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What changed in PIXELWORKS, INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PIXELWORKS, INC's 2024 and 2025 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 2025 report.

+221 added−511 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-13)

Top changes in PIXELWORKS, INC's 2025 10-K

221 paragraphs added · 511 removed · 132 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

27 edited+35 added−111 removed8 unchanged
Biggest changeFinancial information regarding our domestic and foreign operations is presented in "Note 14. Segment Information" in Part II, Item 8 of this Annual Report on Form 10-K. Backlog Our sales are made pursuant to customer purchase orders for delivery of standard products.
Biggest changeSegment Information" in Part II, Item 8 of this Annual Report on Form 10-K. Backlog For information regarding the impact of backlog on the financials of the Company prior to the Sale, see Item 1 under the heading “Backlog” in the 2024 10-K . Sales in the Cinematic market do not have a backlog.
Availability of Securities and Exchange Commission Filings We make available through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports and any filings filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934, free of charge as soon as reasonably practicable after we electronically file or furnish such material with the Securities and Exchange Commission ("SEC").
Availability of Securities and Exchange Commission Filings We make available through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports and any filings filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, free of charge, as soon as reasonably practicable after we electronically file or furnish such material with the SEC.
The SEC maintains an Internet site at www.sec.gov that contains our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, if any, or other filings filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, and proxy and information statements. 16
The SEC maintains an Internet site at www.sec.gov that contains our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, if any, or other filings filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, and proxy and information statements. 8
The patents we hold relate generally to improvements in the visual display of digital image data including, but not limited to, improvements in image scaling, image correction, automatic image optimization and video signal processing for digital displays, and in large part, are implemented in our core technologies and products.
The patents we hold generally relate to improvements in the visual display of digital image data including, but not limited to, improvements in motion estimation/motion compensation, motion grading, image scaling, image correction, automatic image optimization and video signal processing for digital displays, and in large part, are implemented in our core technologies and products.
For content finishing, specific to certain displays, TrueCut Motion will pre-process the content in order to ensure playback according to the original creative intent. For display makers and brands, we provide the certification services, support, and IP licensing necessary to play back TrueCut Motion processed content, and the right to use the TrueCut Motion brand.
For content finishing, specific to certain displays, our TrueCut Motion product may be used to pre-process the content in order to ensure playback according to the original creative intent. For display makers and brands, we provide the certification services, support, and IP licensing necessary to play back TrueCut Motion content, and the right to use the TrueCut Motion brand.
Furthermore, the mismatch between the 24 frame per second rate that is the standard for cinema and the higher screen refresh rates used on home entertainment screens creates additional artifacts, that all together degrade the viewing experience and are no longer faithful to creative intent.
Furthermore, the mismatch between the 24 frame per second rate that is the standard for cinema and the higher screen refresh rates used in some Premium Large Format theaters and on home entertainment screens creates additional artifacts that further degrade the viewing experience and are no longer faithful to creative intent.
Furthermore, the laws of certain foreign countries in which our products are or may be developed, manufactured or sold, including various countries in Asia, may not protect our products or intellectual property rights in the same manner and to the same extent as do the laws of the U.S. and, thus, make the possibility of piracy of our technology and products more likely in these countries. 15 The semiconductor industry is characterized by vigorous protection of intellectual property rights, which have resulted in significant and often protracted and expensive litigation.
Furthermore, the laws of certain foreign countries in which our products are or may be developed, manufactured or sold, including various countries in Asia, may not protect our products or intellectual property rights in the same manner and to the same extent as do the laws of the U.S. and, thus, make the possibility of piracy of our technology and products more likely in these countries.
Our Cinematic solutions expand the creative palette for filmmakers, and ensure the correct presentation of creative intent across screens. In recent years, the trend towards brighter, high dynamic range ("HDR")-capable screens, larger screen sizes and higher resolutions, has amplified artifacts such as judder and strobing and caused the filmed shutter speed to appear faster and more choppy than intended.
In recent years, the trend towards brighter, high dynamic range ("HDR")-capable screens, larger screen sizes and higher resolutions has amplified artifacts such as judder and strobing and caused the filmed shutter speed to appear faster and more choppy than intended.
See "Risk Factors" in Part I, Item 1A, and "Note 11. Commitments and Contingencies" in Part II, Item 8 of this Annual Report on Form 10-K for information on various risks related to intellectual property. Environmental Matters Environmental laws and regulations are complex, change frequently and have tended to become more stringent over time.
See "Risk Factors" in Part I, Item 1A, and "Note 11. Commitments and Contingencies" in Part II, Item 8 of this Annual Report on Form 10-K for information on various risks related to intellectual property.
This “hold” effect is perceived by the brain as motion blur. There are numerous causes of motion blur. The materials used in constructing pixels on the display take a finite amount of time to transition from one state to another. If this time is too long, the image does not update swiftly and motion sequences seem to smear or blur.
This “hold” effect is perceived by the brain as motion blur. There are other causes of motion blur as well. The materials used in constructing pixels on the display take a finite amount of time to transition from one state to another.
At this frame rate, the brain can easily notice the transition from one frame to the next. As the brain and eyes track objects in motion, they have to jump in discrete steps due to the low frame rate.
For example, movies, TV shows, and other premium content are usually authored at 24 frames per second, or 24 Hz. At this frame rate, the brain can easily notice the transition from one frame to the next. As the brain and eyes track objects in motion, they have to jump in discrete steps due to the low frame rate.
For display makers and brands, we provide the certification services, support, and IP licensing necessary to play back TrueCut Motion processed content, and the right to use the TrueCut Motion brand. 9 For clarity, in the table below we describe the relationship between our products and the markets and applications that each serves.
For display makers and brands, we provide the certification services, support, and IP licensing necessary to play back TrueCut Motion processed content, and the right to use the TrueCut Motion brand. We do not use distributors for our TrueCut products.
We provide motion grading services that use these tools as a service, and the tools are also available for license. For content finishing, specific to certain displays, TrueCut Motion will pre-process the content in order to ensure playback according to the original creative intent.
For our TrueCut Motion content creation tools we seek to work directly with filmmakers, providing motion grading services, or the tools are also available for license. For content finishing, specific to certain displays, the TrueCut Motion tools pre-process the content in order to ensure playback according to the original creative intent.
Our Technology: Bridging the Gap Between Device and Content While Preserving Creative Intent Our core technologies are a portfolio of advanced video algorithms and intellectual property to address the many challenges posed by digital video.
Our Technology: Bridging the Gap Between Device and Content While Preserving Creative Intent Our TrueCut Motion platform was developed using advanced video algorithms, motion appearance training data, and other intellectual property to address the challenges posed by motion in digital video due to the quality gap.
We believe that we would compete favorably with respect to these potential competitive solutions and services in terms of cost, price, functionality, efficiency, patented methods, and time to market. Research and Development Research and development efforts are focused on the development of our solutions for the Mobile, Home & Enterprise and Cinema markets.
We believe that we would compete favorably with respect to these potential competitive solutions and services in terms of cost, price, functionality, efficiency, patented methods, and time to market. Research and Development For information regarding the Company’s research and development prior to the Sale, see Item 1 under the heading “Research and Development” in the 2024 10-K .
Unlike competitive solutions it also reduces halo effects that are a typical byproduct of MEMC technology in general. Halos are objectionable blurred regions that surround moving objects as the MEMC algorithms try to reconstruct missing image data caused by the concealing and revealing of objects as they pass over or behind one another.
Halos are objectionable blurred regions that surround moving objects as the algorithms try to reconstruct missing image data caused by the concealing and revealing of objects as they pass over or behind one another. Removing halos dramatically improves image quality and is of particular importance on high-resolution and bright displays where artifacts become more visible.
Customers can use our Pro Software on the application processor or in connection with our visual processor products. • TrueCut Motion Platform. Our TrueCut Motion content creation tools provide filmmakers with the ability to dial in a motion look on a shot-by-shot basis.
TrueCut Motion Platform Our TrueCut Motion content creation software tools provide filmmakers with the ability to customize a motion look on a shot-by-shot basis. We provide motion grading services that use these tools, which are also available for license.
Our TrueCut products do not require manufacturing, since they are based on IP, software, and services. Intellectual Property We use a combination of nondisclosure agreements and patent, copyright, trademark and trade secret laws to protect the algorithms, design and architecture of our technology.
Following the Sale, we use a combination of nondisclosure agreements and patent, copyright, trademark and trade secret laws to protect the algorithms, design and architecture of our technology. Following the Sale, we hold 56 patents and have 6 patent applications pending.
The TrueCut platform includes a mix of services and licensing that is targeted at all levels of the creation, finishing, and distribution of cinematic or streaming digital video. For our TrueCut Motion content creation tools we seek to work directly with filmmakers, providing motion grading services, or the tools are also available for license.
Following the Sale, the Company no longer sells any IC Products. TrueCut Motion Products The TrueCut Motion platform includes a mix of services and licensing that is targeted at all levels of the creation, finishing, and distribution of theatrical or streaming digital video.
We believe our technologies can significantly improve video quality and will become increasingly important as the popularity of video content consumption grows, and pixel densities, screen size and image quality increase. Our products are designed with a flexible architecture that allows us to combine algorithms and functional blocks of digital and mixed signal circuitry.
We believe our technologies can significantly improve video quality while retaining the creator’s intended visual presentation and will become increasingly important as the popularity of video content consumption continues to grow and expand to new and different devices with differing pixel densities, screen sizes and image quality.
Through our end-to-end platform, filmmakers determine the motion look and their creative intent at the source. Their creative intent is preserved through a certified distribution and playback platform all the way to the final presentation to viewers.
This creative intent is preserved through a certified distribution and playback platform all the way to the final presentation to viewers in a theatrical or home entertainment setting, on consumer devices that are reviewed and certified by us.
This stop-start motion is perceived by the brain as judder, jitter or strobing, reducing the visible clarity and fidelity of objects in motion and distracting from the main subject of the content. Most TVs today include frame-rate conversion chips, but many reviewers complain about artifacts such as halos, breakup in the image and the so-called “soap opera effect”.
This stop-start motion is perceived by the brain as judder, jitter or strobing, reducing the visible clarity and fidelity of objects in motion and distracting from the main subject of the content. Additionally, when a motion sequence is played on a digital display device, the new updated frame is drawn over the top of the still visible previous frame.
(“LG”) are bringing high contrast, high brightness, or HDR TVs based on organic light emitting diodes (“OLED”) and local-dimming liquid crystal display (“LCD”) panels to the living room. Furthermore, most premium and high-tier smartphones and tablets from Apple, Samsung, Sony, LG, and Huawei Technologies Co., Ltd now include HDR as a standard feature.
Television manufacturers, including Samsung Electronics Co., Ltd. ("Samsung"), TCL Technology, Sony Group Corporation (“Sony”), and LG Electronics, Inc. (“LG”), bring to the living room high resolution HDR TVs that deliver high contrast and high brightness using organic light emitting diode (“OLED”) and local-dimming liquid crystal display (“LCD”) panels.
This approach provides a closer relationship between the filmmaker and the viewer than has been previously possible. 12 Customers, Sales and Marketing IC Products The key focus of our global sales and marketing strategy for our IC products is to achieve design wins with industry leading branded manufacturers in our target markets and to continue building strong customer relationships.
This approach provides a closer relationship between the filmmaker and the viewer than has been previously possible. 6 Customers, Sales and Marketing IC Products For a description of the IC Products sold by the Company prior to the Sale, see Item 1 under the heading “IC Products” in the 2024 10-K .
Pixelworks has an additional subsidiary in China (Frame Shadow Technology (Shanghai) Co., Ltd. (formerly called Mucheng Huai Management Consulting (Shanghai) Co., Ltd)) which is a research and development center for our TrueCut business. This subsidiary does not operate under PWSH, but rather is owned by Pixelworks through our Oregon limited liability company, Pixelworks Semiconductor Technology Company, LLC.
Pixelworks has one remaining subsidiary in China, Frame Shadow Technology (Shanghai) Co., Ltd. (formerly called Mucheng Huai Management Consulting (Shanghai) Co., Ltd), which is a research and development center. Our executive officers and all of our directors are located in the United States. Our auditor is Grant Thornton LLP, with headquarters in Chicago, Illinois.
In addition, start-up companies may seek to compete in our markets. 14 Although TrueCut Motion is the first motion grading solution for the cinematic market, competitive solutions could arise rapidly.
Competition For information regarding competition in the Mobile and Home & Enterprise businesses applicable to the Company prior to the Sale, see Item 1 under the heading “Competition” in the 2024 10-K . Although TrueCut Motion is the first motion grading solution for the cinematic market, competitive solutions could arise rapidly.
See "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K for information on various environmental risks. Employees As of December 31, 2024, we had a total of 196 employees, the majority of which were full-time, compared to 239 employees as of December 31, 2023.
Employees As of December 31, 2025, we had a total of 163 employees, the majority of which were full-time, compared to 196 employees as of December 31, 2024. Following the Sale and the restructuring related to the Sale, we will have a total of approximately 23 full-time employees.
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Item 1. Business. Overview Pixelworks is a leading provider of high-performance and power-efficient visual processing semiconductor and software solutions that enable consistently high-quality and authentic viewing experiences in a wide variety of applications.
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Item 1. Business. Overview Pixelworks, Inc. (the “Company” or “Pixelworks”) provides industry-leading content creation, video delivery and display processing solutions, and technology that enable highly authentic viewing experiences with superior visual quality across all screens, from cinema to smartphone and beyond.
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We define our primary target markets as Mobile (smartphone and tablet), Home & Enterprise (projectors, personal video recorders ("PVR"), and over-the-air ("OTA") streaming devices), and Cinema (creation, remastering, and delivery of digital video content).
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Pixelworks has been delivering image processing innovations to leading providers of consumer electronics, professional displays, and video streaming services for more than 20 years. On January 6, 2026 (the “Closing Date”), the Company completed the previously announced sale (the “Sale”) of all of the shares of common stock of Pixelworks Semiconductor Technology (Shanghai) Co., Ltd.
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Previously we classified our primary target markets as Mobile, Projector, Video Delivery and Cinema, but have since aggregated the Projector and Video Delivery categories into one market called "Home & Enterprise". Pixelworks has been a pioneer in visual processing technology for over 20 years.
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(“PWSH”) held by Pixelworks Semiconductor Technology Company, LLC, a wholly owned subsidiary of the Company (“Pixelworks LLC”), to Tiansui Xinyuan Technology (Shanghai) Co., Ltd. (the “Buyer”).
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We were one of the first companies to commercially launch a video System on Chip ("SoC") capable of deinterlacing 1080i HDTV signals and one of the first companies with a commercial dual-channel 1080i deinterlacer integrated circuit. We launched one of the industry’s first single-chip SoCs for digital projection.
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The terms of the Sale were set forth in a Purchase Agreement dated as of October 15, 2025 (the “Purchase Agreement”), among the Company, PWSH, Pixelworks LLC, all other shareholders of PWSH except VeriSilicon Microelectronics (Shanghai) Co., Ltd. (each, a “Selling Shareholder"), and the Buyer. Each Selling Shareholder and VeriSilicon Microelectronics (Shanghai) Co., Ltd.
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We were the first company to integrate motion estimation / motion compensation technology ("MEMC") as a mobile-optimized solution for smartphones. In 2019, we introduced our Hollywood award-winning TrueCut Motion TM® video platform, the industry’s first motion grading technology that allows fine tuning of motion appearance in cinematic content.
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(collectively, the “Minority Shareholders”) and Pixelworks LLC also entered into Support Agreements (the “Support Agreements”), and Pixelworks LLC, PWSH and each of the Minority Shareholders entered into a Termination and Release Agreement (the “Release Agreement”), in each case dated October 14, 2025.
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Our core visual processing technology intelligently processes digital images and video from a variety of sources and optimizes the content for a superior viewing experience. Rapid growth in video and gaming consumption, combined with the move towards bright, high resolution, high frame rate and high refresh rate displays, especially in mobile, is increasing the demand for our solutions.
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On the Closing Date: (i) Pixelworks LLC transferred to the Minority Shareholders shares of PWSH capital stock representing a total of approximately 29% of the total outstanding shares of PWSH capital stock; (ii) the Selling Shareholders sold and transferred all of their PWSH shares to the Buyer; (iii) Pixelworks LLC sold and transferred its remaining shares of PWSH capital stock, representing approximately 49% of the total outstanding shares of PWSH capital stock, to the Buyer; and (iv) the Buyer paid the Company approximately RMB 357 million, or approximately $51.0 million in U.S. dollars, net of transaction costs and withholding taxes paid in China.
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Our technologies can be applied across a wide range of applications: cinema theaters, low-power mobile tablets, smartphones, streaming devices, and digital projectors for the home, school, or the workplace. Our products are designed and optimized for power, cost, bandwidth, viewer experience, and overall system performance, according to the requirements of the specific application.
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The remaining transaction expenses incurred by the Company in connection with the Sale, not including compensation that has been paid to the Company’s executive officers and other employees, totaled approximately $1.0 million in U.S. dollars.
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On occasion, we have also licensed our technology. During 2021, we engaged in a strategic plan to re-align our Mobile and Home & Enterprise businesses to improve their focus on their Asia-centered customers and employee stakeholders (the "Strategic Plan"). One of our Chinese subsidiaries, Pixelworks Semiconductor Technology (Shanghai) Co., Ltd.
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Additionally, approximately RMB 8.7 million, or approximately $1.2 million in U.S. dollars, is being held in an escrow account to be released upon the resolution of certain tax matters in China.
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(or "PWSH"), now operates these businesses as a full profit-and-loss center underneath Pixelworks. In connection with this Strategic Plan, the Company and PWSH closed three separate financing transactions in 2021 and 2022, which are further described in "Note 15: Redeemable Non-Controlling Interest and Equity Interest of PWSH Sold to Employees" and "Note 16: Non-Controlling Interest", below.
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The foregoing references to certain provisions of the Purchase Agreement, the Support Agreements and the Release Agreement are not complete and are subject to and qualified in their entirety by reference to the Purchase Agreement filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on October 15, 2025 (the “October 15 8-K”), the Amendment Agreement filed as Exhibit 10.2 to the October 15 8-K, and the form of Support Agreement, together with the form of Termination and Release Agreement attached to the form of Support Agreement as Exhibit A, filed as Exhibit 10.3 to the October 15 8-K.
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PWSH has a branch office located in Shenzhen, China (Pixelworks Semiconductor Technology (Shanghai) Co. Ltd. Shenzhen Branch Office No. 1), which is primarily for sales and customer support for PWSH, and a subsidiary located in Hong Kong (Pixelworks Hong Kong Limited), which has no employees and is used for distribution of PWSH products.
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The Company’s definitive proxy statement filed with the SEC on October 27, 2025, includes additional information under the heading “Principal Terms and Conditions of the Purchase Agreement”, which description is incorporated herein by reference.
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More than a majority of our operations are in China, but our executive officers and all of our directors but one are located in the United States (and he resides in Singapore). We are neither a PRC operating company nor do we conduct our operations in China through the use of variable interest entities.
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As a result of the Sale, Pixelworks no longer operates a semiconductor business, which included the businesses that it previously described as “Mobile” (smartphone and tablet) and “Home & Enterprise” (projectors, personal video recorders, and over-the-air streaming devices). Following the Sale, the Company is focused on developing and licensing cinematic visualization solutions, including its flagship TrueCut Motion TM platform.
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Our auditor is Grant Thornton LLP, with headquarters in Chicago, Illinois. The Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, and related regulations, therefore do not apply to our Company.
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For more information regarding the events leading up to the Sale, and about the Mobile and Home & Enterprise businesses, see Item 1 under the heading “Overview” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 13, 2025 (the “ 2024 10-K ”).
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As part of the Strategic Plan we intended to qualify PWSH to file an application for an initial public offering on the Shanghai Stock Exchange’s Science Technology Innovation Board, known as the STAR Market (such initial public offering on the STAR Market, the “Listing,” and such application, an "IPO application"), a lengthy process that involves several reviews by various government agencies of China, such as the Shanghai Stock Exchange (“SSE”) and the China Securities Regulatory Commission (“CSRC”).
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Following the Sale, we have an intellectual property portfolio of 56 patents issued and 6 patents pending related to the visual display of digital image data.
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The market conditions and regulatory requirements continue to not be conducive to a successful listing by PWSH.
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We are focusing our research and development efforts on developing video algorithms that improve quality and enable the delivery of highly authentic viewing experiences with superior visual quality, across all screens – from cinema to smartphone and beyond.
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We continue to believe that the Listing could have many benefits, including improved access to new capital markets and the funding of PWSH’s growth worldwide, and thus remain prepared to re-engage with the various government agencies of China and our advisors involved in a Listing once those conditions and requirements sufficiently improve.
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We seek to expand our technology portfolio through internal development and co-development with business partners, and we continually evaluate acquisition opportunities and other ways to leverage our technology into other high-value markets. 4 Key Markets Prior to the Sale, the Company focused on its Mobile and Home & Enterprise markets.
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There is no guarantee that PWSH will be approved for a Listing at any point in the future. The Listing of PWSH would not change the status of PXLW as a U.S. public company.
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For more information about the Mobile and Home & Enterprise markets, see Item 1 under the heading “Key Markets” in the 2024 10-K . Following the Sale, the Company is focused on what it calls the Cinematic market.
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Pixelworks continues to work with Morgan Stanley as financial advisor to assist with reviewing potential alternative strategic options specific to inbound interest in the Pixelworks Shanghai subsidiary. 6 Key Markets We target three key markets with our products and services: Mobile, Home & Enterprise, and Cinema. Mobile Our Mobile market category is composed of smartphones and tablets.
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Cinematic Our Cinematic market category is composed of applications and services for content creation, remastering and video streaming, and display of cinematic video. Our Cinematic solutions expand the creative palette for filmmakers and ensure the correct presentation of creative intent across screens.
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The user experience with mobile video and gaming is a key driver of growth in the smartphone and tablet market. Smartphones and tablets pose a number of unique challenges as mobile display systems. Digital video content is available in a wide range of resolutions and frame rates. Power is of primary importance, impacting form factor, cost, and performance.
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TrueCut Motion technology preserves artistic intent across all screens, from theaters to TVs to smartphones to augmented and virtual reality devices. Core Products and Technology Core Products Prior to the Sale, the Company’s core products consisted of Semiconductor Hardware and Software products developed and sold by the Company.
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As these systems have added more functionality, new features have had to compete for battery life, internal bandwidth, and space. The addition of high-resolution and high refresh rate displays has further increased the burden on these resources.
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For more information about the Semiconductor Hardware and Software Products, see Item 1 under the heading “Core Products” in the 2024 10-K . Following the Sale, the Company is focused on our TrueCut Motion Platform and developing other cinematic visualization solutions.
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The challenges of playing low resolution and frame rate content on a high resolution and frame rate display and of rendering high resolution and frame rate mobile games in a power-efficient way are limiting the users’ visual experience on mobile video and gaming. Our Mobile solutions are designed improve this user experience.
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Technology Prior to the Sale, our core technology supported the Mobile and Home & Enterprise businesses. For a description of the technology supporting our products in the Mobile and Home & Enterprise businesses, see “Technology” in the 2024 10-K . Following the Sale, the Company is focused on the technology described below with respect to our Cinematic business.
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Using the same visual processing technology in a mobile device that was developed for large screen TVs is neither feasible nor desirable. The visual processing pipelines used in TVs consume many watts of power and would be unsuitable for battery powered systems. In TVs, the size constraints on electronics are significantly less stringent when compared to mobile systems.
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Evolution of Display Technology and The Performance Gap Display technologies continue to evolve to enable higher resolutions, faster response times and frame rates, higher contrast, increased brightness, and deeper and richer colors. Many smartphones, tablets and PC displays now can display video in High Dynamic Range (HDR) using the same DCI-P3 color gamut used in digital cinema theaters.
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To furnish the Mobile market with appropriate solutions, we have taken a holistic, system-wide view and re-invented its visual processing technology to fit within the mobile constraints of battery life, bandwidth, form factor, performance, and use cases.
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Movie exhibitors are now offering a different sort of theatrical experience by providing Premium Format theaters such as IMAX, Dolby Cinema, AMC PRIME, Laser, and XL, Cinemark XD, Marcus Theaters UltraScreen DLX, and others. These enhanced theaters use much larger screens, superior 4K laser projection, and other technologies to provide brighter, bigger and more colorful displays than standard theaters.
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This approach has enabled us to create technology that meets the power and size requirements of mobile as well as enabling low power but high frame rate, high resolution and high dynamic range video and gaming experiences. The burgeoning global gaming market is dominated by the smartphone segment.
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Finally, a new product category of virtual and augmented reality technology, such as Meta AI and Ray Ban glasses and Apple VisionPro headsets, enables a 3D visual experience that is more immersive to the user. 5 This evolution of display technology outpaces that of mainstream content formats, creating a quality gap that makes it difficult to provide a consistent experience across the varied platforms.
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The vast majority of gamers worldwide play games on a smartphone (June 2020 Ericsson Mobility Report). PC-grade AAA/Cinematic games are being deployed for smartphones. These games require more intensive visual processing, including higher frame rate, resolution, photorealistic, picture quality and responsiveness.
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If this time is too long, the image does not update swiftly and motion sequences seem to smear or blur. These judder and motion blur artifacts are even more noticeable on bright, large screen, high contrast displays, and the displays themselves offer only mitigation that leads to other troublesome and distracting artifacts.
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Cost, size and power limit the rendering capabilities of mobile application processors, which are not keeping up with the sophistication of mobile games. Furthermore, battery life and thermal challenges remain difficult to overcome. Our visual processor solutions enable the most popular mobile games to achieve previously impossible visual experiences and battery life.
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Television manufacturers attempt to solve judder and blur by including frame-rate conversion in the TV hardware, but many reviewers complain about new artifacts that are created, such as halos, breakup in the image and the so-called “soap opera effect”.
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As 5G network coverage rapidly expands worldwide, the availability of 5G chipsets targeting smartphones should continue to reinvigorate market growth given the increased speed and lower latency of the wireless connections. In addition, service providers in some countries will also utilize 5G networks to provide fixed wireless broadband.
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But without frame-rate conversion, the judder and blur are substantially worsened by HDR, 4K and other improvements in contrast, color and detail. Pixelworks was a pioneer of frame rate conversion technology and, prior to the Sale, was well known as the picture-quality leader in display processors for mobile and 3LCD projection devices.
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We further believe our compelling Mobile visual processing functionality, combined with 5G capability, may help motivate consumers to replace their 3G and 4G phones at a faster rate than occurred in the past. Finally, a new smartphone category has emerged as top vendors have previewed foldable smartphones which serve as a phone, and a mini tablet when unfolded.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

70 edited+12 added−220 removed43 unchanged
Biggest changeFailure to comply with these laws and rules could lead to investigation by regulatory authorities, de-listing from the Nasdaq Capital Market, or penalties imposed on us. 24 Regulations related to conflict minerals may adversely impact our business.
Biggest changeWe spend a significant amount of management time and external resources to comply with changing laws, regulations and standards relating to corporate governance and public disclosure, including evolving SEC rules and regulations and Nasdaq rules. Failure to comply with these laws and rules could lead to investigation by regulatory authorities, de-listing from Nasdaq, or penalties imposed on us.
If we fail to anticipate the changing needs of our target markets and emerging technology trends, or adapt that strategy as market conditions evolve, in a timely manner to exploit potential market opportunities our business will be harmed.
If we fail to anticipate the changing needs of our target markets and emerging technology trends or adapt that strategy as market conditions evolve to exploit potential market opportunities in a timely manner, our business will be harmed.
Also, generating revenue from these arrangements is a lengthy and complex process that may last beyond the period in which efforts begin and, once an agreement is in place, the timing of revenue recognition may depend on events such as customer acceptance of deliverables, achievement of milestones, our ability to track and report progress on contracts, customer commercialization of the licensed technology and other factors, any or all of which may or may not be achieved.
Also, generating revenue from these arrangements is a lengthy and complex process that may last beyond the period in which efforts begin and, once an agreement is in place, the timing of revenue recognition may depend on events such as customer acceptance of deliverables, achievement of milestones, our ability to track and report progress on contracts, customer commercialization of the licensed technology, and other factors, any or all of which may not be achieved.
The accounting rules associated with recognizing revenue from these transactions are complex and subject to interpretation. Due to these factors, the amount of licensing revenue recognized in any period, if any, and our results of operations, may differ significantly from our expectations.
The accounting rules associated with recognizing revenue from these transactions are complex and subject to interpretation. Due to these factors, the amount of licensing revenue, if any, recognized in any period, and our results of operations, may differ significantly from our expectations.
Additionally, if any new internal control procedures which may be adopted or our existing internal control procedures are deemed inadequate, or if we identify additional material weaknesses in our disclosure controls or internal controls over financial reporting in the future, we will be unable to assert that our internal controls are effective.
Additionally, if any new internal control procedures which may be adopted or our existing internal control procedures are deemed inadequate, or if we identify additional material weaknesses in our disclosure controls or internal control over financial reporting in the future, we will be unable to assert that our internal controls are effective.
This could result in the lack of a market for our common stock, cause a decrease in the value of our common stock, and adversely affect our business, financial condition and results of operations. Under the Nasdaq Listing Rules, we must maintain a minimum price of $1.00 per share for continued listing on Nasdaq.
This could result in the lack of a market for our common stock, cause a decrease in the value of our common stock, and adversely affect our business, financial condition and results of operations. Under the Nasdaq Listing Rules, we must maintain a minimum price of $1.00 per share for continued listing on the Nasdaq.
The following are examples of such provisions: • if the number of directors is fixed by the board at eight or more, our board of directors is divided into three classes serving staggered terms, which would make it more difficult for a group of shareholders to quickly replace a majority of directors; • our board of directors is authorized, without prior shareholder approval, to create and issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us or to effect a change of control, commonly referred to as "blank check" preferred stock; • members of our board of directors can be removed only for cause and at a meeting of shareholders called expressly for that purpose, by the vote of 75 percent of the votes then entitled to be cast for the election of directors; • our board of directors may alter our bylaws without obtaining shareholder approval; and shareholders are required to provide advance notice for nominations for election to the board of directors or for proposing matters to be acted upon at a shareholder meeting; • Oregon law permits our board to consider other factors beyond shareholder value in evaluating any acquisition offer (so-called "expanded constituency" provisions); and • a supermajority (67%) vote of shareholders is required to approve certain fundamental transactions.
The following are examples of such provisions: • if the number of directors is fixed by the board at eight or more, our board of directors is divided into three classes serving staggered terms, which would make it more difficult for a group of shareholders to quickly replace a majority of directors; • our board of directors is authorized, without prior shareholder approval, to create and issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us or to effect a change of control, commonly referred to as "blank check" preferred stock; • members of our board of directors can be removed only for cause and at a meeting of shareholders called expressly for that purpose, by the vote of 75 percent of the votes then entitled to be cast for the election of directors; • our board of directors may alter our bylaws without obtaining shareholder approval; and shareholders are required to provide advance notice for nominations for election to the board of directors or for proposing matters to be acted upon at a shareholder meeting; • Oregon law permits our board to consider other factors beyond shareholder value in evaluating any acquisition offer (so-called "expanded constituency" provisions); and • a supermajority (67%) vote of shareholders is required to approve certain fundamental transactions. 16
In addition to the minimum $1.00 per share continued listing requirements, the Nasdaq Capital Market has other continued listing requirements, including the requirement that we have at least 300 total shareholders, and we must meet all of the criteria under at least one of the following three standards: (i) a minimum of $500,000 in net income from continuing operations (in the latest fiscal year or in two of the last three fiscal years), at least 500,000 publicly held shares, at least $1.0 million in market value of publicly held shares and at least two registered and active market makers (as such term is defined by the Nasdaq Listing Rules); (ii) a minimum of $35.0 million in market value of listed securities, at least 500,000 publicly held shares, at least $1.0 million in market value of publicly held shares and at least two registered and active market makers; or (iii) a 36 minimum of $2.5 million in shareholders' equity, at least 500,000 publicly held shares, at least $1.0 million in market value of publicly held shares and at least two registered and active market makers.
In addition to the minimum $1.00 per share continued listing requirement, the Nasdaq has other continued listing requirements, including the requirement that we have at least 300 total shareholders, and we must meet all of the criteria under at least one of the following three standards: (i) a minimum of $500,000 in net income from continuing operations (in the latest fiscal year or in two of the last three fiscal years), at least 500,000 publicly held shares, at least $1.0 million in market value of publicly held shares and at least two registered and active market makers (as such term is defined by the Nasdaq Listing Rules); (ii) a minimum of $35.0 million in market value of listed securities, at least 500,000 publicly held shares, at least $1.0 million in market value of publicly held shares and at least two registered and active market makers; or (iii) a minimum of $2.5 million in shareholders' equity, at least 500,000 publicly held shares, at least $1.0 million in market value of publicly held shares and at least two registered and active market makers.
As we have limited insurance coverage, any incurred liability resulting from uncovered claims could adversely affect our financial condition and results of operations . 23 Our insurance policies may not be adequate to fully offset losses from covered incidents, and we do not have coverage for certain losses.
As we have limited insurance coverage, any incurred liability resulting from uncovered claims could adversely affect our financial condition and results of operations . Our insurance policies may not be adequate to fully offset losses from covered incidents, and we do not have coverage for certain losses.
If we are unable to maintain effective disclosure controls and internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock may be materially and adversely affected.
If we are unable to maintain effective disclosure controls and internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock may be materially and adversely affected.
If we are unable to maintain effective disclosure controls and internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports. We have, in the past, and may, in the future, identify material weaknesses in our internal controls over financial reporting.
If we are unable to maintain effective disclosure controls and internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports. We have, in the past, and may, in the future, identify material weaknesses in our internal control over financial reporting.
Other factors that could negatively impact our stock price include: • actual or anticipated fluctuations in our operating results; • changes in or failure to meet expectations as to our future financial performance; • changes in or failure to meet financial estimates of securities analysts; • announcements by us or our competitors of technological innovations, design wins, contracts, standards, acquisitions or divestitures; • the operating and stock price performance of other comparable companies; • issuances or proposed issuances of equity, debt or other securities by us, or sales of securities by our security holders; and • changes in market valuations of other technology companies.
Other factors that could negatively impact our stock price include: • actual or anticipated fluctuations in our operating results; • changes in or failure to meet expectations as to our future financial performance; • changes in or failure to meet financial estimates of securities analysts; • announcements by us or our competitors of technological innovations, contracts, standards, acquisitions or divestitures; • the operating and stock price performance of other comparable companies; • issuances or proposed issuances of equity, debt or other securities by us, or sales of securities by our security holders; and • changes in market valuations of other technology companies.
For portions of our IT infrastructure, including business management and communication software products, we rely on products and services provided by third parties. These providers may also experience breaches and attacks to their products which may impact our systems. Data security breaches may also result from non-technical means, such as actions by an employee with access to our systems.
For portions of our IT infrastructure, including business management and communication software products, we rely on products and services provided by third parties. These providers may also experience breaches and attacks to their products that may impact our systems. Data security breaches may also result from non-technical means, such as actions by an employee with access to our systems.
Our success depends on the continued services of our executive officers and other key management, engineering, and sales and marketing personnel and on our ability to continue to attract, retain and motivate qualified personnel. Competition for skilled engineers and management personnel is intense within our industry, and we may not be successful in hiring and retaining qualified individuals.
Our success depends on the continued services of our executive officers and other key management, engineering, and sales and marketing personnel, as well as our ability to continue to attract, retain and motivate qualified personnel. Competition for skilled engineers and management personnel is intense within our industry, and we may not be successful in hiring and retaining qualified individuals.
Investors should also refer to the other information contained or incorporated by reference in this Annual Report on Form 10-K for the year ended December 31, 2024, including our consolidated financial statements and related notes, and our other filings made from time to time with the SEC.
Investors should also refer to the other information contained or incorporated by reference in this Annual Report on Form 10-K for the year ended December 31, 2025, including our consolidated financial statements and related notes, and our other filings made from time to time with the SEC.
We can provide no assurance that additional financing will be available at all or, if available, that we would be able to obtain additional financing on terms favorable to us. 20 We license our intellectual property, which exposes us to risks of infringement or misappropriation, and may cause fluctuations in our operating results.
We can provide no assurance that additional financing will be available at all or, if available, that we would be able to obtain additional financing on terms favorable to us. 10 We license our intellectual property, which exposes us to risks of infringement or misappropriation, and may cause fluctuations in our operating results.
Effective patent, copyright, trademark and trade secret protection may be unavailable or limited in foreign countries and, thus, make the possibility of piracy of our technology and products more likely in these countries. We cannot assure you that the degree of protection offered by patent or trade secret laws will be sufficient.
Effective patent, copyright, trademark and trade secret protection may be unavailable or limited in foreign countries and, thus, make the possibility of piracy of our technology and products more likely in these countries. We cannot assure you that the degree of protection offered by intellectual property laws will be sufficient.
Future sales of our equity could result in significant dilution to our existing shareholders and depress the market price of our common stock. It is likely that we will need to seek additional capital in the future and from time to time.
Future sales of our equity could result in significant dilution to our existing shareholders and depress the market price of our common stock. It is possible that we will need to seek additional capital from time to time in the future.
An ownership change is generally defined as a greater than 50% increase in equity ownership by 5% shareholders in any three-year period. In the event of certain changes in our shareholder base, we may at some time in the future experience an "ownership change" and the use of our federal net operating loss carryforwards may be limited.
An ownership change is generally defined as a greater than 50% point increase in equity ownership by 5% shareholders in any three-year period.In the event of certain changes in our shareholder base, we may at some time in the future experience an 'ownership change' and the use of our federal net operating loss carryforwards may be limited.
Additionally, any compromise of our information security could result in the unauthorized publication of our confidential business or proprietary information, cause an interruption in our operations, result in the unauthorized release of customer or employee data, result in a violation of privacy or other laws, or expose us to a risk of litigation or damage our reputation, any or all of which could harm our business and operating results.
Additionally, any compromise of our information security could result in the unauthorized publication of our confidential business or proprietary information, cause an interruption in our operations, result in the unauthorized release of customer or employee data, result in a violation of privacy or other laws, or expose us to litigation and reputational risk, any or all of which could harm our business and operating results.
Any IP litigation or claims also could force us to do one or more of the following: • stop selling products using technology that contains the allegedly infringing IP; • attempt to obtain a license to the relevant IP, which may not be available on terms that are acceptable to us or at all; • attempt to redesign those products that contain the allegedly infringing IP; or • pay damages for past infringement claims that are determined to be valid or which are arrived at in settlement of such litigation or threatened litigation.
Any IP litigation or claims also could force us to do one or more of the following: • stop selling products using technology that contains the allegedly infringing IP; • attempt to obtain a license to the relevant IP, which may not be available on terms that are acceptable to us or at all; • attempt to redesign those products that contain the allegedly infringing IP; or • pay damages for past infringement claims that are determined to be valid or in order to settle such litigation or threatened litigation.
This could result in further potential dilution to our existing shareholders and the impairment of our ability to raise capital through the sale of equity, debt or other securities. We may be unable to regain compliance with Nasdaq Listing Rules, which could cause our common stock to be delisted from the Nasdaq Capital Market.
This could result in further potential dilution to our existing shareholders and the impairment of our ability to raise capital through the sale of equity, debt or other securities. We may be unable to maintain compliance with Nasdaq Listing Rules, which could cause our common stock to be delisted from Nasdaq.
Additionally, market fluctuations, as well as general economic and political conditions, including recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of our common stock.
Additionally, market fluctuations, as well as general economic and political conditions, including recessions or interest rate changes, may negatively impact the market price of our common stock.
In addition, if demand for products and solutions from these markets is below our expectations, if we fail to achieve consumer or market acceptance of them or if we are not able to develop these products and solutions in a cost effective or efficient manner, we may not realize benefits from our strategy.
In addition, if demand for products and solutions from these markets is below our expectations, if we fail to achieve consumer or market acceptance, or if we are not able to develop those products and solutions in a cost effective or efficient manner, we may not realize benefits from our strategy.
Factors that may contribute to these fluctuations include those described in this "Risk Factors" section of this report, such as the timing, changes in or cancellation of orders by customers, market acceptance of our products and our customers’ products and the timing and extent of product development costs.
Factors that may contribute to these fluctuations include those described in this "Risk Factors" section of this report, such as the timing, changes in or cancellation of engagements by customers, market acceptance of our products, and the timing and extent of product development costs.
Our cash balances are also lower than those of our competitors, which may limit our ability to develop competitive new products on a timely basis or at all. If we are unable to successfully introduce new or enhanced products, our sales, operating results and financial condition will be adversely affected.
Our cash balances, while enhanced by the Sale, may also be lower than those of our competitors, which may limit our ability to develop competitive new products on a timely basis or at all. If we are unable to successfully introduce new or enhanced products, our sales, operating results and financial condition will be adversely affected.
In the event there is a temporary or permanent injunction entered prohibiting us from marketing or selling certain of our products, or a successful claim of infringement against us requiring us to pay damages or royalties to a third-party and we fail to develop or license a substitute technology, our business, results of operations or financial condition could be materially adversely affected.
In the event there is a temporary or permanent injunction entered prohibiting us from marketing or selling certain of our products, or a successful claim of infringement against us, and we fail to develop or license a substitute technology, our business, results of operations or financial condition could be materially adversely affected.
Examples include the increased adoption of artificial intelligence in visual processing systems, the growing use of broadband to deliver video content, increased display resolution and size, faster screen refresh rates, video capability such as High Dynamic Range, the proliferation of new display devices and the drive to network display devices together.
Examples include the increased adoption of artificial intelligence in visual processing systems, increased display resolution and size, faster screen refresh rates, video capability such as High Dynamic Range, the proliferation of new display devices and the drive to network display devices together.
If one or more of these large shareholders were to sell large portions of their holdings in a relatively short time, for liquidity or other reasons, the prevailing market price of our common stock could be negatively affected.
For example, a number of shareholders own significant blocks of our common stock. If one or more of these large shareholders were to sell large portions of their holdings in a relatively short time, for liquidity or other reasons, the prevailing market price of our common stock could be negatively affected.
If we are not profitable in the future, we may be unable to continue our operations. We have incurred operating losses each fiscal year since 2010 and have an accumulated deficit of $505.9 million as of December 31, 2024.
If we are not profitable in the future, we may be unable to continue our operations. We have incurred operating losses each fiscal year since 2010 and have an accumulated deficit of $528 million as of December 31, 2025.
Additionally, our federal net operating losses may be limited by Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), which imposes an annual limit on the ability of a corporation that undergoes an "ownership change" to use its net operating loss carryforwards to reduce its tax liability.
Our ability to utilize our federal net operating losses may be limited by Section 382 of the Internal Revenue Code of 1986, as amended, which imposes an annual limit on the ability of a corporation that undergoes an 'ownership change' to use its net operating loss carryforwards to reduce its tax liability.
Financial resource constraints could limit our ability to execute our product strategy or require us to implement additional restructuring plans, particularly if we are unable to generate sufficient cash from operations or obtain additional sources of financing. Any future restructuring actions may slow our development of new or enhanced products by limiting our research and development and engineering activities.
Financial resource constraints could limit our ability to execute our product strategy, particularly if we are unable to generate sufficient cash from operations or obtain additional sources of financing. Such constraints may slow our development of new or enhanced products by limiting our research and development and engineering activities.
Acquired assets or businesses may not achieve the anticipated benefits we expect due to a number of factors including: unanticipated costs or liabilities associated with such acquisition, including in the case of acquisitions we may make outside of the United States, difficulty in operating in foreign countries or complying with foreign regulatory requirements, incurrence of acquisition-related costs, harm to our relationships with existing customers as a result of such acquisition, harm to our brand and reputation, the loss of key employees in the acquired businesses, use of resources that are needed in other parts of our business, and use of substantial portions of our available cash to consummate any such acquisition.
Acquired assets or businesses may not achieve the anticipated benefits we expect due to a number of factors including: unanticipated costs or liabilities associated with such acquisition; incurrence of acquisition-related costs; harm to our relationships with existing customers as a result of such acquisition; harm to our brand and reputation; the loss of key employees in the acquired businesses; use of resources that are needed in other parts of our business; and use of substantial portions of our available cash to consummate any such acquisition.
As a result of the historically low volume, our shareholders may be unable to sell significant quantities of common stock in the public trading markets without a significant reduction in the price of our common shares.
If trading volumes return to historically low levels, our shareholders may be unable to sell significant quantities of common stock in the public trading markets without a significant reduction in the price of our common shares.
Such markets may not develop or may take longer to develop than we expect. We cannot assure you that the products we are developing will adequately address the demands of our target customers, or that we will be able to produce our new products at costs that enable us to price these products competitively.
We cannot assure you that the products we are developing will adequately address the demands of our target customers, or that we will be able to produce our new products at costs that enable us to price these products competitively.
If we are not able to respond to the rapid technological changes and evolving industry standards in the markets in which we compete, or seek to compete, our products may become less desirable or obsolete.
We cannot assure you that we can compete successfully against current or potential competitors. If we are not able to respond to the rapid technological changes and evolving industry standards in the markets in which we compete, or seek to compete, our products may become less desirable or obsolete.
Increased competition from both competitors and our customers’ internal development efforts could harm our business, financial condition and results of operations by, for example, increasing pressure on our profit margin or causing us to lose sales opportunities.
Our current or potential customers have developed, and may continue to develop, their own proprietary technologies and become our competitors. Increased competition from both competitors and our customers’ internal development efforts could harm our business, financial condition and results of operations by, for example, increasing pressure on our profit margin or causing us to lose sales opportunities.
Further, the issuance and sale of, or the perception that we may issue and sell, additional shares of common stock pursuant to an “at the market” equity offering program, a private placement or another offering could have the effect of depressing the market price of our common stock or increasing the volatility thereof.
Further, the issuance and sale of, or the perception that we may issue and sell, additional shares of common stock pursuant to an “at the market” equity offering program, a private placement or another offering could have the effect of depressing the market price of our common stock or increasing the volatility thereof. 15 Any issuance by us or sales of our securities by our security holders, including by any of our affiliates, or the perception that such issuances or sales could occur, could negatively impact the market price of our securities.
Although our TrueCut Motion product is the first motion grading solution for the cinematic market, competitive solutions could arise rapidly. These competitive solutions could come from several sources, including companies that provide solutions for other post-processing needs (such as Dolby Laboratories, Inc., Epic Games, Inc., Unity Technologies, Adobe Inc., Soluciones Gráficas por Ordenador S.L.
These competitive solutions could come from several sources, including companies that provide solutions for other post-processing needs (such as Dolby Laboratories, Inc., Epic Games, Inc., Unity Technologies, Adobe Inc., Soluciones Gráficas por Ordenador S.L.
The price of our common stock may decline and the value of our shareholders' investment may be reduced regardless of our performance. The daily trading volume of our common stock has historically been relatively low, although, in the three most recent years, trading volume increased compared to historical levels.
The price of our common stock may decline and the value of our shareholders' investment may be reduced regardless of our performance. The daily trading volume of our common stock was historically relatively low, but has been sporadically higher in recent years, and more frequently higher since mid-2025, compared to historical levels.
In addition, in the past, following periods of volatility in the overall market and the market price of a particular company's securities, securities class action litigation has often been instituted against these companies.
In addition, in the past, following periods of volatility in the overall market and the market price of a particular company's securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources.
These information systems include telecommunications, the Internet, our corporate intranet, various computer hardware and software applications, network communications and e-mail. These information systems are subject to attacks, failures and access denials from a number of potential sources including viruses, destructive or inadequate code, power failures, and physical damage to computers, communication lines and networking equipment.
These information systems are subject to attacks, failures and access denials from a number of potential sources including viruses, destructive or inadequate code, power failures, and physical damage to computers, communication lines and networking equipment.
These suits pressure defendants into entering settlement arrangements to quickly dispose of such suits, regardless of merit. We may also face claims brought by companies that are organized solely to hold and enforce patents.
These claims may be asserted initially or as counterclaims in response to claims made by a company alleging infringement of intellectual property rights. These suits pressure defendants into entering settlement arrangements to quickly dispose of such suits, regardless of merit. We may also face claims brought by companies that are organized solely to hold and enforce patents.
Our stock price is volatile and we believe that we continue to remain susceptible to the market value of our listed securities and/or the market value of our publicly held securities falling below $35.0 million and $1.0 million, respectively.
Our stock price is volatile and the market value of our listed securities and/or the market value of our publicly held securities remains susceptible to falling below $35.0 million and $1.0 million, respectively. Accordingly, we cannot assure you that we will continue to comply with the Nasdaq’s continued listing requirements.
Delayed sales, lower margins or lost customers as a result of these disruptions could adversely affect our financial results, stock price and reputation. 18 If we fail to retain or attract the specialized technical and management personnel required to successfully operate our business, it could harm our business and may result in lost sales and diversion of management resources.
If we fail to retain or attract the specialized technical and management personnel required to successfully operate our business, it could harm our operations and may result in lost sales and diversion of management resources.
If we are unable to successfully compete in our target markets, demand for our products, solutions and technologies could decrease, which would cause our revenue to decline and our financial results to suffer. 17 Our product strategy, which is targeted at markets demanding superior video and digital image quality as well as efficient video delivery, may not address the demands of our target customers and may not lead to increased revenue in a timely manner or at all, which could materially adversely affect our results of operations and limit our ability to grow.
Our product strategy, which is targeted at markets demanding superior image quality, may not address the demands of our target customers and may not lead to increased revenue in a timely manner or at all, which could materially adversely affect our results of operations and limit our ability to grow.
Additionally, any new equity securities issued by us could have rights, preferences or privileges senior to those of our common stock.
The issuance and sale of additional shares of our common stock will have a dilutive impact on our existing shareholders. Additionally, any new equity securities issued by us could have rights, preferences or privileges senior to those of our common stock.
Any transition in our senior management team may involve a diversion of resources and management attention, be disruptive to our daily operations or impact public or market perception, any of which could have a negative impact on our business or stock price.
Any transition in our senior management team may involve a diversion of resources and management attention, be disruptive to our daily operations or impact public or market perception, any of which could have a negative impact on our business or stock price. 9 We have significantly fewer financial resources than most of our competitors, which limits our ability to implement new products or enhancements to our current products, which in turn could adversely affect our future sales and financial condition.
This litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources. 35 The interest of our current or potential significant shareholders may conflict with other shareholders and they may attempt to effect changes or acquire control, which could adversely affect our results of operations and financial condition.
The interests of our current or potential significant shareholders may conflict with other shareholders and they may attempt to effect changes or acquire control, which could adversely affect our results of operations and financial condition.
Any transactions, if consummated, may consume a material portion of our working capital or require the issuance of equity securities that may result in dilution to existing shareholders.
Any transactions, if consummated, may consume a material portion of our working capital or require the issuance of equity securities that may result in dilution to existing shareholders. If additional funds are required to support our working capital requirements, acquisitions or other purposes, we may seek to raise funds through debt or equity financing or from other sources.
We have adopted a product strategy that focuses on our core competencies in visual display processing and delivering high levels of video and digital image quality. With this strategy, we continue to make further investments in the development of our image processor architecture for the projector market, with particular focus on adding increased performance and functionality.
We have adopted a product strategy that focuses on our core competencies in visual display processing and delivering high levels of video and digital image quality that remains true to creative intent. With this strategy, we continue to make further investments in the development of our cinematic visualization tools and technology, including our TrueCut Motion platform.
The introduction of new technologies and emergence of new industry standards could render our products less desirable or obsolete, which could harm our business and significantly decrease our revenue.
The markets in which we compete or seek to compete are subject to rapid technological change, changing customer requirements for new products and features and evolving industry standards. The introduction of new technologies and emergence of new industry standards could render our products less desirable or obsolete, which could harm our business and significantly decrease our revenue.
We cannot assure you that our strategic direction will result in innovative products and technologies that provide value to our customers and partners.
Our existing and new markets and products may require a considerable investment of technical, financial, compliance, sales and marketing resources. We cannot assure you that our strategic direction will result in innovative products and technologies that provide value to our customers and partners.
If and when we achieve profitability depends upon a number of factors, including our ability to develop and market innovative products, accurately estimate inventory needs, contract effectively for manufacturing capacity and maintain sufficient funds to finance our activities.
If and when we achieve profitability depends upon a number of factors, including our ability to develop and market innovative products and maintain sufficient funds to finance our activities. We cannot assure our investors that we will ever achieve annual profitability, or that we will be able to maintain profitability if achieved.
This environment has also made it difficult for us to accurately forecast and plan future business activities. Company Specific Risks If we fail to meet the evolving needs of our markets, identify new products, services or technologies, or successfully compete in our target markets, our revenue and financial results will be adversely impacted.
Company Specific Risks If we fail to meet the evolving needs of our markets, identify new products, services or technologies, or successfully compete in our target markets, our revenue and financial results will be adversely impacted. Pixelworks designs, develops and markets cinematic visualization solutions, including our flagship TrueCut Motion platform.
There is no assurance that we will be able to maintain a consistent level of licensing revenue or mix of licensing revenue and revenue from product sales, which could result in wide fluctuations in our results of operations from period to period, making it difficult to accurately measure the performance of our business.
Additionally, there is no assurance that we will be able to maintain a consistent level of licensing revenue, which could result in significant fluctuations in our results of operations from period to period. Our net operating loss carryforwards may be limited or they may expire before utilization.
In addition, our success depends on our ability to identify emerging industry trends and to develop new products, solutions and technologies. Our existing markets and products and new markets and products may require a considerable investment of technical, financial, compliance, sales and marketing resources.
Our success depends to a significant extent on our ability to meet the evolving needs of the Cinematic market and to enhance our existing products, solutions and technologies. In addition, our success depends on our ability to identify emerging industry trends and to develop new products, solutions and technologies.
Our net operating loss carryforwards may be limited or they may expire before utilization. As of December 31, 2024, we had federal, state and foreign net operating loss carryforwards of approximately $155.6 million, $17.4 million, and $133.2 million, respectively, which will begin to expire in 2025.
As of December 31, 2025, we had federal and state net operating loss carryforwards of approximately $157.9 million and $18.3 million, respectively, which will begin to expire in 2026. Approximately $44.6 million of our federal net operating losses have an indefinite life.
On the other hand, if we underestimate demand, we could forego revenue opportunities, lose market share and damage our customer relationships. We may be unable to successfully manage any future growth, including the integration of any acquisition or equity investment, which could disrupt our business and severely harm our financial condition.
If our insurance coverage is inadequate to protect us against catastrophic losses, any uncovered losses could adversely affect our financial condition and results of operations. 11 We may be unable to successfully manage any future growth, including the integration of any acquisition or equity investment, which could disrupt our business and severely harm our financial condition.
In addition, start-up companies may seek to compete in our markets. 27 Many of our competitors have longer operating histories and greater resources to support development and marketing efforts than we do. Some of our competitors operate their own fabrication facilities.
Many of our competitors have longer operating histories and greater resources to support development and marketing efforts than we do. These competitors may be able to react more quickly and devote more resources to efforts that compete directly with our own.
Additionally, news about PWSH may affect the price of Pixelworks’ common stock, and vice versa, creating additional uncertainty and volatility. General Risks The price of our common stock has and may continue to fluctuate substantially. Our stock price and the stock prices of technology companies similar to Pixelworks have been highly volatile.
These developments could result in an inability to compete for customers or otherwise adversely affect our results of operations. 14 General Risks The price of our common stock has and may continue to fluctuate substantially. Our stock price and the stock prices of technology companies similar to Pixelworks have been highly volatile.
We rely upon certain critical information systems for the operation of our business, and the failure of any critical information system may result in serious harm to our business. We maintain and rely upon certain critical information systems for the effective operation of our business.
Delayed sales, lower margins or lost customers as a result of these disruptions could adversely affect our financial results, stock price and reputation. 12 We rely on certain critical information systems for the operation of our business, and the failure of any critical information system may result in serious harm to our business.
Our failure to predict market needs accurately or to timely develop new competitively priced products or product enhancements that incorporate new industry standards and technologies, including integrated circuits with increasing levels of integration and new features, using smaller geometry process technologies, may harm market acceptance and sales of our products.
Our failure to predict market needs accurately or to timely develop new competitively priced products or product enhancements that incorporate new industry standards and technologies may harm market acceptance and sales of our products. Additionally, software-based products and services such as our TrueCut Motion platform have a relatively lower barrier to entry than physically manufactured products.
We rely on a combination of patent, copyright, trademark and trade secret laws, as well as nondisclosure agreements and other methods, to help protect our proprietary technologies As of December 31, 2024, we held 261 patents and had 14 patent applications pending for protection of our significant technologies.
Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our technology, including our software code. We rely on a combination of patent, copyright, trademark and trade secret laws, as well as nondisclosure agreements and other methods, to help protect our proprietary technologies.
In addition, the Tax Cuts and Jobs Act (the "TCJA"), limits the deduction for net operating loss carryforwards to 80 percent of taxable income for losses arising in taxable years beginning after December 31, 2020. 21 We face a number of risks as a result of the concentration of our operations and customers in Asia.
In addition, the limit on deductions for net operating loss carryforwards included in the Tax Cuts and Jobs Act to 80 percent of taxable income for losses arising in taxable years beginning after December 31, 2020, was continued in the One Big Beautiful Bill Act signed into law on July 4, 2025.
In recent years, there has been an increase in the filing of so-called "nuisance suits," alleging infringement of intellectual property rights. These claims may be asserted initially or as counterclaims in response to claims made by a company alleging infringement of intellectual property rights.
In recent years, there has been significant litigation in the U.S. and in other jurisdictions involving patents and other intellectual property rights. In recent years, there has been an increase in the filing of so-called "nuisance suits," alleging infringement of intellectual property rights.
Our common stock price is currently and may in the future be below the minimum bid price for continued listing on Nasdaq.
We effected the Reverse Stock Split in order to regain compliance with this requirement, and following the Reverse Stock Split our common stock has not traded below the minimum bid price for continued listing on the Nasdaq.
As a result, our customers may cancel, change or delay product purchase commitments, which could cause our revenue to decline and materially and adversely affect our results of operations. Our revenue and operating results can fluctuate from period to period, which could cause our share price to decline.
If we are unable to develop these engagements or to generate a sufficient level of revenue from our TrueCut Motion platform, we may be unable to achieve profitability in the future or continue our operations. Our revenue and operating results can fluctuate from period to period, which could cause our share price to decline.
If we are unable to obtain or maintain any third-party license required to develop new products and product enhancements, we may have to obtain substitute technology with lower quality or performance standards, or at greater cost, either of which could seriously harm the competitiveness of our products. 29 Our limited ability to protect our IP and proprietary rights could harm our competitive position by allowing our competitors to access our proprietary technology and to introduce similar products.
If we do not appropriately anticipate the emergence of new market entrants or respond quickly to increased competition for our services, the demand for our products and services could suddenly and/or rapidly decline. 13 Our limited ability to protect our IP and proprietary rights could harm our competitive position by allowing our competitors to access our proprietary technology and to introduce similar products.
If we are not successful in the timely development of new products, we may fail to obtain new design wins and our financial results will be adversely affected. Intense competition in our markets may reduce sales of our products, reduce our market share, decrease our gross profit and result in large losses.
Company Risks Related to Our Markets Intense competition in our markets may reduce sales of our products, reduce our market share, decrease our gross profit and result in large losses. Although our TrueCut Motion product is the first motion grading solution for the cinematic market, competitive solutions could arise rapidly.
Removed
Risks Related to the Global Economy The continued uncertain global economic environment and volatility in global credit, banking and financial markets could materially and adversely affect our business and results of operations. The state of the global economy continues to be uncertain.
Added
If we are unable to successfully compete in our target markets, demand for our products, solutions and technologies could decrease, which would negatively impact our revenue and financial results.
Removed
Additionally, recent high-profile global business failures, such as the court-ordered liquidation of Chinese property developer Evergrande Group, have caused general uncertainty and concern regarding the health of the economy of China, which is a major market for our products.
Added
This strategy is designed to address the evolving needs of the production and delivery of high-quality digital video. These needs may not develop or may take longer to develop than we expect.
Removed
As a result, we or our manufacturers, vendors and customers might experience deterioration of our or their businesses, cash flow shortages and difficulty obtaining financing, which could result in interruptions or delays in the performance of any contracts, reductions and delays in customer purchases, delays in or the inability of the Company or our customers to obtain financing or of our customers to purchase our products, and bankruptcy of customers.
Added
Additionally, the business strategy for our TrueCut Motion platform requires that we develop and maintain relationships with multiple levels throughout the distribution chain for digital media, from creators to distributors to exhibitors (including the producers of display devices).
Removed
Furthermore, the constraints in the capital and credit markets, may limit our ability to access the capital we need when we need it, on favorable terms or otherwise, or limit the ability of our customers to meet their liquidity needs, which could result in an impairment of their ability to make timely payments to us and reduce their demand for our products, adversely impacting our results of operations and cash flows.
Added
If we are unable to develop or maintain relationships with one or more of those customer bases, if the costs of any such relationships become prohibitively expensive, or if such relationships do not provide us with sufficient revenue, our strategy could fail to produce the level of revenue needed to sustain our business.
Removed
Pixelworks designs, develops and markets visual processing and advanced media processing solutions for the Mobile, Home & Enterprise and Cinema markets. Our success depends to a significant extent on our ability to meet the evolving needs of these markets and to enhance our existing products, solutions and technologies.
Added
Although we have sufficient cash on hand to continue operating in the near term, if we are not profitable in the future, we may be unable to continue our operations. The source of our revenue is concentrated in our TrueCut Motion platform, which depends on relationships with multiple levels of the distribution chain for theatrical and home entertainment.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+1 added−0 removed6 unchanged
Biggest changeWe have a dedicated security team led by our Director of Worldwide IT, who, in coordination with management, including our Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer, monitors the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents in accordance with our incident response and recovery plans.
Biggest changeWe have engaged with consultants with over 20 years of experience in managing and monitoring corporate cybersecurity programs. Those consultants, in coordination with management, including our Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer, monitor the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents in accordance with our incident response and recovery plans.
The audit committee receives regular reports and updates on cybersecurity matters from the leaders of our dedicated security team and management, including developments on existing and new cybersecurity risks and how management is addressing and/or mitigating such risks, cybersecurity and data privacy incidents (if any), the status of key information security initiatives, vulnerability assessments, as well as on existing and emerging threat landscapes.
The audit committee receives regular reports and updates on cybersecurity matters from management, including developments on existing and new cybersecurity risks and how management is addressing or mitigating such risks, cybersecurity and data privacy incidents (if any), the status of key information security initiatives, vulnerability assessments, as well as on existing and emerging threat landscapes.
Additionally, on at least an annual basis, the audit committee reviews and discusses with management our policies and programs with respect to the audit committee’s oversight of cybersecurity threats, which enable the audit committee’s effecting oversight of our overall cybersecurity risk and compliance posture. The audit committee regularly reports to the board of directors on these matters.
Additionally, on at least an annual basis, the audit committee reviews and discusses with management our policies and programs with respect to the audit committee’s oversight of cybersecurity threats, which assists the audit committee in overseeing our overall cybersecurity risk and compliance posture effectively. The audit committee regularly reports to the board of directors on these matters.
See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K for further information regarding cybersecurity risks. 38
See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K for further information regarding cybersecurity risks. We place the utmost importance on the security of our systems and the data we handle.
Threats and incidents that are identified as potentially significant are promptly reported to the audit committee. Our dedicated security team has over 20 years of experience in managing and monitoring corporate cybersecurity programs.
Threats and incidents that are identified as potentially significant are promptly reported to the audit committee.
Added
We maintain a comprehensive process for identifying, assessing, and managing material risks from cybersecurity threats as part of our broader risk management system and processes. 18

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2024, our major facilities consisted of the following: Location Function(s) Square Feet Utilized Lease Expiration China Engineering; sales; customer support; administration 46,000 Various dates through August 2026 Toronto Engineering; administration 12,000 March 2027 California Administration; engineering; sales 6,000 February 2028 Taiwan Customer support; sales; operations; engineering 16,000 Various dates through November 2026 Oregon Administration 5,000 December 2026 Japan Sales; customer support 3,000 January 2025
Biggest changeAs of December 31, 2025, our major facilities related to continuing operations consisted of the following: Location Function(s) Square Feet Utilized Lease Expiration China Engineering; sales; customer support; administration 3,000 August 2026 California Administration; engineering; sales 6,000 February 2028 Oregon Administration 5,000 December 2026

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough we currently believe that resolving such matters, individually or in the aggregate, will not have a material adverse effect on our financial position, our results of operations, or our cash flows, these matters are subject to inherent uncertainties and our view of these matters may change in the future. Item 4. Mine Safety Disclosures. Not Applicable. 39 PART II
Biggest changeAlthough we currently believe that resolving such matters, individually or in the aggregate, will not have a material adverse effect on our financial position, our results of operations, or our cash flows, these matters are subject to inherent uncertainties and our view of these matters may change in the future. Item 4. Mine Safety Disclosures. Not Applicable. 19 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures. 39 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 40 Item 6. Reserved. 40 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 41
Biggest changeItem 4. Mine Safety Disclosures. 19 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 20 Item 6. Reserved. 20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 21

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+0 added−0 removed2 unchanged
Biggest changeAs of March 7, 2025, there were 108 shareholders of record of our common stock and the last per share sales price of the common stock on that date was $0.67.
Biggest changeAs of March 6, 2026, there were 97 shareholders of record of our common stock and the last per share sales price of the common stock on that date was $6.07.

Item 7. Management's Discussion & Analysis

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

26 edited+41 added−48 removed19 unchanged
Biggest changeSelling, general and administrative Selling, general and administrative expense includes compensation and related costs for personnel, sales commissions, allocations for facilities and information technology expenses, travel, outside services and other general expenses incurred in our sales, marketing, customer support, management, legal and other professional and administrative support functions.
Biggest changeResearch and development expense was as follows (in thousands): Year ended December 31, 2025 v. 2024 2025 2024 $ change % change Research and development $ 3,695 $ 4,437 $ (742) (17) % Research and development expense decreased $0.7 million, or 17%, from 2024 to 2025 due to the following factors: • Stock based compensation expense decreased $0.2 million primarily due to the change in our stock price. • A $0.5 million overall decrease across multiple expense categories, as we continued to implement cost control measures. 22 Selling, general and administrative Selling, general and administrative expense includes compensation and related costs for personnel, allocations for facilities and information technology expenses, travel, outside services and other general expenses incurred in our sales, marketing, management, legal and other professional and administrative support functions.
Capital resources At the Market Offering On November 14, 2024, we entered into a sales agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”), pursuant to which we may issue and sell shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $10.0 million, from time to time, through an “at the market” equity offering program under which Roth will act as sales agent (the "2024 ATM Program").
Capital resources At the Market Offering On November 14, 2024, we entered into a sales agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”), pursuant to which we may issue and sell shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $10.0 million, from time to time, through an “at the market” equity offering program under which Roth will act as sales agent (the "ATM Program").
We have entered into a Capital Increase Agreement pursuant to which PWSH, one of our Chinese subsidiaries, received net proceeds from the sale of its securities pursuant thereto in an amount of 99.0 million RMB ($14.6 million USD). Additional information is provided in "Note 16: Non-Controlling Interest", which is incorporated by reference into this section.
We entered into a Capital Increase Agreement pursuant to which PWSH, one of our Chinese subsidiaries, received net proceeds from the sale of its securities pursuant thereto in an amount of 99.0 million RMB ($14.6 million USD). Additional information is provided in "Note 16: Non-Controlling Interest", which is incorporated by reference into this section.
We can provide no assurance that additional financing will be available at all or, if available, that we would be able to obtain additional financing on terms favorable to us. Critical Accounting Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and judgments that affect the amounts reported.
We can provide no assurance that additional financing will be available at all or, if available, that we would be able to obtain additional financing on terms favorable to us. 26 Critical Accounting Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and judgments that affect the amounts reported.
If actual market conditions are less favorable than those we projected at the time the inventory was written down, additional inventory write-downs may be required. Inventory valuation is re-evaluated on a quarterly basis. 48 Goodwill. Goodwill is not amortized, rather tested, at least annually, for impairment at a reporting unit level.
If actual market conditions are less favorable than those we projected at the time the inventory was written down, additional inventory write-downs may be required. Inventory valuation is re-evaluated on a quarterly basis. Goodwill. Goodwill is not amortized, rather tested, at least annually, for impairment at a reporting unit level.
We performed a qualitative assessment during the fourth quarter of 2024 and concluded that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount. As a result, we concluded that a quantitative impairment test was not required and that goodwill was not impaired. Item 7A.
We performed a qualitative assessment during the fourth quarter of 2025 and concluded that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount. As a result, we concluded that a quantitative impairment test was not required and that goodwill was not impaired. Item 7A.
Our ability to utilize our federal net operating losses may be limited by Section 382 of the Internal Revenue Code of 1986, as amended, which imposes an annual limit on the ability of a corporation that undergoes an "ownership change" to use its net operating loss carryforwards to reduce its tax liability.
Our ability to utilize our federal net operating losses may be limited by Section 382 of the Internal Revenue Code of 1986, as amended, which imposes an annual limit on the ability of a corporation that undergoes an 'ownership change' to use its net operating loss carryforwards to reduce its tax liability.
The Sales Agreement may be terminated by us upon prior notice to Roth or by Roth upon prior notice to us, or at any time under certain circumstances, including but not limited to the occurrence of a material adverse change in the Company. We are not obligated to sell any shares under the Sales Agreement.
The Sales Agreement may be terminated by us upon prior notice to Roth or by Roth upon prior notice to us, or at any time under certain circumstances, including but not limited to the occurrence of a material adverse change in the Company.
We continue to record a full valuation allowance against our U.S., Canada and China net deferred tax assets as of December 31, 2024 and 2023, as it is not more likely than not that we will realize a benefit from these assets in a future period.
We continue to record a full valuation allowance against our U.S. federal and state net deferred tax assets at December 31, 2025 and 2024, as it is not more likely than not that we will realize a benefit from these assets in a future period.
As of December 31, 2024, our cash and cash equivalents balance consisted of $18.4 million in cash and $0.2 million in cash equivalents held in U.S. dollar denominated money market funds and $5.0 million held in U.S. dollar denominated certificates of deposit. Our investment policy requires that our portfolio maintains a weighted average maturity of less than 12 months.
As of December 31, 2025, our cash and cash equivalents balance consisted of $1.9 million in cash and $9.3 million in cash equivalents held in U.S. dollar denominated money market funds. Our investment policy requires that our portfolio maintains a weighted average maturity of less than 12 months.
In addition, we write down any obsolete, unmarketable or otherwise impaired inventory to net realizable value. The determination of obsolete or excess inventory requires us to estimate the future demand for our products. The estimate of future demand is compared to inventory levels to determine the amount, if any, of obsolete or excess inventory.
The determination of obsolete or excess inventory requires us to estimate the future demand for our products. The estimate of future demand is compared to inventory levels to determine the amount, if any, of obsolete or excess inventory.
As of December 31, 2024, we have available federal, state and foreign research and experimentation tax credit carryforwards of approximately $4.7 million, $5.5 million and $21.1 million respectively. The federal tax credits will begin expiring in 2025 while the state and foreign tax credits have an indefinite life.
Approximately $44.6 million of our federal net operating losses carry forward indefinitely. As of December 31, 2025, we have available federal and state research and experimentation tax credit carryforwards of approximately $3.5 million, $5.4 million, respectively. The federal credits will begin expiring in 2026 while the state credits have an indefinite life.
The net valuation allowance increased $9.0 million and $11.0 million for the years ended December 31, 2024 and December 31, 2023, respectively. 45 As of December 31, 2024, we have federal, state and foreign net operating loss carryforwards of approximately $155.6 million, $17.4 million, and $133.2 million respectively, which will begin expiring in 2025.
The net valuation allowance decreased by $1.2 million for the year ended December 31, 2025 and decreased by $0.6 for the year ended December 31, 2024. As of December 31, 2025, we have federal and state net operating loss carryforwards of approximately $157.9 million, and $18.3 million, respectively, which will begin expiring in 2026.
Liquidity As of December 31, 2024, our cash and cash equivalents balance of $23.6 million was highly liquid. We anticipate that our existing working capital will be adequate to fund our operating, investing and financing needs for at least the next twelve months.
We anticipate that our existing working capital will be adequate to fund our operating, investing and financing needs for at least the next twelve months.
The Plan included an approximately 16% reduction in workforce, primarily in the areas of operations, research and development, sales, marketing and administration.
In June 2024, we executed a restructuring plan to make the operation of the Company more efficient (the "2024 Plan"). The 2024 Plan included an approximately 16% reduction in workforce, primarily in the areas of operations, research and development, sales, marketing and administration.
During the year ended December 31, 2024, we sold an aggregate of 358,272 shares of our common stock under the 2024 ATM Program, resulting in aggregate net proceeds to us of approximately $0.2 million. 47 Capital Increase Agreements We have entered into a Capital Increase Agreement pursuant to which PWSH, one of our Chinese subsidiaries, received net proceeds from the sale of its securities pursuant thereto in an amount of RMB 279.7 million ($42.3 million USD).
Capital Increase Agreements We entered into a Capital Increase Agreement pursuant to which PWSH, one of our Chinese subsidiaries, received net proceeds from the sale of its securities pursuant thereto in an amount of RMB 279.7 million ($42.3 million USD).
The income tax expense of $0.4 million recorded for the year ended December 31, 2023 is primarily composed of tax expense of $0.1 million for our profitable cost-plus jurisdictions and deferred tax expense of approximately $0.3 million.
Also included is the tax expense related to our profitable cost-plus operations in China and Taiwan. The income tax expense of $0.01 million recorded for the year ended December 31, 2024 is primarily composed of current and deferred tax expense related to our profitable cost-plus operations in China and Taiwan.
The decrease in IC revenue from 2023 compared to 2024 is due to the following factors: • Sales into the Mobile market decreased $15.7 million or 54%, primarily due to decreased units sold associated with a delayed transition to our latest generation mobile products. • Sales into the Home & Enterprise market decreased $0.6 million or 2% .
The decrease in IC revenue from 2024 to 2025 was attributable to the following factors: • Mobile market revenue decreased by $9.5 million, or 69%, primarily due to lower unit sales resulting from a delayed transition to the Company’s latest generation mobile products. • Home & Enterprise market revenue decreased by $1.4 million, or 5%, reflecting lower demand in those end markets.
Provision for income taxes The benefit for income taxes was as follows (in thousands): Year ended December 31, 2024 2023 Provision for income taxes $ 478 $ 357 The income tax expense of $0.5 million recorded for the year ended December 31, 2024 is primarily composed of tax expense of $0.4 million for our profitable cost-plus jurisdictions and deferred tax expense of approximately $0.1 million.
The expense (benefit) for income taxes related to continuing operations was as follows (in thousands): Year ended December 31, 2025 2024 Provision (benefit) for income taxes $ (184) $ 44 The income tax benefit of $0.2 million recorded for the year ended December 31, 2025 primarily relates to the reversal of unrecognized tax benefits due to the lapse of the statute of limitations.
Pixelworks has an additional subsidiary in China (Frame Shadow Technology (Shanghai) Co., Ltd. (formerly called Mucheng Huai Management Consulting (Shanghai) Co., Ltd)) which is a research and development center for our TrueCut business. This subsidiary does not operate under PWSH, but rather is owned by Pixelworks through our Oregon limited liability company, Pixelworks Semiconductor Technology Company, LLC.
Pixelworks has one remaining subsidiary in China, Frame Shadow Technology (Shanghai) Co., Ltd. (formerly called Mucheng Huai Management Consulting (Shanghai) Co., Ltd), which is a research and development center for our TrueCut business. Our executive officers and all of our directors are located in the United States. Our auditor is Grant Thornton LLP, with headquarters in Chicago, Illinois.
Pixelworks’ gross profit margin is subject to variability based on changes in revenue levels, product mix, average selling prices, startup costs and the timing and execution of manufacturing ramps as well as other factors. 43 Research and development Research and development expense includes compensation and related costs for personnel, development-related expenses including non-recurring engineering and fees for outside services, depreciation and amortization, expensed equipment, facilities and information technology expense allocations and travel and related expenses.
Research and development Research and development expense includes compensation and related costs for personnel, development-related expenses including fees for outside services, depreciation and amortization, expensed equipment, facilities and information technology expense allocations and travel and related expenses.
Equity Transfer Agreement We have entered into an Equity Transfer Agreement pursuant to which we received net proceeds of $10.7 million in exchange for a 2.73% equity interest in PWSH. Additional information is provided in "Note 16: Non-Controlling Interest", which is incorporated by reference into this section.
Pursuant to the Sale, following the closing on January 6, 2026, these Capital Increase Agreements have been terminated and the Company has no further obligations under their terms and conditions. Equity Transfer Agreement We entered into an Equity Transfer Agreement pursuant to which we received net proceeds of $10.7 million in exchange for a 2.73% equity interest in PWSH.
An ownership change is generally defined as a greater than 50% increase in equity ownership by 5% shareholders in any three-year period. 46 Liquidity and Capital Resources Cash and cash equivalents Total cash and cash equivalents decreased $23.9 million from $47.5 million at December 31, 2023 to $23.6 million at December 31, 2024.
An ownership change is generally defined as a greater than 50% point increase in equity ownership by 5% shareholders in any three-year period. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid.
The net decrease was primarily the result of $19.8 million used in operating activities, $3.8 million used for purchases of property and equipment and $1.3 million used for payments on other asset financings.
The net increase was primarily the result of $7.9 million in net proceeds from our registered direct offerings, $3.0 million in net proceeds from the sale of patents and $3.0 million in net proceeds from our at the market equity offering, partially offset by $8.0 million used in operating activities, and $0.2 million used for purchases of property and equipment.
Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: Inventory Valuation. We value inventory at the lower of cost or net realizable value.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements for the years ended December 31, 2024 and 2025, however as of December 31, 2025, both inventory and goodwill have been classified as held-for-sale assets: Discontinued Operations.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview Pixelworks is a leading provider of high-performance and power-efficient visual processing semiconductor and software solutions that enable consistently high-quality and authentic viewing experiences in a wide variety of applications.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview Pixelworks, Inc. (the “Company” or “Pixelworks”) provides industry-leading content creation, video delivery and display processing solutions, and technology that enables highly authentic viewing experiences with superior visual quality across all screens, from cinema to smartphone and beyond.
Removed
We define our primary target markets as Mobile (smartphone and tablet), Home & Enterprise (projectors, personal video recorders ("PVR"), and over-the-air ("OTA") streaming devices), and Cinema (creation, remastering, and delivery of digital video content).
Added
Pixelworks has been delivering image processing innovations to leading providers of consumer electronics, professional displays, and video streaming services for more than 20 years. On January 6, 2026 (the “Closing Date”), the Company completed the previously announced sale (the “Sale”) of all of the shares of common stock of Pixelworks Semiconductor Technology (Shanghai) Co., Ltd.
Removed
Previously we classified our primary target markets as Mobile, Projector, Video Delivery and Cinema, but have since aggregated the Projector and Video Delivery categories into one called "Home & Enterprise". Pixelworks has been a pioneer in visual processing technology for over 20 years.
Added
(“PWSH”) held by Pixelworks Semiconductor Technology Company, LLC, a wholly owned subsidiary of the Company (“Pixelworks LLC”), to Tiansui Xinyuan Technology (Shanghai) Co., Ltd. (the “Buyer”).
Removed
We were one of the first companies to commercially launch a video System on Chip ("SoC") capable of deinterlacing 1080i HDTV signals and one of the first companies with a commercial dual-channel 1080i deinterlacer integrated circuit. We launched one of the industry’s first single-chip SoCs for digital projection.
Added
The terms of the Sale were set forth in a Purchase Agreement dated as of October 15, 2025 (the “Purchase Agreement”), among the Company, PWSH, Pixelworks LLC, all other shareholders of PWSH except VeriSilicon Microelectronics (Shanghai) Co., Ltd. (each, a “Selling Shareholder"), and the Buyer. Each Selling Shareholder and VeriSilicon Microelectronics (Shanghai) Co., Ltd.
Removed
We were the first company to integrate motion estimation / motion compensation technology ("MEMC") as a mobile-optimized solution for smartphones. In 2019, we introduced our Hollywood award-winning TrueCut Motion TM video platform, the industry’s first motion grading technology that allows fine tuning of motion appearance in cinematic content.
Added
(collectively, the “Minority Shareholders”) and Pixelworks LLC also entered into Support Agreements (the “Support Agreements”), and Pixelworks LLC, PWSH and each of the Minority Shareholders entered into a Termination and Release Agreement (the “Release Agreement”), in each case dated October 14, 2025.
Removed
Our core visual processing technology intelligently processes digital images and video from a variety of sources and optimizes the content for a superior viewing experience. Rapid growth in video and gaming consumption, combined with the move towards bright, high resolution, high frame rate and high refresh rate displays, especially in mobile, is increasing the demand for our solutions.
Added
On the Closing Date: (i) Pixelworks LLC transferred to the Minority Shareholders shares of PWSH capital stock representing a total of approximately 29% of the total outstanding shares of PWSH capital stock; (ii) the Selling Shareholders sold and transferred all of their PWSH shares to the Buyer; (iii) Pixelworks LLC sold and transferred its remaining shares of PWSH capital stock, representing approximately 49% of the total outstanding shares of PWSH capital stock, to the Buyer; and (iv) the Buyer paid the Company approximately RMB 357 million, or approximately $51.0 million in U.S. dollars, net of transaction costs and withholding taxes paid in China.
Removed
Our technologies can be applied across a wide range of applications: cinema theaters, low-power mobile tablets, smartphones, streaming devices, and digital projectors for the home, school, or the workplace. Our products are designed and optimized for power, cost, bandwidth, viewer experience, and overall system performance, according to the requirements of the specific application.
Added
The remaining transaction expenses incurred by the Company in connection with the Sale, not including compensation that has been paid to the Company’s executive officers and other employees, totaled approximately $1.0 million in U.S. dollars.
Removed
On occasion, we have also licensed our technology. During 2021, we engaged in a strategic plan to re-align our Mobile and Home & Enterprise businesses to improve their focus on their Asia-centered customers and employee stakeholders (the “Strategic Plan”). One of our Chinese subsidiaries, Pixelworks Semiconductor Technology (Shanghai) Co., Ltd.
Added
Additionally, approximately RMB 8.7 million, or approximately $1.2 million in U.S. dollars, is being held in an escrow account to be released upon the resolution of certain tax matters in China.
Removed
(or "PWSH"), now operates these businesses as a full profit-and-loss center underneath Pixelworks. In connection with this Strategic Plan, the Company and PWSH closed three separate financing transactions in 2021 and 2022, which are further described in "Note 15: Redeemable Non-Controlling Interest and Equity Interest of PWSH Sold to Employees" and "Note 16: Non-Controlling Interest".
Added
The foregoing references to certain provisions of the Purchase Agreement, the Support Agreements and the Release Agreement are not complete and are subject to and qualified in their entirety by reference to the Purchase Agreement filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 15, 2025 (the “October 15 8-K”), the Amendment Agreement filed as Exhibit 10.2 to the October 15 8-K, and the form of Support Agreement, together with the form of Termination and Release Agreement attached to the form of Support Agreement as Exhibit A, filed as Exhibit 10.3 to the October 15 8-K.
Removed
PWSH has a branch office located in Shenzhen, China (Pixelworks Semiconductor Technology (Shanghai) Co. Ltd. Shenzhen Branch Office No. 1), which is primarily for sales and customer support for PWSH, and a subsidiary located in Hong Kong (Pixelworks Hong Kong Limited), which has no employees and is used for distribution of PWSH products.
Added
The Company’s definitive proxy statement filed with the SEC on October 27, 2025, includes additional information under the heading “Principal Terms and Conditions of the Purchase Agreement”, which description is incorporated herein by reference.
Removed
We continue to believe that an initial public offering of PWSH shares on the Shanghai Stock Exchange’s Science Technology Innovation Board, known as the STAR Market (the “Listing”) will have many benefits, including improved access to new capital markets and the funding of PWSH’s growth worldwide.
Added
As a result of the Sale, Pixelworks no longer operates a semiconductor business, which included the businesses that it previously described as “Mobile” (smartphone and tablet) and “Home & Enterprise” (projectors, personal video recorders, and over-the-air streaming devices). Following the Sale, the Company is focused on developing and licensing cinematic visualization solutions, including its flagship TrueCut Motion TM platform.
Removed
The process of going public on the STAR Market is lengthy and includes several periods of review by various government agencies of the People’s Republic of China (“PRC”), such as the Shanghai Stock Exchange (“SSE”) and the China Securities Regulatory Commission (“CSRC”).
Added
For more information regarding the events leading up to the Sale, and about the Mobile and Home & Enterprise business, see Item 1 under the heading “Overview” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 13, 2025 (the “ 2024 10-K ”).
Removed
The CSRC and the SSE have recently tightened the standards for the STAR Market and are currently advising companies that are not yet profitable under China GAAP standards against filing an IPO application in the present environment.
Added
Pixelworks was founded in 1997 and is incorporated under the laws of the state of Oregon. 21 Reverse Stock Split On June 6, 2025, the Company effected a one-for-twelve reverse stock split of the Company’s common stock (the "Reverse Stock Split").
Removed
The Company believes this is in large part due to the current economic conditions in China and the recent performance of companies already listed on the STAR Market that were not profitable at the time of their initial public offering. PWSH is not currently profitable under China GAAP standards.
Added
As a result of the Reverse Stock Split, every twelve shares of the Company's Common Stock issued or outstanding were automatically reclassified into one new share of common stock.
Removed
There is no guarantee that PWSH will be approved for a Listing at any point in the future. The listing of PWSH on the STAR Market will not change the status of PXLW as a U.S. public company.
Added
Proportionate adjustments were also made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, as well as to the number of shares issuable under the Company’s equity incentive plans and certain existing agreements.
Removed
More than a majority of our operations are in China, but our executive officers and all of our directors but one are located in the United States (he resides in Singapore). We are neither a PRC operating company nor do we conduct our operations in China through the use of variable interest entities.
Added
The Reverse Stock Split did not decrease the number of authorized shares of common stock or otherwise affect the par value of the common stock. No fractional shares were issued in connection with the Reverse Stock Split.
Removed
Pixelworks continues to work with Morgan Stanley as financial advisor to assist with reviewing potential alternative strategic options specific to inbound interest in the Pixelworks Shanghai subsidiary. 41 As of December 31, 2024, we had an intellectual property portfolio of 261 patents related to the visual display of digital image data.
Added
Shareholders who would have otherwise been entitled to receive fractional shares were entitled to have their fractional shares rounded up to the next whole number share quantity.
Removed
We focus our research and development efforts on developing video algorithms that improve quality and architectures that reduce system power, cost, bandwidth and increase overall system performance and device functionality.
Added
All shares of the Company’s common stock, per-share data and related information included in the accompanying consolidated financial statements have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented. Results of Operations For the year ended December 31, 2025 compared with year ended December 31, 2024.
Removed
We seek to expand our technology portfolio through internal development and co-development with business partners, and we continually evaluate acquisition opportunities and other ways to leverage our technology into other high-value markets. Pixelworks was founded in 1997 and is incorporated under the laws of the state of Oregon.
Added
Except as noted otherwise, all results exclude discontinued operations. Revenue, net Net revenue was as follows (in thousands): Year ended December 31, 2025 v. 2024 2025 2024 $ change % change Revenue, net $ 693 $ 690 $ 3 — % Revenue of $0.7 million recorded in 2025 was consistent with revenue of $0.7 million recorded in 2024.
Removed
Historically, significant portions of our revenue have been generated by sales to a relatively small number of end customers and distributors. We sell our products worldwide through a direct sales force, distributors and manufacturers’ representatives. We sell to distributors in China, Japan and Taiwan.
Added
The majority of revenue in 2024 and 2025 related to the category of services.
Removed
Our distributors often provide engineering support to our end customers and often have valuable and established relationships with our end customers. In certain countries in which we operate, it is customary to sell to distributors.
Added
Cost of revenue and gross profit Cost of revenue and gross profit were as follows (in thousands): Year ended December 31, 2025 % of revenue 2024 % of revenue Total cost of revenue $ 104 15.0 % $ 129 18.7 % Gross profit $ 589 85.0 % $ 561 81.3 % Cost of revenue of $0.1 million and gross profit of $0.6 million recorded in 2025 was consistent with cost of revenue of $0.1 million and gross profit of $0.6 million recorded in 2024.
Removed
While distributor payment to us is not dependent upon the distributor’s ability to resell the product or to collect from the end customer, the distributors may provide longer payment terms to end customers than those we would offer. Significant portions of our products are sold overseas.
Added
Selling, general and administrative expense was as follows (in thousands): Year ended December 31, 2025 v. 2024 2025 2024 $ change % change Selling, general and administrative $ 8,450 $ 8,914 $ (464) (5) % Selling, general and administrative expense decreased $0.5 million, or 5%, from 2024 to 2025 due to an overall decrease across multiple expense categories, as we continue to implement cost control measures.
Removed
Sales outside the U.S. accounted for approximately 98.3% and 99.7% of revenue in 2024 and 2023, respectively. Our integrators, branded manufacturers and branded suppliers incorporate our products into systems that are sold worldwide. The majority of our revenue to date has been denominated in U.S. dollars.
Added
Restructurings In May 2025, we executed a restructuring plan to make the operation of the Company more efficient (the "May 2025 Plan"). The May 2025 Plan included an approximately 4% reduction in workforce, primarily in the area of research and development.
Removed
Seasonality Our business is subject to seasonality related to the markets we serve and the location of our customers.
Added
In February 2025, we executed a restructuring plan to make the operation of the Company more efficient (the "February 2025 Plan"). The February 2025 Plan included an approximately 6% reduction in workforce, primarily in the areas of operations, research and development, and marketing.
Removed
We have typically experienced higher revenue from the digital projector component of the Home & Enterprise market in the third quarter, and lower revenue in the first quarter, as our Japanese customers reduce inventories in anticipation of their March 31 fiscal year end.
Added
Restructuring expense included in our consolidated statements of operations related to continuing operations was as follows (dollars in thousands): Year ended December 31, 2025 2024 Employee severance and benefits $ — $ 174 Total restructuring expense $ — $ 174 Included in operating expenses $ — $ 174 Restructuring expense included in our consolidated statements of operations related to discontinued operations was as follows (dollars in thousands): Year ended December 31, 2025 2024 Employee severance and benefits $ 1,109 $ 1,451 Lease termination costs 153 — Total restructuring expense $ 1,262 $ 1,451 Included in cost of revenue $ 78 $ 16 Included in operating expenses 1,184 1,435 23 Other income, net Other income, net, consisted of the following (in thousands): Year ended December 31, 2025 2024 Interest income $ 123 $ 354 Gain on sale of patents 3,000 — Total other income, net $ 3,123 $ 354 On October 22, 2025, the Company and an unrelated third party (the “Purchaser”) entered into an agreement under which the Company sold 37 patents and related rights and materials (the “Patents”) to the Purchaser for $3.0 million.
Removed
We have typically experienced higher revenue from the mobile market in the fourth quarter, and lower revenue in the first quarter, as mobile phone OEMs ramp production in advance of Chinese New Year. 42 Results of Operations For the year ended December 31, 2024 compared with year ended December 31, 2023.
Added
The Company became the indirect owner of the Patents when it acquired ViXS Systems, Inc. in 2017, and became the sole owner of the Patents in 2021. The technologies underlying the Patents pertain to markets that the Company no longer pursues.
Removed
Revenue, net Net revenue was as follows (in thousands): Year ended December 31, 2024 v. 2023 2024 2023 $ change % change Revenue, net $ 43,206 $ 59,677 $ (16,471) (28) % Net revenue decreased $16.5 million, or 28%, from 2023 to 2024.
Added
Provision (benefit) for income taxes As discussed in Item 8, "Note 1: Basis of Presentation", as of December 31, 2025, the operations of PWSH and subsidiaries in Japan, Hong Kong, and Canada were classified as held-for-sale and the results reported within discontinued operations.
Removed
Revenue recorded in 2024 consisted of $42.3 million in revenue from the sale of integrated circuits ("IC") products and $0.9 million in revenue related to engineering services, license revenue and other. Revenue recorded in 2023 consisted of $58.6 million in revenue from the sale of IC products and $1.1 million in revenue related to engineering services, license revenue and other.
Added
ASU No. 2023-09 requires public business entities to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU No. 2023-09 requires companies to disclose further information about income taxes paid.

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Other PXLW 10-K year-over-year comparisons