MRAM

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements and related notes included in Part I, Item 1 of this report and with our audited financial statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2025. Forward-Looking Statements This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Forward-looking statements are identified by words such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to, among other things, our industry, business, future plans, strategies, objectives, expectations, intentions and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part II, Item 1A — “Risk Factors,” and elsewhere in this report, as well as in our other filings with the Securities and Exchange Commission (SEC). Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements. We caution investors that our business and financial performance are subject to substantial risks and uncertainties. Overview We are a pioneer in the successful commercialization of Magnetoresistive Random Access Memory (MRAM) technology. Our portfolio of MRAM technologies, including Toggle MRAM, Tunnel Magneto Resistance (TMR) Sensors, and Spin-transfer Torque MRAM (STT-MRAM), is delivering superior performance, persistence and reliability in non-volatile memories that transform how mission-critical data is protected against power loss. With almost 20 years of MRAM technology and manufacturing leadership, our memory solutions deliver significant value to our customers in key markets such as industrial, medical, automotive/transportation, aerospace and defense, and data center. We are the leading supplier of discrete MRAM components and a successful licensor of our broad portfolio of related technology and intellectual property. We sell our products directly and through our established distribution channels to industry-leading original equipment manufacturers, original design manufacturers and contract manufacturers. We manufacture our MRAM products using both captive and third-party manufacturing capabilities. We purchase industry-standard complementary metal-oxide semiconductor (CMOS) wafers from semiconductor foundries and perform back end of line (BEOL) processing that includes our magnetic-bit technology at our leased 200mm fabrication facility in Chandler, Arizona. We also manufacture full-flow 300mm CMOS wafers with our STT-MRAM magnetic-bit technology integrated in BEOL as part of our strategic relationship with GLOBALFOUNDRIES Inc. Key Metrics We monitor a variety of key financial metrics to help us evaluate trends, establish budgets, measure the effectiveness of our business strategies, and assess operational efficiencies. These financial metrics include revenue, gross margin, operating expenses, and operating income determined in accordance with GAAP. Additionally, we monitor and project cash flow to determine our sources and uses for working capital to fund our operations. We also monitor adjusted net income, a non-GAAP financial measure, and design wins. We define adjusted net income as net income adjusted for stock-based compensation expense, litigation costs, and non-recurring engineering fees (“NRE”). 17 Table of Contents Adjusted net income. Our management and board of directors use adjusted net income to assess and evaluate our overall performance and financial trends, inform the annual budgeting process, and guide both short-term and long-term operational and strategic planning. As such, we believe adjusted net income provides meaningful insight for investors into our financial performance, consistent with how our management team and board of directors view and analyze our results. Adjusted net income is a non-GAAP financial measure and should be considered alongside, but not as a replacement for or superior to, net income as reported in accordance with GAAP. The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to adjusted net income for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) Adjusted net income (loss) reconciliation: Net loss $ (3,589) $ (670) $ (3,885) $ (1,836) Stock-based compensation expense 1,374 1,419 2,674 2,996 Litigation costs 4,027 — 5,656 — Non-recurring engineering fees 1,050 — 1,050 — Adjusted net income $ 2,862 $ 749 $ 5,495 $ 1,160 Results of Operations The following tables set forth our results of operations for the periods indicated: Three Months Ended June 30, 2026 2025 2026 2025 (In thousands) (As a percentage of revenue) Product sales $ 15,313 $ 11,091 82 % 84 % Licensing, royalty, engineering services and other revenue 3,423 2,110 18 16 Total revenue 18,736 13,201 100 100 Cost of product sales 8,296 6,166 44 47 Cost of licensing, royalty, engineering services and other revenue 343 267 2 2 Total cost of sales 8,639 6,433 46 49 Gross profit 10,097 6,768 54 51 Operating expenses: Research and development 4,838 3,580 26 27 General and administrative 7,827 3,642 42 28 Sales and marketing 1,815 1,507 10 11 Total operating expenses 14,480 8,729 78 66 Loss from operations (4,383) (1,961) (23) (15) Interest income 316 423 2 3 Other income, net 478 842 3 6 Net loss before income taxes (3,589) (696) (18) (5) Income tax benefit (expense) — 26 — — Net loss and comprehensive loss $ (3,589) $ (670) (18) % (5) % 18 Table of Contents Comparison of the three months ended June 30, 2026 and 2025 Revenue We generated 79% and 66% of our revenue from products sold through distributors for the three months ended June 30, 2026 and 2025, respectively. We maintain a direct selling relationship, for strategic purposes, with several key customer accounts. We have organized our sales team and representatives into three primary regions: Asia-Pacific (APAC); North America; and Europe, Middle East and Africa (EMEA). We recognize revenue by geography based on the region in which our products are sold, and not where the end products in which they are assembled are shipped. Our revenue by region for the periods indicated was as follows (in thousands): Three Months Ended June 30, 2026 2025 APAC $ 10,866 $ 8,582 North America 5,256 2,926 EMEA 2,614 1,693 Total revenue $ 18,736 $ 13,201 Three Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Product sales $ 15,313 $ 11,091 $ 4,222 38.1 % Licensing, royalty, engineering services and other revenue 3,423 2,110 $ 1,313 62.2 % Total revenue $ 18,736 $ 13,201 $ 5,535 41.9 % Total revenue increased by $5.5 million, or 41.9%, from $13.2 million during the three months ended June 30, 2025 to $18.7 million during the three months ended June 30, 2026. The increase was due to an increase in product sales of $4.2 million or 38.1%, primarily driven by higher customer demand and increased unit shipments, and an increase in licensing, royalty, engineering services and other revenue of $1.3 million or 62.2%. Licensing, royalty, engineering services and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and terms of each transaction. Licensing, royalty, engineering services and other revenue increased by $1.3 million, or 62.2%, from $2.1 million during the three months ended June 30, 2025, to $3.4 million during the three months ended June 30, 2026. The increase was primarily due to the commencement of a subcontract agreement providing engineering services for military and aerospace applications. 19 Table of Contents Cost of Sales and Gross Margin Three Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Cost of product sales $ 8,296 $ 6,166 $ 2,130 34.5 % Cost of licensing, royalty, engineering services and other revenue 343 267 76 28.5 % Total cost of sales $ 8,639 $ 6,433 $ 2,206 34.3 % Gross margin 53.9 % 51.3 % Cost of product sales increased by $2.1 million, or 34.5%, from $6.2 million during the three months ended June 30, 2025, to $8.3 million during the three months ended June 30, 2026. Cost of product sales have increased consistently and proportionately with the increase in revenues on our Toggle and STT products. Cost of licensing, royalty, engineering services and other revenue remained consistent at $0.3 million for the three months ended June 30, 2025 and the three months ended June 30, 2026, respectively. Gross margin increased from 51.3% during the three months ended June 30, 2025, to 53.9% during the three months ended June 30, 2026. Gross margin increased as a result of the different revenue mix. Operating Expenses Our operating expenses consist of research and development, general and administrative and sales and marketing expenses. Personnel-related expenses, including salaries, benefits, bonuses and stock-based compensation, are among the most significant component of each of our operating expense categories. Three Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Research and development $ 4,838 $ 3,580 $ 1,258 35.1 % Research and development as a % of revenue 26 % 27 % Research and Development Expenses. Research and development expenses increased by $1.3 million, or 35.1%, from $3.6 million during the three months ended June 30, 2025, to $4.8 million during the three months ended June 30, 2026. The research and development expenses increase relates primarily to non-recurring engineering fees. Three Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) General and administrative $ 7,827 $ 3,642 $ 4,185 114.9 % General and administrative as a % of revenue 42 % 28 % General and Administrative Expenses. General and administrative expenses increased by $4.2 million, or 114.9%, from $3.6 million during the three months ended June 30, 2025, to $7.8 million during the three months ended June 30, 20 Table of Contents 2026. The increase is primarily due to the litigation costs related to the patent infringement lawsuit described in Note 5 to our condensed financial statements included in Item 1 of this report. Three Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Sales and marketing $ 1,815 $ 1,507 $ 308 20.4 % Sales and marketing as a % of revenue 10 % 11 % Sales and Marketing Expenses. Sales and marketing expenses increased by $0.3 million, or 20.4%, from $1.5 million during the three months ended June 30, 2025, to $1.8 million during the three months ended June 30, 2026. The increase in sales and marketing expenses relates primarily to higher compensation costs and contract labor. Three Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Interest income $ 316 $ 423 $ (107) (25.3) % Interest income decreased by $0.1 million, or 25.3%, from $0.4 million during the three months ended June 30, 2025, to $0.3 million during the three months ended June 30, 2026. The decrease is primarily due to the decrease in interest rates. Other Income, Net Three Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Other income, net $ 478 $ 842 $ (364) (43.2) % Other income, net decreased by $0.4 million, or 43.2%, from $0.8 million during the three months ended June 30, 2025, to $0.5 million during the three months ended June 30, 2026. Other income relates primarily to other income recognized from a strategic award we received to develop a long-term plan to provide manufacturing services for aerospace and defense segments. 21 Table of Contents Six Months Ended June 30, 2026 2025 2026 2025 (In thousands) (As a percentage of revenue) Product sales $ 29,413 $ 22,117 88 % 84 % Licensing, royalty, engineering services and other revenue 4,195 4,222 12 16 Total revenue 33,608 26,339 100 100 Cost of product sales 15,251 12,195 45 46 Cost of licensing, royalty, engineering services and other revenue 417 623 1 2 Total cost of sales 15,668 12,818 46 49 Gross profit 17,940 13,521 54 51 Operating expenses: Research and development 8,443 6,936 25 26 General and administrative 12,888 7,480 38 28 Sales and marketing 3,708 2,998 11 11 Total operating expenses 25,039 17,414 74 65 Loss from operations (7,099) (3,893) (21) (15) Interest income 633 831 2 3 Other income, net 2,584 1,230 8 5 Net loss before income taxes (3,882) (1,832) (11) (7) Income tax benefit (expense) (3) (4) — — Net loss and comprehensive loss $ (3,885) $ (1,836) (11) % (7) % Comparison of the six months ended June 30, 2026 and 2025 Revenue We generated 84% and 63% of our revenue from products sold through distributors for the six months ended June 30, 2026 and 2025, respectively. We maintain a direct selling relationship, for strategic purposes, with several key customer accounts. We have organized our sales team and representatives into three primary regions: Asia-Pacific (APAC); North America; and Europe, Middle East and Africa (EMEA). We recognize revenue by geography based on the region in which our products are sold, and not where the end products in which they are assembled are shipped. Our revenue by region for the periods indicated was as follows (in thousands): Six Months Ended June 30, 2026 2025 APAC $ 20,060 $ 15,841 North America 8,104 5,409 EMEA 5,444 5,089 Total revenue $ 33,608 $ 26,339 22 Table of Contents Six Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Product sales $ 29,413 $ 22,117 $ 7,296 33.0 % Licensing, royalty, engineering services and other revenue 4,195 4,222 (27) (0.6) % Total revenue $ 33,608 $ 26,339 $ 7,269 27.6 % Total revenue increased by $7.3 million, or 27.6%, from $26.3 million during the six months ended June 30, 2025 to $33.6 million during the six months ended June 30, 2026. The increase was due to an increase in product sales of $7.3 million or 33.0%, primarily driven by higher customer demand and increased unit shipments. Licensing, royalty, engineering services and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and terms of each transaction. We estimate royalty revenue earned throughout the year, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year. Licensing, royalty, engineering services and other revenue remained consistent at $4.2 million for six months ended June 30, 2025 and six months ended June 30, 2026, respectively. Cost of Sales and Gross Margin Six Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Cost of product sales $ 15,251 $ 12,195 $ 3,056 25.1 % Cost of licensing, royalty, engineering services and other revenue 417 623 (206) (33.1) % Total cost of sales $ 15,668 $ 12,818 $ 2,850 22.2 % Gross margin 53.4 % 51.3 % Cost of product sales increased by $3.1 million, or 25.1%, from $12.2 million during the six months ended June 30, 2025, to $15.3 million during the six months ended June 30, 2026. Cost of product sales have increased consistently and proportionately with the increase in revenues on our Toggle and STT products. Cost of licensing, royalty, engineering services and other revenue decreased by $0.2 million, or 33.1%, from $0.6 million during the six months ended June 30, 2025, to $0.4 million during the six months ended June 30, 2026. The decrease was primarily due to a decrease in licensing costs related to labor and materials associated with the development of an AI technology application. Gross margin increased from 51.3% during the six months ended June 30, 2025, to 53.4% during the six months ended June 30, 2026. Gross margin increased as a result of the different revenue mix. 23 Table of Contents Operating Expenses Our operating expenses consist of research and development, general and administrative and sales and marketing expenses. Personnel-related expenses, including salaries, benefits, bonuses and stock-based compensation, are among the most significant component of each of our operating expense categories. Six Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Research and development $ 8,443 $ 6,936 $ 1,507 21.7 % Research and development as a % of revenue 25 % 26 % Research and Development Expenses. Research and development expenses increased by $1.5 million, or 21.7%, from $6.9 million during the six months ended June 30, 2025, to $8.4 million during the six months ended June 30, 2026. The research and development expenses increase relates primarily to non-recurring engineering fees. Six Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) General and administrative $ 12,888 $ 7,480 $ 5,408 72.3 % General and administrative as a % of revenue 38 % 28 % General and Administrative Expenses. General and administrative expenses increased by $5.4 million, or 72.3%, from $7.5 million during the six months ended June 30, 2025, to $12.9 million during the six months ended June 30, 2026. The increase is primarily due to the litigation costs related to the patent infringement lawsuit described in Note 5 to our condensed financial statements included in Item 1 of this report. Six Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Sales and marketing $ 3,708 $ 2,998 $ 710 23.7 % Sales and marketing as a % of revenue 11 % 11 % Sales and Marketing Expenses. Sales and marketing expenses increased by $0.7 million, or 23.7%, from $3.0 million during the six months ended June 30, 2025, to $3.7 million during the six months ended June 30, 2026. The increase in sales and marketing expenses relates primarily to higher compensation costs and contract labor. Six Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Interest income $ 633 $ 831 $ (198) (23.8) % Interest income slightly decreased by $0.2 million, or 23.8%, from $0.8 million during the six months ended June 30, 2025, to $0.6 million during the six months ended June 30, 2026. The change is primarily due to the decrease in interest rates. 24 Table of Contents Other Income, Net Six Months Ended June 30, Change 2026 2025 Amount % (Dollars in thousands) Other income, net $ 2,584 $ 1,230 $ 1,354 110.1 % Other income, net increased by $1.4 million, or 110.1%, from $1.2 million during the six months ended June 30, 2025, to $2.6 million during the six months ended June 30, 2026. Other income relates primarily to income recognized from a strategic award we received to develop a long-term plan to provide manufacturing services for aerospace and defense segments. Liquidity and Capital Resources As of June 30, 2026, we had $43.9 million of cash and cash equivalents, compared to $44.5 million as of December 31, 2025. We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements in the next 12 months. Our long-term capital requirements will depend on many factors, including, among other things, our growth rate, the timing and extent of our spending to support our current and future manufacturing requirements, research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products. Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): Six Month Ended June 30, 2026 2025 (In thousands) Cash provided by operating activities $ 729 $ 6,455 Cash used in investing activities (6,653) (3,878) Cash provided by financing activities 5,370 288 Cash Flows From Operating Activities During the six months ended June 30, 2026, cash provided by operating activities was $0.7 million, which consisted of net loss of $3.9 million, non-cash charges of $4.1 million and changes of net operating assets and liabilities of $0.5 million. The non-cash charges consisted of stock-based compensation of $2.7 million and depreciation and amortization of $1.4 million. The change in our net operating assets and liabilities was primarily due to an increase in accrued liabilities of $3.1 million, an increase in deferred revenue of $3.0 million, a decrease in prepaid and other current assets of $0.6 million, an increase in accounts payable of $0.5 million, offset by an increase in accounts receivable of $2.7 million, an increase in inventory of $2.4 million, a decrease in contract obligation of $1.2 million and an increase in other assets of $0.4 million. During the six months ended June 30, 2025, cash provided by operating activities was $6.5 million, which consisted of net loss of $1.8 million, non-cash charges of $4.7 million and changes of net operating assets and liabilities of $3.6 million. The non-cash charges consisted of stock-based compensation of $3.0 million and depreciation and amortization of $1.7 million. The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $4.4 million due to a one-time distributor transition, which provided improved payment terms, an increase in accounts payable of $0.8 million, an increase in contract obligation of $0.7 million, a decrease in prepaid and other current assets of $0.2 million, offset by an increase in inventory of $2.2 million and a decrease in accrued liabilities of $0.2 million. 25 Table of Contents Cash Flows From Investing Activities Cash used in investing activities during the six months ended June 30, 2026 was $6.7 million due to $5.7 million in purchases of manufacturing equipment and $1.0 million in purchases of intangible assets. Cash used in investing activities during the six months ended June 30, 2025 was $3.9 million due to $2.9 million in purchases of manufacturing equipment and $1.0 million in purchases of intangible assets. Cash Flows From Financing Activities Cash provided by financing activities during the six months ended June 30, 2026 was $5.4 million, primarily due to proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan offset by a nominal amount in payments on finance leases. Cash provided by financing activities during the six months ended June 30, 2025 was $0.3 million, primarily due to proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan offset by a nominal amount in payments on finance leases. Critical Accounting Policies and Significant Judgments and Estimates Our condensed financial statements have been prepared in accordance with GAAP. The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. We base our estimates on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no changes to our critical accounting policies and estimates described in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 4, 2026, that have had a material impact on our condensed financial statements and related notes.