PART I — FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for GSI Technology, Inc. for the quarter ended June 30, 2025, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, balance sheet components, and other financial disclosures [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | Change (in thousands) | % Change | | :----------------------------- | :--------------------------- | :-------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $22,725 | $13,434 | $9,291 | 69.16% | | Total current assets | $31,087 | $23,455 | $7,632 | 32.54% | | Total assets | $50,505 | $43,317 | $7,188 | 16.59% | | Total current liabilities | $5,372 | $7,074 | $(1,702) | -24.06% | | Total liabilities | $13,131 | $15,091 | $(1,960) | -12.99% | | Total stockholders' equity | $37,374 | $28,226 | $9,148 | 32.41% | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric (Three Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Net revenues | $6,283 | $4,671 | $1,612 | 34.51% | | Cost of revenues | $2,632 | $2,510 | $122 | 4.86% | | Gross profit | $3,651 | $2,161 | $1,490 | 68.95% | | Research and development | $3,097 | $4,214 | $(1,117) | -26.51% | | Selling, general and administrative | $2,730 | $2,604 | $126 | 4.84% | | Gain from sale of assets | $0 | $(5,737) | $5,737 | -100.00% | | Total operating expenses | $5,827 | $1,081 | $4,746 | 439.04% | | Income (loss) from operations | $(2,176) | $1,080 | $(3,256) | -301.48% | | Net income (loss) | $(2,217) | $1,078 | $(3,295) | -305.66% | | Basic EPS | $(0.08) | $0.04 | $(0.12) | -300.00% | | Diluted EPS | $(0.08) | $0.04 | $(0.12) | -300.00% | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) | Metric (Three Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Net income (loss) | $(2,217) | $1,078 | $(3,295) | -305.66% | | Total comprehensive income (loss) | $(2,217) | $1,078 | $(3,295) | -305.66% | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) | Metric (Three Months Ended June 30, 2025) | Amount (in thousands) | | :---------------------------------------- | :-------------------- | | Balance, March 31, 2025 | $28,226 | | Issuance of common stock (ATM offering) | $10,798 | | Issuance of common stock (ESOP) | $226 | | Stock-based compensation expense | $341 | | Net loss | $(2,217) | | Balance, June 30, 2025 | $37,374 | | Metric (Three Months Ended June 30, 2024) | Amount (in thousands) | | :---------------------------------------- | :-------------------- | | Balance, March 31, 2024 | $35,970 | | Issuance of common stock (ESOP) | $296 | | Stock-based compensation expense | $658 | | Net income | $1,078 | | Balance, June 30, 2024 | $38,002 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (Three Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :----------------------------------- | :------------------ | :------------------ | :-------------------- | | Net cash used in operating activities| $(1,712) | $(4,264) | $2,552 | | Net cash provided by (used in) investing activities | $(21) | $11,304 | $(11,325) | | Net cash provided by financing activities | $11,024 | $296 | $10,728 | | Net increase in cash and cash equivalents | $9,291 | $7,336 | $1,955 | | Cash and cash equivalents at end of period | $22,725 | $21,765 | $960 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of significant accounting policies, revenue recognition, balance sheet components, and other financial disclosures for the unaudited condensed consolidated financial statements [NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%201%E2%80%94THE%20COMPANY%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the Company's accounting policies, including GAAP and SEC compliance, government grant recognition, marketable securities impairment, accounts receivable allowances, and the impact of global economic factors and new accounting pronouncements - The Company's unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC regulations, with no material changes to **significant accounting policies** from the prior annual report[26](index=26&type=chunk)[28](index=28&type=chunk) - The Company applies IAS 20 by analogy for government agreements, recognizing grants when conditions are met and systematically over the period of related costs[29](index=29&type=chunk) - The Company assesses marketable securities for impairment, recording credit losses through an allowance if the present value of expected cash flows is less than amortized cost[30](index=30&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk) - Accounts receivable are recorded net of estimated allowances for credit losses, considering historical experience, credit quality, age, and economic conditions[34](index=34&type=chunk) - Global economic factors (**higher interest rates**, inflation, geopolitical tensions) and the military conflict in Israel are identified as risks impacting business activities, customers, suppliers, and operations[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - New accounting pronouncements ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) are being evaluated for their impact on financial statements, **effective** for annual periods beginning after December 15, 2024, and December 15, 2026, respectively[38](index=38&type=chunk)[39](index=39&type=chunk) [NOTE 2—REVENUE RECOGNITION](index=12&type=section&id=NOTE%202%E2%80%94REVENUE%20RECOGNITION) This note details the Company's policy for recognizing revenue, primarily from SRAM product sales, and provides a breakdown of revenues by customer and customer type - Revenue is recognized upon product shipment when control, title, and risks/rewards of ownership pass to the customer, and the Company has a right to payment[41](index=41&type=chunk) - Substantially all revenue (approximately **100%** in Q2 2025 and **99%** in Q2 2024) is derived from sales of SRAM products[46](index=46&type=chunk) | Customer | Q2 2025 Net Revenues (%) | Q2 2024 Net Revenues (%) | | :--------- | :----------------------- | :----------------------- | | Nokia | 9% | 21% | | KYEC | 4% | 22% | | Cadence Design Systems | 24% | 0% | | Customer Type | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :-------------- | :-------------------------------------------- | :-------------------------------------------- | | Contract manufacturers | $413 | $411 | | Distribution | $5,794 | $4,240 | | OEMs | $76 | $20 | | Total | $6,283 | $4,671 | [NOTE 3—NET INCOME (LOSS) PER COMMON SHARE](index=14&type=section&id=NOTE%203%E2%80%94NET%20INCOME%20(LOSS)%20PER%20COMMON%20SHARE) This note provides the calculation of basic and diluted net income (loss) per common share, including the impact of anti-dilutive securities | Metric (Three Months Ended June 30,) | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | Net income (loss) | $(2,217) | $1,078 | | Weighted average shares—Basic | 26,967 | 25,374 | | Weighted average shares—Diluted | 26,967 | 25,686 | | Net income (loss) per common share—Basic | $(0.08) | $0.04 | | Net income (loss) per common share—Diluted | $(0.08) | $0.04 | - **7,031 thousand shares** underlying options and ESPP shares were excluded from diluted EPS calculation in Q2 2025 due to their anti-dilutive effect, compared to **7,650 thousand** in Q2 2024[51](index=51&type=chunk) [NOTE 4—BALANCE SHEET DETAIL](index=15&type=section&id=NOTE%204%E2%80%94BALANCE%20SHEET%20DETAIL) This note provides detailed breakdowns of inventories, accounts receivable, and intangible assets, along with information on amortization expenses and recent cost-cutting measures | Inventories (in thousands) | June 30, 2025 | March 31, 2025 | | :------------------------- | :------------ | :------------- | | Work-in-progress | $1,602 | $1,769 | | Finished goods | $2,159 | $2,122 | | Inventory at distributors | $2 | $0 | | Total | $3,763 | $3,891 | | Accounts Receivable, net (in thousands) | June 30, 2025 | March 31, 2025 | | :------------------------------------ | :------------ | :------------- | | Accounts receivable | $1,613 | $3,215 | | Less: Allowances for credit losses | $(26) | $(46) | | Total | $1,587 | $3,169 | | Intangible Assets (in thousands) | Gross Carrying Amount (June 30, 2025) | Accumulated Amortization (June 30, 2025) | Net Carrying Amount (June 30, 2025) | | :------------------------------- | :------------------------------------ | :--------------------------------------- | :---------------------------------- | | Product designs | $590 | $(590) | $0 | | Patents | $4,220 | $(2,956) | $1,264 | | Software | $80 | $(80) | $0 | | Total | $4,890 | $(3,626) | $1,264 | - Amortization of intangible assets included in **cost of revenues** was **$59,000** for Q2 2025, slightly up from **$58,000** in Q2 2024[54](index=54&type=chunk) | Estimated Future Amortization Expense (in thousands) | | :----------------------------------- | | Fiscal year ending March 31, 2026 (remaining nine months): $175 | | Fiscal year ending March 31, 2027: $233 | | Fiscal year ending March 31, 2028: $233 | | Fiscal year ending March 31, 2029: $233 | | Fiscal year ending March 31, 2030: $233 | | Thereafter: $157 | | Total: $1,264 | - The Company implemented strategic cost-cutting measures in August 2024, including an approximate **16% reduction** in its global workforce. Severance payments were completed by March 31, 2025, with no additional charges expected[56](index=56&type=chunk) [NOTE 5—GOODWILL](index=17&type=section&id=NOTE%205%E2%80%94GOODWILL) This note confirms the Company's goodwill balance and the results of its annual impairment test - **Goodwill balance** remained at **$8.0 million** as of June 30, 2025, and March 31, 2025, resulting from the MikaMonu Group Ltd. acquisition in fiscal 2016[58](index=58&type=chunk) - The annual impairment test in Q4 fiscal 2025 concluded **no impairment**, as the fair value of the sole reporting unit exceeded its carrying value[59](index=59&type=chunk) [NOTE 6—INCOME TAXES](index=18&type=section&id=NOTE%206%E2%80%94INCOME%20TAXES) This note discusses the Company's income tax provisions, including its valuation allowance on deferred tax assets and the estimated annual effective income tax rate - The Company maintains a full valuation allowance on its U.S. federal and state deferred tax assets due to historical losses[60](index=60&type=chunk) | Metric (Three Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | | :----------------------------------- | :------------------ | :------------------ | | Income tax expense | $54 | $57 | | Net income (loss) before income taxes| $(2,200) | $1,100 | | Estimated annual effective income tax rate | (2.58%) | (2.89%) | [NOTE 7—FINANCIAL INSTRUMENTS](index=18&type=section&id=NOTE%207%E2%80%94FINANCIAL%20INSTRUMENTS) This note provides details on the Company's financial assets, specifically money market funds, and changes in contingent consideration liability | Financial Assets (in thousands) | June 30, 2025 (Level 1) | March 31, 2025 (Level 1) | | :------------------------------ | :---------------------- | :----------------------- | | Money market funds | $11,888 | $4,836 | - Contingent consideration liability was **$0** at June 30, 2025, compared to **$74,000** at June 30, 2024, reflecting re-measurement and accretion changes[68](index=68&type=chunk) [NOTE 8—LEASES](index=21&type=section&id=NOTE%208%E2%80%94LEASES) This note outlines the Company's lease arrangements, including a sale and leaseback transaction, lease liabilities, and future lease maturities - On June 6, 2024, the Company completed a sale and leaseback transaction for its Sunnyvale property, generating **$11.3 million** in cash and recording a **$5.7 million gain**[71](index=71&type=chunk) | Lease Liabilities (in thousands) | June 30, 2025 | March 31, 2025 | | :------------------------------- | :------------ | :------------- | | Operating lease right-of-use assets | $9,232 | $9,547 | | Lease liabilities-current | $1,615 | $1,642 | | Lease liabilities-non-current | $7,743 | $8,001 | | Total operating lease liabilities| $9,358 | $9,643 | | Lease Costs (Three Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | | :---------------------------------------- | :------------------ | :------------------ | | Operating lease cost | $465 | $233 | | Short-term lease cost | $7 | $8 | | Total | $472 | $241 | | Operating Lease Liabilities Maturities (as of June 30, 2025, in thousands) | | :----------------------------------------------------------------------- | | Fiscal Year 2026 (remaining nine months): $1,217 | | Fiscal Year 2027: $1,621 | | Fiscal Year 2028: $1,192 | | Fiscal Year 2029: $1,220 | | Fiscal Year 2030: $1,257 | | Thereafter: $5,651 | | Total undiscounted future cash flows: $12,158 | | Present value of undiscounted future cash flows: $9,358 | [NOTE 9—COMMITMENTS AND CONTINGENCIES](index=22&type=section&id=NOTE%209%E2%80%94COMMITMENTS%20AND%20CONTINGENCIES) This note addresses the Company's indemnification obligations, noting that they have not materially impacted financial results historically - The Company has indemnification obligations in various agreements, but historically, payments under these agreements have not had a **material effect** on its financial condition or results of operations[75](index=75&type=chunk)[77](index=77&type=chunk) [NOTE 10—STOCK-BASED COMPENSATION](index=24&type=section&id=NOTE%2010%E2%80%94STOCK-BASED%20COMPENSATION) This note details the Company's stock-based compensation plans, including available shares for grant, stock option activity, and related expenses - As of June 30, 2025, **2,841,569 shares** of common stock were available for grant under the Company's Amended and Restated 2016 Equity Incentive Plan[78](index=78&type=chunk) | Stock Option Activity (Three Months Ended June 30, 2025) | | :------------------------------------------------------- | | Balance at March 31, 2025: 7,636,716 options outstanding, weighted average exercise price $5.03 | | Granted: 306,010 options, weighted average exercise price $3.68 | | Exercised: (1,875) options, weighted average exercise price $1.90 | | Forfeited: (75,753) options, weighted average exercise price $3.86 | | Balance at June 30, 2025: 7,865,098 options outstanding, weighted average exercise price $4.98 | | Options vested and exercisable: 5,836,736, weighted average exercise price $5.48 | | Options unvested: 2,028,362, weighted average exercise price $3.56 | | Stock-Based Compensation Expense (Three Months Ended June 30, in thousands) | | :------------------------------------------------------------------------ | | **2025** | | Cost of revenues: $44 | | Research and development: $(62) | | Selling, general and administrative: $359 | | Total: $341 | | **2024** | | Cost of revenues: $56 | | Research and development: $290 | | Selling, general and administrative: $312 | | Total: $658 | [NOTE 11—RELATED PARTY TRANSACTIONS](index=24&type=section&id=NOTE%2011%E2%80%94RELATED%20PARTY%20TRANSACTIONS) This note discloses manufacturing services incurred from a related party, Wistron Neweb Corp (WNC), where a director holds a key position - The Company incurred **$16,000** in manufacturing services from Wistron Neweb Corp (WNC) in Q2 2025, up from **$8,000** in Q2 2024. Haydn Hsieh, a director, is Chairman and Chief Strategy Officer of WNC[80](index=80&type=chunk) [NOTE 12—SEGMENT AND GEOGRAPHIC INFORMATION](index=24&type=section&id=NOTE%2012%E2%80%94SEGMENT%20AND%20GEOGRAPHIC%20INFORMATION) This note clarifies that the Company operates as a single business segment and provides a breakdown of net revenues by geographic area - The Company operates as a single reportable business segment: the design, development, and sale of integrated circuits[81](index=81&type=chunk) | Net Revenues by Geographic Area (Three Months Ended June 30, in thousands) | | :----------------------------------------------------------------------- | | **2025** | | United States: $4,472 | | China: $404 | | Singapore: $484 | | Netherlands: $103 | | Germany: $572 | | Rest of the world: $248 | | Total: $6,283 | | **2024** | | United States: $1,565 | | China: $1,098 | | Singapore: $775 | | Netherlands: $36 | | Germany: $930 | | Rest of the world: $267 | | Total: $4,671 | [NOTE 13—GOVERNMENT AGREEMENTS](index=26&type=section&id=NOTE%2013%E2%80%94GOVERNMENT%20AGREEMENTS) This note details the Company's government prototype agreements for APU2 and Gemini-II technology development, including funding recognition and milestone payments - The Company has prototype agreements with the Space Development Agency (SDA) for APU2 development (**$1.25 million** estimated total) and the U.S. Air Force Research Laboratory (AFRL) for specialized APU2 algorithms (**$1.1 million** estimated total)[85](index=85&type=chunk)[86](index=86&type=chunk) - In October 2024, the Company was selected by the U.S. Army for a potential contract of up to **$250,000** to develop edge computing AI solutions using Gemini-II technology, focusing on 1-bit Large Language Models (LLMs)[87](index=87&type=chunk) - Funding recognized as a reduction to R&D expense was **$543,000** in Q2 2025, up from **$281,000** in Q2 2024. Milestone payments received totaled **$594,000** in Q2 2025 and **$79,000** in Q2 2024[89](index=89&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the quarter ended June 30, 2025, covering business overview, financial performance, liquidity, and critical accounting estimates [Overview](index=28&type=section&id=Overview) This overview describes GSI Technology's focus on high-performance semiconductor memory solutions, its transition to APU products, government agreements, and current liquidity position - GSI Technology provides high-performance semiconductor memory solutions for in-place associative computing (APU) in AI and HPC markets, while current revenue is **primarily from Very Fast SRAMs**[91](index=91&type=chunk) - APU products, focused on similarity search, have not generated material revenues to date but are being developed for applications like visual search, computer vision, drug discovery, and SAR image processing[91](index=91&type=chunk) - The Company has secured government prototype agreements for APU2 development with the Space Development Agency (**$1.25M**), AFWERX/AFRL (**$1.1M**), and the U.S. Army (**$250K**), focusing on space-based computing and edge AI solutions[92](index=92&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - As of June 30, 2025, **cash and cash equivalents** stood at **$22.7 million** with no debt. Liquidity was strengthened by a **$11.3 million** property sale in June 2024 and **$10.8 million** net proceeds from an At-the-Market offering in May/June 2025[97](index=97&type=chunk) [Revenues](index=30&type=section&id=Revenues) This section analyzes the Company's revenue sources, primarily from Very Fast SRAM products, and discusses factors influencing average selling prices and quarterly fluctuations - Substantially all revenues are from Very Fast SRAM products, with direct and indirect sales to networking and telecommunications OEMs accounting for **19% to 34%** in the last three fiscal years[98](index=98&type=chunk) - The average selling price of products has **increased** or remained unchanged recently, but historically declines over a product's life, requiring **increased unit sales** or new higher-priced products to maintain revenue[100](index=100&type=chunk) - Quarterly net revenues fluctuate due to insufficient initial orders, dependence on same-quarter shipments, timing of product releases, and customer order delays/cancellations[101](index=101&type=chunk) | Customer | Q2 2025 Net Revenues (%) | FY2025 Net Revenues (%) | FY2024 Net Revenues (%) | FY2023 Net Revenues (%) | | :--------- | :----------------------- | :---------------------- | :---------------------- | :---------------------- | | KYEC | 4% | 23% | 3% | 2% | | Nokia | 9% | 12% | 21% | 17% | | Cadence Design Systems | 24% | 8% | 8% | 2% | [Cost of Revenues](index=32&type=section&id=Cost%20of%20Revenues) This section details the components of cost of revenues, including outsourced manufacturing expenses, and notes the impact of semiconductor industry cyclical fluctuations and supply chain constraints - **Cost of revenues** primarily includes outsourced wafer fabrication, wafer sort, assembly, test, burn-in expenses, amortized production mask sets, stock-based compensation, and materials/overhead[104](index=104&type=chunk) - Outsourced manufacturing costs are subject to semiconductor industry cyclical fluctuations, with recent **increases** due to supply chain constraints for wafers and outsourced assembly[104](index=104&type=chunk) [Gross Profit](index=34&type=section&id=Gross%20Profit) This section explains the variability of gross profit margins based on product type and anticipates fluctuations due to product mix, average selling prices, and cost control - **Gross profit margins** vary by product, generally higher for radiation-hardened/tolerant SRAMs, higher density products, and higher speed/industrial temperature products[106](index=106&type=chunk) - Overall **gross margins** are expected to fluctuate due to shifts in product mix, changes in average selling prices, and control over **cost of revenues**[106](index=106&type=chunk) [Research and Development Expenses](index=34&type=section&id=Research%20and%20Development%20Expenses) This section outlines the components of R&D expenses, including salaries, prototype development, and mask set costs, emphasizing the need for continued substantial investment in new products - R&D expenses include salaries for design engineers, prototype development, stock-based compensation, and consultant fees, all expensed as incurred[107](index=107&type=chunk) - Costs for pre-production mask sets, such as the **$2.4 million** incurred for APU2 in Q3 fiscal 2024, are charged to R&D and can cause quarterly fluctuations[107](index=107&type=chunk) - Continued **substantial investment** in R&D, particularly for in-place associative computing products, is critical for long-term success and may lead to operating losses[107](index=107&type=chunk) [Selling, General and Administrative Expenses](index=34&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) This section details SG&A expenses, including sales, marketing, and administrative costs, and discusses expectations for future trends relative to revenue growth - SG&A expenses include commissions, salaries for sales, marketing, administrative, finance, and HR personnel, professional fees, and product promotion costs[108](index=108&type=chunk) - Sales and marketing expenses are expected to **increase** in absolute dollars with sales force expansion but decline as a percentage of **net revenues** if revenues grow[108](index=108&type=chunk) [Goodwill](index=34&type=section&id=Goodwill) This section confirms the Company's goodwill balance and the absence of impairment findings from the latest annual test - **Goodwill** remained at **$8.0 million** as of June 30, 2025, and March 31, 2025, with **no impairment** identified during the annual test in Q4 fiscal 2025[109](index=109&type=chunk) [Intangible Assets](index=34&type=section&id=Intangible%20Assets) This section discusses the Company's identifiable amortizable intangible assets, impairment review policy, and potential future impairment risks related to APU product revenue - Identifiable amortizable intangible assets are reviewed for impairment when circumstances indicate carrying value may not be recoverable; **no impairment** indicators were noted as of June 30, 2025[110](index=110&type=chunk) - Failure to generate forecasted revenue from the APU product could lead to a non-cash impairment charge in future periods[110](index=110&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the Company's financial performance, including net revenues, cost of revenues, gross profit, operating expenses, and net income (loss) for the quarter [Net Revenues](index=35&type=section&id=Net%20Revenues) This subsection analyzes the increase in net revenues, changes in average selling price and units shipped, and customer-specific sales fluctuations - **Net revenues increased** by **34.5%** to **$6.3 million** in Q2 2025 from **$4.7 million** in Q2 2024[111](index=111&type=chunk) - The average selling price **increased** by **37.9%** in Q2 2025 compared to Q2 2024, while the number of units shipped **decreased** by **2.0%**, driven by changes in product mix[111](index=111&type=chunk) | Customer (Three Months Ended June 30,) | 2025 Sales (in thousands) | 2024 Sales (in thousands) | Change (in thousands) | | :------------------------------------- | :------------------------ | :------------------------ | :-------------------- | | KYEC | $267 | $1,022 | $(755) | | Nokia | $536 | $998 | $(462) | | Cadence Design Systems | $1,500 | $0 | $1,500 | - The Company observed early indications of improvement in its SRAM business during the second half of fiscal 2025, with existing customers depleting channel inventory and anticipated resumption of ordering[111](index=111&type=chunk) [Cost of Revenues](index=35&type=section&id=Cost%20of%20Revenues) This subsection details the increase in cost of revenues, attributing it to product and customer mix changes, and notes variations in inventory provisions and stock-based compensation - **Cost of revenues increased** by **4.9%** to **$2.6 million** in Q2 2025 from **$2.5 million** in Q2 2024, **primarily due to** changes in product and customer mix[112](index=112&type=chunk) - Provision for excess and obsolete inventories **decreased** to **$70,000** in Q2 2025 from **$91,000** in Q2 2024[112](index=112&type=chunk) - Stock-based compensation expense in **cost of revenues decreased** to **$44,000** in Q2 2025 from **$56,000** in Q2 2024[112](index=112&type=chunk) [Gross Profit](index=35&type=section&id=Gross%20Profit) This subsection highlights the significant increase in gross profit and gross margin, driven by favorable product and customer mix and the impact of fixed overhead - **Gross profit increased** by **69.0%** to **$3.7 million** in Q2 2025 from **$2.2 million** in Q2 2024[113](index=113&type=chunk) - **Gross margin increased** to **58.1%** in Q2 2025 from **46.3%** in Q2 2024, driven by changes in product and customer mix and the impact of fixed overhead on higher shipment levels[113](index=113&type=chunk) [Research and Development Expenses](index=35&type=section&id=Research%20and%20Development%20Expenses) This subsection analyzes the decrease in R&D expenses, attributing it to reduced stock-based compensation, payroll, and software maintenance, partially offset by government contract funding - R&D expenses **decreased** by **26.5%** to **$3.1 million** in Q2 2025 from **$4.2 million** in Q2 2024[114](index=114&type=chunk)[116](index=116&type=chunk) - The **decrease** was **primarily due to** a **$352,000 decrease** in stock-based compensation, a **$337,000 decrease** in payroll-related expenses (due to August 2024 cost reduction measures), and a **$231,000 decrease** in software maintenance expense[116](index=116&type=chunk) - R&D expenses were offset by government contract funding of **$543,000** in Q2 2025, up from **$318,000** in Q2 2024[116](index=116&type=chunk) [Selling, General and Administrative Expense](index=37&type=section&id=Selling,%20General%20and%20Administrative%20Expense) This subsection details the increase in SG&A expenses, specifically noting the rise in stock-based compensation - SG&A expenses **increased** by **4.8%** to **$2.7 million** in Q2 2025 from **$2.6 million** in Q2 2024[117](index=117&type=chunk) - Stock-based compensation expense in SG&A **increased** to **$359,000** in Q2 2025 from **$312,000** in Q2 2024[117](index=117&type=chunk) [Gain from Sale of Assets](index=37&type=section&id=Gain%20from%20Sale%20of%20Assets) This subsection explains the gain recognized from the sale and leaseback of the Company's headquarters building in the prior year - The **gain from sale of assets** in Q2 2024 was **$5.7 million**, resulting from the sale and leaseback of the Company's headquarters building completed on June 6, 2024[118](index=118&type=chunk) [Interest Income and Other Expense, Net](index=37&type=section&id=Interest%20Income%20and%20Other%20Expense,%20Net) This subsection analyzes the decrease in net interest and other income, attributing it to lower interest income and increased foreign currency exchange loss - Interest income and other income (expense), net, **decreased** to **$13,000** in Q2 2025 from **$55,000** in Q2 2024[119](index=119&type=chunk) - Interest income **decreased** by **$22,000** due to lower cash balances invested in money market funds. Foreign currency exchange loss **increased** to **$53,000** in Q2 2025 from **$33,000** in Q2 2024[119](index=119&type=chunk) [Provision for Income Taxes](index=37&type=section&id=Provision%20for%20Income%20Taxes) This subsection details the decrease in the provision for income taxes, primarily due to shifts in the mix of income across operating jurisdictions - The provision for income taxes **decreased** to **$54,000** in Q2 2025 from **$57,000** in Q2 2024, **primarily due to** fluctuations in the relative mix of income among operating jurisdictions[120](index=120&type=chunk) [Net Income (Loss)](index=37&type=section&id=Net%20Income%20(Loss)) This subsection summarizes the Company's shift from net income to a net loss, driven by changes in revenues, gross profit, operating expenses, and the prior year's asset sale gain - The Company reported a **net loss** of **$(2.2) million** in Q2 2025, compared to a **net income** of **$1.1 million** in Q2 2024, **primarily driven by** changes in **net revenues**, **gross profit**, **operating expenses**, and the **gain from sale of assets**[121](index=121&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's cash position, cash flow activities, future capital requirements, and purchase obligations - **Cash and cash equivalents increased** to **$22.7 million** as of June 30, 2025, from **$13.4 million** as of March 31, 2025[121](index=121&type=chunk) | Cash Flow Activity (Three Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | | :----------------------------------------------- | :------------------ | :------------------ | | Net cash used in operating activities | $(1,712) | $(4,264) | | Net cash provided by (used in) investing activities | $(21) | $11,304 | | Net cash provided by financing activities | $11,024 | $296 | - Operating cash outflow in Q2 2025 was **primarily due to** a **net loss** of **$2.2 million** and a **$1.7 million decrease** in accrued expenses (related to a production mask set payment)[122](index=122&type=chunk) - Financing cash inflow in Q2 2025 included **$10.8 million** net proceeds from an At-the-Market offering and **$226,000** from employee stock plans[126](index=126&type=chunk) - The Company believes existing **cash and cash equivalents** will be **sufficient** for at least the next 12 months, but future capital requirements depend on revenue growth, manufacturing costs, and product development[127](index=127&type=chunk) - As of June 30, 2025, purchase obligations totaled **$13.4 million**, with **$2.0 million** payable in the next 12 months[128](index=128&type=chunk) [Critical Accounting Estimates](index=39&type=section&id=Critical%20Accounting%20Estimates) This section refers to the Company's Annual Report for a detailed discussion of critical accounting estimates - **Critical accounting estimates** are disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2025[130](index=130&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of off-balance sheet arrangements as of the reporting date - As of June 30, 2025, the Company had no off-balance sheet arrangements or relationships with unconsolidated entities[131](index=131&type=chunk) [Recent Accounting Pronouncements](index=39&type=section&id=Recent%20Accounting%20Pronouncements) This section directs readers to Note 1 for information on recent accounting pronouncements - Information on recent accounting pronouncements is provided in Note 1 to the condensed consolidated financial statements[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the Company's exposure to market risks, specifically foreign currency exchange risk and interest rate sensitivity, highlighting minimal exposure due to U.S. dollar denominated transactions and short-term investments [Foreign Currency Exchange Risk](index=41&type=section&id=Foreign%20Currency%20Exchange%20Risk) This subsection explains the Company's minimal exposure to foreign currency exchange risks due to U.S. dollar denominated transactions and the absence of hedging activities - The Company has relatively little exposure to foreign currency exchange risks as most revenues and expenses are U.S. dollar denominated, with minimal foreign exchange gains and losses to date[133](index=133&type=chunk) - The Company does not currently use forward exchange contracts or other derivative financial instruments for hedging or speculative purposes[133](index=133&type=chunk) [Interest Rate Sensitivity](index=41&type=section&id=Interest%20Rate%20Sensitivity) This subsection describes the Company's interest rate risk, which is limited due to its cash and cash equivalents being primarily invested in short-term money market funds - **Cash and cash equivalents** totaled **$22.7 million** at June 30, 2025, **primarily invested** in money market funds for working capital[134](index=134&type=chunk) - Due to the short-term nature of investments, the Company believes it has no material exposure to changes in fair value from interest rate fluctuations; a hypothetical **100 basis point change** would not materially affect fair value[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the Company's disclosure controls and procedures and internal control over financial reporting, concluding on their effectiveness and reporting no material changes [Management's Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Management's%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This subsection states management's conclusion that the Company's disclosure controls and procedures were effective as of June 30, 2025 - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were **effective** as of June 30, 2025[136](index=136&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=41&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) This subsection acknowledges that while disclosure controls and internal control provide reasonable assurance, no system can prevent all errors or fraud due to inherent limitations - Management believes disclosure controls and internal control over financial reporting provide reasonable, not absolute, assurance of achieving their objectives, acknowledging that no system can prevent all errors and fraud[137](index=137&type=chunk)[138](index=138&type=chunk)[140](index=140&type=chunk) [Changes in Internal Control over Financial Reporting](index=43&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This subsection reports that no material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[141](index=141&type=chunk) PART II — OTHER INFORMATION [Item 1A. Risk Factors](index=43&type=page&id=Item%201A.%20Risk%20Factors) This section outlines various risks and uncertainties that could adversely affect GSI Technology's business, financial condition, and stock price, including operational, macroeconomic, manufacturing, and market-related challenges [Risk Factor Summary](index=43&type=section&id=Risk%20Factor%20Summary) This summary highlights key risks such as unpredictable operating results, customer concentration, strategic uncertainties, dependence on SRAM sales, new product introduction challenges, macroeconomic pressures, and operational vulnerabilities - Key risks include **unpredictable operating results**, **significant customer concentration** (KYEC, Nokia, Cadence Design Systems), uncertainties from strategic alternatives, dependence on Very Fast SRAMs while transitioning to in-place associative computing, and the risks associated with new product introductions[143](index=143&type=chunk) - Macroeconomic factors such as **higher interest rates**, inflation, trade disputes, geopolitical tensions (including conflicts in Israel and Ukraine), and global economic decline are expected to adversely affect revenues and financial condition[143](index=143&type=chunk) - Operational risks include maintaining **effective internal controls**, potential **goodwill** and intangible asset impairment, reliance on single-source suppliers, challenges in developing new products for rapid market changes, and the cyclical nature of the networking and telecommunications markets[146](index=146&type=chunk) [Risks Related to Our Business and Financial Condition](index=47&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Financial%20Condition) This section details risks impacting the Company's business and financial health, including volatile operating results, rising expenses, customer concentration, strategic review uncertainties, new product development challenges, and potential impairment of assets - Quarterly operating results have varied **significantly**, with **net revenues** ranging from **$4.6 million** to **$6.3 million** and operating losses from **$2.2 million** to **$6.7 million** in the last nine fiscal quarters, making period-to-period comparisons unreliable for future performance prediction[149](index=149&type=chunk) - Expenses are largely fixed and expected to **increase**, with raw material costs (e.g., wafer prices up **20%** in early 2022 and **6%** in early 2023) and manufacturing services rising due to supply chain constraints[153](index=153&type=chunk) - KYEC, Nokia, and Cadence Design Systems collectively accounted for a **significant portion** of **net revenues** in recent fiscal years (e.g., KYEC **23%** in FY2025, Nokia **12%** in FY2025, Cadence **8%** in FY2025), and fluctuations in their orders will **substantially affect operating results**[155](index=155&type=chunk) - The ongoing strategic review initiated on May 2, 2024, to maximize stockholder value (including financing, divestiture, licensing, or sale) creates uncertainty that could disrupt business operations, affect employee retention, and cause stock price volatility[156](index=156&type=chunk)[159](index=159&type=chunk) - Future success is **substantially dependent** on the successful introduction of new in-place associative computing products, a project involving **significant** technological, financial, and market establishment risks[162](index=162&type=chunk) - The Company incurred **net losses** of **$10.6 million**, **$20.1 million**, and **$16.0 million** during fiscal 2025, 2024, and 2023, respectively, with no assurance of sustained revenue growth or profitability[168](index=168&type=chunk) - A **material weakness** in internal control over financial reporting identified in FY2022 and unremediated at FY2023 was **remediated** by March 31, 2024, but there's no assurance against future deficiencies[169](index=169&type=chunk)[170](index=170&type=chunk) - **Goodwill** (**$8.0 million**) and intangible assets (**$1.3 million**) from the MikaMonu acquisition are subject to impairment tests; an adverse change in market conditions or failure of APU products could trigger impairment charges[172](index=172&type=chunk) [Risks Related to Manufacturing and Product Development](index=55&type=section&id=Risks%20Related%20to%20Manufacturing%20and%20Product%20Development) This section covers risks associated with manufacturing, supply chain, product development, competition, sales channels, personnel, intellectual property, and operational growth - The Company relies on single-source suppliers for key components, including TSMC for wafers and ASE for packaging, without long-term fixed-price contracts, exposing it to supply disruptions and cost **increases**[173](index=173&type=chunk) - Failure to develop new products and respond to rapid technological changes and evolving industry standards, particularly in networking and telecommunications, could harm the business[175](index=175&type=chunk) - **Increased** wafer fabrication and assembly costs, driven by demand upturns or inflationary pressures, may not be offset by higher average selling prices, leading to declining **gross margins**[178](index=178&type=chunk) - The Very Fast SRAM market is highly competitive, characterized by price erosion, rapid technological change, and cyclical patterns, with competitors often having greater resources and integrated facilities[180](index=180&type=chunk) - A **significant percentage** of sales are through distributors (e.g., Avnet Logistics accounted for **71.5%** of **net revenues** in Q2 2025), and inability to manage these channels or forecast sales accurately could harm the business[184](index=184&type=chunk) - The average unit selling prices of products historically decline over their lives, requiring continuous introduction of lower-cost versions, **increased unit sales**, or new higher-priced products to maintain revenues and **gross margins**[185](index=185&type=chunk) - The Company's future success is **substantially dependent** on the continued services of senior management and other key personnel, including Lee-Lean Shu (President/CEO) and Dr. Avidan Akerib (VP of Associative Computing), without whom development and strategic objectives could be delayed[186](index=186&type=chunk) - System security risks, data protection breaches, cyber-attacks, and IT integration issues could disrupt internal operations or business partners, leading to financial losses, reputational damage, and **increased expenses**[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) - Demand for the Company's products is tied to the success of OEM customers in manufacturing, marketing, and selling their own products, making the Company **vulnerable** to factors affecting its customers' businesses[194](index=194&type=chunk)[195](index=195&type=chunk) - Products have lengthy sales cycles (up to **24 months**), making expense planning and forecasting difficult, and the new subscription business model for APU products introduces additional execution and customer retention risks[196](index=196&type=chunk)[197](index=197&type=chunk) - Actions by activist stockholders could be costly, time-consuming, and disruptive, potentially interfering with strategic plans and affecting relationships with stakeholders[198](index=198&type=chunk)[201](index=201&type=chunk) - Future acquisitions or investments carry risks such as integration difficulties, diversion of resources, overpaying, and challenges in retaining key employees[202](index=202&type=chunk) - Inability to recruit and retain highly skilled technical, managerial, sales, and marketing personnel could harm business and product development efforts due to intense competition for such individuals[204](index=204&type=chunk) - Claims of intellectual property infringement could lead to **substantial costs**, diversion of resources, and require stopping sales, obtaining licenses, paying damages, or redesigning products[205](index=205&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) - Failure to protect proprietary technology through patents, trade secrets, copyrights, and contractual agreements could allow competitors to use the technology without approval, harming competitive ability[209](index=209&type=chunk) - **Significant order cancellations** or deferrals, which customers can generally do on short notice, could materially and adversely affect operating results by leading to excess inventory, reduced **profit margins**, and **increased** obsolescence[210](index=210&type=chunk) - Business growth could strain management systems, infrastructure, and resources, requiring **significant capital investment** and potentially exposing inadequacies in controls and staffing[211](index=211&type=chunk)[213](index=213&type=chunk) - Difficulties in transitioning to smaller geometry process technologies and advanced manufacturing processes could result in reduced manufacturing yields, delivery delays, and **increased expenses**[214](index=214&type=chunk) - Manufacturing process technologies are subject to rapid change and require **significant R&D expenditures**, such as the **$2.4 million** incurred for an APU2 pre-production mask set in Q3 fiscal 2024[215](index=215&type=chunk) - Complex products could contain defects, leading to delayed revenue recognition, loss of market share, **significant warranty/support costs**, and potential product liability claims[216](index=216&type=chunk) [Risks Related to Our International Business and Operations](index=69&type=section&id=Risks%20Related%20to%20Our%20International%20Business%20and%20Operations) This section addresses risks associated with international operations, including export controls, trade policies, geopolitical instability, and reliance on foreign suppliers and customers - The Company's offerings are subject to export controls and economic sanctions laws, and failure to comply or for channel distributors to obtain necessary licenses could result in fines, penalties, and reputational harm[217](index=217&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Changes in trade policy, including new tariffs, export restrictions, and trade barriers, could **increase** manufacturing/transportation costs, limit market access, and harm revenue and competitive position[221](index=221&type=chunk) - Business performance may be affected by changes in Taiwan's political, social, and economic environment, as much of the manufacturing and testing occurs there; **significant armed conflict** could materially damage the business[222](index=222&type=chunk) - Software development for associative computing products occurs in Israel, making business performance and operations **vulnerable** to the evolving military conflict there[223](index=223&type=chunk) - International business exposes the Company to risks including uncertainties regarding taxes/tariffs, political/economic instability, heightened price sensitivity in emerging markets, compliance with foreign laws, and fluctuations in freight rates[226](index=226&type=chunk)[229](index=229&type=chunk) - Changes in U.S. international trade agreements or corporate tax provisions related to global manufacturing and sales could adversely affect business, financial condition, and results of operations[227](index=227&type=chunk) - Demand for products incorporated into advanced military electronics could **decrease** if U.S. military operations scale back or governmental appropriations for military purchases are reduced[228](index=228&type=chunk) - Reliance on suppliers and customers in the Pacific Rim (e.g., TSMC in Taiwan) exposes the Company to **significant risks** from natural disasters (earthquakes, typhoons) and outbreaks of contagious diseases, which could disrupt production and shipments[230](index=230&type=chunk)[231](index=231&type=chunk) [Risks Relating to Our Common Stock and the Securities Market](index=75&type=section&id=Risks%20Relating%20to%20Our%20Common%20Stock%20and%20the%20Securities%20Market) This section outlines risks related to the Company's common stock, including price volatility, potential need for additional capital, influence of executive officers, and anti-takeover provisions - The trading price of common stock is subject to **significant fluctuation** and volatility due to factors such as financial results, new product announcements, changes in demand estimates, and overall market conditions[233](index=233&type=chunk)[234](index=234&type=chunk) - The Company may need to raise additional capital in the future, which may not be available on favorable terms or at all, potentially leading to dilution for existing stockholders if equity securities are issued[237](index=237&type=chunk) - Executive officers, directors, and their affiliates beneficially owned approximately **25%** of outstanding common stock as of July 31, 2025, allowing them **substantial influence** over stockholder approval matters[238](index=238&type=chunk) - Provisions in the Company's charter documents, such as the Board's authority to issue preferred stock and restrictions on stockholder actions, might inhibit potential acquisition bids and affect the market price of common stock[239](index=239&type=chunk)[240](index=240&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=79&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the Company's stock repurchase program, indicating that no shares were repurchased during the quarter ended June 30, 2025 [Stock Repurchase Program](index=79&type=section&id=Stock%20Repurchase%20Program) This subsection states that despite authorization, no shares were repurchased under the stock repurchase program during the quarter - The Board of Directors authorized a stock repurchase program, but no shares were repurchased during the quarter ended June 30, 2025[241](index=241&type=chunk) [Item 5. Other information](index=79&type=section&id=Item%205.%20Other%20information) This section provides information on insider trading arrangements and policies, stating that no directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter [Insider Trading Arrangements and Policies](index=79&type=section&id=Insider%20Trading%20Arrangements%20and%20Policies) This subsection confirms that no directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter - No director or officer adopted or terminated a Rule 10b5-1(c) trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[242](index=242&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications under the Sarbanes-Oxley Act and Inline XBRL documents | Exhibit Number | Name of Document | | :------------- | :--------------- | | 31.1 | Certification of Lee-Lean Shu, President, Chief Executive Officer and Chairman, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 31.2 | Certification of Douglas M. Schirle, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 32.1 | Certification of Lee-Lean Shu, President, Chief Executive Officer and Chairman, and Douglas M. 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 (formatted in Inline XBRL and contained in Exhibit 101) | [Signatures](index=80&type=section&id=Signatures) This section contains the required signatures of the registrant's authorized officers, confirming the filing of the report - The report was signed on August 8, 2025, by Lee-Lean Shu, President, Chief Executive Officer and Chairman, and Douglas M. Schirle, Chief Financial Officer[246](index=246&type=chunk)

Core Viewpoint - GSI Technology, Inc. has faced significant stock decline and net losses despite revenue growth driven by SRAM chip sales, indicating mixed investor sentiment and operational challenges [1][2][4]. Financial Performance - The company reported a net loss of $2.2 million for the first quarter of fiscal 2026, compared to a net income of $1.1 million in the same quarter last year, which included a one-time gain of $5.7 million [2][4]. - Net revenues increased to $6.3 million, a 35% rise from $4.7 million year-over-year and a 7% sequential increase from $5.9 million [3]. - Gross margin improved to 58.1%, up from 46.3% a year earlier and 56.1% in the previous quarter, attributed to a favorable product mix and better fixed cost absorption [3]. Business Metrics and Segment Breakdown - GSI's SRAM business showed strong performance, with SigmaQuad product shipments accounting for 62.5% of first-quarter shipments, up from 36.3% a year ago [5]. - Sales to key customers shifted, with KYEC sales dropping to $0.3 million (4.3% of net revenues) from $1 million (21.9%) a year ago, while Cadence Design Systems emerged as a significant contributor with $1.5 million in sales (23.9% of net revenues) [6]. - Defense and military shipments decreased to 19.1% of total shipments from 31.9% in the prior-year period, indicating a change in customer mix [7]. Management Commentary - CEO Lee-Lean Shu described the quarter as a "strong start" to fiscal 2026, highlighting advancements in product development and customer engagement [8]. - CFO Douglas Schirle noted an improved financial position, with cash and equivalents rising to $22.7 million from $13.4 million, supported by $11 million raised through the ATM program [9]. Factors Influencing Financial Results - Revenue growth was primarily driven by higher SRAM sales and a favorable product mix, although geopolitical factors and tariffs affected the supply chain [10]. - Operating expenses decreased to $5.8 million from $6.8 million a year ago, with R&D spending dropping from $4.2 million to $3.1 million [11][12]. Guidance - For the second quarter of fiscal 2026, GSI Technology anticipates net revenues between $5.9 million and $6.7 million, with a gross margin between 56% and 58% [13]. Other Developments - The company is undergoing a strategic evaluation process to explore capital options and expand application teams, retaining Needham & Company for assistance [14].

Core Insights - GSI Technology reported significant revenue growth in Q1 of fiscal 2026, driven by increased demand for SRAM in AI applications, achieving $6.3 million in revenue, a 7% sequential increase and a 35% year-over-year increase [10][18] - The company achieved a gross margin of 58.1%, up 200 basis points sequentially and over 1,100 basis points year-over-year, attributed to a favorable product mix and operating leverage [3][32] - Operating expenses decreased by 15% year-over-year to $5.8 million, excluding a prior-year one-time gain [3][33] Financial Performance - Operating loss narrowed to $2.2 million in Q1 2026 from $4.7 million in Q1 2025, while net loss was $2.1 million or $0.08 per diluted share, compared to net income of $1.1 million in the same period last year [4][34] - Cash and cash equivalents stood at $22.7 million as of June 30, 2025, bolstered by $11 million raised under the ATM program [5][35] - Working capital increased to $25.7 million from $16.4 million as of March 31, 2025, and stockholders' equity rose to $37.4 million from $28.2 million [5][35] Customer and Product Insights - SRAM sales to major customers included Cadence Design Systems at $1.5 million (23.9% of revenue), KYEC at $267,000 (4.3% of revenue), and Nokia at $536,000 (8.5% of revenue) [6][29] - Defense and military sales accounted for 19.1% of shipments, down from 31.9% year-over-year, while SigmaQuad product shipments represented 62.5% of shipments, up from 36.3% in the prior year [7][30] Strategic Developments - The company completed the second spin evaluation of the Gemini-II chip, which is now production-ready, and delivered a LiDAR tool to a defense contractor, marking a significant milestone [8][19] - Management is evaluating funding options to expand software and application teams supporting Gemini-II and is actively engaging with Needham and Company for strategic alternatives [9][13] - Guidance for Q2 of fiscal 2026 projects net revenues between $5.9 million and $6.7 million, with gross margin expected in the 56%-58% range [9][37] Supply Chain and Market Outlook - Extended lead times for back-end assembly in Taiwan are causing temporary delays in SRAM order fulfillment, but stable SRAM revenue is anticipated for the remainder of fiscal 2026 as customers adjust [8][12] - The company is developing dynamic low-precision software libraries and AI compiler enhancements to support Gemini-II's position in edge and defense AI markets [13][27]

Financial Data and Key Metrics Changes - The company achieved net revenue of $6.3 million, up 7% sequentially and 35% year over year [4] - Gross margin improved by 200 basis points sequentially and over 1,100 basis points year over year, reaching 58.1% [5][16] - Operating expenses declined by 15% year over year, totaling $5.8 million [5][18] - The net loss for the quarter was $2.1 million, or $0.08 per diluted share, compared to a net income of $1.1 million in the same period last year [19] Business Line Data and Key Metrics Changes - SRAM sales continued to rise, driven by demand from AI chip emulation systems, but faced supply chain constraints impacting 2026 sales [9][10] - Sales to KYEC were $267,000, down from $1 million a year ago, while sales to Cadence Design Systems increased to $1.5 million from zero in the same period last year [15] - Defense and military sales accounted for 19.1% of first-quarter shipments, down from 31.9% a year ago [15] Market Data and Key Metrics Changes - The company is experiencing strong demand for high-performance SRAM chips, particularly from hyperscalers in the AI sector [9] - Extended lead times due to supply chain issues are affecting the ability to fulfill orders, but forecasts from major customers remain solid [10][16] Company Strategy and Development Direction - The company plans to target high-growth opportunities in the satellite and edge computing sectors, leveraging AI capabilities [7] - There is an emphasis on advancing the development of the Gemini II chip and preparing for the next-generation APU, Plateau [8][20] - The company is evaluating strategic options to secure necessary capital for product development [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged supply chain challenges due to tariffs affecting assembly operations, particularly in Taiwan [24] - The company expects net revenues in the second fiscal quarter to range between $5.9 million and $6.7 million, with gross margins between 56% and 58% [20] Other Important Information - The company ended the first quarter with a cash position of $22.7 million, up from $13.4 million at the end of the previous quarter [19] - The company is actively working with the Board and advisors to evaluate strategic alternatives for efficient scaling [7][20] Q&A Session Summary Question: Can you provide more color on the supply chain issues? - The transition of assembly operations from China to Taiwan due to tariffs has affected capacity and lead times [24][25] Question: Will that end up making customers possibly order earlier? - Yes, customers are being informed to adjust their ordering patterns to avoid delays [26][27] Question: Sales to KYEC seemed weak this quarter. Can you comment on that? - Inventory levels have stabilized, but orders were not fulfilled within lead times due to supply chain issues [30] Question: What type of product are you shipping to Cadence? - The company is shipping emulation systems that support the design of AI chips [31] Question: What are the trading windows for the ATM? - The trading window opens two days after the earnings call and closes on the fifteenth of the last month of the quarter [32]

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) GSI Technology's Gemini-II chip is production-ready, with new AI algorithms for edge applications, while Q1 FY2026 saw net revenues of $6.3 million, improved gross margin, and a strong cash balance [CEO Commentary & Strategic Updates](index=1&type=section&id=1.1%20CEO%20Commentary%20%26%20Strategic%20Updates) GSI Technology's CEO announced the Gemini-II chip is production-ready, with SAR and YOLO algorithms optimized for Edge AI, and a multi-modal LLM under development for edge applications - **Gemini-II chip's** second silicon spin is fully functional and **production-ready**, with all known bugs resolved[3](index=3&type=chunk) - Finalized **SAR and YOLO algorithms**, optimized for a low-power Leda board, targeting **Edge AI applications** such as drones in GPS-denied environments and next-generation satellite applications[3](index=3&type=chunk) - Developing a **multi-modal Large Language Model (LLM)** optimized for **edge applications**, with benchmark results anticipated by fall 2025[3](index=3&type=chunk)[6](index=6&type=chunk) [Key Financial Highlights](index=1&type=section&id=1.2%20Key%20Financial%20Highlights) GSI Technology reported Q1 FY2026 net revenues of **$6.3 million**, a **58.1%** gross margin, and a strong **$22.7 million** cash balance, with increased SRAM revenue | Metric | Q1 FY2026 ($) | Q1 FY2025 ($) | Q4 FY2025 ($) | | :---------------- | :-------- | :-------- | :-------- | | Net Revenues | $6.3M | $4.7M | $5.9M | | Gross Margin | 58.1% | 46.3% | 56.1% | - **SRAM revenue increased 7% sequentially and 35% year-over-year**, driven by strong market momentum for leading AI processors[6](index=6&type=chunk) | Metric | June 30, 2025 ($) | March 31, 2025 ($) | | :---------------- | :-------------- | :------------- | | Cash Balance | $22.7M | $13.4M | [Financial Performance - First Quarter Fiscal Year 2026](index=1&type=section&id=Financial%20Performance%20-%20First%20Quarter%20Fiscal%20Year%202026) GSI Technology's Q1 FY2026 financial performance shows increased net revenues and gross margin, managed operating expenses, a net loss, and a significantly strengthened balance sheet with higher cash and working capital [Net Revenues and Gross Margin](index=1&type=section&id=2.1%20Net%20Revenues%20and%20Gross%20Margin) GSI Technology's Q1 FY2026 net revenues reached **$6.3 million**, a **34%** year-over-year increase, with gross margin significantly improving to **58.1%** due to product mix and higher revenue Net Revenues and Gross Margin Trends | Metric | Q1 FY2026 ($) | Q1 FY2025 ($) | Q4 FY2025 ($) | | :---------------- | :-------- | :-------- | :-------- | | Net Revenues | $6.3M | $4.7M | $5.9M | | Gross Margin | 58.1% | 46.3% | 56.1% | - **Gross margin increased by 200 basis points sequentially and over 1,100 basis points year-over-year**, reaching its **highest level in over two years**, driven by product mix and higher revenue impacting fixed costs[4](index=4&type=chunk)[6](index=6&type=chunk) Key Customer Sales as % of Net Revenues (Q1 FY2026) | Customer/Segment | Q1 FY2026 (% of Net Revenues) | Q1 FY2025 (% of Net Revenues) | Q4 FY2025 (% of Net Revenues) | | :----------------- | :---------------------------- | :---------------------------- | :---------------------------- | | KYEC | 4.3% | 21.9% | 29.5% | | Nokia | 8.5% | 21.4% | 7.5% | | Cadence Design Systems | 23.9% | 0% | 10.9% | | Military/Defense | 19.1% (of shipments) | 31.9% (of shipments) | 30.7% (of shipments) | | SigmaQuad | 62.5% (of shipments) | 36.3% (of shipments) | 39.3% (of shipments) | [Operating Expenses](index=1&type=section&id=2.2%20Operating%20Expenses) Total operating expenses for Q1 FY2026 were **$5.8 million**, a decrease from the prior year (excluding a one-time gain), with R&D expenses declining and SG&A remaining stable Operating Expenses Trends (in thousands) | Expense Category | Q1 FY2026 | Q1 FY2025 (excl. gain) | Q4 FY2025 | | :----------------- | :-------- | :--------------------- | :-------- | | Total Operating Expenses | $5,827 | $6,800 | $5,575 | | Research & Development | $3,097 | $4,214 | $2,966 | | Selling, General & Administrative | $2,730 | $2,604 | $2,609 | Stock-Based Compensation Expense (in thousands) | Expense Category | Q1 FY2026 | Q1 FY2025 | Q4 FY2025 | | :----------------- | :-------- | :-------- | :-------- | | Total Stock-Based Compensation | $341 | $658 | $512 | [Net Income (Loss) and EPS](index=2&type=section&id=2.3%20Net%20Income%20%28Loss%29%20and%20EPS) GSI Technology reported a Q1 FY2026 operating loss of **$(2.2) million** and a net loss of **$(2.2) million**, or **$(0.08)** per diluted share, contrasting with prior-year net income that included a one-time gain Net Income (Loss) and EPS Trends | Metric | Q1 FY2026 ($) | Q1 FY2025 ($) | Q4 FY2025 ($) | | :---------------- | :-------- | :-------- | :-------- | | Operating Income (Loss) | $(2.2)M | $(4.7)M (excl. gain) | $(2.3)M | | Net Income (Loss) | $(2.2)M | $1.1M (incl. gain) | $(2.2)M | | Diluted EPS | $(0.08) | $0.04 | $(0.09) | - The **net income of $1.1 million** in Q1 FY2025 included a **one-time gain of $5.7 million** from the sale and leaseback of the company's corporate headquarters[8](index=8&type=chunk)[9](index=9&type=chunk) [Balance Sheet and Liquidity](index=2&type=section&id=2.4%20Balance%20Sheet%20and%20Liquidity) As of June 30, 2025, GSI Technology significantly increased cash and cash equivalents to **$22.7 million**, with working capital improving to **$25.7 million** and stockholders' equity growing to **$37.4 million** Key Balance Sheet Items (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :---------------- | :-------------- | :------------- | | Cash and Cash Equivalents | $22,725 | $13,434 | | Working Capital | $25,700 | $16,400 | | Stockholders' Equity | $37,374 | $28,226 | | Total Assets | $50,505 | $43,317 | - The **increase in cash balance** includes proceeds from the **"at the market" (ATM) program**[6](index=6&type=chunk) [Business Outlook](index=1&type=section&id=Business%20Outlook) GSI Technology provides Q2 FY2026 guidance, projecting net revenues between $5.9 million and $6.7 million, with a gross margin of 56% to 58% [Second Quarter Fiscal Year 2026 Guidance](index=1&type=section&id=3.1%20Second%20Quarter%20Fiscal%20Year%202026%20Guidance) For Q2 FY2026, GSI Technology anticipates net revenues between **$5.9 million** and **$6.7 million**, with a gross margin projected at **56% to 58%** Q2 FY2026 Financial Outlook | Metric | Guidance Range | | :---------------- | :------------- | | Net Revenues ($) | $5.9M - $6.7M | | Gross Margin (%) | 56% - 58% | [Company Information](index=2&type=section&id=Company%20Information) GSI Technology, founded in 1995, is an AI leader specializing in APU technology for high-performance edge computing, with contact details provided for investor and media relations [About GSI Technology](index=2&type=section&id=4.1%20About%20GSI%20Technology) GSI Technology leads the AI revolution with APU technology for efficient database searches and high-performance edge computing, leveraging Gemini-I® and Gemini-II® innovations, founded in 1995 with 127 employees and over 125 patents - GSI Technology is at the forefront of the **AI revolution** with groundbreaking **APU technology** designed for unparalleled efficiency in **billion-item database searches** and **high-performance computing**[12](index=12&type=chunk) - Innovations like **Gemini-I® and Gemini-II®** offer **scalable, low-power, high-capacity computing solutions** that redefine **edge computing capabilities**[12](index=12&type=chunk) - **Founded in 1995**, headquartered in Sunnyvale, California, with **127 employees** and **over 125 granted patents**[13](index=13&type=chunk) [Investor Relations & Media Contacts](index=3&type=section&id=4.2%20Investor%20Relations%20%26%20Media%20Contacts) Investor relations are managed by Hayden IR, media relations by Finn Partners, and company inquiries are directed to CFO Douglas M. Schirle - Investor Relations contact: Kim Rogers, Managing Director at **Hayden IR** (385-831-7337, Kim@HaydenIR.com)[17](index=17&type=chunk) - Media Relations contact: Ricca Silverio at **Finn Partners** for GSI Technology (415-348-2724, gsi@finnpartners.com)[17](index=17&type=chunk) - Company contact: **Douglas M. Schirle, Chief Financial Officer** (408-331-9802)[17](index=17&type=chunk) [Forward-Looking Statements & Risk Factors](index=2&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) This section details forward-looking statements, highlighting that actual results may materially differ due to risks like operating fluctuations, customer dependence, market evolution, competition, and challenges in new product and market development, all amplified by current economic and geopolitical conditions - Forward-looking statements are based on current information and involve **risks and uncertainties** that could cause **actual results to differ materially**[14](index=14&type=chunk) - Key risks include **fluctuations in operating results**, historical **dependence on a limited number of customers**, global public health crises, rapidly evolving markets, the need to develop new products, **intense competition**, and **challenges in developing new products and customer relationships** for associative computing and SRAM products[14](index=14&type=chunk)[15](index=15&type=chunk) - **Economic and geopolitical conditions**, such as changing interest rates, inflationary pressures, policy unpredictability, trade barriers, military conflicts, and global economic declines, are currently **amplifying these risks**[15](index=15&type=chunk) [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents GSI Technology's Condensed Consolidated Statements of Operations and Balance Sheets, detailing financial performance and position for the specified periods [Condensed Consolidated Statements of Operations](index=3&type=section&id=6.1%20Condensed%20Consolidated%20Statements%20of%20Operations) The Condensed Consolidated Statements of Operations detail GSI Technology's financial performance for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, encompassing revenues, cost of goods sold, operating expenses, and net income (loss) per share Condensed Consolidated Statements of Operations (in thousands, except per share data) | | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Three Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------ | :----------------------------- | | Net revenues | $6,283 | $5,883 | $4,671 | | Cost of goods sold | 2,632 | 2,584 | 2,510 | | Gross profit | 3,651 | 3,299 | 2,161 | | Operating expenses: | | | | | Research & development | 3,097 | 2,966 | 4,214 | | Selling, general and administrative | 2,730 | 2,609 | 2,604 | | Gain from sale and leaseback transaction | - | - | (5,737) | | Total operating expenses | 5,827 | 5,575 | 1,081 | | Operating income (loss) | (2,176) | (2,276) | 1,080 | | Interest and other income, net | 13 | 52 | 55 | | Income (loss) before income taxes | (2,163) | (2,224) | 1,135 | | Provision for income taxes | 54 | 6 | 57 | | Net income (loss) | $(2,217) | $(2,230) | $1,078 | | Net income (loss) per share, basic | $(0.08) | $(0.09) | $0.04 | | Net income (loss) per share, diluted | $(0.08) | $(0.09) | $0.04 | | Weighted-average shares used in computing per share amounts: | | | | | Basic | 26,967 | 25,604 | 25,374 | | Diluted | 26,967 | 25,604 | 25,686 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=6.2%20Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets outline GSI Technology's financial position as of June 30, 2025, and March 31, 2025, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | March 31, 2025 | | :---------------------------------- | :-------------- | :------------- | | Cash and cash equivalents | $22,725 | $13,434 | | Accounts receivable | 1,587 | 3,169 | | Inventory | 3,763 | 3,891 | | Other current assets | 3,012 | 2,961 | | Net property and equipment | 722 | 808 | | Operating lease right-of-use assets | 9,232 | 9,547 | | Other assets | 9,464 | 9,507 | | Total assets | $50,505 | $43,317 | | Current liabilities | $5,372 | $7,074 | | Long-term liabilities | 7,759 | 8,017 | | Stockholders' equity | 37,374 | 28,226 | | Total liabilities and stockholders' equity | $50,505 | $43,317 |

Core Insights - GSI Technology, Inc. has successfully completed the evaluation of its Gemini-II chip, confirming it is production-ready and optimized for Edge AI applications, particularly in GPS-denied environments and next-generation satellite applications [3] - The company reported net revenues of $6.3 million for the first quarter of fiscal 2026, a significant increase from $4.7 million in the same period last year, and gross margin improved to 58.1% from 46.3% year-over-year [4][9] - The outlook for the second quarter of fiscal 2026 anticipates net revenues between $5.9 million and $6.7 million, with a gross margin of approximately 56% to 58% [3] Financial Performance - First quarter fiscal 2026 net revenues were $6.3 million, up 34% from $4.7 million in the first quarter of fiscal 2025 and up 7% from $5.9 million in the fourth quarter of fiscal 2025 [4] - Gross margin for the first quarter of fiscal 2026 was 58.1%, an increase of 200 basis points from the prior quarter and over 1,100 basis points compared to the prior year [7] - Total operating expenses for the first quarter of fiscal 2026 were $5.8 million, a decrease from $6.8 million in the same period a year ago [6] Customer and Sales Insights - Sales to Cadence Design Systems increased significantly to $1.5 million, representing 23.9% of net revenues, compared to $0 in the same period last year [5] - Sales to KYEC and Nokia decreased significantly, with KYEC contributing only $267,000 (4.3% of net revenues) and Nokia contributing $536,000 (8.5% of net revenues) in the first quarter of fiscal 2026 [5] Research and Development - The company is developing a multi-modal large language model (LLM) optimized for edge applications, with benchmark results expected by fall 2025 [3][7] - Research and development expenses for the first quarter of fiscal 2026 were $3.1 million, down from $4.2 million in the prior-year period [6] Cash and Equity Position - The quarter-end cash balance was $22.7 million, an increase from $13.4 million at the end of the previous quarter, reflecting strong cash flow management [7][10] - Stockholders' equity as of June 30, 2025, was $37.4 million, up from $28.2 million at the end of the previous fiscal year [10]

SUNNYVALE, Calif., July 17, 2025 (GLOBE NEWSWIRE) -- GSI Technology, Inc. (Nasdaq: GSIT), developer of the Gemini ® Associative Processing Unit (APU) for AI and high-performance parallel computing (HPPC) and a leading provider of high-performance memory solutions for networking, telecommunications and military markets, will announce financial results for its fiscal first quarter 2026 ended June 30, 2025 after the market close on Thursday, July 31, 2025. Management will also conduct a conference call to revi ...

Company Overview - GSI Technology was established in 1995 and had its IPO in 2007[7] - The company has invested $150 million into APU development[7] - GSI Technology has 148 employees worldwide, with 86 dedicated to APU[6] - Insider ownership is at 27%[6] Financial Performance - FY 2025 annual revenue reached $205 million[6] - Cash and cash equivalents totaled $134 million as of March 31, 2025[6] - The company's market capitalization is $942 million[6] - Strategic cost-cutting is expected to generate annualized savings of approximately $35 million[39] - The sale and lease-back of Sunnyvale, CA HQ generated $113 million[39] Market and Product Strategy - The AI semiconductor TAM is projected to reach $312 billion by 2029[15] - The space semiconductor TAM is expected to grow to $48 billion by 2032[14] - GSI is targeting a >$100 million annual market opportunity in radiation-tolerant applications, with ASP up to $30K and 90%+ gross margin[18] - APU reduces operating costs by 80% and power usage by 90% compared to traditional solutions based on AWS benchmark with 1 Billion Dataset[29]

Part I [Business](index=3&type=section&id=Item%201.%20Business) GSI Technology is a fabless semiconductor company transitioning its focus from high-speed synchronous SRAM to in-place associative computing solutions for AI and HPC markets, while continuing to generate revenue from its established SRAM business - The company's primary business is providing in-place associative computing solutions (APU) for AI and HPC markets, while continuing to serve the synchronous SRAM market[11](index=11&type=chunk)[12](index=12&type=chunk) - Fiscal year 2025 net revenue decreased by **6%** compared to fiscal 2024, attributed to cautionary customer spending and reduced demand for SRAM products due to worldwide inflationary pressures and geopolitical tensions[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) - GSI is developing its second-generation Gemini-II chip, with first silicon received in January 2024 and a planned market release in mid-calendar 2025[22](index=22&type=chunk) - The company has secured multiple government contracts (Space Development Agency, AFWERX, U.S. Army) to develop its APU technology for defense and space applications, with milestone payments totaling over **$2.6 million**[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) - In May 2024, GSI initiated a strategic review to explore options like financing, divestitures, licensing, or a sale of the company to maximize shareholder value[26](index=26&type=chunk)[27](index=27&type=chunk) - On June 6, 2024, the company completed a sale and leaseback of its Sunnyvale headquarters, generating net cash proceeds of **$11.2 million** and recording a gain of **$5.7 million**[25](index=25&type=chunk) [Customers](index=17&type=section&id=Item%201.%20Business-Customers) GSI's revenue is significantly concentrated with a few key customers and channels, with distributors accounting for 91.7% of net revenues in fiscal 2025 and Avnet Logistics being the largest direct customer Revenue by Sales Channel (FY2023-FY2025) | Channel | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Direct to Contract Manufacturers | 7.9% | 20.5% | 19.8% | | To Distributors | 91.7% | 76.3% | 77.5% | Revenue from Major Direct Customers (FY2023-FY2025) | Customer | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Avnet Logistics | 49.6% | 50.6% | 48.1% | | Holystone | 22.6% | 2.5% | 2.4% | | Flextronics Technology | 2.7% | 13.5% | 10.4% | | Nexcomm | 9.8% | 9.3% | 16.6% | Revenue from Major End-User Customers (FY2023-FY2025) | End-User Customer | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | KYEC | ~23% | ~3% | ~2% | | Nokia | ~12% | ~21% | ~17% | [Manufacturing](index=19&type=section&id=Item%201.%20Business-Manufacturing) GSI operates a fabless manufacturing model, outsourcing all wafer fabrication, assembly, and most testing, relying heavily on TSMC as its single source for all SRAM and APU wafers - The company utilizes a fabless business model, outsourcing wafer fabrication, assembly, and testing[60](index=60&type=chunk) - All SRAM and APU wafers are currently manufactured by a single foundry, **TSMC**, under purchase orders without a long-term supply contract[61](index=61&type=chunk)[63](index=63&type=chunk) - APU products are manufactured using **28nm** and **16nm** process technology, while SRAM products use **0.13 micron, 90nm, 65nm, and 40nm** technologies[64](index=64&type=chunk) [Intellectual Property](index=23&type=section&id=Item%201.%20Business-Intellectual%20Property) GSI's competitive position relies on protecting its proprietary technology through a combination of patents, copyrights, trade secrets, and contractual agreements, holding 142 U.S. patents, including 82 related to associative computing technology - The company holds **142 United States patents**, comprising **60 for memory** and **82 for associative computing**[73](index=73&type=chunk) - GSI relies on a combination of patents, copyrights, trademarks, and trade secret laws to protect its intellectual property[73](index=73&type=chunk) - The company faces risks from potential patent infringement litigation, which could lead to substantial damages, injunctions, or costly licensing agreements[74](index=74&type=chunk)[76](index=76&type=chunk) [Human Capital Resources](index=25&type=section&id=Item%201.%20Business-Human%20Capital%20Resources) As of March 31, 2025, GSI Technology had 121 full-time employees, with a strong emphasis on engineering talent globally distributed across Sunnyvale, Taiwan, and Israel Employee Distribution as of March 31, 2025 | Category | Number of Employees | | :--- | :--- | | **Total Employees** | **121** | | Engineers | 82 | | - Research & Development | 47 | | Sales & Marketing | 16 | | General & Administrative | 10 | | Manufacturing | 44 | Employee Geographic Location | Location | Number of Employees | | :--- | :--- | | Sunnyvale, CA | 40 | | Taiwan | 40 | | Israel | 33 | [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks that could adversely affect its business, including unpredictable operating results, heavy reliance on major customers, uncertainty of its strategic review, and dependence on single-source suppliers - Significant reliance on key customers **KYEC** and **Nokia**, which accounted for approximately **23%** and **12%** of net revenues in fiscal 2025, respectively[96](index=96&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) - The company's future success is substantially dependent on the commercialization of its new in-place associative computing (APU) products, which involves significant technological and market adoption risks[97](index=97&type=chunk)[113](index=113&type=chunk) - Dependence on single-source suppliers, particularly **TSMC** for all wafer fabrication, poses a significant risk of manufacturing disruption and cost increases[97](index=97&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Geopolitical risks are heightened due to software development operations in Israel and manufacturing and testing operations in Taiwan, which could be affected by military conflicts or political instability[104](index=104&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - The ongoing strategic review creates uncertainty that could adversely affect employee retention, and customer and supplier relationships, with no assurance of a specific outcome[97](index=97&type=chunk)[110](index=110&type=chunk) - The company has a history of significant net losses, reporting losses of **$10.6 million, $20.1 million, and $16.0 million** in fiscal 2025, 2024, and 2023, respectively[117](index=117&type=chunk) [Unresolved Staff Comments](index=64&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[189](index=189&type=chunk) [Cybersecurity](index=64&type=section&id=Item%201C.%20Cybersecurity) GSI has established a cybersecurity risk management program that includes processes to identify, assess, and manage material risks from cyber threats, with Board oversight delegated to the Audit Committee - The company has implemented a cybersecurity risk management program designed to align with **ISO standards**[194](index=194&type=chunk) - The Board of Directors has overall oversight of cybersecurity risk, with the Audit Committee designated to regularly review management's processes and procedures for managing these risks[196](index=196&type=chunk)[197](index=197&type=chunk) - Management provides quarterly cybersecurity updates to the Audit Committee, covering threat risk management, response readiness, and incident response planning[199](index=199&type=chunk) [Properties](index=68&type=section&id=Item%202.%20Properties) The company's principal executive offices are located in a 44,277 square foot facility in Sunnyvale, California, and it also leases a 25,250 square foot facility in Hsin Chu, Taiwan, with aggregate annual gross rent of approximately $1.8 million in fiscal 2025 - Leases a **44,277 sq. ft.** facility in Sunnyvale, CA (headquarters) and a **25,250 sq. ft.** facility in Hsin Chu, Taiwan (manufacturing support)[201](index=201&type=chunk) - Aggregate annual gross rent for leased facilities was approximately **$1.8 million** in fiscal 2025[201](index=201&type=chunk) [Legal Proceedings](index=68&type=section&id=Item%203.%20Legal%20Proceedings) The company reports that there are no legal proceedings - None[202](index=202&type=chunk) [Mine Safety Disclosures](index=68&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[203](index=203&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=68&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) GSI Technology's common stock trades on the Nasdaq Global Market under the symbol "GSIT", and the company has never paid cash dividends nor repurchased shares in the most recent quarter - Common stock is traded on the Nasdaq Global Market under the symbol "**GSIT**"[205](index=205&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[206](index=206&type=chunk) - No shares were repurchased under the company's authorized stock repurchase program in the quarter ended March 31, 2025[207](index=207&type=chunk)[208](index=208&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=71&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2025, GSI's net revenues decreased by 5.7% to $20.5 million, gross margin fell to 49.4%, and a $5.7 million gain from a property sale helped reduce the net loss to $10.6 million, with liquidity supported by $13.4 million in cash [Results of Operations](index=79&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Results%20of%20Operations) For fiscal year 2025, net revenues fell 5.7% to $20.5 million, gross margin declined to 49.4%, and a $5.7 million gain from a property sale contributed to a net loss of $10.6 million, a significant improvement from the prior year Fiscal Year 2025 vs. 2024 Financial Performance (in thousands) | Metric | FY 2025 | FY 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $20,518 | $21,765 | ($1,247) | -5.7% | | Gross Profit | $10,140 | $11,823 | ($1,683) | -14.2% | | Gross Margin | 49.4% | 54.3% | -4.9pp | N/A | | R&D Expenses | $16,005 | $21,689 | ($5,684) | -26.2% | | SG&A Expenses | $10,763 | $10,565 | $198 | +1.9% | | Gain from Sale of Assets | ($5,793) | $0 | ($5,793) | N/A | | Loss from Operations | ($10,835) | ($20,431) | $9,596 | -47.0% | | Net Loss | ($10,639) | ($20,087) | $9,448 | -47.0% | - The decrease in net revenues was primarily due to a **6.4% decrease in units shipped**, with sales to Nokia falling by **$2.0 million**, while sales to KYEC increased by **$4.1 million**[237](index=237&type=chunk) - The decrease in R&D expenses was mainly due to a **$2.4 million reduction** in pre-production mask costs for the APU2 product and a **$2.2 million decrease** in payroll expenses from cost-cutting measures[239](index=239&type=chunk) [Liquidity and Capital Resources](index=83&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Liquidity%20and%20Capital%20Resources) As of March 31, 2025, GSI had $13.4 million in cash and cash equivalents, with net cash used in operating activities of $13.0 million, and believes its existing cash and expected cash flow will be sufficient for at least the next 12 months Cash and Cash Equivalents | Date | Amount (in millions) | | :--- | :--- | | March 31, 2025 | $13.4 | | March 31, 2024 | $14.4 | Cash Flow Summary (Fiscal Year 2025 vs 2024, in millions) | Cash Flow Activity | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($13.0) | ($17.4) | | Net Cash Provided by Investing Activities | $11.4 | $2.8 | | Net Cash Provided by Financing Activities | $0.6 | $1.8 | - The company has an At-the-Market (ATM) offering agreement to sell up to **$25.0 million** of its common stock, and in May and June 2025, it sold **3,380,773 shares** for proceeds of **$11.2 million**[253](index=253&type=chunk)[421](index=421&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=87&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has minimal exposure to foreign currency exchange risk as most transactions are in U.S. dollars and does not believe it has material exposure to interest rate sensitivity due to the short-term nature of its investments - The company has relatively little exposure to foreign currency exchange risk as most transactions are in U.S. dollars[262](index=262&type=chunk) - Due to the short-term nature of its investments in money market funds, the company does not believe it has material exposure to interest rate sensitivity[263](index=263&type=chunk) [Financial Statements and Supplementary Data](index=88&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for fiscal years ended March 31, 2025, 2024, and 2023, including balance sheets, statements of operations, and cash flows, with key figures for fiscal 2025 showing total assets of $43.3 million and a net loss of $10.6 million Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $23,455 | $30,107 | | Total Assets | $43,317 | $42,464 | | Total Current Liabilities | $7,074 | $5,365 | | Total Liabilities | $15,091 | $6,494 | | Total Stockholders' Equity | $28,226 | $35,970 | Consolidated Statement of Operations Data (in thousands) | Account | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | Net Revenues | $20,518 | $21,765 | $29,691 | | Gross Profit | $10,140 | $11,823 | $17,681 | | Loss from Operations | ($10,835) | ($20,431) | ($15,807) | | Net Loss | ($10,639) | ($20,087) | ($15,977) | | Diluted Net Loss Per Share | ($0.42) | ($0.80) | ($0.65) | - The independent auditor's report identifies the valuation of inventories as a Critical Audit Matter, due to the significant judgments required to forecast customer demand and estimate adjustments for excess and obsolete inventory[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=139&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[423](index=423&type=chunk) [Controls and Procedures](index=139&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of March 31, 2025, with no material changes reported during the fourth quarter of fiscal 2025 - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[425](index=425&type=chunk) - Management concluded that internal control over financial reporting was effective as of March 31, 2025[428](index=428&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[429](index=429&type=chunk) [Other Information](index=140&type=section&id=Item%209B.%20Other%20Information) During the quarter ended March 31, 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the fourth quarter of fiscal 2025[430](index=430&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=140&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[431](index=431&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=141&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding executive officers is provided in Part I of this report, with all other required information incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[434](index=434&type=chunk)[435](index=435&type=chunk) [Executive Compensation](index=141&type=section&id=Item%2011.%20Executive%20Compensation) The information required by this item concerning executive compensation is incorporated by reference from the "Executive Compensation" section of the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[436](index=436&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=141&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required by this item regarding security ownership and equity compensation plans is incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[437](index=437&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=141&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) The information required by this item concerning related person transactions and director independence is incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[438](index=438&type=chunk) [Principal Accountant Fees and Services](index=141&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The information required by this item regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[439](index=439&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=142&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Form 10-K, including the index to the Consolidated Financial Statements and a detailed list of all exhibits filed with the report - Lists the financial statements, financial statement schedules, and exhibits filed as part of the annual report[441](index=441&type=chunk)[442](index=442&type=chunk)[444](index=444&type=chunk) [Form 10-K Summary](index=147&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not applicable[447](index=447&type=chunk)

Summary of GSI (GSIT) Conference Call - May 21, 2025 Company Overview - GSI was founded 30 years ago by Leland Shu, the current president and CEO, and went public in February 2007 [2][3] - The company has a market cap of just under $100 million and maintains a significant insider ownership of 27% [6] Financials - GSI finished fiscal year 2025 with revenues of $20.5 million [4] - The company has $13.4 million in cash and cash equivalents and has never carried debt [5] - Operating costs have decreased to $5.6 million in the past quarter, with a cash burn of just over $1.5 million last quarter [40] - Revenues have been growing, attributed mainly to the build-out of AI, with a previous revenue of approximately $4.5 million a year ago [37] Product Lines and Market Focus - GSI specializes in high-density, high-performance memory products, particularly in the SRAM area, which has been profitable and is experiencing growth from the Sigma Quad family [6][7] - The company is expanding into aerospace and AI markets, specifically targeting edge and inference applications with their AI chip, the APU [7][8] - The APU is described as a unique compute-in-memory architecture, allowing for extreme parallel processing with 2 million bit processors [12][14] Technology and Innovation - GSI's APU technology is positioned as a true compute-in-memory solution, contrasting with other companies that offer near-memory processing [12][61] - The APU architecture allows for significant power savings by eliminating the need to transfer data back and forth between memory and processing units [15][16] - The company has two product families: Gemini One and Gemini Two, with Gemini Two expected to be production-worthy soon [24][44] - The upcoming PLATO chip aims to address multimodal generative AI and large language models at the edge, targeting a power consumption of under 10 watts [26][34] Market Opportunities - The AI industry is projected to grow at over 20% CAGR, while the space market is expected to grow at just under 10% CAGR [8] - GSI aims to capture 10-20% of a $100 million market opportunity in radiation-hardened devices for the space industry [10][11] - The company is actively pursuing government funding through SBIRs, having won three grants totaling approximately $3.35 million [41][42] Strategic Initiatives - GSI is focusing on short-term sales with government and military sectors while maintaining discussions with hyperscalers for long-term growth [49] - The company is looking to raise funds for the development of PLATO and the launch of Gemini Two, with a timeline for funding within the next two to three quarters [57][58] - GSI is open to various funding avenues, including equity raises, partnerships, and potential mergers or acquisitions [47] Challenges and Future Outlook - The company acknowledges the need to demonstrate the value of its technology to the market, as current stock prices do not reflect its potential [59] - GSI is optimistic about the future, expecting milestones to kick in during the second half of the year, particularly with the launch of Gemini Two and the development of PLATO [64]