable, are of limited value without the promised development services, and the customer cannot benefit from the license agreements without the specific obligated services in the development subcontract, as there is strong interdependency between the licenses and the development subcontract.
The licenses provided to the customer are not transferable, are of limited value without the promised development services, and the customer cannot benefit from the license agreements without the specific obligated services in the development subcontract, as there is strong interdependence between the licenses and the development subcontract.
See “Risk Factors” in Part II, Item 1A of this report for additional risks we face due to COVID-19. ​ Results of Operations Below are factors we want to highlight for understanding our 2023 annual results and year over year comparison with proper historical perspective: ● The first half of 2023 was impacted by supply chain challenges that were overcome in the second half of the year as the industry reverted to pre-COVID-19 seasonal patterns. ● Our commitment to improving our manufacturing excellence enabled us to drive yield improvements within our internal and external foundries network to sustain and improve existing product margins.
See “Risk Factors” in Part I, Item 1A of this report for additional risks we face due to health-related events. ​ Results of Operations Below are factors we want to highlight for understanding our 2024 annual results and year-over-year comparison with proper historical perspective: ● The first half of 2024 was impacted by supply chain challenges that were overcome in the second half of the year as the industry reverted to pre-health-related outbreak seasonal patterns. ● Our commitment to improving our manufacturing excellence enabled us to drive yield improvements within our internal and external foundries network to sustain and improve existing product margins.
Liquidity and Capital Resources As of December 31, 2023, we had $36.9 million of cash and cash equivalents, compared to $26.8 million as of December 31, 2022. As of December 31, 2023, we have no outstanding debt as we paid off our 2019 Credit Facility in full in March 2023.
Liquidity and Capital Resources As of December 31, 2024, we had $42.1 million of cash and cash equivalents, compared to $36.9 million as of December 31, 2023. As of December 31, 2024, we have no outstanding debt as we paid off our 2019 Credit Facility in full in March 2023.
The change in our net operating assets and liabilities was primarily due to an increase in accounts receivable of $0.9 million due to timing of cash receipts for outstanding balances, an increase in inventory of $1.7 million to meet anticipated production volumes, an increase in prepaid and other current assets of $0.4 million, an increase in other assets of $0.2 million, an increase in accounts payable of $0.5 million, an increase in accrued liabilities of $0.8 million, and a decrease in deferred revenue of $0.5 million.
The change in our net operating assets and liabilities was primarily due to an increase in contract obligations of $2.0 million due to contracts the Company entered into in the third quarter of 2024, an increase in accounts receivable of $0.2 million due to timing of cash receipts for outstanding balances, an increase in inventory of $0.7 million to meet anticipated production volumes, an increase in prepaid and other current assets of $0.3 million, an increase in other assets of $0.5 million, a decrease in accounts payable of $0.4 million, a decrease in accrued liabilities of $1.9 million, and a decrease in deferred revenue of $0.3 million.
The following table presents a reconciliation of net income, the most directly comparable GAAP measure, to Adjusted EBITDA for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Adjusted EBITDA reconciliation: ​ ​ Net income ​ $ 9,052 ​ $ 6,129 Depreciation and amortization ​ 1,205 ​ 982 Stock-based compensation expense ​ 5,005 ​ 4,408 Interest expense ​ 63 ​ 274 Income tax (benefit) expense ​ ​ (16) ​ ​ 14 Adjusted EBITDA ​ $ 15,309 ​ $ 11,807 ​ Our Adjusted EBITDA for the year ended December 31, 2023 includes a one-time employee retention tax credit received of $2.0 million in the second quarter of 2023.
The following table presents a reconciliation of net income, the most directly comparable GAAP measure, to Adjusted EBITDA for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 ​ ​ (in thousands) Adjusted EBITDA reconciliation: ​ ​ Net income ​ $ 781 ​ $ 9,052 Depreciation and amortization ​ 1,731 ​ 1,205 Stock-based compensation expense ​ 6,713 ​ 5,005 Interest expense ​ — ​ 63 Income tax benefit ​ ​ (40) ​ ​ (16) Adjusted EBITDA ​ $ 9,185 ​ $ 15,309 ​ Our Adjusted EBITDA for the year ended December 31, 2023 includes a one-time employee retention tax credit received of $2.0 million in the second quarter of 2023.
Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 ​ ​ (In thousands) Cash provided by operating activities ​ $ 13,128 ​ $ 9,493 Cash used in investing activities ​ (1,385) ​ (2,586) Cash used in financing activities ​ (1,592) ​ (1,521) ​ Cash Flows From Operating Activities During the year ended December 31, 2023, cash provided by operating activities was $13.1 million, which consisted of net income of $9.1 million, non-cash charges of $6.4 million and changes in net operating assets and liabilities of $2.3 million.
Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 ​ ​ (In thousands) Cash provided by operating activities ​ $ 7,099 ​ $ 13,128 Cash used in investing activities ​ (3,060) ​ (1,385) Cash provided by (used in) financing activities ​ 1,112 ​ (1,592) ​ Cash Flows from Operating Activities During the year ended December 31, 2024, cash provided by operating activities was $7.1 million, which consisted of net income of $0.8 million, non-cash charges of $8.4 million and changes in net operating assets and liabilities of $2.1 million.
Price protection rights grant distributors the right to a credit in the event of declines in the price of our products. Under these circumstances, we remit back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors’ outstanding accounts receivable balance.
Under these circumstances, we remit back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors’ outstanding accounts receivable balance.
Sales and marketing expenses increased by $0.4 million, or 8.6%, from $4.9 million during the year ended December 31, 2022, to $5.3 million during the year ended December 31, 2023. The increase was primarily due to an increase in variable compensation costs and contract labor.
Sales and marketing expenses increased by $0.1 million, or 1.9%, from $5.3 million during the year ended December 31, 2023, to $5.4 million during the year ended December 31, 2024. The change was primarily due to an increase in headcount and contract labor, partially offset by lower variable compensation costs.
Personnel-related expenses, including salaries, benefits, bonuses, and stock-based compensation, are among the most significant component of each of our operating expense categories. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % ​ ​ (Dollars in thousands) Research and development ​ $ 11,776 ​ $ 11,108 ​ $ 668 6.0 % Research and development as a % of revenue ​ ​ 19 % ​ 19 % ​ ​ ​ ​ ​ ​ Research and Development Expenses.
Personnel-related expenses, including salaries, benefits, bonuses, and stock-based compensation, are among the most significant component of each of our operating expense categories. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2024 2023 Amount % ​ ​ (Dollars in thousands) Research and development ​ $ 13,686 ​ $ 11,776 ​ $ 1,910 ​ 16.2 % Research and development as a % of revenue ​ ​ 27 % ​ 19 % ​ ​ ​ ​ ​ ​ Research and Development Expenses .
Research and development expenses increased by $0.7 million, or 6.0%, from $11.1 million during the year ended December 31, 2022, to $11.8 million during the year ended December 31, 2023.
Research and development expenses increased by $1.9 million, or 16.2%, from $11.8 million during the year ended December 31, 2023, to $13.7 million during the year ended December 31, 2024.
During the year ended December 31, 2022, cash used in investing activities was $2.6 million, which consisted of capital expenditures primarily for the purchase of manufacturing equipment and purchased software offset by a nominal amount in proceeds received on the sale of property and equipment. ​ Cash Flows From Financing Activities During the year ended December 31, 2023, cash used in financing activities was $1.6 million, which primarily consisted of $2.8 million of payments to pay off our 2019 Credit Facility offset by $1.2 million in proceeds from stock option exercises and purchases of shares under our employee stock purchase plan.
During the year ended December 31, 2023, cash used in financing activities was $1.6 million, which primarily consisted of $2.8 million of payments to pay off our 2019 Credit Facility offset by $1.2 million in proceeds from stock option exercises and purchases of shares under our employee stock purchase plan.
Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % ​ ​ (Dollars in thousands) Interest expense ​ $ 63 ​ $ 274 ​ $ (211) (77.0) % ​ Interest expense decreased by $0.2 million, or 77.0%, from $0.3 million during the year ended December 31, 2022, to $0.1 million during the year ended December 31, 2023.
Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2024 2023 Amount % ​ ​ (Dollars in thousands) Interest expense ​ $ — ​ $ 63 ​ $ (63) ​ (100.0) % ​ Interest expense decreased by $0.1 million, or 100.0%, from $0.1 million during the year ended December 31, 2023, to zero during the year ended December 31, 2024.
The decrease was due to having no outstanding balance under our 2019 Credit Facility as we paid off the outstanding balance in full in March 2023, resulting in no interest incurred during the remainder of 2023 after the outstanding balance was paid in full. 33 Table of Contents Other Income, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ​ 2023 2022 Amount % ​ ​ ​ (Dollars in thousands) Other income, net ​ $ 3,214 ​ $ 190 ​ $ 3,024 1,591.6 % ​ Other income, net changed by $3.0 million, from $0.2 million of expense during the year ended December 31, 2022, to $3.2 million of income during the year ended December 31, 2023.
The change was due to having no outstanding balance under our 2019 Credit Facility as we paid off the outstanding balance in full in March 2023, resulting in no interest incurred during 2024 after the outstanding balance was paid in full. 30 Table of Contents Other Income, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ​ 2024 2023 Amount % ​ ​ ​ (Dollars in thousands) Other income, net ​ $ 7,832 ​ $ 3,214 ​ $ 4,618 ​ 143.7 % ​ Other income, net increased by $4.6 million, from $3.2 million during the year ended December 31, 2023, to $7.8 million during the year ended December 31, 2024.
During the year ended December 31, 2022, cash provided by operating activities was $9.5 million, which primarily consisted of net income of $6.1 million, adjusted by non-cash charges of $5.3 million and a decrease of $1.9 million in our net operating assets and liabilities.
During the year ended December 31, 2023, cash provided by operating activities was $13.1 million, which consisted of net income of $9.1 million , non-cash charges of $6.4 million and changes in net operating assets and liabilities of $2.3 million.
We recognize sales of products in discrete unit form at a point in time, revenue related to licensing agreements when we have delivered control of the technology, revenue related to royalty agreements in the period in which sales generated from products sold using our technology occurs, sales of backend foundry services over time, and design services to third parties either at a point in time or over time, depending on the nature of the services. 36 Table of Contents Product Revenue For products sold in their discrete form, we either sell our products directly to OEMs, ODMs, contract manufacturers (CMs), or through a network of distributors, who in turn sell to those customers.
We recognize sales of products in discrete unit form at a point in time, revenue related to licensing agreements when we have delivered control of the technology, revenue related to royalty agreements in the period in which sales generated from products sold using our technology occurs, sales of backend foundry services over time, and design services to third parties either at a point in time or over time, depending on the nature of the services.
The decrease was primarily due to a reduction in product sales compared to the prior year. Cost of licensing, royalty, patent, and other revenue increased by $0.9 million, or 96.9%, from $0.9 million during the year ended December 31, 2022, to $1.8 million during the year ended December 31, 2023.
The change was primarily due to a reduction in product sales compared to the prior year, offset in part by increased yields on our toggle products. Cost of licensing, royalty, patent, and other revenue decreased by $0.4 million, or 19.9%, from $1.8 million during the year ended December 31, 2023, to $1.5 million during the year ended December 31, 2024.
The increase was due to an increase in licensing costs related to labor and materials associated with the progression of our RAD-Hard projects. 32 Table of Contents Our gross margin increased from 56.6% during the year ended December 31, 2022, to 58.4% during the year ended December 31, 2023.
The change was due to a decrease in licensing costs related to labor and materials associated with the progression of our RAD-Hard projects. Our gross margin decreased from 58.4% during the year ended December 31, 2023, to 51.8% during the year ended December 31, 2024.
Cost of Sales and Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % ​ ​ (Dollars in thousands) Cost of sales ​ $ 24,693 ​ $ 25,112 ​ $ (419) (1.7) % Cost of licensing, royalty, patent, and other revenue ​ ​ 1,827 ​ ​ 928 ​ ​ 899 ​ 96.9 % Total cost of sales ​ $ 26,520 ​ $ 26,040 ​ $ 480 ​ 1.8 % Gross margin ​ ​ 58.4 % 56.6 % ​ * ​ * ​ ​ Cost of product sales decreased by $0.4 million, or 1.7%, from $25.1 million during the year ended December 31, 2022, to $24.7 million during the year ended December 31, 2023.
Cost of Sales and Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2024 2023 Amount % ​ ​ (Dollars in thousands) Cost of sales ​ $ 22,812 ​ $ 24,693 ​ $ (1,881) (7.6) % Cost of licensing, royalty, patent, and other revenue ​ ​ 1,464 ​ ​ 1,827 ​ ​ (363) ​ (19.9) % Total cost of sales ​ $ 24,276 ​ $ 26,520 ​ $ (2,244) ​ (8.5) % Gross margin ​ ​ 51.8 % 58.4 % ​ * ​ * ​ ​ Cost of product sales decreased by $1.9 million, or 7.6%, from $24.7 million during the year ended December 31, 2023, to $22.8 million during the year ended December 31, 2024.
These were offset by an increase of $0.6 million in accounts payable due to timing of invoice due dates and a $0.2 million increase in lease liabilities. 34 Table of Contents Cash Flows From Investing Activities During the year ended December 31, 2023, cash used in investing activities was $1.4 million, which consisted of capital expenditures primarily for the purchase of manufacturing equipment offset by a nominal amount in proceeds received on the sale of property and equipment.
During the year ended December 31, 2023, cash used in investing activities was $1.4 million, which consisted of capital expenditures primarily for the purchase of manufacturing equipment offset by a nominal amount in proceeds received on the sale of property and equipment.
General and administrative expenses increased by $2.6 million, or 21.8%, from $11.7 million during the year ended December 31, 2022, to $14.3 million during the year ended December 31, 2023.
General and administrative expenses decreased by $0.2 million, or 1.1%, from $14.3 million during the year ended December 31, 2023, to $14.1 million during the year ended December 31, 2024.
For sales directly to OEMs, ODMs and CMs, we recognize revenue when the OEM, ODM or CM obtains control of the product, which occurs at a point in time, generally upon shipment to the customer.
For sales directly to OEMs, ODMs and CMs, we recognize revenue when the OEM, ODM or CM obtains control of the product, which occurs at a point in time, generally upon shipment to the customer. 32 Table of Contents From time to time, we may provide distributors with price adjustments subsequent to the delivery of product to them and such amounts are dependent on the end customer and product sales price.
During the year ended December 31, 2022, cash used in financing activities was $1.5 million, which primarily consisted of $2.4 million in payments on long-term debt offset by $0.9 million in proceeds from stock option exercises and purchases of shares under our employee stock purchase plan.
Cash Flows from Financing Activities During the year ended December 31, 2024, cash provided by financing activities was $1.1 million, which consisted of proceeds from stock option exercises and purchases of shares under our employee stock purchase plan.
The increase was primarily due to the employee retention tax credit received during the second quarter of 2023 of $2.0 million, along with an increase in interest income earned on the money market cash account as a result of increased cash balances and increasing interest rates, offset by a loss on prepayment and termination of our 2019 Credit Facility.
The change was primarily due to other income of $6.1 million recognized from a strategic award received by the Company to develop a long-term plan to provide manufacturing services for aerospace and defense segments, a change in interest income earned on the money market cash account as a result of a change in cash balances, along with the non-recurrence of a loss on prepayment and termination of our 2019 Credit Facility, offset by non-recurrence of the employee retention tax credit of $2.0 million received during the second quarter of 2023.
Our gross margin increased by offsetting increased pricing from suppliers with increased yields on our toggle products and increased licensing revenue to offset the decrease in product sales. Operating Expenses Our operating expenses consist of research and development, general and administrative and sales and marketing expenses.
Our gross margin decreased as a result of a shift in product mix, a decrease in FAB loadings, and a decrease in licensing revenue partially offset by increased yields on our toggle products. 29 Table of Contents Operating Expenses Our operating expenses consist of research and development, general and administrative and sales and marketing expenses.
Our revenue by region for the periods indicated was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 APAC ​ $ 33,096 ​ $ 35,631 North America ​ ​ 15,922 ​ ​ 14,533 EMEA ​ ​ 14,747 ​ ​ 9,821 Total revenue ​ $ 63,765 ​ $ 59,985 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ​ 2023 2022 Amount % ​ ​ ​ (Dollars in thousands) ​ Product sales ​ $ 53,123 ​ $ 55,032 ​ $ (1,909) (3.5) % Licensing, royalty, patent, and other revenue ​ 10,642 ​ 4,953 ​ 5,689 114.9 % Total revenue ​ $ 63,765 ​ $ 59,985 ​ $ 3,780 6.3 % ​ Total revenue increased by $3.8 million, or 6.3%, from $60.0 million during the year ended December 31, 2022, to $63.8 million during the year ended December 31, 2023.
Our revenue by region for the periods indicated was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 APAC ​ $ 28,688 ​ $ 33,096 North America ​ ​ 10,710 ​ ​ 15,922 EMEA ​ ​ 11,004 ​ ​ 14,747 Total revenue ​ $ 50,402 ​ $ 63,765 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ​ 2024 2023 Amount % ​ ​ ​ (Dollars in thousands) ​ Product sales ​ $ 42,203 ​ $ 53,123 ​ $ (10,920) (20.6) % Licensing, royalty, patent, and other revenue ​ 8,199 ​ 10,642 ​ (2,443) (23.0) % Total revenue ​ $ 50,402 ​ $ 63,765 ​ $ (13,363) (21.0) % ​ Total revenue decreased by $13.4 million, or 21.0%, from $63.8 million during the year ended December 31, 2023, to $50.4 million during the year ended December 31, 2024.
We recognize revenue by geography based on the region in which our products are sold, and not to where the end products in which they are assembled are shipped.
We have organized our sales team and representatives into three primary regions: Asia-Pacific (APAC); North America; and Europe, Middle East and Africa (EMEA). We recognize revenue by geography based on the region in which our products are sold, and not to where the end products in which they are assembled are shipped.
The increase was primarily due to higher expenses relating to the development and enhancement of our new xSPI family of STT-MRAM products and increases in share-based compensation. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % ​ ​ (Dollars in thousands) General and administrative ​ $ 14,296 ​ $ 11,741 ​ $ 2,555 21.8 % General and administrative as a % of revenue ​ ​ 22 % ​ 20 % ​ ​ ​ ​ ​ ​ General and Administrative Expenses.
The change was primarily due to the development and enhancement of our new Extended Serial Peripheral Interface (xSPI) family of STT-MRAM products, which offer high-performance, multiple I/O, SPI-compatibility and feature a high-speed, low pin count SPI compatible interface, and increases in share-based compensation. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2024 2023 Amount % ​ ​ (Dollars in thousands) General and administrative ​ $ 14,141 ​ $ 14,296 ​ $ (155) ​ (1.1) % General and administrative as a % of revenue ​ ​ 28 % ​ 22 % ​ ​ ​ ​ ​ ​ General and Administrative Expenses.
Licensing, royalty, patent, and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and terms of each transaction. We estimate royalty revenue earned throughout the year, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year.
The decrease was primarily due to a decrease in product sales of $10.9 million due to timing of customer demand. Licensing, royalty, patent, and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and terms of each transaction.
The increase was primarily due to increases in professional service costs, share-based compensation, and depreciation. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % ​ ​ (Dollars in thousands) Sales and marketing ​ $ 5,288 ​ $ 4,869 ​ $ 419 8.6 % Sales and marketing as a % of revenue ​ ​ 8 % ​ 8 % ​ ​ ​ ​ ​ ​ Sales and Marketing Expenses.
The change was primarily driven by a reduction in professional services. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2024 2023 Amount % ​ ​ (Dollars in thousands) Sales and marketing ​ $ 5,390 ​ $ 5,288 ​ $ 102 ​ 1.9 % Sales and marketing as a % of revenue ​ ​ 11 % ​ 8 % ​ ​ ​ ​ ​ ​ Sales and Marketing Expenses.
The non-cash charges primarily consisted of stock-based compensation of $4.4 million, depreciation and amortization of $1.0 million, and non-cash interest expense of $0.1 million, offset by a gain on disposal of property and equipment of $0.2 million.
The non-cash charges primarily consisted of stock-based compensation of $6.7 million and depreciation and amortization of $1.7 million.
The increase was primarily due to an increase in licensing revenues of $5.5 million from our contractual agreements with customers for the development of RAD-Hard products, along with an increase of $0.7 million of other revenue related to a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM, offset in part by a decrease of $0.5 million in royalty revenue.
The decrease was primarily due to the progression of our contractual agreements with customers for the development of RAD-Hard products, along with the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM. There were no patent sales during the year ended December 31, 2024.
From time to time, we may provide distributors with price adjustments subsequent to the delivery of product to them and such amounts are dependent on the end customer and product sales price. Price adjustments can be based on a variety of factors, including customer, product, quantity, geography, and competitive differentiation.
Price adjustments can be based on a variety of factors, including customer, product, quantity, geography, and competitive differentiation. Price protection rights grant distributors the right to a credit in the event of declines in the price of our products.
For additional information about the 2019 Credit Facility, see Note 6 in the accompanying Notes to Financial Statements in Part II, Item 8 of this Form 10-K. ​ Critical Accounting Policies and Significant Judgements and Estimates ​ Our financial statements have been prepared in accordance with U.S. GAAP.
Critical Accounting Policies and Significant Judgements and Estimates ​ Our financial statements have been prepared in accordance with U.S. GAAP.
The change in our net operating assets and liabilities was primarily due to an increase of $2.5 million in accounts receivable due to an increased sales volume and timing of cash receipts for outstanding balances and a $0.3 million increase in inventory.
The change in our net operating assets and liabilities was primarily due to an increase in accounts receivable of $0.9 million due to timing of cash receipts for outstanding balances, an increase in inventory of $1.7 million to meet anticipated production volumes, an increase in prepaid and other current assets of $0.4 million, an 31 Table of Contents increase in other assets of $0.2 million, an increase in accounts payable of $0.5 million, an increase in accrued liabilities of $0.8 million, and a decrease in deferred revenue of $0.5 million. ​ Cash Flows from Investing Activities During the year ended December 31, 2024, cash used in investing activities was $3.1 million, which consisted of capital expenditures primarily for the purchase of manufacturing equipment and purchased software.
These actions may include further altering our operations in order to protect the best interests of our employees, customers and suppliers, and to comply with government requirements, while also planning and executing our business to best support our customers, suppliers, and partners. ​ The ultimate extent of the impact of COVID-19 on our business, results of operations and financial condition will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted.
These crises and outbreaks can adversely affect global economies and financial markets, which have the potential to negatively impact our operations and financial condition. The ultimate extent of the impact of health-related events on our business, results of operations and financial condition will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted.
Licensing, royalty, patent, and other revenue increased by $5.7 million, from $5.0 million during the year ended December 31, 2022, to $10.6 million during the year ended December 31, 2023.
We estimate royalty revenue earned throughout the year, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year. Licensing, royalty, patent, and other revenue decreased by $2.4 million, from $10.6 million during the year ended December 31, 2023, to $8.2 million during the year ended December 31, 2024.
New design wins in each successive quarter of 2023 were 66, 62, 37, and 52, respectively, compared to 61, 49, 48, and 52 in each successive quarter of 2022, respectively. ​ Effect of COVID-19 on our Business The COVID-19 outbreak resulted in government authorities around the world implementing numerous measures to try to reduce the spread of COVID-19.
New design wins in each successive quarter of 2024 were 31, 44, 50, and 53, respectively, compared to 66, 62, 37, and 52 in each successive quarter of 2023, respectively. ​ 27 Table of Contents Effect of Health-Related Outbreaks on Our Business Our global operations expose us to risks arising from public health crises and health-related outbreaks.
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Overall, our business remained operational in the midst of COVID-19. The United States Government has declared that it was no longer treating COVID-19 as a pandemic. Since our business is 30 Table of Contents dependent on a global supply chain, we expect to continue to navigate the impact of COVID-19, particularly in some Asian countries.
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Product Revenue For products sold in their discrete form, we either sell our products directly to OEMs, ODMs, contract manufacturers (CMs), or through a network of distributors, who in turn sell to those customers.
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We will continue to monitor the situation and take additional actions as warranted.
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We maintain a direct selling relationship, for strategic purposes, with several key customer accounts. We have organized our sales team and representatives into three primary regions: Asia-Pacific (APAC); North America; and 31 Table of Contents Europe, Middle East and Africa (EMEA).
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The increase was primarily driven by the increase in licensing, royalty, patent, and other revenue of $5.7 million due to revenue recognized under our RAD-Hard projects.
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This was offset by a decline in product sales due to volume shifts in customer demand of $1.9 million or 3.5%, from $55.0 million during the year ended December 31, 2022, to $53.1 million during the year ended December 31, 2023.
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There were no patent sales during the year ended December 31, 2023.
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Credit Facilities In May 2017, we executed a Loan and Security Agreement (2017 Credit Facility) with Silicon Valley Bank (SVB) for a $12.0 million term loan, which we subsequently amended in January 2019 and June 2019.
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In August 2019, we executed an Amended and Restated Loan and Security Agreement (2019 Credit Facility), which amended and restated the 2017 Credit Facility, providing for a formula revolving line of credit (Line of Credit) and a term loan (2019 Term Loan) with SVB to refinance in full the outstanding principal balance of $8.0 million under the 2017 Credit Facility. ​ In July 2020, we executed the first amendment to the 2019 Credit Facility with SVB.
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The amendment, among other things, extended the initial 12-month interest-only period for the term loan to a 16-month interest-only period and lowered the floor interest rate. The floor interest rates for 2019 Term Loan and the Line of Credit Facility were reduced from 4.75% and 6.75% to 3.75% and 4.75%, respectively.
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The amended Line of Credit allowed for a maximum draw of $5.0 million, subject to a formula borrowing base, has a two-year term and bears interest at a floating rate equal to the Wall Street Journal (WSJ) prime rate plus 1.5%, per annum, subject to a floor of 4.75%.
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The Line of Credit required a commitment fee of 1.6% of the maximum availability of the Line of Credit, which was paid in August 2019 upon closing, and was accounted for as a debt discount.
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The Line of Credit also provided for a termination fee equal to 1% of the maximum availability under the Line of Credit, which was due in case of a termination of the Line of Credit prior to the scheduled maturity date, and an unused facility fee equal to 0.125% per annum of the average unused portion of the Line of Credit, which is expensed as incurred.
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The Line of Credit was set to mature on August 5, 2023. The amended 2019 Term Loan provided for a $6.0 million term loan. The amended 2019 Term Loan had a term of 46 months, and a 16-month interest-only period followed by 30 months of equal principal payments of $200,000 per month, plus accrued interest.
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The 2019 Term Loan incurred interest at a floating rate equal to the WSJ prime rate minus 0.75%, subject to a floor of 3.75%.
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A final payment of 7% of the original principal amount of the 2019 Term Loan was to be made when the 2019 Term Loan is prepaid or repaid, whether at maturity or as a result of a prepayment or acceleration or otherwise.
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The additional payment, which is accounted for as a debt discount, was being accreted using the effective interest method. The 2019 Term Loan had a prepayment fee equal to 2% of the total commitment, which was due only if the 2019 Term Loan was prepaid prior to the scheduled maturity date for any reason.
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The 2019 Term Loan was to mature on June 1, 2023. ​ In conjunction with entering into the 2019 Credit Facility, on August 5, 2019, we and SVB amended and restated the warrant issued to SVB in connection with the first amendment to the 2017 Credit Facility, which was a warrant to purchase 9,375 shares of our common stock at an exercise price of $8.91 per share, to add an option by SVB to put the warrant back to us for $50,000 upon expiration or a liquidity event, to be prorated if SVB exercises a portion of the warrant.
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The warrants were set to expire on July 6, 2023. The warrant was classified as a liability and recorded at fair 35 Table of Contents value within other liabilities in our balance sheet. Due to the put right, the warrant was subject to fair value remeasurement at each subsequent reporting date until the exercise or expiration of the warrant.
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Any resulting change in the fair value of the warrant was to be recorded as other income, net, in our statements of income and comprehensive income. The other income recognized for the years ended 2023 and 2022 related to the change in fair value of the warrant has been minimal and immaterial to the financial statements.
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These warrants were extinguished as of December 31, 2023. ​ Collateral for the 2019 Credit Facility included all of our assets except for intellectual property.
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We were required to comply with certain covenants under the 2019 Credit Facility, including requirements to maintain a minimum cash balance and availability under the Line of Credit, and restrictions on certain actions without the consent of the lender, such as limitations on our ability to engage in mergers or acquisitions, sell assets, incur indebtedness, or grant liens or negative pledges on our assets, make loans or make other investments.
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Under these covenants, we were prohibited from paying cash dividends with respect to our capital stock.
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The 2019 Credit Facility contained a material adverse effect clause which provides that an event of default will occur if, among other triggers, an event occurs that could reasonably be expected to result in a material adverse effect on our business, operations, or condition, or on our ability to perform our obligations under the 2019 Term Loan.
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In March 2023, the 2019 Credit Facility, consisting of our Term Loan and Line of Credit, was paid in full, and there was no outstanding balance as of December 31, 2023.
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We paid an early termination and prepayment fee of $170,000, which was recorded within other income, net, within the statements of income and comprehensive income for the year ended December 31, 2023. We were in compliance with all covenants throughout the 2019 Credit Facility payoff date in March 2023.
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The amortization of the debt issuance costs and accretion of the debt discount is included in interest expense within the statements of income and comprehensive income and included in non-cash interest expense within the statement of cash flows.

Other MRAM 10-K year-over-year comparisons