ALPHA & OMEGA SEMICONDUCTOR Ltd

Previous wording

Except for the historical information contained herein, the matters addressed in this Item 2 constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward looking statements include information set forth under the heading “Factors Affecting Our Performance.” Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed below under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those anticipated by the Company’s management. The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the Act. The Company undertakes no obligation to publicly release the results of any revisions to its forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. Unless the context otherwise requires, the words “AOS,” the “Company,” “we,” “us” and “our” refer to Alpha and Omega Semiconductor Limited and its subsidiaries.

Current wording

Except for the historical information contained herein, the matters addressed in this Item 2 constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward looking statements include information set forth under the heading “Other Factors affecting our Performance.” Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed below under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those anticipated by the Company’s management. The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the Act. The Company undertakes no obligation to publicly release the results of any revisions to its forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. Unless the context otherwise requires, the words “AOS,” the “Company,” “we,” “us” and “our” refer to Alpha and Omega Semiconductor Limited and its subsidiaries.

Previous wording

Management’s discussion should be read in conjunction with management’s discussion included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the Securities and Exchange Commission on August 28, 2025.

Current wording

Management’s discussion should be read in conjunction with management’s discussion included in the Company’s 2025 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on August 28, 2025.

Previous wording

We are a designer, developer, and global supplier of a broad range of discrete power devices, wide band gap power devices, power management ICs and modules, including a wide portfolio of Power MOSFET, SiC, IGBT, IPM, TVS, HV Gate Drivers, Power IC, and Digital Power products. Our portfolio of power semiconductors includes approximately 2,800 products, and has grown with the introduction of over 100 new products in the fiscal year ended June 30, 2025, and over 100 and 60 new products in the fiscal years ended June 30, 2024 and 2023, respectively. During the six months ended December 31, 2025, we introduced 37 new products. Our teams of scientists and engineers have developed extensive intellectual properties and technical knowledge that encompass major aspects of power semiconductors, which we believe enables us to introduce and develop innovative products to address the increasingly complex power requirements of advanced electronics. We have an extensive patent portfolio that consists of 953 patents and 71 patent applications in the United States as of December 31, 2025. We also have a total of 1,080 foreign patents, which primarily were based on our research and development efforts through December 31, 2025. We differentiate ourselves by integrating our expertise in technology, design and advanced manufacturing and packaging to optimize product performance and cost. Our portfolio of products targets high-volume applications, including personal computers, graphic cards, game consoles, home appliances, power tools, smart phones, battery packs, consumer and industrial motor controls and power supplies for computers, servers and telecommunications equipment.

Current wording

We are a designer, developer, and global supplier of a broad range of discrete power devices, wide band gap power devices, power management ICs and modules, including a wide portfolio of Power MOSFET, SiC, IGBT, IPM, TVS, HV Gate Drivers, Power IC, and Digital Power products. Our portfolio of power semiconductors includes approximately 2,800 products, and has grown with the introduction of over 100 new products in the fiscal year ended June 30, 2025, and over 100 and 60 new products in the fiscal years ended June 30, 2024 and 2023, respectively. During the nine months ended March 31, 2026, we introduced 48 new products. Our teams of scientists and engineers have developed extensive intellectual properties and technical knowledge that encompass major aspects of power semiconductors, which we believe enables us to introduce and develop innovative products to address the increasingly complex power requirements of advanced electronics. We have an extensive patent portfolio that consists of 956 patents and 74 patent applications in the United States as of March 31, 2026. We also have a total of 1,087 foreign patents, which primarily were based on our research and development efforts through March 31, 2026. We differentiate ourselves by integrating our expertise in technology, design and advanced manufacturing and packaging to optimize product performance and cost. Our portfolio of products targets high-volume applications, including personal computers, graphic cards, game consoles, home appliances, power tools, smart phones, battery packs, consumer and industrial motor controls and power supplies for computers, servers and telecommunications equipment.

Previous wording

On July 14, 2025, we entered into an equity transfer agreement with a strategic investor to sell approximately 20.3% of outstanding equity interest in the JV Company held by us for an aggregate cash consideration of $150 million to be paid in four installments, subject to satisfaction of certain conditions. On August 29, 2025, the amended Shareholders’ agreement for the JV Company was signed, which reduced our equity interest in the JV Company by 20.3% to an ownership percentage of 18.9%. As of August 29, 2025, all of the conditions for the first installment were satisfied, and we received our first installment payment of RMB 676 million (or $94.5 million based on the currency exchange rate between RMB and U.S. Dollar on August 29, 2025). In addition, we received $11.1 million during the three months ended December 31, 2025 for the second installment payment. In January 2026, we also received $30.3 million for the third installment. We expect to receive the remaining installment payment of approximately $15.8 million and close the transaction in the near future. We believe this sale provides additional and significant capital for us to continue investment in technology, R&D projects and acquisition of assets complementary to our business operations, which will facilitate and accelerate our efforts to develop and distribute innovative and diverse power semiconductor products to customers worldwide.

Current wording

On July 14, 2025, we entered into an equity transfer agreement with a strategic investor to sell approximately 20.3% of outstanding equity interest in the JV Company held by us for an aggregate cash consideration of $150 million to be paid in four installments, subject to satisfaction of certain conditions. On August 29, 2025, the amended Shareholders’ agreement for the JV Company was signed, which reduced our equity interest in the JV Company by 20.3% to an ownership percentage of 18.9%. As of August 29, 2025, all of the conditions for the first installment were satisfied, and we received our first installment payment of RMB 676 million (or $94.5 million based on the currency exchange rate between RMB and U.S. Dollar on August 29, 2025). In addition, we received $11.1 million for the second installment payment during the three months ended December 31, 2025, and $30.3 million for the third installment payment during the three months ended March 31, 2026. We expect to receive the remaining installment payment of approximately $15.6 million and close the transaction in the near future. We believe this sale provides additional and significant capital for us to continue investment in technology, R&D projects and acquisition of assets complementary to our business operations, which will facilitate and accelerate our efforts to develop and distribute innovative and diverse power semiconductor products to customers worldwide.

Previous wording

In February 2023, we entered into a license agreement with a customer to license our proprietary SiC technology and provided 24-months of engineering and development services for a total fee of $45.0 million. The license and development fee required significant integration to create a combined output to the customer and was determined to be one performance obligation and was recognized over the 24 months during which we performed the engineering and development services. We use the input method to measure progress and recognize revenue, based on the effort expended relative to the estimated total effort to satisfy the performance obligation. As of June 30, 2025, all revenue has been recognized and all consideration has been received associated with the license agreement, therefore we no longer have any obligations under the license agreement. During the three and six months ended December 31, 2025, we recorded nil of license and development revenue, respectively. During the three and six months ended December 31, 2024 we recorded $5.4 million and $11.0 million of license and development revenue, respectively. We also entered into an accompanying supply agreement to provide limited wafer supply to the customer.

Current wording

In February 2023, we entered into a license agreement with a customer to license our proprietary SiC technology and provided 24-months of engineering and development services for a total fee of $45.0 million. The license and development fee required significant integration to create a combined output to the customer and was determined to be one performance obligation and was recognized over the 24 months during which we performed the engineering and development services. We use the input method to measure progress and recognize revenue, based on the effort expended relative to the estimated total effort to satisfy the performance obligation. As of June 30, 2025, all revenue has been recognized and all consideration has been received associated with the license agreement, therefore we no longer have any obligations under the license agreement. During the three and nine months ended March 31, 2026, we recorded nil of license and development revenue, respectively. During the three and nine months ended March 31, 2025 we recorded $2.8 million and $13.8 million of license and development revenue, respectively. We also entered into an accompanying supply agreement to provide limited wafer supply to the customer.

Previous wording

The following tables set forth statements of loss, also expressed as a percentage of revenue, for the three and six months ended December 31, 2025 and 2024. Our historical results of operations are not necessarily indicative of the results for any future period.

Current wording

The following tables set forth statements of loss, also expressed as a percentage of revenue, for the three and nine months ended March 31, 2026 and 2025. Our historical results of operations are not necessarily indicative of the results for any future period.

Previous wording

Total revenue was $162.3 million for the three months ended December 31, 2025, a decrease of $10.9 million, or 6.3% as compared to $173.2 million for the same quarter last year. The decrease was primarily due to a decrease of $12.0 million in sales of power discrete products and a decrease of $5.4 million in license and development services, partially offset by an increase $5.1 million in sales of power IC products and an increase of $1.4 million in packaging and testing services and other. The net decrease in power discrete products and power IC products sales was primarily due to a 5.7% decrease in unit shipment, partially offset by a 1.7% increase in average selling price as compared to same quarter last year due to a shift in product mix. The net decrease in revenues was primarily driven by a decrease in power supply and industrial markets, particularly in power tools products and quick chargers products, as well as a decrease in consumer markets, particularly in gaming products, partially offset by an increase in the computing markets, particularly in notebook products. The increase in revenue of packaging and testing services and other for the three months ended December 31, 2025, as compared to same quarter last year, was primarily due to increased demand. The decrease in license and development services for the three months ended December 31, 2025 was related to the license agreement with a customer to license our proprietary SiC technology and provided 24-month engineering and development services, which was completed during the three months ended March 31, 2025.

Current wording

Total revenue was $163.8 million for the three months ended March 31, 2026, a decrease of $0.8 million, or 0.5% as compared to $164.6 million for the same quarter last year. The decrease was primarily due to a decrease of $7.7 million in sales of power IC products and a decrease of $2.8 million in license and development services, partially offset by an increase of $8.2 million in sales of power discrete products and an increase of $1.4 million in packaging and testing services and other. The net increase in power discrete products and power IC products sales was primarily due to a 4.1% increase in average selling price, partially offset by a 3.6% decrease in unit shipment as compared to same quarter last year due to a shift in product mix. Such net increase in revenues was primarily driven by an increase in communication markets, particularly in battery products, offset by a decrease in power supply and industrial markets, particularly in power tools products. The increase in revenue of packaging and testing services and other for the three months ended March 31, 2026, as compared to same quarter last year, was primarily due to increased demand. The decrease in license and development services for the three months ended March 31, 2026 was related to the license agreement with a customer to license our proprietary SiC technology and provided 24-month engineering and development services, which was completed during the three months ended March 31, 2025.

Previous wording

Total revenue was $344.8 million for the six months ended December 31, 2025, a decrease of $10.3 million, or 2.9% as compared to $355.0 million for the same period last year. The decrease was primarily due to a decrease of $25.9 million in sales of power discrete products, as well as a decrease of $11.0 million in license and development services, partially offset by an increase of $24.9 million in sales of power IC products and an increase of $1.8 million in packaging and testing services and other. The net decrease in power discrete products and power IC products sales was primarily due to a 2.5% decrease in unit shipment, partially offset by a 2.3% increase in average selling price as compared to same period last year due to a shift in product mix. The net decrease in revenues was primarily driven by a decrease in consumer markets, particularly in home appliances and gaming products, and a decrease in power supply and industrial markets, particularly in power tools products and quick chargers products, as well as a decrease in communication market, particularly in battery products, partially offset by an increase in the computing markets, particularly in notebook. The increase in revenue from packaging and testing services and other for the six months ended December 31, 2025, as compared to same period last year, was primarily due to increased demand. The decrease in license and development services for the six months ended December 31, 2025 was related to the license agreement with a customer to license our proprietary SiC technology and provided 24-month engineering and development services, which was completed during the three months ended March 31, 2025.

Current wording

Total revenue was $508.6 million for the nine months ended March 31, 2026, a decrease of $11.1 million, or 2.1% as compared to $519.7 million for the same period last year. The decrease was primarily due to a decrease of $17.7 million in sales of power discrete products, as well as a decrease of $13.8 million in license and development services, partially offset by an increase of $17.2 million in sales of power IC products and an increase of $3.2 million in packaging and testing services and other. The net decrease in power discrete products and power IC products sales was primarily due to a 2.9% decrease in unit shipment, partially offset by a 2.9% increase in average selling price as compared to same period last year due to a shift in product mix. Such net decrease in revenues was primarily driven by a decrease in consumer markets, particularly in home appliances and gaming products, and a decrease in power supply and industrial markets, particularly in power tools products and quick chargers products, partially offset by an increase in the computing markets, particularly in notebook. The increase in revenue from packaging and testing services and other for the nine months ended March 31, 2026, as compared to same period last year, was primarily due to increased demand. The decrease in license and development services for the nine months ended March 31, 2026 was related to the license agreement with a customer to license our proprietary SiC technology and provided 24-month engineering and development services, which was completed during the three months ended March 31, 2025.

Previous wording

Cost of goods sold was $127.4 million for the three months ended December 31, 2025, a decrease of $5.7 million or 4.3%, as compared to $133.1 million for the same quarter last year. The decrease was primarily due to 6.3% decrease in sales. Gross margin decreased by 1.6 percentage points to 21.5% for the three months ended December 31, 2025, as compared to 23.1% for the same quarter last year. The decrease in gross margin was primarily due to higher material costs and lower unit shipments during the three months ended December 31, 2025.

Current wording

Cost of goods sold was $129.3 million for the three months ended March 31, 2026, a decrease of $0.2 million or 0.2%, as compared to $129.5 million for the same quarter last year. The decrease was primarily due to 0.5% decrease in sales. Gross margin decreased by 0.3 percentage points to 21.1% for the three months ended March 31, 2026, as compared to 21.4% for the same quarter last year. The decrease in gross margin was primarily due to higher material costs and lower unit shipments during the three months ended March 31, 2026.

Previous wording

Gross margin decreased by 1.3 percentage points to 22.5% for the six months ended December 31, 2025, as compared to 23.8% for the same period last year. The decrease in gross margin was primarily due to higher material costs and lower unit shipments during the periods.

Current wording

0.9%, as compared to $400.0 million for the same period last year. The decrease was primarily due to 2.1% decrease in sales. Gross margin decreased by 0.9 percentage points to 22.1% for the nine months ended March 31, 2026, as compared to 23.0% for the same period last year. The decrease in gross margin was primarily due to higher material costs and lower unit shipments during the current periods.

Previous wording

Research and development expenses were $49.4 million for the six months ended December 31, 2025, an increase of $2.9 million, or 6.3%, as compared to $46.4 million for the same period last year. The increase was primarily attributable to an increase in employee compensation and benefits expense, mainly due to increased headcount and merit salary increases.

Current wording

Research and development expenses were $75.4 million for the nine months ended March 31, 2026, an increase of $5.6 million, or 8.0%, as compared to $69.8 million for the same period last year. The increase was primarily attributable to a

Previous wording

Selling, general and administrative expenses were $23.2 million for the three months ended December 31, 2025, an increase of $1.2 million, or 5.6%, as compared to $22.0 million for the same quarter last year. The increase was primarily due to a $0.3 million increase in employee compensation and benefits expenses primarily due to merit salary increases and higher medical insurance expense, a $0.5 million increase in legal expenses and a $0.3 million increase in audit and tax professional service fees.

Current wording

Selling, general and administrative expenses were $22.5 million for the three months ended March 31, 2026, an increase of $0.1 million, or 0.4%, as compared to $22.4 million for the same quarter last year. The increase was primarily due to a $0.5 million increase in employee compensation and benefit expenses primarily due to merit salary increases and higher bonus expense, a $0.4 million increase in legal expenses, $0.3 million increase in design-win commission and a $0.1 million increase in audit and tax professional service fees, offset by $1.4 million decrease in share-based compensation expense as a result of the change in estimated achievement of the performance conditions associated with the MSUs granted in December 2021. In addition, during the three months ended March 31, 2026, we identified one purchased manufacturing equipment, for which we were unable to meet our production process requirements. Because the equipment had no alternative uses, we recorded an impairment of $0.3 million related to such equipment.

Previous wording

Selling, general and administrative expenses were $46.5 million for the six months ended December 31, 2025, an increase of $2.2 million, or 5.0%, as compared to $44.3 million for the same period last year. The increase was primarily due to a $1.2 million increase in employee compensation and benefits expenses primarily due to merit salary increases and higher medical insurance expense, a $0.6 million increase in legal expenses and a $0.5 million increase in audit and tax professional service fees.

Current wording

Selling, general and administrative expenses were $69.0 million for the nine months ended March 31, 2026, an increase of $2.3 million, or 3.5%, as compared to $66.7 million for the same period last year. The increase was primarily due to a $1.7 million increase in employee compensation and benefits expenses primarily due to merit salary increases and higher bonus expense, a $0.9 million increase in legal expenses, and a $0.6 million increase in audit and tax professional service fees, offset by a $1.0 million decrease in share-based compensation expense as a result of the change in estimated achievement of the performance conditions associated with the MSUs granted in December 2021. and $0.1 million decrease in design-win commission expense. In addition, during the nine months ended March 31, 2026, we recorded an impairment of $0.3 million related to an equipment.

Previous wording

Other income (loss), net increased in the three months ended December 31, 2025, as compared to the same periods last year primarily due to an increase in foreign currency exchange gain as a result of the appreciation of RMB against USD.

Current wording

Other income (loss), net increased in the three months ended March 31, 2026, as compared to the same quarter last year primarily due to an increase in foreign currency exchange gain as a result of the appreciation of RMB against USD.

Previous wording

Other income (loss), net increased in the six months ended December 31, 2025, as compared to the same periods last year primarily due to an increase in foreign currency exchange gain as a result of the appreciation of RMB against USD, as well as $1.9 million of certain services were provided by the Company to the JV Company.

Current wording

Other income (loss), net increased in the nine months ended March 31, 2026, as compared to the same periods last year primarily due to an increase in foreign currency exchange gain as a result of the appreciation of RMB against USD, as well as $1.9 million of certain services were provided by the Company to the JV Company.

Previous wording

Interest income decreased in the three and six months ended December 31, 2025, as compared to the same periods last year primarily due to lower interest rates in the current periods.

Current wording

Interest income decreased in the nine months ended March 31, 2026, as compared to the same period last year primarily due to lower interest rates in the current periods.

Previous wording

Interest expense decreased in the three and six months ended December 31, 2025 as compared to the same periods last year primarily due to lower outstanding loan balance in the current periods.

Current wording

Interest expense decreased in the three and nine months ended March 31, 2026 as compared to the same period last year primarily due to lower outstanding loan balance in the current periods.

Previous wording

Equity method investment income increased in the six months ended December 31, 2025, as compared to the same period last year as a result of the gain from the sales of 20.3% outstanding equity interest in the JV Company in August 2025, as well as an income recorded from the equity method investment during the six months ended December 31, 2025, compared to the equity method investment loss in the same periods last year.

Current wording

Equity method investment income increased in the nine months ended March 31, 2026, as compared to the same period last year as a result of the gain from the sales of 20.3% outstanding equity interest in the JV Company in August 2025, as well as an income recorded from the equity method investment during the nine months ended March 31, 2026, compared to the equity method investment loss in the same period last year.

Previous wording

We recognized income tax expense of approximately $1.5 million and $1.2 million for the three months ended December 31, 2025 and 2024, respectively. The income tax expense of $1.5 million for the three months ended December 31, 2025 included a $0.1 million discrete tax expense. The income tax expense of $1.2 million for the three months ended December 31, 2024 included a $0.1 million discrete tax expense. Excluding the discrete income tax items, the income tax expense for the three months ended December 31, 2025 and 2024 was $1.4 million and $1.2 million, respectively, and the effective tax rate for the three months ended December 31, 2025 and 2024 was (12.0)% and (22.1%), respectively. The changes in the tax expense and effective tax rate between the periods resulted primarily from changes in the mix of earnings in various geographic jurisdictions between the current period and the same period of last year.

Current wording

We recognized income tax expense of approximately $1.0 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively. The income tax expense of $1.0 million for the three months ended March 31, 2026 included a $0.1 million discrete tax expense. The income tax expense of $0.7 million for the three months ended March 31, 2025 included a $0.1 million discrete tax expense. Excluding the discrete income tax items, the income tax expense for the three months ended March 31, 2026 and 2025 was $0.9 million and $0.6 million, respectively, and the effective tax rate for the three months ended March 31, 2026 and 2025 was (7.4)% and (5.8%), respectively. The changes in the tax expense and effective tax rate between the periods resulted primarily from changes in the mix of earnings in various geographic jurisdictions between the current period and the same period of last year.

Previous wording

We recognized income tax expense of approximately $3.4 million and $2.3 million for the six months ended December 31, 2025 and 2024, respectively. The income tax expense of $3.4 million for the six months ended December 31, 2025 included a $0.1 million discrete tax expense. The income tax expense of $2.3 million for the six months ended December 31, 2024 included a $0.1 million discrete tax expense. Excluding the discrete income tax items, the income tax expense for the six months ended December 31, 2025 and 2024 was $3.3 million and $2.1 million, respectively, and the effective tax rate for the six months ended December 31, 2025 and 2024 was (27.3)% and (31.4%), respectively. The changes in the tax expense and effective tax rate between the periods resulted primarily from changes in the mix of earnings in various geographic jurisdictions between the current year and the same period of last year, including reporting $0.7 million of income tax expense related to the Company’s income from its investment in CQJV for the six months ended December 31, 2025 versus an $0.2 million tax benefit for the six months ended December 31, 2024.

Current wording

$0.2 million discrete tax expense. The income tax expense of $2.9 million for the nine months ended March 31, 2025 included a $0.2 million discrete tax expense. Excluding the discrete income tax items, the income tax expense for the nine months ended March 31, 2026 and 2025 was $4.2 million and $2.7 million, respectively, and the effective tax rate for the nine months ended March 31, 2026 and 2025 was (17.0)% and (16.1%), respectively. The changes in the tax expense and effective tax rate between the periods resulted primarily from changes in the mix of earnings in various geographic jurisdictions between the current year and the same period of last year, including reporting $0.7 million of income tax expense related to the Company’s income from its investment in CQJV for the nine months ended March 31, 2026 versus a $0.2 million tax benefit for the nine months ended March 31, 2025. In addition, income tax payable increased by $10.4 million and deferred tax liability decreased by $10.5 million as a result of the sale of approximately 20.3% of the Company’s equity interest in the JV company for $150 million during the nine months ended March 31, 2026 . We made income tax payments of approximately $0.7 million and $9.3 million during the three and nine months ended March 31, 2026, respectively, as a result of the sale transaction.

Previous wording

We file our income tax returns in the United States and in various foreign jurisdictions. The tax years 2004 to 2025 remain open to examination by U.S. federal and state tax authorities. The tax years 2019 to 2025 remain open to examination by foreign tax authorities.

Current wording

The Company files its income tax returns in the United States and in various foreign jurisdictions. The tax years 2004 to 2025 remain open to examination by U.S. federal and state tax authorities. The tax years 2019 to 2025 remain open to examination by foreign tax authorities.

Previous wording

Our income tax returns are subject to examinations by the Internal Revenue Service and other tax authorities in various jurisdictions. In accordance with the guidance on the accounting for uncertainty in income taxes, the Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes. These assessments can require considerable estimates and judgments. As of December 31, 2025, the gross amount of unrecognized tax benefits was approximately $10.8 million, of which $7.5 million, if recognized, would reduce the effective income tax rate in future periods. If our estimate of income tax liabilities proves to be less than the ultimate assessment, then a further charge to expense would be required. If events occur and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. We do not anticipate any material changes to its uncertain tax positions during the next twelve months.

Current wording

In accordance with the guidance on the accounting for uncertainty in income taxes, the Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes. These assessments can require considerable estimates and judgments. As of March 31, 2026, the gross amount of unrecognized tax benefits was approximately $10.9 million, of which $7.5 million, if recognized, would reduce the effective income tax rate in future periods. If the Company's estimate of income tax liabilities proves to be less than the ultimate assessment, then a further charge to expense would be required. If events occur and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determine the liabilities are no longer necessary.

Previous wording

In September 2021, Jireh Semiconductor Incorporated (“Jireh”), one of the wholly-owned subsidiaries, entered into a financing arrangement agreement with a company (“Lender”) for the lease and purchase of a machinery equipment manufactured by a supplier. This agreement includes a payment term of five (5) years, pursuant to which Jireh commenced payments of interests and principal to the Lender in September 2022 when the final installation and acceptance of the equipment were completed. After the end of such payment term, Jireh has the option to purchase the equipment for $1. The implied interest rate was 4.75% per annum which was adjustable based on every five basis point increase in 60-month U.S. Treasury Notes. The total purchase price of this equipment was euro 12.0 million. In April 2021, Jireh made a down payment of euro 6.0 million, representing 50% of the total purchase price of the equipment, to the supplier. In June 2022, the equipment was delivered to Jireh after Lender paid 40% of the total purchase price, for euro 4.8 million, to the supplier on behalf of Jireh. In September 2022, Lender paid the remaining 10% payment for the total purchase price and reimbursed Jireh for the 50% down payment, after the installation and configuration of the equipment. The title of the equipment was transferred to Lender following such payment. The agreement was amended with fixed implied interest rate of 7.51% and monthly payment of principal and interest effective in October 2022. Other terms remain the same. In addition, Jireh purchased hardware for the machine under this financing arrangement. The purchase price of this hardware was $0.2 million. The financing arrangement is secured by this equipment and other equipment at Jireh, which had the net book value of $11.3 million as of December 31, 2025. As of December 31, 2025, the outstanding balance of this debt financing was $5.1 million.

Current wording

In September 2021, Jireh Semiconductor Incorporated (“Jireh”), one of the wholly-owned subsidiaries, entered into a financing arrangement agreement with a company (“Lender”) for the lease and purchase of a machinery equipment manufactured by a supplier. This agreement includes a payment term of five (5) years, pursuant to which Jireh commenced payments of interest and principal to the Lender in September 2022 when the final installation and acceptance of the equipment were completed. After the end of such payment term, Jireh has the option to purchase the equipment for $1. The implied interest rate was 4.75% per annum which was adjustable based on every five basis point increase in 60-month U.S. Treasury Notes. The total purchase price of this equipment was euro 12.0 million. In April 2021, Jireh made a down payment of euro 6.0 million, representing 50% of the total purchase price of the equipment, to the supplier. In June 2022, the equipment was delivered to Jireh after Lender paid 40% of the total purchase price, for euro 4.8 million, to the supplier on behalf of Jireh. In September 2022, Lender paid the remaining 10% payment for the total purchase price and reimbursed Jireh for the 50% down payment, after the installation and configuration of the equipment. The title of the equipment was transferred to Lender following such payment. The agreement was amended with fixed implied interest rate of 7.51% and monthly payment of principal and interest effective in October 2022. Other terms remain the same. In addition, Jireh purchased hardware for the machine under this financing arrangement. The purchase price of this hardware was $0.2 million. The financing arrangement is secured by this equipment and other equipment at Jireh, which had a net book value of $10.9 million as of March 31, 2026. As of March 31, 2026, the outstanding balance of this debt financing was $4.4 million.

Previous wording

On August 18, 2021, Jireh entered into a term loan agreement with a financial institution (the “Bank”) in an amount up to $45.0 million for the purpose of expanding and upgrading our fabrication facility located in Oregon. The obligation under the loan agreement is secured by substantially all assets of Jireh and guaranteed by us. The agreement has a 5.5 year term and matures on February 16, 2027. Jireh is required to make consecutive quarterly payments of principal and interest. The loan accrues interest based on adjusted SOFR plus the applicable margin based on the outstanding balance of the loan. This agreement contains customary restrictive covenants and includes certain financial covenants that we are required to maintain. Jireh drew down $45.0 million on February 16, 2022 with the first payment of principal beginning in October 2022. As of June 30, 2025, Jireh was in compliance with these covenants andthe outstanding balance of this loanwas $20.3 million. In August 2025, the Company paid the outstanding balance in full and this agreement was terminated. As of December 31, 2025, there was no outstanding balance.

Current wording

On August 18, 2021, Jireh entered into a term loan agreement with a financial institution (the “Bank”) in an amount up to $45.0 million for the purpose of expanding and upgrading our fabrication facility located in Oregon. The obligation under the loan agreement is secured by substantially all assets of Jireh and guaranteed by us. The agreement has a 5.5-year term and matures on February 16, 2027. Jireh is required to make consecutive quarterly payments of principal and interest. The loan accrues interest based on adjusted SOFR plus the applicable margin based on the outstanding balance of the loan. This agreement contains customary restrictive covenants and includes certain financial covenants that we are required to maintain. Jireh drew down $45.0 million on February 16, 2022 with the first payment of principal beginning in October 2022. As of June 30, 2025, Jireh was in compliance with these covenants and the outstanding balance of this loan was $20.3 million. In August 2025, we paid the outstanding balance in full and this agreement was terminated. As of March 31, 2026, there was no outstanding balance.

Previous wording

As of December 31, 2025 and June 30, 2025, we had $196.8 million and $153.5 million of cash, cash equivalents and restricted cash, respectively. Our cash, cash equivalents and restricted cash primarily consist of cash on hand, restricted cash, and short-term bank deposits with original maturities of three months or less. Of the $196.8 million and $153.5 million cash, cash equivalents and restricted cash, $89.4 million and $40.7 million, respectively, are deposited with financial institutions outside the United States.

Current wording

As of March 31, 2026 and June 30, 2025, we had $190.7 million and $153.5 million of cash, cash equivalents and restricted cash, respectively. Our cash, cash equivalents and restricted cash primarily consist of cash on hand, restricted cash, and short-term bank deposits with original maturities of three months or less. Of the $190.7 million and $153.5 million cash, cash equivalents and restricted cash, $81.2 million and $40.7 million, respectively, are deposited with financial institutions outside the United States.

Previous wording

For the six months ended December 31, 2025, the $23.1 million decrease in cash provided by operating activities compared to the same period last year was primarily due to an increase of net loss of $6.3 million, a decrease of non-cash expenses of $11.3 million, which includes an increase of $8.7 million in deferred income tax, net and an increase of $2.9 million in equity method investment gain due to the 20.3% equity method investment sale and income recorded from the equity method investment in current period, compared to a loss recorded from the equity method investment in the same period last year, an increase of $22.4 million in inventory purchase, a decrease of accounts payable of $8.5 million primarily due to timing of payment, a decrease of $3.3 million in net payable, equity investee, and increase of $0.4 million in other current and long-term assets. These sources of cash were offset by an increase of $2.5 million in income tax payable primarily due to the sale of the 20.3% interest in the equity method investment, a decrease of $13.1 million in accounts receivable, a decrease of $8.5 million in contract assets, and an increase of $4.6 million in deferred revenue.

Current wording

For the nine months ended March 31, 2026, the $38.8 million decrease in cash provided by operating activities compared to the same period last year was primarily due to an increase of net loss of $9.3 million, a decrease of non-cash expenses of $15.9 million, which includes an increase of $8.1 million in deferred income tax, net, a decrease of $4.2 million in depreciation and amortization, and an increase of $2.5 million in equity method investment gain due to the 20.3% equity method investment sale and income recorded from the equity method investment in current period, compared to a loss recorded from the equity method investment in the same period last year, an increase of $17.0 million in inventory purchase, a decrease of accounts payable of $20.9 million primarily due to timing of payment, and a decrease of $5.1 million in net payable, equity investee. These sources of cash were offset by a decrease of $12.3 million in accounts receivable, $4.0 million increase in deferred revenue, an increase of $11.5 million in accrued and other liabilities, and an increase of $2.6 million in income tax payable primarily due to the sale of the 20.3% interest in the equity method investment.

Previous wording

For the six months ended December 31, 2025, the $88.6 million increase in cash provided by investing activities compared to the same period last year was primarily due to $103.2 million of proceeds from sale of equity interest in the JV Company, net with transaction costs, partially offset by $10.3 million of more purchases of property and equipment, $3.5 million of a loan issued to a supplier, and $0.5 million of more purchase of intangible assets, as well a $0.3 million less government grant related to equipment in the six months ended December 31, 2025 compared to the same period last year

Current wording

For the nine months ended March 31, 2026, the $110.4 million increase in cash provided by investing activities compared to the same period last year was primarily due to $133.5 million of proceeds from sale of equity interest in the JV Company, net with transaction costs, partially offset by $14.0 million of more purchases of property and equipment, $8.0 million of a loan issued to a supplier, and $0.6 million of more purchase of intangible assets, as well a $0.5 million less government grant related to equipment in the nine months ended March 31, 2026 compared to the same period last year.

Previous wording

For the six months ended December 31, 2025, the $29.5 million increase in cash used in financing activities compared to the same period last year was primarily due to $15.9 million of repayment of loan borrowings and $14.0 million of payment for repurchases of common shares, partially offset by $0.3 million of withholding tax on restricted stock units.

Current wording

For the nine months ended March 31, 2026, the $28.3 million increase in cash used in financing activities compared to the same period last year was primarily due to $13.7 million of repayment of loan borrowings and $18.2 million of payment for repurchases of common shares, partially offset by $3.5 million of withholding tax on restricted stock units.

Previous wording

There were no material changes outside of our ordinary course of business in our contractual obligations from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Current wording

There were no material changes outside of our ordinary course of business in our contractual obligations from those disclosed in our 2025 Form 10-K.