offer a ~~broad~~broader array of ~~memory~~ products and offer some of their products at lower prices than we do, we believe that our focus on ~~and~~ performance leadership ~~in, low latency, high density Very Fast SRAMs provide~~provides us with key competitive advantages.

In December 2021, we were among the leaders in the Billion-Scale Approximate Nearest Neighbor Search Challenge held at the NeurIPS 2021 Conference performing on par with NVIDIA and Intel. Our results in the ANNS Challenge proved that our technology could perform on par with the category leaders in AI. The Billion-Scale ANNS Challenge was created to provide a comparative understanding of algorithmic ideas and their application at scale, promote the development of new techniques for the problem and demonstrate their value, and introduce a standard benchmarking approach.

In April 2022, we announced that our submission to the MoSAIC Challenge won first place in the Human/Object Tagging category. The MoSAIC Challenge was designed to identify best-in-class, cutting-edge hardware and software solutions to address challenging and longstanding technological gaps concerning remote autonomous indoor maneuvers. The MoSAIC Challenge was led by the U.S. Department of Defense (“DoD”), Irregular Warfare Technical Support Directorate (“IWTSD”), and the Israel Ministry of Defense (“IMOD”), Directorate of Defense Research and Engineering (DDR&D), along with the Merage Institute.

We believe that our ability to compete successfully in the rapidly evolving markets for “big data” and memory products for the networking and telecommunications markets depends on a number of factors, including:

~~product performance, features, quality, reliability and price;~~

●product performance, features, including low power consumption, quality, reliability and price;

●manufacturing flexibility, product availability and customer service throughout the lifetime of the product;

●

the availability of software tools, such as compilers and libraries that enable customers to easily design products for their specific needs;

~~the timing and success of new product introductions by us, our customers and our competitors; and~~

●the timing and success of new product introductions by us, our customers and our competitors; and

●our ability to anticipate and conform to new industry standards.

We believe we compete favorably with our competitors based on these factors. However, we may not be able to compete successfully in the future with respect to any of these factors. Our failure to compete successfully in these or other areas could harm our business.

The market for networking memory products is competitive and is characterized by technological change, declining average selling prices and product obsolescence. Competition could increase in the future from existing competitors and from other companies that may enter our existing or future markets with solutions that may be less costly or provide higher performance or more desirable features than our products. This increased competition may result in price reductions, reduced profit margins and loss of market share.

In addition, we are vulnerable to advances in technology by competitors, including new SRAM architectures as well as new forms of ~~DRAM~~Dynamic Random Access Memory (“DRAM”) and other new memory technologies. Because we have limited experience developing ICintegrated circuit (“IC”) products other than Very Fast SRAMs, ~~and LLDRAMs,~~ any efforts by us to introduce new products based on new technology, including ~~the~~our new in-place associative computing products, ~~currently under development,~~ may not be successful and, as a result, our business may suffer.

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Intellectual Property

Our ability to compete successfully depends, in part, upon our ability to protect our proprietary technology and information. We rely on a combination of patents, copyrights, trademarks, trade secret laws, non-disclosure and other contractual arrangements and technical measures to protect our intellectual property. We believe that it is important to maintain a large patent portfolio to protect our innovations. We currently hold 44123 United States patents, including 63 memory patents and 60 associative computing patents, and have in excess of a dozen patent applications pending. We ~~do not consider our existing patents to be materially important to our business, and we~~ cannot assure you that any patents will be issued as a result of our pending ~~applications or that any patents issued will be valuable to our business.~~applications. We believe that factors such as the technological and creative skills of our personnel and the success of our ongoing product development efforts are ~~more~~also important ~~than our patent portfolio~~ in maintaining our competitive position. We generally enter into confidentiality or license agreements with our employees, distributors, customers and potential customers and limit access to our proprietary information. Our intellectual property rights, if challenged, may not be upheld as valid, may not be adequate to prevent misappropriation of our technology or may not prevent the development of competitive products. Additionally, we may not be able to obtain patents or other intellectual property protection in the future. 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 to the same extent as do the laws of the United States and thus make the possibility of piracy of our technology and products more likely in these countries.

The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights, which have resulted in significant and often protracted and expensive litigation. We or our foundry from time to time are notified of claims that we may be infringing patents or other intellectual property rights owned by third parties. We have ~~recently~~ been involved in patent infringement ~~litigation. See Item 3. Legal Proceedings.~~litigation in the past. We have been subject to other intellectual property claims in the past and we may be subject to additional claims and litigation in the future. Litigation by or against us relating to allegations of patent infringement or other intellectual property matters could result in significant expense to us and divert the efforts of our technical and management personnel, whether or not such litigation results in a determination favorable to us. In the event of an adverse result in any such litigation, we could be required to pay substantial damages, cease the manufacture, use and sale of infringing products, expend significant resources to develop non-infringing technology, discontinue the use of certain processes or obtain licenses to the infringing technology. Licenses may not be offered or the terms of any offered licenses may not be acceptable to us. If we fail to obtain a license from a third party for technology used by us, we could incur substantial liabilities and be required to suspend the manufacture of products or the use by our foundry of certain processes.

~~Employees~~Human Capital Resources

In November 2022, we announced measures taken to reduce our operating expenses by approximately $7.0 million on an annualized basis, primarily from salary reductions related to reduced headcount and salary decreases for certain retained employees, as well as targeted reductions in research and development spending. These strategic cost reduction measures are expected to enable us to better focus on our operational resources on advancing our proprietary APU technology. None of our Gemini-II chip development and core APU software development efforts, including the building of the APU compiler, was affected by the reduction in research and development spending. The APU marketing, sales, and APU engineering efforts will retain priority in our budget. The spending reductions are not expected to impact the launch of Gemini-I in target markets, including SAR, search, and SaaS. The cost reduction initiative is expected to be completed by September 30, 2023 and will result in an approximate 15% decrease in our global workforce. In total, we expect to incur approximately $917,000 in cash expenditures for termination costs, including the payout of accrued vacation, of which $490,000 was incurred in fiscal 2023.

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As of March 31, ~~2016~~,2023, we had ~~142~~156 full-time employees, including 78107 engineers, of which 4770 are engaged in research and development and 4048 have PhD or MS degrees, 1816 employees in sales and marketing, ~~ten~~10 employees in general and administrative capacities and 6860 employees in manufacturing. Of these employees, 5651 are based in our Sunnyvale facility, ~~and 60~~55 are based in our Taiwan facility and 35 are based in our Israel facility.We believe that our future success will depend in large part on our ability to attract and retain highly-skilled, engineering, managerial, sales and marketing personnel. Our employees are not represented by any collective bargaining unit, and we have never experienced a work stoppage. We believe that our employee relations are good.

Compensation and benefits

Our goal is to attract, motivate and retain talent with a focus on encouraging performance, promoting accountability and adhering to our company values. The future growth and success of our company largely depends on our ability to attract, train and retain qualified professionals. As part of our effort to do so, we offer competitive compensation and benefit programs including a 401(k) Plan, stock options for all employees, flexible spending accounts and paid time off. We understand that effective compensation and benefits programs are important in retaining high-performing and qualified individuals. We continue to assess our healthcare and retirement benefits each year in order to provide competitive benefits to our employees.

Diversity, inclusion and belonging

We are committed to our continued efforts to increase diversity and foster an inclusive work environment that supports the global workforce and the communities we serve. We recruit the best people for the job regardless of gender, ethnicity or other protected traits and it is our policy to fully comply with all laws applicable to discrimination in the workplace. Our diversity, equity and inclusion principles are also reflected in our employee training and policies. We continue to enhance our diversity, equity and inclusion policies which are guided by our executive leadership team.

Ethics & Corporate Responsibility

We are committed to ensuring ethical organizational governance, embracing diversity and inclusion in the board room and throughout the organization and are committed to observing fair, transparent, and accountable operating practices. We seek to create and foster a healthy, balanced, and ethical work environment for everyone in our organization. To this end, we promote an ethical organizational culture and encourage all employees to raise questions or concerns about actual or potential ethical issues and company policies and to offer suggestions about how we can make our organization better. These practices are set forth in our Code of Business Conduct and Ethics, which is periodically reviewed by all of our employees and is available on our website under “Corporate Governance.”

Health and safety

We are committed to maintain a safe and healthy workplace for our employees. Our policies and practices are intended to protect our employees.

Since fiscal 2021, in response to the COVID-19 pandemic, we implemented safety protocols and new procedures to protect our employees. These protocols, which were no longer being enforced, included complying with social distancing and other health and safety standards as required by state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

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Investor Information

You can access financial and other information in the Investor Relations section of our website at www.gsitechnology.com. We make available, on our website, free of charge, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or

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furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC.

The charters of our Audit Committee, our Compensation Committee, and our Nominating and Governance Committee, our code of conduct (including code of ethics provisions that apply to our principal executive officer, principal financial officer, controller, and senior financial officers) and our corporate governance guidelines are also available at our website under ~~"Corporate~~“Corporate Governance."” These items are also available to any stockholder who requests them by calling (408) 331-8800. The contents of our website are not incorporated by reference in this report.

The SEC maintains an Internet site that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.

Information About Our Executive Officers

The following table sets forth certain information concerning our executive officers as of June 1, ~~2016:~~2023:


Name	Age		Title
Lee-Lean Shu	61	68		President, Chief Executive Officer and Chairman
Avidan Akerib	67		Vice President, Associative Computing
Didier Lasserre	51	58		Vice President, Sales
Douglas Schirle	61	68		Chief Financial Officer
Bor-Tay Wu	64	71		Vice President, Taiwan Operations
Ping Wu	59	66		Vice President, U.S. Operations
Robert Yau	63	70		Vice President, Engineering, Secretary and Director

Lee-Lean Shu co-founded our company in March 1995 and has served as our President and Chief Executive Officer and as a member of our Board of Directors since inception. Since October 2000, Mr. Shu has also served as Chairman of our Board. From January 1995 to March 1995, Mr. Shu was Director, SRAM Design at Sony Microelectronics Corporation, a semiconductor company and a subsidiary of Sony Corporation, and from July 1990 to January 1995, he was a design manager at Sony Microelectronics Corporation.

Avidan Akerib has served as our Vice President, Associative Computing since MikaMonu Group Ltd. was acquired in November 2015. From July 2011 to November 2015, Dr. Akerib served as co-founder and chief technologist of MikaMonu Group Ltd, a developer of computer in-memory and storage technologies. From July 2008 to March 2011, Dr. Akerib served as chief scientist of ZikBit Ltd., a developer of DRAM computing technologies. From Jan 2001 to July 2007, Dr. Akerib was the General Manager of NeoMagic Israel, a supplier of low-power audio and video integrated circuits for mobile use. Dr. Akerib has a PhD in applied mathematics and computer science from the Weizmann Institute of Science, Israel, and an MSc and BSc in electrical engineering from Tel Aviv University and Ben Gurion University, respectively. Dr. Akerib is the inventor of more than 50 patents related to parallel and In Memory Associative Computing.

Didier Lasserre has served as our Vice President, Sales since July 2002. From November 1997 to July 2002, Mr. Lasserre served as our Director of Sales for the Western United States and Europe. From July 1996 to October

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1997, Mr. Lasserre was an account manager at Solectron Corporation, a provider of electronics manufacturing services. From June 1988 to July 1996, Mr. Lasserre was a field sales engineer at Cypress Semiconductor Corporation, a semiconductor company.

Douglas Schirle has served as our Chief Financial Officer since August 2000. From June 1999 to August 2000, Mr. Schirle served as our Corporate Controller. From March 1997 to June 1999, Mr. Schirle was the Corporate Controller at Pericom Semiconductor Corporation, a provider of digital and mixed signal integrated circuits. From November 1996 to February 1997, Mr. Schirle was Vice President, Finance for Paradigm Technology, a manufacturer of SRAMs, and from December 1993 to October 1996, he was the Controller for Paradigm Technology. Mr. Schirle was formerly a certified public accountant.

Bor-Tay Wu has served as our Vice President, Taiwan Operations since January 1997. From January 1995 to December 1996, Mr. Wu was a design manager at Atalent, an IC design company in Taiwan.

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Ping Wu has served as our Vice President, U.S. Operations since September 2006. He served in the same capacity from February 2004 to April 2006. From April 2006 to August 2006, Mr. Wu was Vice President of Operations at QPixel Technology, a semiconductor company. From July 1999 to January 2004, Mr. Wu served as our Director of Operations. From July 1997 to June 1999, Mr. Wu served as Vice President of Operations at Scan Vision, a semiconductor manufacturer.

Robert Yau co-founded our company in March 1995 and has served as our Vice President, Engineering and as a member of our Board of Directors since inception. From December 1993 to February 1995, Mr. Yau was design manager for specialty memory devices at Sony Microelectronics Corporation. From 1990 to 1993, Mr. Yau was design manager at MOSEL/VITELIC, a semiconductor company.

Item 1A. Risk Factors

Our future performance is subject to a variety of risks. If any of the following risks actually occur, our business, financial condition and results of operations could suffer and the trading price of our common stock could decline. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business operations. You should also refer to other information contained in this report, including our consolidated financial statements and related notes.

Risk Factor Summary

Our business is subject to numerous risks and uncertainties, which are more fully described in the Risk Factors below. These risks include, but are not limited to:

Risks Related to Our Business and Financial Condition

●

Unpredictable fluctuations in our operating results could cause our stock price to decline.

●

Our largest OEM customer accounts for a significant percentage of our net revenues. If this customer, or any of our other major customers, reduces the amount they purchase, stops purchasing our products or fails to pay us, our financial position and operating results will suffer.

●

We have incurred significant losses and may incur losses in the future.

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●

We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, our ability to produce timely and accurate financial statements could be impaired.

●

Goodwill impairment and related charges, as well as other accounting charges or adjustments could negatively impact our operating results.

●

We depend upon the sale of our Very Fast SRAMs for most of our revenues and the market for Very Fast SRAMs is highly competitive.

●

If we do not successfully implement certain cost reduction initiatives, we may suffer adverse impacts on our business and operations.

●

We are dependent on a number of single source suppliers.

●

If we do not successfully develop and introduce the new in-place associative computing products, which entails certain significant risks, our business will be harmed.

●

If we are unable to offset increased wafer fabrication and assembly costs, our gross margins will suffer.

●

We are subject to the highly cyclical nature of the networking and telecommunications markets.

●

We rely heavily on distributors and our business will be negatively impacted if we are unable to develop and manage distribution channels and accurately forecast future sales through our distributors.

●

The average selling prices of our products are expected to decline.

●

We are substantially dependent on the continued services of our senior management and other key personnel. If we are unable to recruit or retain qualified personnel, our business could be harmed.

●

Cyber-attacks could disrupt our operations or the operations of our partners, and result in reduced revenue, increased costs, liability claims and harm our reputation or competitive position.

●

Demand for our products may decrease if our OEM customers experience difficulty manufacturing, marketing or selling their products.

●

Our products have lengthy sales cycles that make it difficult to plan our expenses and forecast results.

●

Our business could be negatively affected as a result of actions of activist stockholders or others.

●

Our acquisition of companies or technologies could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results.

●

Our business will suffer if we are unable to protect our intellectual property or if there are claims that we infringe third party intellectual property rights.

●

Current unfavorable economic and market conditions may adversely affect our business, financial condition, results of operations and cash flows.

●

If our business grows, such growth may place a significant strain on our management and operations.

Risks Related to Manufacturing and Product Development

●

We may experience difficulties in transitioning our manufacturing process technologies, which may result in reduced manufacturing yields, delays in product deliveries and increased expenses.

●

Manufacturing process technologies are subject to rapid change and require significant expenditures.

●

Our products may contain defects, which could reduce revenues or result in claims against us.

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Risks Related to Our International Business and Operations

●

The international political, social and economic environment, particularly as it relates to Taiwan, may affect our business performance.

●

Certain of our independent suppliers and OEM customers have operations in the Pacific Rim, an area subject to significant risk of natural disasters and outbreak of contagious diseases such as COVID-19.

●

The United States could materially modify certain international trade agreements, or change tax provisions related to the global manufacturing and sales of our products.

●

Some of our products are incorporated into advanced military electronics, and changes in international geopolitical circumstances and domestic budget considerations may hurt our business.

Risks Relating to Our Common Stock and the Securities Market

●

The trading price of our common stock is subject to fluctuation and is likely to be volatile.

●

We may need to raise additional capital in the future, which may not be available on favorable terms or at all, and which may cause dilution to existing stockholders.

●

Use of a portion of our cash reserves to repurchase shares of our common stock presents potential risks and disadvantages to us and our continuing stockholders.

●

Our executive officers, directors and their affiliates hold a substantial percentage of our common stock.

●

The provisions of our charter documents might inhibit potential acquisition bids that a stockholder might believe are desirable, and the market price of our common stock could be lower as a result.

Risks Related to Our Business and Financial Condition

Unpredictable fluctuations in our operating results could cause our stock price to decline.

Our quarterly and annual revenues, expenses and operating results have varied significantly and are likely to vary in the future. For example, in the twelve fiscal quarters ended March 31, ~~2016~~,2023,we recorded net revenues of as much as ~~$16.4~~$9.0 million and as little as ~~$12.2~~$5.4 million, and ~~quarterly operating income of as much as $241,000 and, in eleven quarters,~~ operating losses ~~including an operating loss of $3.6~~from $2.9 million ~~in the quarter ended March 31, 2014.~~to $5.7 million. We therefore believe that period-to-period comparisons of our operating results are not a good indication of our future performance, and you should not rely on them to predict our future performance or the future performance of our stock price. ~~In future periods, we may not have any revenue growth, or our revenues could decline.~~ Furthermore, if our operating expenses exceed our expectations, our financial performance could be adversely affected. Factors that may affect periodic operating results in the future include:

●

commercial acceptance of our ~~ability to anticipate and conform to new industry standards.~~

associative computing products;

●

commercial acceptance of our RadHard and RadTolerant products;

●

changes in our customers' inventory management practices;

●

unpredictability of the timing and size of customer orders, since most of our customers purchase our products on a purchase order basis rather than pursuant to a long-term contract;

●

changes in our ~~customers' inventory management practices;~~

product pricing policies, including those made in response to new product announcements, pricing changes of our competitors and price increases by our foundry and suppliers;

●

our ability to anticipate and conform to new industry standards;

●

fluctuations in availability and costs associated with materials and manufacturing services needed to satisfy customer ~~requirements;~~

requirements caused by supply constraints;

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●

restructuring, asset and goodwill impairment and related charges, as well as other accounting changes or adjustments;

●

manufacturing defects, which could cause us to incur significant warranty, support and repair costs, lose potential sales, harm our relationships with customers and result in write-downs;

and

●

~~changes in our product pricing policies, including those made in response to new product announcements and pricing changes of our competitors;~~

~~fluctuations in our quarterly operating expenses due to substantial litigation-related expenses in some quarters; and~~

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our ability to address technology issues as they arise, improve our products' functionality and expand our product offerings.

Our expenses are, to a large extent, fixed, and we expect that these expenses will increase in the future.In fiscal years 2022 and 2023, we experienced price increases for raw materials, including a 20% increase in the price of wafers that was implemented in early calendar 2022 and a 6% increase that was implemented in early calendar 2023, as well as varying pricing increases for manufacturing services due to the supply chain constraints in the semiconductor market. We expect to experience additional price increases for raw materials in fiscal year 2024 due to worldwide inflationary pressures. We will not be able to adjust our spending quickly if our revenues fall short of our expectations. If this were to occur, our operating results would be harmed. If our operating results in future quarters fall below the expectations of market analysts and investors, the price of our common stock could fall.

Rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine, significant fluctuations in energy prices and the decline in the global economic environment have caused increased stock market volatility and uncertainty in customer demand and the worldwide economy in general, and we may continue to experience decreased sales and revenues in the future. We expect such impact will in particular affect our SRAM sales and has also impacted the launch of our APU product to some degree and the adoption of RadHard and RadTolerant SRAM products by aerospace and military customers. However, the magnitude of such impact on our business and its duration is highly uncertain.

Our ~~two~~ largest OEM ~~customers account~~customer accounts for a significant percentage of our net revenues. If ~~either of these customers,~~this customer, or any of our other major customers, reduces the amount they purchase or stop purchasing our products, our operating results will suffer.

~~Alcatel-Lucent, currently~~Nokia, our largest customer, purchases our products directly from us and through contract manufacturers and distributors. Purchases by ~~Alcatel-Lucent~~Nokia represented approximately ~~32%~~17%, ~~25%~~29% and ~~19%~~39% of our net revenues in fiscal ~~2016, 2015~~2023, 2022 and 2014, respectively. Cisco Systems, historically our largest OEM customer, purchases our products through its consignment warehouses and contract manufacturers and directly from us. Purchases by Cisco Systems represented approximately 9%, 13% and 19% of our net revenues in fiscal ~~2016~~, ~~2015~~ ~~and~~ ~~2014~~,2021, respectively. We expect that our operating results in any given period will continue to depend significantly on orders from our key OEM customers, particularly ~~Alcatel-Lucent and Cisco Systems,~~Nokia, and our future success is dependent to a large degree on the business success of ~~these OEMs~~this customer over which we have no control. We do not have long-term contracts with ~~Alcatel-Lucent, Cisco Systems~~Nokia or any of our other major OEM customers, distributors or contract manufacturers that obligate them to purchase our products. We expect that future direct and indirect sales to ~~Alcatel-Lucent, Cisco Systems~~Nokia and our other key OEM customers will continue to fluctuate significantly on a quarterly basis and that such fluctuations may substantially affect our operating results in future periods. If we fail to continue to sell to our key OEM customers, distributors or contract manufacturers in sufficient quantities, our business could be harmed.

Rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine, significant fluctuations in energy prices and the resulting decline in the global economic environment are expected to adversely affect our revenues, results of operations and financial condition.

Our business is expected to be materially adversely affected by rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine and the significant fluctuations in energy prices, all of which are contributing to a decline in the global economic environment.

Our quarterly revenues have been flat and trended downward in the past year due to the decline in the global economic environment that has resulted in less demand for GSI’s products. We expect that a continued rise in interest rates, continued inflationary pressures, recent bank failures, continued uncertainties in the business climate

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caused by the military conflict in Ukraine and related fluctuations in energy prices will adversely impact demand for new and existing products, and to impact the mindset of potential commercial partners to launch new products using GSI’s technology. The resulting decline in the global economic environment is expected to have an adverse impact on our business and financial condition.

Disruptions in the capital and financial markets as a result of rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine, significant fluctuations in energy prices and the decline in the global economic environment may also adversely affect our ability to obtain additional liquidity should the impacts of a decline in the global economic environment continue for a prolonged period.

We have incurred significant losses ~~in prior periods~~ and may incur losses in the future.

We have incurred significant ~~losses in prior periods.~~losses. We incurred net losses of ~~$2.2~~$16.0 million, $16.4 million and ~~$5.0~~$21.5 million during fiscal ~~2016~~2023, 2022 and ~~2015,~~2021, respectively. Our operating expenses over the past several years included substantial expenses related to legal proceedings which resulted in operating losses. Although these proceedings were concluded in fiscal 2016, thereThere can be no assurance that our Very Fast SRAMs will continue to receive broad market acceptance, that our new product development initiatives will be successful or that we will be able to achieve sustained revenue growth or ~~return~~profitability.

We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, or if we fail to ~~profitability.~~develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

In the course of preparing our financial statements for the fiscal year ended March 31, 2022, we identified a material weakness in our internal control over financial reporting which remained un-remediated at March 31, 2023. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified pertains to the design and maintenance of control over the review of the forecasts used to calculate the contingent consideration liability, used in the goodwill impairment test and used in the recoverability test for intangible assets. This material weakness has not been remediated as of March 31, 2023. Our management is taking steps to remediate our material weakness, including re-evaluating the methodology and procedures involved in developing forecasts as well as the review and oversight of the forecasting process. We are in the process of implementing a detailed plan for the remediation of the material weakness, including enhancing management’s review controls over the forecasts used to calculate the contingent consideration liability, used in the recoverability test for intangible assets and used in the goodwill impairment test. Although we have begun implementing the enhancements described above, the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Until this material weakness is remediated, we plan to continue to perform additional analyses and other procedures to ensure that our consolidated financial statements are prepared in accordance with GAAP.

If we are unable to further implement and maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price. If we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources.

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Furthermore, we cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to our material weakness in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of periodic management evaluations.

If we determine that our goodwill and intangible assets have become impaired, we may incur impairment charges, which would negatively impact our operating results.

Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed in a business combination, such as our acquisition of MikaMonu Group Ltd. in fiscal 2016. We test for goodwill impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset is more likely than not impaired. If the carrying value of a material asset is determined to be impaired, it will be written down to fair value by a charge to operating earnings. As of March 31, 2023, we had a goodwill balance of $8.0 million and intangible assets of $1.8 million, respectively, from the MikaMonu acquisition. An adverse change in market conditions, including a sustained decline in our stock price, loss of significant customers, or a weakened demand for our products could be considered to be an impairment triggering event. If such change has the effect of changing one of our critical assumptions or estimates, a change to the estimation of fair value could result in an impairment charge to our goodwill or intangible assets, which would negatively impact our operating results and harm our business. In the fiscal year ended March 31, 2023, we identified sustained declines in our stock price that resulted in our market capitalization being below the carrying value of our stockholders’ equity. We concluded the sustained declines in our stock price were triggering events and proceeded with quantitative goodwill impairment assessments. The results of the quantitative goodwill impairment assessments that we performed indicated the fair value of our sole reporting unit exceeded its carrying value as of December 31, 2022, February 28, 2023 and March 31, 2023.

We depend upon the sale of our Very Fast SRAMs for most of our revenues, and a downturn in demand for these products could significantly reduce our revenues and harm our business.

We derive most of our revenues from the sale of Very Fast SRAMs, and we expect that sales of these products will represent the substantial majority of our revenues for the foreseeable future. Our business depends in large part upon continued demand for our products in the markets we currently serve, which will continue to be adversely impacted by the decline in the global economic environment, and adoption of our products in new markets. Market adoption will be dependent upon our ability to increase customer awareness of the benefits of our products and to prove their high-performance and cost-effectiveness. We may not be able to sustain or increase our revenues from sales of our products, particularly if the networking and telecommunications markets were to experience another significant downturn in the future. Any decrease in revenues from sales of our products could harm our business more than it would if we offered a more diversified line of products.

~~Table~~Our future success is substantially dependent on the successful introduction of ~~Contents~~

If we do not successfully develop new products to respond to rapid market changes due to changing technology and evolving industry standards, particularly in the networking and telecommunications markets, our business will be harmed. Our effort to develop new in-place associative computing products ~~involves additional~~which entails significant risks.

~~If we fail to offer technologically advanced products and respond to technological advances and emerging standards, we may not generate sufficient revenues to offset~~Since 2015, our development costs and other expenses, which will hurt our business. The development of new or enhanced products is a complex and uncertain process that requires the accurate anticipation of technological and market trends. In particular, the networking and telecommunications markets are rapidly evolving and new standards are emerging. We are vulnerable to advances in technology by competitors, including new SRAM architectures, new forms of DRAM and the emergence of new memory technologies that could enableprincipal strategic objective has been the development of ~~products that feature higher performance or lower cost.~~our first in-place associative computing product. We ~~may experience development, marketing~~have devoted, and ~~other technological difficulties that may delay or limit our ability~~will continue to respond to technological changes, evolving industry standards, competitive developments or end-user requirements. For example, because we have limited experience developing integrated circuits, or IC, products other than Very Fast SRAMs and LLDRAMs, our efforts to introduce new products may not be successful and our business may suffer. Other challenges that we face include:

~~our products may become obsolete upon the introduction of alternative technologies;~~

~~we may incur substantial costs if we need to modify our products to respond to these alternative technologies;~~

~~we may not have sufficient resources to develop or acquire new technologies or to introduce new products capable of competing with future technologies;~~

~~new products that we develop may not successfully integrate with our end-users' products into which they are incorporated;~~

~~we may be unable to develop new products that incorporate emerging industry standards;~~

~~we may be unable to develop or acquire the rights to use the intellectual property necessary to implement new technologies; and~~

~~when introducing new or enhanced products, we may be unable to manage effectively the transition from older products.~~

~~In particular, we are devoting~~devote, substantial efforts and resources to the development of our new family of in-place associative computing ~~solutions utilizing patented technology obtained in our recent acquisition of MikaMonu.~~products. This ~~new development~~ongoing project involves the commercialization of new, cutting-edge technology, will require a continuing substantial effort ~~over more than a year~~ during fiscal 2024

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and will be subject to significant risks. In addition to the typical risks ~~including technical~~associated with the development of technologically advanced products, this project will be subject to enhanced risks of technological problems related to the development of this entirely new category of products, substantial risks of delays or unanticipated costs that may be encountered, ~~in the development of the new associative computing products~~ and risks associated with the establishment of entirely new markets and customer and partner relationships. The establishment of new customer and partner relationships and selling our in-place associative computing products to such new customers is a significant undertaking that requires us to invest heavily in our sales team, enter into new channel partner relationships, expand our marketing activities and change the focus of our business and operations. Our inability to successfully establish a market for the ~~sale of such products.~~

~~We are subject to the highly cyclical nature of the networking and telecommunications markets.~~

Our products are incorporated into routers, switches, wireless local area network infrastructure equipment, wireless base stations and network access equipment used in the highly cyclical networking and telecommunications markets. We expect that the networking and telecommunications markets will continue to be highly cyclical,

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~~characterized by periods of rapid growth and contraction. Our business and our operating results are likely to fluctuate, perhaps quite severely, as a result of this cyclicality.~~

~~The market for Very Fast SRAMs is highly competitive.~~

The market for Very Fast SRAMs, which are used primarily in networking and telecommunications equipment, is characterized by price erosion, rapid technological change, cyclical market patterns and intense foreign and domestic competition. Several of our competitors offer a broad array of memory products and have greater financial, technical, marketing, distribution and other resources than we have. Some of our competitors maintain their own semiconductor fabrication facilities, which may provide them with capacity, cost and technical advantages over us. We cannot assure youproduct that we have developed will ~~be able to compete successfully against any of these competitors. Our ability to compete successfully in this market depends~~have a material adverse effect on ~~factors both within~~our future financial and ~~outside of~~business success, including our ~~control, including:~~

~~real or perceived imbalances in supply and demand of Very Fast SRAMs;~~

~~the rate at which OEMs incorporate our products into their systems;~~

~~the success of our customers' products;~~

~~our ability to develop and market new products; and~~

~~the supply and cost of wafers.~~

In addition, we are vulnerable to advances in technology by competitors, including new SRAM architectures and new forms of DRAM, or the emergence of new memory technologies that could enable the development of products that feature higher performance, lower cost or lower power capabilities.prospects for increased revenues. Additionally, the trend toward incorporating SRAM into other chips in the networking and telecommunications markets has the potential to reduce future demand for Very Fast SRAM products. There can be no assurance that we will be able to compete successfully in the future. Our failure to compete successfully in these or other areas could harm our business.

~~The average selling prices of our products are expected to decline, and~~ if we are unable to ~~offset these declines, our operating results will suffer.~~

~~Historically,~~meet the ~~average unit selling prices~~expectations of market analysts and investors with respect to this major product introduction effort, then the price of our ~~products have declined substantially over the lives of the products, and we expect this trend to continue. A reduction in overall average selling prices of our products~~common stock could result in reduced revenues and lower gross margins. Our ability to increase our net revenues and maintain our gross margins despite a decline in the average selling prices of our products will depend on a variety of factors, including our ability to introduce lower cost versions of our existing products, increase unit sales volumes of these products, and introduce new products with higher prices and greater margins. If we fail to accomplish any of these objectives, our business will suffer. To reduce our costs, we may be required to implement design changes that lower our manufacturing costs, negotiate reduced purchase prices from our independent foundries and our independent assembly and test vendors, and successfully manage our manufacturing and subcontractor relationships. Because we do not operate our own wafer foundry or assembly facilities, we may not be able to reduce our costs as rapidly as companies that operate their own foundries or facilities.fall.

~~Global economic and market conditions may adversely affect our business, financial condition and results of operations.~~

We sell our products to end customers both in the United States and internationally. We also rely heavily on our suppliers in Asia. We are therefore susceptible to adverse domestic and international economic and market

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conditions. In recent years, turmoil in global financial markets and economic conditions has impacted credit availability, consumer spending and capital expenditures, including expenditures for networking and telecommunications equipment. Weakness in global networking and telecommunications markets, particularly in Asia, has continued to adversely impact our revenues in recent quarters. Slowness in economic growth, domestically and in our key markets, uncertainty regarding macroeconomic trends, and volatility in financial markets may continue to adversely affect our business, financial condition and results of operations over coming quarters.

We are dependent on a number of single source suppliers, and if we fail to obtain adequate supplies, our business will be harmed and our prospects for growth will be curtailed.

We currently purchase several key components used in the manufacture of our products from single sources and are dependent upon supply from these sources to meet our needs. If any of these suppliers cannot provide components on a timely basis, at the same price or at all, our ability to manufacture our products will be constrained and our business will suffer. For example, due to worldwide inflationary pressures, the cost of wafers and assembly services have increased by approximately 25% since the beginning of fiscal 2021. Most significantly, we obtain wafers for our Very Fast SRAM and APU products from a single foundry, TSMC, and most of them are packaged at ASE. ~~Wafers for our LLDRAM products are obtained exclusively from Powerchip.~~ If we are unable to obtain an adequate supply of wafers from TSMC ~~or Powerchip~~ or find alternative sources in a timely manner, we will be unable to fulfill our customer orders and our operating results will be harmed. We do not have supply agreements with TSMC, ~~Powerchip,~~ ASE or any of our other independent assembly and test suppliers, and instead obtain manufacturing services and products from these suppliers on a purchase-order basis. Our suppliers, including TSMC, ~~and Powerchip,~~ have no obligation to supply products or services to us for any specific product, in any specific quantity, at any specific price or for any specific time period. As a result, the loss or failure to perform by any of these suppliers could adversely affect our business and operating results.

Should any of our single source suppliers experience manufacturing failures or yield shortfalls, be disrupted by natural disaster, military action or political instability, choose to prioritize capacity or inventory for other uses or reduce or eliminate deliveries to us for any other reason, we likely will not be able to enforce fulfillment of any delivery commitments and we would have to identify and qualify acceptable replacements from alternative sources of supply. In particular, if TSMC is unable to supply us with sufficient quantities of wafers to meet all of our requirements, we would have to allocate our products among our customers, which would constrain our growth and might cause some of them to seek alternative sources of supply. Since the manufacturing of wafers and other components is extremely complex, the process of qualifying new foundries and suppliers is a lengthy process and there is no assurance that we would be able to find and qualify another supplier without materially adversely affecting our business, financial condition and results of operations.

~~Because~~If we ~~outsource~~do not successfully develop new products to respond to rapid market changes due to changing technology and evolving industry standards, particularly in the networking and telecommunications markets, our ~~wafer manufacturing~~business will be harmed.

If we fail to offer technologically advanced products and ~~independent wafer foundry capacity is limited,~~respond to technological advances and emerging standards, we may ~~be required~~not generate sufficient revenues to ~~enter into costly long-term supply arrangements~~offset our development costs and other expenses, which will hurt our business. The development of new or enhanced products is a complex and uncertain process that requires the accurate anticipation of technological and market trends. In particular, the networking and telecommunications markets are rapidly evolving and new standards are emerging. We are vulnerable to ~~secure foundry capacity.~~

We do not have long-term supply agreements with TSMC or Powerchip, but instead obtain our wafers on a purchase order basis. In order to secure future wafer supply from TSMC or Powerchip or from other independent foundries, we may be required to enter into various arrangements with them, which could include:

~~contracts that commit us to purchase specified quantities of wafers over extended periods;~~

~~investments in and joint ventures with the foundries; or~~

~~non-refundable deposits with or prepayments or loans to foundries in exchange for capacity commitments.~~

advances in technology by competitors, including new SRAM architectures, new forms of DRAM and the emergence of new memory

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technologies that could enable the development of products that feature higher performance or lower cost. In addition, the trend toward incorporating SRAM into other chips in the networking and telecommunications markets has the potential to reduce future demand for Very Fast SRAM products. We may experience development, marketing and other technological difficulties that may delay or limit our ability to respond to technological changes, evolving industry standards, competitive developments or end-user requirements. For example, because we have limited experience developing integrated circuits, or IC, products other than Very Fast SRAMs, our efforts to introduce new products may not be ~~able~~successful and our business may suffer. Other challenges that we face include:

our products may become obsolete upon the introduction of alternative technologies;

we may incur substantial costs if we need to modify our products to respond to these alternative technologies;

we may not have sufficient resources to develop or acquire new technologies or to introduce new products capable of competing with future technologies;

new products that we develop may not successfully integrate with our end-users’ products into which they are incorporated;

we may be unable to develop new products that incorporate emerging industry standards;

we may be unable to develop or acquire the rights to use the intellectual property necessary to implement new technologies; and

when introducing new or enhanced products, we may be unable to effectively manage the transition from older products.

If we do not successfully implement the cost reduction initiatives that were announced on November 30, 2022, we may suffer adverse impacts on our business and operations.

On November 30, 2022, we announced the implementation of cost reduction initiatives. The cost reduction initiatives are expected to ~~make any~~be completed by September 30, 2023, and will result in an approximate 15% decrease in our global workforce. The aim of these ~~arrangements~~initiatives is to reduce GSI Technology’s operating expenses by approximately $7.0 million on an annualized basis, primarily from salary reductions related to reduced headcount and salary decreases for certain retained employees, as well as targeted reductions in ~~a timely fashion or at all,~~research and development spending. The implementation of these ~~arrangements, if any,~~cost reduction initiatives may ~~not be~~result in unintended and adverse impacts on ~~terms favorable~~our business and operations. Any failure to ~~us. Moreover, even if we are able to secure independent foundry capacity, we may be obligated to use all of that capacity or incur penalties. These penalties may be expensive and~~successfully implement the cost reduction initiatives could ~~harm~~prevent us from focusing our ~~financial results.~~operational resources on advancing GSI Technology’s proprietary APU technology.

If we are unable to offset increased wafer fabrication and assembly costs by increasing the average selling prices of our products, our gross margins will suffer.

If there is a significant upturn in the ~~networking and telecommunications markets that results in increased~~ demand for ~~our~~the manufacturing and assembly of semiconductor products ~~and competing products,~~as occurred in fiscal 2022, the available supply of wafers and packaging services may be limited. As a result, we could be required to obtain additional manufacturing and assembly capacity in order to meet increased demand. Securing additional manufacturing and assembly capacity may cause our wafer fabrication and assembly costs to increase. Inflationary pressures may also cause our wafer fabrication costs to increase. If we are unable to offset these increased costs by increasing the average selling prices of our products, our gross margins will decline.

We are subject to the highly cyclical nature of the networking and telecommunications markets.

Our Very Fast SRAM products are incorporated into routers, switches, wireless local area network infrastructure equipment, wireless base stations and network access equipment used in the highly cyclical

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networking and telecommunications markets. We expect that the networking and telecommunications markets will continue to be highly cyclical, characterized by periods of rapid growth and contraction. Our business and our operating results are likely to fluctuate, perhaps quite severely, as a result of this cyclicality.

The market for Very Fast SRAMs is highly competitive.

The market for Very Fast SRAMs, which are used primarily in networking and telecommunications equipment, is characterized by price erosion, rapid technological change, cyclical market patterns and intense foreign and domestic competition. Several of our competitors offer a broad array of memory products and have greater financial, technical, marketing, distribution and other resources than we have. Some of our competitors maintain their own semiconductor fabrication facilities, which may provide them with capacity, cost and technical advantages over us. We cannot assure you that we will be able to compete successfully against any of these competitors. Our ability to compete successfully in this market depends on factors both within and outside of our control, including:

real or perceived imbalances in supply and demand of Very Fast SRAMs;

the rate at which OEMs incorporate our products into their systems;

the success of our customers’ products;

the price of our competitors’ products relative to the price of our products;

our ability to develop and market new products; and

the supply and cost of wafers.

In fiscal 2022 and 2023 we experienced increases of 20% and 6%, respectively, in wafer fabrication costs due to supply chain constraints, which resulted in us increasing the cost of our products. Inflationary pressures are expected to result in additional increases in our wafer fabrication costs, which may require us to further increase the cost of our products. Our customers may decide to purchase products from our competitors rather than accept these price increases and our business may suffer. There can be no assurance that we will be able to compete successfully in the future. Our failure to compete successfully in these or other areas could harm our business.

We rely heavily on distributors and our success depends on our ability to develop and manage our indirect distribution channels.

A significant percentage of our sales are made to distributors and to contract manufacturers who incorporate our products into end products for OEMs. For example, in fiscal ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~,2021, our largest distributor Avnet Logistics accounted for ~~28.2%~~48.1%, ~~35.2%~~38.0% and ~~30.3%~~29.8%, respectively, of our net revenues. Avnet Logistics and our other existing distributors may choose to devote greater resources to marketing and supporting the products of other companies. Since we sell through multiple channels and distribution networks, we may have to resolve potential conflicts between these channels. For example, these conflicts may result from the different discount levels offered by multiple channel distributors to their customers or, potentially, from our direct sales force targeting the same equipment manufacturer accounts as our indirect channel distributors. These conflicts may harm our business or reputation.

The average selling prices of our products are expected to decline, and if we are unable to offset these declines, our operating results will suffer.

Historically, the average unit selling prices of our products have declined substantially over the lives of the products, and we expect this trend to continue. A reduction in overall average selling prices of our products could result in reduced revenues and lower gross margins. Our ability to increase our net revenues and maintain our gross

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margins despite a decline in the average selling prices of our products will depend on a variety of factors, including our ability to introduce lower cost versions of our existing products, increase unit sales volumes of these products, and introduce new products with higher prices and greater margins. If we fail to accomplish any of these objectives, our business will suffer. To reduce our costs, we may be required to implement design changes that lower our manufacturing costs, negotiate reduced purchase prices from our independent foundries and our independent assembly and test vendors, and successfully manage our manufacturing and subcontractor relationships. Because we do not operate our own wafer foundry or assembly facilities, we may not be able to reduce our costs as rapidly as companies that operate their own foundries or facilities.

We are substantially dependent on the continued services and performance of our senior management and other key personnel.

Our future success is substantially dependent on the continued services and continuing contributions of our senior management who must work together effectively in order to design our products, expand our business, increase our revenues and improve our operating results. Members of our senior management team have long-standing and important relationships with our key customers and suppliers. The loss of services, whether as a result of illness, resignation, retirement or death, of Lee-Lean Shu, our President and Chief Executive Officer, Dr. Avidan Akerib, our Vice President of Associative Computing, any other executive officer or other key employee could significantly delay or prevent the achievement of our development and strategic objectives. We do not have employment contracts with, nor maintain key person insurance on, any of our executive officers or other key employees.

System security risks, data protection, cyber-attacks and systems integration issues could disrupt our internal operations or the operations of our business partners, and any such disruption could harm our reputation or cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operation or otherwise adversely affect our stock price.

Security breaches, computer malware and cyber-attacks have become more prevalent and sophisticated and may increase in the future due to a number of our employees working from home and the potential for retaliatory cyber-attacks as a result of the military conflict in Ukraine. Experienced computer programmers and hackers may be able to penetrate our network security or the network security of our business partners, and misappropriate or compromise our confidential and proprietary information, create system disruptions or cause shutdowns. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions and delays that may impede our sales, manufacturing, distribution or other critical functions.

We manage and store various proprietary information and sensitive or confidential data relating to our business on the cloud. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or confidential data about us, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our reputation or otherwise harm our business. In addition, the cost and operational consequences of implementing further data protection measures could be significant.

Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time consuming, disruptive and resource-intensive than originally anticipated. Such disruptions could adversely impact our ability to attract and retain customers, fulfill orders and interrupt other processes and could adversely affect our business, financial results, stock price and reputation.

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We may be unable to accurately ~~predict~~forecast future sales through our distributors, which could harm our ability to efficiently manage our resources to match market demand.

Our financial results, quarterly product sales, trends and comparisons are affected by fluctuations in the buying patterns of the OEMs that purchase our products from our distributors. While we attempt to assist our distributors in maintaining targeted stocking levels of our products, we may not consistently be accurate or successful. This process involves the exercise of judgment and use of assumptions as to future uncertainties, including end user demand. Inventory levels of our products held by our distributors may exceed or fall below the levels we consider desirable on a going-forward basis. This could result in distributors returning unsold inventory to us, or in us not having sufficient inventory to meet the demand for our products. If we are not able to accurately ~~predict~~forecast sales through our distributors or effectively manage our relationships with our distributors, our business and financial results will suffer.

A small number of customers generally account for a significant portion of our accounts receivable in any period, and if any one of them fails to pay us, our financial position and operating results will suffer.

At March 31, ~~2016, four~~2023, three customers accounted for ~~26%~~36%, 25%~~, 13%~~ and ~~11%~~19% of our accounts receivable, respectively. If any of these customers do not pay us, our financial position and operating results will be harmed. Generally, we do not require collateral from our customers.

Demand for our products may decrease if our OEM customers experience difficulty manufacturing, marketing or selling their products.

Our products are used as components in our OEM customers’ products, including routers, switches and other networking and telecommunications products. Accordingly, demand for our products is subject to factors affecting the ability of our OEM customers to successfully introduce and market their products, including:

capital spending by telecommunication and network service providers and other end-users who purchase our OEM customers’ products;

the competition our OEM customers face, particularly in the networking and telecommunications industries;

the technical, manufacturing, sales and marketing and management capabilities of our OEM customers;

the financial and other resources of our OEM customers; and

the inability of our OEM customers to sell their products if they infringe third-party intellectual property rights.

As a result, if OEM customers reduce their purchases of our products, our business will suffer.

Our products have lengthy sales cycles that make it difficult to plan our expenses and forecast results.

Our products are generally incorporated in our OEM customers’ products at the design stage. However, their decisions to use our products often require significant expenditures by us without any assurance of success, and often precede volume sales, if any, by a year or more. If an OEM customer decides at the design stage not to incorporate our products into their products, we will not have another opportunity for a design win with respect to that customer’s product for many months or years, if at all. Our sales cycle can take up to 24 months to complete, and because of this lengthy sales cycle, we may experience a delay between increasing expenses for research and development and our sales and marketing efforts and the generation of volume production revenues, if any, from these expenditures. Moreover, the value of any design win will largely depend on the commercial success of our

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OEM customers’ products. There can be no assurance that we will continue to achieve design wins or that any design win will result in future revenues.

We ~~have previously disclosed~~are developing a ~~material weakness~~subscription business model for certain of our new APU products, which will take time to implement and will be subject to execution risks. The sales cycle for subscription products is different from our hardware sales business and we will need to implement strategies to manage customer retention, which may be more volatile than the hardware sales to OEM customers. We anticipate that there will be quarterly fluctuations in the revenue and expenses associated with this new license-based business as we optimize the sales process for our ~~internal control over financial reporting~~target customers. Furthermore, because of the time it takes to build a meaningful subscription business, we expect to incur significant expenses relating to the ~~evaluation and calculation~~subscription business before generating revenue from that new business.

Our business could be negatively affected as a result of actions of activist stockholders or others.

We may be subject to actions or proposals from stockholders or others that may not align with our business strategies or the interests of our ~~inventory reserve which~~other stockholders. Responding to such actions can be costly and time-consuming, disrupt our business and operations, and divert the attention of our board of directors, management, ~~believes has been fully remediated. Should we have inadequately remediated this material weakness or should we otherwise fail to maintain effective internal control over financial reporting~~ and ~~disclosure controls and processes,~~employees from the pursuit of our business strategies. Such activities could interfere with our ability to ~~report~~execute our strategic plan. Activist stockholders or others may create perceived uncertainties as to the future direction of our business or strategy which may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel and potential customers, and may affect our relationships with current customers, vendors, investors, and other third parties. In addition, a proxy contest for the election of directors at our annual meeting would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by management and our board of directors. The perceived uncertainties as to our future direction also could affect the market price and volatility of our securities.

Claims that we infringe third party intellectual property rights could seriously harm our business and require us to incur significant costs.

There has been significant litigation in the semiconductor industry involving patents and other intellectual property rights. We were previously involved in protracted patent infringement litigation, and we could become subject to additional claims or litigation in the future as a result of allegations that we infringe others’ intellectual property rights or that our use of intellectual property otherwise violates the law. Claims that our products infringe the proprietary rights of others would force us to defend ourselves and possibly our customers, distributors or manufacturers against the alleged infringement. Any such litigation regarding intellectual property could result in substantial costs and diversion of resources and could have a material adverse effect on our business, financial condition and results of operations. Similarly, changing our products or processes to avoid infringing the rights of others may be costly or impractical. If any claims received in the future were to be upheld, the consequences to us could require us to:

stop selling our products that incorporate the challenged intellectual property;

obtain a license to sell or use the relevant technology, which license may not be available on reasonable terms or at all;

pay damages; or

redesign those products that use the disputed technology.

Although patent disputes in the semiconductor industry have often been settled through cross-licensing arrangements, we may not be able in any or every instance to settle an alleged patent infringement claim through a cross-licensing arrangement in part because we have a more limited patent portfolio than many of our competitors. If a successful claim is made against us or any of our customers and a license is not made available to us on

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commercially reasonable terms or we are required to pay substantial damages or awards, our business, financial condition and results of operations ~~accurately and on a timely basis could~~would be materially adversely affected.

In connection with the completion of the quarter-end closing and review procedures for the quarter ended December 31, 2013, certain errors were identified in the evaluation and calculation of our inventory write-down for the quarter and nine month period then ended that were the result of a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

During these closing and review procedures, our management determined that we had not designed and maintained effective controls over the review of supporting information to confirm the completeness and accuracy of our calculations for the write-down of excess or obsolete inventory, thereby affecting the valuation of our inventory as of December 31, 2013. While this control deficiency did not result in any material misstatement of our historical financial statements, it did result in adjustments identified by our auditors as part of their quarterly review process, and require corrections after our initial estimate of excess and obsolete inventory write-downs for the three month period ended December 31, 2013.

A material weakness in our internal control over financial reporting could adversely impact our ability to provide timely and accurate financial information. Following the identification of the error in our financial statements and the material weakness that gave rise to the error, our management implemented a remediation plan which it believes fully remediated the material weakness. Should our remediation efforts prove to have been inadequate or should we otherwise fail to maintain effective internal control over financial reporting and disclosure controls and procedures, we could be unable to meet our reporting obligations accurately and on a timely basis. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could adversely affect the trading price of our common stock.

Our acquisition of companies or technologies could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results.

In November 2015, we acquired all of the outstanding capital stock of privately held MikaMonu Group Ltd., a development-stage, Israel-based company that specializes in in-place associative computing for markets including big data, computer vision and cyber security. We also acquired substantially all of the assets related to the SRAM memory device product line of Sony Corporation in 2009. We intend to supplement our internal development activities by seeking opportunities to make additional acquisitions or investments in companies, assets or technologies that we believe are complementary or strategic. Other than the MikaMonu and Sony acquisitions, we have not made any such acquisitions or investments, and therefore our experience as an organization in making such acquisitions and investments is limited. In connection with the ~~recently completed~~ MikaMonu acquisition, we are subject to risks related to potential problems, delays or ~~anticipated~~unanticipated costs that may be encountered in the development of products based on the MikaMonu technology and the establishment of new markets and customer relationships for the potential new products. In addition, in connection with ~~the MikaMonu acquisition and~~ any future acquisitions or investments we may make, we face numerous other risks, including:

difficulties in integrating operations, technologies, products and personnel;

diversion of financial and managerial resources from existing operations;

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risk of overpaying for or misjudging the strategic fit of an acquired company, asset or technology;

problems or liabilities stemming from defects of an acquired product or intellectual property litigation that may result from offering the acquired product in our markets;

challenges in retaining key employees to maximize the value of the acquisition or investment;

inability to generate sufficient return on investment;

incurrence of significant one-time write-offs; and

delays in customer purchases due to uncertainty.

If we proceed with additional acquisitions or investments, we may be required to use a considerable amount of our cash, or to finance the transaction through debt or equity securities offerings, which may decrease our financial liquidity or dilute our stockholders and affect the market price of our stock. As a result, if we fail to properly evaluate and execute acquisitions or investments, our business and prospects may be harmed.

~~Claims that~~If we ~~infringe third party intellectual property rights could seriously harm~~are unable to recruit or retain qualified personnel, our business and ~~require us~~product development efforts could be harmed.

We must continue to ~~incur significant costs.~~

~~In recent years, there has been significant litigation in the semiconductor industry involving patents~~identify, recruit, hire, train, retain and ~~other intellectual property rights. We have recently been involved in protracted patent infringement litigation,~~motivate highly skilled technical, managerial, sales and we could become subject to additional claims or litigation in the future as a result of allegations that we infringe others' intellectual property rights or that our use of intellectual property otherwise violates the law. Claims that our products infringe the proprietary rights of others would force us to defend ourselvesmarketing and ~~possibly our customers, distributors or manufacturers against the alleged infringement. Any such litigation regarding intellectual property could result in substantial costs~~administrative personnel. Competition for these individuals is intense, and diversion of resources and could have a material adverse effect on our business, financial condition and results of operations. Similarly, changing our products or processes to avoid infringing the rights of others may be costly or impractical. If any claims received in the future were to be upheld, the consequences to us could require us to:

~~stop selling our products that incorporate the challenged intellectual property;~~

~~obtain a license to sell or use the relevant technology, which license may not be available on reasonable terms or at all;~~

~~pay damages; or~~

~~redesign those products that use the disputed technology.~~

~~Although patent disputes in the semiconductor industry have often been settled through cross-licensing arrangements,~~ we may not be able to successfully recruit, assimilate or retain sufficiently qualified personnel. We may encounter difficulties in ~~any or every instance~~recruiting and retaining a sufficient number of qualified engineers, which could harm our ability to ~~settle an alleged patent infringement claim through~~develop new products and adversely impact our relationships with existing and future end-users at a ~~cross-licensing arrangement in part because we have a more limited patent portfolio than many~~critical stage of development. The failure to recruit and retain necessary technical, managerial, sales, marketing and administrative personnel could harm our ~~competitors. If a successful claim is made against us or any of~~business and our ability to obtain new OEM customers and a license is not made available to us on commercially reasonable terms or we are required to pay substantial damages or awards, our business, financial condition and results of operations would be materially adversely affected.

develop new products.

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Our business will suffer if we are unable to protect our intellectual property.

Our success and ability to compete depends in large part upon protecting our proprietary technology. We rely on a combination of patent, trade secret, copyright and trademark laws and non-disclosure and other contractual agreements to protect our proprietary rights. These agreements and measures may not be sufficient to protect our technology from third-party infringement. Monitoring unauthorized use of our intellectual property is difficult and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. Our attempts to enforce our intellectual property rights could be time consuming and costly. WeIn the past, we have ~~recently~~ been involved in litigation to enforce our intellectual property rights and to protect our trade secrets. Additional litigation of this type may be necessary in the future. Any such litigation could result in substantial costs and diversion of resources. If competitors are able to use our technology without our approval or compensation, our ability to compete effectively could be harmed.

We may experience difficulties in transitioning to smaller geometry process technologies and other more advanced manufacturing process technologies, which may result in reduced manufacturing yields, delays in product deliveries and increased expenses.

In order to remain competitive, we expect to continue to transition the manufacture of our products to smaller geometry process technologies. This transition will require us to migrate to new manufacturing processes for our products and redesign certain products. The manufacture and design of our products is complex, and we may experience difficulty in transitioning to smaller geometry process technologies or new manufacturing processes. These difficulties could result in reduced manufacturing yields, delays in product deliveries and increased expenses. We are dependent on our relationships with TSMC and Powerchip to transition successfully to smaller geometry process technologies and to more advanced manufacturing processes. We cannot assure you that TSMC or Powerchip will be able to effectively manage the transition or that we will be able to maintain our relationship with them. If we or TSMC or Powerchip experience significant delays in this transition or fail to implement these transitions, our business, financial condition and results of operations could be materially and adversely affected.

~~Manufacturing process technologies are subject to rapid change and require significant expenditures for research and development.~~

We continuously evaluate the benefits of migrating to smaller geometry process technologies in order to improve performance and reduce costs. Historically, these migrations to new manufacturing processes have resulted in significant initial design and development costs associated with pre-production mask sets for the manufacture of new products with smaller geometry process technologies. For example, in fiscal 2014, we incurred $809,000 and $648,000, respectively, in research and development expense associated with pre-production mask sets which were not later used in production as part of the transition to our new 40 nanometer SRAM process technology and 63 nanometer DRAM process technology. We will incur similar expenses in the future as we continue to transition our products to smaller geometry processes. The costs inherent in the transition to new manufacturing process technologies will adversely affect our operating results and our gross margin.

~~Our products are complex to design and manufacture and could contain defects, which could reduce revenues or result in claims against us.~~

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~~Our OEM customers could also seek and obtain damages from us for their losses. A product liability claim brought against us, even if unsuccessful, would likely be time consuming and costly to defend.~~

Defects in wafers and other components used in our products and arising from the manufacturing of these products may not be fully recoverable from TSMC or our other suppliers. For example, in the quarter ended December 31, 2005, we incurred a charge of approximately $900,000 related to the write-off of inventory resulting from an error in the assembly process at one of our suppliers. This write-off adversely affected our operating results for fiscal 2006.

~~Demand for our products may decrease if our OEM customers experience difficulty manufacturing, marketing or selling their products.~~

Our products are used as components in our OEM customers' products, including routers, switches and other networking and telecommunications products. Accordingly, demand for our products is subject to factors affecting the ability of our OEM customers to successfully introduce and market their products, including:

~~capital spending by telecommunication and network service providers and other end-users who purchase our OEM customers' products;~~

~~the competition our OEM customers face, particularly in the networking and telecommunications industries;~~

~~the technical, manufacturing, sales and marketing and management capabilities of our OEM customers;~~

~~the financial and other resources of our OEM customers; and~~

~~the inability of our OEM customers to sell their products if they infringe third-party intellectual property rights.~~

~~As a result, if OEM customers reduce their purchases of our products, our business will suffer.~~

~~Our products have lengthy sales cycles that make it difficult to plan our expenses and forecast results.~~

Our products are generally incorporated in our OEM customers' products at the design stage. However, their decisions to use our products often require significant expenditures by us without any assurance of success, and often precede volume sales, if any, by a year or more. If an OEM customer decides at the design stage not to incorporate our products into their products, we will not have another opportunity for a design win with respect to that customer's product for many months or years, if at all. Our sales cycle can take up to 24 months to complete, and because of this lengthy sales cycle, we may experience a delay between increasing expenses for research and development and our sales and marketing efforts and the generation of volume production revenues, if any, from these expenditures. Moreover, the value of any design win will largely depend on the commercial success of our OEM customers' products. There can be no assurance that we will continue to achieve design wins or that any design win will result in future revenues.

Any significant order cancellations or order deferrals could adversely affect our operating results.

We typically sell products pursuant to purchase orders that customers can generally cancel or defer on short notice without incurring a significant penalty. Any significant cancellations or deferrals in the future could materially and adversely affect our business, financial condition and results of operations. Cancellations or deferrals could cause us to hold excess inventory, which could reduce our profit margins, increase product obsolescence and

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restrict our ability to fund our operations. We generally recognize revenue upon shipment of products to a customer. If a customer refuses to accept shipped products or does not pay for these products, we could miss future revenue projections or incur significant charges against our income, which could materially and adversely affect our operating results.

If our business grows, such growth may place a significant strain on our management and operations and, as a result, our business may suffer.

We are endeavoring to expand our business, and any growth that we are successful in achieving could place a significant strain on our management systems, infrastructure and other resources. To manage the potential growth of our operations and resulting increases in the number of our personnel, we will need to invest the necessary capital to continue to improve our operational, financial and management controls and our reporting systems and procedures. Our controls, systems and procedures may prove to be inadequate should we experience significant growth. In addition, we may not have sufficient administrative staff to support our operations. For example, we currently have only ~~five~~four employees in our finance department in the United States, including our Chief Financial Officer. Furthermore, our officers have limited experience in managing large or rapidly growing businesses. If our management fails to respond effectively to changes in our business, our business may suffer.

Risks Related to Manufacturing and Product Development

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transition or fail to implement these transitions, our business, financial condition and results of operations could be materially and adversely affected.

Manufacturing process technologies are subject to rapid change and require significant expenditures for research and development.

We continuously evaluate the benefits of migrating to smaller geometry process technologies in order to improve performance and reduce costs. Historically, these migrations to new manufacturing processes have resulted in significant initial design and development costs associated with pre-production mask sets for the manufacture of new products with smaller geometry process technologies. For example, in the second quarter of fiscal 2019, we incurred approximately $1.0 million in research and development expense associated with a pre-production mask set that will not be used in production as part of the transition to our new 28 nanometer SRAM process technology for our APU product. We will incur similar expenses in the future as we continue to transition our products to smaller geometry processes. The costs inherent in the transition to new manufacturing process technologies will adversely affect our operating results and our gross margin.

Our products are complex to design and manufacture and could contain defects, which could reduce revenues or result in claims against us.

We develop complex products. Despite testing by us and our OEM customers, design or manufacturing errors may be found in existing or new products. These defects could result in a delay in recognition or loss of revenues, loss of market share or failure to achieve market acceptance. These defects may also cause us to incur significant warranty, support and repair costs, divert the attention of our engineering personnel from our product development efforts, result in a loss of market acceptance of our products and harm our relationships with our OEM customers. Our OEM customers could also seek and obtain damages from us for their losses. A product liability claim brought against us, even if unsuccessful, would likely be time consuming and costly to defend. Defects in wafers and other components used in our products and arising from the manufacturing of these products may not be fully recoverable from TSMC or our other suppliers.

Risks Related to Our International Business and Operations

Changes in Taiwan’s political, social and economic environment may affect our business performance.

Because much of the manufacturing and testing of our products is conducted in Taiwan, our business performance may be affected by changes in Taiwan’s political, social and economic environment. For example, political instability or restrictions on transportation logistics for our products resulting from changes in the relationship among the United States, Taiwan and the People’s Republic of China could negatively impact our business. Any significant armed conflict related to this matter would be expected to materially and adversely damage our business. Moreover, the role of the Taiwanese government in the Taiwanese economy is significant. Taiwanese policies toward economic liberalization, and laws and policies affecting technology companies, foreign investment, currency exchange rates, taxes and other matters could change, resulting in greater restrictions on our ability and our suppliers’ ability to do business and operate facilities in Taiwan. If any of these changes were to occur, our business could be harmed and our stock price could decline.

Our international business exposes us to additional risks.

Products shipped to destinations outside of the United States accounted for ~~60.3%~~51.4%,~~66.2%~~53.5% and ~~69.2%~~55.4% of our net revenues in fiscal ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~,2021, respectively. Moreover, a substantial portion of our products is manufactured and tested in Taiwan, and ~~we are now conducting business~~the software development for our associative computing products occurs in ~~Israel as a result~~

Table of ~~our recently completed acquisition of MikaMonu.~~Contents

Israel. We intend to continue expanding our international business in the future. Conducting business outside of the United States subjects us to additional risks and challenges, including:

potential political and economic instability in, or armed conflicts that involve or affect, the countries in which we, our customers and our suppliers are located;

uncertainties regarding taxes, tariffs, quotas, export controls and license requirements, trade wars, policies that favor domestic companies over nondomestic companies, including government efforts to provide for the development and growth of local competitors, and other trade barriers;

heightened price sensitivity from customers in emerging markets;

compliance with a wide variety of foreign laws and regulations and unexpected changes in these laws and regulations;

~~legal uncertainties regarding taxes, tariffs, quotas, export controls, competition, export licenses~~fluctuations in freight rates and ~~other trade barriers;~~transportation disruptions;

~~potential political and economic instability in, or foreign conflicts that involve or affect, the countries in which we, our customers and our suppliers are located;~~

~~difficulties in collecting accounts receivable and longer accounts receivable payment cycles;~~

difficulties and costs of staffing and managing personnel, distributors and representatives across different geographic areas and cultures, including assuring compliance with the U. S. Foreign Corrupt Practices Act and other U. S. and foreign anti-corruption laws;

·difficulties in collecting accounts receivable and longer accounts receivable payment cycles; and

limited protection for intellectual property rights in some ~~countries; and~~countries.

~~fluctuations in freight rates and transportation disruptions.~~

Moreover, our reporting currency is the U.S. dollar. However, a portion of our cost of revenues and our operating expenses is denominated in currencies other than the U.S. dollar, primarily the New Taiwanese ~~dollar.~~dollar and Israeli Shekel. As a result, appreciation or depreciation of other currencies in relation to the U.S. dollar could result in transaction gains or

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losses that could impact our operating results. We do not currently engage in currency hedging activities to reduce the risk of financial exposure from fluctuations in foreign exchange rates.

TSMC, ~~and Powerchip,~~ as well as our other independent suppliers and many of our OEM customers, have operations in the Pacific Rim, an area subject to significant ~~earthquake~~ risk of earthquakes, typhoons and other natural disasters and adverse consequences related to the ~~potential~~ outbreak of contagious ~~diseases such as the H1N1 Flu.~~diseases.

The ~~foundries~~foundry that ~~manufacture~~manufactures our Fast SRAM and ~~LLDRAM~~APU products, TSMC, ~~and Powerchip,~~ and all of the principal independent suppliers that assemble and test our products are located in Taiwan. Many of our customers are also located in the Pacific Rim. The risk of an earthquake in these Pacific Rim locations is significant. The occurrence of an earthquake, typhoon or other natural disaster near the fabrication facilities of TSMC or our other independent suppliers could result in damage, power outages and other disruptions that impair their production and assembly capacity. Any disruption resulting from such events could cause significant delays in the production or shipment of our products until we are able to shift our manufacturing, assembling, packaging or production testing from the affected contractor to another third-party vendor. In such an event, we may not be able to obtain alternate foundry capacity on favorable terms, or at all.

The ~~outbreak~~recent COVID-19 global pandemic, along with the previous outbreaks of SARS, ~~in 2003~~H1N1 and the Avian Flu, curtailed travel tobetween and ~~from certain~~within countries, ~~primarily~~including in the Asia-Pacific ~~region, and limited travel within those countries. If there were to be another outbreak~~region. Outbreaks of anew contagious ~~disease, such as SARS~~diseases or the ~~H1N1 Flu,~~resurgence of existing diseases that significantly ~~affected~~affect the Asia-Pacific region could disrupt the operations of our key suppliers ~~could be disrupted.~~and manufacturing partners. In addition, our business could be harmed if such an outbreak resulted in travel being restricted, the implementation of stay-at-home or shelter-in-place orders or if it adversely affected the operations of ~~our suppliers or~~ our OEM customers or the demand for our products or our OEM ~~customers'~~customers’ products.

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We do not maintain sufficient business interruption and other insurance policies to compensate us for all losses that may occur. Any losses or damages incurred by us as a result of a catastrophic event or any other significant uninsured loss in excess of our insurance policy limits could have a material adverse effect on our business.

~~Changes~~The United States could materially modify certain international trade agreements, or change tax provisions related to the global manufacturing and sales of our products.

A portion of our business activities are conducted in ~~Taiwan's political, social~~foreign countries, including Taiwan and ~~economic environment may~~Israel. Our business benefits from free trade agreements, and we also rely on various U.S. corporate tax provisions related to international commerce as we develop, manufacture, market and sell our products globally. Any action to materially modify international trade agreements, change corporate tax policy related to international commerce or mandate domestic production of goods, could adversely affect our business, ~~performance.~~financial condition and results of operations.

Because much of the manufacturing and testing of our products is conducted in Taiwan, our business performance may be affected by changes in Taiwan's political, social and economic environment. For example, any political instability resulting from the relationship among the United States, Taiwan and the People's Republic of China could damage our business. Moreover, the role of the Taiwanese government in the Taiwanese economy is significant. Taiwanese policies toward economic liberalization, and laws and policies affecting technology companies, foreign investment, currency exchange rates, taxes and other matters could change, resulting in greater restrictions on our ability and our suppliers' ability to do business and operate facilities in Taiwan. If any of these changes were to occur, our business could be harmed and our stock price could decline.

~~We are substantially dependent on the continued services and performance of our senior management and other key personnel.~~

Our future success is substantially dependent on the continued services and continuing contributions of our senior management who must work together effectively in order to design our products, expand our business, increase our revenues and improve our operating results. Members of our senior management team have long-standing and important relationships with our key customers and suppliers. The loss of services of Lee-Lean Shu, our President and Chief Executive Officer, Robert Yau, our Vice President of Engineering, any other executive officer or other key employee could significantly delay or prevent the achievement of our development and strategic objectives. We do not have employment contracts with, nor maintain key person insurance on, any of our executive officers.

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~~If we are unable to recruit or retain qualified personnel, our business and product development efforts could be harmed.~~

We must continue to identify, recruit, hire, train, retain and motivate highly skilled technical, managerial, sales and marketing and administrative personnel. Competition for these individuals is intense, and we may not be able to successfully recruit, assimilate or retain sufficiently qualified personnel. We may encounter difficulties in recruiting and retaining a sufficient number of qualified engineers, which could harm our ability to develop new products and adversely impact our relationships with existing and future end-users at a critical stage of development. The failure to recruit and retain necessary technical, managerial, sales, marketing and administrative personnel could harm our business and our ability to obtain new OEM customers and develop new products.

~~We may need to raise additional capital in the future, which may not be available on favorable terms or at all, and which may cause dilution to existing stockholders.~~

We may need to seek additional funding in the future. We do not know if we will be able to obtain additional financing on favorable terms, if at all. If we cannot raise funds on acceptable terms, if and when needed, we may not be able to develop or enhance our products, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, and we may be required to reduce operating costs, which could seriously harm our business. In addition, if we issue equity securities, our stockholders may experience dilution or the new equity securities may have rights, preferences or privileges senior to those of our common stock.

Some of our products are incorporated into advanced military electronics, and changes in international geopolitical circumstances and domestic budget considerations may hurt our business.

Some of our products are incorporated into advanced military electronics such as radar and guidance systems. Military expenditures and appropriations for such purchases rose significantly in recent years. However, asif current U.S. military operations around the ~~current conflict in Afghanistan winds down,~~world are scaled back, demand for our products for use in military applications may decrease, and our operating results could suffer. Domestic budget considerations may also adversely affect our operating results. For example, if governmental appropriations for military purchases of electronic devices that include our products are reduced, our revenues will likely decline.

Risks Relating to Our ~~operations involve~~Common Stock and the ~~use of hazardous and toxic materials, and we must comply with environmental laws and regulations, which can be expensive, and may affect our business and operating results.~~Securities Market

We are subject to federal, state and local regulations relating to the use, handling, storage, disposal and human exposure to hazardous and toxic materials. If we were to violate or become liable under environmental laws in the future as a result of our inability to obtain permits, human error, accident, equipment failure or other causes, we could be subject to fines, costs, or civil or criminal sanctions, face property damage or personal injury claims or be required to incur substantial investigation or remediation costs, which could be material, or experience disruptions in our operations, any of which could have a material adverse effect on our business. In addition, environmental laws could become more stringent over time imposing greater compliance costs and increasing risks and penalties associated with violations, which could harm our business.

We face increasing complexity in our product design as we adjust to new and future requirements relating to the material composition of our products, including the restrictions on lead and other hazardous substances that apply to specified electronic products put on the market in the European Union, China and California. Other countries, including at the federal and state levels in the United States, are also considering similar laws and regulations. Certain electronic products that we maintain in inventory may be rendered obsolete if they are not in compliance with such laws and regulations, which could negatively impact our ability to generate revenue from those products. Although we cannot predict the ultimate impact of any such new laws and regulations, they will

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likely result in additional costs, or in the worst case decreased revenue, and could even require that we redesign or change how we manufacture our products. Such redesigns result in additional costs and possible delayed or lost revenue.

The trading price of our common stock is subject to fluctuation and is likely to be volatile.

The trading price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control, including:

●

the establishment of a market for our new associative computing products;

●

actual or anticipated declines in operating results;

●

changes in financial estimates or recommendations by securities analysts;

●

the institution of legal proceedings against us or significant developments in such proceedings;

●

announcements by us or our competitors of financial results, new products, significant technological innovations, contracts, acquisitions, strategic relationships, joint ventures, capital commitments or other events;

●

changes in industry estimates of demand for Very Fast SRAM, RadHard and RadTolerant products;

●

the gain or loss of significant orders or customers;

●

recruitment or departure of key personnel; and

●

market conditions in our industry, the industries of our customers and the economy as a whole.

In recent years, the stock market in general, and the market for technology stocks in particular, have experienced extreme price fluctuations, which have often been unrelated to the operating performance of affected

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companies. The market price of our common stock might experience significant fluctuations in the future, including fluctuations unrelated to our performance. These fluctuations could materially adversely affect our business relationships, our ability to obtain future financing on favorable terms or otherwise harm our business. In addition, in the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities. This risk is especially acute for us because the extreme volatility of market prices of technology companies has resulted in a larger number of securities class action claims against them. Due to the potential volatility of our stock price, we may in the future be the target of similar litigation. Securities litigation could result in substantial costs and divert ~~management's~~management’s attention and resources. This could harm our business and cause the value of our stock to decline.

~~Use~~We may need to raise additional capital in the future, which may not be available on favorable terms or at all, and which may cause dilution to existing stockholders.

We may need to seek additional funding in the future. We do not know if we will be able to obtain additional financing on favorable terms, if at all. If we cannot raise funds on acceptable terms, if and when needed, we may not be able to develop or enhance our products, take advantage of ~~a portion of~~future opportunities or respond to competitive pressures or unanticipated requirements, and we may be required to reduce operating costs, which could seriously harm our ~~cash reserves~~business. In addition, if we issue equity securities, our stockholders may experience dilution or the new equity securities may have rights, preferences or privileges senior to ~~repurchase shares~~those of our common ~~stock presents potential risks and disadvantages to us and our continuing stockholders.~~ stock.

From November 2008 through March 2016 we repurchased and retired an aggregate of 10,340,501 shares of our common stock at a total cost of $53.5 million, including 3,846,153 shares repurchased at a total cost of $25 million pursuant to a modified “Dutch auction” self-tender offer that we completed in August 2014 and additional shares repurchased in the open market pursuant to our stock repurchase program. At March 31, 2016, we had outstanding authorization from our Board of Directors to purchase up to an additional $1.5 million of our common stock from time to time under our repurchase program.~~In May 2016, the Board extended the repurchase program by authorizing the repurchase of up to an additional $10 million of our common stock. Although our Board~~

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~~has determined that these repurchases are in the best interests of our stockholders, they expose us to certain risks including:~~

the risks resulting from a reduction in the size of our “public float,” which is the number of shares of our common stock that are owned by non-affiliated stockholders and available for trading in the securities markets, which may reduce the volume of trading in our shares and result in reduced liquidity and, potentially, lower trading prices;

the risk that our stock price could decline and that we would be able to repurchase shares of our common stock in the future at a lower price per share than the prices we have paid in our tender offer and repurchase program; and

the risk that the use of a portion of our cash reserves for this purpose has reduced, or may reduce, the amount of cash that would otherwise be available to pursue potential cash acquisitions or other strategic business opportunities.

Our executive officers, directors and entities affiliated with them hold a substantial percentage of our common stock.

As of May 31, ~~2016~~2023, our executive officers, directors and entities affiliated with them beneficially owned approximately ~~35%~~32% of our outstanding common stock. As a result, these stockholders will be able to exercise substantial influence over, and may be able to effectively control, matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, which could have the effect of delaying or preventing a third party from acquiring control over or merging with us.

The provisions of our charter documents might inhibit potential acquisition bids that a stockholder might believe are desirable, and the market price of our common stock could be lower as a result.

Our Board of Directors has the authority to issue up to 5,000,000 shares of preferred stock. Our Board of Directors can fix the price, rights, preferences, privileges and restrictions of the preferred stock without any further vote or action by our stockholders. The issuance of shares of preferred stock might delay or prevent a change in control transaction. As a result, the market price of our common stock and the voting and other rights of our stockholders might be adversely affected. The issuance of preferred stock might result in the loss of voting control to other stockholders. We have no current plans to issue any shares of preferred stock. Our charter documents also contain other provisions, which might discourage, delay or prevent a merger or acquisition, including:

~~our stockholders have no right to remove directors without cause;~~

our stockholders have no right to act by written consent;

our stockholders have no right to call a special meeting of stockholders; and

our stockholders must comply with advance notice requirements to nominate directors or submit proposals for consideration at stockholder meetings.

These provisions could also have the effect of discouraging others from making tender offers for our common stock. As a result, these provisions might prevent the market price of our common stock from increasing substantially in response to actual or rumored takeover attempts. These provisions might also prevent changes in our management.

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~~Table~~Use of ~~Contents~~a portion of our cash reserves to repurchase shares of our common stock presents potential risks and disadvantages to us and our continuing stockholders.

Since November 2008, we have repurchased and retired an aggregate of 12,004,779 shares of our common stock at a total cost of $60.7 million, including 3,846,153 shares repurchased at a total cost of $25 million pursuant to a modified “Dutch auction” self-tender offer that we completed in August 2014 and additional shares repurchased in the open market pursuant to our stock repurchase program. At March 31, 2023, we had outstanding authorization from our Board of Directors to purchase up to an additional $4.3 million of our common stock from time to time under our repurchase program.Although our Board has determined that these repurchases are in the best interests of our stockholders, they expose us to certain risks including:

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our executive offices, our principal administration, marketing and sales operations and a portion of our research and development operations are located in a 44,277 square foot facility in Sunnyvale, California, which we purchased in fiscal 2010. In addition, we occupy approximately 25,250 square feet in a facility located in Hsin Chu, Taiwan under a lease expiring in August ~~2017.~~2023. This facility supports our manufacturing activities. We believe that both our Sunnyvale and Taiwan facilities are adequate for our needs for the foreseeable future. We also lease space in the United States in the states of Georgia and Texas and in Israel. The aggregate annual gross rent for our leased facilities was approximately ~~$348,000~~$764,000 in fiscal ~~2016.~~2023.

Item 3. Legal Proceedings

None.

In March 2011, Cypress Semiconductor Corporation, a semiconductor manufacturer, filed a lawsuit against us in the United States District Court for the District of Minnesota alleging that our products, including our SigmaDDR and SigmaQuad families of Very Fast SRAMs, infringe five patents held by Cypress. The complaint sought unspecified damages for past infringement and a permanent injunction against future infringement.

On June 10, 2011, Cypress filed a complaint against us with the United States International Trade Commission (the “ITC”). The ITC complaint, as subsequently amended, alleged infringement by GSI of three of the five patents involved in the District Court case and one additional patent and also alleged infringement by three of our distributors and 11 of our customers who allegedly incorporate our SRAMs in their products. The ITC complaint sought a limited exclusion order excluding the allegedly infringing SRAMs, and products containing them, from entry into the United States and permanent orders directing GSI and the other respondents to cease and desist from selling or distributing such products in the United States. On July 21, 2011, the ITC formally instituted an investigation in response to Cypress’s complaint. On June 7, 2013, the ITC announced that the full Commission had affirmed the determination of Chief Administrative Law Judge Charles E. Bullock that GSI’s SRAM devices, and products containing them, do not infringe the Cypress patents and that Cypress had failed to establish the existence of a domestic industry that practices the patents. Moreover, the Commission reversed a portion of Judge Bullock’s determination with respect to the validity of the patents, finding the asserted claims of one of the patents to have been anticipated by prior art and, therefore, invalid. The Commission ordered the investigation terminated, and Cypress did not appeal the ruling.

The Minnesota District Court case had been stayed pending the conclusion of the ITC proceeding. Following the termination of the ITC proceeding, the stay was lifted. On May 1, 2013, Cypress filed an additional lawsuit in the United States District Court for the Northern District of California alleging infringement by our products of five additional Cypress patents. Like the Minnesota case, the complaint in the California lawsuit sought unspecified damages for past infringement and a permanent injunction against future infringement. We filed answers in both cases denying liability and asserting affirmative defenses. On August 7, 2013, the parties stipulated that the claims in the Minnesota case with respect to three of the asserted patents would be dismissed without prejudice and that the claims with respect to the remaining two patents would be transferred to the Northern District of California and consolidated with the pending California case. On August 20, 2013, the Court in the California case ordered the cases consolidated.

On July 22, 2011, we filed a complaint against Cypress in the United States District Court for the Northern District of California. Our complaint alleged that Cypress had conducted an unlawful combination and conspiracy to monopolize the market for certain high-performance SRAM devices, known as fast synchronous Quad Data Rate (or QDR) SRAMs and Double Data Rate (or DDR) SRAMs. The complaint alleged that the anti-competitive,

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collusive and conspiratorial conduct of Cypress and certain co-conspirators violated Section 1 of the Sherman Act and also constituted unlawful restraint of trade and unfair competition under applicable provisions of California law. The complaint sought treble damages, in an amount to be determined at trial, a preliminary and permanent injunction prohibiting the continuation of the unfair and illegal business practices and recovery of GSI’s attorneys’ fees and costs.

~~On May 6, 2015, the Company and Cypress entered into a settlement agreement to resolve the patent infringement and antitrust litigation. Under the settlement agreement:~~

~~Each of the parties agreed to dismiss its lawsuit with prejudice in consideration of the dismissal with prejudice of the lawsuit brought by the other party; and~~

~~Each party released all claims against the other with respect to issues raised in the two lawsuits.~~

~~The parties agreed that the settlement agreement was entered into to resolve disputed claims, and that each party denies any liability to the other party.~~

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for ~~Registrant's~~Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information, Holders of Common Stock and Dividends

Our common stock ~~has~~is traded on the Nasdaq Global Market under the symbol ~~"GSIT" since our initial public offering on March 29, 2007. The following table sets forth, for the periods indicated, the high and low sales prices for our common stock on such market.~~

Fiscal Year Ended March 31, 2015

High

Low
First quarter

$
7.15

$
5.36

Second quarter

6.62

4.91

Third quarter

5.50

4.52

Fourth quarter

5.90

4.87

Fiscal Year Ended March 31, 2016

First quarter

$
5.88

$
4.75

Second quarter

5.43

4.00

Third quarter

4.55

3.72

Fourth quarter

4.64

3.33

~~Holders of Common Stock~~“GSIT”.

On May 31, ~~2016, the closing price of our common stock on the Nasdaq Global Market was $4.00, and~~2023, there were 34approximately 21 holders of record of our common stock. Because many of such shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial holders of our common stock represented by these record holders.

~~Dividend Policy~~

We have never declared or paid cash dividends on our common stock. The payment of dividends in the future will be at the discretion of our Board of Directors. However, we currently intend to retain future earnings to finance the growth and development of our business,stock, and we do not anticipate declaring or paying any cash dividends in the foreseeable future.

~~Securities Authorized for Issuance under Equity Compensation Plans~~

Please see Part III, Item 12 of this report for information regarding securities authorized for issuance under our equity compensation plans. Such information is incorporated by reference from our definitive proxy statement for our 2016 annual meeting of stockholders.

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Issuer Purchases of Equity Securities

Our Board of Directors has authorized us to repurchase, at management’s discretion, shares of our common stock. Under the repurchase program, we may repurchase shares from time to time on the open market or in private transactions. The specific timing and amount of the repurchases will be dependent on market conditions, securities law limitations and other factors. The repurchase program may be suspended or terminated at any time without prior notice. ~~Below is summary of the repurchases of our common stock made during~~During the quarter ended March 31, ~~2016, all~~2023, we did not repurchase any of ~~which were made~~our shares under ~~our repurchase program.~~

Value of Shares

That May Yet Be

Average

Repurchased

Shares

Price per

Under the
Period

Repurchased

Share

Program
Beginning approximate dollar value available to be repurchased as of December 31, 2015

$
4,419,935

January 1 to January 31, 2016

166,317

$
3.64

$
3,815,140
February 1 to February 29, 2016

383,615

$
3.52

$
2,465,714
March 1 to March 31, 2016

244,123

$
4.05

$
1,476,041
Total shares repurchased

794,055

Ending approximate dollar value that may be repurchased under the program as of March 31, 2016

$
1,476,041

~~In May 2016, the Board extended~~ the repurchase ~~program by authorizing the repurchase of up to an additional $10 million of our common stock.~~program.

Item 6. ~~Selected Financial Data~~Reserved

You should read the following selected consolidated financial data in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this report. The selected consolidated statement of operations data set forth below for the fiscal years ended ~~March 31, 2016~~, ~~2015~~ ~~and~~ ~~2014~~ ~~and the selected consolidated balance sheet data as of~~ ~~March 31, 2016~~ ~~and~~ ~~2015~~ are derived from, and are qualified by reference to, our audited consolidated financial statements included elsewhere in this report. The selected consolidated statement of operations data set forth below for the fiscal years ended ~~March 31, 2013~~ ~~and~~ ~~2012~~ ~~and the selected consolidated balance sheet data as of~~ ~~March 31, 2014~~, ~~2013~~ ~~and~~ ~~2012~~ ~~are derived from audited consolidated financial statements not included in this report.~~

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Fiscal Year Ended March 31,

2016

2015

2014

2013

2012

(In thousands, except per share amounts)
Consolidated Statement of Operations Data:

Net revenues

$
52,736

$
53,498

$
58,579

$
66,014

$
82,540
Cost of revenues

25,999

28,375

32,469

37,426

45,891
Gross profit

26,737

25,123

26,110

28,588

36,649
Operating expenses:

Research and development

12,095

11,917

13,110

11,472

10,637
Selling, general and administrative

17,663

19,247

18,814

13,696

19,356
Total operating expenses

29,758

31,164

31,924

25,168

29,993
Income (loss) from operations

(3,021)

(6,041)

(5,814)

3,420

6,656
Interest and other income (expense), net

210

388

338

464

525
Income (loss) before income taxes

(2,811)

(5,653)

(5,476)

3,884

7,181
Provision (benefit) for income taxes

(641)

(675)

713

38

425
Net income (loss)

$
(2,170)

$
(4,978)

$
(6,189)

$
3,846

$
6,756
Basic and diluted net income (loss) per share available to common stockholders:

Basic

$
(0.10)

$
(0.20)

$
(0.23)

$
0.14

$
0.24
Diluted

$
(0.10)

$
(0.20)

$
(0.23)

$
0.14

$
0.23
Weighted average shares used in per share calculations:

Basic

22,593

25,029

27,505

27,124

28,497
Diluted

22,593

25,029

27,505

28,077

29,496

March 31,

2016

2015

2014

2013

2012

(In thousands)
Consolidated Balance Sheet Data:

Cash, cash equivalents and short-term investments

$
55,112

$
58,977

$
80,932

$
67,259

$
58,678
Working capital

62,720

66,230

90,670

86,619

82,684
Total assets

106,530

108,889

141,677

145,845

143,117
Total stockholders' equity

89,869

96,396

128,378

132,183

128,779

Item 7. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ substantially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under ~~"Risk Factors"~~“Risk Factors” and elsewhere in this report. The following discussion should be read together with our consolidated financial statements and the related notes included elsewhere in this report.

~~Overview~~This discussion and analysis generally covers our financial condition and results of operations for the fiscal year ended March 31, 2023, including year-over-year comparisons versus the fiscal year ended March 31, 2022. Our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 includes year-over-year comparisons versus the fiscal year ended March 31, 2021 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Overview

We are a ~~fabless~~leading provider of high-performance semiconductor ~~company that designs, develops~~memory solutions for in-place associative computing applications in high growth markets such as artificial intelligence and high-performance computing, including natural language processing and computer vision. Our initial associative processing unit (“APU”) products are focused on applications using similarity search, but have not resulted in material revenues to date. Similarity search is used in visual search queries for ecommerce, computer vision, drug discovery, cyber security and service markets such as NoSQL, Elasticsearch, and OpenSearch. We also design, develop and market static random access memories, or SRAMs, that operate at speeds of less than 10 nanoseconds, which we refer to as Very Fast SRAMs, ~~and low latency dynamic random access memories, or LLDRAMs,~~ primarily for the networking and telecommunications

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and the military/defense and aerospace markets. We are subject to the highly cyclical nature of the semiconductor industry, which has experienced significant fluctuations, often in connection with fluctuations in demand for the products in which semiconductor devices are used. Our revenues have been substantially impacted by significant fluctuations in sales to ~~Cisco Systems, historically~~ our largest customer, ~~and more recently to Alcatel-Lucent.~~Nokia. We expect that future direct and indirect sales to ~~these two customers~~Nokia will continue to fluctuate significantly on a quarterly basis. The ~~worldwide financial crisis~~networking and telecommunications market has accounted for a significant portion of our net revenues in the past and has declined during the past several years and is expected to continue to decline. In anticipation of the decline of the networking and telecommunications market, we have been using the revenue generated by the sales of high-speed synchronous SRAM products to finance the development of our new in-place associative computing solutions and the ~~resulting economic impact on the end markets we serve have adversely impacted our financial results since the second half~~marketing and sale of ~~fiscal 2009,~~new types of SRAM products such as radiation-hardened and ~~we expect that the unsettled global economic environment will continue to affect our operating results in future periods.~~radiation-tolerant SRAMs. However, with no debt and substantial liquidity, ~~and a history of positive cash flows from operations,~~ we believe we are in a better financial position than many other companies of our size.

Our revenues in recent years have been impacted by changes in customer buying patterns and communication limitations related to COVID-19 restrictions that required a significant number of our customer contacts to work from home. Our results for the fiscal years ended March 31, 2021 and 2022 demonstrated the challenges that we have faced during the COVID-19 global pandemic, which restricted the activities of our sales force and distributors, reduced customer demand and caused the postponement of investment in certain customer sectors. These challenges impacted us as we entered new markets and engaged with target customers to sell our new APU product. Industry conferences and on-site training workshops, which are typically used for building a sales pipeline, were limited due to COVID-19 related restrictions. We adapted our sales strategies for the COVID-19 environment, where we could not have face-to-face meetings and conduct secure meetings with government and defense customers. While the COVID-19 pandemic has ended, the significant fluctuations in energy prices, worldwide inflationary pressures, rising interest rates and decline in the global economic environment have had, and may continue to have, an adverse impact on our business and financial condition. Furthermore, the easing of supply chain shortages and prior buffer stock purchases from significant customers have led to a decrease in fiscal 2023 revenues.

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As of March 31, 2023, we had cash, cash equivalents and short-term investments of $30.6 million, with no debt. We have a team in-place with tremendous depth and breadth of experience and knowledge, with a legacy business that is providing an ongoing source of funding for the development of new product lines. We have a strong balance sheet and liquidity position that we anticipate will provide financial flexibility and security in the current environment of economic uncertainty. Generally, our primary source of liquidity is cash equivalents and short-term investments. Our level of cash equivalents and short-term investments has historically been sufficient to meet our current and longer term operating and capital needs. We believe that during the next 12 months, continued inflationary pressures and rising interest rates will continue to negatively impact general economic activity and demand in our end markets. Although it is difficult to estimate the length or gravity of the continued inflationary pressures and rising interest rates, the impact of recent bank failures, significant fluctuations in energy prices and the decline in the global economic environment, are expected to have an adverse effect on our results of operations, financial position, including potential impairments, and liquidity in fiscal 2024.

In November 2022, we announced measures taken to reduce our operating expenses by approximately $7.0 million on an annualized basis, primarily from salary reductions related to reduced headcount and salary decreases for certain retained employees, as well as targeted reductions in research and development spending. These strategic cost reduction measures are expected to enable us to better focus on our operational resources on advancing our proprietary APU technology. None of the Gemini-II chip development and core APU software development, including the APU compiler, will be affected by the reduction in research and development spending. The APU marketing, sales, and APU engineering efforts will retain priority in the budget. The spending reductions are not expected to impact the launch of Gemini-I in target markets, including SAR, search, and SaaS. The cost reduction initiative is expected to be completed by September 30, 2023 and will result in an approximate 15% decrease in our global workforce. In total, we expect to incur approximately $917,000 in cash expenditures for termination costs, including the payout of accrued vacation, of which $490,000 was incurred in fiscal 2023.

Revenues. ~~Our~~ Substantially all of our revenues are derived ~~primarily~~ from sales of our Very Fast SRAM products. Sales to networking and telecommunications OEMs accounted for ~~63%~~32% to ~~73%~~53% of our net revenues during our last three fiscal years. We also sell our products to OEMs that manufacture products for military and aerospace applications such as radar and guidance systems ~~for professional audio applications such as sound mixing systems,~~and satellites, for test and measurement applications such as high-speed testers, for automotive applications such as smart cruise control, and ~~voice recognition systems, and~~ for medical applications such as ultrasound and CAT scan ~~equipment.~~equipment.

As is typical in the semiconductor industry, the selling prices of our products generally decline over the life of the product. Our ability to increase net revenues, therefore, is dependent upon our ability to increase unit sales volumes of existing products and to introduce and sell new products with higher average selling prices in quantities sufficient to compensate for the anticipated declines in selling prices of our more mature products. Although we expect the average selling prices of individual products to decline over time, we believe that, over the next several quarters, our overall average selling prices will increase due to a continuing shift in product mix to a higher percentage of higher price, higher density ~~products.~~products, and to a lesser extent, recent price increases to our customers due to supply constraints. Our ability to increase unit sales volumes is dependent primarily upon increases in customer demand but, particularly in periods of increasing demand, can also be affected by our ability to increase production through the availability of increased wafer fabrication capacity from TSMC, ~~and Powerchip,~~ our wafer ~~suppliers,~~supplier, and our ability to increase the number of good integrated circuit die produced from each wafer through die size reductions and yield enhancement activities.

We may experience fluctuations in quarterly net revenues for a number of reasons. Historically, orders on hand at the beginning of each quarter are insufficient to meet our revenue objectives for that quarter and are generally cancelable up to 30 days prior to scheduled delivery. Accordingly, we depend on obtaining and shipping orders in the same quarter to achieve our revenue objectives. In addition, the timing of product releases, purchase

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orders and product availability could result in significant product shipments at the end of a quarter. Failure to ship these products by the end of the quarter may adversely affect our operating results. Furthermore, our customers may delay scheduled delivery dates and/or cancel orders within specified timeframes without significant penalty.

We sell our products through our direct sales force, international and domestic sales representatives and distributors. ~~Revenues~~Our revenues have been and are expected to continue to be impacted by changes in customer buying patterns and communication limitations related to changes in working habits that have resulted in a significant number of our customer contacts working from home. Our customer contracts, which may be in the form of purchase orders, contracts or purchase agreements, contain performance obligations for delivery of agreed upon products. Delivery of all performance obligations contained within a contract with a customer typically occurs at the same time (or within the same accounting period). Transfer of control occurs at the time of shipment or at the time the product is pulled from consignment as that is the point at which delivery has occurred, title and the risks and rewards of ownership have passed to the customer, and we have a right to payment. Thus, we will recognize revenue upon shipment of the product for direct sales ~~except for~~and sales to ~~distributors, are generally recognized upon shipment, net of sales returns and allowances.~~our distributors. Sales to consignment warehouses, who purchase products from us for use by contract manufacturers, are recorded upon delivery to the contract manufacturer. Sales to distributors are recorded as deferred revenues for financial reporting purposes and recognized as revenues when the products are resold by the distributors to the OEM. Sales to distributors are made under agreements allowing for returns or credits under certain circumstances. We therefore defer recognition of revenue on sales to distributors until products are resold by the distributor.

Historically, a small number of OEM customers have accounted for a substantial portion of our net revenues, and we expect that significant customer concentration will continue for the foreseeable future. Many of our OEMs use contract manufacturers to manufacture their equipment. Accordingly, a significant percentage of our net

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revenues is derived from sales to these contract manufacturers and to consignment warehouses. In addition, a significant portion of our sales are made to foreign and domestic distributors who resell our products to OEMs, as well as their contract manufacturers. Direct sales to contract manufacturers and consignment warehouses accounted for ~~37.6%~~19.8%, ~~33.1%~~31.0% and ~~37.5%~~43.7% of our net revenues for fiscal ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~,2021, respectively. Sales to foreign and domestic distributors accounted for ~~50.4%~~77.5%, ~~58.7%~~66.8% and ~~50.0%~~54.7%of our net revenues for fiscal ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~,2021, respectively. The following direct customers accounted for 10% or more of our net revenues in one or more of the following periods:



	Fiscal Year Ended
	March 31,
	2016		2015		2014
Contract manufactures and consignment warehouses:
SMART Modular Technologies	-	%	5.2	%	14.4	%

							Fiscal Year Ended
							March 31,
							2023		2022		2021
Contract manufacturers and consignment warehouses:
Flextronics Technology	13.7		8.1		11.9		10.4	%	16.0	%	21.1	%
Sanmina	16.4		12.6		8.5		8.8		11.2		21.5
Distributors:
Avnet Logistics	28.2		35.2		30.3		48.1		38.0		29.8
Nexcomm	13.3		12.3		10.2		16.6		17.2		14.7

~~Alcatel-Lucent~~Nokia was our largest customer in fiscal ~~2016~~2023, 2022 and ~~2015. Alcatel-Lucent~~2021. Nokia purchases products directly from us and through contract manufacturers and distributors. Based on information provided to us by ~~Alcatel-Lucent’s~~its contract manufacturers and our distributors, purchases by ~~Alcatel-Lucent~~Nokia represented approximately ~~32%~~17%, ~~25%~~29% and ~~19%~~39% of our net revenues in fiscal ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~, respectively. Cisco Systems, historically our largest OEM customer, purchases our products primarily through its consignment warehouses and also purchases some products through its contract manufacturers and directly from us. Based on information provided to us by Cisco Systems' consignment warehouses and contract manufacturers, purchases by Cisco Systems represented approximately 9%, 13% and 19% of our net revenues in fiscal ~~2016~~, ~~2015~~ ~~and~~ ~~2014~~,2021, respectively. Our revenues have been substantially impacted by significant fluctuations in sales to ~~Alcatel-Lucent and Cisco Systems,~~Nokia, and we expect that future direct and indirect sales to ~~these two customers~~Nokia will continue to fluctuate substantially on a quarterly basis and that such fluctuations may significantly affect our operating results in future periods. To our knowledge, none of our other OEM customers accounted for more than 10% of our net revenues in fiscal ~~2016~~, ~~2015~~2023, 2022 or ~~2014~~.2021.

Cost of Revenues. Our cost of revenues consists primarily of wafer fabrication costs, wafer sort, assembly, test and burn-in expenses, the amortized cost of production mask sets, stock-based compensation and the cost of materials and overhead from operations. All of our wafer manufacturing and assembly operations, and a significant

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portion of our wafer sort testing operations, are outsourced. Accordingly, most of our cost of revenues consists of payments to TSMC ~~Powerchip~~ and independent assembly and test houses. Because we do not have long-term, fixed-price supply contracts, our wafer fabrication, assembly and other outsourced manufacturing costs are subject to the cyclical fluctuations in demand for semiconductors. We have experienced increased costs as a result of supply chain constraints for wafers and outsourced assembly, burn-in and test operations. We expect these increased manufacturing costs will continue into fiscal 2024. Cost of revenues also includes expenses related to supply chain management, quality assurance, and final product testing and documentation control activities conducted at our headquarters in Sunnyvale, California and our branch operations in Taiwan.

Gross Profit. Our gross profit margins vary among our products and are generally greater on our radiation hardened and radiation tolerant SRAMs, on our higher density products and, within a particular density, greater on our higher speed and industrial temperature products. We expect that our overall gross margins will fluctuate from period to period as a result of shifts in product mix, changes in average selling prices and our ability to control our cost of revenues, including costs associated with outsourced wafer fabrication and product assembly and testing.

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Research and Development Expenses. Research and development expenses consist primarily of salaries and related expenses for design engineers and other technical personnel, the cost of developing prototypes, stock-based compensation and fees paid to consultants. We charge all research and development expenses to operations as incurred. We charge mask costs used in production to ~~costs~~cost of revenues over a 12-month period. However, we charge costs related to pre-production mask sets, which are not used in production, to research and development expenses at the time they are incurred. These charges often arise as we transition to new process technologies and, accordingly, can cause research and development expenses to fluctuate on a quarterly basis. We believe that continued investment in research and development is critical to our long-term success, and we expect to continue to devote significant resources to product development activities. In particular, we ~~plan to devote~~are devoting substantial resources to the development of a new category of in-place associative computing ~~products based on patented technology obtained in our acquisition of MikaMonu in November 2015.~~products. Accordingly, we expect that our research and development expenses will ~~increase~~continue to be substantial in future periods ~~although such~~and may lead to operating losses in some periods. Such expenses as a percentage of net revenues may ~~fluctuate.~~fluctuate from period to period.

Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of commissions paid to independent sales representatives, salaries, stock-based compensation and related expenses for personnel engaged in sales, marketing, administrative, finance and human resources activities, professional fees, costs associated with the promotion of our products and other corporate expenses. We expect that our sales and marketing expenses will increase in absolute dollars in future periods if we are able to grow and expand our sales force but that, to the extent our revenues increase in future periods, these expenses will generally decline as a percentage of net revenues. We also expect that, in support of any future growth that we are able to achieve, general and administrative expenses will generally increase in absolute dollars. General and administrative expenses increased significantly beginning in fiscal 2012 as a result of substantial legal expenses, principally related to our patent infringement and antitrust litigation with Cypress Semiconductor Corporation. These expenses varied significantly from quarter to quarter thereafter, depending on the relative level of activity in the Cypress litigation. In May 2015, we entered into a settlement agreement to resolve our protracted litigation with Cypress. See “Part I. Item 3. Legal Proceedings.” Although we ceased to incur legal expenses related to our litigation with Cypress after the quarter ended June 30, 2015, legal expenses associated with unrelated commercial and trade secret litigation in which we were the plaintiff continued to be significant through the quarter ended December 31, 2015, reflecting preparation for and conduct of the trial of that case which was concluded in November 2015.

Acquisition

On November 23, 2015, we acquired all of the outstanding capital stock of privately held MikaMonu Group Ltd. (“MikaMonu”), a development-stage, Israel-based company that ~~specializes~~specialized in in-place associative computing for markets including big data, computer vision and cyber security. MikaMonu, located in Tel Aviv, held 12 United States patents and had a number of pending patent applications.

The acquisition was undertaken ~~by the Company~~ in order to gain access to the MikaMonu patents and the potential markets, and new customer base in those markets, that can be served by new products that we ~~plan to develop~~are developing using the ~~MikaMonu patents obtained in the acquisition.~~in-place associative computing technology.

The acquisition has been accounted for as a purchase under authoritative guidance for business combinations. The purchase price of the acquisition ~~has been preliminarily~~was allocated to the intangible assets acquired, with the excess

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of the purchase price over the fair value of assets acquired recorded as goodwill. We ~~will~~ perform a goodwill impairment test ~~in February~~near the end of each fiscal ~~year. The results of operations of MikaMonu~~year and ~~the estimated fair value of the assets acquired were included in our consolidated financial statements beginning November 23, 2015.~~if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis.

Under the terms of the acquisition agreement, we paid the former MikaMonu shareholders initial cash consideration of approximately ~~$4.4~~$4.9 million, ~~at the closing on November 23, 2015. We will make~~and cash retention payments ~~of up~~totaling $2.5 million in 2017, 2018 and 2019 to ~~$484,000 to the three former MikaMonu shareholders in May 2017 upon the release of cash held in escrow for~~

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~~potential indemnification claims. This amount is included in other assets on the Consolidated Balance Sheet at March 31, 2016.~~

~~We are also required to pay~~ the former MikaMonu shareholders, ~~future contingent consideration consisting of retention payments and “earnout” payments, as described below.~~

~~We will make cash retention payments of up to an additional $2.5 million to the three former MikaMonu shareholders in installments over a four-year period,~~that were conditioned on the continued employment of Dr. Avidan Akerib, MikaMonu’s co-founder and chief technologist. ~~The retention amount of $2.5 million has been deposited in escrow and is included in other assets on the Consolidated Balance Sheet at March 31, 2016.~~

We will also make “earnout” payments to the former MikaMonu shareholders in cash or shares of our common stock, at our discretion, during a period of up to ten years following the closing if certain product development milestones and revenue targets for products based on the MikaMonu technology are achieved. Earnout amounts of $750,000 ~~will be payable if~~were paid in the fiscal year ended March 31, 2019 based on the achievement of certain product development milestones are achieved by December 31, 2017. Additional earnout amounts of $2,750,000 and $4,000,000 will be payable if certain revenue milestones are achieved by January 1, 2021 and January 1, 2022, respectively; and additionalmilestones. Earnout payments, up to a maximum of ~~$30~~$30.0 million, equal to 5% of net revenues from the sale of qualifying products in excess of certain thresholds, will be made quarterly through December 31, 2025.

The portion of the retention payment ~~contingently payable~~made to Dr. Akerib (approximately $1.2 million) ~~will be~~was recorded as compensation expense over the period that his services ~~are~~were provided to us. The portion of the retention payment ~~contingently payable~~made to the other former MikaMonu shareholders (approximately $1.3 million) plus the maximum amount of the potential earnout payments totals approximately ~~$38.8 million.~~$30.0 million at March 31, 2023. We determined that the fair value of this contingent consideration liability was $5.8 million at the acquisition date.

The ~~fair value of the~~ contingent consideration liability ~~was determined as~~is included in contingent consideration, non-current on the Consolidated Balance Sheet at March 31, 2022 and 2023 in the amount of ~~the acquisition date using unobservable inputs. These inputs include the estimated amount~~$2.7 million and timing of future revenues, the probability of success (achievement of the various contingent events) and a risk-adjusted discount rate of approximately 14.8% used to adjust the probability-weighted cash flows to their present value. Subsequent to the acquisition date, at$1.1 million, respectively.

At each reporting period, the contingent consideration liability will be re-measured at then current fair value with changes recorded in the Consolidated ~~Statement~~Statements of Operations. Changes in any of the inputs may result in significant adjustments to the recorded fair value. ~~The amount included in other accrued expenses on~~Re-measurement of the ~~Consolidated Balance Sheet at March 31, 2016 was $5.9 million.~~

~~Acquisition-related costs of approximately $426,000 are included in selling, general and administrative expenses in the Consolidated Statements of Operations for~~contingent consideration liability during the fiscal year ended March 31, ~~2016.~~2023 resulted in a decrease of the contingent consideration liability of $1.9 million.

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Results of Operations

The following table sets forth statement of operations data as a percentage of net revenues for the periods indicated:



	Fiscal Year Ended March 31,
	2016			2015			2014

										Year Ended March 31,
										2023		2022
Net revenues		100.0	%		100.0	%		100.0	%	100.0	%	100.0	%
Cost of revenues		49.3			53.0			55.4		40.4		44.5
Gross profit		50.7			47.0			44.6		59.6		55.5
Operating expenses:
Research and development		22.9			22.3			22.4		79.3		73.9
Selling, general and administrative		33.5			36.0			32.1		33.5		30.6
Total operating expenses		56.4			58.3			54.5		112.8		104.5
Loss from operations		(5.7)			(11.3)			(9.9)		(53.2)		(49.0)
Interest and other income (expense), net		0.4			0.7			0.6		0.7		(0.2)
Loss before income taxes		(5.3)			(10.6)			(9.3)		(52.5)		(49.2)
Provision (benefit) for income taxes		(1.2)			(1.2)			1.2		1.3		(0.2)
Net loss		(4.1)	%		(9.3)	%		(10.6)	%	(53.8)		(49.0)

Fiscal Year Ended March 31, ~~2016~~2023 Compared to Fiscal Year Ended March 31, ~~2015~~2022

Net Revenues. Net revenues decreased by ~~1.4%~~11.1% from ~~$53.5~~$33.4 million in fiscal ~~2015~~2022 to ~~$52.7~~$29.7 million in fiscal ~~2016.~~2023.The ~~reduction reflected~~overall average selling price of all units shipped in fiscal 2023 increased by 2.1% in fiscal 2023 compared to the ~~continuing weakness~~prior fiscal year. The decrease in net revenues in fiscal 2023 compared to fiscal 2022 is related to the decline in the global economic environment during the period. Units shipped decreased by 13.7% in fiscal 2023 compared to fiscal 2022. The networking and telecommunications markets represented 32% and 49% of shipments in fiscal 2023 and in ~~particular, continued weakness in Asia.~~fiscal 2022, respectively. Direct and indirect sales to ~~Alcatel-Lucent,~~Nokia, currently ~~our largest customer, increased by $3.9 million from $13.2 million in fiscal 2015 to $17.1 million fiscal 2016, reflecting increased demand for its systems that incorporate our products.However, direct and indirect sales to Cisco Systems, historically~~ our largest customer, decreased by ~~$2.6~~$4.6 million from ~~$7.1~~$9.6 million in fiscal ~~2015~~2022 to ~~$4.5~~$5.0 million fiscal 2023 due to buffer stock purchases in fiscal ~~2016 due~~2022 which did not recur in fiscal 2023 as supply shortages eased. Shipments to softness in the market for its switches and routers that incorporate our products. We believe that our net revenues were also negatively impacted during fiscal 2015 and the first quarter of fiscal 2016 by uncertainty regarding the outcome of our patent litigation with Cypress Semiconductor that was settled in May 2015. We believe that the Commission’s favorable final determination in the ITC proceeding reduced this market uncertainty somewhat, and that the uncertainty was resolved with the settlement of the litigation. However, some design-in losses that we suffered during the pendency of the ITC proceedingNokia will continue to ~~adversely affect our revenues throughout the life~~fluctuate as a result of ~~the related products.~~demand and shipments to its end customers. Shipments of our SigmaQuad product line accounted for ~~53.5%~~49.1% of total shipments in fiscal ~~2016~~2023 compared to ~~41.6%~~51.2% of total shipments in fiscal ~~2015.~~2022. While recent customer order patterns have been particularly variable, these fluctuations are related to economic and external factors, which include the rapid rise in energy prices, worldwide inflationary pressures, rising interest rates and the decline in the global economic environment.

Cost of Revenues. Cost of revenues decreased by ~~8.4%~~19.1% from ~~$28.4~~$14.8 million in fiscal ~~2015~~2022 to ~~$26.0~~$12.0 million in fiscal ~~2016. This decrease was primarily due to~~2023. Cost of revenues decreased as a result of the ~~corresponding decrease in net revenues, favorable product mix and reductions in variable manufacturing costs~~lower volume of units shipped in fiscal ~~2016.~~2023 compared to fiscal 2022 as discussed above. Cost of revenues included a provision for excess and obsolete inventories of $226,000 in fiscal 2023 compared to $402,000 in fiscal 2022. Cost of revenues included stock-based compensation expense of ~~$320,000~~$202,000 and ~~$401,000,~~$248,000, respectively, in fiscal ~~2016~~2023 and fiscal ~~2015.~~2022.

Gross Profit. Gross profit ~~increased~~decreased by ~~6.4%~~4.6% from ~~$25.1~~ $18.5 million in fiscal ~~2015~~2022 to ~~$26.7~~$17.7 million in fiscal ~~2016.~~2023. Gross margin increased from ~~47.0%~~55.5% in fiscal ~~2015~~2022 to ~~50.7%~~59.6% in fiscal ~~2016.~~2023. The ~~increases~~change in gross profit ~~and improvements~~is primarily related to the change in net revenues discussed above. The increase in gross margin ~~were~~was primarily related to ~~favorable~~ changes in the mix of products and ~~customers.~~customers and, to a lesser extent, a 20% price increase effective in December 2021 for the majority of our products.

Research and Development Expenses. Research and development expenses ~~increased 1.5%~~decreased 4.5% from ~~$11.9~~$24.7 million in fiscal ~~2015~~2022 to ~~$12.1~~$23.6 million in fiscal ~~2016. This increase~~2023. The reduction in research and development spending in fiscal

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2023 reflects the impact of cost reduction measures implemented in the quarter ended December 31, 2022. The decrease in research and development spending was primarily ~~due~~related to ~~an increase~~decreases of $1.7 million in payroll

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related expenses ~~of $314,000~~ and ~~lesser increases~~$360,000 in ~~patent related legal fees and travel related expenses,~~stock-based compensation expense, partially offset by ~~a decrease~~increases of $436,000 in ~~depreciation expense of $129,000~~outside consulting expenses and ~~lesser decreases~~$253,000 in ~~facilities related expenses, stock-based compensation expense and~~ software maintenance expenses. Payroll expenses increased as a result of our acquisition of MikaMonu in November 2015 and the subsequent hiring of engineers to work on our in-place associative computing product development.expense. Research and development expenses included stock-based compensation expense of ~~$858,000~~$1.3 million and ~~$941,000, respectively,~~$1.7 million in fiscal ~~2016~~2023 and fiscal ~~2015.~~2022, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative expenses ~~decreased 8.2%~~increased 1.4% from $~~19.2~~ $10.2 million in fiscal ~~2015~~2022 to ~~$17.7~~$10.4 million in fiscal ~~2016. This decrease was primarily related~~2023. In fiscal 2023, the value of contingent consideration liability resulting from the MikaMonu acquisition decreased by $1.5 million compared to a ~~$1.5~~decrease of $1.6 million ~~decrease~~ in ~~legal fees related to the patent infringement~~fiscal 2022 as a result of re-measurement of contingent consideration liability in each year. The increase in selling, general and ~~antitrust litigation involving Cypress Semiconductor Corporation which was settled~~administrative expenses included increases of $348,000 in ~~May 2015 and commercial and trade secret litigation in which we were the plaintiff, the trial of which concluded in November 2015, and lesser decreases in other~~ professional fees ~~stock-based compensation,~~and $121,000 in facility ~~related expenses and payroll~~ related expenses, partially offset by ~~an increase~~decreases of $423,000 in ~~independent sales representative commissions.~~payroll related expenses and $118,000 in stock-based compensation expense. Payroll related expenses included approximately $200,000 for severance payments made to terminated employees as a result of our cost cutting measures discussed above. Selling, general and administrative expenses included stock-based compensation expense of ~~$672,000~~$951,000 and ~~$735,000,~~$1.1 million, respectively, in fiscal ~~2016~~2023 and fiscal ~~2015.~~2022.

Interest and Other Income (Expense), Net. Interest and other income (expense), net ~~decreased 45.9%~~increased from ~~$388,000~~an expense of $60,000 in fiscal ~~2015~~2022 to ~~$210,000~~ income of $202,000 in fiscal ~~2016.~~2023. Interest income ~~decreased~~increased by ~~$17,000~~$252,000 due to ~~lower~~higher interest rates received on ~~reduced balances of~~ cash and short-term and long-term investments, partially offset by lower levels of short-term and long-term investments. ~~A foreign currency exchange gain of $64,000 in fiscal 2015 compared to a~~The foreign currency exchange loss ~~of $97,000~~decreased from ($131,000) in fiscal ~~2016.~~2022 to ($121,000) in fiscal 2023. The exchange ~~gain or~~ loss in each period was primarily related to our Taiwan branch ~~operations.~~operations and operations in Israel.

Provision (benefit) for Income Taxes. The provision for income taxes increased from a benefit from income taxes of ($45,000) in fiscal 2022 to a provision of $372,000 in fiscal 2023. The benefit for income taxes ~~of $675,000~~ in fiscal ~~2015 compared to~~2022 included a benefit of ~~$641,000 in~~($220,000) related to the approval by the Israel tax authorities of a “Preferred Company” tax rate that was retroactively applied to fiscal ~~2016.~~2018 and subsequent fiscal years. Because we recorded a cumulative three-year loss on a U.S. tax basis for the year ended March 31, ~~2016~~2023 and the realization of our deferred tax assets is questionable, we recorded a tax provision reflecting a ~~full~~ valuation allowance of ~~$6.4~~$17.5 million in net deferred tax assets in fiscal ~~2016.~~2023. Reductions in uncertain tax benefits due to lapses in the statute of limitations were not significant in the years ended March 31, 2023 and 2022.

Net ~~Income (Loss).~~Loss.Net loss ~~decreased from $5.0~~was ($16.4) million in fiscal ~~2015~~2022 compared to ~~$2.2~~a net loss of ($16.0) million in fiscal ~~2016.~~2023. This decrease was primarily due to the changes in net revenues, gross profit and operating expenses discussed above.

~~Fiscal Year Ended March 31, 2015 Compared to Fiscal Year Ended March 31, 2014~~

~~Net Revenues.~~ ~~Net revenues decreased by 8.7% from $58.6 million in fiscal 2014 to $53.5 million in fiscal 2015.~~The reduction reflected the continuing weakness in the global networking and telecommunications markets and, in particular, continued weakness in Asia. Direct and indirect sales to Alcatel-Lucent, currently our largest customer, increased by $2.0 million from $11.2 million in fiscal 2014 to $13.2 million fiscal 2015.However, direct and indirect sales to Cisco Systems, historically our largest customer, decreased by $3.9 million from $11.0 million in fiscal 2014 to $7.1 million in fiscal 2015 due to softness in the market for its switches and routers that incorporate our products. We believe that our net revenues in each of these periods were also negatively impacted by uncertainty regarding the outcome of our patent litigation with Cypress Semiconductor. We believe that the Commission’s favorable determination in the ITC proceeding in June 2013 reduced this market uncertainty, although some design-in losses that we suffered during the pendency of the ITC proceeding will continue to adversely affect our revenues throughout the life of the related products. Shipments of our SigmaQuad product line accounted for 41.6% of total shipments in fiscal 2015 compared to 42.2% of total shipments in fiscal 2014.

~~Cost of Revenues.~~ Cost of revenues decreased by 12.6% from $32.5 million in fiscal 2014 to $28.4 million in fiscal 2015. This decrease was primarily due to the corresponding decrease in net revenues, favorable product mix and reductions in variable manufacturing costs in fiscal 2015, in addition to a decrease of $1.0 million in non-cash write-downs of excess or obsolete inventory compared to fiscal 2014. A write-down of $985,000 was taken in the three months ended December 31, 2013 to reflect the fact that management’s prior expectations of increasing demand for our products, following the favorable ITC ruling in June 2013 and the exit of a competitor from the

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~~SRAM market in the December 2012 quarter, did not materialize. Cost of revenues included stock-based compensation expense of $401,000 and $386,000, respectively, in fiscal 2015 and fiscal 2014.~~

~~Gross Profit.~~ Gross profit decreased by 3.8% from $26.1 million in fiscal 2014 to $25.1 million in fiscal 2015. However, gross margin increased from 44.6% in fiscal 2014 to 47.0% in fiscal 2015. The decrease in gross profit was related to the corresponding decrease in net revenues, while the improvement in gross margin was due to favorable changes in the mix of products and customers and the reduction in the non-cash write-down of excess or obsolete inventory.

~~Research and Development Expenses.~~ Research and development expenses decreased 9.1% from $13.1 million in fiscal 2014 to $11.9 million in fiscal 2015. This decrease was primarily due to decreases of $1.5 million in expenses related to pre-production mask sets, a $177,000 decrease in depreciation expense and lesser decreases in repairs and maintenance expense and patent-related expenses, partially offset by an increase of $567,000 in payroll-related expenses. Research and development expenses included stock-based compensation expense of $941,000 and $970,000, respectively, in fiscal 2015 and fiscal 2014.

~~Selling, General and Administrative Expenses.~~ ~~Selling, general and administrative expenses increased 2.3% from~~ $18.8 million in fiscal 2014 to $19.2 million in fiscal 2015. This increase was primarily related to increases of $346,000 in payroll-related expenses and $308,000 in non-legal professional fees and lesser increases in travel related expenses and legal fees related to the patent infringement and antitrust litigation involving Cypress Semiconductor Corporation and other pending litigation, partially offset by decreases instock-based compensation expense and independent sales representative commissions. Selling, general and administrative expenses included stock-based compensation expense of $735,000 and $872,000, respectively, in fiscal 2015 and fiscal 2014.

~~Interest and Other Income (Expense), Net.~~ Interest and other income (expense), net increased 14.8% from $338,000 in fiscal 2014 to $388,000 in fiscal 2015. Interest income decreased by $63,000 due to lower interest rates received on reduced balances of cash and short-term and long-term investments. These decreases were more than offset by a foreign currency exchange gain of $64,000 in fiscal 2015 compared to a foreign currency exchange loss of $49,000 in fiscal 2014. The exchange gain or loss in each period was related to our Taiwan branch operations.

~~Provision for Income Taxes.~~ The provision for income taxes of $713,000 in fiscal 2014 compared to a benefit of $675,000 in fiscal 2015. Because we recorded a cumulative three-year loss on a U.S. tax basis for the year ended March 31, 2015, we recorded a tax provision reflecting a full valuation allowance of our $6.0 million in deferred tax assets in fiscal 2015.

~~Net Income (Loss).~~ Net loss decreased from $6.2 million in fiscal 2014 to $5.0 million in fiscal 2015. This decrease was primarily due to the changes in net revenues, gross profit and operating expenses discussed above.

Liquidity and Capital Resources

As of March 31, ~~2016~~,2023, our principal sources of liquidity were cash, cash equivalents and short-term investments of ~~$55.1~~$30.6 millioncompared to ~~$59.0~~$44.0 million as of March 31, ~~2015~~.2022. Cash, cash equivalents and short-term investments totaling ~~$24.5~~$21.4 million were held in foreign locations as of March 31, ~~2016.~~

2023. Net cash ~~provided by~~used in operating activities was ~~$460,000 for fiscal~~ ~~2016~~ ~~compared to $1.1~~$16.8 million and $13.8 million for fiscal ~~2015~~2023 and ~~$8.7 million for~~ fiscal ~~2014~~. The primary sources of cash in fiscal 2016 were non-cash stock-based compensation expense of $1.9 million, depreciation and amortization expense of $1.5 million and a provision for excess and obsolete inventory of $1.2 million. 2022, respectively.

The primary uses of cash in fiscal ~~2016~~2023 were athe net loss of ~~$2.2~~$16.0 million, a ~~decrease of $2.1 million~~reduction in accrued expenses and other liabilities of $2.3 million and ~~a decrease~~an increase in inventories of ~~$485,000~~$2.0 million. The reduction in ~~deferred revenue.~~accrued expenses and other liabilities was primarily related to the payment of fiscal 2022 year-end accruals for incentive compensation. The ~~primary sources~~uses of cash in fiscal ~~2015~~2023 were less than the net loss due to non-cash items including stock-based compensation of $2.5 million and depreciation and amortization expenses of $1.0 million. The primary source of cash in fiscal 2023 was a decrease in ~~prepaid expenses and other assets of $2.9 million, non-cash stock-based compensation expense of $2.1 million, depreciation and amortization expense of $1.6~~

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~~million and a provision for excess and obsolete inventory~~accounts receivable of $1.1 million. The primary uses of cash in fiscal ~~2015~~2022 were athe net loss of ~~$5.0~~$16.4 million ~~a decrease of $1.9 million~~and increases in accounts ~~payable~~receivable, inventory and an increase of $1.3 million in inventories. The primary sources of cash in fiscal 2014 were a reduction in inventory of $3.5 million, adjustments for non-cash stock-based compensation expense of $2.2 million, a provision for excess and obsolete inventory of $2.1 million and depreciation expense of $2.0 million, partially offset by a net loss of $6.2 million and a decrease in accrued expenses and other liabilities. ~~We allowed inventory levels~~The uses of cash in fiscal 2022 were less than the net loss due to ~~decrease in response to the slowdown in our business during fiscal 2014~~non-cash items including stock-based compensation of $3.0 million and ~~fiscal 2015.~~ depreciation and amortization expenses of $1.0 million.

Net cash provided by investing activities was ~~$935,000 in fiscal 2016 compared $23.2~~$6.7 million and $4.2 million in fiscal ~~2015~~2023 and ~~net cash used in investing activities of $8.2 million in fiscal 2014.~~2022, respectively. Investment activities in fiscal ~~2016~~2023 primarily consisted ~~primarily~~ of the maturity of ~~corporate notes, state and municipal obligations and~~ certificates of deposit and agency bonds of ~~$23.6~~$7.0 million partially offset by the purchase of ~~investments of $14.1 million, our acquisition of MikaMonu for $4.4 million, restricted cash of $3.0 million related to amounts held in escrow related to the acquisition and the purchase of~~ property and equipment ~~for $1.2 million.~~of $316,000. Investment activities in fiscal ~~2015~~2022 primarily consisted ~~primarily~~ of the ~~sale and~~ maturity of ~~corporate notes and~~ certificates of ~~deposits~~deposit and agency bonds of ~~$39.7~~$12.1 million partially offset by the purchase of ~~investments of $16.0 million. Investment activities in fiscal 2014 consisted primarily of the purchase of agency bonds, state and municipal obligations, corporate notes and~~ certificates of depositof ~~$35.9 million, substantially offset by proceeds from the sales and maturities of investments of $28.4~~$7.2 million.

Cash used in financing activities in fiscal 2016, fiscal 2015 and in fiscal 2014 included the repurchase of our common stock for a total purchase price of $7.0 million, $30.0 million and $2.9 million, respectively. We repurchased 1,611,969 shares of our common stock at an average price of $4.36 per share in fiscal 2016. Cash provided by financing activities was $402,000 and $2.4 million in fiscal ~~2016, fiscal 2015~~2023 and fiscal ~~2014 primarily~~2022, respectively and consisted of the net proceeds from the sale of common stock pursuant to our employee stock plans.

At March 31, ~~2016~~,2023, we had total minimum lease obligations of approximately ~~$447,000~~$686,000 from April 1, ~~2016~~2023 through February ~~28, 2018,~~29, 2024, under non-cancelable operating ~~leases.~~leases for our facilities.

WeWhile the disruptions in the capital markets as a result of rising interest rates, worldwide inflationary pressures, significant fluctuations in energy prices and the decline in the global economic environment have created significant uncertainty as to general economic and capital market conditions for the remainder of 2023 and beyond, we believe that our existing balances of cash, cash equivalents and short-term investments, and cash flow expected to be generated from our future operations, will be sufficient to meet our cash needs for working capital and capital expenditures for at least the next 12 months, although we could be required, or could elect, to seek additional funding prior to that time. Our future capital requirements will depend on many factors, including the rate of revenue growth, if any, that we experience, any additional manufacturing cost increases resulting from supply constraints, the extent to which we utilize subcontractors, the levels of inventory and accounts receivable that we maintain, the timing and extent of spending to support our product development efforts and the expansion of our sales and marketing efforts. ~~Additional~~A material decline in the global economic environment could result in a need to raise additional capital ~~may also be required for the consummation of any acquisition~~or incur additional indebtedness to fund strategic initiatives or operating activities, particularly if we pursue additional acquisitions of businesses, products or ~~technologies that we may undertake.~~technologies. We cannot assure you that additional equity or debt financing, if required, will be available on terms that are acceptable or at all.

~~Contractual Obligations~~

~~The following table describes our contractual obligations as~~As of March 31, ~~2016~~:2023, we had $1.7 million in purchase obligations for facility leases and software and test purchase obligations that are binding commitments, of which $1.3 million are payable in the next twelve months and $416,000 are committed in the long term.

Payments due by period

Up to 1 year

1 - 3 years

3 - 5 years

More than 5 years

Total
Facilities and equipment leases

$
304,000

143,000

$
-

$
-

$
447,000
Wafer, test and mask purchase obligations

2,147,000

847,000

101,000

-

3,095,000

$
2,451,000

$
990,000

$
101,000

$
-

$
3,542,000

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As of March 31, ~~2016~~,2023, the current portion of our unrecognized tax benefits was $0, and the long-term portion was ~~$116,000. We do not expect to make federal income tax payments in the next twelve months, and we arenot able to make a reasonably reliable estimate~~$0.

Table of ~~the timing of such payments due to uncertainties in the timing of tax credit outcomes.~~Contents

In connection with the acquisition of MikaMonu on November 23, 2015, we are required to make contingent consideration payments to the former MikaMonu shareholders conditioned upon the ~~retention of MikaMonu’s key employee and the~~ achievement of certain ~~product development milestones and~~ revenue targets for products based on the MikaMonu technology. As of March 31, ~~2016,~~2023, the accrual for potential payment of contingent consideration was ~~$5.9~~$1.1 million.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States ~~("GAAP"~~(“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates are inherent in the preparation of the consolidated financial statements and include estimates affecting ~~revenue recognition,~~ obsolete and excess inventory, ~~the valuation allowance on deferred tax assets,~~contingent consideration and the valuation of ~~equity instruments~~intangibles and ~~stock-based compensation.~~goodwill. We believe that we consistently apply these judgments and estimates and that our financial statements and accompanying notes fairly represent our financial results for all periods presented. However, any errors in these judgments and estimates may have a material impact on our balance sheet and statement of operations. Critical accounting estimates, as defined by the Securities and Exchange Commission, are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult and subjective judgments and estimates of matters that are inherently uncertain. Our critical accounting estimates include those regarding ~~revenue recognition,~~ the valuation of inventories, ~~taxes~~contingent consideration and ~~stock-based compensation.~~the valuation of intangibles and goodwill.

Revenue Recognition. ~~We recognize revenue when persuasive evidence~~ Revenue is recognized upon transfer of ~~an arrangement exists,~~control which occurs at the point at which delivery has occurred, title and the ~~price is fixed or determinable~~risks and ~~collectability~~rewards of ownership have passed to the customer, and the Company has a right to payment. For all transactions apart from consignment sales, the Company will recognize revenue upon shipment of the ~~resulting receivable~~product. For consignment sales, revenue is ~~reasonably assured. Under these criteria,~~recognized at the time that the product is pulled from consignment warehouses.

There was no revenue from the sale of our products is generally recognized upon shipment according to our shipping terms, net of accruals for estimated sales returns and allowances based on historical experience. Sales to distributors are made under agreements allowing for returns or credits. We defer recognition of revenue on sales to distributors until products are resold by the distributor to the end-user. Distributors have stock rotation, price protection and ship from stock pricing adjustment rights, and we therefore defer recognition of revenue on sales to distributors until products are resold by the distributor. In light of uncertainties related to the stock rotation rights and possible changes to sales pricesin fiscal 2023 resulting from ~~price protection and price adjustment rights granted, we are unable to reasonably estimate possible changes and~~sales of SaaS applications. See the resulting sales price to the distributor is not fixed or determinable until the final sale to the end user. Sales to consignment warehouses, who purchase products from us for use by contract manufacturers, are recorded upon delivery to the contract manufacturers.policy in Note 2 – Revenue Recognition.

The timing of recognizing revenues on product sales to distributors is dependent on receiving pertinent and accurate data from our distributors in a timely fashion. Distributors provide us monthly data regarding the product, price, quantity, and end customer for their shipments as well as the quantities of our products they have in stock at month end. In determining the appropriate amount of revenue to recognize, we use this data in reconciling differences between our estimate of their inventory levels and their reported inventories and shipment activities. If distributors incorrectly report their inventories or shipment activities, it could lead to inaccurate reporting of our revenues and income.

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Valuation of Inventories. Inventories are stated at the lower of cost or ~~market~~net realizable value, cost being determined on a weighted average basis. Our inventory write-down allowance is established when conditions indicate that the selling price of our products could be less than cost due to physical deterioration, obsolescence based on changes in technology and demand, changes in price levels, or other causes. We consider the need to establish the allowance for excess inventory generally based on inventory levels in excess of 12 months of forecasted customer demand for each specific ~~product. Inventory consists of finished goods at our premises or consignment warehouses, work in progress at our premises or our contract manufacturers~~product, which is based on historical sales and finished goods at distributors and takes into account any uncancellable purchase commitments. Historically, it has been difficult to forecast customer demand especially at the part-number level. Many of the orders we receive from our customers and distributors request delivery of product on relatively short notice and with lead times less than our manufacturing cycle time. In order to provide competitive delivery times to our customers, we build and stock a certain amount of inventory in anticipation of customer demand that may not materialize. Moreover, as is common in the semiconductor industry, we may allow customers to cancel orders with minimal advance notice. Thus, even product built to satisfy specific customer orders may not ultimately be required to fulfill customer demand. Nevertheless, atexpected future orders. At any point in time, some portion of our inventory is subject to the risk of being materially in excess of our projected demand. Additionally, our average selling prices could decline due to market or other conditions, which creates a risk that costs of manufacturing our inventory may not be recovered. These factors contribute to the risk that we may be required to record additional inventory write-downs in the future, which could be material. In addition, if actual market conditions are more favorable than expected, inventory previously written down may be sold to customers resulting in lower cost of sales and higher income from operations than expected in that period.

Accounting for Income Taxes.We account for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. We make certain estimates and judgments in the calculation of tax liabilities and the determination of deferred tax assets, which arise from temporary differences between tax and financial statement recognition methods. We record a valuation allowance to reduce our deferred tax assets to the amount that management estimates is more likely than not

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to be realized. ~~As of March 31, 2016, our net deferred tax assets of $6.4 million are subject~~Due to historical losses in the U.S., we have a full valuation ~~allowance.~~ allowance on our U.S. federal and state deferred tax assets. If, in the future we determine that we are likely to realize all or part of our net deferred tax assets, an adjustment to deferred tax assets would be added to earnings in the period such determination is made.

In addition, the calculation of tax liabilities involves inherent uncertainty in the application of complex tax laws. We record tax reserves for additional taxes that we estimate we may be required to pay as a result of future potential examinations by federal and state taxing authorities. If the payment ultimately proves to be unnecessary, the reversal of these tax reserves would result in tax benefits being recognized in the period we determine such reserves are no longer necessary. If an ultimate tax assessment exceeds our estimate of tax liabilities, an additional charge to provision for income taxes will result. See the policy in Note 6 – Income Taxes.

Stock-Based ~~Compensation.~~ ~~Under authoritative guidance, stock-based~~Compensation Expense. Stock-based compensation expense recognized in the statement of operations is based on options ultimately expected to vest, reduced by the amount of estimated forfeitures. We chose the straight-line method of allocating compensation cost over the requisite service period of the related award in accordance with the authoritative guidance. We calculated the expected term based on the historical average period of time that options were outstanding as adjusted for expected changes in future exercise patterns, which, for options granted in fiscal ~~2016~~, ~~2015~~2023, 2022 and ~~2014,~~2021, resulted in an expected term of approximately

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~~five years.~~4.6 to 5.0 years, 5.0 years and 5.0 years, respectively. We used our historical volatility to estimate expected volatility in fiscal ~~2016, 2015~~2023, 2022 and ~~2014.~~2021. The risk-free interest rate is based on the U.S. Treasury yields in effect at the time of grant for periods corresponding to the expected life of the options. The dividend yield is 0%, based on the fact that we have never paid dividends and have no present intention to pay dividends. Determining some of these assumptions requires significant judgment and changes to these assumptions could result in a significant change to the calculation of stock-based compensation in future periods.

~~Cash flows, if any, resulting from the tax benefits from tax deductions in excess of the compensation cost recognized~~ See Accounting for ~~those options (excess tax benefits) are classified as financing cash flows.~~

As stock-based compensation ~~expense recognized~~ in the Consolidated Statement of Operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. We estimate forfeitures at the time of grant and revise the original estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.Note 1.

~~We have no stock-based compensation arrangements with non-employees except for stock options granted to our non-employee directors.~~

Contingent Consideration. The fair value of the contingent consideration liability potentially payable in connection with our acquisition of MikaMonu was initially determined as of the acquisition date using unobservable inputs. These inputs ~~include~~included the estimated amount and timing of future cash flows, the probability of ~~success (achievement~~achievement of the ~~various contingent events)~~forecast, and a risk-adjusted discount rate to adjust the probability-weighted cash flows to their present value. ~~Subsequent to~~Since the acquisition date, at each reporting period, the contingent consideration liability ~~will be~~is re-measured at its then current fair value with changes recorded selling, general and administrative expenses in the Consolidated Statements of Operations. ~~Changes in~~Due to revisions to the amount of expected revenue, the timing of revenue to be recognized prior to the end of the earnout period and the probability of achievement of the APU revenue forecast, the contingent consideration liability decreased by $1.7 million from March 31, 2022 to March 31, 2023. Future changes to any of the inputs, including forecasted revenues from a new product, which are inherently difficult to estimate, or the valuation model selected, may result in material adjustments to the recorded fair ~~value.~~value.

Valuation of ~~Goodwill.~~

Goodwill and Intangibles. Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed in a business combination. We test for goodwill impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset is more likely than not impaired. We have one reporting unit. We assess goodwill for impairment on an annual basis on the last day of February in the fourth quarter of our fiscal year.

~~As of March 31, 2016, we~~We had a goodwill balance of $8.0 ~~million.~~million as of both March 31, 2023 and March 31, 2022. The goodwill resulted from the acquisition of MikaMonu Group Ltd. in fiscal 2016.

Our market capitalization declined in fiscal 2016. A significant decline in a company’s stock price may suggest that an adverse change in the business climate may have caused the fair value of one or more reporting units to fall below their carrying value. Significant judgment has been applied to determine whether stock price declines are a short-term swing or a long-term trend. We ~~believe that the decline in our stock price will not be sustained.~~

~~We utilized a two-step quantitative analysis to complete~~completed our annual goodwill impairment test during the fourth quarter of fiscal ~~2016~~2023 and concluded that there was no impairment, as the fair value of our sole reporting unit exceeded its carrying value. W~~e determined that the second step of the impairment test was not necessary. We believe that the fair value established during~~

For the fiscal ~~2016 annual goodwill impairment testing was reasonable, and no triggering event has taken place subsequent to the fiscal 2016 annual assessment. However, a~~year ended March 31, 2023, we identified sustained ~~decline~~declines in our stock price ~~could constitute a~~that resulted in our market capitalization being below the carrying value of our stockholders’ equity. We concluded the sustained declines in our stock price were triggering ~~event that would require assessment for potential~~events and proceeded with quantitative goodwill impairment ~~in fiscal 2017.~~

assessments.

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~~Off-Balance Sheet Arrangements~~

At The results of the quantitative goodwill impairment assessments that we performed indicated the fair value of our sole reporting unit exceeded its carrying value as of December 31, 2022, February 28, 2023, and March 31, ~~2016~~,2023. The quantitative impairment assessments were performed as of December 1, 2022, February 28, 2023, and March 31, 2023, utilizing an equal weighting of the income approach and the market comparable method. The analysis required the comparison of our carrying value with our fair value, with an impairment recorded for any excess of carrying value over the fair value. The income approach utilized a discounted cash flow analysis to determine the fair value of our single reporting unit. Key assumptions used in the discounted cash flow analysis included, but are not limited to, a discount rate of approximately 22% to account for risk in achieving the forecast and a terminal growth rate for cash flows of 2%. The market comparable method was used to determine the fair value of the reporting unit by multiplying forecasted revenue by a market multiple. The revenue market multiple was calculated by comparing the enterprise value to revenue for comparable companies in the semiconductor industry and then applying a control premium. The equal weighting of the income approach and the market comparable method was then reconciled to the market approach. The market approach was calculated by multiplying the average closing share price of our common stock for the 30 days prior to the measurement date, by the number of outstanding shares of our common stock and adding a control premium that reflected the premium a hypothetical buyer might pay. The control premium was estimated using historical acquisition transactions in the semiconductor industry over the past five years. The results of the quantitative analysis performed indicated the fair value of the reporting unit exceeded its carrying value. As a result, we ~~did not have any off-balance sheet arrangements~~concluded there was no goodwill impairment as of December 31, 2022, February 28, 2023, or ~~relationships with unconsolidated entities or financial partnerships,~~March 31, 2023.

A number of significant assumptions and estimates are involved in the income approach and the market comparable method. The income approach assumes the future cash flows reflect market expectations. The market comparable method requires an estimate of a revenue market multiple and an appropriate control premium. These fair value measurements require significant judgements using Level 3 inputs, such as ~~entities often referred~~discounted cash flows from operations and revenue forecasts, which are not observable from the market, directly or indirectly. There is uncertainty in the projected future cash flows used in our impairment analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, or if the assumptions used in the analysis change in the future, we may be required to recognize impairment charges in future periods. Key assumptions in the market approach include determining a control premium. We believe our procedures for determining fair value are reasonable and consistent with current market conditions as ~~structured finance~~of December 31, 2022 and March 31, 2023.

Intangible assets with finite useful lives are amortized over their estimated useful lives, generally on a straight-line basis over five to fifteen years. We review identifiable amortizable intangible assets for impairment whenever events or ~~special purpose entities, established~~changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value. Based on the uncertainty of forecasts, events such as the failure to generate revenue from future product launches could result in impairment in the future.We identified a potential impairment indicator for the ~~purpose~~finite lived intangible assets and performed a recoverability test by comparing the sum of ~~facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Accordingly, we are not exposed~~the estimated undiscounted future cash flows of the asset group to the ~~type~~carrying amount as of ~~financing, liquidity, market or credit risk~~December 31, 2022 and March 31, 2023. The result of the recoverability tests indicated that the sum of the expected future cash flows was greater than the carrying amount of the finite lived intangible assets. Based on the uncertainty of forecasts inherent with a new product, events such as the failure to generate forecasted revenue from the APU product could ~~arise if we had engaged~~result in ~~such relationships.~~a non-cash impairment charge in future periods.

Recent Accounting Pronouncements

~~In March 2016,~~ ~~the Financial Accounting Standards Board (“FASB”)~~ issued an accounting standard update for the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This accounting standard update will be effective ~~for annual periods beginning after December 15, 2016, and interim periods within those annual periods,~~ ~~and early adoption is permitted. We are currently evaluating the methods and impact of adopting the new accounting standard on our consolidated financial statements.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~“Leases (Topic 842).”~~ The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. All leases create an asset and a liability for the lessee in accordance with FASB Concepts Statement No. 6, ~~Elements of Financial Statements, and, therefore, recognition of those lease assets and lease liabilities represents a change of previous GAAP, which did not require lease assets and lease liabilities~~Please refer to be recognized for most leases. This ASU is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. We are currently evaluating the impact the pronouncement will have onNote 1 to our consolidated financial statements ~~and related disclosures.~~

~~In January 2016,~~appearing under Part II, Item 8 for a discussion of recent accounting pronouncements that may impact the FASB issued an accounting standard update which requires equity investments to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The accounting standard update also updates certain presentation and disclosure requirements. This accounting standard update will be effective ~~for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years~~, ~~and early adoption is permitted. We are currently evaluating the impact of this accounting standard update on our consolidated financial statements.~~

~~In November 2015,~~ ~~the FASB~~ ~~issued ASU No. 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes~~, which eliminates the current requirement to present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. The update is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. Implementation of this guidance in the quarter ended March 31, 2016 did not have a material impact on our consolidated financial statements.

In September 2015, the FASB issued a new accounting standard that eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination. The new guidance requires that the cumulative impact of a measurement period adjustment including the impact on prior periods be recognized in the reporting period in which the adjustment is identified along with additional disclosures. The new guidance will be effective for us beginning in the first quarter of fiscal 2017. The new guidance is required to be adopted prospectively with early adoption permitted for financial statements that have not yet been made available for issuance. The new guidance is not expected to have a material impact on the Company’s consolidated financial statements.

Company.

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~~In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory".~~ This standard update intends to simplify the subsequent measurement of inventory, excluding inventory accounted for under the last-in, first-out or the retail inventory methods. The update replaces the current lower of cost or market test with a lower of cost and net realizable value test. Under the current guidance, market could be replacement cost, net realizable value or net realizable value less an approximately normal profit margin. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The update is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of this accounting standard on our consolidated financial statements.

In August 2014, the FASB issued new guidance related to our responsibility to evaluate whether there is substantial doubt about our ability to continue ongoing business operations and to provide relevant footnote disclosures. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

~~In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers~~." The new accounting standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. ASU No. 2014-09 provides for one of two methods of transition: retrospective application to each prior period presented; or recognition of the cumulative effect of retrospective application of the new standard in the period of initial application. We are currently evaluating the impact of this accounting standard on our consolidated financial statements. In March, April and May 2016, the FASB issued additional updates to the new revenue standard relating to reporting revenue on a gross versus net basis, identifying performance obligations and licensing arrangements, and narrow-scope improvements and practical expedients, respectively. We are in the process of assessing the impact this additional guidance is expected to have upon adoption, including determining the adoption method.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk. Our revenues and expenses, except those expenses related to our operations in Israel and Taiwan, including subcontractor manufacturing expenses in Taiwan, are denominated in U.S. dollars. As a result, we have relatively little exposure for currency exchange risks, and foreign exchange losses have been minimal to date. We do not currently enter into forward exchange contracts to hedge exposure denominated in foreign currencies or any other derivative financial instruments for trading or speculative purposes. In the future, if we ~~feel~~believe our foreign currency exposure has increased, we may consider entering into hedging transactions to help mitigate that risk.

Interest Rate Sensitivity.We had cash, cash equivalents, short term investments and long-term investments totaling ~~$66.3~~$30.6 million at March 31, ~~2016~~.2023. These amounts were invested primarily in money market funds, ~~state and municipal obligations, corporate notes,~~ certificates of deposit and agency bonds. The cash, cash equivalents and short-term marketable securities are held for working capital purposes. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. We believe a hypothetical 100 basis point increase in interest rates would not materially affect the fair value of our interest-sensitive financial instruments. Declines in interest rates, however, will reduce future investment income.

Table of Contents

~~Table of Contents~~

Item 8. Financial Statements and Supplementary Data

GSI TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


		Page
Report of Independent Registered Public Accounting Firm (BDO USA, LLP; San Jose, CA; PCAOB ID#243)		53 50
Consolidated Balance Sheets As of March 31, ~~2016~~2023 and ~~2015~~2022		54 53
Consolidated Statements of Operations For the Three Years Ended March 31, ~~2016, 2015~~2023, 2022 and ~~2014~~2021		55 54
Consolidated Statements of Comprehensive Loss For the Three Years Ended March 31, ~~2016, 2015~~2023, 2022 and ~~2014~~2021		56 55
Consolidated Statements of Stockholders’ Equity For the Three Years Ended March 31, ~~2016, 2015~~2023, 2022 and ~~2014~~2021		57 56
Consolidated Statements of Cash Flows For the Three Years Ended March 31, ~~2016, 2015~~2023, 2022 and ~~2014~~2021		58 57
Notes to Consolidated Financial Statements		59 58

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~~Report~~

Report of Independent Registered Public Accounting Firm

~~To the~~

Shareholders and Board of Directors ~~and Stockholders of~~

GSI Technology, Inc.:

~~In our opinion,~~Sunnyvale, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of GSI Technology, Inc. (the “Company”) as of March 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and ~~cash flows present fairly, in all material respects, the financial position of GSI Technology, Inc. and its subsidiaries at March 31, 2016 and 2015, and the results of their operations and their~~ cash flows for each of the three years in the period ended March 31, ~~2016~~2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2023, in conformity with accounting principles generally accepted in the United States of America.~~Also in our opinion,~~

Basis for Opinion

These consolidated financial statements are the ~~Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2016, based on criteria established in~~ ~~Internal Control - Integrated Framework (2013)issued by the Committee of Sponsoring Organizations~~responsibility of the ~~Treadway Commission (COSO).~~ The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting~~, included in the accompanying Management's Report on Internal Control over Financial Reporting under item 9A.~~Company’s management. Our responsibility is to express ~~opinions on these financial statements and~~an opinion on the ~~Company's internal control over~~Company’s consolidated financial ~~reporting~~statements based on our ~~integrated~~audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the ~~audits~~audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, ~~and~~ whether ~~effective~~due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting ~~was maintained in all material respects.~~ but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the consolidated financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, ~~and~~as well as evaluating the overall presentation of the consolidated financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.statements. We believe that our audits provide a reasonable basis for our ~~opinions.~~opinion.

~~A company’s internal control over~~

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial ~~reporting~~statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements; and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Table of Contents

Valuation of Inventories

As described in Note 1 to the consolidated financial statements, the Company’s consolidated inventory balance is stated at lower of cost or net realizable value. The valuation of inventories is adjusted by the Company when conditions indicate a ~~process designed~~decline in value due to ~~provide reasonable assurance regarding~~obsolescence and is adjusted based on estimates for inventory levels in excess of forecasted demand for each specific product.

We identified the ~~reliability~~valuation of inventories as a critical audit matter due to the significant judgments and estimates required by management. Determining whether a decline in value has occurred requires significant judgments related to: (i) future demand for excess units on hand based on historical sales and expected future orders, and (ii) obsolescence of certain products based on changes in technology and demand. Auditing these judgments was especially challenging and involved subjective auditor judgment due to the nature and extent of audit effort required to address these matters.

The primary procedures we performed to address this critical audit matter included:

●

Evaluating management's inventory valuation estimates by, (i) comparing ending inventory quantities on hand to recent and expected shipment quantities, and (ii) reviewing at-risk inventory items for potential obsolescence based on changes in shipment trends.

●

Challenging the reasonableness of management's assumptions related to future orders by verifying the reliability of current backlog and historical sales data, evaluating fluctuations in demand for certain product ordered by a limited number of customers, and assessing changes in technology.

Valuation of Contingent Consideration

As described in Notes 7 and 14 to the consolidated financial ~~reporting~~statements, on November 23, 2015, the Company acquired all of the outstanding stock of MikaMonu Group Ltd. (“MikaMonu”) for cash and future contingent consideration payable to former MikaMonu shareholders based on the achievement of certain milestones, including development of qualifying products and meeting certain revenue targets from the sale of those products. Since the initial measurement at the acquisition date, the liability has been re-measured to fair value at each balance sheet date. The inputs used in the valuation include the estimated amount and timing of future cash flows, the probability of achievement of the forecast, and a risk-adjusted discount rate to adjust the probability-weighted cash flows to their present value.

We identified the valuation of the contingent consideration liability as a critical audit matter due to the significant judgments required to estimate the fair value at the balance sheet date. Valuation of the contingent consideration liability involves management’s complex judgments related to determining: (i) the continued appropriateness of the valuation model selected, and (ii) the reasonableness of inputs and assumptions used in the valuation model, including estimated amount and timing of future cash flows, probability of achievement of the forecast, and risk-adjusted discount rate. Auditing these inputs and assumptions involved especially challenging and subjective auditor judgements due to the nature and extent of procedures performed and the ~~preparation~~specialized knowledge required to audit the valuation.

The primary procedures we performed to address this critical audit matter included:

●

Evaluating the reasonableness of inputs used in the valuation including management’s forecast of amount and timing of future cash flows, including challenging assumptions such as the probability of achieving forecasted cash flows and examining third-party market sources and contradictory evidence from retrospective reviews of prior period forecasts.

●

Utilizing professionals with specialized skills and knowledge in valuation to: (i) test the appropriateness of the valuation model utilized by management to estimate the fair value of the contingent consideration;

Table of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Contents

(ii) verify the reasonableness of the risk-adjusted discount rate used in the model; and (iii) perform sensitivity analyses to test the effects of potential changes in the risk-adjusted discount rate based on comparable public companies and incorporating market risk to management’s revenue forecasts.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ ~~PricewaterhouseCoopers~~BDO USA, LLP

We have served as the Company's auditor since 2017.

San Jose, California

June ~~10, 2016~~

28, 2023

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GSI TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS


		March 31,
		2023		2022

		(In thousands, except share and per share amounts)
ASSETS
Cash and cash equivalents	$	27,212	$	36,971
Short-term investments		3,363		6,992
Accounts receivable, net		3,471		4,518
Inventories		6,415		4,655
Prepaid expenses and other current assets		1,414		1,555
Total current assets		41,875		54,691
Property and equipment, net		7,423		7,359
Operating lease right-of-use assets		684		889
Long-term investments		—		3,345
Goodwill		7,978		7,978
Intangible assets, net		1,790		2,023
Deposits		126		137
Total assets	$	59,876	$	76,422
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable ($8 and $32 to a related party)	$	1,621	$	1,474
Lease liabilities, current		413		537
Accrued expenses and other liabilities		5,168		6,850
Total current liabilities		7,202		8,861
Deferred tax liability		12		11
Lease liabilities, non-current		238		361
Contingent consideration, non-current		1,052		2,738
Total liabilities		8,504		11,971
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock: $0.001 par value authorized: 5,000,000 shares; issued and outstanding: none		—		—
Common Stock: $0.001 par value authorized: 150,000,000 shares; issued and outstanding: 24,685,059 and 24,486,239 shares, respectively		25		24
Additional paid-in capital		55,953		53,083
Accumulated other comprehensive loss		(127)		(154)
Retained earnings (deficit)		(4,479)		11,498
Total stockholders’ equity		51,372		64,451
Total liabilities and stockholders’ equity	$	59,876	$	76,422

March 31,

2016

2015

(In thousands, except share and per share amounts)
ASSETS

Cash and cash equivalents

$
31,963

$
36,776
Short-term investments

23,149

22,201
Accounts receivable, net

7,478

8,257
Inventories

7,174

8,412
Prepaid expenses and other current assets

2,198

2,297
Total current assets

71,962

77,943
Property and equipment, net

8,653

8,708
Long-term investments

11,148

21,740
Goodwill

8,030

-
Intangible assets, net

3,651

393
Other assets

3,086

105
Total assets

$
106,530

$
108,889
LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable

$
2,514

$
2,961
Accrued expenses and other liabilities

4,398

5,937
Deferred revenue

2,330

2,815
Total current liabilities

9,242

11,713
Income taxes payable

116

780
Long-term deferred income taxes

811

-
Other accrued expenses

6,492

-
Total liabilities

16,661

12,493
Commitments and contingencies (Note 7)

Stockholders' equity:

Preferred stock: $0.001 par value authorized: 5,000,000 shares; issued and outstanding: none

-

-
Common Stock: $0.001 par value authorized: 150,000,000 shares; issued and outstanding: 21,716,364 and 23,128,372 shares, respectively

22

23
Additional paid-in capital

25,050

29,407
Accumulated other comprehensive income

27

26
Retained earnings

64,770

66,940
Total stockholders' equity

89,869

96,396
Total liabilities and stockholders' equity

$
106,530

$
108,889

The accompanying notes are an integral part of these consolidated financial statements.

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GSI TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended March 31,

2016

2015

2014

(In thousands, except per share amounts)
Net revenues

$
52,736

$
53,498

$
58,579
Cost of revenues

25,999

28,375

32,469
Gross profit

26,737

25,123

26,110
Operating expenses:

Research and development

12,095

11,917

13,110
Selling, general and administrative

17,663

19,247

18,814
Total operating expenses

29,758

31,164

31,924
Loss from operations

(3,021)

(6,041)

(5,814)
Interest income, net

307

324

387
Other income (expense), net

(97)

64

(49)
Loss before income taxes

(2,811)

(5,653)

(5,476)
Provision (benefit) for income taxes

(641)

(675)

713
Net loss

$
(2,170)

$
(4,978)

$
(6,189)
Net loss per share:

Basic

$
(0.10)

$
(0.20)

$
(0.23)
Diluted

$
(0.10)

$
(0.20)

$
(0.23)
Weighted average shares used in per share calculations:

Basic

22,593

25,029

27,505
Diluted

22,593

25,029

27,505


	Year Ended March 31,
	2023		2022		2021

	(In thousands, except per share amounts)
Net revenues	$	29,691	$	33,384	$	27,729
Cost of revenues ($240, $397 and $482 to a related party)		12,010		14,847		14,512
Gross profit		17,681		18,537		13,217
Operating expenses:
Research and development		23,550		24,672		23,344
Selling, general and administrative		9,938		10,218		11,137
Total operating expenses		33,488		34,890		34,481
Loss from operations		(15,807)		(16,353)		(21,264)
Interest income, net		308		71		295
Other expense, net		(106)		(131)		(201)
Loss before income taxes		(15,605)		(16,413)		(21,170)
Provision (benefit) for income taxes		372		(45)		335
Net loss	$	(15,977)	$	(16,368)	$	(21,505)
Net loss per share:
Basic	$	(0.65)	$	(0.67)	$	(0.91)
Diluted	$	(0.65)	$	(0.67)	$	(0.91)
Weighted average shares used in per share calculations:
Basic		24,595		24,303		23,671
Diluted		24,595		24,303		23,671

The accompanying notes are an integral part of these consolidated financial statements.

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GSI TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Year Ended March 31,

2016

2015

2014

(In thousands, except per share amounts)

Net loss

$
(2,170)

$
(4,978)

$
(6,189)
Net unrealized gain (loss) on available-for-sale investments, net of tax

1

(7)

(12)
Comprehensive net loss

$
(2,169)

$
(4,985)

$
(6,201)


	Year Ended March 31,
	2023		2022		2021

	(In thousands)
Net loss	$	(15,977)	$	(16,368)	$	(21,505)
Net unrealized gain (loss) on available-for-sale investments		27		(134)		(91)
Total comprehensive loss	$	(15,950)	$	(16,502)	$	(21,596)

The accompanying notes are an integral part of these consolidated financial statements.

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GSI TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


						Accumulated
				Additional		Other			Retained	Total
	Common Stock			Paid-in		Comprehensive		Earnings		Stockholders'
	Shares	Amount		Capital		Income (Loss)		(Deficit)		Equity

	(In thousands, except share amounts)
Balance, March 31, 2020	23,229,286	$	23	$	40,176	$	71	$	49,371	$	89,641
Issuance of common stock under employee stock option plans	790,990		1		4,692		—		—		4,693
Stock-based compensation expense	—		—		2,854		—		—		2,854
Net loss	—		—		—		—		(21,505)		(21,505)
Net unrealized loss on available-for-sale investments	—		—		—		(91)		—		(91)
Balance, March 31, 2021	24,020,276		24		47,722		(20)		27,866		75,592
Issuance of common stock under employee stock option plans	465,963		—		2,368		—		—		2,368
Stock-based compensation expense	—		—		2,993		—		—		2,993
Net loss	—		—		—		—		(16,368)		(16,368)
Net unrealized loss on available-for-sale investments	—		—		—		(134)		—		(134)
Balance, March 31, 2022	24,486,239		24		53,083		(154)		11,498		64,451
Issuance of common stock under employee stock option plans	198,820		1		401		—		—		402
Stock-based compensation expense	—		—		2,469		—		—		2,469
Net loss	—		—		—		—		(15,977)		(15,977)
Net unrealized loss on available-for-sale investments	—		—		—		27		—		27
Balance, March 31, 2023	24,685,059	$	25	$	55,953	$	(127)	$	(4,479)	$	51,372

The accompanying notes are an integral part of these consolidated financial statements.

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Retained

Stockholders'

Shares

Amount

Capital

Income

Earnings

Equity

Balance, March 31, 2013

27,065,209

$
27

$
54,004

$
45

$
78,107

$
132,183
Issuance of common stock
under employee stock option plans

932,800

1

3,080

-

-

3,081
Repurchase and retirement of common stock

(436,527)

-

(2,880)

-

-

(2,880)
Stock-based compensation expense

-

-

2,228

-

-

2,228
Windfall tax benefit from
stock options exercised

-

-

(33)

-

-

(33)
Comprehensive loss:

Net loss

-

-

-

-

(6,189)

(6,189)
Net unrealized loss on
available-for-sale investments

-

-

-

(12)

-

(12)
Total comprehensive loss

-

-

-

-

-

(6,201)
Balance, March 31, 2014

27,561,482

28

56,399

33

71,918

128,378
Issuance of common stock
under employee stock option plans

228,665

-

952

-

-

952
Repurchase and retirement of common stock

(4,661,775)

(5)

(30,021)

-

-

(30,026)
Stock-based compensation expense

-

-

2,077

-

-

2,077
Comprehensive loss:

Net loss

-

-

-

-

(4,978)

(4,978)
Net unrealized loss on
available-for-sale investments

-

-

-

(7)

-

(7)
Total comprehensive loss

-

-

-

-

-

(4,985)
Balance, March 31, 2015

23,128,372

23

29,407

26

66,940

96,396
Issuance of common stock
under employee stock option plans

199,961

-

818

-

-

818
Repurchase and retirement of common stock

(1,611,969)

(1)

(7,025)

-

-

(7,026)
Stock-based compensation expense

-

-

1,850

-

-

1,850
Comprehensive loss:

Net loss

-

-

-

-

(2,170)

(2,170)
Net unrealized gain on
available-for-sale investments

-

-

-

1

-

1
Total comprehensive loss

-

-

-

-

-

(2,169)
Balance, March 31, 2016

21,716,364

$
22

$
25,050

$
27

$
64,770

$
89,869

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GSI TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended March 31,
	2023		2022		2021

	(In thousands)
Cash flows from operating activities:
Net loss	$	(15,977)	$	(16,368)	$	(21,505)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for doubtful accounts and other		(21)		(39)		35
Provision for excess and obsolete inventories		226		402		466
Non-cash lease expense		581		373		598
Change in fair value of contingent consideration		(1,685)		(1,487)		327
Depreciation and amortization		1,015		1,004		1,214
Stock-based compensation		2,469		2,993		2,854
Amortization of premium on investments		13		69		88
Changes in assets and liabilities:
Accounts receivable		1,068		(814)		2,630
Inventories		(1,986)		(714)		(527)
Prepaid expenses and other assets		140		(70)		440
Accounts payable		(383)		(127)		383
Accrued expenses and other liabilities		(2,305)		952		(2,255)
Net cash used in operating activities		(16,845)		(13,826)		(15,252)
Cash flows from investing activities:
Purchase of investments		—		(7,163)		(17,510)
Maturities of short-term investments		7,000		12,132		21,000
Purchases of property and equipment		(316)		(774)		(203)
Net cash provided by investing activities		6,684		4,195		3,287
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock plans		402		2,368		4,693
Net cash provided by financing activities		402		2,368		4,693
Net decrease in cash and cash equivalents		(9,759)		(7,263)		(7,272)
Cash and cash equivalents at beginning of the period		36,971		44,234		51,506
Cash and cash equivalents at end of the period	$	27,212	$	36,971	$	44,234
Non-cash investing and financing activities:
Purchases of property and equipment through accounts payable and accruals	$	564	$	34	$	6
Operating lease right-of-use assets exchanged for lease obligations		376		585		658
Supplemental cash flow information:
Net cash paid for income taxes	$	155	$	26	$	858

The accompanying notes are an integral part of these consolidated financial statements.

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~~GSI TECHNOLOGY, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Year Ended March 31,

2016

2015

2014

(In thousands)
Cash flows from operating activities:

Net loss

$
(2,170)

$
(4,978)

$
(6,189)
Adjustments to reconcile net loss to net cash provided by operating activities:

Allowance for sales returns, doubtful accounts and other

(3)

(8)

(5)
Provision for excess and obsolete inventories

1,172

1,067

2,079
Depreciation and amortization

1,459

1,633

1,981
Stock-based compensation

1,850

2,077

2,228
Deferred income taxes

-

-

1,224
Windfall tax benefits from stock options exercised

-

-

33
Amortization of bond premium on investments

209

593

842
Changes in assets and liabilities, net of impact of acquisition:

Accounts receivable

782

(11)

2,008
Inventory

66

(1,294)

3,545
Prepaid expenses and other assets

102

2,854

1,046
Accounts payable

(441)

(1,915)

1,066
Accrued expenses and other liabilities

(2,081)

811

(857)
Deferred revenue

(485)

292

(554)
Net cash provided by operating activities

460

1,121

8,447
Cash flows from investing activities:

Purchase of investments

(14,149)

(16,009)

(35,866)
Sales and maturities of investments

23,585

39,699

28,412
Acquisition

(4,359)

-

-
Restricted cash

(2,984)

-

-
Purchases of property and equipment

(1,158)

(481)

(761)
Net cash provided by (used in) investing activities

935

23,209

(8,215)
Cash flows from financing activities:

Repurchase of common stock

(7,026)

(30,026)

(2,880)
Windfall tax benefits from stock options exercised

-

-

(33)
Proceeds from issuance of common stock under employee stock plans

818

952

3,081
Net cash provided by (used in) financing activities

(6,208)

(29,074)

168
Net increase (decrease) in cash and cash equivalents

(4,813)

(4,744)

400
Cash and cash equivalents at beginning of the year

36,776

41,520

41,120
Cash and cash equivalents at end of the year

$
31,963

$
36,776

$
41,520
Non-cash financing activities:

Purchases of property and equipment through accounts payable and
accruals

$
-

$
6

$
-
Supplemental cash flow information:

Net cash paid (received) for income taxes

$
78

$
(2,394)

$
2

~~The accompanying notes are an integral part of these consolidated financial statements.~~

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NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

GSI Technology, Inc. (the ~~"Company"~~“Company”) was incorporated in California in March 1995 and reincorporated in Delaware on June 9, 2004. The Company is a provider of ~~"Very Fast" SRAM~~high-performance semiconductor memory solutions to networking, industrial, medical, aerospace and military customers. The Company’s products ~~and LLDRAM products that~~ are incorporated primarily in high-performance networking and telecommunications equipment, such as routers, switches, wide area network infrastructure equipment, wireless base stations and network access equipment. In addition, the Company serves the ongoing needs of the military, industrial, test equipment and medical markets for high-performance SRAMs. The Company’s in-place associative computing product is targeted for markets including computer vision, synthetic aperture radar, drug discovery, cybersecurity, and service markets such as NoSQL, Elasticsearch, and OpenSearch, which the Company plans to support with a SaaS solution.

Accounting principles

The consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States of America ~~("GAAP"~~(“GAAP”).

Basis of consolidation

The consolidated financial statements include the accounts of the ~~Company's~~Company’s four ~~wholly-owned~~wholly owned subsidiaries, GSI Technology Holdings, Inc., GSI Technology (BVI), Inc., GSI Technology Israel Ltd. and GSI Technology Taiwan, Inc. All ~~significant~~ inter-company transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates are inherent in the preparation of the consolidated financial statements and include ~~revenue recognition,~~ obsolete and excess inventory, the valuation ~~allowance on deferred tax assets,~~of contingent consideration and the valuation of ~~equity instruments~~intangibles and ~~stock-based compensation.~~ goodwill. The uncertainty created by the disruptions in the capital markets as a result of rising interest rates, worldwide inflationary pressures, significant fluctuations in energy prices and the decline in the global economic environment, has made such estimates more difficult and subjective. Actual results could differ materially from those estimates.

Risk and uncertainties

The decline in the global economic environment due to, among other things, rising interest rates, worldwide inflationary pressures and significant fluctuations in energy prices has affected the business activities of the Company, its customers, suppliers, and other business partners in the fiscal year ended March 31, 2023. In addition, the COVID-19 global pandemic significantly impacted the global economic environment, disrupted normal business operations and had significant negative impacts on the Company’s business during the last three years.

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The Company’s revenues have been adversely impacted by changes in customer buying patterns and communication limitations related to COVID-19 restrictions that required a significant number of its customer contacts to work from home. The Company’s results for the fiscal years ended March 31, 2023, 2022 and 2021 demonstrated the challenges that the Company has faced during the COVID-19 global pandemic, which has restricted the activities of the Company’s sales force and distributors, reduced customer demand and caused the postponement of investment in certain customer sectors. These challenges have also impacted the Company as it entered new markets and engaged with target customers to sell its new APU product. Industry conferences and on-site training workshops, which are typically used for building a sales pipeline, were limited, due to COVID-19 related restrictions. The Company adapted its sales strategies for the COVID-19 environment, where it could not do face-to-face meetings and conduct secure meetings with government and defense customers.

The Company believes that during the next 12 months disruptions in the capital markets as a result of rising interest rates, worldwide inflationary pressures, significant fluctuations in energy prices and the decline in the global economic environment could impact general economic activity and demand in the Company’s end markets. Additionally, fluctuations in customer demand due to previous buffer stock purchases during the semiconductor supply shortage may negatively impact near-term revenues.

The Company buys all of its SRAM ~~and LLDRAM~~ wafers, an integral ~~components~~component of its products, from a single ~~suppliers~~supplier and is also dependent on independent suppliers to assemble and test its products. During the years ended March 31, ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~,2021, all of the wafers used in the ~~Company's~~Company’s SRAM ~~and LLDRAM~~ products were supplied by Taiwan Semiconductor Manufacturing Company Limited, or ~~TSMC, and Powerchip Technology Corporation, or Powerchip, respectively.~~TSMC. If ~~these suppliers fail~~this supplier fails to satisfy the ~~Company's~~Company’s requirements on a timely basis at competitive prices, the Company could suffer manufacturing delays, a possible loss of revenues, or higher cost of revenues, any of which could adversely affect operating results.

A majority of the ~~Company's~~Company’s net revenues come from sales to customers in the networking and telecommunications equipment industry. A decline in demand in this industry could have a material adverse ~~affect~~effect on the ~~Company's~~Company’s operating results and financial condition.

Because much of the manufacturing and testing of the ~~Company's~~Company’s products is conducted in Taiwan, its business performance may be affected by changes in ~~Taiwan's~~Taiwan’s political, social and economic environment. For example, any political instability ~~resulting~~or restrictions on transportation logistics for our products that result from the relationship among the United States, Taiwan and the ~~People's~~People’s Republic of China could damage the ~~Company's~~Company’s business. Moreover, the role of the Taiwanese government in the Taiwanese economy is significant. Taiwanese policies toward economic liberalization, and laws and policies affecting technology companies, foreign investment, currency exchange rates, taxes and other matters could change,

~~Table of Contents~~

resulting in greater restrictions on the ~~Company's~~Company’s and its suppliers' ability to do business and operate facilities in Taiwan. If any of these risks were to occur, the ~~Company's~~Company’s business could be harmed.

Some of the ~~Company's~~Company’s suppliers and the ~~Company's~~Company’s two principal operations are located near fault lines. In the event of a major earthquake, typhoon or other natural disaster near the facilities of any of these suppliers or the Company, the ~~Company's~~Company’s business could be harmed.

From time to time, the Company is involved in legal actions. ~~See Note 7 for information regarding litigation that was resolved during the year ended March 31, 2016.~~ There are many uncertainties associated with any litigation, and the Company may not prevail. If information becomes available that causes us to determine that a loss in any of ~~our~~the Company’s pending litigation, or the settlement of such litigation, is probable, and we can reasonably estimate the loss associated with such events, we will record the loss in accordance with GAAP. However, the actual liability in any such litigation may be materially different from ~~our~~the Company’s estimates, which could require us to record additional costs.

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Revenue recognition

The Company recognizes revenue when ~~persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability~~control of the ~~resulting receivable~~promised goods or services is ~~reasonably assured.~~transferred to its customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Under ~~these~~this criteria, revenue from the sale of products is generally recognized upon shipment according to the ~~Company's~~Company’s shipping terms, net of accruals for estimated variable consideration resulting from sales returns and allowances based on historical experience. Sales to distributors are made under agreements allowing for returns or credits. Distributors have stock rotation, price protection and ship from stock pricing adjustment rights and the Company therefore defers recognition of revenue on sales to distributors until products are resold by the distributor. In light of possible changes to sales prices resulting from price protection and price adjustment rights granted, sales prices to the distributor are not fixed or determinable until the final sale to the end user. For sales toWhen consignment warehouses ~~who~~ purchase products from the Company for use by contract manufacturers, revenues are recognized upon delivery to the contract manufacturer.

Cash and cash equivalents

Cash and cash equivalents include cash in demand accounts and highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase, stated at cost, which approximates their fair value.

Short-term and long-term investments

All of the ~~Company's~~Company’s short-term and long-term investments are classified as available-for-sale. Available-for-sale debt securities with maturities greater than twelve months are classified as long-term investments when they are not intended for use in current operations. Investments in available-for-sale securities are reported at fair value with unrecognized gains (losses), net of tax, as a component of ~~"Accumulated~~“Accumulated other comprehensive ~~income"~~loss” on the Consolidated Balance Sheets. The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when the declines in fair value are determined to be other-than-temporary.

Concentration of credit risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents, short-term and long-term investments and accounts receivable. The Company places its cash primarily in checking, certificate of deposit, and money market accounts with reputable financial ~~institutions.~~institutions, and by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The ~~Company's~~Company’s accounts ~~receivable~~receivables are derived primarily from revenue earned from customers located in the U.S. and Asia. The Company performs ongoing credit evaluations of its ~~customers'~~customers’ financial condition and, generally, requires no collateral from its customers. The Company maintains an allowance for doubtful accounts receivable

~~Table of Contents~~

based upon the expected collectability of accounts receivable. There were no write offs of accounts receivable in the years ended March 31, ~~2016, 2015~~2023, 2022 or ~~2014.~~2021.

At March 31, ~~2016, four~~2023, three customers accounted for ~~26%~~36%, 25% and 19% of accounts receivable, and for the year then ended, three customers accounted for 48%, ~~13%~~17% and 10% of net revenues. At March 31, 2022, three customers accounted for 34%, 28% and ~~11%~~19% of accounts receivable, and for the year then ended, four customers accounted for ~~28%~~38%, 17%, 16%~~, 14%~~ and ~~13%~~11% of net revenues. AtFor the year ended March 31, 2015, four customers accounted for 25%, 20%, 16%, and 13% of accounts receivable, and for the year then ended, three customers accounted for 35%, 13% and 12% of net revenues. At March 31, 2014, four customers accounted for 20%, 16%, 14%, and 12% of accounts receivable, and for the year then ended, 2021, four customers accounted for 30%, ~~14%~~22%, ~~12%~~21% and ~~10%~~15% of net revenues.

Inventories

Inventories are stated at the lower of cost or ~~market~~net realizable value, cost being determined on a weighted average basis. Inventory write-down allowances are established when conditions indicate that the selling price could be less than cost due to physical deterioration, obsolescence of certain products based on changes in technology and demand, changes in price levels, or other causes. These allowances, once recorded, result in a new cost basis for the related inventory. These allowances are also considered for excess inventory generally based on inventory levels in excess of 12 months of forecasted customer demand based on historical sales and expected future orders, as

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estimated by management, for each specific product. The allowance is not reversed until the inventory is sold or ~~disposed of.~~disposed.

The Company recorded write-downs of excess and obsolete inventories of ~~$1.2 million, $1.1 million~~$226,000, $402,000 and ~~$2.1 million,~~$466,000, respectively, in fiscal ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~. 2021.

Property and equipment, net

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as presented below:



Software		3 to 5 years
Computer and other equipment		5 to 10 years
Building and building improvements		10 to 25 years
Furniture and fixtures		7 years

Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the remaining lease term of the respective assets. Gains or losses on disposals of property and equipment are recorded within ~~income~~loss from operations. Costs of repairs and maintenance are ~~typically~~ included as part of operating expenses unless they are incurred in relation to major improvements to existing property and equipment, at which time they are capitalized.

Operating Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, lease liabilities, current and lease liabilities, non-current on the Company's Consolidated Balance Sheets. The Company did not identify any finance leases as of March 31, 2023 and 2022.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on observed market data and other information available at the lease commencement date. The operating lease ROU assets also include any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company does not record leases on the Consolidated Balance Sheet with a term of one year or less. The Company does not separate lease and non-lease components but rather accounts for each separate component as a single lease component for all underlying classes of assets. Variable lease payments are expensed as incurred and are not included within the operating lease ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance and utilities. Lease expense for minimum operating lease payments is recognized on a straight-line basis over the lease term.

Impairment of long-lived assets

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. If the sum of the expected future cash flows (undiscounted and before interest) from the use of the assets is less than the net book value of the asset an impairment could exist and the amount of the impairment loss, if any, will generally be measured as the difference between the net book value of the assets and their estimated fair values. There were no impairment losses recognized during the years ended March 31, ~~2016~~, ~~2015~~2023, 2022 or ~~2014~~.

2021.

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Goodwill and intangible assets

Goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

The Company assesses goodwill for impairment on an annual basis on the last day of February in the fourth quarter of its fiscal year and if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. The Company has one reporting unit. ~~In accordance with ASU 2011-08,~~ ~~Testing Goodwill for~~ Impairment~~, qualitative factors can be assessed to determine whether it~~ is ~~necessary to perform~~recognized if the ~~current two-step test for goodwill impairment. If an entity believes, as a result~~carrying value of ~~its qualitative assessment, that it is more-likely-than-not that~~the net assets of the reporting unit exceeds the fair value of athe reporting unit, ~~is less than its carrying~~with the impairment loss not to exceed the amount of goodwill allocated to the ~~quantitative impairment test is required. Otherwise, no further testing is required.~~reporting unit.

Intangible assets with finite useful lives are amortized over their estimated useful lives, generally on a straight-line basis over five to fifteen years. The Company reviews identifiable amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value. The Company identified a potential impairment indicator for the finite lived intangible assets and performed a recoverability test by comparing the sum of the estimated undiscounted future cash flows of the asset group to the carrying amount as of March 31, 2023 and March 31, 2022. The result of the recoverability test indicated that the sum of the expected future cash flows was greater than the carrying amount of the finite lived intangible assets. Based on the uncertainty of forecasts inherent with a new product, events such as the failure to generate forecasted revenue from the APU product could result in a non-cash impairment in future periods.

Research and development

Research and development expenses are related to new product designs, including, salaries, stock-based compensation, contractor fees, preproduction masks, and allocation of corporate costs and are charged to the statement of operations as incurred.

Income taxes

The Company accounts for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when it is more likely than not that the deferred tax asset will not be realized. ~~Because~~Due to historical losses in the U.S., the Company ~~recorded a cumulative three-year loss on a U.S. tax basis for the period ended March 31, 2016, the Company~~ has ~~recorded a tax provision reflecting~~ a full valuation allowance on its U.S. federal and state deferred tax assets. As of ~~its $6.4 million~~March 31, 2023 and ~~$6.0 million of~~2022, the Company’s net deferred tax assets ~~at March 31, 2016~~of $17.5 and ~~2015,~~$16.2 million, respectively, were subject to a valuation allowance of $17.5 and $16.2 million, respectively. Management continues to evaluate the realizability of deferred tax assets and the related valuation allowance.

Authoritative guidance prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the ~~company~~Company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). Under the guidance, the financial statements will reflect expected future tax consequences of such positions presuming the taxing ~~authorities'~~Authorities’ full knowledge of the position and all relevant facts, but without considering time values. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation process, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

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Shipping and handling costs

The Company records costs related to shipping and handling in cost of revenues.

~~Table of Contents~~

Advertising expense

Advertising costs are charged to expense in the period incurred. Advertising expense was ~~$4,000, $5,000 and $7,000~~not material for the years ended March 31, ~~2016~~, ~~2015~~,2023, 2022 and ~~2014, respectively.~~2021.

Foreign currency transactions

The U.S. dollar is the functional currency for all of the ~~Company's~~Company’s foreign operations. Foreign currency transaction gains and losses, resulting from transactions denominated in currencies other than U.S. dollars are included in the Consolidated Statements of Operations. These gains and losses were not material for the years ended March 31, ~~2016~~2023, 2022 or 2021.

Segments

Segment reporting is based on the “management approach,” following the method that management organizes the Company’s reportable segments for which separate financial information is made available to, and evaluated regularly by, the chief operating decision maker in allocating resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer (“CEO”), ~~2015~~ or ~~2014~~.

~~Segments~~

who makes the decision on allocating resources and in assessing performance. The ~~Company operates~~CEO reviews the Company's consolidated results as one ~~segment~~operating segment. In making operating decisions, the CEO primarily considers consolidated financial information, accompanied by disaggregated information about revenues by customers and product. All of the Company’s principal operations and decision-making functions are located in the U.S. The Company’s CEO views its operations, manages its business, and uses one measurement of profitability for the ~~design, development~~one operating segment, which designs, develops and ~~sale of~~sells integrated circuits.

Accounting for stock-based compensation

Stock-based compensation expense recognized in the Consolidated ~~Statement~~Statements of Operations is based on options ultimately expected to vest, reduced by the amount of estimated forfeitures. The Company chose the straight-line method of allocating compensation cost over the requisite service period of the related award according to authoritative guidance. The Company ~~calculated~~calculates the expected term based on the historical average period of time that options were outstanding as adjusted for expected changes in future exercise patterns, which, for options granted in fiscal ~~2016, 2015~~2023, 2022 and ~~2014~~2021 resulted in an expected term of approximately ~~five years.~~ 4.6 to 5.0 years, 5.0 years and 5.0 years, respectively. The Company ~~used~~uses its historical volatility to estimate expected ~~volatility~~ ~~in fiscal 2016, 2015 and 2014.~~ volatility. The risk-free interest rate is based on the U.S. Treasury yields in effect at the time of grant for periods corresponding to the expected life of the options. The dividend yield is 0%, based on the fact that the Company has never paid dividends and has no present intention to pay dividends. Changes to these assumptions may have a significant impact on the results of operations.

Authoritative guidance requires cash flows, if any, resulting from the tax benefits from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash ~~flows.~~flows in the Consolidated Statements of Cash Flows.

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Comprehensive loss

~~Comprehensive income (loss)~~ is defined to include all changes in stockholders’ equity during a period except those resulting from investments by owners and distributions to owners. For the years ended March 31, ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~,2021, comprehensive loss was ~~$2,169,000, $4,985,000~~$16.0 million, $16.5 million and ~~$6,201,000,~~$21.6 million, respectively.

~~Business combinations~~Accounting pronouncements not yet effective for fiscal 2023

The Company allocates the fair value of the purchase consideration of its acquisitions to the tangible assets, liabilities, and intangible assets acquired, based on their estimated fair values. Goodwill represents the excess of acquisition cost over the fair value of tangible and identified intangible net assets of businesses acquired. Transaction costs and costs to restructure the acquired company are expensed as incurred. The operating results of the acquired company are reflected in the Company’s consolidated financial statements after the closing date of the business combination. See Note 11 for additional information related to the acquisition of MikaMonu Group Ltd.

~~Table of Contents~~

~~Recent accounting pronouncements~~

In ~~March~~June 2016, the Financial Accounting Standards Board (“FASB”) issued ~~an accounting standard update for~~Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 replaces the ~~accounting for share-based payment transactions, including~~incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, loans, and other financial instruments, the ~~income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This accounting standard update~~Company will be ~~effective~~ required to use a forward-looking expected loss model rather than the incurred loss model for ~~annual periods beginning after December 15, 2016, and interim periods within those annual periods,~~ ~~and early adoption is permitted. The Company is currently evaluating~~recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the ~~methods and impact~~amortized cost basis of ~~adopting~~ the ~~new accounting standard on its consolidated financial statements.~~

~~In February 2016, the FASB issued~~securities. ASU ~~2016-02,~~ ~~“Leases (Topic 842)~~.” The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. All leases create an asset and a liability for the lessee in accordance with FASB Concepts Statement No. 6, ~~Elements of Financial Statements~~, and, therefore, recognition of those lease assets and lease liabilities represents a change of previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases. This ASU2016-13 is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. The Company is currently evaluating the impact the pronouncement will have on its consolidated financial statements and related disclosures.

In January 2016, the FASB issued an accounting standard update which requires equity investments to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The accounting standard update also updates certain presentation and disclosure requirements. This accounting standard update will be effective for fiscal years beginning after December 15, ~~2017,~~2022, including interim periods within those fiscal years,~~and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.~~

~~In November 2015, the~~ ~~FASB~~ ~~issued ASU No. 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes~~, which eliminates the current requirement to present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. The update is effective for annual reporting periods beginning after December 15, 2016, with early adoption ~~permitted.~~permitted beginning April 1, 2019. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. Implementation of this guidance ~~in the quarter ended March 31, 2016~~on April 1, 2023 did not have a material impact on the Company’s consolidated financial ~~statements.~~statements and related disclosures.

~~In September 2015,~~NOTE 2 —REVENUE RECOGNITION

The Company determines revenue recognition through the ~~FASB issued~~following steps: (1) identification of the contract with a ~~new~~customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, we satisfy a performance obligation.

The Company’s customer contracts, which may be in the form of purchase orders, contracts or purchase agreements, contain performance obligations for delivery of agreed upon products. Delivery of all performance obligations contained within a contract with a customer typically occurs at the same time (or within the same accounting ~~standard that eliminates~~period). Transfer of control occurs at the ~~requirement~~point at which delivery has occurred, title and the risks and rewards of ownership have passed to ~~restate prior period financial statements for measurement period adjustments following~~the customer, and the Company has a ~~business combination. The new guidance requires~~right to payment. For all transactions apart from consignment sales, the Company will recognize revenue upon shipment of the product. For consignment sales, which are infrequent and did not occur in fiscal 2023, revenue is recognized at the time that the ~~cumulative impact~~product is pulled from consignment warehouses.

Because all of the Company’s performance obligations relate to contracts with a ~~measurement period adjustment including~~duration of less than one year, the ~~impact on prior periods be recognized in~~Company elected to apply the optional exemption practical expedient and, therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting ~~period in which~~period.

The Company adjusts the ~~adjustment~~transaction price for variable consideration. Variable consideration is ~~identified along with additional disclosures. The new guidance will be effective for~~not typically significant and primarily results from stock rotation rights and quick pay discounts provided to certain distributors. As a practical expedient, the Company ~~beginning in~~is recognizing the ~~first quarter~~incremental costs of ~~fiscal 2017. The new guidance is required to be adopted prospectively with early adoption permitted for financial statements~~obtaining a contract, specifically commission expenses that have ~~not yet been made available for issuance. The new guidance is not expected~~a period of benefit of less than twelve months, as an expense when incurred. Additionally, the Company has adopted an accounting policy to ~~have~~recognize shipping costs that occur after control transfers to the customer as a ~~material impact on the Company’s consolidated financial statements.~~

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~~adoption permitted.~~ The ~~Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.~~

~~In August 2014, the FASB issued new guidance related to the~~ Company’s responsibility to evaluate whether there is substantial doubt about its ability to continue ongoing business operations and to provide relevant footnote disclosures. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

~~In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." The new accounting standard outlines a single comprehensive model for entities to use in accounting for revenue arising from~~ contracts with customers do not typically include extended payment terms. Payment terms vary by contract type and ~~supersedes most current~~type of customer and generally range from 30 to 60 days from shipment. Additionally, the Company has right to payment upon shipment.

The Company records revenue ~~recognition guidance.~~net of sales tax, value added tax, excise tax and other taxes collected concurrent with product sales. The ~~accounting standard~~impact of such taxes on product sales is ~~effective~~immaterial.

The Company warrants its products to be free of defects generally for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. ASU No. 2014-09 provides for onea period of ~~two methods~~three years. The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of ~~transition: retrospective application to each prior period presented; or recognition~~revenues. Warranty costs and the accrued warranty liability were not material as of March 31, 2023 and 2022.

Substantially all of the ~~cumulative effect~~Company’s revenue is derived from sales of ~~retrospective application~~SRAM products which represented approximately 97%, 97% and 98% of total revenues in the years ended March 31, 2023, 2022 and 2021, respectively.

Nokia, the Company’s largest customer, purchases products directly from the Company and through contract manufacturers and distributors. Based on information provided to the Company by its contract manufacturers and distributors, purchases by Nokia represented approximately 17%, 29% and 39% of the ~~new standard~~Company’s net revenues in fiscal 2023, 2022 and 2021, respectively.

See “Note 13 - Segment and Geographic Information” for revenue by shipment destination.

The following table presents the ~~period of initial application. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.~~ ~~In March, April and May 2016, the FASB issued additional updates to the new~~Company’s revenue standard relating to reporting revenue on a gross versus net basis, identifying performance obligations and licensing arrangements, and narrow-scope improvements and practical expedients, respectively. The Company is in the process of assessing the impact this additional guidance is expected to have upon adoption, including determining the adoption method.disaggregated by customer type.


	Year Ended March 31,
	2023		2022		2021

	(In thousands)
Contract manufacturers	$	5,882	$	10,354	$	12,127
Distribution		23,023		22,289		15,172
OEMs		786		741		430
	$	29,691	$	33,384	$	27,729

NOTE 2—3—NET LOSS PER COMMON SHARE

The Company uses the treasury stock method to calculate the weighted average shares used in computing diluted net loss per share.The following table sets forth the computation of basic and diluted net loss per share:


	Year Ended March 31,
	2023		2022		2021

	(In thousands, except per share amounts)
Net loss	$	(15,977)	$	(16,368)	$	(21,505)

Denominators:
Weighted average shares—Basic		24,595		24,303		23,671
Dilutive effect of employee stock options		—		—		—
Dilutive effect of employee stock purchase plan options		—		—		—
Weighted average shares—Dilutive		24,595		24,303		23,671
Net loss per common share—Basic	$	(0.65)	$	(0.67)	$	(0.91)
Net loss per common share—Diluted	$	(0.65)	$	(0.67)	$	(0.91)

Year Ended March 31,

2016

2015

2014

(In thousands, except per share amounts)
Net loss

$
(2,170)

$
(4,978)

$
(6,189)

Denominators:

Weighted average shares—Basic

22,593

25,029

27,505
Dilutive effect of employee stock options

-

-

-
Dilutive effect of employee stock purchase plan options

-

-

-
Weighted average shares—Dilutive

22,593

25,029

27,505
Net loss per common share—Basic

$
(0.10)

$
(0.20)

$
(0.23)
Net loss per common share—Diluted

$
(0.10)

$
(0.20)

$
(0.23)

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The following shares of common stock ~~underlying outstanding stock options, determined~~(determined on a weighted average ~~basis,~~basis) were excluded from the computation of diluted net loss per common share as they had an anti-dilutive effect:

Year Ended March 31,

2016

2015

2014

(In thousands)
Shares underlying options

5,407

3,851

2,911


	Year Ended March 31,
	2023	2022	2021

	(In thousands)
Shares underlying options and ESPP shares	8,531	6,405	4,607

NOTE 4—BALANCE SHEET DETAIL


	March 31,
	2023		2022

	(In thousands)
Inventories:
Work-in-progress	$	3,629	$	3,085
Finished goods		2,767		1,555
Inventory at distributors		19		15
	$	6,415	$	4,655


	March 31,
	2023		2022

	(In thousands)
Accounts receivable, net:
Accounts receivable	$	3,531	$	4,599
Less: Allowances for doubtful accounts and other		(60)		(81)
	$	3,471	$	4,518


	March 31,
	2023		2022

	(In thousands)
Prepaid expenses and other current assets:
Prepaid tooling and masks	$	333	$	68
Other receivables		156		226
Other prepaid expenses and other current assets		925		1,261
	$	1,414	$	1,555

6566

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	March 31,
	2023		2022

	(In thousands)
Property and equipment, net:
Computer and other equipment	$	19,188	$	18,415
Software		4,428		4,425
Land		3,900		3,900
Building and building improvements		3,741		3,735
Furniture and fixtures		102		102
Leasehold improvements		910		878
		32,269		31,455
Less: Accumulated depreciation		(24,846)		(24,096)
	$	7,423	$	7,359

~~NOTE 3—BALANCE SHEET DETAIL~~

March 31,

2016

2015

(In thousands)
Inventories:

Work-in-progress

$
1,697

$
2,422
Finished goods

5,011

5,362
Inventory at distributors

466

628

$
7,174

$
8,412

March 31,

2016

2015

(In thousands)
Accounts receivable, net:

Accounts receivable

$
7,578

$
8,360
Less: Allowances for sales returns, doubtful accounts and other

(100)

(103)

$
7,478

$
8,257

March 31,

2016

2015

(In thousands)
Prepaid expenses and other current assets:

Prepaid tooling and masks

$
1,224

$
1,208
Prepaid income taxes

-

139
Other receivables

230

350
Other prepaid expenses

744

600

$
2,198

$
2,297

March 31,

2016

2015

(In thousands)
Property and equipment, net:

Computer and other equipment

$
18,394

$
17,264
Software

4,793

4,792
Land

3,900

3,900
Building and building improvements

2,256

2,256
Furniture and fixtures

114

110
Leasehold improvements

687

791

30,144

29,113
Less: Accumulated depreciation and amortization

(21,491)

(20,405)

$
8,653

$
8,708

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Depreciation ~~and amortization~~ expense was ~~$1,459,000, $1,633,000~~$782,000, $771,000 and ~~$1,981,000~~$981,000 for the years ended March 31, ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~,2021, respectively.

March 31,

2016

2015

(In thousands)
Other assets:

Non-current deferred income taxes

$
-

$
27
Deposits

3,086

78

$
3,086

$
105

The following table summarizes the components of intangible assets and related accumulated amortization balances at March 31, ~~2016~~2023 and ~~2015,~~2022, respectively (in thousands):


	As of March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets:
Product designs	$	590	$	(590)	$	—
Patents		4,220		(2,430)		1,790
Software		80		(80)		—
Total	$	4,890	$	(3,100)	$	1,790


	As of March 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets:
Product designs	$	590	$	(590)	$	—
Patents		4,220		(2,197)		2,023
Software		80		(80)		—
Total	$	4,890	$	(2,867)	$	2,023

As of March 31, 2016

Gross

Carrying

Accumulated

Net Carrying

Amount

Amortization

Amount
Intangible assets:

Product designs

$
590

$
(555)

$
35
Patents

4,220

(604)

3,616
Software

80

(80)

-
Total

$
4,890

$
(1,239)

$
3,651

As of March 31, 2015

Gross

Carrying

Accumulated

Net Carrying

Amount

Amortization

Amount
Intangible assets:

Product designs

$
590

$
(470)

$
120
Patents

720

(447)

273
Software

80

(80)

-
Total

$
1,390

$
(997)

$
393

Amortization of intangible assets of ~~$242,000~~$233,000, $233,000 and ~~171,000~~$233,000 was included in cost of revenues for the years ended March 31, ~~2016~~2023, 2022 and ~~2015, respectively~~.

2021, respectively.

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As of March 31, ~~2016~~,2023, the estimated future amortization expense of intangible assets in the table above is as follows (in thousands):


Fiscal year ending March 31,
2024	$	233
2025		233
2026		233
2027		233
2028		233
Thereafter		625
Total	$	1,790


	March 31,
	2023		2022

	(In thousands)
Accrued expenses and other liabilities:
Accrued compensation	$	3,441	$	5,524
Accrued commissions		214		232
Income taxes payable		345		127
Miscellaneous accrued expenses		1,168		967
	$	5,168	$	6,850

Year Ending March 31,

2017

$
349
2018

313
2019

267
2020

233
2021

233
Thereafter

2,256
Total

$
3,651

March 31,

2016

2015

(In thousands)
Accrued expenses and other liabilities:

Accrued compensation

$
3,082

$
3,386
Accrued professional fees

83

1,380
Accrued commissions

284

268
Accrued royalties

21

26
Other accrued expenses

928

877

$
4,398

$
5,937

On November 30, 2022, the Company announced cost reduction initiatives which included an approximate 15% reduction in the Company’s global workforce. The Company incurred $0.3 million in severance related charges during fiscal 2023 including $0.1 million recorded as cost of revenues and $0.2 million recorded as selling, general and administrative expense in the condensed consolidated statements of operations. The Company expects to incur an additional $0.3 million in severance related charges during the first half of fiscal 2024. There were no severance charges accrued as of March 31, 2023 as the terms of the severance benefits have not been communicated to employees expected to be impacted. There was no accrued severance as of March 31, 2022 and there were no severance charges incurred during the year ended March 31, 2022.

NOTE 5—GOODWILL

March 31,

2016

2015

(In thousands)
Other accrued expenses:

Contingent consideration

$
5,856

$
-
Escrow indemnity accrual

484

-
Other long-term accrued liabilities

152

-

$
6,492

$
-

~~NOTE 4—GOODWILL~~

Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed in a business combination. The Company tests for goodwill impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset is more likely than not impaired. The Company has one reporting unit. The Company assesses goodwill for impairment on an annual basis on the last day of February in the fourth quarter of its fiscal year.

~~As of March 31, 2016, the~~Goodwill Impairment Test

The Company had a goodwill balance of $8.0 ~~million.~~million as of both March 31, 2023 and 2022. The goodwill resulted from the acquisition of MikaMonu Group Ltd. (“MikaMonu”) in fiscal 2016.

~~The Company’s~~During each of the three months ended December 31, 2022 and March 31, 2023, we identified sustained declines in our stock price that resulted in our market capitalization ~~declined~~being below the carrying value of our stockholders’ equity. We concluded the sustained declines in ~~fiscal 2016. A significant decline in a company’s~~our stock price ~~may suggest~~ were triggering events and proceeded with quantitative goodwill impairment assessments. The results of the quantitative goodwill impairment assessments

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that ~~an adverse change in the business climate may have caused~~we performed indicated the fair value of one or more reporting units to fall below their carrying value. Significant judgment has been applied to determine whether stock price declines are a short-term swing or a long-term trend. The Company believes that the decline in its stock price will not be sustained.

~~Table of Contents~~

The Company utilized a two-step quantitative analysis to complete its annual impairment test during the fourth quarter of fiscal 2016 and concluded that there was no impairment, as the fair value of itsour sole reporting unit exceeded its carrying ~~value.~~ value as of December 31, 2022, February 28, 2023 and March 31, 2023.

The ~~Company determined that the second step~~quantitative impairment assessments performed as of December 31, 2022 and March 31, 2023, utilized an equal weighting of the income approach and market comparable approach. The analysis required the comparison of the Company’s carrying value with its fair value, with an impairment ~~test was not necessary.~~recorded for any excess of carrying value over the fair value. The ~~Company believes that~~income approach utilized a discounted cash flow analysis to determine the fair value ~~established during~~of the ~~fiscal 2016 annual~~ Company’s single reporting unit. Key assumptions used in the discounted cash flow analysis included, but are not limited to, a discount rate of approximately 22% to account for risk in achieving the forecast and a terminal growth rate for cash flows of 2%. The market comparable method was used to determine the fair value of the reporting unit by multiplying forecasted revenue by a market multiple. The revenue market multiple was calculated by comparing the enterprise value to revenue for comparable companies in the semiconductor industry and then applying a control premium. The equal weighting of the income approach and the market comparable method was then reconciled to the market approach. The market approach was calculated by multiplying the average closing share price of the Company’s common stock for the 30 days prior to the measurement date, by the number of outstanding shares of the Company’s common stock and adding a control premium that reflected the premium a hypothetical buyer might pay. The control premium was estimated using historical acquisition transactions in the semiconductor industry over the past five years. The results of the quantitative analysis performed indicated the fair value of the reporting unit exceeded its carrying value. As a result, the Company concluded there was no goodwill impairment ~~testing was reasonable,~~as of December 31, 2022 and ~~no triggering event has taken place subsequent to~~March 31, 2023.

A number of significant assumptions and estimates are involved in the ~~fiscal 2016 annual assessment. However,~~income approach and the market comparable method. The income approach assumes the future cash flows reflect market expectations. The market comparable method requires an estimate of a ~~sustained~~revenue market multiple and an appropriate control premium. These fair value measurements require significant judgements using Level 3 inputs, such as discounted cash flows from operations and revenue forecasts, which are not observable from the market, directly or indirectly. There is uncertainty in the projected future cash flows used in the Company’s impairment analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, if there is a further decline in the Company’s stock price, ~~could constitute a triggering event that would require assessment~~or if the assumptions used in the analysis change in the future, the Company may be required to recognize impairment charges in future periods. Key assumptions in the market approach include determining the control premium. The Company believes its procedures for ~~potential goodwill impairment in fiscal 2017.~~determining fair value are reasonable and consistent with current market conditions as of March 31, 2023.

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NOTE 5—6—INCOME TAXES

Loss before income taxes and the provision for income ~~tax expense~~taxes consists of the following:


							Year Ended March 31,
							2023		2022		2021


	Year Ended March 31,
	2016		2015		2014
	(In thousands)
							(In thousands)
Loss before income taxes:
U.S.	$	(3,426)	$	(6,910)	$	(6,388)	$	(10,992)	$	(11,132)	$	(10,775)
Foreign		615		1,257		912		(4,613)		(5,281)		(10,395)
	$	(2,811)	$	(5,653)	$	(5,476)
							$	(15,605)	$	(16,413)	$	(21,170)
Current income tax expense (benefit):
U.S. federal	$	(354)	$	(619)	$	(1,782)	$	—	$	—	$	(379)
Foreign		15		(2)		113		382		(48)		714
State		(289)		(54)		(82)		1		1		(1)
		(628)		(675)		(1,751)
								383		(47)		334
Deferred income tax expense (benefit):
U.S. federal		(3)		-		1,892		(7)		2		1
Foreign		(10)		-		-
State		-		-		572		(4)		—		—
		(13)		-		2,464
Provision (benefit) for income tax	$	(641)	$	(675)	$	713
								(11)		2		1
Provision (benefit) for income taxes							$	372	$	(45)	$	335

~~Income~~The provision for income tax ~~expense~~ differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pre-tax ~~income~~loss as follows:


							Year Ended March 31,
							2023		2022		2021


	Year Ended March 31,
	2016		2015		2014
	(In thousands)
							(In thousands)
U.S. Federal taxes at statutory rate	$	(956)	$	(1,922)	$	(1,862)	$	(3,277)	$	(3,447)	$	(4,446)
State taxes, net of federal benefit		(204)		(39)		490		(3)		1		(1)
Settlement of uncertain tax positions								—		—		524
Stock-based compensation		470		447		392		463		605		482
Tax credits		(539)		(472)		(338)		(487)		(497)		(509)
Foreign tax rate differential		(368)		(916)		(650)		1,350		1,277		2,419
GILTI tax								1,262		—		—
Tax exempt interest		(9)		(20)		(29)		—		—		(5)
Other		6		(35)		(72)
		(1,600)		(2,957)		(2,069)
Tax remeasurement								—		(220)		—
Non-deductible expenses and other								1		4		(2)
								(691)		(2,277)		(1,538)
Valuation allowance		959		2,282		2,782		1,063		2,232		1,873
	$	(641)	$	(675)	$	713
							$	372	$	(45)	$	335

6970

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Deferred tax assets and deferred tax liabilities consist of the following:


					March 31,
					2023		2022


	March 31,
	2016		2015
	(In thousands)
					(In thousands)
Deferred tax assets:
Deferred revenue	$	231	$	110
Tax credits		2,706		1,766	$	8,714	$	7,861
Net operating losses		1,356		1,165		4,064		5,207
Capitalized research and development						2,106		—
Stock-based compensation		1,550		1,387		1,119		1,171
Property and equipment		297		193		551		771
Unrecognized gains						10		22
Other reserves and accruals		1,175		1,407		1,073		1,384
Total deferred tax assets	$	7,315	$	6,028		17,637		16,416
Less valuation allowance						(17,480)		(16,183)
Deferred tax assets, net						157		233
Deferred tax liabilities:
Intangible assets	$	(856)	$	-
Unrecognized gains		(14)		(11)
Leased assets						(169)		(244)
Total deferred tax liabilities	$	(870)	$	(11)		(169)		(244)

Net deferred tax assets	$	6,445	$	6,017
Valuation allowance		(7,256)		(6,017)
Net deferred tax liability	$	(811)	$	-	$	(12)	$	(11)

~~U.S. income taxes and withholding taxes have not been provided on a cumulative total of $40.1 million of undistributed earnings for certain non-U.S. subsidiaries.~~ The Company currently intends to indefinitely reinvest ~~these~~ earnings in operations outside the United States. No provision has been made for state income taxes that might be payable upon remittance of such earnings, nor is it practicable to determine the amount of such potential liability.

The long-term portion of the ~~Company's~~Company’s unrecognized tax benefits at March 31, ~~2016~~2023 and ~~2015~~2022 was ~~$116,000 and $780,000, respectively,~~$0 for both years, of which the timing of the resolution is uncertain.As of March 31, ~~2016,~~ ~~$1,943,000~~2023 and 2022, $3.7 million and $3.5 million, respectively, of unrecognized tax benefits had been recorded as a reduction to net deferred tax assets. ~~As of~~ ~~March 31, 2016, the Company’s~~ ~~net deferred tax assets of $6.4 million are subject to a full valuation allowance.~~ It is possible, however, that some months or years may elapse before an uncertain position for which the Company has established a reserve is resolved. A reconciliation of unrecognized tax benefits is as follows:


							Year Ended March 31,
							2023		2022		2021


	Year Ended March 31,
	2016		2015		2014
	(In thousands)
							(In thousands)
Unrecognized tax benefits, beginning of period	$	1,982	$	2,386	$	2,760	$	3,502	$	3,273	$	3,321
Additions based on tax positions related to current year		453		292		250		221		229		233
Additions based on tax positions related to prior years		183		-		13
Settlements during the current year		-		-		-
Lapses during the current year applicable to statutes of limitations		(563)		(696)		(637)
Settlements during the period								—		—		(203)
Reductions based on tax positions related to prior years								—		—		(78)
Unrecognized tax benefits, end of period	$	2,055	$	1,982	$	2,386	$	3,723	$	3,502	$	3,273

~~The~~There is no unrecognized tax benefit balance as of March 31, ~~2016~~ of ~~$112,000~~2023 that would affect the ~~Company's~~Company’s effective tax rate if ~~recognized.~~recognized after considering the valuation allowance. At March 31, 2023, due to the Company’s valuation allowance in the United States, there was no net income tax effect related to Global intangible low-taxed income (“GILTI”) in the Company’s fiscal year ended March 31, 2023.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted. The CARES Act, along with the Consolidated Appropriations Act (“CAA”) and the American Rescue Plan Act of 2021 (“ARPA”) is an emergency economic stimulus package passed in response to the COVID-19 global pandemic that includes aid to small businesses in the form of loans and grants and other efforts to stabilize the U.S. economy. Also included in the CARES Act are numerous income tax provisions including changes to the net operating loss

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rule. During fiscal year 2021, the Company recorded a $378,000 tax benefit resulting from the carryback of the Company’s fiscal year 2020 federal net operating loss to fiscal year 2018 due to the five-year net operating loss carryback provision from the March 2020 CARES Act. The Company has not filed for funding related to the CARES Act, CAA and ARPA.

Management believes ~~that it is reasonably possible~~ that within the next twelve months the Company ~~could~~will have ano material reduction in uncertain tax benefits, ~~of up to $16,000,~~ including interest and penalties, as a result of the lapse of statute of limitations.

The ~~Company's~~Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes in the Consolidated Statements of Operations.

The Company's federal and state net operating loss carryforwards for income tax purposes are approximately $13.1 million and $22.1 million, respectively, at March 31, 2023. The Company's federal net operating loss carryforwards do not expire and the Company’s state tax net operating loss carryforwards expire beginning in 2034. The Company's federal and state tax credit carryforwards for income tax purposes are approximately $4.6 million and $5.1 million respectively, at March 31, 2023. The Company's federal tax credit carryforwards expire beginning in 2033. The Company's state tax credit carryforwards have no expiration date.Utilization of the Company’s net operating loss carryforwards and research tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation could result in the expiration of the net operating loss carryforwards and research tax credit carryforwards before utilization. The Company has not performed an analysis to determine if a limitation applies and whether the limitation would cause the net operating losses to expire unutilized.

Due to historical losses in the U.S., the Company has a full valuation allowance on its U.S. federal and state deferred tax assets. As of March 31, 2023 and 2022, the Company’s net deferred tax assets of $17.5 million and $16.2 million, respectively, were subject to a valuation allowance of $17.5 million and $16.2 million, respectively. The net valuation allowance increased by $1.3 million and $3.2 million in fiscal 2023 and 2022, respectively. As of March 31, 2023 and 2022, the Company’s net deferred tax liabilities were $12,000 and $11,000, respectively. The deferred tax assets consist primarily of the tax credits and federal and state net operating losses. Realization of deferred tax assets is dependent upon future taxable income, if any, the amount and timing of which are uncertain. In assessing the realizability of deferred tax assets, management determined that it is more likely than not that no deferred tax assets will be realized. Therefore, the Company has provided a full valuation allowance against these deferred tax assets.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. ~~As of March 31, 2016, the Company maintained a full valuation allowance of $7.3 million for deferred tax assets that are not expected to be utilized in future years.~~ Fiscal years 2013 through ~~2016~~2022 remain open to examination by the federal tax authorities and fiscal years ~~2011~~2012 through ~~2016~~2022 remain open to examination by the state of California. Fiscal years 2020, 2021, 2022 and 2023 are subject to audit by the Israeli tax authorities. During the quarter ended June 30, 2020, the Company settled an income tax audit in Israel for fiscal years 2016 through 2019 that resulted in a discrete tax provision of $479,000 and a tax liability of $713,000 as of June 30, 2020 that was paid in the quarter ended September 30, 2020.

NOTE 6—7—FINANCIAL INSTRUMENTS

Fair value measurements

Authoritative accounting guidance for fair value measurements provides a framework for measuring fair value and related ~~disclosure.~~disclosures. The guidance applies to all financial assets and financial liabilities that are measured on a recurring basis. The guidance requires fair value measurement to be classified and disclosed in one of the following three categories:

Level 1: Valuations based on quoted prices in active markets for identical assets and liabilities. The fair value of available-for-sale securities included in the Level 1 category is based on quoted prices that are readily and

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regularly available in an active market.As of March 31, ~~2016~~,2023, the Level 1 category included money market funds of ~~$6.6~~$7.8 million, which were included in cash and cash equivalents on the Consolidated Balance Sheets.

Level 2: Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. The fair value of available-for-sale securities included in the Level 2 category is based on the market values obtained from an independent pricing service that were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from ~~well established~~well-established independent pricing vendors and broker-dealers. As of March 31, ~~2016~~,2023, the Level 2 category included short-term investments of ~~$23.2 million and long term-investments of $11.1~~$3.4 million which were primarily comprised of certificates of deposit, ~~corporate debt securities and government~~supranational obligations and agency securities. There were no long-term investments as of March 31, 2023.

Level 3: Valuations based on inputs that are unobservable and involve management judgment and the reporting ~~entity's~~entity’s own assumptions about market participants and pricing. As of March 31, ~~2016~~,2023, the Company’s Level 3 financial instruments measured at fair value on the Consolidated Balance Sheets consisted of the contingent consideration liability related to the MikaMonu acquisition. The fair value of the contingent consideration liability was initially determined as of the acquisition date using unobservable inputs. These inputs include the estimated amount and timing of future cash flows, the probability of achievement of the forecast and a risk-adjusted discount rate of approximately 14.8% used to adjust the probability-weighted cash flows to their present value. Significant increases (decreases) to the estimated amount and timing of future cash flows or the probability of achievement of the forecast would result in a significantly higher (lower) fair value measurement. Conversely, a significant increase (decrease) in the risk-adjusted discount rate would result in a significantly (lower) higher fair value measurement. Generally, changes used in the assumptions for future cash flows and probability of achievement of the forecast would be accompanied by a directionally similar change in the fair value measurement and expense. Conversely, changes in the risk-adjusted discount rate would be accompanied by a directionally opposite change in the related fair value measurement and expense. The continued appropriateness of the valuation model selected or any decision to change the valuation model may also lead to changes in fair value measurement. Subsequent to the acquisition date, at each reporting period, the contingent consideration liability is re-measured to fair value with changes recorded in selling, general and administrative expenses in the Consolidated Statements of Operations. During the most recent re-measurement of the contingent consideration liability as of March 31, 2023, the Company used a risk-adjusted discount rate of approximately 15.2% to adjust the probability-weighted cash flows to their present value using probabilities ranging from 15% to 90% for the remaining contingent events. The contingent consideration liability is included in contingent consideration, non-current on the Consolidated Balance Sheet at March 31, 2023 and 2022 in the amount of $1.1 million and $2.7 million, respectively.

Refer to Note ~~11,~~14, “Acquisition” for more information.

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The fair value of financial assets measured on a recurring basis is as follows (in thousands):


			Fair Value Measurements at Reporting Date Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical Assets		Observable		Unobservable
			and Liabilities		Inputs		Inputs
	March 31, 2023		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds	$	7,796	$	7,796	$	—	$	—
Marketable securities		3,363		—		3,363		—
Total	$	11,159	$	7,796	$	3,363	$	—

Liabilities:
Contingent consideration	$	1,052	$	—	$	—	$	1,052


			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets and Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	March 31, 2016		(Level 1)		(Level 2)		(Level 3)

											Fair Value Measurements at Reporting Date Using
											Quoted Prices
											in Active		Significant
											Markets for		Other		Significant
											Identical Assets		Observable		Unobservable
											and Liabilities		Inputs		Inputs
									March 31, 2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds	$	6,611	$	6,611		—	$	—	$	16,142	$	16,142	$	—	$	—
Marketable securities		34,297		—		34,297		—		10,337		—		10,337		—
Total	$	40,908	$	6,611	$	34,297	$	—	$	26,479	$	16,142	$	10,337	$	—

Liabilities:
Contingent consideration									$	2,738	$	—	$	—	$	2,738

Fair Value Measurements at Reporting Date Using

Quoted Prices in Active Markets for Identical Assets and Liabilities

Significant Other Observable Inputs

Significant Unobservable Inputs


March 31, 2015

(Level 1)

(Level 2)

(Level 3)

Assets:

Money market funds

$
4,409

$
4,409

$
—

$
—

Marketable securities

43,941

—

43,941

—

Total

$
48,350

$
4,409

$
43,941

$
—

The following table sets forth the changes in fair value of contingent consideration for the fiscal years ended March 31, 2023, 2022 and 2021, respectively:


	Year Ended March 31,
	2023		2022		2021

	(In thousands)
Contingent consideration, beginning of period	$	2,738	$	4,225	$	3,898
Change due to accretion		222		88		98
Re-measurement of contingent consideration		(1,908)		(1,575)		229
Contingent consideration, end of period	$	1,052	$	2,738	$	4,225

Short-term and long-term investments

All of the ~~Company's~~Company’s short-term and long-term investments are classified as available-for-sale. Available-for-sale debt securities with maturities greater than twelve months are classified as long-term investments when they are not intended for use in current operations. Investments in available-for-sale securities are reported at fair value with unrecognized gains (losses), net of tax, as a component of accumulated other comprehensive ~~income~~loss on the Consolidated Balance Sheets. The Company had money market funds of ~~$6.6~~$7.8 million and ~~$4.4~~$16.1 million at March

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31, 2023 and March 31, ~~2016~~ ~~and~~ ~~March 31, 2015~~,2022, respectively, included in cash and cash equivalents on the Consolidated Balance Sheets. The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when the declines are determined to be other-than-temporary.

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The following table summarizes the ~~Company's~~Company’s available-for-sale investments:

March 31, 2016

Gross

Gross

Unrealized

Unrealized

Fair

Cost

Gains

Losses

Value

(In thousands)
Short-term investments:

State and municipal obligations

$
1,011

$
-

$
-

$
1,011
Corporate notes

5,680

-

(3)

5,677
Agency bonds

2,001

1

-

2,002
Foreign government obligations

2,695

3

-

2,698
Certificates of deposit

11,750

12

-

11,762
Total short-term investments

$
23,137

$
16

$
(3)

$
23,150
Long-term investments:

Corporate notes

$
558

$
1

$
-

$
559
Certificates of deposit

8,500

24

(1)

8,523
Agency bonds

1,000

4

-

1,004
Foreign government obligations

1,060

1

-

1,061
Total long-term investments

$
11,118

$
30

$
(1)

$
11,147


	March 31, 2023
			Gross		Gross
			Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

	(In thousands)
Short-term investments:
Certificates of deposit	$	1,750	$	—	$	(13)	$	1,737
Supranational obligations		654		—		(17)		637
Agency bonds		999		—		(10)		989
Total short-term investments	$	3,403	$	—	$	(40)	$	3,363


	March 31, 2022
			Gross		Gross
			Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

	(In thousands)
Short-term investments:
Certificates of deposit	$	4,000	$	—	$	(11)	$	3,989
Supranational obligations		1,007		—		(7)		1,000
Agency bonds		2,011		—		(8)		2,003
Total short-term investments	$	7,018	$	—	$	(26)	$	6,992
Long-term investments:
Certificates of deposit	$	1,750	$	—	$	(18)	$	1,732
Supranational obligations		651		—		(17)		634
Agency bonds		997		—		(18)		979
Total long-term investments	$	3,398	$	—	$	(53)	$	3,345

March 31, 2015

Gross

Gross

Unrealized

Unrealized

Fair

Cost

Gains

Losses

Value

(In thousands)
Short-term investments:

State and municipal obligations

$
6,810

$
-

$
-

$
6,810
Corporate notes

7,366

10

-

7,376
Agency bonds

1,006

-

-

1,006
Certificates of deposit

7,000

9

-

7,009
Total short-term investments

$
22,182

$
19

$
-

$
22,201
Long-term investments:

State and municipal obligations

$
1,053

$
4

$
-

$
1,057
Corporate notes

4,232

-

(10)

4,222
Certificates of deposit

9,750

24

(1)

9,773
Agency bonds

4,003

4

(2)

4,005
Other

2,684

-

(1)

2,683
Total long-term investments

$
21,722

$
32

$
(14)

$
21,740

The ~~Company's~~following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position as of March 31, 2023 and 2022, respectively.


	March 31, 2023
	Less Than 12 Months				12 Months or Greater				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Loss		Value		Loss		Value		Loss

	(In thousands)
Certificates of deposit	$	—	$	—	$	1,737	$	(13)	$	1,737	$	(13)
Agency bonds		—		—		990		(10)		990		(10)
Supranational obligations		—		—		636		(17)		636		(17)
	$	—	$	—	$	3,363	$	(40)	$	3,363	$	(40)

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	March 31, 2022
	Less Than 12 Months				12 Months or Greater				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Loss		Value		Loss		Value		Loss

	(In thousands)
Certificates of deposit	$	4,974	$	(26)	$	246	$	(3)	$	5,220	$	(29)
Agency bonds		2,982		(26)		—		—		2,982		(26)
Supranational obligations		1,634		(24)		—		—		1,634		(24)
	$	9,590	$	(76)	$	246	$	(3)	$	9,836	$	(79)

The Company’s investment portfolio consists of both corporate and governmental securities that have a maximum maturity of three years. All unrealized gains and losses are due to changes in interest rates and bond yields. Subject to normal credit risks, the Company has the ability to realize the full value of all these investments upon maturity.

At March 31, ~~2016~~,2023 and 2022, the deferred tax ~~liability~~asset related to unrecognized gains and losses on short-term and long-term investments was ~~$14,000. At~~ $10,000 and $22,000, respectively.

As of March 31, ~~2015, the deferred tax liability related to unrecognized gains and losses on short-term and long-term investments was $11,000.~~

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~~As of~~ ~~March 31, 2016~~,2023, contractual maturities of the ~~Company's~~Company’s available-for-sale ~~non-equity~~ investments were as follows:


							Fair
					Cost		Value


			Fair
	Cost		Value
	(In thousands)
					(In thousands)
Maturing within one year	$	23,137	$	23,150	$	3,403	$	3,363
Maturing in one to three years		11,118		11,147		—		—
Maturing in more than three years		-		-
	$	34,255	$	34,297
					$	3,403	$	3,363

NOTE 8—LEASES

~~NOTE 7—COMMITMENTS AND CONTINGENCIES~~

~~Operating leases~~

The Company ~~leases office space and equipment under noncancelable~~has operating leases ~~with various expiration dates through February 2018. Rent expense~~ for ~~the years ended~~ ~~March 31, 2016~~, ~~2015~~corporate offices, and ~~2014~~ ~~was $348,000, $354,000~~research and ~~$368,000, respectively.~~development facilities. The ~~terms of the facility~~Company’s leases ~~provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid.~~

~~Future minimum lease payments under noncancelable operating leases with~~have remaining lease terms ~~in excess~~ of ~~one year at~~ 5 months to 49 months, some of which include options to extend for up to 5 years.

Supplemental balance sheet information related to leases was as follows:


	As of		As of
	March 31, 2023		March 31, 2022

	(In thousands)
Operating Leases
Operating lease right-of-use assets	$	684	$	889

Lease liabilities-current	$	413	$	537
Lease liabilities-non-current		238		361
Total operating lease liabilities	$	651	$	898

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The following table provides the details of lease costs:


	Year Ended March 31,
	2023		2022

	(In thousands)
Operating lease cost (fixed)	$	592	$	429
Short-term lease cost		31		254
	$	623	$	683

The following table provides other information related to leases:


	Year Ended March 31,
	2023		2022

	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	589	$	436

Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	376	$	585

Weighted-average remaining lease term (years):
Operating leases		2.42		1.70

Weighted-average discount rate:
Operating leases		4.37%		4.25%

The following table provides the maturities of the Company’s operating lease liabilities as of March 31, ~~2016~~ ~~are as follows:~~2023:

Operating

Leases

(In thousands)
Fiscal Year Ending March 31,

2017

$
304
2018

143
2019

-
2020

-
2021

-
Thereafter

-
Total

$
447


	Operating Lease
	Liabilities
Fiscal Year	(In thousands)
2024	$	420
2025		84
2026		86
2027		89
2028		7
Total undiscounted future cash flows		686
Less: Imputed interest		(35)
Present value of undiscounted future cash flows	$	651

Presentation on statement of financial position
Current	$	413
Non-current	$	238

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NOTE 9—COMMITMENTS AND CONTINGENCIES

Royalty obligations

The Company has license agreements that require it to pay royalties on the sale of products using the licensed technology. Royalty expense for the years ended March 31, ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~2021 was ~~$44,000,~~$39,000,$~~53,000~~32,000 and ~~$59,000,~~$35,000, respectively, and was included within cost of revenues.

Indemnification obligations

The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the Company, under which the Company customarily agrees to hold the other party harmless against losses

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arising from a breach of representations and covenants related to such matters as title to assets sold and certain intellectual property rights. In each of these circumstances, payment by the Company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other ~~party's~~party’s claims. Further, the ~~Company's~~Company’s obligations under these agreements may be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments made by it under these agreements.

It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the ~~Company's~~Company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material effect on its business, financial condition, cash flows or results of operations. The Company believes that if it were to incur a loss in any of these matters, such loss should not have a material effect on its business, financial condition, cash flows or results of operations.

Product warranties

The Company warrants its products to be free of defects generally for a period of three years. The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of revenues. Warranty costs and the accrued warranty liability were not ~~significant~~material as of March 31, 2023 and 2022 and for the years ended March 31, ~~2016~~, ~~2015~~2023, 2022 or ~~2014~~.2021.

~~Legal proceedings~~

In March 2011, Cypress Semiconductor Corporation, a semiconductor manufacturer, filed a lawsuit against the Company in the United States District Court for the District of Minnesota alleging that the Company’s products, including its SigmaDDR and SigmaQuad families of Very Fast SRAMs, infringe five patents held by Cypress. The complaint sought unspecified damages for past infringement and a permanent injunction against future infringement.

On June 10, 2011, Cypress filed a complaint against the Company with the United States International Trade Commission (the “ITC”). The ITC complaint, as subsequently amended, alleged infringement by the Company of three of the five patents involved in the District Court case and one additional patent and also alleged infringement by three of the Company’s distributors and 11 of its customers who allegedly incorporate the Company’s SRAMs in their products. The ITC complaint sought a limited exclusion order excluding the allegedly infringing SRAMs, and products containing them, from entry into the United States and permanent orders directing the Company and the other respondents to cease and desist from selling or distributing such products in the United States. On July 21, 2011, the ITC formally instituted an investigation in response to Cypress’s complaint. On June 7, 2013, the ITC announced that the full Commission had affirmed the determination of Chief Administrative Judge Charles E. Bullock that GSI’s SRAM devices, and products containing them, do not infringe the Cypress patents and that Cypress had failed to establish existence of a domestic industry that practices the patents. Moreover, the Commission reversed a portion of Judge Bullock’s determination with respect to the validity of the patents, finding the asserted claims of one of the patents to have been anticipated by prior art and, therefore, invalid. The Commission ordered the investigation terminated, and Cypress did not appeal the ruling.

The Minnesota District Court case had been stayed pending the conclusion of the ITC proceeding. Following the termination of the ITC investigation, the stay was lifted. On May 1, 2013, Cypress filed an additional lawsuit in the United States District Court for the Northern District of California alleging infringement by the Company’s products of five additional Cypress patents. Like the Minnesota case, the complaint in the California lawsuit sought unspecified damages for past infringement and a permanent injunction against future infringement. The Company filed answers in both cases denying liability and asserting affirmative defenses. On August 7, 2013, the parties stipulated that the claims in the Minnesota case with respect to three of the asserted patents would be dismissed without prejudice and that the claims with respect to the remaining two patents would be transferred to the Northern

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~~District of California and consolidated with the pending California case. On August 20, 2013, the Court in the California case ordered the cases consolidated.~~NOTE 10—COMMON STOCK

The Company did not record any loss contingency during fiscal 2014, fiscal 2015 or fiscal 2016 in connection with these legal proceedings as the Company was unable to predict their outcome and could not estimate the likelihood or potential dollar amount of any adverse results.

On May 6, 2015, the Company and Cypress entered into a settlement agreement to resolve the patent infringement litigation and a separate lawsuit pending in the United States District Court for the Northern District of California in which the Company alleged that Cypress had violated federal and state antitrust laws. Under the settlement agreement:

~~Each of the parties agreed to dismiss its lawsuit with prejudice in consideration of the dismissal with prejudice of the lawsuit brought by the other party; and~~

~~Each party agreed to release all claims against the other with respect to issues raised in the two lawsuits.~~

~~The parties agreed that the settlement agreement was entered into to resolve disputed claims, and that each party denies any liability to the other party.~~

~~NOTE 8—COMMON STOCK~~

~~The Company's~~Company’s Certificate of Incorporation, as amended, authorizes the Company to issue 150,000,000 shares of $0.001 par value common stock.

~~On August 6, 2014, the Company completed a modified “Dutch auction” self-tender offer to repurchase for cash shares of its common stock.~~ The Company accepted for purchase and retirement an aggregate of 3,846,153 shares of its common stock at a final purchase price of $6.50 per share, for an aggregate cost of approximately $25 million, excluding fees and expenses related to the tender offer.

The Company’s board of directors has authorized the repurchase, at ~~management's~~management’s discretion, of shares of its common stock. Under the repurchase program, the Company may repurchase shares from time to time on the open market or in private transactions. The specific timing and amount of the repurchases will be dependent on market conditions, securities law limitations and other factors. The repurchase program may be suspended or terminated at any time without prior notice. Through March 31, ~~2016,~~2023, including the shares purchased in ~~the~~a modified “Dutch Auction” self-tender offer, the Company has repurchased and retired a total of ~~10,340,501~~12,004,779 shares at an average cost of ~~$5.18~~$5.06 per share for a total cost of ~~$53.5~~$60.7 million. At March 31, ~~2016,~~2023, management was authorized to repurchase additional shares with a value of up to ~~$1.5~~$4.3 million under the repurchase program.

~~NOTE 9—STOCK- BASED COMPENSATION~~

~~The 2000 Stock Option Plan~~

In February 2001, the Company adopted the 2000 Stock Option Plan (the "2000 Plan"). The 2000 Plan provided for the granting of stock options and stock purchase rights to employees, consultants and directors of the Company. Options granted under the 2000 Plan could be either incentive stock options ("ISOs") or nonstatutory stock options ("NSOs"). In December 2006, the Company's board of directors authorized an additional 500,000 shares of the Company's common stock to be reserved for issuance under the 2000 Plan. As of March 31, 2008, the Company had reserved 3,500,000 shares of common stock for issuance under the 2000 Plan.

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Options under the 2000 Plan could be granted for periods of up to ten years. However, in the case of ISOs granted to an optionee who, at the time the option was granted, owned stock representing more than 10% of the voting power of all classes of stock of the Company, the maximum term of an option was five years from the date of grant. The exercise price of an ISO or NSO could not be less than 100% and 85% of the estimated fair value of the shares as determined by the board of directors on the date of grant, respectively. However the exercise price of an ISO or NSO granted to a 10% or greater stockholder could not be less than 110% of the estimated fair value of the shares on the date of grant.NOTE 11—STOCK-BASED COMPENSATION

The 2007 Equity Incentive Plan

In January 2007, the ~~Company's~~Company’s board of directors approved the 2007 Equity Incentive Plan, (the ~~"Equity Plan"~~“2007 Plan”), which was subsequently approved by the ~~Company's~~Company’s stockholders in March 2007. A total of 3,000,000 shares of common stock were authorized and reserved for issuance under the ~~Equity~~2007 Plan. This reserve automatically ~~increases~~increased on April 1 of each year through 2017 by an amount equal to the smaller of (a) five percent of the number of shares of common stock issued and outstanding on the immediately preceding March 31, or (b) a lesser amount determined by the board of directors. ~~Appropriate adjustments will~~As described below, the 2007 Plan was terminated in August 2016 and no further awards may be ~~made in~~granted pursuant to the ~~number of authorized shares and other numerical limits in the Equity Plan and in outstanding awards to prevent dilution or enlargement of participants' rights in~~2007 Plan. In the event of a stock split or other change in the ~~Company's~~Company’s capital structure. Shares subject to awards which expire or are cancelled or forfeited will again become available for issuance under the Equity Plan. The shares available will not be reduced by awards settled in cash or by shares withheld to satisfy tax withholding obligations. Only the net number of shares issued upon the exercise of stock appreciation rights or options exercised by means of a net exercise or by tender of previously owned sharesstructure, appropriate adjustments will be ~~deducted from the shares available under the Equity Plan.~~

~~To enable compensation provided~~made in connection with certain types of awards intended to qualify as “performance-based” within the meaning of Section 162(m) of the Internal Revenue Code, the Equity Plan establishes limits on the maximum aggregate number of shares or dollar value for which awards may be granted to an employee in any fiscal year, as follows:

~~No more than 300,000 shares subject to stock options and stock appreciation rights.~~

~~No more than 100,000 shares subject to restricted stock and restricted stock unit awards.~~

For each full fiscal year of the Company contained in the performance period of the award, no more than 50,000 shares subject to performance share awards and other stock-based awards or more than $500,000 subject to performance unit awards and other cash-based awards.

~~In addition, to comply with applicable tax rules, the Equity Plan also limits~~ the number of ~~shares that may be issued upon the exercise~~outstanding awards to prevent dilution or enlargement of ISOs granted under the Equity Plan to 3,000,000, cumulatively increased on April 1 of each subsequent year through 2017, by an amount equal to the smallest of (a) five percent of the number of shares of common stock issued and outstanding on the immediately preceding March 31, (b) 1,500,000 shares, or (c) a lesser amount determined by the board of directors.participants’ rights.

Upon the adoption of the Equity Plan in March 2007, the 2000 Plan was terminated, no further options were granted under the 2000 Plan, the 535,597 shares that remained reserved for grant under the 2000 Plan were cancelled, and all subsequent grants of stock options were made pursuant to the Equity Plan.

Awards ~~may~~could be granted under the ~~Equity~~2007 Plan to the ~~Company's~~Company’s employees, including officers, directors, or consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. ~~To date, options~~Options granted to non-officer employees generally vest at the rate of 25% on the first anniversary and subsequent anniversaries of the date of grant, while grants to officers vest in full four years after the anniversary date of the ~~officer's~~

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officer’s employment that is closest to the date of grant. While the Company may grant ISOs only to employees, the Company may grant NSOs, stock appreciation rights, restricted stock purchase rights or bonuses, restricted stock units, performance shares, performance units and cash-based awards or other stock-based awards to any eligible participant. Non-employee director awards may be granted only to members of the Company's board of directors who, at the time of grant, are not employees. Deferred compensation awards may be granted only to officers, directors and selected members of management or highly compensated employees.

Only members of the board of directors who are not employees at the time of grant are eligible to participate in the nonemployee director awards component of the Equity Plan. The board or the compensation committee shall set the amount and type of nonemployee director awards to be awarded on a periodic, non-discriminatory basis. Nonemployee director awards may be granted in the form of NSOs, stock appreciation rights, restricted stock awards and restricted stock unit awards. Subject to adjustment for changes in the Company's capital structure, no nonemployee director may be awarded, in any fiscal year, one or more nonemployee director awards for more than 2,000 shares. However, the annual limit may be increased by the following additions: (i) an additional 10,000 shares in the fiscal year in which the nonemployee director is first appointed or elected to the board, (ii) an additional 2,000 shares in any fiscal year in which the nonemployee director is serving as the chairman or lead director of the board, (iii) an additional 1,000 shares in any fiscal year for each committee of the board on which the nonemployee director is then serving other than as chairman of the committee, and (iv) an additional 2,000 shares in any fiscal year for each committee of the board on which the nonemployee director is then serving as chairman of the committee.

In the event of a change in control as described in the ~~Equity~~2007 Plan, the acquiring or successor entity may assume or continue all or any awards outstanding under the ~~Equity~~2007 Plan or substitute substantially equivalent awards. Any awards which are not assumed or continued in connection with a change in control or exercised or settled prior to the change in control will terminate effective as of the time of the change in control. The administrator may provide for the acceleration of vesting of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all nonemployee director awards will automatically be accelerated in full. The ~~Equity~~2007 Plan also authorizes the administrator, in its discretion and without the consent of any participant, to cancel each or any outstanding award denominated in shares upon a change in control in exchange for a payment to the participant with respect to each vested share subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share of common stock in the change in control transaction over the exercise price per share, if any, under the award.

The 2016 Equity Incentive Plan

In June 2016, the Company’s board of directors approved the 2016 Equity Incentive Plan, (the “2016 Plan”), which was subsequently approved by the Company’s stockholders in August 2016. In connection with the stockholders’ approval of the 2016 Plan, 6,000,000 shares available for future award under the 2007 Plan were transferred to the 2016 Plan, 705,699 shares available for grant under the 2007 plan were canceled and the 2007 Plan was terminated. The Company granted options under the 2007 Plan until August 2016, and the 2007 Plan continues to govern the terms of options that remain outstanding under the 2007 Plan.

In July 2021, the Company’s board of directors approved the amendment and restatement of the 2016 Plan, which was subsequently approved by the Company’s stockholders in August 2021.The following summary highlights the material changes to the 2016 Plan:

●

The number of shares available for issuance was increased by 4,000,000 shares;

●

The sum of the aggregate grant date fair value of all equity awards and cash compensation for services as a director that may be provided to any non-employee director in any fiscal year was limited to $300,000, reflecting an amendment to a provision of the 2016 Plan that applies a limit of $150,000 to the grant of equity awards alone in any fiscal year; and

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●

The period during which new awards may be granted under the 2016 Plan was extended to August 25, 2031.

Appropriate and proportionate adjustments will be made to the number of shares authorized and other numerical limits in the 2016 Plan and to outstanding awards in the event of any change in the Company’s common stock through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares or similar change in the Company’s capital structure, or if the Company makes a distribution to its stockholders in a form other than common stock (excluding regular and periodic cash dividends) that has a material effect on the fair market value of the Company’s common stock. In such circumstances, the administrator also has the discretion under the 2016 Plan to adjust other terms of outstanding awards as it deems appropriate.

If any award granted under the 2016 Plan expires or otherwise terminates for any reason without having been exercised or settled in full, or if shares subject to forfeiture or repurchase are forfeited or repurchased by the Company for not more than the participant's purchase price, any such shares reacquired or subject to a terminated award will again become available for issuance under the 2016 Plan. Shares will not be treated as having been issued under the 2016 Plan and will therefore not reduce the number of shares available for issuance to the extent an award is settled in cash or to the extent that shares are withheld or reacquired by the Company in satisfaction of a tax withholding obligation. Upon the exercise of a stock appreciation right, tender of shares in payment of an option's exercise price or net-exercise of an option, the number of shares available under the 2016 Plan will be reduced by number of shares actually issued in settlement of the award.

To enable compensation provided in connection with certain types of awards intended to qualify as “performance-based” within the meaning of Section 162(m) of the Internal Revenue Code, the 2016 Plan establishes limits on the maximum aggregate number of shares or dollar value for which awards may be granted to an employee in any fiscal year, as follows:

●No more than 300,000 shares subject to stock options and stock appreciation rights.

●No more than 100,000 shares subject to restricted stock and restricted stock unit awards.

●For each full fiscal year of the Company contained in the performance period of performance shares or performance unit awards, no more than 50,000 shares subject to performance share awards or more than $500,000 subject to performance unit awards.

●For each full fiscal year of the Company contained in the performance period of cash-based or other stock-based awards, no more than $500,000 subject to cash-based awards or more than 50,000 shares subject to other stock-based awards.

Awards may be granted under the 2016 Plan to the Company’s employees, including officers, directors and consultants or those of any present or future parent or subsidiary corporation or other affiliated entity of the Company. To date, options granted to non-officer employees generally vest 25% on the first anniversary and subsequent anniversaries of the date of grant, while grants to officers generally vest in full four years after the anniversary date of the officer’s employment that is closest to the date of grant.

While the Company may grant incentive stock options only to employees, the Company may grant nonstatutory stock options, stock appreciation rights, restricted stock and stock units, performance shares and units, other stock-based awards and cash-based awards to any eligible participant. Non-employee director awards may be granted only to members of the Company’s board of directors who, at the time of grant, are not employees.

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Only members of the board of directors who are not employees at the time of grant are eligible to participate in the nonemployee director awards component of the 2016 Plan. The board or the compensation committee shall set the amount and type of nonemployee director awards to be awarded on a periodic, non-discriminatory basis. Nonemployee director awards may be granted in the form of NSOs, stock appreciation rights, restricted stock awards and restricted stock unit awards. Subject to adjustment for changes in the Company's capital structure, no nonemployee director may be awarded, in any fiscal year, one or more nonemployee director awards for more than a number of shares determined by dividing $150,000 by the fair market value of a share of the Company’s stock determined on the last trading day immediately preceding the date on which the applicable nonemployee award is granted.

The 2016 Plan provides that, without the approval of a majority of the votes cast in person or by proxy at a meeting of the Company’s stockholders, the administrator may not provide for any of the following with respect to underwater options or stock appreciation rights: (1) either the cancellation of such outstanding options or stock appreciation rights in exchange for the grant of new options or stock appreciation rights at a lower exercise price or the amendment of outstanding options or stock appreciation rights to reduce the exercise price, (2) the issuance of new full value awards in exchange for the cancellation of such outstanding options or stock appreciation rights, or (3) the cancellation of such outstanding options or stock appreciation rights in exchange for payments in cash.

In the event of a change in control as described in the 2016 Plan, the surviving, continuing, successor or purchasing entity or its parent may, without the consent of any participant, either assume or continue outstanding awards or substitute substantially equivalent awards for its stock. If so determined by the Committee, stock-based awards will be deemed assumed if, for each share subject to the award prior to the change in control, its holder is given the right to receive the same amount of consideration that a stockholder would receive as a result of the change in control. Any awards which are not assumed or continued in connection with a change in control or exercised or settled prior to the change in control will terminate effective as of the time of the Change in Control. The administrator may provide for the acceleration of vesting or settlement of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all nonemployee director awards will automatically be accelerated in full. The 2016 Plan also authorizes the administrator, in its discretion and without the consent of any participant, to cancel each or any outstanding award denominated in shares of stock upon a change in control in exchange for a payment to the participant with respect to each vested share (and each unvested share if so determined by the administrator) subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share of common stock in the change in control transaction over the exercise or purchase price per share, if any, under the award.

The 2007 Employee Stock Purchase Plan

In January 2007, the board of directors approved the 2007 Employee Stock Purchase Plan (the ~~"2007~~“2007 Purchase ~~Plan"~~Plan”) which was subsequently approved by the ~~Company's~~Company’s stockholders in March 2007. A total of 500,000 shares of the ~~Company's~~Company’s common stock was authorized and reserved for sale under the 2007 Purchase Plan. In addition, the 2007 Purchase Plan provides for an automatic annual increase in the number of shares available for issuance under the plan on April 1 of each year beginning in 2008 and continuing through and including April 1, 2017 equal to the lesser of (1) one percent of the number of issued and outstanding shares of common stock on the immediately preceding March 31, (2) 250,000 shares or (3) a number of shares as the board of directors may determine. Appropriate adjustments will be made in the number of authorized shares and in outstanding purchase rights to prevent dilution or enlargement of participants' rights in the event of a stock split or other change in our capital structure. Shares subject to purchase rights ~~which~~that expire or are canceled will again become available for issuance under the 2007 Purchase Plan.

The ~~Company's~~Company’s employees and employees of any parent or subsidiary corporation designated by the administrator will be eligible to participate in the 2007 Purchase Plan if they are customarily employed by us for

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more than 20 hours per week and more than five months in any calendar year. However, an employee may not be granted a right to purchase stock under the 2007 Purchase Plan if: (1) the employee immediately after such grant

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would own stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock or of any parent or subsidiary corporation, or (2) the ~~employee's~~employee’s rights to purchase stock under all of our employee stock purchase plans would accrue at a rate that exceeds $25,000 in value for each calendar year of participation in such plans.

The 2007 Purchase Plan is designed to be implemented through a series of sequential offering periods, generally six (6) months in duration beginning on the first trading day on or after May 1 and November 1 of each year. The administrator is authorized to establish additional or alternative sequential or overlapping offering periods and offering periods having a different duration or different starting or ending dates, provided that no offering period may have a duration exceeding 27 months.

Amounts accumulated for each participant under the 2007 Purchase Plan are used to purchase shares of the ~~Company's~~Company’s common stock at the end of each offering period at a price generally equal to 85% of the lower of the fair market value of our common stock at the beginning of an offering period or at the end of the offering period. Prior to commencement of an offering period, the administrator is authorized to reduce, but not increase, this purchase price discount for that offering period, or, under circumstances described in the 2007 Purchase Plan, during that offering period. The maximum number of shares a participant may purchase in any six-month offering period is the lesser of (i) that number of shares determined by multiplying (x) 1,000 shares by (y) the number of months (rounded to the nearest whole month) in the offering period and rounding to the nearest whole share or (ii) that number of whole shares determined by dividing (x) the product of $2,083.33 and the number of months (rounded to the nearest whole month) in the offering period and rounding to the nearest whole dollar by (y) the fair market value of a share of our common stock at the beginning of the offering period. Prior to the beginning of any offering period, the administrator may alter the maximum number of shares that may be purchased by any participant during the offering period or specify a maximum aggregate number of shares that may be purchased by all participants in the offering period. If insufficient shares remain available under the plan to permit all participants to purchase the number of shares to which they would otherwise be entitled, the administrator will make a pro rata allocation of the available shares. Any amounts withheld from participants' compensation in excess of the amounts used to purchase shares will be refunded, without interest. During fiscal 2023, 198,820 shares of common stock were issued under the 2007 Purchase Plan.

In the event of a change in control, an acquiring or successor corporation may assume our rights and obligations under the 2007 Purchase Plan. If the acquiring or successor corporation does not assume such rights and obligations, then the purchase date of the offering periods then in progress will be accelerated to a date prior to the change in control.

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The following table summarizes stock option activities:



			Weighted
		Number of Shares	Average	Weighted
	Shares	Underlying	Remaining	Average
	Available for	Options	Contractual	Exercise		Intrinsic
	Grant	Outstanding	Life (Years)	Price		Value
Balance at March 31, 2013	4,867,458	6,336,319			4.46

										Weighted
									Number of Shares	Average	Weighted
								Shares	Underlying	Remaining	Average
								Available for	Options	Contractual	Exercise		Intrinsic
								Grant	Outstanding	Life (Years)	Price		Value
Balance at March 31, 2020								2,522,314	8,135,791		$	6.17
Granted								(1,285,252)	1,285,252		$	6.46
Exercised								—	(667,503)		$	5.99	$	961,633
Forfeited								94,500	(320,663)		$	7.84
Balance at March 31, 2021								1,331,562	8,432,877		$	6.17
Options reserved	1,353,260	-			-			4,000,000	—		$	—
Granted	(784,303)	784,303			6.45			(1,280,761)	1,280,761		$	5.43
Exercised	-	(816,957)			3.10	$	2,629,982	—	(316,784)		$	5.12	$	149,937
Forfeited	149,085	(159,685)			6.04			484,862	(806,179)		$	6.45
Balance at March 31, 2014	5,585,500	6,143,980			5.13
Options reserved	1,377,699	-			-
Balance at March 31, 2022								4,535,663	8,590,675		$	6.07
Granted	(791,903)	791,903			5.20			(1,535,647)	1,535,647		$	3.01
Exercised	-	(119,085)			3.88		262,253	—	—		$	—	$	—
Forfeited	42,647	(42,647)			5.49			594,835	(1,317,162)		$	5.50
Balance at March 31, 2015	6,213,943	6,774,151			5.16
Options reserved	1,156,419	-			-
Granted	(969,913)	969,913			4.42
Exercised	-	(76,745)			4.19		46,977
Forfeited	31,614	(41,614)			4.82
Balance at March 31, 2016	6,432,063	7,625,705		$	5.08
Balance at March 31, 2023								3,594,851	8,809,160	5.52	$	5.62
Options vested and exercisable		5,246,088	3.70	$	5.02	$	939,846		5,470,684	3.77	$	6.01	$	—
Options vested and expected to vest		7,574,414	5.14	$	5.08	$	1,150,077		8,628,329	5.44	$	5.64	$	—

The options outstanding and by exercise price at March 31, ~~2016~~2023 are as follows:

Number of

Options Outstanding

Options Exercisable

Shares

Weighted

Weighted Average

Weighted

Underlying

Average

Remaining

Number

Average

Options

Exercise

Contractual

Vested and

Exercise
Exercise Price

Outstanding

Price

Life (Years)

Exercisable

Price
$
2.43
-
3.40

895,204

$
3.17

5.06

586,394

$
3.05
$
3.43
-
4.00

1,118,969

$
3.81

3.10

1,118,969

$
3.81
$
4.17
-
4.81

935,478

$
4.41

5.75

670,261

$
4.33
$
4.90
-
4.98

793,963

$
4.95

7.92

298,150

$
4.91
$
5.13
-
5.34

625,513

$
5.23

8.49

62,626

$
5.22
$
5.50

783,433

$
5.50

0.63

783,433

$
5.50
$
5.59
-
6.00

899,930

$
5.77

5.24

568,526

$
5.80
$
6.28
-
6.63

808,219

$
6.48

6.08

645,440

$
6.47
$
6.82
-
7.00

651,376

$
6.90

5.76

398,669

$
6.92
$
9.20

113,620

$
9.20

4.83

113,620

$
9.20

7,625,705

$
5.08

5.17

5,246,088

$
5.02


				Number of	Options Outstanding			Options Exercisable
				Shares	Weighted		Weighted Average		Weighted
				Underlying	Average		Remaining	Number	Average
				Options	Exercise		Contractual	Vested and	Exercise
Exercise Price				Outstanding	Price		Life (Years)	Exercisable	Price
$	1.87	-	3.40	1,069,082	$	2.52	7.84	299,414	$	3.40
$	3.60	-	4.42	913,408	$	4.12	8.41	161,432	$	4.06
$	4.68	-	4.99	1,081,111	$	4.97	2.84	1,081,111	$	4.97
$	5.13	-	5.58	1,346,631	$	5.42	5.32	735,451	$	5.30
$	5.69	-	5.83	953,077	$	5.80	5.46	411,522	$	5.77
$	5.91	-	6.70	1,182,559	$	6.42	4.70	1,118,669	$	6.44
$	6.86	-	7.40	935,148	$	7.10	3.19	935,148	$	7.10
$	7.46	-	8.00	698,791	$	7.74	6.65	536,608	$	7.75
$	8.09			77,260	$	8.09	4.22	77,260	$	8.09
$	8.30			552,093	$	8.30	6.33	114,069	$	8.30
				8,809,160	$	5.62	5.52	5,470,684	$	6.01

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Stock-based compensation

The Company recognized ~~$1,850,000, $2,077,000~~$2.5 million, $3.0 million and ~~$2,228,000~~$2.9 million of stock-based compensation expense for the years ended March 31, ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~,2021, respectively, as follows:


							Year Ended March 31,
							2023		2022		2021


	Year Ended March 31,
	2016		2015		2014
	(In thousands)
							(In thousands)
Cost of revenues	$	320	$	401	$	386	$	202	$	248	$	346
Research and development		858		941		970		1,316		1,676		1,509
Selling, general and administrative		672		735		872		951		1,069		999
Total	$	1,850	$	2,077	$	2,228	$	2,469	$	2,993	$	2,854

Stock-based compensation expense in the years ended March 31, ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~2021 included ~~$136,000, $153,000~~$211,000, $260,000 and ~~$152,000,~~$276,000, respectively, related to the ~~Company's~~Company’s Employee Stock Purchase Plan.

No tax benefit was recognized in either fiscal ~~2016~~2023 or fiscal ~~2015~~2022 due to a full valuation allowance.There were no windfall tax benefits realized from exercised stock options recognized in fiscal ~~2016~~2023 or fiscal ~~2015. The reversal of previously recognized windfall tax benefits realized from exercised stock options was $33,000 in fiscal 2014.~~2022. Compensation cost capitalized within inventory at March 31, ~~2016~~2023 and 2022 was not material.As of March 31, ~~2016~~,2023, the ~~Company's~~Company’s total unrecognized compensation cost was ~~$2.9~~$4.4 million, which will be recognized over the weighted average period of ~~2.13~~1.74 years.The Company calculated the fair value of ~~stock based~~stock-based awards in the periods presented using the Black-Scholes option pricing model and the following weighted average assumptions:



	Year Ended March 31,
	2016				2015				2014
	(In thousands)

													Year Ended March 31,
													2023				2022				2021
Stock Option Plans:
Risk-free interest rate	1.41	-	1.57	%	1.47	-	1.7	%	0.91	-	1.61	%	2.95	-	4.27	%	0.66	-	1.62	%	0.22	-	0.42	%
Expected life (in years)			5.00				5.00				5.00		4.55	-	5.00				5.00				5.00
Volatility	36.3	-	38.0	%	40.4	-	44.8	%	45.5	-	48.4	%	49.2	-	53.1	%	47.7	-	49.1	%	41.9	-	47.6	%
Dividend yield			-	%			-	%			-	%			—	%			—	%			—	%
Employee Stock Purchase Plan:
Risk-free interest rate	0.09		0.15	%			0.05	%	0.07	-	0.09	%	1.54	-	4.54	%	0.04	-	0.07	%	0.12	-	0.15	%
Expected life (in years)			0.50				0.50				0.50				0.50				0.50				0.50
Volatility	26.3	-	27.9	%	30.8	-	38.0	%	30.4	-	32.8	%	49.3	-	58.2	%	45.6	-	57.4	%	67.1	-	68.6	%
Dividend yield			-	%			-	%			-	%			—	%			—	%			—	%

The weighted average fair value of options granted during the years ended March 31, ~~2016~~, ~~2015~~2023, 2022 and ~~2014~~2021 was ~~$1.52, $2.08~~$1.38, $2.29 and ~~$2.73,~~$2.55, respectively.

NOTE 12—RELATED PARTY TRANSACTION

The Company incurred non-recurring engineering service expense and manufacturing services of approximately $240,000, $397,000 and $482,000 during the fiscal years ended March 31, 2023, 2022 and 2021, respectively, from Wistron Neweb Corp (“WNC”) in connection with the manufacturing of single-APU PCIe boards, to be used in the Company’s in-place associative computing product. Haydn Hsieh, a member of the Company’s board of directors, is the Chairman and Chief Strategy Officer of WNC. The amount owed to WNC, of $8,000 and $32,000 at March 31, 2023 and 2022, respectively, is included in accounts payable in the Consolidated Balance Sheets.

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NOTE ~~10—~~13—SEGMENT AND GEOGRAPHIC INFORMATION

Based on its operating management and financial reporting structure, the Company has determined that it has one reportable business segment: the design, development and sale of integrated circuits.

The following is a summary of net revenues by geographic area based on the location to which product is shipped:


							Year Ended March 31,
							2023		2022		2021


	Year Ended March 31,
	2016		2015		2014
		(In thousands)
							(In thousands)
United States	$	20,951	$	18,099	$	18,021	$	14,435	$	15,517	$	12,375
China		12,123		15,695		13,294		1,582		2,108		2,454
Malaysia		32		2,720		9,827
Singapore		7,345		6,552		5,979		4,941		5,731		4,074
Netherlands								3,087		5,172		5,555
Germany								4,474		3,471		2,395
Rest of the world		12,285		10,432		11,458		1,172		1,385		876
	$	52,736	$	53,498	$	58,579
							$	29,691	$	33,384	$	27,729

All sales are denominated in United States dollars.

The locations and net book value of long-lived assets and operating lease right-of-use assets are as follows:


					March 31,
					2023		2022


	March 31,
	2016		2015
		(In thousands)
					(In thousands)
United States	$	6,085	$	6,630	$	7,453	$	7,027
Taiwan		2,521		2,078		177		407
Israel		47		-		477		814
	$	8,653	$	8,708
					$	8,107	$	8,248

NOTE 14—ACQUISITION

~~NOTE 11—ACQUISITION~~

On November 23, 2015, the Company acquired all of the outstanding capital stock of privately held MikaMonu Group Ltd. (“MikaMonu”), a development-stage, Israel-based company that ~~specializes~~specialized in in-place associative computing for markets including big data, computer vision and cyber security. MikaMonu, located in Tel Aviv, held 12 United States patents and had a number of pending patent applications.

The acquisition was undertaken by the Company in order to gain access to the MikaMonu patents and the potential markets, and new customer base in those markets, that can be served by new products that the Company plans to develop using the MikaMonu patents.

~~The acquisition has been~~ accounted for as a purchase under authoritative guidance for business combinations. The purchase price of the acquisition ~~has been preliminarily~~was allocated to the intangible assets acquired, with the excess of the purchase price over the fair value of assets acquired recorded as goodwill. The Company performs a goodwill impairment test in February of each fiscal year and if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis.

~~Table of Contents~~

~~The results of operations of MikaMonu and the estimated fair value of the assets acquired were included in the Company’s consolidated financial statements beginning November 23, 2015.~~

Consideration

Under the terms of the acquisition agreement, the Company paid the former MikaMonu shareholders initial cash consideration of approximately $4.4 million at the closing on November 23, 2015. The Company will make cash payments of up to $484,000 to the three former MikaMonu shareholders in May 2017 upon the release of cash held in escrow for potential indemnification claims. This amount is included in other assets on the Consolidated Balance Sheet at March 31, 2016.

$4.9 million. The Company is also required to pay the former MikaMonu shareholders future contingent consideration consisting of retention payments and “earnout” payments, as described below.

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The Company ~~will make~~made cash retention payments of ~~up to an additional~~ $2.5 million to the three former MikaMonu shareholders in installments over a four-year period, that were conditioned on the continued employment of Dr. Avidan Akerib, MikaMonu’s co-founder and chief technologist. The retention amount of $2.5 million ~~has been~~was deposited in ~~escrow~~escrow. Of this amount, $743,000, $750,000 and $1.0 million was paid to the former MikaMonu shareholders during the quarters ended December 31, 2017, 2018 and 2019, respectively. The Company is ~~included in other assets on the Consolidated Balance Sheet at March 31, 2016.~~not required to make any further retention payments.

The Company will also make “earnout” payments to the former MikaMonu shareholders in cash or shares of the Company’s common stock, at the Company’s discretion, during a period of up to ten years following the closing if certain product development milestones and revenue targets for products based on the MikaMonu technology are achieved. Earnout amounts of $750,000 ~~will be payable if~~were paid in the fiscal year ended March 31, 2019 based on the achievement of certain product development ~~milestones are achieved by December 31, 2017.~~milestones. Additional ~~earnout amounts of $2,750,000 and $4,000,000 will be payable if certain revenue milestones are achieved by January 1, 2021 and January 1, 2022, respectively; and additional~~ payments, up to a maximum of ~~$30~~$30.0 million, equal to 5% of net revenues from the sale of qualifying products in excess of certain thresholds, will be made quarterly through December 31, 2025.

The portion of the retention payment contingently payable to Dr. Akerib (approximately $1.2 million) ~~will be~~was recorded as compensation expense over the period that his services ~~are~~were provided to the Company. The portion of the retention payment ~~contingently payable~~made to the other former MikaMonu shareholders (approximately $1.3 million) plus the maximum amount of the potential earnout payments as of March 31, 2023 totals approximately ~~$38.8~~$32.0 million. The Company determined that the fair value of this contingent consideration liability was $5.8 million at the acquisition date.

The ~~fair value of the~~ contingent consideration liability ~~was determined as~~is included in contingent consideration, non-current on the Consolidated Balance Sheets at March 31, 2023 and 2022 in the amount of ~~the acquisition date using unobservable inputs. These inputs include the estimated amount~~$1.1 million and timing of future cash flows, the probability of success (achievement of the various contingent events) and a risk-adjusted discount rate of approximately 14.8% used to adjust the probability-weighted cash flows to their present value. Subsequent to the acquisition date, at$2.7 million, respectively.

At each reporting period, the contingent consideration liability ~~will be~~is re-measured to fair value with changes recorded in the Consolidated Statements of Operations. Changes in any of the inputs may result in material adjustments to the recorded fair value. The amount included in other accrued expenses on the Consolidated Balance Sheet at March 31, 2016 was $5.9 million.

~~Acquisition-related costs~~

~~Acquisition-related costs of approximately $32,000 and $426,000 are included~~ in selling, general and administrative expenses in the Consolidated Statements of ~~Operations~~Operations. Re-measurement of the contingent consideration liability resulted in an increase (reduction) in fair value for the ~~three months and twelve months~~years ended March 31, ~~2016,~~2023, 2022 and 2021 of ($1.9 million), ($1.6 million) and $229,000, respectively. See Note 7 for the valuation of contingent consideration.

~~Table of Contents~~

~~Purchase price allocation~~

The allocation of the purchase price to acquired identifiable intangible assets and goodwill was based on their estimated fair values at the date of acquisition. The fair value allocated to patents was $3.5 million and the fair value allocated to goodwill was $8.0 million. Goodwill represents the excess of the cost of an acquisition over the sum of the amounts assigned to identifiable intangible assets acquired less liabilities assumed. The goodwill resulting from the acquisition is not deductible for tax purposes.

~~The fair value allocated to tangible and identifiable intangible assets and goodwill of MikaMonu acquired on November 23, 2015 was computed as follows (in thousands):~~


~~Cash and cash equivalents~~	$	1
~~Other receivables~~		54
~~Property and equipment, net~~		10
~~Intangible assets~~		~~3,500~~
~~Goodwill~~		~~8,030~~
~~Total assets acquired~~		~~11,595~~
~~Accrued expenses~~		~~(10)~~
~~Net deferred tax liability~~		~~(821)~~
~~Total liabilities assumed~~		~~(831)~~
~~Fair value of net assets acquired~~	$	~~10,764~~

The deferred tax liability associated with the estimated fair value adjustments of the intangible assets acquired is recorded at an estimated weighted average statutory tax rate in the jurisdictions where the fair value adjustments may occur.

~~Identifiable intangible assets~~

The following table sets forth the components of the identifiable intangible assets acquired in the MikaMonu acquisition, which are being amortized over their estimated useful lives on a straight-line basis:

Fair Value

Useful Life

(in thousands)

(in years)

Patents

$
3,500

15

Total acquired identifiable intangible assets

$
3,500

The fair value of patents was determined using relief from royalty approach, which discounted expected future cash flows to present value. The cash flows were discounted at a rate of approximately 14.0%.

~~Prior to the closing of the acquisition, there were no material relationships between the Company and MikaMonu.~~

~~Table of Contents~~

~~The following table summarizes total net revenues and net loss of the combined entity had the acquisition of MikaMonu occurred on April 1, 2014 (in thousands, except loss per share data):~~

Year Ended March 31,

2016

2015

Pro forma net revenues

$
52,736

$
54,134

Pro forma net loss

$
(2,575)

$
(5,810)

Pro forma net loss per share, basic and diluted

$
(0.11)

$
(0.23)

The combined results in the table above have been prepared for comparative purposes only and include acquisition related adjustments for, among other items, the amortization of identifiable intangible assets. Since the acquisition date, the results of MikaMonu have been included in the Company’s consolidated financial statements. The combined results do not purport to be indicative of the results of operations which would have resulted had the acquisition been effected at the beginning of the applicable periods noted above, or the future results of operations of the combined entity.

NOTE ~~12—~~15—EMPLOYEE BENEFIT PLANS

The Company provides a defined contribution retirement plan (the ~~"Retirement Plan"~~“Retirement Plan”), which qualifies under Section 401(k) of the Internal Revenue Code of 1986. The Retirement Plan covers essentially all United States employees. Eligible employees may make contributions to the Retirement Plan up to 15% of their annual compensation, but no greater than the annual IRS limitation for any plan year. The Retirement Plan does not provide for Company contributions.

The Company provides a defined contribution retirement plan (the “Taiwan Pension Plan”) that covers essentially all of its employees located in Taiwan. The Company makes contributions to the Taiwan Pension Plan equal to 6% of eligible compensation and employees can make voluntary contributions of up to 6% of eligible compensation. All contributions are fully vested.

The Company provides a defined contribution retirement plan (the “Pension Plan”) that covers essentially all of its employees located in Israel. Eligible employees may make contributions to the Pension Plan up to 5%6% of eligible compensation, and the Company contributes up to 15.83% of eligible compensation. All contributions are fully vested.

Pursuant to Israeli labor laws, the Company’s Israeli subsidiary is required to pay severance pay to dismissed employees and employees leaving their employment in certain circumstances. Severance pay is computed based on length of service and generally according to the latest monthly salary and one month’s salary for each year worked.

~~NOTE 13 —QUARTERLY FINANCIAL DATA (Unaudited)~~

Three Months Ended

June 30,

September 30,

December 31,

March 31,

2015

2015

2015

2016

(In thousands, except per share amounts)
Consolidated Statement of Operations Data:

Net revenues

$
14,025

$
13,577

$
12,921

$
12,213
Gross profit

$
7,295

$
6,917

$
6,386

$
6,139
Net loss

$
(917)

$
(347)

$
(819)

$
(87)
Net loss per common share—Basic

$
(0.04)

$
(0.02)

$
(0.04)

$
-
Net loss per common share—Diluted

$
(0.04)

$
(0.02)

$
(0.04)

$
-

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Three Months Ended

June 30,

September 30,

December 31,

March 31,

2014

2014

2014

2015

(In thousands, except per share amounts)
Consolidated Statement of Operations Data:

Net revenues

$
12,945

$
13,263

$
14,227

$
13,063
Gross profit

$
5,939

$
6,061

$
6,650

$
6,473
Net income (loss)

$
(1,446)

$
(950)

$
148

$
(2,730)
Net income (loss) per common share—Basic

$
(0.05)

$
(0.04)

$
0.01

$
(0.12)
Net income (loss) per common share—Diluted

$
(0.05)

$
(0.04)

$
0.01

$
(0.12)

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

~~Not applicable.~~None.

Item 9A. ~~Control~~sControls and Procedures

~~Management's~~Management’s Evaluation of Disclosure Controls and Procedures

~~Based on their evaluation of our disclosure~~We maintain “disclosure controls and procedures, ~~(as~~” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as ~~amended) as of~~ ~~March 31, 2016~~amended (the "Exchange Act"), ~~our Chief Executive Officer and Chief Financial Officer have concluded~~ that ~~our disclosure controls and procedures were effective as of the end of the period covered by this report for the purpose of ensuring~~are designed to ensure that ~~the~~ information required to be disclosed by usa company in the reports ~~we file~~that it files or ~~submit~~submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and ~~forms,~~forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the ~~information~~reports that it files or submits under the Exchange Act is accumulated and communicated to ~~our~~the company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of March 31, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, solely as a result of the material weakness in ~~order~~the Company's internal control over financial reporting, as of such date, our disclosure controls and procedures were not effective. The material weakness resulted in a significant adjustment to ~~allow timely decisions regarding~~the fair value of the contingent consideration liability in the current period. Management corrected this misstatement prior to issuance of the financial statements for the fiscal year ended March 31, 2023. Additionally, management has performed an analysis to ensure no other material errors resulted from this control failure.

Management’s Report on Internal Controls Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and can only provide reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an assessment of our internal control over financial reporting based on the framework established in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on the assessment, management concluded that, as of March 31, 2023, our internal control over financial reporting was not effective.

During its review, management determined that the material weakness, which was identified in the course of preparing our financial statements for the fiscal year ended March 31, 2022, remained un-remediated at March 31, 2023. Specifically, management concluded that it did not design and maintain adequate controls over the review of forecasts and the probability of achievement of the forecast used to calculate the contingent consideration liability, used in the goodwill impairment test and used in the recoverability test over intangible assets.

Because we are a non-accelerated filer, our independent registered public accounting firm is not required ~~disclosure.~~to attest to or issue a report on the effectiveness of our internal control over financial reporting.

~~Changes~~87

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Remediation Plans for Material Weakness in Internal Control over Financial Reporting

~~There~~We are committed to maintaining a strong internal control environment. In response to the identified material weakness above, we, with the oversight of the Audit Committee of the Board of Directors, will take comprehensive actions to remediate the material weakness in internal control over financial reporting. We will re-evaluate the process and procedures involved in developing forecasts used for the calculation of the contingent consideration liability, used in the goodwill impairment test and used in the recoverability test for intangible assets. The remediation efforts are intended both to address the identified material weakness, and to enhance our overall financial control environment. We continue to evaluate and work to improve our controls and procedures and internal control over financial reporting. Until this material weakness is remediated, we plan to continue to perform additional analyses and other procedures to ensure our consolidated financial statements are prepared in accordance with GAAP.

Changes in Internal Control Over Financial Reporting

Except for our identification and assessment of the material weakness described above, there were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, ~~2016~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within GSI Technology, Inc. have been detected.

~~Management's Report on Internal Control over Financial Reporting~~

~~Table of Contents~~

~~to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.~~

~~We assessed the effectiveness of our internal control over financial reporting as of~~ ~~March 31, 2016. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in~~ ~~Internal Control—Integrated Framework (2013)~~. Based on our assessment using those criteria, our management (including our Chief Executive Officer and Chief Financial Officer) concluded that our internal control over financial reporting was effective as of ~~March 31, 2016~~.

The effectiveness of the Company's internal control over financial reporting as of March 31, 2016 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on page 53 ~~of thisAnnual Report on Form 10-K.~~

Item 9B. Other Information

Not applicable.

Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

The SEC allows us to include information required in this report by referring to other documents or reports we have already filed or will soon be filing. This is called ~~"incorporation~~“incorporation by reference."” We intend to file our definitive proxy statement for our ~~2016~~2023 annual meeting of stockholders (the ~~"Proxy Statement"~~“Proxy Statement”) pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report, and certain information therein is incorporated in this report by reference.

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item with respect to executive officers is set forth in Part I of this Annual Report on Form 10-K and the remaining information required by this item is incorporated by reference from the sections entitled ~~"Proposal~~“Proposal No. 1 - Election of ~~Directors", "Corporate Governance"~~Directors” and ~~"Section 16(a) Beneficial Ownership Reporting Compliance"~~“Corporate Governance” to be included in the Proxy Statement.

Item 11. Executive Compensation

The information required by this item is incorporated by reference from the section entitled ~~"Executive Compensation"~~“Executive Compensation” to be included in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated by reference from the sections entitled ~~"Principal~~“Principal Stockholders and Stock Ownership by ~~Management"~~Management” and “Executive Compensation – Equity Compensation Plan Information” to be included in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated by reference from the section entitled ~~"Related~~“Related Person ~~Transactions"~~Transactions” and ~~"Corporate~~“Corporate Governance—Director ~~Independence"~~Independence” to be included in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated by reference from the section entitled ~~"Proposal~~“Proposal No. 2 - Ratification of Appointment of Independent Registered Public Accounting ~~Firm"~~Firm” to be included in the Proxy Statement.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)The following documents are filed as part of this Form:

1.Financial Statements

~~(a)The following documents are filed as part of this Form:~~

1.~~Financial Statements~~


		Page
Report of Independent Registered Public Accounting Firm		53 50
Consolidated Balance Sheets As of March 31, ~~2016~~2023 and ~~2015~~2022		54 53
Consolidated Statements of Operations For the Three Years Ended March 31, ~~2016, 2015~~2023, 2022 and ~~2014~~2021		55 54
Consolidated Statements of Comprehensive Loss For the Three Years Ended March 31, ~~2016, 2015~~2023, 2022 and ~~2014~~2021		56 55
Consolidated Statements of Stockholders’ Equity For the Three Years Ended March 31, ~~2016, 2015~~2023, 2022 and ~~2014~~2021		57 56
Consolidated Statements of Cash Flows For the Three Years Ended March 31, ~~2016, 2015~~2023, 2022 and ~~2014~~2021		58 57
Notes to Consolidated Financial Statements		59

2.~~Financial Statement Schedules~~58

2.Financial Statement Schedules

Schedules not listed above have been omitted because the information required to be set forth therein is not applicable, is not ~~material~~required or is shown in the consolidated financial statements or the notes thereto.

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3.Exhibits:

3.~~Exhibits:~~

The following exhibits are filed herewith:

Exhibit Numbe

Name of Document
3.1

Restated Certificate of Incorporation of Registrant (Incorporated by reference to Exhibit 3.3 to Registrant's Registration Statement on Form S-1 (File No. 333-139885) filed on February 16, 2007)
3.2

Bylaws of Registrant (Incorporated by reference to Exhibit 3.4 to Registrant's Registration Statement on Form S-1 (File No. 333-139885) filed on February 16, 2007)
10.1

Form of Indemnity Agreement between Registrant and Registrant's directors and officers (Incorporated by reference to identically-numbered exhibit to Registrant's Registration Statement on Form S-1 (File No. 333-139885) filed on January 10, 2007)
10.2

(1)
1997 Stock Plan and form of Stock Option Agreement (Incorporated by reference to identically-numbered exhibit to Registrant's Registration Statement on Form S-1 (File No. 333-139885) filed on February 16, 2007)
10.3

(1)
2000 Stock Option Plan and form of Stock Option Agreement (Incorporated by reference to identically-numbered exhibit to Registrant's Registration Statement on Form S-1 (File No. 333-139885) filed on February 16, 2007)
10.4

(1)
2007 Equity Incentive Plan, as amended (Incorporated by reference to Appendix A to Registrant's definitive Proxy Statement filed on July 21,2011)
10.5

(1)
2007 Employee Stock Purchase Plan and form of Subscription Agreement (Incorporated by reference to identically-numbered exhibit to Registrant's Registration Statement on Form S-1 (File No. 333-139885) filed on February 16, 2007)
10.6

(1)
Form of Notice of Grant of Stock Option (U.S. Participant) (Incorporated by reference to Exhibit 99.1 to Registrant's Current Report on Form 8-K filed on June 4, 2007)
10.7

(1)
Form of Notice of Grant of Stock Option (Non-U.S. Participant) (Incorporated by reference to Exhibit 99.2 to Registrant's Current Report on Form 8-K filed on June 4, 2007)
10.8

(1)
Form of Stock Option Agreement (U.S. Participant) (Incorporated by reference to Exhibit 99.3 to Registrant's Current Report on Form 8-K filed on June 4, 2007)
10.9

(1)
Form of Stock Option Agreement (Non-U.S. Participant) (Incorporated by reference to Exhibit 99.4 to Registrant's Current Report on Form 8-K filed on June 4, 2007)
10.10

Intellectual Property Agreement dated August 28, 2009 between GSI Technology, Inc. and Sony Electronics Inc. (Incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q filed on November 16, 2009)
10.11

Factory Lease Agreement for No. 1, 6th Floor, 30 Tai-Yuan Street, Chu-Pei City, Taiwan dated August 9, 2012 (Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on September 11, 2012)
10.12

(2)
Master Purchase Agreement dated August 31, 2011 between Registrant and Cisco Systems, Inc. (Incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10‑Q filed on November 4, 2011)
10.13

(2)
Master Purchase Agreement dated August 31, 2011 between Registrant and Cisco Systems International B.V. (Incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10‑Q filed on November 4, 2011)
10.14

(1)
GSI Technology, Inc. 2014 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on June 3, 2013)


Exhibit Number		Name of Document
3.1		Amended and Restated Certificate of Incorporation of Registrant (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on August 26, 2022)
3.2		Bylaws of Registrant (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on January 25, 2022)
4.1		Description of Registrant's securities registered pursuant to Section 12 of the Securities Exchange Act of 1934
10.1		Form of Indemnity Agreement between Registrant and Registrant’s directors and officers (Incorporated by reference to identically-numbered exhibit to Registrant’s Registration Statement on Form S-1 (File No. 333-139885) filed on January 10, 2007)
10.2	(1)	2007 Equity Incentive Plan, as amended (Incorporated by reference to Appendix A to Registrant’s definitive Proxy Statement filed on July 21,2011)
10.3	(1)	2007 Employee Stock Purchase Plan and form of Subscription Agreement (Incorporated by reference to identically-numbered exhibit to Registrant’s Registration Statement on Form S-1 (File No. 333-139885) filed on February 16, 2007)
10.4	(1)	Form of Notice of Grant of Stock Option (U.S. Participant) (Incorporated by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed on June 4, 2007)
10.5	(1)	Form of Notice of Grant of Stock Option (Non-U.S. Participant) (Incorporated by reference to Exhibit 99.2 to Registrant’s Current Report on Form 8-K filed on June 4, 2007)
10.6	(1)	Form of Stock Option Agreement (U.S. Participant) (Incorporated by reference to Exhibit 99.3 to Registrant’s Current Report on Form 8-K filed on June 4, 2007)
10.7	(1)	Form of Stock Option Agreement (Non-U.S. Participant) (Incorporated by reference to Exhibit 99.4 to Registrant’s Current Report on Form 8-K filed on June 4, 2007)
10.8		Intellectual Property Agreement dated August 28, 2009 between GSI Technology, Inc. and Sony Electronics Inc. (Incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q filed on November 16, 2009)
10.9	(2)	Master Purchase Agreement dated August 31, 2011 between Registrant and Cisco Systems, Inc. (Incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed on November 4, 2011)
10.10	(2)	Master Purchase Agreement dated August 31, 2011 between Registrant and Cisco Systems International B.V. (Incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q filed on November 4, 2011)
10.11		Stock Purchase Agreement dated November 23, 2015 among GSI Technology, Inc., GSI Technology Holdings, Inc. and MikaMonu Group Ltd. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on February 4, 2016)
10.12	(1)	GSI Technology, Inc. 2016 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K/A filed on September 2, 2016)

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10.13	(1)	GSI Technology, Inc. 2016 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K/A filed on August 26, 2021)
10.14	(1)	Form of Notice of Grant of Stock Option (U.S. Participant) under 2016 Equity Incentive Plan (Incorporated by reference to Exhibit 10.2 to Registrant’s Form 10-Q filed on November 4, 2016)
10.15	(1)	Form of Notice of Grant of Stock Option (Non-U.S. Participant) under 2016 Equity Incentive Plan (Incorporated by reference to Exhibit 10.3 to Registrant’s Form 10-Q filed on November 4, 2016)
10.16	(1)	Form of Stock Option Agreement (U.S. Participant) under 2016 Equity Incentive Plan (Incorporated by reference to Exhibit 10.4 to Registrant’s Form 10-Q filed on November 4, 2016)
10.17	(1)	Form of Stock Option Agreement (Non-U.S. Participant) under 2016 Equity Incentive Plan (Incorporated by reference to Exhibit 10.5 to Registrant’s Form 10-Q filed on November 4, 2016)
10.18	(1)	GSI Technology, Inc. Executive Retention and Severance Plan (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on October 3, 2014)
10.19	(1)	First Amendment to the GSI Technology, Inc. Executive Retention and Severance Plan dated August 29. 2017 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on August 31, 2018)
10.20	(1)	Second Amendment to the GSI Technology, Inc. Executive Retention and Severance Plan dated August 27. 2020 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on August 28, 2020)
10.21		Factory Lease Agreement for No. 1, 6th Floor, 30 Tai-Yuan Street, Chu-Pei City, Taiwan dated August 31, 2017 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on September 27, 2017)
10.22	(1)	GSI Technology, Inc. 2021 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on June 4, 2020)
10.23		Factory Lease Agreement for No. 1, 6th Floor, 30 Tai-Yuan Street, Chu-Pei City, Taiwan dated August 13, 2020 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on August 19, 2020)
10.24	(1)	GSI Technology, Inc. 2022 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on June 4, 2021)
10.25	(1)	GSI Technology, Inc. 2023 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on June 3, 2022)
10.26	(1)	GSI Technology, Inc. 2024 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on June 2, 2023)
21.1		List of Subsidiaries
23.1		Consent of Independent Registered Public Accounting Firm – BDO USA, LLP
24.1		Power of Attorney (Incorporated by reference to the signature page of this Annual Report on Form 10-K)
31.1		Certification of Lee-Lean Shu, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Douglas Schirle, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

10.15

(1)
GSI Technology, Inc. 2015 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on May 30, 2014)
10.16

Factory Lease Agreement for No. 1, 6th Floor, 30 Tai-Yuan Street, Chu-Pei City, Taiwan dated August 22, 2014 (Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on August 26, 2014)
10.17

(1)
GSI Technology, Inc. 2016 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on August 3, 2015)
10.18

Stock Purchase Agreement dated November 23, 2015 among GSI Technology, Inc., GSI Technology Holdings, Inc. and MikaMonu Group Ltd. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on February 4, 2016)
21.1

List of Subsidiaries
23.1

Consent of Independent Registered Public Accounting Firm
24.1

Power of Attorney (Incorporated by reference to the signature page of this Annual Report on Form 10-K)
31.1

Certification of Lee-Lean Shu, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2

Certification of Douglas Schirle, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1

Certification of Lee-Lean Shu, President and Chief Executive Officer, and Douglas Schirle, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS

XBRL Instance Document
101.SCH

XBRL Taxonomy Extension Schema Document
101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF

XBRL Taxonomy Extension Definition Linkbase Document
101.LAB

XBRL Taxonomy Extension Label Linkbase Document
101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Table of Contents

32.1		Certification of Lee-Lean Shu, President and Chief Executive Officer, and Douglas Schirle, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL documents)

__________________________________


(1)	Compensatory plan or management contract.
(2)	This exhibit has been filed separately with the Commission pursuant to an application for confidential treatment which has been granted by the Commission. The confidential portions of this exhibit have been omitted and marked by asterisks.

Item 16. Form 10-K Summary

Not applicable.

9193

Table of Contents

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


June ~~10, 2016~~28, 2023	GSI TECHNOLOGY, INC.

	By:	/s/ DOUGLAS M. SCHIRLE
		Douglas M. Schirle Chief Financial Officer

9294

Table of Contents

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Lee-Lean Shu and Robert Yau, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


Name	Title	Date

/s/ LEE-LEAN SHU	President, Chief Executive Officer and Chairman	June ~~10, 2016~~28, 2023
Lee-Lean Shu	(Principal Executive Officer)

/s/ DOUGLAS M. SCHIRLE	Chief Financial Officer	June ~~10, 2016~~28, 2023
Douglas M. Schirle	(Principal Financial and Accounting Officer)

/s/ ROBERT YAU	Vice President, Engineering, Secretary and Director	June ~~10, 2016~~28, 2023
Robert Yau

/s/ JACK A. BRADLEY	Director	June ~~10, 2016~~28, 2023
Jack A. Bradley

/s/ ~~E. THOMAS HART~~ELIZABETH CHOLAWSKY	Director	June ~~10, 2016~~28, 2023
~~E. Thomas Hart~~Elizabeth Cholawsky

/s/ HAYDN HSIEH	Director	June ~~10 2016~~28, 2023
Haydn Hsieh

/s/ RUEY L. LU	Director	June ~~10, 2016~~28, 2023
Ruey L. Lu

/s/ ~~ARTHUR O. WHIPPLE~~BARBARA NELSON	Director	June ~~10, 2016~~28, 2023
~~Arthur O. Whipple~~Barbara Nelson

9395


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Common Stock, $0.001 par value	GSIT	The Nasdaq Stock Market LLC



Large accelerated filer ☐	Accelerated filer ☒☐	Non-accelerated filer ☐☒	Smaller reporting company ☒	Emerging growth company ☐


~~Alcatel-Lucent~~BAE Systems	~~Cisco Systems~~Ciena	~~General Dynamics~~Honeywell
~~Huawei Technologies~~	~~IBM~~	Lockheed	Nokia	Raytheon
~~Raytheon~~	Rockwell	~~ZTE~~


	☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


PART I			Page
~~PART I~~	~~Page~~
Item 1.	Business	3
Item 1A.	Risk Factors	1917
Item 1B.	Unresolved Staff Comments	34
~~Item 2.~~	~~Properties~~	34
~~Item 3.~~	~~Legal Proceedings~~	34
~~Item 4.~~	~~Mine Safety Disclosures~~	35
Item 2.	Properties	35
~~PART II~~Item 3.	Legal Proceedings	35
Item 4.	Mine Safety Disclosures	35

PART II		36
Item 5.	Market for ~~Registrant's~~Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36
Item 6.	~~Selected Financial Data~~Reserved	3736
Item 7.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	3837
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	5148
Item 8.	Financial Statements and Supplementary Data	5249
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	86
~~Item 9A.~~	~~Controls and Procedures~~	86
~~Item 9B.~~	~~Other Information~~	87
Item 9A.	Controls and Procedures	87
~~PART III~~		88
Item ~~10.~~9B.	~~Directors, Executive Officers and Corporate Governance~~Other Information	88
Item ~~11.~~9C.	~~Executive Compensation~~Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	88

PART III		89
Item ~~12.~~10.	Directors, Executive Officers and Corporate Governance	89
Item 11.	Executive Compensation	89
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	8889
Item 13.	Certain Relationships and Related Transactions, and Director Independence	88
~~Item 14.~~	~~Principal Accountant Fees and Services~~	88

~~PART IV~~		89
Item ~~15.~~14.	~~Exhibits~~Principal Accountant Fees and ~~Financial Statement Schedules~~Services	89

~~SIGNATURES~~PART IV	92	90
Item 15.	Exhibits and Financial Statement Schedules	90
Item 16.	Form 10-K Summary	93

SIGNATURES		94