PRSO 10-K & 10-Q changes, risk factors and insider trading

Our consolidated financial statements as of December 31, 20242025 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of December 31, 2024,2025, we had cash and cash equivalents of $3.3$2.9 million and an accumulated deficit of $177.1 $181.9 million. We believe that our existing cash and cash equivalents and expected receipts associated with forecasted product sales will enable us to meet our capital needs through at leastinto the second third quarter of 2025.2026.

Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to achieve sustainable revenues and profitable operations. We will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time. As a result of our expected operating losses and cash burn for the foreseeable future and recurring losses from operations, if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively,effectively. whichAs a raisesresult, management has concluded, and our independent registered public accounting firm has agreed with our conclusion that there is substantial doubt as toregarding our ability to continue as a going concern.concern for a period of at least 12 months beyond the filing of this Annual Report on Form 10-K. If we cannot continue as a viable entity, our stockholders would likely lose most or all of their investment in us.

Taiwan Semiconductor Manufacturing Corporation, or TSMC, is the sole foundry that manufacturesmanufactured the wafers used to produce our memory IC products. TSMCproducts, informed us that it would be discontinuingdiscontinued the foundry process used to produce thesuch wafers necessary to produce our memory ICs.wafers. As we were not in a position to transition wafer production to a new foundry and continue to manufacture these products, we initiated an end-of-life, or EOL, of our memory IC products in 2023, and ceased production of these products in 2024. As of December 31, 2024,2025, we had hadno remaining EOL purchase orders from customers totaling approximately $2.3 million, and we expect to ship all of these orders by March 2025.customers. We do not expect any further shipments or to generate any meaningful revenue from shipments of our memory IC products after March December 2025. For the years ended December 31, 20242025 and 2023,2024, our memory IC products represented overapproximately 85% 22% and 60%89% of our revenues, respectively. The discontinuation of the production and sale of our memory IC products will negatively impact our future revenues, results of operations and cash flows.

In addition, we maintain an inventory of our products at various stages of production, as well as an inventory of finished goods. As we are generally a sole-source supplier, we hold these inventories in anticipation of customer orders. If those customer purchase orders do not materialize in a timely manner or customers do not honor those purchase orders, we can have excess or obsolete inventory which we would have to write-down, and our gross profit and results of operations would be adversely affected. During the years ended December 31, 20242025 and 2023,2024, we recorded inventory write-downs of approximately $0.4 million$36,000 and $3.5$0.4 million, respectively.

We intend to continue spending to grow our business. If we do not achieve and maintain profitability, we will need additional financing to pursue our business strategy, develop new products, respond to competition and market opportunities and acquire complementary businesses or technologies. There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to us. Adverse market conditions, volatility in the capital markets, declines in our stock price, changes in investor sentiment, interest rate increases, or factors specific to our business or industry could impair our ability to raise capital on terms favorable to us or at all. In addition, so long as our public float remains below $75 million, we are subject to the “baby shelf” limitations under General Instruction I.B.6 of Form S-3, which restricts the amount of securities we may sell under a shelf registration statement in any 12-month period to one-third of our public float. This limitation may constrain the amount of capital we can raise through our “at the market” offering program or through registered shelf offerings and may require us to rely on alternative, potentially more costly or time-consuming offering structures, such as registration statements on Form S-1.

As discussed under “We discontinued the production of our memory products,” TSMC, which is the sole foundry that manufactures manufactured the wafers used to produce our memory IC products, informed us that it will be discontinuingdiscontinued the foundry process used to produce the waferssuch necessary to produce our memory ICs.wafers. We arewere not in a position to transition wafer production to a new foundry and continue to manufacture these products. As a result, we initiated an EOL of our memory IC products. We do not expect to generate any meaningful revenue from shipments of our memory IC products after December 2025. The discontinuation of the production and sale of our memory IC products will negatively impact our future revenues, results of operations and cash flows.

To date, we have not achieved the anticipated benefits of conducting business as a fabless semiconductor company.

Our overall revenue has been highly concentrated, with a few customers accounting for a significant percentage of our total revenue. For the yearsyear ended December 31, 2025 our five largest customers represented approximately 80% of our total revenue. For the year ended December 31, 2024 and 2023, our threetwo largest customers represented approximately 86% and 75% of our total revenue,revenue. respectively. We expect that a relatively small number of customers will continue to account for a substantial portion of our revenue for the foreseeable future.

We might also face credit risks associated with the concentration of our revenue among a small number of licensees and customers. At December 31, 2025, two customers represented approximately 93% of total trade receivables and at December 31, 2024, three customers represented approximately 91% of total trade receivables and at December 31, 2023, three customers represented approximately 83% of total trade receivables. Our failure to collect receivables from any customer, which represents a large percentage of receivables, on a timely basis, or at all, could adversely affect our cash flow or results of operations.

We have experienced and may continuein tothe future experience disruptions in our global semiconductor supply chain, with suppliers increasing lead times or placing products on allocation, including procuring necessary components, wafers, substrates and assembly services in a timely fashion. AsIn the past, as a result of these supply chain disruptions, we have had to increase customer order lead times, and we may be required to purchase some products on allocation. We may be unable to satisfy all of the demand for our products, which may adversely affect customer relationships and impact revenue.

As of December 31, 2024,2025, we had approximately $212.1$214 million of net operating loss, or NOL, carryforwards for U.S. federal tax purposes. Under U.S. federal income tax law, we generally can use our NOL carryforwards (and certain related tax credits) to offset ordinary taxable income, thereby reducing our U.S. federal income tax liability, for up to 20 years from the year in which the losses were generated, generated for the years before 2018, after which time they will expire. Our California NOL carryforwards (and certain related tax credits) generally may be used to offset future state taxable income for 20 years from the year in which the losses are generated, depending on the state, after which time they will expire. The rate at which we can utilize our NOL carryforwards is limited (which could result in NOL carryforwards expiring prior to their use) each time we experience an “ownership change,” as determined under Section 382 of the Internal Revenue Code. A Section 382 ownership change generally occurs if a shareholder or a group of shareholders who are deemed to own at least 5% of our common stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. If an ownership change occurs, Section 382 generally would impose an annual limit on the amount of post-ownership change taxable income that may be offset with pre-ownership change NOL carryforwards equal to the product of the total value of our outstanding equity immediately prior to the ownership change (reduced by certain items specified in Section 382) and the U.S. federal long-term tax-exempt interest rate in effect at the time of the ownership change. A number of special and complex rules apply in calculating this Section 382 limitation. While the complexity of Section 382 makes it difficult to determine whether and when an ownership change has occurred, and a formal study has not been performed, we believe that a Section 382 ownership change occurred as a result of our business combination with Peraso Technologies Inc. in 2021. We believe this Section 382 limitation will result in substantially all of our federal and state NOLs and federal tax credit carryforwards incurred prior to December 2021 expiring before they can be utilized. In addition, our ability to use our NOL carryforwards will be limited to the extent we fail to generate enough taxable income in the future before they expire. Existing and future Section 382 limitations and our inability to generate enough taxable income in the future could result in a substantial portion of our NOL carryforwards expiring before they are used. We have recorded a full valuation allowance for our deferred tax assets.

Geopolitical issues around the world can impact macroeconomic conditions and could have a material adverse impact on our business. For instance, world unrest due to wars, terrorist attacks and other disruptive events, such as the COVID-19 pandemic, have led to global economic disruptions, and mounting inflationary cost pressures and recessionary fears have negatively impacted the global and domestic economy. Since mid-2022, the U.S. Federal Reserve has addressed elevated inflation by periodically increasing interest rates. Given current market conditions, we may be unable to access the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business.

Inflation rates in the markets in which we operate have increased and may continue to rise. Inflation overin the last tworecent years has led us to experience higher costs, including, among others, labor, wafer and transportation. Our suppliers have raised their prices and may continue to raise prices, and, although we have made minimal price increases thus far, in the competitive markets in which we operate, we may not be able to make corresponding price increases to preserve our gross margins and profitability. In addition, inflationary pressures could cause customers to delay or reduce purchases of our products or delay payments to us. If inflation rates continue to rise or remain elevated for a sustained period of time, they could have a material adverse effect on our business, financial condition, results of operations and liquidity.

The sale of our common stock resulting from the exercise of any options or vesting of restricted stock units granted to executive officers and other employees under our equity compensation plan and the exercise of any warrants, and other issuances of our common stock could have an adverse effect on the market price of the shares of our common stock. We are generally not restricted from issuing additional shares of common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive shares of common stock, provided that we are subject to the listing rules of the Nasdaq Stock Market (which generally require stockholder approval for any transactions which would result in the issuance of more than 20% of our then outstanding shares of common stock or voting rights representing over 20% of our then outstanding shares of stock). Sales of a substantial number of shares of our common stock in the public market or the perception that such sales might occur could materially adversely affect the market price of the shares of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Accordingly, our stockholders bear the risk that our future offerings will reduce the market price of our common stock and dilute their stock holdings in us. In addition, issuances of our common stock resulting from the exercise of options or vesting of restricted stock units granted under our equity compensation plan and the exercise of any warrants, and other issuances of our common stock could have an adverse effect on the market price of the shares of our common stock.

Our strategy and primary business objective is to be a profitable, IP-rich fabless semiconductor company offering integrated circuits, or ICs, antenna modules and related non-recurring engineering services. We specialize in the development of mmWave semiconductors, primarily in the unlicensed 60 GHz spectrum band for 802.11ad/ay-compliant devices and in the 28/39 GHz spectrum bands for 5G-compliant devices. We derive our revenue from selling semiconductor devices, as well as antenna modules based on using those mmWave semiconductor devices. We have pioneered a high-volume mmWave IC production test methodology using standard, low-cost production test equipment. It has taken us several years to refine performance of this production test methodology, and we believe this places us in a leadership position in addressing the operational challenges of delivering mmWave products into high-volume markets. We also produce and sell complete mmWave antenna modules. The primary advantage provided by our antenna modules is that our proprietary mmWave ICs and the antenna are integrated into a single device. A differentiating characteristic of mmWave technology is that the RF amplifiers must be as close as possible to the antenna to minimize loss. WithOur ourmodule module,is wedesigned canto guaranteeenhance the performance of the amplifier/antenna interface and simplify customers’ radio frequency (“RF”) engineering, facilitating more opportunities for customer prospects that have not provided RF-type systems, as well as shortening the time to market for new products.

We also had a memory product line comprising our Bandwidth Engine IC products. These products integrate our proprietary, 1T-SRAM high-density embedded memory and a highly-efficient serial interface protocol resulting in a monolithic memory IC solution optimized for memory bandwidth and transaction access performance. Taiwan Semiconductor Manufacturing Corporation, or TSMC, is the sole foundry that manufacturesmanufactured the wafers used to produce our memory IC products.products, TSMC informed us that it would be discontinuingdiscontinued the foundry process used to produce wafers, insuch turn, necessary to manufacture our memory ICs.wafers. As a result, in May 2023, we initiated an end-of-life, or EOL, of our memory IC products, and and, in March 2025, we commencedfulfilled initialall then-outstanding EOL shipments during the quarter ended September 30, 2023. As of December 31, 2024, we had remaining EOL purchase orders totaling approximately $2.3 million, and we expect to ship all of these orders by March 2025. We do not expect any further shipments or to generate any revenue from shipments offor our memory IC productsproducts. afterSubsequent to March 2025, we received additional purchase orders and recorded revenue totaling approximately $0.5 million during the second half of 2025.

On August 30, 2024, we entered into an At The Market Offering Agreement (the “Sales Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”) with respect to an “at the market” offering program, under which we may, from time to time, in our sole discretion, issue and sell through Ladenburg, acting as agent or principal, shares of our common stockstock. initiallyOn having anNovember aggregate21, offering2025, pricewe offiled upa prospectus supplement to $1,425,000.our Afterregistration statement sellingon $169,215Form ofS-3 shares(File pursuantNo. 333-280798) to the Sales Agreement, on December 10, 2024, we increasedincrease the maximum aggregatenumber offeringof amountshares of common stock issuableto pursuantup to thean Salesaggregate Agreementof to$3,150,000 of $2,693,527.shares, exclusive of previously sold shares. The Sales Agreement provides that Ladenburg will be entitled to compensation for its services equal to 3.0% of the gross proceeds from sales of any shares of common stock pursuant to the Sales Agreement in addition to the reimbursement of certain expenses. We have no obligation to sell any shares pursuant to the Sales Agreement and either we or Ladenburg may terminate the Sales Agreement in accordance with its terms. During the three and twelve months ended December 31, 2024,2025, we sold 153,2001,710,732 and 3,713,939 shares of common stock for net proceeds of approximately $186,500 $2,095,000 and $4,351,100 pursuant to the Sales Agreement.Agreement

Our Historically, our licensing contracts for our memory technology typically provide provided for royalties based on the licensee’s use of our memory technology in its currently shipping commercial products. We estimate its estimated royalty revenue in the calendar quarter in which the licensee uses the licensed technology. Payments are were received in the subsequent quarter. Royalty revenues from licensees of our memory technology are no longer material due to reduced shipments by these licensees, which we attribute to the discontinuation of the foundry process by TSMC, therefore royalty revenue is recorded when a licensee reports actual amounts to us. We also generate revenue from licensing itsour mmWave technology. We recognize Licenselicense feefees as revenue at the point of time when the control of the license has been transferred and we have no continuing performance obligations to the customer.

Product revenue increaseddecreased for 20242025 compared with 2023 2024 primarily due to the decrease of our memory IC product shipments attributable to the significant reduction in EOL shipments in 2025 as compared with 2024. The decreases were partially offset by an increase in shipments of our memory IC products due to the EOL we initiated in 2023. The increase in memory shipments was partially offset by a decrease in shipments of our mmWave products.ICs and antenna modules.

We expect sales of our mmWave products to increase from a volume and revenue perspective overin the next 12 months,2026, as we expect i) an increase in orders from existing customers,customers which appear to have reduced inventory levels that had increased due to the worldwide inventory correction and ii) new customers to commence production during 2025.2026.

Royalty and other revenue includes royalty, non-recurring engineering services and license revenues. The decreaseincrease in royalty and other revenue for 20242025 compared with 20232024 was primarily due to an a decreaseincrease in non-recurring engineering services revenue related to our mmWave technology combinedattributable to a statement of work entered withinto in July 2025 partially offset by a decrease in royalties from licensees of our memory technology,technology due to reduced shipments by these licensees, which werewe impactedattribute to the discontinuation of the foundry process by the same factors that produced our EOL.TSMC.

Cost of net revenue is primarily comprised of direct and indirect costs related to the sale of our products, including amortization of certain intangible assets and depreciation of production-related fixed assets and, prior to January 1, 2025, amortization of intangible assets.

Cost of net revenue decreased for 20242025 compared with 2023, 2024, primarily due related to the decrease in product mix,revenue and amortization of developed technology intangible assets of approximately $2.3 million incurred in 2024, as salesthese assets were fully amortized as of ourDecember memory IC products increased, and a reduction in inventory write-down charges. Our memory products generate higher margins than our mmWave products, for which we experienced reduced sales during31, 2024. Inventory write-down charges declined by byapproximately $3.1 million$374,000 from $3.5 million recorded in 2023 to $0.4 million recorded in 2024.2024 to approximately $36,000 recorded in 2025. The previous write-downs were primarily attributable to inventory identified as excess and obsolete based on inventory expiration and customer forecasts. If our utilization of inventory is, or if our estimates of our inventory’s potential utility become, less favorable than currently expected, additional inventory write-downs may be required.

Gross profit increaseddecreased for 20242025 compared with 20232024 primarily due to the reduction in revenue combined with product mix, specifically the increasedecrease in memory IC shipments andpartially reductionoffset by an increase in mmWave product shipmentsshipments. The gross margin percentage increased in 2025 compared with 2024 due to approximately $2.3 million of amortization of intangible assets recorded to cost of net revenue combined with a $3.1 million$374,000 decrease in inventory write-down charges in 20242025 compared with 2023.2024. DuringIn addition, during the year ended December 31, 2024,2025, we recorded revenue for sales of approximately $139,000 frommmWave inventory with a cost of approximately $1,351,000 that had been written down in prior periods.to January 1, 2025.

Research and Development (R&D)

Our research and development, or R&DD, expenses include costs related to the development of our products. We expense R&D costs as they are incurred.

Selling, General and Administrative (SG&A)

Selling, general and administrative, or SG&A, expenses consist primarily of personnel and related overhead costs for sales, marketing, finance, human resources and general management and, andprior to January 1, 2025, amortization of certain intangible assets.

The increase decrease for 20242025 compared with 20232024 was primarily attributable to increasedreductions consultingin expenses for facilities, stock based compensation and professional services costs and increased amortization of purchased intangible assets for customer relationships relationships,of approximately $1.0 million, which were fully amortized as we reduced the estimated life of theseDecember intangibles31, during 2023.2024. These increasesdecreases were partially offset by the impact of headcount reductions initiatedincreases in 2023, including the elimination of certain employeeconsulting and consultingprofessional positionsservices and reductions of other discretionary operating expenses during 2023.costs.

In November 2023, we implemented an employee lay-off and terminated certain consulting positions (the “Reductions”) to reduce operating expenses and cash burn, as we prioritized business activities and projects that we believe will have a higher return on investment. As part of the Reductions, we implemented a temporary lay-off that impacted 16 employees (the “Employees”) of Peraso Tech. During the six months ended June 30, 2024, we determined that we would not recall any of the 11 Employees that remained on our payroll and commenced notifying the remaining Employees that their employment would be terminated. As a result, we recorded severance charges of approximately $0.4 million for the year ended December 31, 2024. The severance liabilities were fully paid as of December 31, 2024.2025.

As a result of the decision to not recall the Employees, we determined that it was probable that a number of our non-cancelable licenses for computer-aided design software would not be utilized during the remaining license terms. During the year ended December 31, 2024, we expensed $1.6 million for the value of the remaining contractual liabilities liabilities.and recorded liabilities of approximately $1.6 million. During the three months ended June 30, 2025, a licensor terminated one of the license agreements and initiated a refund of approximately $56,300 for amounts previously paid by us. As a result, we reversed approximately $222,600 of expense and approximately $166,300 of the related contractual liabilities for this licensor during the three months ended June 30, 2025. As of December 31, 2025, the remaining contractual liabilities had been paid.

In 2023, 2025, net cash provided fromby investingfinancing activities of $1.0$5.3 million primarily comprised $0.9 million representedin $1.1net proceeds from a warrant inducement offering in September 2025 and $4.4 million of net proceeds from maturities and sales ofunder short-term investments,our partiallyat-the offsetmarket byoffering $0.1 million of purchases of fixed assets.program.

Our primary purchase obligations include non-cancelable purchase orders for inventory. At December 31, 2024,2025, the Companywe had outstanding non-cancelable purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $3.1$2.7 million.

We incurred net losses of approximately $10.7$4.8 million and $16.8$10.7 million for the years ended December 31, 20242025 and 2023,2024, respectively, and we had an accumulated deficit of approximately $177.1$181.9 million as of December 31, 2024.2025. These and prior year losses have resulted in significant negative cash flows and have required us to raise substantial amounts of additional capital. As a result, management has concluded, and our independent registered public accounting firm has agreed with our conclusion, that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months beyond the filing of this Annual Report on Form 10-K. To date, we have primarily financed our operations through loans, offerings of common stock and warrants and issuances of convertible notes.

We expect to continue to incur operating losses during 2025, 2026, as we willdo ceasenot expect to generate any meaningful revenue from shipments of our remaining memory products after March 2025 and as we continue to secure new customers for and continue to invest in the development of our mmWave products. Further, we expect our cash expenditures to continue to exceed receipts for at least the next 12 months, as our revenues will not be sufficient to offset our operating expenses. In addition, we have incurred and may continue to incur substantial costs related to our strategic alternative exploration process, including our evaluation of Mobix Labs’ proposal, which costs include the fees of our financial and legal advisors. We believe that our existing cash and cash equivalents as of December 31, 20242025 and expected receipts associated with forecasted product sales will enable us to meet our capital needs through at leastinto the second third quarter of 2025.2026.

We will need to increase revenues beyond the levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time. As a result of our expected operating losses and cash burn and recurring losses from operations, if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt as to our ability to continue as a going concern within one year from the date of issuance of theseour consolidated financial statements. The consolidated financial statements presented in Item 8 of this Report have been prepared assuming that we will continue as a going concern, and do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to us. We are currently seeking additional financing in order to meet our cash requirements for the foreseeable future. If we are unsuccessful in these efforts, we will need to implement additional cost reduction strategies, which could further affect itsour near- and long-term business plan. These efforts may include, but are not limited to, reducing headcount and curtailing business activities. As further discussed in Note 10 to the consolidated financial statements, in November 2024, we entered into a warrant inducement offering for net proceeds of approximately $2.6 million. Additionally, on August 30, 2024, we entered into the Sales Agreement with Ladenburg, pursuant to which we may offer and sell, from time to time at our sole discretion, shares of our common stock through Ladenburg as agent and/or principal (subject to the limitations of General Instruction I.B.6 of Form S-3) through an at-the-market program. Further, during 2023 and 2024, we implemented reductions in our workforce and eliminated 19 full-time equivalent positions. These cost reduction actions were intended to preserve cash, as we kept capital expenditures to minimum levels in order to reduce operating costs and our short-term cash needs.

Our condensed consolidated financial statements as of MarchJune 31,30, 2026 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $2.7$3.3 million and an accumulated deficit of $184.4$186.6 million. We believe that our existing cash and cash equivalents as of MarchJune 31,30, 2026 and expected receipts associated with forecasted product sales will enable us to meet our capital needs into the fourth quarter of 2026. This estimate does not assume any further sales under the Sales Agreement or the Purchase Agreement with Roth Principal Investments, both of which remain available to us, at our discretion, as potential additional sources of capital, subject to compliance with the terms and conditions of each agreement, as applicable.

We incurred net losses of approximately $2.5 $4.7 million for the threesix months ended MarchJune 31,30, 2026 and $4.8 million for the year ended December 31, 2025, and we had an accumulated deficit of approximately $184.4$186.6 million as of MarchJune 31,30, 2026. These and prior-year losses have resulted in significant negative cash flows. To remain competitive and expand our product offerings to customers, we will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time. Given our history of fluctuating revenues and operating losses, and the challenges we face in securing customers for our products, we cannot be certain that we will be able to achieve and maintain profitability on either a quarterly or annual basis in the future. As a result, we may need to raise additional capital in the future, which may or may not be available to us at all or only on unfavorable terms.

Our evaluation of strategic alternatives, including Mobix Labs’ proposal,alternatives may not lead to a favorable outcome and could create business disruption and stock price volatility.

The process of reviewing potential strategic alternatives has been and may continue to be a significant distraction for our Boardboard of directors and management, and has required and may continue to require the expenditure of significant time and resources by us, which may cause concern to our employees, investors, strategic partners, and other constituencies and may have a material impact on our business and operating results and/or result in increased volatility in our share price.

We also had a memory product line comprising our Bandwidth Engine IC products. Taiwan Semiconductor Manufacturing Corporation, or TSMC, the sole foundry that manufactured the wafers used to produce our memory IC products, discontinued the foundry process used to produce such wafers. As a result, in May 2023, we initiated an end-of-life, or EOL, of our memory IC products, and, in March 2025, we fulfilled all then-outstanding EOL orders for our memory IC products. Subsequent to March 2025, we received additional purchase orders and recorded revenue totaling approximately $0.5 million duringIn the second half of 2025. During the three months ended March 31, 2026,2025, we receivedfulfilled an additionaltwo purchase orderorders andfor recorded revenue totaling approximately $20,000.$0.5 million. During the six months ended June 30, 2026, we fulfilled two additional purchase orders for revenue totaling approximately $27,000.

We incurred net losses of approximately $2.5 $4.7 million for the threesix months ended MarchJune 31,30, 2026 and $4.8 million for the year ended December 31, 2025, and we had an accumulated deficit of approximately $184.4$186.6 million as of MarchJune 31,30, 2026. These and prior year losses have resulted in significant negative cash flows and historically have required us to raise substantial amounts of additional capital. As discussed below, this raises significant doubt about our ability to continue as a going concern. We will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.

On August 30, 2024, we entered into an At The Market Offering Agreement (the “Sales Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”) with respect to an “at the market” offering program, under which we may, from time to time, in our sole discretion, issue and sell through Ladenburg, acting as agent or principal, shares of our common stock. The Sales Agreement provides that Ladenburg will be entitled to compensation for its services equal to 3.0% of the gross proceeds from sales of any shares of common stock pursuant to the Sales Agreement in addition to the reimbursement of certain expenses. We have no obligation to sell any shares pursuant to the Sales Agreement and either we or Ladenburg may terminate the Sales Agreement in accordance with its terms. During the twelve months ended December 31, 2025 and 2024, we sold 3,713,939 and 251,621 shares, respectively, of common stock for net proceeds of approximately $4,351,100 and $336,000, respectively, pursuant to the Sales Agreement. During the three months ended March 31, 2026, we sold 2,371,943 shares of common stock for net proceeds of approximately $2,303,484 pursuant to the Sales Agreement. Subsequent to March 31, 2026, we have sold 2,104,742 shares of common stock for net proceeds of approximately $2,061,205 through May 12, 2026. We currently have no amounts registered for sale under the Sales Agreement. We intend to file a new prospectus supplement under our existing shelf registration statement on Form S-3 following the filing of this Quarterly Report on Form 10-Q to register additional shares of common stock for sale under the Sales Agreement. The amount available for sale under any such prospectus supplement will be subject to limitations under General Instruction I.B.6 of Form S-3, which limits the aggregate market value of securities that may be sold by us during any 12-month period, as well as market conditions and other factors.

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of these condensed consolidated financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis we make these estimates based on our historical experience and on assumptions that we consider reasonable under the circumstances. Actual results may differ from these estimates and reported results could differ under different assumptions or conditions. Our significant accounting policies and estimates are disclosed in Note 1 of the “Notes to Condensed Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 1 of the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2025. As of March 31,June 30, 2026, there have been no material changes to our significant accounting policies and estimates.

The following tabletables details revenue by product category for the three and six months ended MarchJune 31,30, 2026 and 2025:

Product revenue decreased for the three and six months ended MarchJune 31,30, 2026 compared with the same period of 2025 primarily due to the decrease in sales of our EOL memory IC products dueand to the significanta decrease in EOL shipments and decreases in shipments of our mmWave ICs and antenna modules. The decline in mmWave product shipments during the three six months ended MarchJune 31,30, 2026 alsowas reflected the delayed shipment of a sizable order dueattributed to material availability constraints from one of our suppliers, as well as subdued near-term demand from existing fixed wireless access customers. The delayed order was shipped subsequent to March 31, 2026.

Services and other revenue includes royalty, non-recurring engineering services and license revenues. The increase in services and other revenue for the three and six months ended MarchJune 31,30, 2026 compared with the same period of 2025 was primarily due to an increase in non-recurring engineering services revenue related to our mmWave technology, partially offset by a decrease in royalties from licensees of our memory technology due to reduced shipments by these licensees, which we attribute to the discontinuation of the foundry process by TSMC.

Cost of net revenue decreased for the three and six months ended MarchJune 31,30, 2026 when compared with the same periodperiods inof 2025, primarily relateddue to the decreasecorresponding decreases in product revenue.

Gross profit decreased for the three months ended MarchJune 31,30, 2026 compared with the same period of 2025, primarily due to the reduction in product revenues, partially offset by increased services and other revenues. During the three months ended MarchJune 31,30, 2026 and 2025, we sold mmWave inventory with cost of net revenue values of approximately $182,000$0.3 million and $94,000,$0.2 million, respectively, which was written down prior to January 1, 2026,2026. Gross profit decreased for the six months ended June 30, 2026 compared with the same period of 2025, primarily due to the reduction in product revenues combined with product mix, specifically the decrease in memory IC shipments. The decrease was partially offset by the net increase in services and other revenues. During the six months ended June 30, 2026 and 2025, we sold tommWave customers.inventory with cost of net revenue values of approximately $0.5 million and $0.3 million, respectively.

We expect that total R&D expenses will remain flat for the remainder of 2026 compared with the priorfirst periodssix months of 2025.2026.

The slight increase for the three months ended June 30, 2026 compared with the same period of 2025 was primarily attributable to increases in consulting and professional services costs. The decrease for the three six months ended MarchJune 31,30, 2026 compared with the same period of 2025 was primarily attributable to reductions in expenses for facilities and stock based compensation. These decreases were partially offset by increases in consulting and professional services costs. We expect that total SG&A expense will remain flat or slightly decrease for the remainder of 2026 compared with 2025, as we continue to manage our SG&A expenses.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $2.7$3.3 million and working capital of $4.0 million.

Net cash used in operating activities was $1.0$3.9 million for the first threesix months of 2025,2026, which primarily resulted from our net loss of $0.5$4.7 million, as adjusted for cash outflows of $0.7 million in net changes in assets and liabilities, and partially offset by non-cash charges of $0.1 million of depreciation and amortization and $0.1$0.3 million of stock based compensation.compensation, and $0.4 million in net changes in assets and liabilities. The changes in assets and liabilities primarily related to the timing of collections of receivables, purchases of inventory and other vendor payables and prepayments.

Net cash used in investing activities ofwas approximately $0.2$0.3 million for the threefirst six months endedof March 31, 20262026, which was attributable to the purchase of fixed assets.

Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 20252026 comprised $0.4$4.7 million of net proceeds from sales ofunder our commonat-the stockmarket underoffering the Sales Agreement,program, partially offset by repaymentapproximately $0.1 million of financingpayments leaserelated liabilities.to costs associated with our committed equity facility and proceeds from option exercises.

Our primary purchase obligations include non-cancelable purchase orders for inventory. At MarchJune 31,30, 2026, we had outstanding non-cancelable purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $3.2$2.4 million.

We incurred net losses of approximately $2.5$4.7 million for the threesix months ended MarchJune 31,30, 2026 and $4.8 million for the year ended December 31, 2025, and we had an accumulated deficit of approximately $184.4$186.6 million as of MarchJune 31,30, 2026. These and prior year losses have resulted in significant negative cash flows and have required us to raise substantial amounts of additional capital. To date, we have primarily financed our operations through loans, offerings of common stock and warrants and issuances of convertible notes.

We expect to continue to incur operating losses during 2026, as we do not expect to generate any meaningful revenue from shipments of our remaining memory products and as we continue to secure new customers for and continue to invest in the development of our mmWave products. Further, we expect our cash expenditures to continue to exceed receipts for at least the next 12 months, as our revenues will not be sufficient to offset our operating expenses. In addition, we have incurred and may continue to incur substantial costs related to our strategic alternative exploration process, which costs include the fees of our financial and legal advisors. We believe that our existing cash and cash equivalents as of MarchJune 31, 30, 2026 and expected receipts associated with forecasted product sales will enable us to meet our capital needs into the fourth quarter of 2026. This estimate does not assume any further sales under the Sales Agreement or the Purchase Agreement with Roth Principal Investments, both of which remain available to us, at our discretion, as potential additional sources of capital, subject to compliance with the terms and conditions of each agreement, as applicable.

We will need to increase revenues beyond the levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time. As a result of our expected operating losses and cash burn and recurring losses from operations, if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt as to our ability to continue as a going concern within one year from the date of issuance of our condensed consolidated financial statements. In addition, our independent registered public accounting firm, in its report on our consolidated financial statements for the year ended December 31, 2025, expressed substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements presented in Part I, Item 1 of this Quarterly Report on Form 10-Q have been prepared assuming that we will continue as a going concern, and do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to us. We aremay currently sellingsell shares of our common stock under the Sales AgreementAgreement, and may sell shares of our common stock under the Purchase Agreement with Roth Principal Investments, in each case from time to time and at our discretion, and we are seeking additional financing in order to meet our cash requirements for the foreseeable future. If we are unsuccessful in these efforts, we will need to implement additional cost reduction strategies, which could further affect our near- and long-term business plan. These cost reduction strategies may include, but are not limited to, reducing headcount and curtailing business activities.

In the ordinary course of business, we enter into contractual arrangements under which we may agree to indemnify the counter-party from losses relating to a breach of representations and warranties, a failure to perform certain covenants, or claims and losses arising from certain external events as outlined within the contract, which may include, for example, losses arising from litigation or claims relating to past performance. Such indemnification clauses may not be subject to maximum loss clauses. We have also entered into indemnification agreements with our officers and directors. No material amounts related to these indemnifications are reflected in our condensed consolidated financial statements for the threesix months ended MarchJune 31,30, 2026.