Financial Position - The company reported cash and cash equivalents of $21.6 million as of December 31, 2023, with no debt[101]. - Cash and cash equivalents as of December 31, 2023 were $21.6 million, down from $30.6 million as of March 31, 2023[126]. - The company believes existing cash balances and expected cash flow will be sufficient for working capital and capital expenditures for at least the next 12 months[131]. - The company sold 133,000 shares at an average price of $4.20, resulting in proceeds of $542,000 after offering costs of $389,000 during Q3 2023[133]. - As of December 31, 2023, the company had $4.2 million in purchase obligations, with $3.3 million due within the next twelve months[133]. - The contingent consideration liability related to the acquisition of MikaMonu was accrued at $495,000, payable through December 31, 2025, contingent on revenue targets[133]. - The company reported cash and cash equivalents of $21.6 million as of December 31, 2023, primarily invested in money market funds[138]. Revenue and Sales Performance - Sales to networking and telecommunications OEMs accounted for 32% to 53% of net revenues over the last three fiscal years, with Nokia being the largest customer, representing approximately 23% of net revenues in the nine months ended December 31, 2023[107]. - Net revenues decreased by 17.5% from $6.4 million in Q4 2022 to $5.3 million in Q4 2023, and by 31.8% from $24.3 million in the nine months ended December 31, 2022 to $16.6 million in the same period in 2023[116]. Expenses and Costs - Research and development expenses included a charge of $2.4 million for a pre-production mask set for the APU-2 during the quarter ended December 31, 2023[110]. - Research and development expenses increased by 26.2% from $5.5 million in Q4 2022 to $7.0 million in Q4 2023, primarily due to increased pre-production mask costs for the APU-2 product[120]. - Selling, general and administrative expenses decreased by 9.5% from $3.0 million in Q4 2022 to $2.7 million in Q4 2023, while increasing by 1.8% from $8.1 million in the nine months ended December 31, 2022 to $8.2 million in the same period in 2023[121]. - The company has been impacted by supply chain constraints and inflation, leading to increased costs in wafer fabrication and assembly operations[108]. Profitability and Loss - Gross profit decreased by 19.7% from $3.7 million in Q4 2022 to $3.0 million in Q4 2023, and by 37.5% from $14.7 million in the nine months ended December 31, 2022 to $9.2 million in the same period in 2023[118]. - Net loss was $6.6 million in Q4 2023 compared to $4.8 million in Q4 2022, and $15.8 million in the nine months ended December 31, 2023 compared to $12.0 million in the same period in 2022[125]. Future Outlook - The company expects continued fluctuations in revenues due to changes in customer buying patterns and economic conditions, including inflation and energy price fluctuations[98]. - The company anticipates that overall average selling prices will increase in the coming quarters due to a shift towards higher price, higher density products[104]. - The company expects that selling, general, and administrative expenses will increase in absolute dollars as it expands its sales force[111]. Internal Controls and Compliance - There was a material weakness in internal control over financial reporting identified as of March 31, 2023, which has not been remediated as of December 31, 2023[140]. - Management has implemented a detailed plan to remediate the identified material weakness, focusing on enhancing review controls over forecasts used for contingent consideration calculations[142]. - The company does not have any off-balance sheet arrangements or relationships with unconsolidated entities as of December 31, 2023[135]. Risk Factors - Foreign currency exchange risks are minimal, as revenues and expenses are primarily denominated in U.S. dollars[137]. - The company does not currently enter into forward exchange contracts or derivative financial instruments for hedging or speculative purposes[137]. - 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[138].
GSI Technology(GSIT) - 2024 Q3 - Quarterly Report