Financial Performance - Net revenues decreased by 20.3% from $5.7 million in Q3 2023 to $4.6 million in Q3 2024, and by 18.4% from $11.3 million in the first half of 2023 to $9.2 million in the first half of 2024[106]. - Gross profit decreased by 43.7% from $3.1 million in Q3 2023 to $1.8 million in Q3 2024, with gross margin dropping from 54.7% to 38.6%[112]. - Net loss was $5.5 million in Q3 2024 compared to $4.1 million in Q3 2023, and $4.4 million in the first half of 2024 compared to $9.2 million in the first half of 2023[120]. - The average selling price of units shipped decreased by 12.0% in Q3 2024 compared to Q3 2023, with the number of units shipped decreasing by 10.5%[106]. - Direct and indirect sales to Nokia decreased from $1.2 million in Q3 2023 to $812,000 in Q3 2024, and from $3.0 million in the first half of 2023 to $1.8 million in the first half of 2024[110]. Cash and Liquidity - Cash and cash equivalents of $18.4 million as of September 30, 2024, with no debt[90]. - Cash and cash equivalents increased to $18.4 million as of September 30, 2024, up from $14.4 million as of March 31, 2024[121]. - Net cash used in operating activities was $7.7 million for the first half of 2024, compared to $6.3 million for the first half of 2023[122]. - Net cash provided by investing activities was $11.3 million in the first half of 2024, primarily from the sale and leaseback transaction[125]. - Net cash provided by financing activities for the six months ended September 30, 2024, was $373,000, compared to $1.5 million for the same period in 2023[126]. - The company believes its existing cash balances and future cash flow will be sufficient for working capital and capital expenditures for at least the next 12 months[127]. - The company sold 133,000 shares at an average price of $4.20 for proceeds of $542,000 during the quarter ended September 30, 2023[127]. Operational Changes - The company initiated measures to reduce operating expenses by approximately $3.5 million annually, resulting in a 16% decrease in the global workforce[91]. - The company has experienced a decline in revenues due to changes in customer buying patterns and communication limitations related to COVID-19, with a decrease in revenues expected in the second half of fiscal 2023 and into fiscal 2025[87]. - Research and development expenses are expected to remain substantial as the company invests in new in-place associative computing products, potentially leading to operating losses in some periods[102]. - Research and development expenses increased by 2.1% from $4.7 million in Q3 2023 to $4.8 million in Q3 2024, primarily due to outside consulting expenses for the next generation APU product[113]. - Selling, general and administrative expenses increased by 1.2% from $2.5 million in Q3 2023 to $2.6 million in Q3 2024, while decreasing by 6.7% from $5.5 million in the first half of 2023 to $5.2 million in the first half of 2024[116]. Market Conditions - The company expects continued inflationary pressures and high interest rates to negatively impact general economic activity and demand in its end markets over the next 12 months[90]. - The company has been impacted by increased costs due to inflation and supply chain constraints, particularly in wafer fabrication and outsourced manufacturing[98]. - The company anticipates fluctuations in quarterly net revenues due to the cyclical nature of the semiconductor industry and reliance on obtaining and shipping orders within the same quarter[94]. Goodwill and Obligations - The company completed its annual goodwill impairment test with no impairment noted, maintaining a goodwill balance of $8.0 million as of September 30, 2024[104]. - As of September 30, 2024, the company had $14.9 million in purchase obligations, with $1.6 million due in the next twelve months[128]. - The accrual for potential contingent consideration related to the acquisition of MikaMonu was $51,000 as of September 30, 2024, payable through December 31, 2025[129]. Financial Instruments and Risk Management - The company does not currently enter into forward exchange contracts to hedge foreign currency exposure, which is minimal[134]. - A hypothetical 100 basis point change in interest rates is not expected to materially affect the fair value of the company's interest-sensitive financial instruments[135]. - The company may require additional capital for potential acquisitions of businesses, products, or technologies in the future[127].
GSI Technology(GSIT) - 2025 Q2 - Quarterly Report