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| PART I | | |
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| Item 1. | Business | 5 |
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| Item 1A. | Risk Factors | 11 |
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| Item 1B. | Unresolved Staff Comments | 26 |
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| Item 1C. | Cybersecurity | 26 |
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| Item 2. | Properties | 28 |
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| Item 3. | Legal Proceedings | 28 |
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| Item 4. | Mine Safety Disclosures | 28 |
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| PART II | | |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 29 |
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| Item 6. | [Reserved] | 29 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 30 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 38 |
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| Item 8. | Financial Statements and Supplementary Data | 39 |
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| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 64 |
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| Item 9A. | Controls and Procedures | 64 |
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| Item 9B. | Other Information | 65 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 65 |
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| PART III | | |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 66 |
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| Item 11. | Executive Compensation | 66 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 66 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 66 |
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| Item 14. | Principal Accountant Fees and Services | 66 |
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| PART IV | | |
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| Item 15. | Exhibits and Financial Statement Schedules | 67 |
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| SIGNATURES | 75 | |
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Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are statements of events or results that may occur in the future are deemed to be forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These forward-looking statements include, but are not limited to, statements about:
| ● | estimates of our future revenue, expenses, capital requirements and our needs for additional financing; |
| ● | the implementation of our business model and strategic plans for our products, technologies and businesses; |
| ● | our expectations regarding current supply constraints; |
| ● | competitive companies and technologies and our industry; |
| ● | our ability to manage and grow our business by expanding our sales to existing customers or introducing our products to new customers; |
| ● | our ability to establish and maintain intellectual property (IP) protection for our products or avoid claims of infringement; |
| ● | our ability to hire and retain key personnel; |
| ● | our financial performance; |
| ● | our estimates of the MRAM market opportunity; and |
| ● | the volatility of our share price. |
Forward-looking statements are based on management’s current expectations, estimates, forecasts, and projections about our business and the industry in which we operate, and management’s beliefs and assumptions are not guarantees of future performance or development and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this report may turn out to be inaccurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, these statements should not be regarded as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and elsewhere in this report. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments. Additionally, there may be other risks that are otherwise described from time to time in the reports that we file with the Securities and Exchange Commission (SEC). We caution investors that our business and financial performance are subject to substantial risks and uncertainties. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Risk Factor Summary
We are subject to a variety of risks and uncertainties, including risks related to our financial condition, risks related to our business and our industry, risks related to our intellectual property and technology, risks related to regulatory matters and compliance, risks related to our common stock and certain general risks, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. These risks include, but are not limited to, the following principal risks:
| ● | We may need additional funding and may be unable to raise capital when needed, which could force us to delay, reduce, or eliminate planned activities. |
| ● | We cannot be certain that we will sustain profitability. |
| ● | The limited history of STT-MRAM adoption makes it difficult to evaluate our current business and future prospects. |
| ● | We may be unable to match production with customer demand for a variety of reasons including macroeconomic factors due to the cyclical nature of the semiconductor industry, our inability to accurately forecast customer demand, supply chain constraints, or the capacity constraints of our suppliers, which could adversely affect our operating results. |
| ● | As we expand into new potential markets, we expect to face intense competition, including from our customers and potential customers, and may not be able to compete effectively, which could harm our business. |
| ● | We rely on third parties to distribute, manufacture, package, assemble and test our products, which exposes us to a number of risks, including reduced control over manufacturing and delivery timing and potential exposure to price fluctuations, which could result in a loss of revenue or reduced profitability. |
| ● | Disruptions in our supply chain may adversely impact our ability to fulfill customer demand which, in turn, may adversely impact our business, results of operations, and financial condition. |
| ● | Our joint development agreement and strategic relationships involve numerous risks. |
| ● | We must continuously develop new and enhanced products, and if we are unable to successfully market our new and enhanced products for which we incur significant expenses to develop, our results of operations and financial condition will be materially adversely affected. |
| ● | Our success and future revenue depend on our ability to secure design wins and on our customers’ ability to successfully sell the products that incorporate our solutions. Securing design wins is a lengthy, expensive, and competitive process, and may not result in actual orders and sales, which could cause our revenue to decline. |
| ● | The loss of one or several of our customers or reduced orders or pricing from existing customers may have a significant adverse effect on our operations and financial results. |
| ● | We face competition and expect competition to increase in the future. If we fail to compete effectively, our revenue growth and results of operations will be materially and adversely affected. |
| ● | Our costs may increase substantially if we or our third-party manufacturing contractors do not achieve satisfactory product yields or quality. |
| ● | The complexity of our products may lead to defects, which could negatively impact our reputation with customers and result in liability. |
| ● | We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased expenses. |
| ● | Changes to industry standards and technical requirements relevant to our products and markets could adversely affect our business, results of operations, and prospects. |
| ● | Our success depends on our ability to attract and retain key employees, and our failure to do so could harm our ability to grow our business and execute our business strategies. |
| ● | We currently maintain, and are seeking to expand, operations outside the United States which exposes us to significant risks. |
For a more complete discussion of the material risk factors applicable to us, see “Risk Factors” in Part I, Item 1A of this report.
